<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-K
[xx] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 001-13807
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ElderTrust
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 23-2932973
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
415 McFarlan Road, Suite 202
Kennett Square, PA 19348
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(610) 925-0808
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which
Common shares of beneficial interest, registered:
par value $.01 per share New York Stock Exchange
- ------------------------------------- ------------------------------
Securities registered pursuant to Section 12(g) of the Act:
(Not applicable)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes No X
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based upon the closing price of the registrant's common
shares of beneficial interest as of March 20, 1998 is $121,024.293. */
The number of shares outstanding of each of the registrant's classes
of common shares of beneficial interest, as of the latest practicable date is:
Class: Common shares of beneficial interest, par value $.01 per share.
Outstanding at March 20, 1998: 7,390,100 shares.
Documents Incorporated by Reference:
Parts I-III: Portions of the Company's prospectus dated January 26, 1988
contained in the Company's registration statement on Form S-11 (333-37451)
relating to the Company's initial public offering.
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*/ Solely for the purposes of this calculation, all trustees and executive
officers of the registrant and all shareholders beneficially owning more than
5% of the registrant's common shares of beneficial interest are considered to
be affiliates.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
<S> <C> <C> <C>
PART I Item 1. Business.................................................................... 3
Item 2. Properties.................................................................. 3
Item 3. Legal Proceedings........................................................... 3
Item 4. Submission of Matters to a Vote of Security Holders......................... 3
PART II Item 5. Market for Registrant's Common Equity and
Related Stockholders Matters................................................ 4
Item 6. Selected Financial Data..................................................... 4
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 4
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk........................................................... 4
Item 8. Financial Statements and Supplementary Data................................. 4
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................................... 10
PART III Item 10. Directors and Executive Officers of the Registrant.......................... 10
Item 11. Executive Compensation...................................................... 10
Item 12. Security Ownership of Certain Beneficial Owners
and Management.............................................................. 10
Item 13. Certain Relationships and Related Transactions.............................. 11
PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K................................................................. 11
SIGNATURES ........................................................................................ 12
</TABLE>
2
<PAGE>
PART I
Item 1. Business.
ElderTrust, a Maryland real estate investment trust (together with
its subsidiaries, the "Company"), was formed on September 23, 1997 to invest
in healthcare-related real estate and mortgages. At December 31, 1997, the
Company had no operations.
The Company completed its initial public offering ("IPO") on January
30, 1998. The net proceeds to the Company from the IPO, after deducting
underwriting discount and offering expenses, totaled approximately $116.5
million. For a description of the proposed business operations of the Company,
reference is made to the discussion under the captions "Risk Factors" and
"Business and Properties" in the Company's prospectus dated January 26, 1998
contained in the Company's registration statement on Form S-11 (333-37451)
relating to its IPO (the "Prospectus"), which discussion is incorporated
herein by reference. The Company has completed all of the initial investments
described in the Company's Prospectus, except for the acquisition of one
skilled nursing facility, Silverlake NRC, for which a necessary consent to the
transfer of the facility to the Company was not received. Additionally, an
initial draw of $900,000 under the construction loan for the Mallard Landing
development project has not yet been made.
The Company has in place a secured credit facility of up to $140
million from an affiliate of Deutsche Morgan Grenfell (the "Credit Facility").
The term of the facility is 364 days, subject to extension options. The
Company currently has borrowings under the Credit Facility totaling
approximately $34.1 million and additional borrowing authority of
approximately $18.5 million based on the properties and other assets that
currently comprise the borrowing base.
Item 2. Properties.
The information set forth under the caption "Business and Properties
Initial Properties" in the Company's Prospectus is incorporated herein by
reference. As noted above, the Silverlake NRC skilled nursing facility was not
acquired because a consent necessary to the transfer of the facility to the
Company was not received.
Item 3. Legal Proceedings.
The information set forth under the caption "Business and Properties --
Legal Proceedings" in the Company's Prospectus is incorporated herein by
reference.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
3
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Company's common shares of beneficial interest, par value $.01 per
share (the "Common Shares") began trading on the New York Stock Exchange on
January 27, 1998. As of March 20, 1998, the Company had approximately 25
holders of its outstanding Common Shares.
On September 23, 1997, the Company was capitalized with the issuance
to the Company's chief financial officer of 100 Common Shares for an aggregate
purchase price of $100. The issuance of such Common Shares was effected in
reliance upon an exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").
On July 30, 1997, ElderTrust Operating Limited Partnership (the
"Operating Partnership") was capitalized with the issuance of a general
partnership interest to ElderTrust Realty Group, Inc. in exchange for a
capital contribution in the amount of $200 and with the issuance of a limited
partnership interest to ET Partnership in exchange for a capital contribution
of $200,000. The issuance of such limited partnership interests in the
Operating Partnership was effected in reliance upon an exemption from
registration under Section 4(2) of the Securities Act, and Regulation D
promulgated thereunder.
On September 10, 1997, the Operating Partnership issued additional
limited partnership interests to Messrs. Romanov and McCreary in exchange for
capital contributions in the aggregate amount of $200. The issuance of such
limited partnership interests in the Operating Partnership was effected in
reliance upon an exemption from registration under Section 4(2) of the
Securities Act, and Regulation D promulgated thereunder.
Item 6. Selected Financial Data.
At December 31, 1997, the Company had total assets of $100
representing the consideration the Company received for the issuance of 100
Common Shares to the Company's chief financial officer in its formation on
September 23, 1997. See "Financial Statements and Supplementary Data."
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information set forth under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the
Company's Prospectus is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
The financial statement included in this Annual Report on Form 10-K
is set forth below.
4
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholder
ElderTrust:
We have audited the accompanying balance sheet of ElderTrust as of December 31,
1997. This balance sheet is the responsibility of the Company's management. Our
responsibility is to express an opinion on this balance sheet based upon our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of ElderTrust as of December 31, 1997,
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Washington, DC
January 30, 1998
5
<PAGE>
ELDERTRUST
Balance Sheet
December 31, 1997
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Assets
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Cash $ 100
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Shareholder's equity
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Preferred shares of beneficial interest, $.01 par value:
20,000,000 shares authorized; none issued or outstanding $
-
Common shares of beneficial interest, $.01 par value:
100,000,000 shares authorized; 100 issued and outstanding 1
Additional paid-in-capital 99
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Total shareholder's equity $ 100
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See accompanying notes to balance sheet.
6
<PAGE>
ELDERTRUST
Notes to Balance Sheet
December 31, 1997
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ElderTrust
Notes to Balance Sheet
December 31, 1997
(1) Organization
ElderTrust was formed in the State of Maryland on September 23, 1997
and issued a total of 100 shares to the Company's chief financial
officer for a total consideration of $100. The Company completed its
initial public offering on January 30, 1998 pursuant to which it issued
6,957,500 shares (the "Offering"). Net proceeds to the Company prior to
deducting offering expenses were approximately $116.5 million.
The Company had no operations through December 31, 1997. The Company
intends to begin operations by 1) purchasing a diversified portfolio of
healthcare properties, consisting primarily of assisted living and
skilled nursing facilities which will be leased back to the current
owners or other third parties; 2) making construction loans
collateralized by healthcare properties under construction and making
term loans collateralized by healthcare properties on which
construction has been recently completed, but which are still in
transition to occupancy levels required under purchase/leaseback
agreements; 3) acquiring a first mortgage loan secured by an unoccupied
personal care facility and 4) acquiring a 95% equity interest in an
entity which will acquire a second mortgage loan.
(2) Federal Income Taxes
At the earliest possible date, the Company intends to qualify as a real
estate investment trust under the Internal Revenue Code of 1986, as
amended. Accordingly, upon such qualification it will not be subject to
federal income taxes on amounts distributed to shareholders provided it
distributes at least 95 percent of its taxable income and meets certain
other conditions. The Company may, however, be subject to state or
local taxation in various jurisdictions.
(3) Planned Transactions
The Company intends to contribute the proceeds of the Offering to an
operating partnership in exchange for the sole general partner interest
and a majority limited partner interest. The operating partnership
expects to use the contributions from the Company and borrowings under
a proposed credit facility to purchase 21 healthcare properties for an
aggregate cost of $155.6 million and to fund construction and term
loans on nine healthcare properties with an aggregate balance of $34.8
million. In addition, the Company expects to make a $5.6 million loan
to ET Capital Corp. ("ET Capital") and expects to invest an additional
$1.8 million to acquire a 95%, nonvoting equity interest in ET Capital.
ET Capital expects to use the proceeds from the loan and the
contributed capital from the Company and the Company's chief executive
officer to purchase a $7.5 million working capital term note from
Genesis Health Ventures, Inc. ("Genesis"), which is secured by a second
lien on 11 skilled nursing facilities and related accounts receivable
and other working capital assets. The Company also expects to acqure a
$800,000 first mortgage note from Genesis. Thirteen of the properties
to be purchased with an aggregate cost of $93.4 million are owned by
Genesis and will be leased back to affiliates of Genesis or to third
parties under long-term operating leases. A construction loan of
approximately $2.0 million will be purchased from Genesis. Affiliates
of Genesis will be the borrowers on seven of the nine construction and
term loans, and Genesis manages the properties securing the working
capital term note. The Chairman and chief executive officer of Genesis
is chairman of the board of trustees of the Company.
7
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(3) Continued
The operating partnership has agreements to purchase the properties and
to purchase or make the construction, term and first and second
mortgage loans, subject to certain terms and conditions, including,
among other things, successful completion of the Offering and obtaining
a credit facility. The Company has obtained a commitment from an
affiliate of a commercial bank for a secured credit facility which
would be used to pay a portion of the purchase price of the properties
and to fund the construction and term loans and which would be
available for working capital needs and other general corporate
purposes. Management believes that the Company will be able to obtain
sufficient credit on acceptable terms.
The Company has agreed to reimburse actual costs incurred on its behalf
by Genesis upon consummation of the Offering. These costs relate to
organizing the Company, negotiating property acquisitions, performing
due diligence related to the properties, performing corporate work in
contemplation of the Offering, and preparing the registration
statement. This amount is estimated to be approximately $3.0 million
and will be payable upon the closing of the Offering from the proceeds
of the Offering.
The Company and Genesis plan to enter into an agreement for a period of
three years from the closing of the Offering (subject to annual
renewal), pursuant to which Genesis has granted the Company a right of
first refusal to purchase and leaseback to Genesis any assisted living,
independent living or skilled nursing facility which Genesis determines
to sell and leaseback (other than sale/leaseback transactions with
commercial banking institutions). The agreement also would provide the
Company with (i) a right to offer financing to Genesis and other
developers of assisted and independent living facilities which, once
developed, will be operated by Genesis and (ii) a right to offer
financing to Genesis with respect to any new off-balance sheet
financing of skilled nursing facilities currently owned by Genesis. The
Company intends to provide Genesis with a first right of refusal to
lease or manage any assisted living, independent living or skilled
nursing facility financed or acquired by the Company within Genesis'
markets unless the facility will be leased or managed by the developing
or selling company or an affiliate thereof.
(4) Employee Benefit Plans and Related Matters
The Company's board of trustees intends to adopt a share option and
incentive plan. The Company has reserved 9.9% of the total number of
common shares and operating partnership units outstanding from time to
time for issuance under the share option and incentive plan. As of the
effective date of the Offering, the Company intends to grant options to
purchase 497,500 shares. Of these options, 150,000 will vest
immediately, and the remainder will vest over three to five years. The
Company intends to adopt the intrinsic value approach to accounting for
share-based compensation.
The Company's president and chief executive officer and its chief
financial officer were issued limited partnership interests in the
operating partnership in consideration for services rendered in
connection with the formation of the Company. It is anticipated that
the operating partnership will issue 130,750 limited partnership units
in respect of these interests at the time of the Offering. The
operating partnership will recognize compensation expense equal to the
estimated fair market value of the units awarded which will be reported
in the Company's statement of operations upon completion of the
Offering. These units are redeemable beginning fourteen months after
completion of the Offering for either cash or, at the option of the
Company, common shares on a one-for-one basis.
8
<PAGE>
(4) Continued
The Company will enter into an employment agreement with its president
and chief executive officer upon consummation of the Offering. The
agreement will have an initial term of three years, subject to
automatic renewal for subsequent two year terms, and will cover matters
including compensation, disability and termination. The agreement will
also contain provisions which are intended to limit the president from
competing with the Company throughout the term of the agreement and for
a period of two years thereafter.
The Company will also enter into a non-competition agreement with the
chairman of the board of trustees. The agreement will be in effect
during the period that he serves as chairman.
9
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information set forth under the caption "Management -- Trustees,
Trustee Nominees and Executive Officers" in the Company's Prospectus is
incorporated herein by reference.
Item 11. Executive Compensation.
The information set forth under the captions "Management --
Compensation of the Board of Trustees," "1998 Share Option and Incentive
Plan," "Employment and Non-Competition Agreements" and "Incentive
Compensation" in the Company's Prospectus is incorporated herein by reference.
Item 12. Securities Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information as of March 20,
1998 regarding the beneficial ownership of Common Shares (or Common Shares for
which units of beneficial interest ("Units") in the Operating Partnership are
exchangeable) by (i) each trustee of the Company, (ii) each executive officer
of the Company, (iii) all trustees and executive officers of the Company as a
group, and (iv) each person or entity which is known by the Company to be the
beneficial owner of 5% or more of the outstanding Common Shares. Except as
indicated below, all of such Common Shares are owned directly, and the
indicated person or entity has sole voting and investment power.
<TABLE>
<CAPTION>
Number of Shares and Units Percentage of All
Beneficially owned After Common Shares Percent of All
the Offering and Common
Name of Beneficial Owner (1) -------------------------- Units Shares (2)
- ---------------------------- ----------------- --------------
<S> <C> <C> <C>
Michael R. Walker................................ 265,625(3) 3.4% 3.5%
Edward B. Romanov, Jr............................ 606,350(4) 7.7 7.9
Kent P. Dauten................................... 102,500(3) 1.3 1.4
Rodman W. Moorhead, III.......................... 27,500 * *
Timothy T. Weglicki.............................. 2,500 * *
D. Lee McCreary, Jr.............................. 24,200 * *
All trustees and executive officers as a group.
(6 persons).................................. 1,028,675(3)(4) 13.1% 13.7%
</TABLE>
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* Less than 1%.
(1) Address: c/o ElderTrust, 415 McFarlan Road, Suite 202, Kennett Square,
Pennsylvania 19348.
(2) Assumes that all Units held by the person are presented to the
Operating Partnership for redemption and acquired by the Company for
Common Shares. The total number of Common Shares outstanding used in
calculating the percentage assumes that none of the Units held by other
persons are similarly acquired for Common Shares.
(3) Excludes the indirect interests of Messrs. Walker and Dauten as
shareholders of Senior LifeChoice Corp. in 165,850 Units that are owned
by that entity.
(4) Includes presently exercisable options for 150,000 Common Shares.
10
<PAGE>
Item 13. Certain Relationships and Related Transactions.
The information set forth under the caption "Certain Relationships and
Related Transactions" in the Company's Prospectus is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) List of documents filed as part of Form 10-K.
(1) Financial Statements:
Balance Sheet -- December 31, 1997.
Notes to Balance Sheet.
Report of Independent Auditors.
(2) Financial Statements Schedules:
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable or are included in
the consolidated balance sheet.
(3) Exhibits:
The exhibits filed as part of this Annual Report on Form
10-K are listed on the Index to Exhibits on pages 13 to 14 and are
incorporated by reference herein.
(b) Reports on Form 8-K.
None.
(c) Exhibits.
The Company hereby files as part of this Annual Report on Form
10-K the exhibits listed in the Index to Exhibits.
(d) Financial Statement Schedules.
Not applicable.
11
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
ELDERTRUST
----------------------------------------
Registrant
By:/s/ Edward B. Romanov, Jr.
-------------------------------------
Edward B. Romanov, Jr.
President and Chief Executive Officer
March 30, 1998
-------------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Edward B. Rommanov, Jr. March 30, 1998
By:---------------------------------- ----------------------
Edward B. Romanov, Jr. Date
President, Chief Executive Officer and Trustee
(Principal Executive Officer)
/s/ D.Lee McCreary, Jr. March 30, 1998
By:---------------------------------- ----------------------
D. Lee McCreary, Jr. Date
Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
/s/ Michael R. Walker March 30, 1998
By:---------------------------------- ----------------------
Michael R. Walker Date
Chairman of the Board
/s/ Kent P. Dauten March 30, 1998
By:---------------------------------- ----------------------
Kent P. Dauten Date
Trustee
/s/ Rodman W. Moorhead, III March 30, 1998
By:---------------------------------- ----------------------
Rodman W. Moorhead, III Date
Trustee
/s/ Timothy T. Weglicki March 30, 1998
By:---------------------------------- ----------------------
Timothy T. Weglicki Date
Trustee
12
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page (by
Sequential
Exhibit Numbering
Number Identity of Exhibit System)
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<S> <C> <C>
3.1 Amended and Restated Declaration of Trust of the Company
3.2 Amended and Restated Bylaws of the Company
10.1 Second Amended and Restated Agreement of Limited Partnership
of the Operating Partnership
10.2 Registration Rights Agreement between the Company and the
persons named therein
+10.3 1998 Share Option and Incentive Plan
+10.4(1) Subscription Agreement between the Company and Edward B.
Romanov, Jr. dated as of October 8, 1997
+10.5 Employment Agreement between the Company and Edward B.
Romanov, Jr.
+10.6 Non-Competition Agreement between the Company and Michael R.
Walker
+10.7(1) Form of Indemnification Agreement between the Company and
each of its officers and trustees
10.8(1) Form of Asset Transfer Agreement between the Operating
Partnership and Genesis Health Ventures, Inc. ("Genesis
Health Ventures") (Heritage Woods, Willowbrook, Riverview
Ridge, Pleasant View, Rittenhouse, Lopatcong, Phillipsburg,
Wayne, POB 1, Lacey Bank Building, Belvedere, Chapel Manor
and Pennsburg Manor)
10.9(1) Plan of Asset Transfer and Contribution Agreement between
the Operating Partnership and Senior LifeChoice dated as of
September 25, 1997
10.10(1) Form of Asset Transfer Agreement between Operating
Partnership and certain limited partners in Senior
LifeChoice of Paoli, L.P. and Senior LifeChoice of
Kimberton, L.P. who are selling partnership interests for
cash
10.11(1) Plan of Asset Transfer and Contribution Agreement among the
Operating Partnership, GHV Associates and the partners in
GHV Associates dated as of September 25, 1997
10.12(1) Plan of Asset Transfer and Contribution Agreement
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
among the Operating Partnership and certain partners in
Salisbury Medical Office Building General Partnership
dated as of September 25, 1997
10.13(1) Form of Asset Transfer Agreement between the Operating
Partnership and certain parties in Salisbury Medical Office
Building General Partnership who are selling partnership
interests for cash
10.14.1(1) Form of Term Loan Agreement (Mifflin and Coquina Center
(Genesis))
10.14.2(1) Form of Secured Note (Mifflin and Coquina Center (Genesis))
10.14.3(1) Form of Mortgage and Security Agreement (Mifflin and Coquina
Center (Genesis))
10.14.4(1) Form of Assignment of Rents and Leases (Mifflin and Coquina
Center (Genesis))
10.14.5(1) Form of Collateral Assignment of Agreements Affecting Real
Estate (Mifflin and Coquina Center (Genesis))
10.14.6(1) Form of Guaranty and Suretyship Agreement (Mifflin and
Coquina Center (Genesis))
10.15.1(1) Form of Construction Loan Agreement (Oaks (Genesis))
10.15.2(1) Form of Secured Note (Oaks (Genesis))
10.15.3(1) Form of Mortgage and Security Agreement (Oaks (Genesis))
10.15.4(1) Form of Assignment of Rents and Leases (Oaks (Genesis))
10.15.5(1) Form of Collateral Assignment of Agreements Affecting Real
Estate (Oaks (Genesis))
10.15.6(1) Form of Guaranty and Suretyship Agreement (Oaks (Genesis))
10.16(1) Form of Assignment and Assumption Agreement between the
Operating Partnership and Genesis (Montchanin Construction
Loan)
10.17(1) Form of Construction Loan Commitment between the Operating
Partnership and Genesis
10.18(1) Form of Assignment and Assumption Agreement Between the
Operating Partnership and Genesis (Penn Mortgage)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.19.1 Assignment and Assumption Agreement between ET Capital Corp.
and Genesis (Florida Facilities Note)
10.19.2 Amendment of Working Capital Loan and Security Agreement
among ET Capital Corp., Genesis and the Age Institute of
Florida
10.19.3 Intercreditor Agreement among ET Capital Corp., Genesis and
the Age Institute of Florida
10.20 Right of First Refusal Agreement between the Operating
Partnership and Genesis
10.21 Option Agreement to purchase Holton Point facility between
the Operating Partnership and Genesis
10.22(1) Form of Minimum Rent lease between the Operating Partnership
and Genesis (Heritage Woods, Highgate at Paoli Pointe,
Rittenhouse, Lopatcong, Phillipsburg and Wayne)
10.23(1) Form of Percentage Rent Lease between the Operating
Partnership and Genesis (Willowbrook, Riverview Ridge and
Pleasant View)
10.24(1) Form of Fixed Rent Lease between the Operating Partnership
and Genesis (Salisbury Medical Office Building, Windsor
Office Building and Windsor Clinic ant Training Facility)
10.25 Credit Facility
10.26 Cross Indemnification and Contribution Agreement between the
Company and Genesis
21 Subsidiaries of the Company
27 Financial Data Schedule
99(2) The Company's Prospectus dated January 26, 1998
</TABLE>
- --------------
+ Management contract or compensatory plan or arrangement
(1) Incorporated by reference to the Company's Form S-11 Registration Statement
(331-37451)
(2) Incorporated by reference to the Company's Prospectus dated January 26, 1998
filed pursuant to Rule 424(b)(4)
10
<PAGE>
ELDERTRUST
----------
ARTICLES OF AMENDMENT AND RESTATEMENT OF
DECLARATION OF TRUST
FIRST: ElderTrust, a Maryland real estate investment trust
(the "Trust") under Title 8 of the Corporations and Associations Article of
the Annotated Code of Maryland ("Title 8"), desires to amend and restate its
Declaration of Trust as currently in effect (as so amended and restated, and
as the same may be amended hereafter, the "Declaration of Trust").
SECOND: The following provisions are all the provisions of
this Declaration of Trust currently in effect and as hereinafter amended:
ARTICLE I
FORMATION
The Trust is a real estate investment trust within the
meaning of Title 8. The Trust shall not be deemed to be a general partnership,
limited partnership, joint venture, joint stock company or, except as provided
in Section 13.4 hereof, a corporation (but nothing herein shall preclude the
Trust from being treated for tax purposes as an association under the Internal
Revenue Code of 1986, as amended (the "Code")).
ARTICLE II
NAME
The name of the Trust is: ElderTrust.
So far as may be practicable, the business of the Trust
shall be conducted and transacted under that name, which name (and the word
"Trust" wherever used in this Declaration of Trust, except where the context
otherwise requires) shall refer to the Trustees (as hereinafter defined)
collectively but not individually or personally and shall not refer to the
Shareholders (as hereinafter defined) or to any officers, employees or agents
of the Trust or of such Trustees.
Under circumstances in which the Board of Trustees of the
Trust (the "Board of Trustees" or "Board") determines that the use of the name
of the Trust is not practicable, the Trust may use any other designation or
name for the Trust.
<PAGE>
ARTICLE III
PURPOSES AND POWERS
Section 3.1 Purposes. The purposes for which the Trust is
formed are to invest in and to acquire, hold, finance, manage, administer,
control and dispose of property, including, without limitation or obligation,
engaging in business as a real estate investment trust under the Code.
Section 3.2 Powers. The Trust shall have all of the powers
granted to real estate investment trusts pursuant to Title 8 or any successor
statute and shall have all other and further powers set forth in this
Declaration of Trust which are not inconsistent with law and are appropriate
to promote and attain the purposes set forth in this Declaration of Trust.
Section 3.3 Investment Policy. The fundamental investment
policy of the Trust is to make investments in such a manner as to comply with
the provisions of the Code applicable to real estate investment trusts and
with the requirements of Title 8, with respect to the composition of the
Trust's investments and the derivation of its income. Subject to Section
5.2(u) hereof, the Trustees will use their best efforts to carry out this
fundamental investment policy and to conduct the affairs of the Trust in such
a manner as to continue to qualify the Trust for the tax treatment provided
for real estate investment trusts in the Code; provided, however, no Trustee,
officer, employee or agent of the Trust shall be liable for any act or
omission resulting in the loss of tax benefits under the Code, except to the
extent provided in Section 9.2 hereof. The Trustees may change from time to
time by resolution or in the bylaws of the Trust (the "Bylaws"), such
investment policies as they determine to be in the best interests of the
Trust, including prohibitions or restrictions upon certain types of
investments.
ARTICLE IV
RESIDENT AGENT
The name of the resident agent of the Trust in the State of
Maryland is The Corporation Trust Incorporated, 300 E. Lombard St., Baltimore,
MD 21202. Said resident agent is a Maryland corporation. The Trust may have such
offices or places of business within or outside the State of Maryland as the
Board of Trustees may from time to time determine.
<PAGE>
ARTICLE V
BOARD OF TRUSTEES
Section 5.1 Powers. Subject to any express limitations
contained in this Declaration of Trust or in the Bylaws, (a) the business and
affairs of the Trust shall be managed under the direction of the Board of
Trustees and (b) the Board shall have full, exclusive and absolute power,
control and authority over any and all property of the Trust. The Board may
take any action as in its sole judgment and discretion is necessary or
appropriate to conduct the business and affairs of the Trust. This Declaration
of Trust shall be construed with a presumption in favor of the grant of power
and authority to the Board. Any construction of this Declaration of Trust or
determination made in good faith by the Board concerning its powers and
authority hereunder shall be conclusive. The enumeration and definition of
particular powers of the Trustees included in this Declaration of Trust or in
the Bylaws shall in no way be limited or restricted by reference to or
inference from the terms of this or any other provision of this Declaration of
Trust or the Bylaws or construed or deemed by inference or otherwise in any
manner to exclude or limit the powers conferred upon the Board or the Trustees
under the general laws of the State of Maryland as now or hereafter in force
or any other applicable laws.
Section 5.2 Specific Powers and Authority. Subject only to
the express limitations herein, and in addition to all other powers and
authority conferred by this Declaration of Trust or by law, the Trustees,
without any vote, action or consent by the Shareholders, shall have and may
exercise, at any time or times, in the name of the Trust or on its behalf the
following powers and authorities:
(a) Investments. Subject to Section 9.4 hereof, to invest
in, purchase or otherwise acquire and to hold real, personal or mixed,
tangible or intangible, property of any kind wherever located, or rights or
interests therein or in connection therewith, all without regard to whether
such property, interests or rights are authorized by law for the investment of
funds held by trustees or other fiduciaries, or whether obligations the Trust
acquires have a term greater or lesser than the term of office of the Trustees
or the possible termination of the Trust, for such consideration as the
Trustees may deem proper (including cash, property of any kind or securities
of the Trust); provided, however, that the Trustees shall take such actions as
they deem necessary and desirable to comply with any requirements of Title 8
relating to the types of assets held by the Trust.
(b) Sale, Disposition and Use of Property. Subject to
Sections 3.3 and 9.4 and Article XI hereof: (i) to sell, rent, lease, hire,
exchange, release, partition, assign, mortgage, grant security interests in,
encumber, negotiate, dedicate, grant easements in and options with respect to,
convey, transfer (including transfers to entities wholly or partially owned by
the Trust or the Trustees) or otherwise dispose of any or all of the property
of the Trust by deeds (including deeds in lieu of foreclosure with or without
consideration), trust deeds, assignments, bills of sale, transfers, leases,
mortgages, financing statements, security agreements and other instruments for
any of such purposes executed and delivered for and on behalf of the Trust or
the Trustees by one or more of the Trustees or by a duly authorized officer,
employee, agent or nominee of the Trust, on such terms as they deem
appropriate; (ii) to give consents and make contracts relating to the property
of the Trust and its use or other property or matters; (iii) to develop,
improve, manage, use, alter or otherwise deal with the property of the Trust;
and (iv) to rent, lease or hire from others property of any kind; provided,
however, that the Trust may not use or apply land for any purposes not
permitted by applicable law.
<PAGE>
(c) Financings. To borrow or in any other manner raise money
for the purposes and on the terms they determine, and to evidence the same by
issuance of securities of the Trust, which may have such provisions as the
Trustees determine; to reacquire such securities of the Trust; to enter into
other contracts or obligations on behalf of the Trust; to guarantee, indemnify
or act as surety with respect to payment or performance of obligations of any
person; to mortgage, pledge, assign, grant security interests in or otherwise
encumber the property of the Trust to secure any such securities of the Trust,
contracts or obligations (including guarantees, indemnifications and
suretyships); and to renew, modify, release, compromise, extend, consolidate
or cancel, in whole or in part, any obligation to or of the Trust or
participate in any reorganization of obligors to the Trust.
(d) Loans. Subject to the provisions of Section 9.4 hereof,
to lend money or other property of the Trust on such terms, for such purposes
and to such persons as they may determine.
(e) Issuance of Securities. Subject to the provisions of
Article VI hereof: (i) to create and authorize and direct the issuance (on
either a pro rata or a non-pro rata basis) by the Trust, in Shares (as
hereinafter defined), units or amounts of one or more types, series or
classes, of securities of the Trust, which may have such voting rights,
dividend or interest rates, preferences, subordinations, conversion or
redemption prices or rights, maturity dates, distribution, exchange, or
liquidation rights or other rights as the Trustees may determine, without vote
of or other action by the Shareholders, to such persons for such
consideration, at such time or times and in such manner and on such terms as
the Trustees determine; (ii) to list or to designate for listing or quotation
any of the securities of the Trust on any national securities exchange or
automated inter-dealer quotation system; and (iii) to purchase or otherwise
acquire, hold, cancel, reissue, sell and transfer any securities of the Trust.
(f) Expenses and Taxes. To pay any charges, expenses or
liabilities necessary or desirable, in the sole discretion of the Trustees,
for carrying out the purposes of this Declaration of Trust and conducting the
business of the Trust, including compensation or fees to Trustees, officers,
employees and agents of the Trust, and to persons contracting with the Trust,
and any taxes, levies, charges and assessments of any kind imposed upon or
chargeable against the Trust, the property of the Trust or the Trustees in
connection therewith; and to prepare and file any tax returns, reports or
other documents and take any other appropriate action relating to the payment
of any such charges, expenses or liabilities.
<PAGE>
(g) Collection and Enforcement. To collect, sue for and
receive money or other property due to the Trust; to consent to extensions of
the time for payment, or to the renewal, of any securities or obligations; to
engage or to intervene in, prosecute, defend, compound, enforce, compromise,
release, abandon or adjust any actions, suits, proceedings, disputes, claims,
demands, security interests or things relating to the Trust, the property of
the Trust or the Trust's affairs; to exercise any rights and enter into any
agreements and take any other action necessary or desirable in connection with
the foregoing.
(h) Deposits. To deposit funds or securities constituting
part of the property of the Trust in banks, trust companies, savings and loan
associations, financial institutions and other depositories, whether or not
such deposits will draw interest, subject to withdrawal on such terms and in
such manner as the Trustees determine.
(i) Allocation; Accounts. To determine whether moneys,
profits or other assets of the Trust shall be charged or credited to, or
allocated between, income and capital, including whether or not to amortize
any premium or discount and to determine in what manner any expenses or
disbursements are to be borne as between income and capital (regardless of how
such items would normally or otherwise be charged to or allocated between
income and capital without such determination); to treat any dividend or other
distribution on any investment as, or apportion it between, income and
capital; in their discretion to provide reserves for depreciation,
amortization, obsolescence or other purposes in respect of any property of the
Trust in such amounts and by such methods as they determine; to determine what
constitutes net earnings, profits or surplus; to determine the method or form
in which the accounts and records of the Trust shall be maintained; and to
allocate to the Shareholders' equity account less than all of the
consideration paid for Shares and to allocate the balance to paid-in capital
or capital surplus.
(j) Valuation of Property. To determine the value of all or
any part of the property of the Trust and of any services, securities,
property or other consideration to be furnished to or acquired by the Trust,
and to revalue all or any part of the property of the Trust, all in accordance
with such appraisals or other information as are reasonable, in their sole
judgment.
(k) Ownership and Voting Powers. To exercise all of the
rights, powers, options and privileges pertaining to the ownership of any
mortgages, securities, real estate and other property of the Trust to the same
extent that an individual owner might, including, without limitation, to vote
or give any consent, request or notice or waive any notice, either in person
or by proxy or power of attorney, which proxies and powers of attorney may be
for any general or special meetings or action, and may include the exercise of
discretionary powers.
<PAGE>
(l) Officers; Delegation of Powers. To elect, appoint or
employ such officers for the Trust and such committees of the Board of
Trustees with such powers and duties as the Trustees may determine or the
Bylaws provide; to engage, employ or contract with and pay compensation to any
person (including, subject to Section 9.4 hereof, any Trustee and any person
who is an affiliate of any Trustee) as agent, representative, advisor, member
of an advisory board, employee or independent contractor (including advisers,
consultants, transfer agents, registrars, underwriters, accountants,
attorneys-at-law, real estate agents, property and other managers, appraisers,
brokers, architects, engineers, construction managers, general contractors or
otherwise) in one or more capacities, to perform such services on such terms
as the Trustees may determine; and to delegate to one or more Trustees,
officers or other persons engaged or employed as aforesaid, or to committees
of Trustees, the performance of acts or other things (including granting of
consents), the making of decisions and the execution of such deeds, contracts
or other instruments, in the name of the Trust or the Trustees, or as their
attorneys or otherwise, as the Trustees may determine.
(m) Associations. Subject to Section 9.4 hereof, to cause
the Trust to enter into joint ventures, general or limited partnerships,
participation or agency arrangements or any other lawful combinations,
relationships or associations of any kind.
(n) Reorganization; Merger, Consolidation or Sale of Trust
Property. Subject to Article XI hereof: (i) to cause to be organized or assist
in organizing any person under the laws of any jurisdiction to acquire all or
any part of the property of the Trust, carry on any business in which the
Trust shall have an interest or otherwise exercise the powers the Trustees
deem necessary, useful or desirable to carry on the business of the Trust or
to carry out the provisions of this Declaration of Trust; (ii) to merge or
consolidate the Trust with any person; (iii) to sell, rent, lease, hire,
convey, negotiate, assign, exchange or transfer all or any part of the
property of the Trust to or with any person in exchange for securities of such
person or otherwise; and (iv) to lend money to, subscribe for and purchase the
securities of, and enter into any contracts with, any person in which the
Trust holds, or is about to acquire, securities or any other interests.
(o) Insurance. To purchase and pay for out of property of
the Trust insurance policies insuring the Trust and the property of the Trust
against any and all risks, and insuring the Shareholders, Trustees, officers,
employees and agents of the Trust individually against all claims and
liabilities of every nature arising by reason of holding or having held any
such status, office or position or by reason of any action alleged to have
been taken or omitted (including those alleged to constitute misconduct, gross
negligence, reckless disregard of duty or bad faith) by any such person in
such capacity, whether or not the Trust would have the power to indemnify such
person against such claim or liability.
<PAGE>
(p) Executive Compensation, Pension and Other Plans. To
adopt and implement executive compensation, pension, profit sharing, share
option, share bonus, share purchase, share appreciation rights, restricted
share, savings, thrift, retirement, incentive or benefit plans, trusts or
provisions, applicable to any or all Trustees, officers, employees or agents
of the Trust, or to other persons who have benefited the Trust, all on such
terms and for such purposes as the Trustees may determine.
(q) Distributions. To declare and pay dividends or other
distributions to Shareholders, subject to the provisions of Section 6.5
hereof.
(r) Indemnification. In addition to the indemnification
provided for in Section 9.3 hereof, to indemnify any person, including any
independent contractor, with whom the Trust has dealings.
(s) Charitable Contributions. To make donations for the
public welfare or for community, charitable, religious, educational,
scientific, civic or similar purposes, regardless of any direct benefit to the
Trust.
(t) Discontinue Operations; Bankruptcy. To discontinue the
operations of the Trust (subject to Section 12.2 hereof); to petition or apply
for relief under any provision of federal or state bankruptcy, insolvency or
reorganization laws or similar laws for the relief of debtors; to permit any
property of the Trust to be foreclosed upon without raising any legal or
equitable defenses that may be available to the Trust or the Trustees or
otherwise defending or responding to such foreclosure; to confess judgment
against the Trust; or to take such other action with respect to indebtedness
or other obligations of the Trustees, in such capacity, the property of the
Trust or the Trust as the Trustees in their discretion may determine.
(u) Termination of Status. To terminate the status of the
Trust as a real estate investment trust under the Code; provided, however,
that the Board of Trustees shall take no action to terminate the Trust's
status as a real estate investment trust under the Code until such time as (i)
the Board of Trustees adopts a resolution recommending that the Trust
terminate its status as a real estate investment trust under the Code, (ii)
the Board of Trustees presents the resolution at an annual or special meeting
of the Shareholders and (iii) such resolution is approved by the holders of a
majority of the issued and outstanding Common Shares (as hereinafter defined).
(v) Fiscal Year. Subject to the Code, to adopt, and from
time to time change, a fiscal year for the Trust.
(w) Seal. To adopt and use a seal, but the use of a seal
shall not be required for the execution of instruments or obligations of the
Trust.
<PAGE>
(x) Bylaws. To adopt, implement and from time to time alter,
amend or repeal Bylaws relating to the business and organization of the Trust
which are not inconsistent with the provisions of this Declaration of Trust.
(y) Accounts and Books. To determine from time to time
whether and to what extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the Trust, or any of
them, shall be open to the inspection of Shareholders.
(z) Voting Trust. To participate in, and accept securities
issued under or subject to, any voting trust.
(aa) Proxies. To solicit proxies of the Shareholders at the
expense of the Trust.
(bb) Ownership Limits. To determine that it is no longer in
the best interests of the Trust to attempt to, or continue to, qualify as a
real estate investment trust under the Code or that compliance with any
restriction or limitations on ownership and transfers of Shares set forth in
Article VII hereof is no longer required for the Trust to qualify as a real
estate investment trust under the Code.
(cc) Further Powers. To do all other acts and things and
execute and deliver all instruments incident to the foregoing powers, and to
exercise all powers which they deem necessary, useful or desirable to carry on
the business of the Trust or to carry out the provisions of this Declaration
of Trust, even if such powers are not specifically provided hereby.
Section 5.3 Determination of Best Interest of Trust. In
determining what is in the best interest of the Trust, a Trustee shall
consider the interests of the Shareholders of the Trust and, in his sole and
absolute discretion, may consider (a) the interests of the Trust's employees,
suppliers, creditors and customers, (b) the economy of the nation, (c)
community and societal interests and (d) the long-term as well as short-term
interests of the Trust and its Shareholders, including the possibility that
these interests may be best served by the continued independence of the Trust.
Section 5.4 Number and Classification. The number of
Trustees (the "Trustees") shall initially be two (2), which number (i) shall
automatically be increased to five (5) effective immediately following the
closing of the Trust's initial public offering and (ii) may be thereafter
increased or decreased from time to time in accordance with the Bylaws of the
Trust; provided, however, that, effective immediately following the closing of
the Trust's initial public offering, the total number of Trustees shall not be
fewer than three (3) and not more than nine (9). Notwithstanding the
foregoing, if for any reason any or all of the Trustees cease to be Trustees,
such event shall not terminate the Trust or affect this Declaration of Trust
or the powers of any remaining Trustees. The names and addresses of the
initial two (2) Trustees are:
Name Address
---- -------
Michael R. Walker c/o Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Edward B. Romanov, Jr. c/o ElderTrust
415 McFarlan Road, Suite 202
Kennett Square, Pennsylvania 19348
<PAGE>
Effective immediately following the closing of the Trust's
initial public offering, the number of Trustees shall automatically be
increased to five (5), whereupon the Trustees, including the initial Trustees,
shall be divided into three classes as nearly equal in number as possible and
initially consisting of one, two and two members, respectively, with the term
of office of one class expiring each year. One class of Trustees, consisting
initially of one member, shall hold office initially for a term expiring at
the annual meeting of Shareholders in 1999; another class, consisting
initially of two members, shall hold office initially for a term expiring at
the annual meeting of Shareholders in 2000; and the third class, consisting
initially of two members, shall hold office initially for a term expiring at
the annual meeting of Shareholders in 2001. The Board of Trustees, by
resolution, shall designate the Trustees who will serve in each class.
The Trustees may fill any vacancy, whether resulting from an
increase in the number of Trustees or otherwise, on the Board of Trustees.
Beginning with the annual meeting of Shareholders in 1999 and at each
succeeding annual meeting of Shareholders, the successor or successors to the
class of Trustees whose term expires at such meeting shall be elected to hold
office for a term expiring at the third succeeding annual meeting of
Shareholders. Trustees shall hold office until their successors are duly
elected and qualify. Election of Trustees by Shareholders shall require the
vote and be in accordance with the procedures set forth in the Bylaws.
It shall not be necessary to list in this Declaration of
Trust the names and addresses of any Trustees hereafter elected.
Section 5.5 Resignation, Removal or Death. Any Trustee may
resign by written notice to the Board, effective upon execution and delivery
to the Trust of such written notice or upon any future date specified in the
notice. Subject to the rights of holders of one or more classes or series of
Preferred Shares, as hereinafter defined, to elect one or more Trustees, a
Trustee may be removed at any time, only with cause, at a meeting of the
Shareholders, by the affirmative vote of the holders of a majority of the
Shares then outstanding and entitled to vote for the election of Trustees.
Upon the resignation or removal of any Trustee, or his otherwise ceasing to be
a Trustee, he shall automatically cease to have any right, title or interest
in and to the property of the Trust and shall execute and deliver such
documents as the remaining Trustees require for the conveyance of any property
of the Trust held in his name, and shall account to the remaining Trustees as
they require for all property which he holds as Trustee. Upon the incapacity
or death of any Trustee, his legal representative shall perform the acts
described in the foregoing sentence.
<PAGE>
Section 5.6 Title to Property of the Trust. Legal title to
all property of the Trust shall be vested in the Trustees, but they may cause
legal title to any property of the Trust to be held by or in the name of any
Trustee, or the Trust, or any other person as nominee. The right, title and
interest of the Trustees in and to the property of the Trust shall
automatically vest in successor and additional Trustees upon their
qualification and acceptance of election or appointment as Trustees, and they
shall thereupon have all the rights and obligations of Trustees, whether or
not conveyancing documents have been executed and delivered pursuant to
Section 5.5 hereof or otherwise. Written evidence of the qualification and
acceptance of election or appointment of successor and additional Trustees may
be filed with the records of the Trust and in such other offices, agencies or
places as the Trustees may deem necessary or desirable.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1 Authorized Shares. The Trust shall have the
authority to issue a total of 120 million shares of beneficial interest
("Shares"), of which 100 million shall be common shares of beneficial
interest, $.01 par value per share ("Common Shares"), and 20 million shall be
preferred shares of beneficial interest, $.01 par value per share ("Preferred
Shares"). The Board of Trustees, with the approval of the holders of record of
outstanding Shares (the "Shareholders") by a majority of the votes entitled to
be cast at a meeting of Shareholders duly called and at which a quorum is
present, may amend this Declaration of Trust from time to time to increase or
decrease the aggregate number of Shares or the number of Shares of any class
that the Trust has authority to issue. This Amendment and Restatement is not
increasing or decreasing the aggregate par value.
Section 6.2 Common Shares. Subject to the provisions of
Article VII, each Common Share shall entitle the holder thereof to one vote on
each matter upon which holders of Common Shares are entitled to vote, and all
Common Shares shall have equal dividend, distribution, liquidation and other
rights, and shall have no preference, cumulative, preemptive, appraisal,
conversion or exchange rights.
Section 6.3 Preferred Shares. The Board of Trustees may
classify any unissued Preferred Shares, and may reclassify any previously
classified but unissued Preferred Shares of any series from time to time, in
one or more series of Preferred Shares. Prior to issuance of classified or
reclassified Preferred Shares of any series, the Board of Trustees by
resolution shall (a) designate that series to distinguish it from all other
series of Preferred Shares; (b) specify the number of Preferred Shares to be
included in the series; (c) set, subject to the provisions of Article VII and
subject to the express terms of any series of Preferred Shares outstanding at
the time, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each series; and (d)
cause the Trust to file Articles Supplementary with the State Department of
Assessments and Taxation of Maryland (the "SDAT"). Any of the terms of any
series of Preferred Shares set pursuant to clause (c) of this Section 6.3 may
be made dependent upon facts ascertainable outside this Declaration of Trust
(including, without limitation, the occurrence of any event or a determination
or action by the Trust or any other person or body) and may vary among holders
thereof, provided that the manner in which such facts or variations shall
operate upon the terms of such series of Shares is clearly and expressly set
forth in the Articles Supplementary filed with the SDAT.
<PAGE>
Section 6.4 Authorization by Board of Share Issuance. The
Board of Trustees may authorize the issuance from time to time of Shares of
any class or series, whether now or hereafter authorized, or securities or
rights convertible into Shares of any class or series, whether now or
hereafter authorized, for such consideration (whether in cash, property, past
or future services, obligation for future payment or otherwise) as the Board
of Trustees may deem advisable (or without consideration in the case of a
Share split or Share dividend), subject to such restrictions or limitations,
if any, as may be set forth in this Declaration of Trust or the Bylaws.
Section 6.5 Dividends and Distributions. The Board of
Trustees may from time to time authorize, declare and pay to Shareholders such
dividends or distributions, in cash, property or other assets of the Trust or
in securities of the Trust or from any other source as the Board of Trustees
in its discretion shall determine. The Board of Trustees shall endeavor to
declare and pay such dividends and distributions as shall be necessary for the
Trust to qualify as a real estate investment trust under the Code; provided,
however, that Shareholders shall have no right to any dividend or distribution
unless and until authorized and declared by the Board. The exercise of the
powers and rights of the Board of Trustees pursuant to this Section 6.5 shall
be subject to the provisions of any class or series of Shares at the time
outstanding. The receipt by any person in whose name any Shares are registered
on the records of the Trust or by his duly authorized agent shall be a
sufficient discharge for all dividends or distributions payable or deliverable
in respect of such Shares and from all liability to see to the application
thereof. Unless the status of the Trust as a real estate investment trust
under the Code has been terminated pursuant to Section 5.2(u) hereof, no
determination shall be made by the Board of Trustees nor shall any transaction
be entered into by the Trust which would cause any Shares or other beneficial
interest in the Trust not to constitute "transferable shares" or "transferable
certificates of beneficial interest" under Section 856(a)(2) of the Code or
which would cause any distribution to constitute a preferential dividend as
described in Section 562(c) of the Code.
Section 6.6 General Nature of Shares. All Shares shall be
personal property entitling the Shareholders only to those rights provided in
this Declaration of Trust. The Shareholders shall have no interest in the
property of the Trust and shall have no right to compel any partition,
division, dividend or distribution of the Trust or of the property of the
Trust. The death of a Shareholder shall not terminate the Trust or give his
legal representative any rights against other Shareholders, the Trustees or
the property of the Trust, except the right, exercised in accordance with
applicable provisions of the Bylaws, to receive a new certificate for Shares
in exchange for the certificate held by the deceased Shareholder. The Trust is
entitled to treat as Shareholders only those persons in whose names Shares are
registered as holders of Shares on the beneficial interest ledger of the
Trust.
Section 6.7 Fractional Shares. The Trust may, without the
consent or approval of any Shareholders, issue fractional Shares, eliminate a
fraction of a Share by rounding up or down to a full Share, arrange for the
disposition of a fraction of a Share by the person entitled to it, or pay cash
for the fair value of a fraction of a Share.
Section 6.8 Declaration and Bylaws. All Shareholders are
subject to the provisions of this Declaration of Trust and the Bylaws.
<PAGE>
ARTICLE VII
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES
Section 7.1 Definitions. For the purpose of this Article
VII, the following terms shall have the following meanings:
Beneficial Ownership. The term "Beneficial Ownership" shall
mean ownership of Shares by a Person, whether the interest in Shares is held
directly or indirectly (including by a nominee), and shall include interests
that would be treated as owned through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial
Owner," "Beneficially Own," "Beneficially Owns," "Beneficially Owning" and
"Beneficially Owned" shall have the correlative meanings.
Benefit Plan Investor. The term "Benefit Plan Investor"
shall have the meaning provided in 29 C.F.R. ss. 2510.3-101(f)(2), or any
successor regulation thereto.
Business Day. The term "Business Day" shall mean any day,
other than a Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in New York, New York are authorized or required by
law, regulation or executive order to close.
Charitable Beneficiary. The term "Charitable Beneficiary"
shall mean one or more beneficiaries of the Charitable Trust as determined
pursuant to Section 7.3.7, provided that each such organization must be
described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or
(viii) thereof) and 170(c)(2) of the Code.
Charitable Trust. The term "Charitable Trust" shall mean any
trust provided for in Section 7.2.1(b)(i) and Section 7.3.1.
Charitable Trustee. The term "Charitable Trustee" shall mean
the Person unaffiliated with the Trust and a Prohibited Owner, that is
appointed by the Trust to serve as trustee of the Charitable Trust.
Closing Price. The "Closing Price" on any date shall mean
the last sale price for such Shares, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such Shares, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, if such Shares are not listed or admitted
to trading on the NYSE, as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such Shares are listed or admitted to trading or,
if such Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by the NASDAQ Stock Market or, if such system is no longer in use,
the principal other automated inter-dealer quotation system that may then be
in use or, if such Shares are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market
maker making a market in such Shares selected by the Board of Trustees or, in
the event that no trading price is available for such Shares, the fair market
value of Shares, as determined in good faith by the Board of Trustees.
<PAGE>
Constructive Ownership. The term "Constructive Ownership"
shall mean ownership of Shares by a Person, whether the interest in Shares is
held directly or indirectly (including by a nominee), and shall include
interests that would be treated as owned through the application of Section
318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Own," "Constructively Owns,"
"Constructively Owning" and "Constructively Owned" shall have the correlative
meanings.
Effective Date. The term "Effective Date" shall mean the date
of the closing of the initial public offering of Common Shares.
ERISA Investor. The term "ERISA Investor" shall mean any
holder of Shares that is (i) an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
(ii) a plan as defined in Section 4975(e) of the Code (any such employee
benefit plan or plan described in clause (i) or this clause (ii) being
referred to herein as a "Plan"), (iii) a trust which was established pursuant
to a Plan, or a nominee for such trust or Plan, or (iv) an entity whose
underlying assets include assets of a Plan by reason of such Plan's investment
in such entity.
Excepted Holder. The term "Excepted Holder" shall mean a
Shareholder of the Trust for whom an Excepted Holder Limit is created by the
Board of Trustees pursuant to Section 7.2.7.
Excepted Holder Limit. The term "Excepted Holder Limit"
shall mean, provided that the affected Excepted Holder agrees to comply with
the requirements established by the Board of Trustees pursuant to Section
7.2.7, and subject to adjustment pursuant to Section 7.2.8, the percentage
limit established by the Board of Trustees pursuant to Section 7.2.7.
Excluded Holder. The term "Excluded Holder" shall mean Edward
B. Romanov, Jr. and any other Person who is or would be either a Beneficial
Owner or a Constructive Owner of either Common Shares or Preferred Shares as a
result of the Beneficial Ownership or Constructive Ownership of either Common
Shares or Preferred Shares by Edward B. Romanov, Jr. or whose ownership would
cause Edward B. Romanov, Jr. to be a Beneficial Owner or Constructive Owner of
such Shares.
Excluded Holder Limit. The term "Excluded Holder Limit"
shall mean (i) with respect to the Common Shares, 15.0% (in value or number of
Shares, whichever is more restrictive) of the outstanding Common Shares of the
Trust; and (ii) with respect to any class or series of Preferred Shares, 9.9%
(in value or number of Shares, whichever is more restrictive) of the
outstanding Shares of such class or series of Preferred Shares of the Trust.
Initial Date. The term "Initial Date" shall mean
September 23, 1997.
Initial Shareholder. The term Initial Shareholder shall mean
D. Lee McCreary, Jr.
Market Price. The term "Market Price" on any date shall
mean, with respect to any class or series of outstanding Shares, the Closing
Price for such Shares on such date.
NYSE. The term "NYSE" shall mean the New York Stock Exchange,
Inc.
<PAGE>
Ownership Limit. The term "Ownership Limit" shall mean (i)
with respect to the Common Shares, 8.6% (in value or number of Shares,
whichever is more restrictive) of the outstanding Common Shares of the Trust;
and (ii) with respect to any class or series of Preferred Shares, 9.9% (in
value or number of Shares, whichever is more restrictive) of the outstanding
Shares of such class or series of Preferred Shares of the Trust.
Person. The term "Person" shall mean an individual,
corporation, partnership, estate, trust (including a trust qualified under
Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently
set aside for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity and also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
Prohibited Owner. The term "Prohibited Owner" shall mean,
with respect to any purported Transfer, any Person who, but for the provisions
of Section 7.2.1, would Beneficially Own or Constructively Own Shares, and if
appropriate in the context, shall also mean any Person who would have been the
record owner of Shares that the Prohibited Owner would have so owned.
Publicly Offered Securities. The term "Publicly Offered
Securities" shall have the meaning provided in 29 C.F.R. ss. 2510.3-101(b)(2),
or any successor regulation thereto.
REIT. The term "REIT" shall mean a real estate investment
trust within the meaning of Section 856 of the Code.
Restriction Termination Date. The term "Restriction
Termination Date" shall mean the first day after the Initial Date on which the
Board of Trustees determines that it is no longer in the best interests of the
Trust to attempt to, or continue to, qualify as a REIT or that compliance with
the restrictions and limitations on Beneficial Ownership, Constructive
Ownership and Transfers of Shares set forth herein is no longer required in
order for the Trust to qualify as a REIT.
<PAGE>
Transfer. The term "Transfer" shall mean any issuance, sale,
transfer, gift, assignment, devise or other disposition, as well as any other
event that causes any Person to acquire Beneficial Ownership or Constructive
Ownership, or any agreement to take any such actions or cause any such events,
of Shares or the right to vote or receive dividends on Shares, including (a) a
change in the capital structure of the Trust, (b) a change in the relationship
between two or more Persons which causes a change in ownership of Shares by
application of Section 544 of the Code, as modified by Section 856(h), (c) the
granting or exercise of any option or warrant (or any disposition of any
option or warrant), pledge, security interest, or similar right to acquire
Shares, (d) any disposition of any securities or rights convertible into or
exchangeable for Shares or any interest in Shares or any exercise of any such
conversion or exchange right and (e) Transfers of interests in other entities
that result in changes in Beneficial Ownership or Constructive Ownership of
Shares; in each case, whether voluntary or involuntary, whether owned of
record, Constructively Owned or Beneficially Owned and whether by operation of
law or otherwise. (For purposes of this Article VII, the right of a limited
partner in ElderTrust Operating Limited Partnership, a Delaware limited
partnership, to require the partnership to redeem such limited partner's units
of partnership interest pursuant to Section 8.6 of the Agreement of Limited
Partnership of ElderTrust Operating Limited Partnership shall not be
considered to be an option or similar right to acquire Shares of the Trust.)
The terms "Transferring" and "Transferred" shall have the correlative
meanings.
Section 7.2 Restrictions on Ownership and Transfer of Shares.
Section 7.2.1 Ownership Limitations. From the Initial
Date and prior to the Restriction Termination Date:
(a) Basic Restrictions.
(i) (1) No Person, other than an
Excepted Holder, an Excluded Holder or the Initial Shareholder, shall
Beneficially Own or Constructively Own Shares in excess of the Ownership Limit,
(2) no Excepted Holder shall Beneficially Own or Constructively Own Shares in
excess of the Excepted Holder Limit for such Excepted Holder, (3) no Excluded
Holder shall Beneficially Own or Constructively Own Shares in excess of the
Excluded Holder Limit and (4) the Initial Shareholder shall not Beneficially Own
or Constructively Own shares in excess of the Ownership Limit on any date after
the Effective Date.
(ii) No Person shall Beneficially
Own or Constructively Own Shares to the extent that (1) such Beneficial
Ownership of Shares would result in the Trust being "closely held" within the
meaning of Section 856(h) of the Code (without regard to whether the ownership
interest is held during the last half of a taxable year) or (2) such Beneficial
Ownership or Constructive Ownership of Shares would result in the Trust
otherwise failing to qualify as a REIT (including, but not limited to, ownership
that would result in the Trust actually owning or Constructively Owning an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the Trust from such tenant would cause the Trust to fail
to satisfy any of the gross income requirements of Section 856(c) of the Code).
<PAGE>
(iii) No Person shall Transfer any
Shares if, as a result of the Transfer, the Shares would be Beneficially Owned
by less than 100 Persons (determined without reference to the rules of
attribution under Section 544 of the Code). Notwithstanding any other provisions
contained herein (but subject to Section 7.5), any Transfer of Shares (whether
or not such Transfer is the result of a transaction entered into through the
facilities of the NYSE or any other national securities exchange or automated
inter-dealer quotation system) that, if effective, would result in Shares being
Beneficially Owned by less than 100 Persons (determined under the principles of
Section 856(a)(5) of the Code) shall be void ab initio, and the intended
transferee shall acquire no rights in such Shares.
(b) Transfer in Trust. If any Transfer of
Shares (whether or not such Transfer is the result of a transaction entered
into through the facilities of the NYSE or any other national securities
exchange or automated inter-dealer quotation system) occurs which, if
effective, would result in any Person Beneficially Owning or Constructively
Owning Shares in violation of Section 7.2.1(a)(i) or (ii), then:
(i) that number of Shares the
Beneficial Ownership or Constructive Ownership of which otherwise would cause
such Person to violate Section 7.2.1(a)(i) or (ii) (rounded to the nearest
whole share) shall be automatically transferred to a Charitable Trust for the
benefit of a Charitable Beneficiary, as described in Section 7.3, effective as
of the close of business on the Business Day prior to the date of such
Transfer, and such Person shall acquire no rights in such Shares; or
(ii) subject to Section 7.5, if
the transfer to the Charitable Trust described in clause (i) of this sentence
would not be effective for any reason to prevent the violation of Section
7.2.1(a)(i) or (ii), then the Transfer of that number of Shares that otherwise
would cause any Person to violate Section 7.2.1(a)(i) or (ii) shall be void ab
initio, and the intended transferee shall acquire no rights in such Shares.
Section 7.2.2 Remedies for Breach. Subject to Section 7.5,
if the Board of Trustees or any duly authorized committee thereof shall at any
time determine in good faith that a Transfer or other event has taken place
that results in a violation of Section 7.2.1 or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership or Constructive
Ownership of any Shares in violation of Section 7.2.1 (whether or not such
violation is intended), the Board of Trustees or a committee thereof shall
take such action as it deems advisable to refuse to give effect to or to
prevent such Transfer or other event, including, without limitation, causing
the Trust to redeem Shares, refusing to give effect to such Transfer on the
books of the Trust or instituting proceedings to enjoin such Transfer or other
event; provided, however, that any Transfer or attempted Transfer or other
event in violation of Section 7.2.1 shall automatically result in the transfer
to the Charitable Trust described above, and, where applicable, such Transfer
(or other event) shall be void ab initio as provided above irrespective of any
action (or non-action) by the Board of Trustees or a committee thereof.
<PAGE>
Section 7.2.3 Notice of Restricted Transfer. Any Person who
acquires or attempts or intends to acquire Beneficial Ownership or
Constructive Ownership of Shares that will or may violate Section 7.2.1(a), or
any Person who would have owned Shares that resulted in a transfer to the
Charitable Trust pursuant to the provisions of Section 7.2.1(b), shall
immediately give written notice to the Trust of such event, or in the case of
such a proposed or attempted transaction, give at least 15 days prior written
notice, and shall provide to the Trust such other information as the Trust may
request in order to determine the effect, if any, of such acquisition or
ownership on the Trust's status as a REIT.
Section 7.2.4 Owners Required To Provide Information. From
the Initial Date and prior to the Restriction Termination Date:
(a) every owner of more than five percent
(or such lower percentage as required by the Code or the regulations
promulgated thereunder) of the outstanding Shares, within 30 days after the
end of each taxable year, shall give written notice to the Trust stating the
name and address of such owner, the number of Shares Beneficially Owned and a
description of the manner in which such Shares are held; provided that a
Shareholder of record who holds outstanding Shares as nominee for another
Person, which other Person is required to include in gross income the
dividends received on such Shares (an "Actual Owner"), shall give written
notice to the Trust stating the name and address of such Actual Owner and the
number of Shares of such Actual Owner with respect to which the Shareholder of
record is nominee. Each owner shall provide to the Trust such additional
information as the Trust may request in order to determine the effect, if any,
of such Beneficial Ownership on the Trust's status as a REIT and to ensure
compliance with the Ownership Limit.
(b) each Person who is a Beneficial Owner
or Constructive Owner of Shares and each Person (including the Shareholders of
record) who is holding Shares for a Beneficial Owner or Constructive Owner
shall provide to the Trust such information as the Trust may request, in good
faith, in order to determine the Trust's status as a REIT and to comply with
requirements of any taxing authority or governmental authority or to determine
such compliance.
Section 7.2.5 Remedies Not Limited. Subject to
Section 5.2(u) and Section 7.5, nothing contained in this Section 7.2 shall
limit the authority of the Board of Trustees to take such other action as it
deems necessary or advisable to protect the Trust and the interests of its
Shareholders in preserving the Trust's status as a REIT.
Section 7.2.6 Ambiguity. In the case of an
ambiguity in the application of any of the provisions of this Section 7.2,
Section 7.3 or any definition contained in Section 7.1, the Board of Trustees
shall have the power to determine the application of the provisions of this
Section 7.2 or Section 7.3 with respect to any situation based on the facts
known to it. If this Section 7.2 or Section 7.3 requires an action by the
Board of Trustees and this Declaration of Trust fails to provide specific
guidance with respect to such action, the Board of Trustees shall have the
power to determine the action to be taken so long as such action is not
contrary to the provisions of this Section 7.2 or Sections 7.1 or 7.3.
<PAGE>
Section 7.2.7 Exceptions.
(a) The Board, in its sole and absolute
discretion, may grant to any Person who makes a request therefor an exception
to the Ownership Limit or the Excluded Holder Limit with respect to the
ownership of any series or class of Preferred Shares, subject to the following
conditions and limitations: (A) the Board shall have determined that (x)
assuming such Person would Beneficially Own or Constructively Own the maximum
amount of Common Shares and Preferred Shares permitted as a result of the
exception to be granted and (y) assuming that all other Persons who would be
treated as "individuals" for purposes of Section 542(a)(2) of the Code
(determined taking into account Section 856(h)(3)(A) of the Code) would
Beneficially Own or Constructively Own the maximum amount of Common Shares and
Preferred Shares permitted under this Article VII (taking into account any
exception, waiver, or exemption granted under this Section 7.2.7 to (or with
respect to) such Persons), the Trust would not be "closely held" within the
meaning of Section 856(h) of the Code (assuming that the ownership of Shares
is determined during the second half of a taxable year) and would not
otherwise fail to qualify as a REIT; and (B) such Person provides to the Board
such representations and undertakings, if any, as the Board may, in its sole
and absolute discretion, determine to be necessary in order for it to make the
determination that the conditions set forth in clause (A) above of this
Section 7.2.7(a) have been or will continue to be satisfied (including,
without limitation, an agreement as to a reduced Ownership Limit, Excepted
Holder Limit or Excluded Holder Limit for such Person with respect to the
Beneficial Ownership or Constructive Ownership of one or more other classes of
Shares not subject to the exception), and such Person agrees that any
violation of such representations and undertakings or any attempted violation
thereof will result in the application of the remedies set forth in Section
7.2 with respect to Shares held in excess of the Ownership Limit, the Excepted
Holder Limit or the Excluded Holder Limit (as may be applicable) with respect
to such Person (determined without regard to the exception granted such Person
under this subparagraph (a)). If a member of the Board requests that the Board
grant an exception pursuant to this subparagraph (a) with respect to such
member or with respect to any other Person if such Board member would be
considered to be the Beneficial Owner or Constructive Owner of Shares owned by
such Person, such member of the Board shall not participate in the decision of
the Board as to whether to grant any such exception.
<PAGE>
(b) In addition to exceptions permitted
under subparagraph (a) above, the Board in its sole and absolute discretion,
may grant to any Person who makes a request therefor an exception from the
Ownership Limit if: (i) such Person submits to the Board information
satisfactory to the Board, in its reasonable discretion, demonstrating that
such Person is not an individual for purposes of Section 542(a)(2) of the Code
(determined taking into account Section 856(h)(3)(A) of the Code); (ii) such
Person submits to the Board information satisfactory to the Board, in its
reasonable discretion, demonstrating that no Person who is an individual for
purposes of Section 542(a)(2) of the Code (determined taking into account
Section 856(h)(3)(A) of the Code) would be considered to Beneficially Own
Shares in excess of the Ownership Limit by reason of the Excepted Holder's
ownership of Shares in excess of the Ownership Limit pursuant to the exception
granted under this subparagraph (b); (iii) such Person submits to the Board
information satisfactory to the Board, in its reasonable discretion,
demonstrating that clause (2) of subparagraph (a)(ii) of Section 7.2.1 will
not be violated by reason of the Excepted Holder's ownership of Shares in
excess of the Ownership Limit pursuant to the exception granted under this
subparagraph (b); and (iv) such Person provides to the Board such
representations and undertakings, if any, as the Board may, in its reasonable
discretion, require to ensure that the conditions in clauses (i), (ii) and
(iii) hereof are satisfied and will continue to be satisfied throughout the
period during which such Person owns Shares in excess of the Ownership Limit
pursuant to any exception thereto granted under this subparagraph (b), and
such Person agrees that any violation of such representations and undertakings
or any attempted violation thereof will result in the application of the
remedies set forth in Section 7.2 with respect to Shares held in excess of the
Ownership Limit with respect to such Person (determined without regard to the
exception granted such Person under this subparagraph (b)).
(c) Prior to granting any exception or
exemption pursuant to subparagraph (a) or (b), the Board must receive a ruling
from the Internal Revenue Service or advice of counsel, in either case in form
and substance satisfactory to the Board, in its sole and absolute discretion,
as it may deem necessary or advisable in order to determine or ensure the
Trust's status as a REIT.
(d) Subject to Section 7.2.1(a)(ii), an
underwriter that participates in a public offering or a private placement of
Shares (or securities convertible into or exchangeable for Shares) may
Beneficially Own or Constructively Own Shares (or securities convertible into
or exchangeable for Shares) in excess of the Ownership Limit, but only to the
extent necessary to facilitate such public offering or private placement; and,
provided, that the ownership of Shares by such underwriter would not result in
the Trust being "closely held" within the meaning of Section 856(h) of the
Code, or otherwise result in the Trust's failing to qualify as a REIT. In this
regard, at no time may either (x) an underwriter or (y) any Person who would
Constructively Own Shares owned by an underwriter Constructively Own,
concurrently, 10% or more of the outstanding securities of any class or series
of (i) the Trust and any tenant or lessee of the Trust (which, as of the
Effective Date, includes, but is not limited to, Genesis Health Ventures,
Inc., Crozer-Genesis ElderCare Limited Partnership, Senior LifeChoice, LLC and
the Age Institute of Florida or subsidiaries of any of the above), and (ii)
the Trust and any Person that would be considered to Constructively Own or
Beneficially Own 10% or more of any tenant or lessee of the Trust (which, as
of the Effective Date, includes, but is not limited to, Genesis Health
Ventures, Inc.).
<PAGE>
(e) The Board of Trustees may only reduce
the Excepted Holder Limit for an Excepted Holder: (1) with the written consent
of such Excepted Holder at any time; or (2) pursuant to the terms and
conditions of the agreements and undertakings entered into with such Excepted
Holder in connection with the establishment of the Excepted Holder Limit for
that Excepted Holder. No Excepted Holder Limit shall be reduced to a
percentage that is less than the Ownership Limit.
Section 7.2.8 Increase in Ownership Limit. The
Board of Trustees may from time to time increase the Ownership Limit, subject
to the limitations provided in this Section 7.2.8.
(a) The Ownership Limit may not be
increased if, after giving effect to such increase, five Persons who are
considered individuals pursuant to Section 542 of the Code, as modified by
Section 856(h)(3) of the Code (taking into account all of the Excepted Holders
and Excluded Holders), could Beneficially Own, in the aggregate, more than
49.5% of the value of the outstanding Shares.
(b) Prior to the modification of the
Ownership Limit pursuant to this Section 7.2.8, the Board may require such
opinions of counsel, affidavits, undertakings or agreements as it may deem
necessary or advisable in order to determine or ensure the Trust's status as a
REIT if the modification in the Ownership Limit were to be made.
Section 7.2.9 Legend. Each certificate for Shares
shall bear substantially the following legend:
The Shares represented by this certificate are subject to
restrictions on Beneficial and Constructive Ownership and
Transfer for the purpose of the Trust's maintenance of its
status as a real estate investment trust (a "REIT") under
the Internal Revenue Code of 1986, as amended (the "Code").
Subject to certain further restrictions and except as
expressly provided in the Trust's Declaration of Trust, (i)
no Person may Beneficially Own or Constructively Own Common
Shares of the Trust in excess of 8.6 percent (in value or
number of Shares) of the outstanding Common Shares of the
Trust unless such Person is an Excepted Holder or Excluded
Holder (in which case the Excepted Holder Limit or Excluded
Holder Limit, as applicable, shall apply); (ii) with respect
to any class or series of Preferred Shares, no Person may
Beneficially Own or Constructively Own more than 9.9 percent
(in value or number of Shares) of the outstanding Shares of
such class or series of Preferred Shares of the Trust,
unless such Person is an Excepted Holder (in which case the
Excepted Holder Limit shall be applicable); (iii) no Person
may Beneficially Own or Constructively Own Shares that would
result in the Trust being "closely held" under Section
856(h) of the Code or otherwise cause the Trust to fail to
qualify as a REIT; and (iv) no Person may Transfer Shares if
such Transfer would result in Shares of the Trust being
owned by fewer than 100 Persons. Any Person who Beneficially
Owns or Constructively Owns or attempts to Beneficially Own
or Constructively Own Shares which cause or will cause a
Person to Beneficially Own or Constructively Own Shares in
excess or in violation of the above limitations must
immediately notify the Trust. If any of the restrictions on
transfer or ownership are violated, the Shares represented
hereby will be automatically transferred to a Charitable
Trustee of a Charitable Trust for the benefit of one or more
Charitable Beneficiaries. In addition, upon the occurrence
of certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. A Person
who attempts to Beneficially Own or Constructively Own
Shares in violation of the ownership limitations described
above shall have no claim, cause of action, or any recourse
whatsoever against a transferor of such Shares. Unless
otherwise defined herein, all capitalized terms in this
legend have the meanings defined in the Trust's Declaration
of Trust, as the same may be amended from time to time, a
copy of which, including the restrictions on transfer and
ownership, will be furnished to each holder of Shares of the
Trust on request and without charge.
<PAGE>
Instead of the foregoing legend, the certificate
may state that the Trust will furnish a full statement about certain
restrictions on transferability to a Shareholder on request and without
charge.
Section 7.3 Transfer of Shares in Trust.
Section 7.3.1 Ownership in Trust. Upon any
purported Transfer or other event described in Section 7.2.1(b) that would
result in a transfer of Shares to a Charitable Trust, such Shares shall be
deemed to have been transferred to the Charitable Trustee as trustee of a
Charitable Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Charitable Trustee shall be deemed to be
effective as of the close of business on the Business Day prior to the
purported Transfer or other event that results in the transfer to the
Charitable Trust pursuant to Section 7.2.1(b). The Charitable Trustee shall be
appointed by the Trust and shall be a Person unaffiliated with the Trust and
any Prohibited Owner. Each Charitable Beneficiary shall be designated by the
Trust as provided in Section 7.3.7.
Section 7.3.2 Status of Shares Held by the
Charitable Trustee. Shares held by the Charitable Trustee shall be issued and
outstanding Shares of the Company. The Prohibited Owner shall have no rights
in the Shares held by the Charitable Trustee. The Prohibited Owner shall not
benefit economically from ownership of any Shares held in trust by the
Charitable Trustee, shall have no rights to dividends or other distributions
and shall not possess any rights to vote or other rights attributable to the
Shares held in the Charitable Trust. The Prohibited Owner shall have no claim,
cause of action, or any other recourse whatsoever against the purported
transferor of such Shares.
Section 7.3.3 Dividend and Voting Rights. The
Charitable Trustee shall have all voting rights and rights to dividends or
other distributions with respect to Shares held in the Charitable Trust, which
rights shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or other distribution paid prior to the discovery by
the Trust that Shares have been transferred to the Charitable Trustee shall be
paid by the recipient thereof with respect to such Shares to the Charitable
Trustee upon demand and any dividend or other distribution authorized but
unpaid shall be paid when due to the Charitable Trustee. Any dividends or
distributions so paid over to the Charitable Trustee shall be held in trust
for the Charitable Beneficiary. The Prohibited Owner shall have no voting
rights with respect to Shares held in the Charitable Trust and, subject to
Maryland law, effective as of the date that Shares have been transferred to
the Charitable Trustee, the Charitable Trustee shall have the authority (at
the Charitable Trustee's sole discretion) (i) to rescind as void any vote cast
by a Prohibited Owner prior to the discovery by the Trust that Shares have
been transferred to the Charitable Trustee and (ii) to recast such vote in
accordance with the desires of the Charitable Trustee acting for the benefit
of the Charitable Beneficiary; provided, however, that if the Trust has
already taken irreversible action, then the Charitable Trustee shall not have
the power to rescind and recast such vote. Notwithstanding the provisions of
this Article VII, until the Trust has received notification that Shares have
been transferred into a Charitable Trust, the Trust shall be entitled to rely
on its share transfer and other Shareholder records for purposes of preparing
lists of Shareholders entitled to vote at meetings, determining the validity
and authority of proxies and otherwise conducting votes of Shareholders.
<PAGE>
Section 7.3.4 Rights Upon Liquidation. Upon any
voluntary or involuntary liquidation, dissolution or winding up of or any
distribution of the assets of the Trust, the Charitable Trustee shall be
entitled to receive, ratably with each other holder of Shares of the class or
series of Shares that is held in the Charitable Trust, that portion of the
assets of the Trust available for distribution to the holders of such class or
series (determined based upon the ratio that the number of Shares or such
class or series of Shares held by the Charitable Trustee bears to the total
number of Shares of such class or series of Shares then outstanding). The
Charitable Trustee shall distribute any such assets received in respect of the
Shares held in the Charitable Trust in any liquidation, dissolution or winding
up of, or distribution of the assets of the Trust, in accordance with Section
7.3.5.
Section 7.3.5 Sale of Shares by Charitable
Trustee. Within 20 days of receiving notice from the Trust that Shares have
been transferred to the Charitable Trust, the Charitable Trustee of the
Charitable Trust shall sell the Shares held in the Charitable Trust to a
person, designated by the Charitable Trustee, whose ownership of the Shares
will not violate the ownership limitations set forth in Section 7.2.1(a). Upon
such sale, the interest of the Charitable Beneficiary in the Shares sold shall
terminate and the Charitable Trustee shall distribute the net proceeds of the
sale to the Prohibited Owner and to the Charitable Beneficiary as provided in
this Section 7.3.5. The Prohibited Owner shall receive the lesser of (1) the
price paid by the Prohibited Owner for the Shares or, if the Prohibited Owner
did not give value for the Shares in connection with the event causing the
Shares to be held in the Charitable Trust (e.g., in the case of a gift, devise
or other such transaction), the Market Price of the Shares on the day of the
event causing the Shares to be held in the Charitable Trust and (2) the price
per share received by the Charitable Trustee from the sale or other
disposition of the Shares held in the Charitable Trust. Any net sales proceeds
in excess of the amount payable to the Prohibited Owner shall be immediately
paid to the Charitable Beneficiary. If, prior to the discovery by the Trust
that Shares have been transferred to the Charitable Trustee, such Shares are
sold by a Prohibited Owner, then (i) such Shares shall be deemed to have been
sold on behalf of the Charitable Trust and (ii) to the extent that the
Prohibited Owner received an amount for such Shares that exceeds the amount
that such Prohibited Owner was entitled to receive pursuant to this Section
7.3.5, such excess shall be paid to the Charitable Trustee upon demand.
Section 7.3.6 Purchase Right in Shares Transferred
to the Charitable Trustee. Shares transferred to the Charitable Trustee shall
be deemed to have been offered for sale to the Trust, or its designee, at a
price per share equal to the lesser of (i) the price per share in the
transaction that resulted in such transfer to the Charitable Trust (or, in the
case of a devise or gift, the Market Price at the time of such devise or gift)
and (ii) the Market Price on the date the Trust, or its designee, accepts such
offer. The Trust shall have the right to accept such offer until the
Charitable Trustee has sold the Shares held in the Charitable Trust pursuant
to Section 7.3.5. Upon such a sale to the Trust, the interest of the
Charitable Beneficiary in the Shares sold shall terminate and the Charitable
Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.
<PAGE>
Section 7.3.7 Designation of Charitable
Beneficiaries. By written notice to the Charitable Trustee, the Trust shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Charitable Trust such that (i) Shares held in the
Charitable Trust would not violate the restrictions set forth in Section
7.2.1(a) in the hands of such Charitable Beneficiary and (ii) each such
organization must be described in Sections 501(c)(3), 170(b)(1)(A) or
170(c)(2) of the Code.
Section 7.4. Restrictions on Ownership and Transfer of Shares
by Benefit Plans.
Section 7.4.1 Ownership Limitations.
Notwithstanding any other provisions herein, if and to the extent that any
Shares do not constitute Publicly Offered Securities, then Benefit Plan
Investors may not, on any date, hold, individually or in the aggregate, 25
percent or more of the value of such class of Shares. For purposes of
determining whether Benefit Plan Investors hold, individually or in the
aggregate, 25 percent or more of the value of such class of Shares, the value
of Shares of such class held by any Trustee or officer of the Trust, or any
other Person who has discretionary authority or control with respect to the
assets of the Trust, or any Person who provides investment advice for a fee to
the Trust in connection with its assets, shall be disregarded.
Section 7.4.2 Remedies for Violations by Benefit
Plan Investors. If the Board of Trustees or any duly authorized committee
thereof shall at any time determine in good faith that (i) a Transfer or other
event has taken place that results in a violation of Section 7.4.1 or will
otherwise result in the underlying assets and property of the Trust becoming
assets of any ERISA Investor or (ii) that a Person intends to acquire or has
attempted to acquire or hold Shares in a manner that will result in a
violation of Section 7.4.1 or will otherwise result in the underlying assets
and property of the Trust becoming assets of any ERISA Investor, the Board of
Trustees or a committee thereof shall take such action as it deems advisable
to mitigate, prevent or cure the consequences that might result to the Trust
from such Transfer or other event, including without limitation, refusing to
give effect to or preventing such Transfer or event through redemption of such
Shares or refusal to give effect to the Transfer or event on the books of the
Trust, or instituting proceedings to enjoin such Transfer or other event.
Section 7.4.3 Information on Benefit Plan Status.
Any Person who acquires or attempts or intends to acquire or hold Shares shall
provide to the Trust such information as the Trust may request in order to
determine whether such acquisition or holding has or will result in a
violation of Section 7.4.1 or otherwise result in the underlying assets and
property of the Trust becoming assets of any ERISA Investor, including the
name and address of any Person for whom a nominee holds Shares and whether the
underlying assets of such Person include assets of any Benefit Plan Investor.
<PAGE>
Section 7.5 NYSE Transactions. Nothing in this Article VII
shall preclude the settlement of any transaction entered into through the
facilities of the NYSE or any other national securities exchange or automated
inter-dealer quotation system; provided, that the fact that the settlement of
any transaction takes place shall not negate the effect of any other provision
of this Article VII and any transferee in such a transaction shall be subject
to all of the provisions and limitations set forth in this Article VII.
Section 7.6 Enforcement. The Trust is authorized
specifically to seek equitable relief, including injunctive relief, to enforce
the provisions of this Article VII.
Section 7.7 Non-Waiver. No delay or failure on the part of
the Trust or the Board of Trustees in exercising any right hereunder shall
operate as a waiver of any right of the Trust or the Board of Trustees, as the
case may be, except to the extent specifically waived in writing.
ARTICLE VIII
SHAREHOLDERS
Section 8.1 Meetings. There shall be an annual meeting of
the Shareholders, to be held on proper notice at such time (after the delivery
of the annual report as provided in the Bylaws) and convenient location as
shall be determined by or in the manner prescribed in the Bylaws, for the
election of the Trustees, if required, and for the transaction of any other
business within the powers of the Trust. Except as otherwise provided in this
Declaration of Trust, special meetings of Shareholders may be called in the
manner provided in the Bylaws. If there are no Trustees, the officers of the
Trust shall promptly call a special meeting of the Shareholders entitled to
vote for the election of successor Trustees. Any meeting may be adjourned and
reconvened as the Trustees determine or as provided in the Bylaws.
Section 8.2 Voting Rights. Subject to the provisions of any
class or series of Shares then outstanding, the Shareholders shall be entitled
to vote only on the following matters: (a) election of Trustees as provided in
Section 5.4 and the removal of Trustees as provided in Section 5.5; (b)
amendment of this Declaration of Trust as provided in Article X; (c)
termination of the Trust as provided in Section 12.2; (d) reorganization,
merger or consolidation of the Trust, or the sale or disposition of
substantially all of the property of the Trust, as provided in Article XI; (e)
such other matters with respect to which the Board of Trustees has adopted a
resolution declaring that a proposed action is advisable and directing that
the matter be submitted to the Shareholders for approval or ratification
(including, without limitation, a resolution recommending the termination of
the Trust's status as a real estate investment trust under the Code pursuant
to Section 5.2(u) hereof); and (f) such other matters as may be properly
brought before a meeting by a Shareholder pursuant to the Bylaws. Except with
respect to the foregoing matters, no action taken by the Shareholders at any
meeting shall in any way bind the Board of Trustees.
<PAGE>
Section 8.3 Preemptive and Appraisal Rights. Except as may
be provided by the Board of Trustees in setting the terms of classified or
reclassified Preferred Shares pursuant to Section 6.3, no holder of Shares
shall, as such holder, (a) have any preemptive right to purchase or subscribe
for any additional Shares of the Trust or any other security of the Trust
which it may issue or sell or (b) except as expressly required by Title 8,
have any right to require the Trust to pay him the fair value of his Shares in
an appraisal or similar proceeding.
Section 8.4 Extraordinary Actions. Except as otherwise
specifically provided in this Declaration of Trust (including without
limitation, in those provisions relating to election and removal of Trustees
and changes in the number of authorized Shares), notwithstanding any provision
of law permitting or requiring any action to be taken or authorized by the
affirmative vote of the holders of a greater number of votes, any such action
shall be effective and valid if taken or authorized by the affirmative vote of
not less than sixty-six and two-thirds percent (66 2/3%) of all the votes
entitled to be cast on the matter.
Section 8.5 Action By Shareholders without a Meeting.
Subject to Title 8 and any other applicable provisions of law, the Bylaws may
provide that any action required or permitted to be taken at a meeting of the
Shareholders may be taken without a meeting by the written consent of all
Shareholders entitled to vote on such matter; provided, that all Shareholders
entitled to notice of any such meeting but not entitled to vote on such matter
shall have made a written waiver of any right to dissent to such action taken
without a meeting.
ARTICLE IX
LIABILITY LIMITATION, INDEMNIFICATION AND TRANSACTIONS WITH THE TRUST
Section 9.1 Limitation of Shareholders' Liability. No
Shareholder shall be liable for any debt, claim, demand, judgment or
obligation of any kind of, against or with respect to the Trust by reason of
his being a Shareholder, nor shall any Shareholders be subject to any personal
liability whatsoever, in tort, contract or otherwise, to any person in
connection with the property or the affairs of the Trust by reason of his
being a Shareholder.
<PAGE>
Section 9.2 Limitation of Trustee and Officer Liability. To
the maximum extent that Maryland law in effect from time to time permits
limitation of the liability of trustees and officers of a real estate
investment trust, no Trustee or officer of the Trust shall be liable to the
Trust or to any Shareholders for money damages. Neither the amendment nor
repeal of this Section 9.2, nor the adoption or amendment of any other
provision of this Declaration of Trust inconsistent with this Section 9.2,
shall apply to or affect in any respect the applicability of the preceding
sentence with respect to any act or failure to act which occurred prior to
such amendment, repeal or adoption. In the absence of any Maryland statute
limiting the liability of trustees and officers of a Maryland real estate
investment trust for money damages in a suit by or on behalf of the Trust or
by any Shareholders, no Trustee or officer of the Trust shall be liable to the
Trust or to any Shareholders for money damages except to the extent that (a)
the Trustee or officer actually received an improper benefit or profit in
money, property or services, for the amount of the benefit or profit in money,
property or services actually received, or (b) a judgment or other final
adjudication adverse to the Trustee or officer is entered in a proceeding
based on a finding in the proceeding that the Trustee's or officer's action or
failure to act was material to the cause of action adjudicated in the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty.
Section 9.3 Indemnification. The Trust shall have the power,
to the maximum extent permitted by Maryland law in effect from time to time,
to obligate itself to indemnify, and to pay or reimburse reasonable expenses
in advance of final disposition of a proceeding to, (a) any individual who is
a present or former Shareholder, Trustee or officer of the Trust or (b) any
individual who, while a Trustee of the Trust and at the request of the Trust,
serves or has served as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise from and against any claim or liability
to which such person may become subject or which such person may incur by
reason of his status as a present or former Shareholder, Trustee or officer of
the Trust. The Trust shall have the power, with the approval of its Board of
Trustees, to provide such indemnification and advancement of expenses to a
person who served a predecessor of the Trust in any of the capacities
described in (a) or (b) above and to any employee or agent of the Trust or a
predecessor of the Trust.
Section 9.4 Transactions Between the Trust and its Trustees,
Officers, Employees and Agents. Subject to any express restrictions in this
Declaration of Trust or adopted by the Trustees in the Bylaws or by
resolution, the Trust may enter into any contract or transaction of any kind
with any person, including any Trustee, officer, employee or agent of the
Trust or any person affiliated with a Trustee, officer, employee or agent of
the Trust, whether or not any of them has a financial interest in such
transaction.
<PAGE>
Section 9.5 Express Exculpatory Clauses in Instruments. The
Board of Trustees shall cause to be inserted in every written agreement,
undertaking or obligation made or issued on behalf of the Trust, an
appropriate provision to the effect that neither the Shareholders nor the
Trustees, officers, employees or agents of the Trust shall be liable under any
written instrument creating an obligation of the Trust, and all persons shall
look solely to the property of the Trust for the payment of any claim under or
for the performance of that instrument. The omission of the foregoing
exculpatory language from any instrument shall not affect the validity or
enforceability of such instrument and shall not render any Shareholder,
Trustee, officer, employee or agent liable thereunder to any third party nor
shall the Trustees or any officer, employee or agent of the Trust be liable to
anyone for such omission.
ARTICLE X
AMENDMENTS
Section 10.1 General. The Trust reserves the right from time
to time to make any amendment to this Declaration of Trust, now or hereafter
authorized by law, including any amendment altering the terms or contract
rights, as expressly set forth in this Declaration of Trust, of any Shares.
All rights and powers conferred by this Declaration of Trust on Shareholders,
Trustees and officers are granted subject to this reservation. Articles of
Amendment to this Declaration of Trust (a) shall be signed and acknowledged by
at least a majority of the Trustees, or an officer duly authorized by at least
a majority of the Trustees, (b) shall be filed for record as provided in
Section 13.5 and (c) shall become effective as of the later of the time the
SDAT accepts the Articles of Amendment for record or the time established in
the Articles of Amendment, not to exceed 30 days after the Articles of
Amendment are accepted for record. All references to this Declaration of Trust
shall include all amendments thereto.
Section 10.2 By Trustees. The Trustees may amend this
Declaration of Trust from time to time, in the manner provided by Title 8,
without any action by the Shareholders, to qualify as a real estate investment
trust under the Code or under Title 8.
Section 10.3 By Shareholders. Except as otherwise provided
in this Declaration of Trust, any amendment to this Declaration of Trust shall
be valid only if proposed in a resolution adopted by the Board of Trustees,
which resolution shall set forth the proposed amendment and declare that it is
advisable, and approved at an annual or special meeting of Shareholders by the
affirmative vote of not less than two-thirds of all the votes entitled to be
cast on the matter.
<PAGE>
ARTICLE XI
REORGANIZATION; MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY
Section 11.1 Reorganization. Subject to the provisions of
any class or series of Shares at the time outstanding, the Trustees shall have
the power (i) to cause the organization of a corporation, association, trust
or other organization to take over the property of the Trust and carry on the
affairs of the Trust, or (ii) merge the Trust into, or sell, convey and
transfer the property of the Trust to, any such corporation, association,
trust or organization in exchange for securities thereof or beneficial
interests therein, and the assumption by the transferee of the liabilities of
the Trust, and upon the occurrence of (i) or (ii) above terminate the Trust
and deliver such securities or beneficial interests ratably among the
Shareholders according to the respective rights of the class or series of
Shares held by them; provided, however, that any such action shall have been
approved, at a meeting of the Shareholders called for that purpose, by the
affirmative vote of the holders of not less than two-thirds of the Shares then
outstanding and entitled to vote thereon.
Section 11.2 Merger, Consolidation or Sale of Property of
the Trust. Subject to the provisions of any class or series of Shares at the
time outstanding, the Trustees shall have the power to (a) merge into another
entity, (b) consolidate the Trust with one or more other entities into a new
entity or (c) sell, lease, exchange or otherwise transfer or dispose of all or
substantially all of the property of the Trust. Any such action must be
approved by the Board of Trustees and, after notice to all Shareholders
entitled to vote on the matter, by the affirmative vote of not less than
two-thirds of all the votes entitled to be cast on the matter.
ARTICLE XII
DURATION AND TERMINATION OF TRUST
Section 12.1 Duration. The Trust shall continue perpetually
unless terminated pursuant to Section 12.2 or pursuant to any applicable
provision of Title 8.
Section 12.2 Termination.
(a) Subject to the provisions of any
class or series of Shares at the time outstanding, the Trust may be terminated
at any meeting of Shareholders, by the affirmative vote of two-thirds of all
the votes entitled to be cast on the matter. Upon the termination of the
Trust:
(i) The Trust shall carry on no
business except for the purpose of winding up its affairs.
<PAGE>
(ii) The Trustees shall proceed
to wind up the affairs of the Trust and all of the powers of the Trustees
under this Declaration of Trust shall continue, including the powers to
fulfill or discharge the Trust's contracts, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of the
remaining property of the Trust to one or more persons at public or private
sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its liabilities and
do all other acts appropriate to liquidate its business.
(iii) After paying or adequately
providing for the payment of all liabilities, and upon receipt of such
releases, indemnities and agreements as they deem necessary for their
protection, the Trustees may distribute the remaining property of the Trust
among the Shareholders so that after payment in full or the setting apart for
payment of such preferential amounts, if any, to which the holders of any
Shares at the time outstanding shall be entitled, the remaining property of
the Trust shall, subject to any participating or similar rights of Shares at
the time outstanding, be distributed ratably among the holders of Common
Shares at the time outstanding.
(b) After termination of the Trust, the
liquidation of its business and the distribution to the Shareholders as herein
provided, a majority of the Trustees shall execute and file with the Trust's
records a document certifying that the Trust has been duly terminated, and the
Trustees shall be discharged from all liabilities and duties hereunder, and
the rights and interests of all Shareholders shall cease.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Governing Law. This Declaration of Trust is
executed by the undersigned Trustees and delivered in the State of Maryland
with reference to the laws thereof, and the rights of all parties and the
validity, construction and effect of every provision hereof shall be subject
to and construed according to the laws of the State of Maryland without regard
to conflicts of laws provisions thereof.
Section 13.2 Reliance by Third Parties. Any certificate
shall be final and conclusive as to any person dealing with the Trust if
executed by the Secretary or an Assistant Secretary of the Trust or a Trustee,
and if certifying to: (a) the number or identity of Trustees, officers of the
Trust or Shareholders; (b) the due authorization of the execution of any
document; (c) the action or vote taken, and the existence of a quorum, at a
meeting of the Board of Trustees or Shareholders; (d) a copy of this
Declaration of Trust or of the Bylaws as a true and complete copy as then in
force; (e) an amendment to this Declaration of Trust; (f) the termination of
the Trust; or (g) the existence of any fact or relating to the affairs of the
Trust. No purchaser, lender, transfer agent or other person shall be bound to
make any inquiry concerning the validity of any transaction purporting to be
made by the Trust on its behalf or by any officer, employee or agent of the
Trust.
<PAGE>
Section 13.3 Severability.
(a) The provisions of this Declaration of Trust
are severable, and if the Board of Trustees shall determine, with the advice
of counsel, that any one or more of such provisions (the "Conflicting
Provisions") are in conflict with the Code, Title 8 or other applicable
federal or state laws, the Conflicting Provisions, to the extent of the
conflict, shall be deemed never to have constituted a part of this Declaration
of Trust, even without any amendment of this Declaration of Trust pursuant to
Article X and without affecting or impairing any of the remaining provisions
of this Declaration of Trust or rendering invalid or improper any action taken
or omitted prior to such determination. No Trustee shall be liable for making
or failing to make such a determination.
(b) If any provision of this Declaration of Trust
shall be held invalid or unenforceable in any jurisdiction, such holding shall
apply only to the extent of any such invalidity or unenforceability and shall
not in any manner affect, impair or render invalid or unenforceable such
provision in any other jurisdiction or any other provision of this Declaration
of Trust in any jurisdiction.
Section 13.4 Construction. In this Declaration of Trust,
unless the context otherwise requires, words used in the singular or in the
plural include both the plural and singular and words denoting any gender
include all genders. The title and headings of different parts are inserted
for convenience and shall not affect the meaning, construction or effect of
this Declaration of Trust. In defining or interpreting the powers and duties
of the Trust and its Trustees and officers, reference may be made by the
Trustees or officers, to the extent appropriate and not inconsistent with the
Code or Title 8, to Titles 1 through 3 of the Corporations and Associations
Article of the Annotated Code of Maryland.
Section 13.5 Recordation. This Declaration of Trust and any
Articles of Amendment hereto shall be filed for record with the SDAT and may
also be filed or recorded in such other places as the Trustees deem
appropriate, but failure to file for record this Declaration of Trust or any
Articles of Amendment hereto in any office other than in the State of Maryland
shall not affect or impair the validity or effectiveness of this Declaration
of Trust or any amendment hereto. A restated Declaration of Trust shall, upon
filing, be conclusive evidence of all amendments contained therein and may
thereafter be referred to in lieu of the original Declaration of Trust and the
various Articles of Amendments thereto.
THIRD: The amendment to and restatement of the Declaration
of Trust of the Trust as hereinabove set forth has been duly approved and
advised by the Board of Trustees by majority vote thereof and approved by the
sole shareholder of the Trust as required by law.
<PAGE>
FOURTH: The current address of the principal office of the
Trust is 415 McFarlan Road, Suite 202, Kennett Square, Pennsylvania 19348.
FIFTH: The name and address of the Trust's current resident
agent is as set forth in Article IV of the foregoing amendment and restatement
of the Declaration of Trust of the Trust.
SIXTH: The number of trustees of the Trust and the names of
those currently in office are as set forth in Article V of the foregoing
amendment and restatement of the Declaration of Trust of the Trust.
<PAGE>
IN WITNESS WHEREOF, these Articles of Amendment
and Restatement of Declaration of Trust have been signed on this 27th day of
January, 1998 by all of the Trustees of the Trust, each of whom acknowledges,
that this document is his free act and deed, and that to the best of his
knowledge, information, and belief, the matters and facts set forth herein are
true in all material respects and that the statement is made under the
penalties for perjury.
/s/ Michael R. Walker
_________________________
Michael R. Walker
/s/ Edward B. Romanov, Jr.
_________________________
Edward B. Romanov, Jr.
<PAGE>
ELDERTRUST
AMENDED AND RESTATED BYLAWS
ElderTrust, a real estate investment trust organized under
the laws of the State of Maryland (the "Trust") having The Corporation Trust
Incorporated as its resident agent located at 32 South Street, Baltimore,
Maryland 21202, hereby adopts the following as the Amended and Restated Bylaws
(as the same may be amended from time to time, the "Bylaws") of the Trust:
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office ElderTrust
(the "Trust") shall be located at such place or places as the Trustees may
designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional
offices at such places as the Trustees may from time to time determine or the
business of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held
at the principal office of the Trust or at such other place within the United
States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. The Trust shall hold its first
annual meeting of shareholders in January 1998. Thereafter, an annual meeting
of the shareholders for the election of Trustees and the transaction of any
business within the powers of the Trust shall be held during the month of May
of each year, after the delivery of the annual report referred to in Section
12 of this Article II, at a convenient location and on proper notice, on a
date and at the time set by the Trustees, beginning with the year 1999.
Failure to hold an annual meeting does not invalidate the Trust's existence or
affect any otherwise valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The Chairman of the Board or
the President or one-third of the Trustees may call special meetings of the
shareholders. Special meetings of shareholders shall also be called by the
Secretary upon the written request of the holders of shares entitled to cast
not less than a majority of all the votes entitled to be cast at such meeting.
Such request shall state the purpose of such meeting and the matters proposed
to be acted on at such meeting. Within ten (10) days of the receipt of such a
request, the Secretary shall inform such shareholders of the reasonably
estimated cost of preparing and mailing notice of the meeting (including all
proxy materials that may be required in connection therewith) and, upon
payment by such shareholders to the Trust of such costs, the Secretary shall,
within thirty (30) days of such payment, or such longer period as may be
necessitated by compliance with any applicable statutory or regulatory
requirements, give notice to each shareholder entitled to notice of the
meeting.
<PAGE>
Unless requested by shareholders entitled to cast a majority
of all the votes entitled to be cast at such meeting, a special meeting need
not be called to consider any matter which is substantially the same as a
matter voted on at any meeting of the shareholders held during the preceding
twelve months.
Section 4. NOTICE. Not less than ten nor more than 90 days
before each meeting of shareholders, the Secretary shall give to each
shareholder entitled to vote at such meeting and to each shareholder not
entitled to vote who is entitled to notice of the meeting written or printed
notice stating the time and place of the meeting and, in the case of a special
meeting or as otherwise may be required by any statute, the purpose for which
the meeting is called, either by mail or by presenting it to such shareholder
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the shareholder at his post office address as it
appears on the records of the Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be
transacted at an annual meeting of shareholders without being specifically
designated in the notice, except such business as is required by any statute
to be stated in such notice. No business shall be transacted at a special
meeting of shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the
shareholders, the Chairman of the Board, if there be one, shall conduct the
meeting or, in the case of vacancy in office or absence of the Chairman of the
Board, one of the following officers present shall conduct the meeting in the
order stated: the Vice Chairman of the Board, if there be one, the Chief
Executive Officer, if there be one, the President, the Vice Presidents in
their order of rank and seniority, or a Chairman chosen by the shareholders
entitled to cast a majority of the votes which all shareholders present in
person or by proxy are entitled to cast, shall act as Chairman, and the
Secretary, or, in his absence, an Assistant Secretary, or in the absence of
both the Secretary and Assistant Secretaries, a person appointed by the
Chairman shall act as Secretary.
<PAGE>
Section 7. QUORUM. At any meeting of shareholders, the
presence in person or by proxy of shareholders entitled to cast a majority of
all the votes entitled to be cast at such meeting shall constitute a quorum;
but this section shall not affect any requirement under any statute or the
declaration of trust ("Declaration of Trust") for the vote necessary for the
adoption of any measure. If, however, such quorum shall not be present at any
meeting of the shareholders, the shareholders entitled to vote at such
meeting, present in person or by proxy, shall have the power to adjourn the
meeting from time to time to a date not more than 120 days after the original
record date without notice other than announcement at the meeting. At such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 8. VOTING. Subject to the rights of the holders of
any series of Preferred Shares (as defined in the Declaration of Trust) to
elect additional Trustees under specified circumstances, a plurality of all
the votes cast at a meeting of shareholders duly called and at which a quorum
is present shall be sufficient to elect a Trustee. Each share may be voted for
as many individuals as there are Trustees to be elected and for whose election
the share is entitled to be voted. A majority of the votes cast at a meeting
of shareholders duly called and at which a quorum is present shall be
sufficient to approve any other matter which may properly come before the
meeting, unless more than a majority of the votes cast is required herein or
by statute or by the Declaration of Trust. Unless otherwise provided in the
Declaration of Trust, each outstanding share, regardless of class, shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders.
Section 9. PROXIES. A shareholder may cast the votes
entitled to be cast by the shares owned of record by him either in person or
by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the Trust
before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of
the Trust registered in the name of a corporation, partnership, trust or other
entity, if entitled to be voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the case may be, or a
proxy appointed by any of the foregoing individuals, unless some other person
who has been appointed to vote such shares pursuant to a bylaw or a resolution
of the governing board of such corporation or other entity or agreement of the
partners of the partnership presents a certified copy of such bylaw,
resolution or agreement, in which case such person may vote such shares. Any
trustee or other fiduciary may vote shares registered in his name as such
fiduciary, either in person or by proxy.
Shares of the Trust directly or indirectly owned by it shall
not be voted at any meeting and shall not be counted in determining the total
<PAGE>
number of outstanding shares entitled to be voted at any given time, unless
they are held by it in a fiduciary capacity, in which case they may be voted
and shall be counted in determining the total number of outstanding shares at
any given time.
The Trustees may adopt by resolution a procedure by which a
shareholder may certify in writing to the Trust that any shares registered in
the name of the shareholder are held for the account of a specified person
other than the shareholder. The resolution shall set forth the class of
shareholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the share transfer books, the time after the record date or closing
of the share transfer books within which the certification must be received by
the Trust; and any other provisions with respect to the procedure which the
Trustees consider necessary or desirable. On receipt of such certification,
the person specified in the certification shall be regarded as, for the
purposes set forth in the certification, the shareholder of record of the
specified shares in place of the shareholder who makes the certification.
Notwithstanding any other provision contained herein or in
the Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the
Corporations and Associations Article of the Annotated Code of Maryland (or
any successor statute) shall not apply to any acquisition by any person of
shares of beneficial interest of the Trust. This section may be repealed, in
whole or in part, at any time, whether before or after an acquisition of
control shares and, upon such repeal, may, to the extent provided by any
successor bylaw, apply to any prior or subsequent control share acquisition.
Section 11. INSPECTORS. At any meeting of shareholders, the
chairman of the meeting may appoint one or more persons as inspectors for such
meeting. Such inspectors shall ascertain and report the number of shares
represented at the meeting based upon their determination of the validity and
effect of proxies, count all votes, report the results and perform such other
acts as are proper to conduct the election and voting with impartiality and
fairness to all the shareholders.
Each report of an inspector shall be in writing and signed
by him or by a majority of them if there is more than one inspector acting at
such meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the results
of the voting shall be prima facie evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS. The Trustees shall
submit to the shareholders at or before the annual meeting of shareholders a
report of the business and operations of the Trust during the prior fiscal
<PAGE>
year, containing a balance sheet and a statement of income and surplus of the
Trust, accompanied by the certification of an independent certified public
accountant, and such further information as the Trustees may determine is
required pursuant to any law or regulation to which the Trust is subject.
Within the earlier of 20 days after the annual meeting of shareholders or 120
days after the end of the fiscal year of the Trust, the Trustees shall place
the annual report on file at the principal office of the Trust and with any
governmental agencies as may be required by law and as the Trustees may deem
appropriate.
Section 13. NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.
(a) Annual Meetings of Shareholders. (1) Nominations of
persons for election to the Board of Trustees and the proposal of business to
be considered by the shareholders may be made at an annual meeting of
shareholders (i) pursuant to the Trust's notice of meeting, (ii) by or at the
direction of the Trustees or (iii) by any shareholder of the Trust who was a
shareholder of record both at the time of giving of notice provided for in
this Section 13 (a) and at the time of the annual meeting, who is entitled to
vote at the meeting and who complied with the notice procedures set forth in
this Section 13(a).
(2) For nominations or other business to be
properly brought before an annual meeting by a shareholder pursuant to clause
(iii) of paragraph (a) (1) of this Section 13, the shareholder must have given
timely notice thereof in writing to the Secretary of the Trust and such other
business must otherwise be a proper matter for action by shareholders. To be
timely, a shareholder's notice shall be delivered to the Secretary at the
principal executive offices of the Trust not later than the close of business
on the 60th day nor earlier than the close of business on the 90th day prior
to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced by
more than 30 days or delayed by more than 60 days from such anniversary date
or if the Trust has not previously held an annual meeting, notice by the
shareholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the tenth day following the day on which public announcement of the date of
such meeting is first made by the Trust. In no event shall the public
announcement of a postponement or adjournment of an annual meeting to a later
date or time commence a new time period for the giving of a shareholder's
notice as described above. Such shareholder's notice shall set forth as to
each person whom the shareholder proposes to nominate for election or
reelection as a Trustee all information relating to such person that is
required to be disclosed in solicitations of proxies for election of Trustees
in an election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (including such person's
<PAGE>
written consent to being named in the proxy statement as a nominee and to
serving as a Trustee if elected); (ii) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of
such shareholder and of the beneficial owner, if any, on whose behalf the
proposal is made; and (iii) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made,
(x) the name and address of such shareholder, as they appear on the Trust's
books, and of such beneficial owner and (y) the number of each class of shares
of the Trust which are owned beneficially and of record by such shareholder
and such beneficial owner.
(3) Notwithstanding anything in the second
sentence of paragraph (a) (2) of this Section 13 to the contrary, in the
event that the number of Trustees to be elected to the Board of Trustees is
increased and there is no public announcement by the Trust naming all of the
nominees for Trustee or specifying the size of the increased Board of Trustees
at least 70 days prior to the first anniversary of the preceding year's annual
meeting, a shareholder's notice required by this Section 13(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Trust not later than the close of business on
the tenth day following the day on which such public announcement is first made
by the Trust.
(b) Special Meetings of Shareholders. Only such business
shall be conducted at a special meeting of shareholders as shall have been
brought before the meeting pursuant to the Trust's notice of meeting.
Nominations of persons for election to the Board of Trustees may be made at a
special meeting of shareholders at which Trustees are to be elected (i)
pursuant to the Trust's notice of meeting (ii) by or at the direction of the
Board of Trustees or (iii) provided that the Board of Trustees has determined
that Trustees shall be elected at such special meeting, by any shareholder of
the Trust who was a shareholder of record both at the time of giving of notice
provided for in this Section 13(b) and at the time of the special meeting, who
is entitled to vote at the meeting and who complied with the notice procedures
set forth in this Section 13 (b). In addition to the foregoing requirements,
for nominations or other business to be properly brought before a special
meeting by a shareholder, such shareholder's notice containing the information
required by paragraph (a) (2) of this Section 13 must be delivered to the
Secretary at the principal executive offices of the Trust not earlier than the
close of business on the 90th day prior to such special meeting and not later
than the close of business on the later of the 60th day prior to such special
meeting or the tenth day following the day on which public announcement is
first made of the date of the special meeting. In no event shall the public
announcement of a postponement or adjournment of a special meeting to a later
date or time commence a new time period for the giving of a shareholder's
notice as described above.
<PAGE>
(c) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this Section 13 shall be eligible
to serve as Trustees and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 13. The chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case
may be, in accordance with the procedures set forth in this Section 13 and, if
any proposed nomination or business is not in compliance with this Section 13,
to declare that such nomination or proposal shall be disregarded.
(2) For purposes of this Section 13, "public
announcement" shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable news service or in a
document publicly filed by the Trust with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of
this Section 13, a shareholder shall also comply with all applicable
requirements of state law and of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this Section
13. Nothing in this Section 13 shall be deemed to affect any rights of
shareholders to request inclusion of proposals in, nor any of the rights of
the Trust to omit a proposal from, the Trust's proxy statement pursuant to
Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS. Subject to the
rights of the holders of any series of Preferred Shares to elect additional
Trustees under specified circumstances and notwithstanding the provisions of
Section 13 of this Article II, any action required or permitted to be taken at
a meeting of shareholders may be taken without a meeting if a consent in
writing, setting forth such action, is signed by all shareholders entitled to
vote on such matter; provided, that all shareholders entitled to notice of any
such meeting but not entitled to vote on such matter shall have made a written
waiver of any right to dissent to such action taken without a meeting.
Section 15. VOTING BY BALLOT. Voting on any question or in
any election at a meeting of shareholders may be viva voce unless the
presiding officer shall order or any shareholder present of such meeting in
person or by proxy shall demand that voting be by ballot.
<PAGE>
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING
OVER. The business and affairs of the Trust shall be managed under the
direction of its Board of Trustees. A Trustee shall be an individual at least
21 years of age who is not under legal disability. In case of failure to elect
Trustees at an annual meeting of the shareholders, the Trustees holding over
shall continue to direct the management of the business and affairs of the
Trust until their successors are elected and qualify.
Section 2. NUMBER. At any regular meeting or at any special
meeting called for that purpose, a majority of the entire Board of Trustees
may establish, increase or decrease the number of Trustees, subject to any
limitations on the number of Trustees set forth in the Declaration of Trust.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of
the Trustees shall be held immediately after and at the same place as the
annual meeting of shareholders, no notice other than this Bylaw being
necessary. The Trustees may provide, by resolution, the time and place, either
within or without the State of Maryland, for the holding of regular meetings
of the Trustees without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the
Trustees may be called by or at the request of the Chairman of the Board, the
Chief Executive Officer or the President or by a majority of the Trustees then
in office. The person or persons authorized to call special meetings of the
Trustees may fix any place, either within or without the State of Maryland, as
the place for holding any special meeting of the Trustees called by them.
Section 5. NOTICE. Notice of any special meeting shall be
given by written notice delivered personally, telegraphed,
facsimile-transmitted or mailed to each Trustee at his business or residence
address. Personally delivered or telegraphed notices shall be given at least
two days prior to the meeting. Notice by mail shall be given at least five
days prior to the meeting. Telephone or facsimile-transmission notice shall be
given at least 24 hours prior to the meeting. If mailed, such notice shall be
deemed to be given when deposited in the United States mail properly
addressed, with postage thereon prepaid. If given by telegram, such notice
shall be deemed to be given when the telegram is delivered to the telegraph
company. Telephone notice shall be deemed given when the Trustee is personally
given such notice in a telephone call to which he is a party.
Facsimile-transmission notice shall be deemed given upon completion of the
transmission of the message to the number given to the Trust by the Trustee
and receipt of a completed answer-back indicating receipt. Neither the
business to be transacted at, nor the purpose of, any annual, regular or
<PAGE>
special meeting of the Trustees need be stated in the notice, unless
specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the Trustees shall
constitute a quorum for convening any meeting of the Trustees, provided that,
if less than a majority of such Trustees are present at said meeting, a
majority of the Trustees present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the
Declaration of Trust or these Bylaws, the vote of a majority of a particular
group of Trustees is required for action, a quorum must also include a
majority of such group.
The Trustees present at a meeting which has been duly called
and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Trustees to leave less than a quorum.
Section 7. VOTING. The action of the majority of the
Trustees present at a meeting at which a quorum is present when such meeting
is convened shall be the action of the Trustees, unless the concurrence of a
greater proportion is required for such action by applicable statute, the
Declaration of Trust or these Bylaws.
Section 8. TELEPHONE MEETINGS. Trustees may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.
Section 9. INFORMAL ACTION BY TRUSTEES. Any action required
or permitted to be taken at any meeting of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each Trustee and
such written consent is filed with the minutes of proceedings of the Trustees.
Section 10. VACANCIES. If for any reason any or all of the
Trustees cease to be Trustees, such event shall not terminate the Trust or
affect these Bylaws or the powers of the remaining Trustees hereunder (even if
fewer than two Trustees remain). Any vacancy (including a vacancy created by
an increase in the number of Trustees) shall be filled, at any regular meeting
or at any special meeting called for that purpose, by a majority of the
Trustees. Any individual so elected as Trustee shall hold office until the
next annual meeting of Shareholders and until his successor is elected and
qualifies.
Section 11. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The
Trustees may from time to time appoint a Chairman of the Board and a Vice
Chairman of the Board. The Chairman of the Board shall preside over the
meetings of the Trustees and of the shareholders at which he shall be present
<PAGE>
and shall in general oversee all of the business and affairs of the Trust. In
the absence of the Chairman of the Board, the Vice Chairman of the Board shall
preside at such meetings at which he shall be present. The Chairman and the
Vice Chairman of the Board may execute any deed, mortgage, bond, contract or
other instrument, except in cases where the execution thereof shall be
expressly delegated by the Trustees or by these Bylaws to an officer or some
other agent of the Trust or shall be required by law to be otherwise executed.
The Chairman of the Board and the Vice Chairman of the Board shall perform
such other duties as may be assigned to him or them by the Trustees.
Section 12. COMPENSATION.
Trustees shall not receive any stated salary for their
services as Trustees but, by resolution of the Trustees, may receive fixed
sums per year or per meeting or per visit to real property owned or to be
acquired by the Trust and for any service or activity they perform or engage
in as Trustees. Such fixed sums may be paid either in cash or in shares of the
Trust. Trustees may be reimbursed for expenses of attendance, if any, at each
annual, regular or special meeting of the Trustees or of any committee
thereof; and for their expenses, if any, in connection with each property
visit and any other service or activity performed or engaged in as Trustees;
but nothing herein contained shall be construed to preclude any Trustees from
serving the Trust in any other capacity and receiving compensation therefor.
Section 13. REMOVAL OF TRUSTEES. The shareholders may, at
any time, remove any Trustee in the manner provided in the Declaration of
Trust. Subject to the rights of the holders of any series of Preferred Shares
to elect additional Trustees resulting from the removal of one or more
Trustees or under other specified circumstances, the shareholders may elect a
successor to fill a vacancy on the Board of Trustees which results from the
removal of a Trustee.
Section 14. LOSS OF DEPOSITS. No Trustee shall be liable for
any loss which may occur by reason of the failure of the bank, trust company,
savings and loan association, or other institution with whom moneys or shares
have been deposited.
Section 15. SURETY BONDS. Unless required by law, no
Trustee shall be obligated to give any bond or surety or other security for
the performance of any of his duties.
Section 16. RELIANCE. Each Trustee, officer, employee and
agent of the Trust shall, in the performance of his duties with respect to the
Trust, be fully justified and protected with regard to any act or failure to
<PAGE>
act in reliance in good faith upon the books of account or other records of
the Trust, upon an opinion of counsel or upon reports made to the Trust by any
of its officers or employees or by the adviser, accountants, appraisers or
other experts or consultants selected by the Trustees or officers of the
Trust, regardless of whether such counsel or expert may also be a Trustee.
Section 17. INTERESTED TRUSTEE TRANSACTIONS. Section 2-419
of the Maryland General Corporation Law (the "MGCL") shall be available for
and apply to any contract or other transaction between the Trust and any of
its Trustees or between the Trust and any other trust, corporation, firm or
other entity in which any of its Trustees is a trustee or director or has a
material financial interest.
Section 18. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES
AND AGENTS. The Trustees shall have no responsibility to devote their full
time to the affairs of the Trust. Any Trustee or officer, employee or agent of
the Trust (other than a full-time officer, employee or agent of the Trust), in
his personal capacity or in a capacity as an affiliate, employee, or agent of
any other person, or otherwise, may have business interests and engage in
business activities similar or in addition to those of or relating to the
Trust.)
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATION. The Trustees
may appoint from among its members an Executive Committee, an Audit Committee
and a Compensation Committee, each composed of at least two Trustees, and
other committees, each composed of one or more Trustees, to serve at the
pleasure of the Trustees; provided, that the membership of the Compensation
Committee shall consist of a majority of Independent Trustees and the
membership of the Audit Committee shall consist only of Independent Trustees
so long as they continue in office. An individual shall be deemed to be an
"Independent Trustee" hereunder if such individual is not an affiliate of the
Trust and is not an employee of the Trust.
Section 2. POWERS. The Trustees may delegate to committees
appointed under Section 1 of this Article IV any of the powers of the
Trustees, except as prohibited by law.
Section 3. MEETINGS. Notice of committee meetings shall be
given in the same manner as notice for special meetings of the Board of
Trustees. One-third, but not less than two (except for one-member committees),
of the members of any committee shall be present in person at any meeting of
such committee in order to constitute a quorum for the transaction of business
at such meeting, and the act of a majority present shall be the act of such
committee. The Board of Trustees may designate a chairman of any committee,
<PAGE>
and such chairman or any two members of any committee (except for one-member
committees) may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any
such committee, the members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another Trustee to act at the meeting in the place of such
absent or disqualified members.
Each committee shall keep minutes of its proceedings and
shall report the same to the Board of Trustees at the next succeeding meeting,
and any action by the committee shall be subject to revision and alteration by
the Board of Trustees, provided that no rights of third persons shall be
affected by any such revision or alteration.
Section 4. TELEPHONE MEETINGS. Members of a committee of the
Trustees may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation in a meeting by these
means shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action
required or permitted to be taken at any meeting of a committee of the
Trustees may be taken without a meeting, if a consent in writing to such
action is signed by each member of the committee and such written consent is
filed with the minutes of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the
Board of Trustees shall have the power at any time to change the membership of
any committee, to fill all vacancies, to designate alternate members to
replace any absent or disqualified member or to dissolve any such committee.
Section 7. EMERGENCY. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Trust by its Trustees and officers as contemplated by the
Declaration of Trust and these Bylaws, any two or more available members of
the then incumbent Executive Committee shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business of
the Trust in accordance with the provisions of this Article IV. In the event
of the unavailability, at such time, of a minimum of two members of the then
incumbent Executive Committee, the available Trustees shall elect an Executive
Committee composed of any two members of the Board of Trustees, whether or not
they be officers of the Trust, which two members shall constitute the
Executive Committee for the full conduct and management of the affairs of the
Trust in accordance with the foregoing provisions of this Section 7. This
<PAGE>
Section 7 shall be subject to implementation by resolution of the Board of
Trustees passed from time to time for that purpose, and any provisions of the
Bylaws (other than this Section 7) and any resolutions which are contrary to
the provisions of this Section 7 or to the provisions of any such implementing
resolutions shall be suspended until it shall be determined by any interim
Executive Committee acting under this Section 7 that it shall be to the
advantage of the Trust to resume the conduct and management of its affairs and
business under all the other provisions of these Bylaws.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust
shall include a President, a Secretary and a Treasurer and may include a Chief
Executive Officer, a Chief Operating Officer, a Chief Financial Officer, a
Chief Legal Counsel, one or more Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers. In addition, the Trustees
may from time to time appoint such other officers with such powers and duties
as they shall deem necessary or desirable. The officers of the Trust shall be
elected annually by the Trustees at the first meeting of the Trustees held
after each annual meeting of shareholders. If the election of officers shall
not be held at such meeting, such election shall be held as soon thereafter as
may be convenient. Each officer shall hold office until his successor is
elected and qualifies or until his death, resignation or removal in the manner
hereinafter provided. Any two or more offices except President and Vice
President may be held by the same person. In their discretion, the Trustees
may leave unfilled any office except that of President and Secretary. Election
of an officer or agent shall not of itself create contract rights between the
Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of
the Trust may be removed at any time by the Trustees if in their judgment the
best interests of the Trust would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Any officer of the Trust may resign at any time by giving written notice of
his resignation to the Trustees, the Chairman of the Board, the President or
the Secretary. Any resignation shall take effect at any time subsequent to the
time specified therein or, if the time when it shall become effective is not
specified therein, immediately upon its receipt. The acceptance of a
resignation shall not be necessary to make it effective unless otherwise
stated in the resignation. Such resignation shall be without prejudice to the
contract rights, if any, of the Trust.
Section 3. VACANCIES. A vacancy in any office may be filled
by the Trustees for the balance of the term.
<PAGE>
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may
designate a Chief Executive Officer from among the elected officers. The Chief
Executive Officer shall have responsibility for implementation of the policies
of the Trust, as determined by the Trustees, and for the administration of the
business affairs of the Trust. In the absence of both the Chairman and Vice
Chairman of the board, the Chief Executive Officer shall preside over the
meetings of the Trustees and of the shareholders at which he shall be present.
Section 5. PRESIDENT. In the absence of the Chairman, the
Vice Chairman of the Board and the Chief Executive Officer, the President
shall preside over the meetings of the Trustees and of the shareholders at
which he shall be present. In the absence of a designation of a Chief
Executive Officer by the Trustees, the President shall be the Chief Executive
Officer and shall be ex officio a member of all committees that may, from time
to time, be constituted by the Trustees. The President may execute any deed,
mortgage, bond, contract or other instrument, except in cases where the
execution thereof shall be expressly delegated by the Trustees or by these
Bylaws to some other officer or agent of the Trust or shall be required by law
to be otherwise executed; and in general shall perform all duties incident to
the office of president and such other duties as may be prescribed by the
Chief Executive Officer or the Trustees from time to time.
Section 6. CHIEF OPERATING OFFICER. The Trustees may
designate a Chief Operating Officer from among the elected officers. Said
officer will have the responsibilities and duties as set forth by the Chief
Executive Officer, the President or the Trustees.
Section 7. VICE PRESIDENTS. In the absence of the President
or in the event of a vacancy in such office, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election or, in the absence of any
designation, then in the order of their election) shall perform the duties of
the President and when so acting shall have all the powers of and be subject
to all the restrictions upon the President; and shall perform such other
duties as from time to time may be assigned to him or her by the Chief
Executive Officer, the President or the Trustees. The Trustees may designate
one or more Vice Presidents as Executive Vice President, Senior Vice President
or as Vice President for particular areas of responsibility.
Section 8. TREASURER. The Treasurer shall have the custody
of the funds and securities of the Trust and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Trust and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Trust in such depositories as may be designated by the Trustees.
The Treasurer shall disburse the funds of the Trust as may
be ordered by the Trustees, taking proper vouchers for such disbursements, and
<PAGE>
shall render to the Chief Executive Officer, the President and the Trustees,
at the regular meetings of the Trustees or whenever they may require it, an
account of all his or her transactions as Treasurer and of the financial
condition of the Trust.
If required by the Trustees, the Treasurer shall give the
Trust a bond in such sum and with such surety or sureties as shall be
satisfactory to the Trustees for the faithful performance of the duties of his
or her office and for the restoration to the Trust, in case of his or her
death, resignation, retirement or removal from office, of all books, papers,
vouchers, moneys and other property of whatever kind in his or her possession
or under his or her control belonging to the Trust.
Section 9. CHIEF FINANCIAL OFFICER. The Trustees may
designate a Chief Financial Officer from among the elected officers. Said
officer will have the responsibilities and duties as set forth by the Chief
Executive Officer, the President or the Trustees.
Section 10. CHIEF LEGAL COUNSEL. The Trustees may designate
a Chief Legal Counsel from among the elected officers. Said officer will have
the responsibilities and duties as set forth by the Chief Executive Officer,
the President or the Trustees.
Section 11. SECRETARY. The Secretary shall (a) keep the
minutes of the proceedings of the shareholders, the Trustees and committees of
the Trustees in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the trust records and of the seal of the
Trust; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (e) have
general charge of the share transfer books of the Trust; and (f) in general
perform such other duties as from time to time may be assigned to him by the
Chief Executive Officer, the President or the Trustees.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or Treasurer,
respectively, or by the Chief Executive Officer, the President or the
Trustees. The Assistant Treasurers shall, if required by the Trustees, give
bonds for the faithful performance of their duties in such sums and with such
surety or sureties as shall be satisfactory to the Trustees.
Section 13. SALARIES. The salaries and other compensation of
the officers shall be fixed from time to time by the Trustees and no officer
shall be prevented from receiving such salary or other compensation by reason
of the fact that he or she is also a Trustee.
<PAGE>
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer
or agent to enter into any contract or to execute and deliver any instrument
in the name of and on behalf of the Trust and such authority may be general or
confined to specific instances. Any agreement, deed, mortgage, lease or other
document executed by one or more of the Trustees or by an authorized person
shall be valid and binding upon the Trustees and upon the Trust when
authorized or ratified by action of the Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the Trust shall be signed by such officer or agent of
the Trust in such manner as shall from time to time be determined by the
Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise
employed shall be deposited from time to time to the credit of the Trust in
such banks, trust companies or other depositories as the Trustees may
designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Each shareholder shall be entitled
to a certificate or certificates which shall represent and certify the number
of shares of each class of beneficial interest held by him in the Trust. Each
certificate shall be signed by the Chief Executive Officer, the President or a
Vice President and countersigned by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer and may be sealed with the seal, if
any, of the Trust. The signatures may be either manual or facsimile.
Certificates shall be consecutively numbered; and if the Trust shall, from
time to time, issue several classes of shares, each class may have its own
number series. A certificate is valid and may be issued whether or not an
officer who signed it is still an officer when it is issued. Each certificate
representing shares which are restricted as to their transferability or voting
powers, which are preferred or limited as to their dividends or as to their
allocable portion of the assets upon liquidation or which are redeemable at
the option of the Trust, shall have a statement of such restriction,
limitation, preference or redemption provision, or a summary thereof, plainly
stated on the certificate. In lieu of such statement or summary, the Trust may
set forth upon the face or back of the certificate a statement that the Trust
will furnish to any shareholder, upon request and without charge, a full
statement of such information.
<PAGE>
Section 2. TRANSFERS. Certificates shall be treated as
negotiable and title thereto and to the shares they represent shall be
transferred by delivery thereof to the same extent as those of a Maryland
stock corporation. Upon surrender to the Trust or the transfer agent of the
Trust of a share certificate duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, the Trust shall issue a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
The Trust shall be entitled to treat the holder of record of
any share or shares as the holder in fact thereof and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
the State of Maryland.
Notwithstanding the foregoing, transfers of shares of
beneficial interest of the Trust will be subject in all respects to the
Declaration of Trust and all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated
by the Trustees may direct a new certificate to be issued in place of any
certificate previously issued by the Trust alleged to have been lost, stolen
or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate, an officer designated by the Trustees may, in
his discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or the owner's legal
representative to advertise the same in such manner as he shall require or to
give bond, with sufficient surety, to the Trust to indemnify it against any
loss or claim which may arise as a result of the issuance of a new
certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD
DATE. The Trustees may set, in advance, a record date for the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or determining shareholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of shareholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date
is fixed and shall be not more than 90 days and, in the case of a meeting of
shareholders not less than ten days, before the date on which the meeting or
particular action requiring such determination of shareholders of record is to
be held or taken.
In lieu of fixing a record date, the Trustees may provide
that the share transfer books shall be closed for a stated period but not
longer than 20 days. If the share transfer books are closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
<PAGE>
shareholders, such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the share transfer books are
not closed for the determination of shareholders, (a) the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day on which the notice
of meeting is mailed or the 30th day before the meeting, whichever is the
closer date to the meeting; and (b) the record date for the determination of
shareholders entitled to receive payment of a dividend or an allotment of any
other rights shall be the close of business on the day on which the resolution
of the Trustees, declaring the dividend or allotment of rights, is adopted.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except when (i) the
determination has been made through the closing of the transfer books and the
stated period of closing has expired or (ii) the meeting is adjourned to a
date more than 120 days after the record date fixed for the original meeting,
in either of which case a new record date shall be determined as set forth
herein.
Section 5. SHARE LEDGER. The Trust shall maintain at its
principal office or at the office of its counsel, accountants or transfer
agent, an original or duplicate share ledger containing the name and address
of each shareholder and the number of shares of each class held by such
shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The
Trustees may issue fractional shares or provide for the issuance of scrip, all
on such terms and under such conditions as they may determine. Notwithstanding
any other provision of the Declaration of Trust or these Bylaws, the Trustees
may issue units consisting of different securities of the Trust. Any security
issued in a unit shall have the same characteristics as any identical
securities issued by the Trust, except that the Trustees may provide that for
a specified period securities of the Trust issued in such unit may be
transferred on the books of the Trust only in such unit.
ARTICLE VIII
FISCAL YEAR
The Trustees shall have the power, from time to time, to fix
the fiscal year of the Trust by a duly adopted resolution.
<PAGE>
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions
upon the shares of beneficial interest of the Trust may be authorized and
declared by the Trustees, subject to the provisions of law and the Declaration
of Trust. Dividends and other distributions may be paid in cash, property or
shares of the Trust, subject to the provisions of law and the Declaration of
Trust.
Section 2. CONTINGENCIES. Before payment of any dividends or
other distributions, there may be set aside out of any funds of the Trust
available for dividends or other distributions such sum or sums as the
Trustees may from time to time, in their absolute discretion, think proper as
a reserve fund for contingencies, for equalizing dividends or other
distributions, for repairing or maintaining any property of the Trust or for
such other purpose as the Trustees shall determine to be in the best interest
of the Trust, and the Trustees may modify or abolish any such reserve in the
manner in which it was created.
ARTICLE X
PROHIBITED INVESTMENTS AND ACTIVITIES;
INVESTMENT POLICIES
Notwithstanding anything to the contrary in the Declaration
of Trust, the Trust shall not enter into any transaction referred to in (i),
(ii) or (iii) below which it does not believe is in the best interests of the
Trust, and will not, without the approval of a majority of the disinterested
Trustees, (i) acquire from or sell to any Trustee, officer or employee of the
Trust, any corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise in which a Trustee, officer or employee of the Trust
owns more than a one percent interest or any affiliate of any of the
foregoing, any of the assets or other property of the Trust, except for the
acquisition directly or indirectly of certain properties or interest therein,
directly or indirectly, through entities in which it owns an interest in
connection with the initial public offering of shares by the Trust or pursuant
to agreements entered into in connection with such offering, which properties
shall be described in the prospectus relating to such initial public offering,
(ii) make any loan to or borrow from any of the foregoing persons or (iii)
engage in any other transaction with any of the foregoing persons. Each such
transaction will be in all respects on such terms as are, at the time of the
transaction and under the circumstances then prevailing, fair and reasonable
to the Trust. Subject to the foregoing and the provisions of the Declaration
of Trust, the Board of Trustees may from time to time adopt, amend, revise or
terminate any policy or policies with respect to investments by the Trust as
it shall deem appropriate in its sole discretion.
<PAGE>
ARTICLE XI
SEAL
Section 1. SEAL. The Trustees may authorize the adoption
of a seal by the Trust. The seal shall have inscribed thereon the name of
the Trust and the year of its formation. The Trustees may authorize one or
more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or
required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the
word "(SEAL)" adjacent to the signature of the person authorized to execute
the document on behalf of the Trust.
ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Maryland law in effect
from time to time, the Trust shall indemnify (a) any Trustee, officer or
shareholder or any former Trustee, officer or shareholder (including among the
foregoing, for all purposes of this Article XII and without limitation, any
individual who, while a Trustee, officer or shareholder and at the express
request of the Trust, serves or has served another corporation, partnership,
joint venture, trust, employee benefit plan or any other enterprise as a
director, officer, shareholder, partner or trustee of such corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise)
who has been successful, on the merits or otherwise, in the defense of a
proceeding to which he was made a party by reason of service in such capacity,
against reasonable expenses incurred by him in connection with the proceeding,
(b) any Trustee or officer or any former Trustee or officer against any claim
or liability to which he may become subject by reason of such status unless it
is established that (i) his act or omission was material to the matter giving
rise to the proceeding and was committed in bad faith or was the result of
active and deliberate dishonesty, (ii) he actually received an improper
personal benefit in money, property or services or (iii) in the case of a
criminal proceeding, he had reasonable cause to believe that his act or
omission was unlawful and (c) each shareholder or former shareholder against
any claim or liability to which he may become subject by reason of such
status. In addition, the Trust shall, without requiring a preliminary
determination of the ultimate entitlement to indemnification, pay or
reimburse, in advance of final disposition of a proceeding, reasonable
expenses incurred by a Trustee, officer or shareholder or former Trustee,
<PAGE>
officer or shareholder made a party to a proceeding by reason such status,
provided that, in the case of a Trustee or officer, the Trust shall have
received (i) a written affirmation by the Trustee or officer of his good faith
belief that he has met the applicable standard of conduct necessary for
indemnification by the Trust as authorized by these Bylaws and (ii) a written
undertaking by or on his behalf to repay the amount paid or reimbursed by the
Trust if it shall ultimately be determined that the applicable standard of
conduct was not met. The Trust may, with the approval of its Trustees, provide
such indemnification or payment or reimbursement of expenses to any Trustee,
officer or shareholder or any former Trustee, officer or shareholder who
served a predecessor of the Trust and to any employee or agent of the Trust or
a predecessor of the Trust. Neither the amendment nor repeal of this Article,
nor the adoption or amendment of any other provision of the Declaration of
Trust or these Bylaws inconsistent with this Article, shall apply to or affect
in any respect the applicability of this Article with respect to any act or
failure to act which occurred prior to such amendment, repeal or adoption.
Any indemnification or payment or reimbursement of the
expenses permitted by these Bylaws shall be furnished in accordance with the
procedures provided for indemnification or payment or reimbursement of
expenses, as the case may be, under Section 2-418 of the MGCL for directors of
Maryland corporations. The Trust may provide to Trustees, officers and
shareholders such other and further indemnification or payment or
reimbursement of expenses, as the case may be, to the fullest extent permitted
by the MGCL, as in effect from time to time, for directors of Maryland
corporations.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the
Declaration of Trust or Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the waiver of notice, unless
specifically required by statute. The attendance of any person at any meeting
shall constitute a waiver of notice of such meeting, except where such person
attends a meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or
convened.
<PAGE>
ARTICLE XIV
AMENDMENT OF BYLAWS
The Trustees shall have the exclusive power to adopt, alter
or repeal any provision of these Bylaws and to make new Bylaws.
ARTICLE XV
MISCELLANEOUS
All references to the Declaration of Trust shall include any
amendments thereto. In these Bylaws, unless the context otherwise requires,
words used in the singular or in the plural include both the plural and
singular and words denoting any gender include all genders.
* * * *
<PAGE>
-----------------------------------------
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ELDERTRUST OPERATING LIMITED PARTNERSHIP
-----------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS.......................................................1
ARTICLE II ORGANIZATIONAL MATTERS.............................................14
Section 2.1 Organization................................................14
Section 2.2 Name........................................................15
Section 2.3 Registered Office and Agent; Principal Office...............15
Section 2.4 Term........................................................15
ARTICLE III PURPOSE...........................................................15
Section 3.1 Purpose and Business........................................15
Section 3.2 Powers......................................................16
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF
PARTNERSHIP INTERESTS...................................................16
Section 4.1 Capital Contributions of the Partners; Restatement of
Capital Accounts on the Effective Date...........................16
Section 4.2 Issuances of Partnership Interests..........................17
Section 4.3 No Preemptive Rights........................................19
Section 4.4 Other Contribution Provisions...............................19
Section 4.5 No Interest on Capital......................................19
ARTICLE V DISTRIBUTIONS.......................................................19
Section 5.1 Requirement and Characterization of Distributions...........19
Section 5.2 Amounts Withheld............................................23
Section 5.3 Distributions Upon Liquidation..............................23
Section 5.4 Revisions to Reflect Issuance of Partnership Interests......23
ARTICLE VI ALLOCATIONS........................................................23
Section 6.1 Allocations For Capital Account Purposes....................23
Section 6.2 Revisions to Allocations to Reflect Issuance of Partnership
Interests........................................................24
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS.............................25
Section 7.1 Management..................................................25
Section 7.2 Certificate of Limited Partnership..........................29
Section 7.3 Title to Partnership Assets.................................30
Section 7.4 Reimbursement of the General Partner........................30
Section 7.5 Outside Activities of the General Partner; Relationship of
Shares to Partnership Units; Funding Debt........................32
Section 7.6 Transactions with Affiliates................................33
Section 7.7 Indemnification.............................................34
Section 7.8 Liability of the General Partner............................36
Section 7.9 Other Matters Concerning the General Partner................37
Section 7.10 Reliance by Third Parties..................................37
Section 7.11 Restrictions on General Partner's Authority................38
Section 7.12 Loans by Third Parties.....................................39
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.......................39
Section 8.1 Limitation of Liability.....................................39
Section 8.2 Management of Business......................................39
Section 8.3 Outside Activities of Limited Partners......................39
Section 8.4 Return of Capital...........................................40
Section 8.5 Rights of Limited Partners Relating to the Partnership......40
i
<PAGE>
Section 8.6 Redemption Right............................................41
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS.............................44
Section 9.1 Records and Accounting......................................44
Section 9.2 Fiscal Year.................................................44
Section 9.3 Reports.....................................................44
ARTICLE X TAX MATTERS.........................................................45
Section 10.1 Preparation of Tax Returns.................................45
Section 10.2 Tax Elections..............................................45
Section 10.3 Tax Matters Partner........................................45
Section 10.4 Organizational Expenses....................................47
Section 10.5 Withholding................................................47
ARTICLE XI TRANSFERS AND WITHDRAWALS..........................................48
Section 11.1 Transfer...................................................48
Section 11.2 Transfers of Partnership Interests of General Partner......48
Section 11.3 Limited Partners' Rights to Transfer.......................49
Section 11.4 Substituted Limited Partners...............................51
Section 11.5 Assignees..................................................51
Section 11.6 General Provisions.........................................52
ARTICLE XII ADMISSION OF PARTNERS.............................................54
Section 12.1 Admission of a Successor General Partner...................54
Section 12.2 Admission of Additional Limited Partners...................54
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership......................................................55
ARTICLE XIII DISSOLUTION AND LIQUIDATION......................................55
Section 13.1 Dissolution................................................55
Section 13.2 Winding Up.................................................56
Section 13.3 Compliance with Timing Requirements of Regulations.........57
Section 13.4 Deemed Distribution and Recontribution.....................58
Section 13.5 Rights of Limited Partners.................................58
Section 13.6 Notice of Dissolution......................................58
Section 13.7 Cancellation of Certificate of Limited Partnership.........58
Section 13.8 Reasonable Time for Winding Up.............................59
Section 13.9 Waiver of Partition........................................59
Section 13.10 Liability of Liquidator...................................59
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS......................59
Section 14.1 Amendments.................................................59
Section 14.2 Meetings of the Partners...................................61
ARTICLE XV GENERAL PROVISIONS.................................................62
Section 15.1 Addresses and Notice.......................................62
Section 15.2 Titles and Captions........................................62
Section 15.3 Pronouns and Plurals.......................................62
Section 15.4 Further Action.............................................62
Section 15.5 Binding Effect.............................................62
Section 15.6 Creditors..................................................62
Section 15.7 Waiver.....................................................63
Section 15.8 Counterparts...............................................63
Section 15.9 Applicable Law.............................................63
ii
<PAGE>
Section 15.10 Invalidity of Provisions..................................63
Section 15.11 Power of Attorney.........................................63
Section 15.12 Entire Agreement..........................................65
Section 15.13 No Rights as Shareholders.................................65
Section 15.14 Limitation to Preserve REIT Status........................65
iii
<PAGE>
EXHIBIT A
---------
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
---------
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
---------
SPECIAL ALLOCATION RULES
EXHIBIT D
---------
NOTICE OF REDEMPTION
EXHIBIT E
---------
VALUE OF CONTRIBUTED PROPERTY
EXHIBIT F
---------
FORM OF PARTNERSHIP UNIT CERTIFICATE
EXHIBIT G
---------
DEFICIT RESTORATION OBLIGATIONS
iv
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ELDERTRUST OPERATING LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of __, 1998, is entered into by and among ElderTrust, a Maryland real
estate investment trust, as the General Partner of the Partnership, and Thomas
W. Balderston, Gregory H. Doyle, Richard R. Howard, D. Lee McCreary, Jr., MGI
Limited Partnership, a Delaware limited partnership, Edward B. Romanov, Jr.,
Senior LifeChoice Corporation, a Pennsylvania corporation, Michael R. Walker
and Joseph A. Williamson, as Limited Partners, together with any other Persons
who become Partners in the Partnership as provided herein.
WHEREAS, the Partnership was formed on July 30, 1997, and, on July
30, 1997 the Partnership, adopted an Agreement of Limited Partnership;
WHEREAS, on September 10, 1997, the Partnership adopted a First
Amended and Restated Agreement of Limited Partnership in the form of the Prior
Agreement;
WHEREAS, the General Partner has been admitted to the Partnership as
an additional general partner pursuant to the terms of the Prior Agreement;
WHEREAS, ElderTrust Realty Group, a Maryland corporation and the
initial general partner of the Partnership, has withdrawn from the Partnership
effective as of the Effective Date; and
WHEREAS, the Partners desire to continue the business of the
Partnership pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Prior Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such
statute.
<PAGE>
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each Partnership Year (i)
increased by any amounts which such Partner is obligated to restore pursuant
to any provision of this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account
is intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to
any Partner, the deficit balance, if any, in such Partner's Adjusted Capital
Account as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B.
"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Affiliate" means, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by or under common
control with such Person, (ii) any Person owning or controlling ten percent
(10%) or more of the outstanding voting interests of such Person, (iii) any
Person of which such Person owns or controls ten percent (10%) or more of the
voting interests or (iv) any officer, director, general partner or trustee of
such Person or any Person referred to in clauses (i), (ii), and (iii) above.
For purposes of this definition, "control," when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreed Value" means (i) in the case of any Contributed
Property contributed to the Partnership as of the Effective Date, the amount
set forth on Exhibit E as the Agreed Value of such Property; (ii) in the case
of any other Contributed Property, the 704(c) Value of such property as of the
time of its contribution to the Partnership, reduced by any liabilities either
assumed by the Partnership upon such contribution or to which such property is
subject when contributed; and (iii) in the case of any property distributed to
a Partner by the Partnership, the Partnership's Carrying Value of such
property at the time such property is distributed, reduced by any indebtedness
either assumed by such Partner upon such distribution or to which such
property is subject at the time of distribution as determined under Section
752 of the Code and the regulations thereunder.
"Agreement" means this Agreement of Limited Partnership, as
it may be amended, supplemented or restated from time to time.
2
<PAGE>
"Assignee" means a Person to whom one or more Partnership
Units have been transferred in a manner permitted under this Agreement, but
who has not become a Substituted Limited Partner, and who has the rights set
forth in Section 11.5.
"Available Cash" means, subject to the final sentence of
this definition, with respect to any period for which such calculation is
being made:
(a) all cash revenues and funds received by the Partnership
from whatever source (excluding the proceeds of any Capital Contribution) plus
the amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no longer
necessary) in reserves of the Partnership, which reserves are referred to in
clause (b)(iv) below;
(b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments
made during such period by the Partnership,
(ii) all cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans
made thereto) to the extent that such investments are permitted under this
Agreement and are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves
established during such period which the General Partner determines is
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, (i) during the term of the
Credit Agreement, Available Cash for any fiscal quarter of the Partnership
shall not exceed an amount which would result in a distribution to the General
Partner, in accordance with the provisions of Article V of this Agreement, of
an amount equal to 89% of the General Partner's estimated funds from
operations for such fiscal quarter; provided, that Available Cash may exceed
the limit set forth in this clause (i) to enable the General Partner to
distribute Available Cash to the General Partner in an amount sufficient to
enable the General Partner Entity to pay shareholder dividends that will (1)
satisfy the REIT Requirements of, and (2) avoid any federal income or excise
tax liability for, the General Partner Entity, and (ii) Available Cash shall
not include any cash received or reductions in reserves, or take into account
any disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such Contributed
Property or Adjusted Property and the adjusted basis thereof for federal
income tax purposes as of such date. A Partner's share of the Partnership's
Book-Tax Disparities in all of its Contributed Property and Adjusted Property
will be reflected by the difference between such Partner's Capital Account
balance as maintained pursuant to Exhibit B and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained strictly
in accordance with federal income tax accounting principles.
3
<PAGE>
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Philadelphia, Pennsylvania are
authorized or required by law to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Exhibit B. The initial Capital Account balance for each
Partner who is a Partner on the Effective Date shall be the amount set forth
opposite such Partner's name on Exhibit A hereto.
"Capital Contribution" means, with respect to any Partner,
any cash, cash equivalents or the Agreed Value of Contributed Property which
such Partner contributes or is deemed to contribute to the Partnership
pursuant to Section 4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed
Property or Adjusted Property, the 704(c) Value of such property reduced (but
not below zero) by all Depreciation with respect to such Contributed Property
or Adjusted Property, as the case may be, charged to the Partners' Capital
Accounts and (ii) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time
to time in accordance with Exhibit B, and to reflect changes, additions
(including capital improvements thereto) or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on
the Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Delaware Secretary of
State, as amended from time to time in accordance with the terms hereof and
the Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
"Class A Unit" means any Partnership Unit that is not
specifically designated by the General Partner as being of another specified
class of Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
4
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended
and in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of
future law.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 14.2.
"Consent of the Outside Limited Partners" means the Consent
of Limited Partners (excluding for this purpose any Limited Partnership
Interests held by the General Partner, any Person of which the General Partner
owns or controls more than fifty percent (50%) of the voting interests and any
Person directly or indirectly owning or controlling more than fifty percent
(50%) of the outstanding voting interests of the General Partner) holding
Percentage Interests that are greater than fifty percent (50%) of the
aggregate Percentage Interest of all Limited Partners who are not excluded for
the purposes hereof.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act,
but excluding cash contributed or deemed contributed to the Partnership. Once
the Carrying Value of a Contributed Property is adjusted pursuant to Exhibit
B, such property shall no longer constitute a Contributed Property for
purposes of Exhibit B, but shall be deemed an Adjusted Property for such
purposes.
"Conversion Factor" means 1.0; provided that, if the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor
shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time) and the denominator of which shall
be the actual number of Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination; and provided further that if an entity shall cease
to be the General Partner Entity (the "Predecessor Entity") and another entity
shall become the General Partner Entity (the "Successor Entity"), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which is the Value of one Share of the Predecessor
Entity, determined as of the date when the Successor Entity becomes the
General Partner Entity, and the denominator of which is the Value of one Share
of the Successor Entity, determined as of that same date. (For purposes of the
second provision in the preceding sentence, if any shareholders of the
Predecessor Entity will receive consideration in connection with the
transaction in which the Successor Entity becomes the General Partner Entity,
the numerator in the fraction described above for determining the adjustment
to the Conversion Factor (that is, the Value of one Share of the Predecessor
Entity) shall be the sum of the greatest amount of cash and the fair market
value (as determined in good faith by the General Partner) of any securities
and other consideration that the holder of one Share in the Predecessor Entity
could have received in such transaction (determined without regard to any
provisions governing fractional shares).) Any adjustment to the Conversion
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Factor shall become effective immediately after the effective date of the
event retroactive to the record date, if any, for the event giving rise
thereto, it being intended that (x) adjustments to the Conversion Factor are
to be made to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Partnership Units and (y) if
a Specified Redemption Date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion
Factor applicable to such redemption shall be adjusted to take into account
such event.
"Convertible Funding Debt" has the meaning set forth in
Section 7.5.F.
"Credit Agreement" means that certain Credit Agreement dated
as of the Effective Date among the General Partner, the Partnership, Various
Banks, Deutsche Bank AG, New York Branch, as Issuing Bank, and German American
Capital Corporation, as Administrative Agent.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services, (ii) all amounts owed by
such Person to banks or other Persons in respect of reimbursement obligations
under letters of credit, surety bonds and other similar instruments
guaranteeing payment or other performance of obligations by such Person, (iii)
all indebtedness for borrowed money or for the deferred purchase price of
property or services secured by any lien on any property owned by such Person,
to the extent attributable to such Person's interest in such property, even
though such Person has not assumed or become liable for the payment thereof,
and (iv) obligations of such Person incurred in connection with entering into
a lease which, in accordance with generally accepted accounting principles,
should be capitalized.
"Declaration of Trust" means the Declaration of Trust of the
General Partner filed in the State of Maryland on September 23, 1997, as
amended or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date
with respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any
date with respect to any class of Partnership Interests, (a) if the common
shares of beneficial interest (or other comparable equity interests) of the
General Partner Entity are Publicly Traded (i) the total number of shares of
beneficial interest (or other comparable equity interest) of the General
Partner Entity corresponding to such class of Partnership Interest (as
provided for in Section 4.2.B) issued and outstanding as of the close of
business on such date (excluding any treasury shares) multiplied by the Value
of a share of such beneficial interest (or other comparable equity interest)
on such date divided by (ii) the Percentage Interest of the General Partner in
such class of Partnership Interests on such date, and (b) otherwise, the
aggregate Value of such class of Partnership Interests determined as set forth
in the fourth and fifth sentences of the definition of Value.
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"Deficit Restoration Agreement" means an agreement made by a
Partner and accepted by the Partnership whereby such Partner agrees to
contribute an amount of cash set forth in such Deficit Restoration Agreement
to the Partnership in the event of the liquidation of the Partnership pursuant
to Article XIII.
"Depreciation" means, for each fiscal year, an amount equal
to the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as
the federal income tax depreciation, amortization, or other cost recovery
deduction for such year bears to such beginning adjusted tax basis; provided,
however, that if the federal income tax depreciation, amortization, or other
cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Carrying Value using any
reasonable method selected by the General Partner.
"Distribution Period" has the meaning set forth in Section
5.1.C.
"Effective Date" means the date of the closing of the
initial public offering of the General Partner pursuant to the Purchase
Agreement.
"ElderTrust Realty Group" means ElderTrust Realty Group,
Inc., a Maryland corporation and the initial general partner of the
Partnership.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plan Investor" means (i) a Plan, (ii) a trust which
was established pursuant to a Plan, or a nominee for such trust or Plan, or
(iii) an entity whose underlying assets include assets of a Plan by reason of
such Plan's investment in such entity.
"ET Partnership" means ET Partnership, a Pennsylvania general
partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Funding Debt" means the incurrence of any Debt by or on
behalf of the General Partner Entity for the purpose of providing funds to the
Partnership.
"General Partner" means ElderTrust, a Maryland real estate
investment trust, or any of its successors as a general partner of the
Partnership.
"General Partner Entity" means the General Partner;
provided, however, that if (i) the common shares of beneficial interest (or
other comparable equity interests) of the General Partner are at any time not
Publicly Traded and (ii) the common shares of beneficial interest (or other
comparable equity interests) of an entity that owns, directly or indirectly,
fifty percent (50%) or more of the common shares of beneficial interest (or
other comparable equity interests) of the General Partner are Publicly Traded,
the term "General Partner Entity" shall refer to such entity whose common
shares of beneficial interest (or other comparable equity securities) are
Publicly Traded. If both requirements set forth in clauses (i) and (ii) above
are not satisfied, then the term "General Partner Entity" shall mean the
General Partner.
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"General Partner Payment" has the meaning set forth in Section
15.14 hereof.
"General Partnership Interest" means a Partnership Interest
held by the General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural
Person, such natural Person's spouse, parents, descendants, nephews, nieces,
brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her Person or estate, (ii) as to any corporation which is a Partner, the
filing of a certificate of dissolution, or its equivalent, for the corporation
or the revocation of its charter, (iii) as to any partnership or limited
liability company which is a Partner, the dissolution and commencement of
winding up of the partnership or limited liability company, (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership, (v) as to any trustee of a trust which is
a Partner, the termination of the trust (but not the substitution of a new
trustee) or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect, (b) the Partner is adjudged
as bankrupt or insolvent, or a final and nonappealable order for relief under
any bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files
an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f)
any proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Partner's consent or acquiescence of
a trustee, receiver of liquidator has not been vacated or stayed within ninety
(90) days of such appointment or (h) an appointment referred to in clause (g)
is not vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a
proceeding by reason of its status as (A) the General Partner, (B) a Limited
Partner, or (C) a trustee, director or officer of the Partnership, or the
General Partner and (ii) such other Persons (including Affiliates of the
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General Partner, a Limited Partner or the Partnership) as the General Partner
may designate from time to time (whether before or after the event giving rise
to potential liability), in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited
Partner in Exhibit A, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest
of a Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Limited Partnership
Interest may be expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.A.
"MGI" means MGI Limited Partnership, a Delaware limited
partnership.
"Net Income" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain for such taxable period
over the Partnership's items of loss and deduction for such taxable period.
The items included in the calculation of Net Income shall be determined in
accordance with Exhibit B. If an item of income, gain, loss or deduction that
has been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if
any, of the Partnership's items of loss and deduction for such taxable period
over the Partnership's items of income and gain for such taxable period. The
items included in the calculation of Net Loss shall be determined in
accordance with Exhibit B. If an item of income, gain, loss or deduction that
has been included in the initial computation of Net Loss is subjected to the
special allocation rules in Exhibit C, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase shares of beneficial interest (or other comparable equity interest)
of the General Partner, excluding grants under any Share Option Plan, or (ii)
any Debt issued by the General Partner that provides any of the rights
described in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage
or negative pledge securing a Nonrecourse Liability, the amount of any taxable
gain that would be allocated to the Partners pursuant to Section 2.B of
Exhibit C if such properties were disposed of in a taxable transaction in full
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satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions
for a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption
substantially in the form of Exhibit D.
"Partner" means the General Partner or a Limited Partner,
and "Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth
in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act upon the terms and conditions set forth in this Agreement, or any
successor to such limited partnership.
"Partnership Interest" means a Limited Partnership Interest
or the General Partnership Interest and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Partnership Interest may be
expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established
by the General Partner either (i) for the distribution of Available Cash
pursuant to Section 5.1 hereof, which record date shall be the same as the
record date established by the General Partner Entity for a distribution to
its shareholders of some or all of its portion of such distribution, or (ii)
if applicable, for determining the Partners entitled to vote on or consent to
any proposed action for which the consent or approval of the Partners is
sought pursuant to Section 14.2 hereof.
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"Partnership Unit" means a fractional, undivided share of
the Partnership Interests of all Partners issued pursuant to Sections 4.1 and
4.2, and includes Class A Units, Class B Units and any other classes or series
of Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such Partnership Units are set forth in Exhibit A, as such
Exhibit may be amended from time to time. The ownership of Partnership Units
shall be evidenced by a certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class
of Partnership Interests, its interest in such class, determined by dividing
the Partnership Units of such class owned by such Partner by the total number
of Partnership Units of such class then outstanding as specified in Exhibit A,
as such exhibit may be amended from time to time, multiplied by the aggregate
Percentage Interest allocable to such class of Partnership Interests. If the
Partnership shall at any time have outstanding more than one class of
Partnership Interests, the Percentage Interest attributable to each class of
Partnership Interests shall be determined as set forth in Section 4.2.B.
"Person" means a natural person, partnership (whether
general or limited), trust, estate, association, corporation, limited
liability company, unincorporated organization, custodian, nominee or any
other individual or entity in its own or any representative capacity.
"Plan" means (i) an employee benefit plan subject to Title I
of ERISA or (ii) a plan as defined in Section 4975(e) of the Code.
"Predecessor Entity" has the meaning set forth in the
definition of "Conversion Factor" herein.
"Prior Agreement" means the First Amended and Restated
Agreement of Limited Partnership of the Partnership dated as of September 10,
1997, which Prior Agreement is amended and restated in its entirety by this
Agreement as of the Effective Date.
"Publicly Traded" means listed or admitted to trading on the
New York Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on The Nasdaq Stock Market,
Inc. National Market, or any successor to any of the foregoing.
"Purchase Agreement" means that certain purchase agreement
among the General Partner and Merrill Lynch & Co., BT Alex. Brown Incorporated
and Goldman Sachs & Co., as representatives of the several underwriters, in
connection with the initial public offering of Shares by the General Partner
"Qualified REIT Subsidiary" means any Subsidiary of the
General Partner that is a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
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"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by Section 734
or Section 743 of the Code) upon the disposition of any property or asset of
the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such
property or asset.
"Redeeming Partner" has the meaning set forth in Section
8.6.A.
"Redemption Amount" means either the Cash Amount or the
Shares Amount, as determined by the General Partner, in its sole and absolute
discretion; provided that if the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall
be paid only in the form of the Cash Amount unless the Redeeming Partner, in
its sole and absolute discretion, consents to payment of the Redemption Amount
in the form of the Shares Amount. A Redeeming Partner shall have no right,
without the General Partner's consent, in its sole and absolute discretion, to
receive the Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
"Regulation" or "Regulations" means the Income Tax
Regulations promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).
"REIT" means a real estate investment trust under Section
856 of the Code.
"REIT Requirements" has the meaning set forth in Section
5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as it may adopt;
provided, however, subject to Exhibit B, the General Partner shall, in its
sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the 704(c) Value of Contributed
Properties in a single or integrated transaction among each separate property
on a basis proportional to its fair market values. The 704(c) Values of the
Contributed Properties contributed to the Partnership as of the Effective Date
are set forth on Exhibit E.
"Share" means a share of beneficial interest (or other
comparable equity interest) of the General Partner Entity. Shares may be
issued in one or more classes or series in accordance with the terms of the
Declaration of Trust (or, if the General Partner is not the General Partner
Entity, the organizational documents of the General Partner Entity). If there
is more than one class or series of Shares, the term "Shares" shall, as the
context requires, be deemed to refer to the class or series of Shares that
correspond to the class or series of Partnership Interests for which the
reference to Shares is made. When used with reference to Class A Units, the
term "Shares" refers to common shares of beneficial interest (or other
comparable equity interest) of the General Partner Entity.
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"Shares Amount" means a number of Shares equal to the
product of the number of Partnership Units offered for redemption by a
Redeeming Partner times the Conversion Factor; provided that, if the General
Partner Entity issues to all holders of Shares rights, options, warrants or
convertible or exchangeable securities entitling such holders to subscribe for
or purchase Shares or any other securities or property (collectively, the
"rights"), then the Shares Amount shall also include such rights that a holder
of that number of Shares would be entitled to receive.
"Share Option Plan" means any equity incentive plan of the
General Partner, the Partnership and/or any Affiliate of the Partnership.
"Specified Redemption Date" means the tenth Business Day
after receipt by the General Partner of a Notice of Redemption; provided that,
if the Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the General Partner of a Notice of
Redemption.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, trust, partnership or joint venture,
or other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests is owned, directly
or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
"Successor Entity" has the meaning set forth in the definition
of "Conversion Factor" herein.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash or a related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets of the
Partnership for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i)
the fair market value of such property (as determined under Exhibit B) as of
such date, over (ii) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Exhibit B) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i)
the Carrying Value of such property (prior to any adjustment to be made
pursuant to Exhibit B) as of such date, over (ii) the fair market value of
such property (as determined under Exhibit B) as of such date.
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"Valuation Date" means the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
first Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the
General Partner Entity that are Publicly Traded, the average of the daily
market price for the ten consecutive trading days immediately preceding the
date with respect to which value must be determined. The market price for each
such trading day shall be the closing price, regular way, on such day, or if
no such sale takes place on such day, the average of the closing bid and asked
prices on such day. If the outstanding Shares of the General Partner Entity
are Publicly Traded and the Shares Amount includes rights that a holder of
Shares would be entitled to receive, then the Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. If the Shares of the General Partner Entity are not Publicly
Traded, the Value of the Shares Amount per Partnership Unit offered for
redemption (which will be the Cash Amount per Partnership Unit offered for
redemption payable pursuant to Section 8.6.A) means the amount that a holder
of one Partnership Unit would receive if each of the assets of the Partnership
were to be sold for its fair market value on the Specified Redemption Date,
the Partnership were to pay all of its outstanding liabilities, and the
remaining proceeds were to be distributed to the Partners in accordance with
the terms of this Agreement. Such Value shall be determined by the General
Partner, acting in good faith and based upon a commercially reasonable
estimate of the amount that would be realized by the Partnership if each asset
of the Partnership (and each asset of each partnership, limited liability
company, trust, joint venture or other entity in which the Partnership owns a
direct or indirect interest) were sold to an unrelated purchaser in an arms'
length transaction where neither the purchaser nor the seller were under
economic compulsion to enter into the transaction (without regard to any
discount in value as a result of the Partnership's minority interest in any
property or any illiquidity of the Partnership's interest in any property). In
connection with determining the Deemed Value of the Partnership Interest for
purposes of determining the number of additional Partnership Units issuable
upon a Capital Contribution funded by an underwritten public offering or an
arm's length private placement of shares of beneficial interest (or other
comparable equity interest) of the General Partner, the Value of such shares
shall be the public offering or arm's length private placement price per share
of such class of beneficial interest (or other comparable equity interest)
sold.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant
to the provisions of the Act and upon the terms and conditions set forth in
the Prior Agreement. The Partners hereby agree to continue the business of the
Partnership upon the terms and conditions set forth in this Agreement. Except
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as expressly provided herein to the contrary, the rights and obligations of
the Partners and the administration and termination of the Partnership shall
be governed by the Act. The Partnership Interest of each Partner shall be
personal property for all purposes.
Section 2.2 Name
The name of the Partnership is ElderTrust Operating Limited
Partnership. The Partnership's business may be conducted under any other name
or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and
from time to time and shall notify the Limited Partners of such change in the
next regular communication to the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in
the State of Delaware shall be located at Corporation Trust Center, 1209
Orange Street, Wilmington, County of New Castle, Delaware 19801, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be Corporation Trust Company. The
principal office of the Partnership shall be 415 McFarlan Road, Suite 202,
Kennett Square, PA 19348, or such other place as the General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 2.4 Term
The term of the Partnership commenced on July 30, 1997 and
shall continue until December 31, 2096, unless it is dissolved sooner pursuant
to the provisions of Article XIII or as otherwise provided by law.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by
the Partnership is (i) to conduct any business that may be lawfully conducted
by a limited partnership organized pursuant to the Act; provided, however,
that such business shall be limited to and conducted in such a manner as to
permit the General Partner Entity at all times to be classified as a REIT,
unless the General Partner Entity ceases to qualify or is not qualified as a
REIT for any reason or reasons not related to the business conducted by the
Partnership, (ii) to enter into any corporation, partnership, joint venture,
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trust, limited liability company or other similar arrangement to engage in any
of the foregoing or the ownership of interests in any entity engaged, directly
or indirectly, in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the status of the General Partner Entity as a REIT inures to
the benefit of all the Partners and not solely to the General Partner Entity
or its Affiliates.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership, including,
without limitation, full power and authority, directly or through its
ownership interest in other entities, to enter into, perform and carry out
contracts of any kind, borrow money and issue evidences of indebtedness,
whether or not secured by mortgage, deed of trust, pledge or other lien,
acquire, own, manage, improve and develop real property, and lease, sell,
transfer and dispose of real property; provided, however, that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of
the General Partner, in its sole and absolute discretion, (i) could adversely
affect the ability of the General Partner Entity to continue to qualify as a
REIT, (ii) could subject the General Partner Entity to any additional taxes
under Section 857 or Section 4981 of the Code or (iii) could violate any law
or regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless such action (or inaction) shall have
been specifically consented to by the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners; Restatement of
Capital Accounts on the Effective Date
ElderTrust Realty Group, Edward B. Romanov, Jr., D. Lee
McCreary, Jr. and ET Partnership previously made Capital Contributions to the
Partnership. Pursuant to the Act and the Prior Agreement, the General Partner
has been admitted to the Partnership as an additional limited partner without
having made a capital contribution. On the Effective Date, ElderTrust Realty
Group shall withdraw from the Partnership. Also on the Effective Date, ET
Partnership shall be liquidated and Michael R. Walker, Edward B. Romanov, Jr.
and MGI shall acquire the limited partnership interests previously held by ET
Partnership. On the Effective Date, the General Partner and the Limited
Partners other than MGI, Edward B. Romanov, Jr. and D. Lee McCreary, Jr. shall
make the Capital Contributions described in the section captioned "Formation
Transactions" in the final prospectus of the General Partner in connection
with the initial public offering of the Shares. On the Effective Date, the
Partnership shall be recapitalized so that the Partners shall own Partnership
Units in the amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage
Interest shall be adjusted in Exhibit A from time to time by the General
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Partner to the extent necessary to reflect accurately redemptions, Capital
Contributions, the issuance of additional Partnership Units or similar events
having an effect on a Partner's Percentage Interest. To the extent the
Partnership acquires any property by the merger of any other Person into the
Partnership, Persons who receive Partnership Interests in exchange for their
interests in the Person merging into the Partnership shall become Partners and
shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement and as set forth in Exhibit A. A number of
Partnership Units held by the General Partner equal to one-tenth of one
percent (0.1%) of all outstanding Partnership Units (as of the Effective Date)
shall be deemed to be the General Partner Partnership Units and shall be the
General Partnership Interest of such General Partner. All other Partnership
Units held by the General Partners shall be deemed to be Limited Partnership
Interests and shall be held by the General Partner in its capacity as a
Limited Partner in the Partnership. Except as provided in Sections 7.5 and
10.5 hereof, the Partners shall have no obligation to make any additional
Capital Contributions or provide any additional funding to the Partnership
(whether in the form of loans, repayments of loans or otherwise). Except for
those Partners listed on Exhibit G who have entered into one or more Deficit
Restoration Obligation Agreements and have agreed thereby to contribute an
amount of cash up to the amount listed next to each such Partner's name on
Exhibit G in the event of the liquidation of the Partnership pursuant to
Article XIII, no Partner shall have any obligation to restore any deficit that
may exist in its Capital Account, either upon a liquidation of the Partnership
or otherwise.
Section 4.2 Issuances of Partnership Interests
A. General. The General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners (including the
General Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of property to the
Partnership) Partnership Units or other Partnership Interests in one or more
classes, or in one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties senior
to Limited Partnership Interests, all as shall be determined, subject to
applicable Delaware law, by the General Partner in its sole and absolute
discretion, including, without limitation, (i) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests, (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that, no such Partnership Units
or other Partnership Interests shall be issued to the General Partner unless
either (a) the Partnership Interests are issued in connection with the grant,
award or issuance of Shares or other equity interests in the General Partner
having designations, preferences and other rights such that the economic
interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights
(except voting rights) of the Partnership Interests issued to the General
Partner in accordance with this Section 4.2.A or (b) the additional
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Partnership Interests are issued to all Partners holding Partnership Interests
in the same class in proportion to their respective Percentage Interests in
such class. If the Partnership issues Partnership Interests pursuant to this
Section 4.2.A, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Section 5.4, Section
6.2 and Section 8.6) as it deems necessary to reflect the issuance of such
Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units and if the Partnership shall
have outstanding more than one class of Partnership Interests, the Percentage
Interest related thereto shall be equal to a fraction, the numerator of which
is equal to the amount of cash, if any, plus the Agreed Value of Contributed
Property, if any, contributed with respect to such additional Partnership
Units and the denominator of which is equal to the sum of (i) the Deemed Value
of the Partnership Interests for all outstanding classes (computed as of the
Business Day immediately preceding the date on which the additional Capital
Contributions are made (an "Adjustment Date")) plus (ii) the aggregate amount
of additional Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such additional Partnership Units. The
Percentage Interest of each other Partner holding Partnership Interests not
making a full pro rata Capital Contribution shall be adjusted to a fraction
the numerator of which is equal to the sum of (i) the Deemed Partnership
Interest Value of such Limited Partner (computed as of the Business Day
immediately preceding the Adjustment Date) plus (ii) the amount of additional
Capital Contributions (such amount being equal to the amount of cash, if any,
plus the Agreed Value of Contributed Property, if any, so contributed), if
any, made by such Partner to the Partnership in respect of such Partnership
Interest as of such Adjustment Date and the denominator of which is equal to
the sum of (i) the Deemed Value of the Partnership Interests of all
outstanding classes (computed as of the Business Day immediately preceding
such Adjustment Date) plus (ii) the aggregate amount of the additional Capital
Contributions contributed to the Partnership on such Adjustment Date in
respect of such additional Partnership Interests. For purposes of calculating
a Partner's Percentage Interest pursuant to this Section 4.2.B, cash Capital
Contributions by a General Partner will be deemed to equal the cash
contributed by such General Partner plus (a) in the case of cash contributions
funded by an offering of any equity interests in or other securities of the
General Partner, the offering costs attributable to the cash contributed to
the Partnership, and (b) in the case of Partnership Units issued pursuant to
Section 7.5.E, an amount equal to the difference between the Value of the
Shares sold pursuant to any Share Option Plan and the net proceeds of such
sale.
C. Classes of Partnership Units. From and after the
Effective Date, subject to Section 4.2.A above, the Partnership shall have two
classes of Partnership Units entitled "Class A Units" and "Class B Units."
Either Class A Units or Class B Units, at the election of the General Partner,
in its sole and absolute discretion, may be issued to newly admitted Partners
in exchange for the contribution by such Partners of cash, real estate
partnership interests, stock, notes or other assets or consideration;
provided, that all Partnership Units issued to Partners on the Effective Date
shall be Class A Units; and, provided further, that any Partnership Unit that
is not specifically designated by the General Partner as being of a particular
class shall be deemed to be a Class A Unit. Each Class B Unit shall be
converted automatically into a Class A Unit on the day immediately following
the Partnership Record Date for the Distribution Period (as defined in Section
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5.1.C) in which such Class B Unit was issued, without the requirement for any
action by either the Partnership or the Partner holding the Class B Unit.
D. Certain Restrictions on Issuances of Partnership Units or
Other Partnership Interests. Notwithstanding the foregoing, in no event may
the General Partner cause the Partnership to issue to Partners (including the
General Partner and its affiliates) or other Persons any Partnership Units or
other Partnership Interests (i) if such issuance would cause the Partnership
Interests of "benefit plan investors" to become "significant," as those terms
are used in 29 C.F.R. ss. 2510.3-101(f), or any successor regulation thereto,
or would cause the Partnership to become, with respect to any employee benefit
plan subject to Title I of ERISA, a "party-in-interest" (as defined in Section
3(14) of ERISA) or, with respect to any plan defined in Section 4975(e) of the
Code, a "disqualified person" (as defined in Section 4975(e) of the Code), or
(ii) if such issuance would, in the opinion of counsel to the Partnership,
cause any portion of the assets of the Partnership to constitute assets of any
ERISA Plan Investor pursuant to 29 C.F.R. ss. 2510.3-101, or any successor
regulation thereto.
Section 4.3 No Preemptive Rights
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership or (ii) issuance or sale of any
Partnership Units or other Partnership Interests.
Section 4.4 Other Contribution Provisions
If any Partner is admitted to the Partnership and is given a
Capital Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as if
the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
Section 4.5 No Interest on Capital
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. General. The General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D;
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provided, that during the term of the Credit Agreement, the General Partner
may not make any distribution with respect to a fiscal quarter until the
General Partner has released its quarterly earnings report with respect to
such fiscal quarter. Notwithstanding anything to the contrary contained
herein, in no event may a Partner receive a distribution of Available Cash
with respect to a Partnership Unit for a quarter or shorter period if such
Partner is entitled to receive a distribution with respect to a Share for
which such Partnership Unit has been redeemed or exchanged. Unless otherwise
expressly provided for herein or in an agreement at the time a new class of
Partnership Interests is created in accordance with Article IV hereof, no
Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest. The General Partner shall make such reasonable
efforts, as determined by it in its sole and absolute discretion and
consistent with the qualification of the General Partner Entity as a REIT, to
distribute Available Cash (a) to Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of
property of the Partnership by a Limited Partner under Section 707 of the Code
or the Regulations thereunder; provided that, the General Partners and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner being so
treated, and (b) to the General Partner in an amount sufficient to enable the
General Partner Entity to pay shareholder dividends that will (1) satisfy the
requirements for qualification as a REIT under the Code and the Regulations
(the "REIT Requirements") of, and (2) avoid any federal income or excise tax
liability for, the General Partner Entity.
B. Method. (i) Each holder of Partnership Interests that is
entitled to any preference in distribution shall be entitled to a distribution
in accordance with the rights of any such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after
the payment of any preference in distribution in accordance with the foregoing
clause (i), with respect to Partnership Interests that are not entitled to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within each such class, pro rata in proportion to
the respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for
any quarter or shorter period with respect to which a distribution is to be
made (a "Distribution Period") Class B Units are outstanding on the
Partnership Record Date for such Distribution Period, the General Partner
shall allocate the Available Cash with respect to such Distribution Period
available for distribution with respect to the Class A Units and Class B Units
collectively between the Partners who are holders of Class A Units ("Class A")
and the Partners who are holders of Class B Units ("Class B") as follows:
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(1) Class A shall receive that
portion of the Available Cash (the "Class A Share")
determined by multiplying the amount of Available
Cash by the following fraction:
A x Y
--------------------------
(A x Y)+(B x X)
(2) Class B shall receive that
portion of the Available Cash (the "Class B Share")
determined by multiplying the amount of Available
Cash by the following fraction:
B x X
--------------------------
(A x Y)+(B x X)
(3) For purposes of the foregoing
formulas, (i) "A" equals the number of Class A
Units outstanding on the Partnership Record Date
for such Distribution Period; (ii) "B" equals the
number of Class B Units outstanding on the
Partnership Record Date for such Distribution
Period; (iii) "Y" equals the number of days in the
Distribution Period; and (iv) "X" equals the number
of days in the Distribution Period for which the
Class B Units were issued and outstanding.
The Class A Share shall be distributed among Partners
holding Class A Units on the Partnership Record Date for the Distribution
Period in accordance with the number of Class A Units held by each Partner on
such Partnership Record Date; provided that, in no event may a Partner receive
a distribution of Available Cash with respect to a Class A Unit if a Partner
is entitled to receive a distribution out of such Available Cash with respect
to a Share for which such Class A Unit has been redeemed or exchanged. The
Class B Shares shall be distributed among the Partners holding Class B Units
on the Partnership Record Date for the Distribution Period in accordance with
the number of Class B Units held by each Partner on such Partnership Record
Date. In no event shall any Class B Units be entitled to receive any
distribution of Available Cash for any Distribution Period ending prior to the
date on which such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on
Different Dates. If Class B Units which have been issued on different dates
are outstanding on the Partnership Record Date for any Distribution Period,
then the Class B Units issued on each particular date shall be treated as a
separate series of Partnership Units for purposes of making the allocation of
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Available Cash for such Distribution Period among the holders of Partnership
Units (and the formula for making such allocation, and the definitions of
variables used therein, shall be modified accordingly). Thus, for example, if
two series of Class B Units are outstanding on the Partnership Record Date for
any Distribution Period, the allocation formula for each series, "Series B1"
and "Series B2" would be as follows:
(1) Series B1 shall receive that
portion of the Available Cash determined by
multiplying the amount of Available Cash by the
following fraction:
B1 x X1
--------------------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that
portion of the Available Cash determined by
multiplying the amount of Available Cash by the
following fraction:
B2 x X2
--------------------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing
formulas the definitions set forth in Section
5.1.C.3 remain the same except that (i) "B1" equals
the number of Partnership Units in Series B1
outstanding on the Partnership Record Date for such
Distribution Period; (ii) "B2" equals the number of
Partnership Units in Series B2 outstanding on the
Partnership Record Date for such Distribution
Period; (iii) "X1" equals the number of days in the
Distribution Period for which the Partnership Units
in Series B1 were issued and outstanding; and (iv)
"X2" equals the number of days in the Distribution
Period for which the Partnership Units in Series B2
were issued and outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the Shares
of the General Partner Entity are not Publicly Traded, the General Partner
shall make cash distributions with respect to the Class A Units at least
annually for each taxable year of the Partnership beginning prior to the
fifteenth (15th) anniversary of the Effective Date in an aggregate amount with
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respect to each such taxable year at least equal to 95% of the Partnership's
taxable income for such year allocable to the Class A Units, with such
distributions to be made not later than 60 days after the end of such year.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions
of any state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 13.2.
Section 5.4 Revisions to Reflect Issuance of Partnership Interests
If the Partnership issues Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to Article IV
hereof, the General Partner shall make such revisions to this Article V and
Exhibit A as it deems necessary to reflect the issuance of such additional
Partnership Interests without the requirements for any other consents or
approvals.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the Partnership's
items of income, gain, loss and deduction (computed in accordance with Exhibit
B) shall be allocated among the Partners in each taxable year (or portion
thereof) as provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 1 of Exhibit C, Net Income shall be allocated
(i) first, to the General Partner to the extent that Net Losses previously
allocated to the General Partner pursuant to the last sentence of Section
6.1.B exceed Net Income previously allocated to the General Partner pursuant
to this clause (i) of Section 6.1.A, (ii) second, to the holders of any
Partnership Interests that are entitled to any preference in distribution in
accordance with the rights of any such class of Partnership Interests until
each such Partnership Interest has been allocated, on a cumulative basis
pursuant to this clause (ii), Net Income equal to the amount of distributions
received which are attributable to the preference of such class of Partnership
Interests (and, within such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period for which such
allocation is being made) and (iii) third, with respect to Partnership
Interests that are not entitled to any preference in the allocation of Net
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<PAGE>
Income, pro rata to each such class in accordance with the terms of such class
(and, within such class, pro rata in proportion to the respective Percentage
Interests as of the last day of the period for which such allocation is being
made).
B. Net Losses. After giving effect to the special
allocations set forth in Section 1 of Exhibit C, Net Losses shall be allocated
(i) first, to the holders of any Partnership Interests that are entitled to
any preference in distribution in accordance with the rights of any such class
of Partnership Interests to the extent that any prior allocations of Net
Income to such class of Partnership Interests pursuant to Section 6.1.A(ii)
exceed, on a cumulative basis, distributions with respect to such Partnership
Interests pursuant to clause (i) of Section 5.1.B (and, within such class, pro
rata in proportion to the respective Percentage Interests as of the last day
of the period for which such allocation is being made) and (ii) second, with
respect to classes of Partnership Interests that are not entitled to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the period for which
such allocation is being made); provided that Net Losses shall not be
allocated to any Partner (including the General Partner) pursuant to this
Section 6.1.B to the extent that such allocation would cause such Partner
(including the General Partner) to have an Adjusted Capital Account Deficit
(or increase any existing Adjusted Capital Account Deficit) at the end of such
taxable year (or portion thereof). All Net Losses in excess of the limitations
set forth in this Section 6.1.B shall be allocated to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of
Regulation Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities
of the Partnership in excess of the sum of (i) the amount of Partnership
Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
D. Recapture Income. Any gain allocated to the Partners upon
the sale or other taxable disposition of any Partnership asset shall, to the
extent possible after taking into account other required allocations of gain
pursuant to Exhibit C, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains
as Recapture Income.
Section 6.2 Revisions to Allocations to Reflect Issuance of
Partnership Interests
If the Partnership issues Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to Article IV
hereof, the General Partner shall make such revisions to this Article VI and
Exhibit A as it deems necessary to reflect the terms of the issuance of such
Partnership Interests, including making preferential allocations to classes of
Partnership Interests that are entitled thereto. Such revisions shall not
require the consent or approval of any other Partner.
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ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Partnership are and shall be exclusively vested in the General
Partner, and no Limited Partner shall have any right to participate in or
exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners
with or without cause. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are
granted to the General Partner under any other provision of this Agreement,
the General Partner, subject to Section 7.11, shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all powers set forth in Section 3.2
and to effectuate the purposes set forth in Section 3.1, including, without
limitation:
(1) the making of any expenditures, the
lending or borrowing of money (including,
without limitation, making prepayments on
loans and borrowing money to permit the
Partnership to make distributions to its
Partners in such amounts as are required
under Section 5.1.E or will permit the
General Partner Entity (so long as the
General Partner Entity qualifies as REIT)
to avoid the payment of any federal income
tax (including, for this purpose, any
excise tax pursuant to Section 4981 of the
Code) and to make distributions to its
shareholders sufficient to permit the
General Partner Entity to maintain REIT
status), the assumption or guarantee of,
or other contracting for, indebtedness and
other liabilities, the issuance of
evidences of indebtedness (including the
securing of same by mortgage, deed of
trust or other lien or encumbrance on the
Partnership's assets) and the incurring of
any obligations the General Partner Entity
deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other
filings, or rendering of periodic or other
reports to governmental or other agencies
having jurisdiction over the business or
assets of the Partnership;
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or
exchange of any or all of the assets of
the Partnership (including the exercise or
grant of any conversion, option, privilege
or subscription right or other right
available in connection with any assets at
any time held by the Partnership) or the
merger or other combination of the
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Partnership with or into another entity on
such terms as the General Partner deems
proper;
(4) the use of the assets of the Partnership
(including, without limitation, cash on
hand) for any purpose consistent with the
terms of this Agreement and on any terms
it sees fit, including, without
limitation, the financing of the conduct
of the operations of the General Partner,
the Partnership or any of the
Partnership's Subsidiaries, the lending of
funds to other Persons (including, without
limitation, the Partnership's
Subsidiaries) and the repayment of
obligations of the Partnership and its
Subsidiaries and any other Person in which
the Partnership has an equity investment
and the making of capital contributions to
its Subsidiaries;
(5) the management, operation, leasing,
landscaping, repair, alteration,
demolition or improvement of any real
property or improvements owned by the
Partnership or any Subsidiary of the
Partnership or any Person in which the
Partnership has made a direct or indirect
equity investment;
(6) the negotiation, execution, and
performance of any contracts, conveyances
or other instruments that the General
Partner considers useful or necessary to
the conduct of the Partnership's
operations or the implementation of the
General Partner's powers under this
Agreement, including contracting with
contractors, developers, consultants,
accountants, legal counsel, other
professional advisors and other agents and
the payment of their expenses and
compensation out of the Partnership's
assets;
(7) the mortgage, pledge, encumbrance or
hypothecation of any assets of the
Partnership, and the use of the assets of
the Partnership (including, without
limitation, cash on hand) for any purpose
consistent with the terms of this
Agreement and on any terms it sees fit,
including, without limitation, the
financing of the conduct or the operations
of the General Partner or the Partnership,
the lending of funds to other Persons
(including, without limitation, any
Subsidiaries of the Partnership) and the
repayment of obligations of the
Partnership, any of its Subsidiaries and
any other Person in which it has an equity
investment;
(8) the distribution of Partnership cash or
other Partnership assets in accordance
with this Agreement;
(9) the holding, managing, investing and
reinvesting of cash and other assets of
the Partnership;
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(10) the collection and receipt of revenues and
income of the Partnership;
(11) the selection, designation of powers,
authority and duties and the dismal of
employees of the Partnership (including,
without limitation, employees having
titles such as "president," "vice
president," "secretary" and "treasurer")
and agents, outside attorneys,
accountants, consultants and contractors
of the Partnership and the determination
of their compensation and other terms of
employment or hiring;
(12) the maintenance of such insurance for the
benefit of the Partnership and the
Partners as it deems necessary or
appropriate;
(13) the formation of, or acquisition of an
interest (including non-voting interests
in entities controlled by Affiliates of
the Partnership or third parties) in, and
the contribution of property to, any
further limited or general partnerships,
joint ventures, limited liability
companies or other relationships that it
deems desirable (including, without
limitation, the acquisition of interests
in, and the contributions of funds or
property to, or making of loans to, its
Subsidiaries and any other Person in which
it has an equity investment from time to
time, or the incurrence of indebtedness on
behalf of such Persons or the guarantee of
the obligations of such Persons); provided
that, as long as the General Partner has
determined to continue to qualify as a
REIT, the Partnership may not engage in
any such formation, acquisition or
contribution that would cause the General
Partner to fail to qualify as a REIT;
(14) the control of any matters affecting the
rights and obligations of the Partnership,
including the settlement, compromise,
submission to arbitration or any other
form of dispute resolution or abandonment
of any claim, cause of action, liability,
debt or damages due or owing to or from
the Partnership, the commencement or
defense of suits, legal proceedings,
administrative proceedings, arbitrations
or other forms of dispute resolution, the
representation of the Partnership in all
suits or legal proceedings, administrative
proceedings, arbitrations or other forms
of dispute resolution, the incurring of
legal expense and the indemnification of
any Person against liabilities and
contingencies to the extent permitted by
law;
(15) the determination of the fair market value
of any Partnership property distributed in
kind, using such reasonable method of
valuation as the General Partner may
adopt;
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(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under
a general or limited power of attorney, of
any right, including the right to vote,
appurtenant to any assets or investment
held by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this
Agreement on behalf of or in connection
with any Subsidiary of the Partnership or
any other Person in which the Partnership
has a direct or indirect interest,
individually or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this
Agreement on behalf of any Person in which
the Partnership does not have any interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering of
any and all deeds, leases, notes, deeds to
secure debt, mortgages, deeds of trust,
security agreements, conveyances,
contracts, guarantees, warranties,
indemnities, waivers, releases or other
legal instruments or agreements in writing
necessary or appropriate in the judgment
of the General Partner for the
accomplishment of any of the powers of the
General Partner enumerated in this
Agreement;
(20) the distribution of cash to acquire
Partnership Units held by a Limited
Partner in connection with a Limited
Partner's exercise of its Redemption Right
under Section 8.6;
(21) the amendment and restatement of Exhibit A
to reflect accurately at all times the
Capital Contributions and Percentage
Interests of the Partners as the same are
adjusted from time to time to the extent
necessary to reflect redemptions, Capital
Contributions, the issuance of Partnership
Units, the admission of any Additional
Limited Partner or any Substituted Limited
Partner or otherwise, which amendment and
restatement, notwithstanding anything in
this Agreement to the contrary, shall not
be deemed an amendment of this Agreement,
as long as the matter or event being
reflected in Exhibit A otherwise is
authorized by this Agreement; and
(22) the acceptance on behalf of the
Partnership of any Deficit Restoration
Obligation Agreement made by any Partner,
and the amendment and restatement of
Exhibit G to reflect accurately at all
times the names of the Partners who have
made one or more Deficit Restoration
Agreements which have been accepted by the
Partnership and the aggregate amounts
obligated by such Partners pursuant to
such Deficit Restoration Agreements, which
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amendment and restatement, notwithstanding
anything in this Agreement to the contrary,
shall not be deemed an amendment of this
Agreement.
B. No Approval by Limited Partners. Except as provided in
Section 7.11, each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement,
the Act or any applicable law, rule or regulation, to the full extent
permitted under the Act or other applicable law. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement
or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date hereof,
the General Partner may cause the Partnership to obtain and maintain (i)
casualty, liability and other insurance on the properties of the Partnership
and (ii) liability insurance for the Indemnitees hereunder and (iii) such
other insurance as the General Partner, in its sole and absolute discretion,
determines to be necessary.
D. Working Capital and Other Reserves. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time, including upon liquidation of the Partnership under Article
XIII.
E. No Obligation to Consider Tax Consequences of Limited
Partners. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action
taken (or not taken) by any of them. The General Partner and the Partnership
shall not have liability to a Limited Partner for monetary damages or
otherwise for losses sustained, liabilities incurred or benefits not derived
by such Limited Partner in connection with such decisions, provided that the
General Partner has acted in good faith and pursuant to its authority under
this Agreement.
Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate
with the Secretary of State of Delaware. To the extent that such action is
determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, the
District of Columbia or other jurisdiction in which the Partnership may elect
to do business or own property. Subject to the terms of Section 8.5.A(4), the
General Partner shall not be required, before or after filing, to deliver or
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mail a copy of the Certificate or any amendment thereto to any Limited
Partner. The General Partner shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be reasonable and necessary
or appropriate for the formation, continuation, qualification and operation of
a limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and any other state, the District
of Columbia or other jurisdiction in which the Partnership may elect to do
business or own property.
Section 7.3 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partners, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrant that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by that entity for the use and
benefit of the Partnership in accordance with the provisions of this
Agreement. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
Section 7.4 Reimbursement of the General Partner
A. No Compensation. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations.
The General Partner shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the ownership and operation
of, or for the benefit of, the Partnership (including, without limitation,
expenses related to the operations of the General Partner and to the
management and administration of any Subsidiaries of the General Partner or
the Partnership or Affiliates of the Partnership, such as auditing expenses
and filing fees); provided that, the amount of any such reimbursement shall be
reduced by (i) any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it on behalf of the
Partnership as permitted in Section 7.5.A (which interest is considered to
belong to the Partnership and shall be paid over to the Partnership to the
extent not applied to reimburse the General Partner for expenses hereunder);
and (ii) any amount derived by the General Partner from any investments
permitted in Section 7.5.A. The General Partner shall determine in good faith
the amount of expenses incurred by it related to the ownership and operation
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of, or for the benefit of, the Partnership. If certain expenses are incurred
for the benefit of the Partnership and other entities (including the General
Partner), such expenses will be allocated to the Partnership and such other
entities in such a manner as the General Partner in its sole and absolute
discretion deems fair and reasonable. Such reimbursements shall be in addition
to any reimbursement to the General Partner pursuant to Section 10.3.C and as
a result of indemnification pursuant to Section 7.7. All payments and
reimbursements hereunder shall be characterized for federal income tax
purposes as expenses of the Partnership incurred on its behalf, and not as
expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General
Partner shall also be reimbursed for all expenses it incurs relating to any
issuance of Partnership Interests, Shares, Debt of the Partnership or the
General Partner or rights, options, warrants or convertible or exchangeable
securities pursuant to Article IV (including, without limitation, all costs,
expenses, damages and other payments resulting from or arising in connection
with litigation related to any of the foregoing), all of which expenses are
considered by the Partners to constitute expenses of, and for the benefit of,
the Partnership.
D. Purchases of Shares by the General Partner. If the
General Partner exercises its rights under the Declaration of Trust to
purchase Shares or otherwise elects to purchase from its shareholders Shares
in connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend
reinvestment or equity purchase program adopted by the General Partner, any
employee equity purchase plan adopted by the General Partner or any similar
obligation or arrangement undertaken by the General Partner in the future, the
purchase price paid by the General Partner for those Shares and any other
expenses incurred by the General Partner in connection with such purchase
shall be considered expenses of the Partnership and shall be reimbursable to
the General Partner, subject to the conditions that: (i) if those Shares
subsequently are to be sold by the General Partner, the General Partner shall
pay to the Partnership any proceeds received by the General Partner for those
Shares (provided that a transfer of Shares for Partnership Units pursuant to
Section 8.6 would not be considered a sale for such purposes); and (ii) if
such Shares are not retransferred by the General Partner within thirty (30)
days after the purchase thereof, the General Partner shall cause the
Partnership to cancel a number of Partnership Units (rounded to the nearest
whole Partnership Unit) held by the General Partner equal to the product
attained by multiplying the number of those Shares by a fraction, the
numerator of which is one and the denominator of which is the Conversion
Factor.
E. Reimbursement not a Distribution. If and to the extent
any reimbursement made pursuant to this Section 7.4 is determined for federal
income tax purposes not to constitute a payment of expenses of the
Partnership, the amount so determined shall constitute a guaranteed payment
with respect to capital within the meaning of Section 707(c) of the Code,
shall be treated consistently therewith by the Partnership and all Partners
and shall not be treated as a distribution for purposes of computing the
Partners' Capital Accounts.
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Section 7.5 Outside Activities of the General Partner; Relationship
of Shares to Partnership Units; Funding Debt
A. General. Without the Consent of the Outside Limited
Partners, the General Partner shall not, directly or indirectly, enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests as a General Partner or Limited
Partner and the management of the business of the Partnership and such
activities as are incidental thereto. Without the Consent of the Outside
Limited Partners, the assets of the General Partner shall be limited to
Partnership Interests and permitted debt obligations of the Partnership (as
contemplated by Section 7.5.F), so that Shares and Partnership Units are
completely fungible except as otherwise specifically provided herein;
provided, that the General Partner shall be permitted to hold such bank
accounts or similar instruments or accounts in its name as it deems necessary
to carry out its responsibilities and purposes as contemplated under this
Agreement and its organizational documents (provided that accounts held on
behalf of the Partnership to permit the General Partner to carry out its
responsibilities under this Agreement shall be considered to belong to the
Partnership and the interest earned thereon shall, subject to Section 7.4.B,
be applied for the benefit of the Partnership); and, provided further, that
the General Partner shall be permitted to acquire, directly or through a
Qualified REIT Subsidiary or limited liability company, up to a one percent
(1%) interest in any partnership or limited liability company at least
ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership. The General Partner and any of its Affiliates
may acquire Limited Partnership Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partnership
Interests.
B. Repurchase of Shares. If the General Partner exercises
its rights under the Declaration of Trust to purchase Shares or otherwise
elects to purchase from its shareholders Shares in connection with a share
repurchase or similar program or for the purpose of delivering such shares to
satisfy an obligation under any dividend reinvestment or share purchase
program adopted by the General Partner, any employee share purchase plan
adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, then the General Partner
shall cause the Partnership to purchase from the General Partner that number
of Partnership Units of the appropriate class equal to the product obtained by
multiplying the number of Shares purchased by the General Partner times a
fraction, the numerator of which is one and the denominator of which is the
Conversion Factor, on the same terms and for the same aggregate price that the
General Partner purchased such Shares.
C. Forfeiture of Shares. If the Partnership or the General
Partner acquires Shares as a result of the forfeiture of such Shares under a
restricted or similar share plan, then the General Partner shall cause the
Partnership to cancel that number of Partnership Units equal to the number of
Shares so acquired, and, if the Partnership acquired such Shares, it shall
transfer such Shares to the General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the
General Partner shall not grant, award, or issue any additional Shares (other
than Shares issued pursuant to Section 8.6 hereof or pursuant to a dividend or
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distribution (including any share split) of Shares to all of its
shareholders), other equity securities of the General Partner, New Securities
or Convertible Funding Debt unless (i) the General Partner shall cause,
pursuant to Section 4.2.A hereof, the Partnership to issue to the General
Partner Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences
and other rights, all such that the economic interests are substantially the
same as those of such additional Shares, other equity securities, New
Securities or Convertible Funding Debt, as the case may be, and (ii) the
General Partner transfers to the Partnership, as an additional Capital
Contribution, the proceeds from the grant, award, or issuance of such
additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be, or from the exercise of rights contained in
such additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be. Without limiting the foregoing, the General
Partner is expressly authorized to issue additional Shares, other equity
securities, New Securities or Convertible Funding Debt, as the case may be,
for less than fair market value, and the General Partner is expressly
authorized, pursuant to Section 4.2.A hereof, to cause the Partnership to
issue to the General Partner corresponding Partnership Interests, as long as
(a) the General Partner concludes in good faith that such issuance is in the
interests of the General Partner and the Partnership (for example, and not by
way of limitation, the issuance of Shares and corresponding Partnership Units
pursuant to a share purchase plan providing for purchases of Shares, either by
employees or shareholders, at a discount from fair market value or pursuant to
employee share options that have an exercise price that is less than the fair
market value of the Shares, either at the time of issuance or at the time of
exercise) and (b) the General Partner transfers all proceeds from any such
issuance or exercise to the Partnership as an additional Capital Contribution.
E. Share Option Plan. If at any time or from time to time,
the General Partner sells Shares pursuant to any Share Option Plan, the
General Partner shall transfer the net proceeds of the sale of such Shares to
the Partnership as an additional Capital Contribution in exchange for an
amount of additional Partnership Units equal to the number of Shares so sold
divided by the Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding
Debt, including, without limitation, a Funding Debt that is convertible into
Shares or otherwise constitutes a class of New Securities ("Convertible
Funding Debt"), subject to the condition that the General Partner lend to the
Partnership the net proceeds of such Funding Debt; provided, that Convertible
Funding Debt shall be issued pursuant to Section 7.5.D above; and, provided
further, that the General Partner shall not be obligated to lend the net
proceeds of any Funding Debt to the Partnership in a manner that would be
inconsistent with the General Partner's ability to remain qualified as a REIT.
If the General Partner enters into any Funding Debt, the loan to the
Partnership shall be on comparable terms and conditions, including interest
rate, repayment schedule and costs and expenses, as are applicable with
respect to or incurred in connection with such Funding Debt.
Section 7.6 Transactions with Affiliates
A. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or
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indirectly, sell, transfer or convey any property to, or purchase any property
from, or borrow funds from, or lend funds to, any Partner or any Affiliate of
the Partnership or the General Partner that is not also a Subsidiary of the
Partnership, except pursuant to transactions that are on terms that are fair
and reasonable and no less favorable to the Partnership than would be obtained
from an unaffiliated third party.
B. Conflict Avoidance. The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, a
right of first opportunity arrangement and other conflict avoidance agreements
with various Affiliates of the Partnership and the General Partner on such
terms as the General Partner, in its sole and absolute discretion, believes is
advisable.
C. Benefit Plans Sponsored by the Partnership. The General
Partner, in its sole and absolute discretion and without the approval of the
Limited Partners, may propose and adopt on behalf of the Partnership employee
benefit plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them.
Section 7.7 Indemnification
A. General. The Partnership shall indemnify each Indemnitee
to the fullest extent provided by the Act from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorneys fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from or in connection with any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, incurred by the Indemnitee and relating to
the Partnership or the General Partner or the operation of, or the ownership
of property by, any of them as set forth in this Agreement in which any such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed
in bad faith or was the result of active and deliberate dishonesty, (ii) the
Indemnitee actually received an improper personal benefit in money, property
or services or (iii) in the case of any criminal proceeding, the Indemnitee
had reasonable cause to believe that the act or omission was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guarantee, contractual obligation for any
indebtedness or other obligation or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into
one or more indemnity agreements consistent with the provisions of this
Section 7.7 in favor of any Indemnitee having or potentially having liability
for any such indebtedness. The termination of any proceeding by judgment,
order or settlement does not create a presumption that the Indemnitee did not
meet the requisite standard of conduct set forth in this Section 7.7.A. The
termination of any proceeding by conviction or upon a plea of nolo contendere
or its equivalent, or an entry of an order of probation prior to judgment,
creates a rebuttable presumption that the Indemnitee acted in a manner
contrary to that specified in this Section 7.7.A with respect to the subject
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matter of such proceeding. Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Partnership, and any insurance
proceeds from the liability policy covering the General Partner and any
Indemnitee, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership or otherwise
provide funds to enable the Partnership to fund its obligations under this
Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to
be incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Partnership
as authorized in this Section 7.7.A has been met and (ii) a written
undertaking by or on behalf of the Indemnitee to repay the amount if it shall
ultimately be determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification provided by
this Section 7.7 shall be in addition to any other rights to which an
Indemnitee or any other Person may be entitled under any agreement, pursuant
to any vote of the Partners, as a matter of law or otherwise, and shall
continue as to an Indemnitee who has ceased to serve in such capacity unless
otherwise provided in a written agreement pursuant to which such Indemnitee is
indemnified.
D. Insurance. The Partnership may purchase and maintain
insurance on behalf of the Indemnitees and such other Persons as the General
Partner shall determine against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7,
(i) excise taxes assessed on an Indemnitee, or for which the Indemnitee is
otherwise found liable, in connection with an ERISA Plan Investor pursuant to
applicable law shall constitute fines within the meaning of this Section 7.7
and (ii) actions taken or omitted by the Indemnitee in connection with an
ERISA Plan Investor in the performance of its duties shall be deemed to be for
a purpose which is not opposed to the best interests of the Partnership.
F. No Personal Liability for Limited Partners. In no event
may an Indemnitee subject any of the Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be
denied indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement.
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H. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their employees, officers, directors, trustees,
heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons. Any amendment,
modification or repeal of this Section 7.7, or any provision hereof, shall be
prospective only and shall not in any way affect the limitation on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or related to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
I. Indemnification Payments Not Distributions. If and to the
extent any payments to the General Partner pursuant to this Section 7.7
constitute gross income to the General Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners'
Capital Accounts.
J. Exception to Indemnification. Notwithstanding anything to
the contrary in this Agreement, the General Partner shall not be entitled to
indemnification hereunder for any loss, claim, damage, liability or expense
for which the General Partner is obligated to indemnify the Partnership under
any other agreement between the General Partner and the Partnership.
Section 7.8 Liability of the General Partner
A. General. Notwithstanding anything to the contrary set
forth in this Agreement, the General Partner shall not be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses
sustained, liabilities incurred or benefits not derived as a result of errors
in judgment or mistakes of fact or law or of any act or omission unless the
General Partner acted in bad faith and the act or omission was material to the
matter giving rise to the loss, liability or benefit not derived.
B. No Obligation to Consider Separate Interests of Limited
Partners or Shareholders. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, that the General
Partner is under no obligation to consider the separate interests of the
Limited Partners (including, without limitation, the tax consequences to
Limited Partners or Assignees) in deciding whether to cause the Partnership to
take (or decline to take) any actions, and that the General Partner shall not
be liable for monetary damages for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and duties
as General Partner set forth in Section 7.1.A, the General Partner may
exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner in
good faith.
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D. Effect of Amendment. Notwithstanding any other provision
contained herein, any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may consult
with legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisers selected by it, and any
act taken or omitted to be taken in reliance upon the opinion of such Persons
as to matters which the General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively presumed to
have been done or omitted in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act
through any of its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be
done by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the
General Partner Entity. Notwithstanding any other provisions of this Agreement
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission
is necessary or advisable in order (i) to protect the ability of the General
Partner Entity to continue to qualify as a REIT or (ii) to allow the General
Partner Entity to avoid incurring any liability for taxes under Section 857 or
4981 of the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
Section 7.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval of
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any other Partner or Person, to encumber, sell or otherwise use in any manner
any and all assets of the Partnership, to enter into any contracts on behalf
of the Partnership and to take any and all actions on behalf of the
Partnership, and such Person shall be entitled to deal with the General
Partner as if the General Partner were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives
any and all defenses or other remedies which may be available against such
Person to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with
the General Partner or its representatives be obligated to ascertain that the
terms of this Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the General Partner or its
representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was
in full force and effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do so
for and on behalf of the Partnership, and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
Section 7.11 Restrictions on General Partner's Authority
A. Consent Required. The General Partner may not take any
action in contravention of an express prohibition or limitation of this
Agreement without the written Consent of (i) all Partners adversely affected
or (ii) such lower percentage of the Limited Partnership Interests as may be
specifically provided for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided
in Article XIII, the General Partner may not, directly or indirectly, cause
the Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions (including by way of merger (including a
triangular merger), consolidation or other combination with any other Persons)
(i) if such merger, sale or other transaction is in connection with a
Termination Transaction permitted under Section 11.2.B hereof, without the
Consent of the Partners holding at least a majority of the then outstanding
Partnership Units (including any Partnership Units held by the General
Partner), or (ii) otherwise, without the Consent of the Outside Limited
Partners; provided, that the General Partner may cause the Partnership to
enter into the Credit Agreement as of the Effective Date and to execute such
transactions in connection therewith (including a transfer of Partnership
property pursuant to a mortgage or deed of trust, a pledge agreement or any
similar security agreement) as the General Partner deems appropriate in its
sole discretion.
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Section 7.12 Loans by Third Parties
The Partnership may incur Debt, or enter into similar
credit, guarantee, financing or refinancing arrangements for any purpose
(including, without limitation, in connection with any acquisition of
property) with any Person that is not the General Partner upon such terms as
the General Partner determines appropriate; provided that, except for Debt
incurred by the General Partner in connection with the Credit Agreement, the
Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by such General Partner in its sole
discretion.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement, including Section
10.5 and Section 13.3, or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, partner,
agent or trustee of the General Partner, the Partnership or any of their
Affiliates, in their capacity as such) shall take part in the operation,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to Section 7.5 hereof, and subject to any agreements
entered into pursuant to Section 7.6.C hereof and to any other agreements
entered into by a Limited Partner or its Affiliates with the Partnership or a
Subsidiary, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct or indirect
competition with the Partnership. Neither the Partnership nor any Partners
shall have any rights by virtue of this Agreement in any business ventures of
any Limited Partner or Assignee. None of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any business ventures of any other Person
(other than the General Partner to the extent expressly provided herein), and
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such Person (other than the General Partner) shall have no obligation pursuant
to this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in
Section 8.6, no Limited Partner shall be entitled to the withdrawal or return
of its Capital Contribution, except to the extent of distributions made
pursuant to this Agreement or upon termination of the Partnership as provided
herein. No Limited Partner or Assignee shall have priority over any other
Limited Partner or Assignee either as to the return of Capital Contributions
(except as permitted by Section 4.2.A) or, except to the extent provided by
Exhibit C or as permitted by Sections 4.2.A, 5.1.B(i), 6.1.A(ii) and 6.1.B(i),
or otherwise expressly provided in this Agreement, as to profits, losses,
distributions or credits.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written
demand with a statement of the purpose of such demand and at such Limited
Partner's own expense:
(1) to obtain a copy of the most recent annual
and quarterly reports filed with the
Securities and Exchange Commission by the
General Partner Entity pursuant to the
Exchange Act;
(2) to obtain a copy of the Partnership's
federal, state and local income tax
returns for each Partnership Year;
(3) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto,
together with executed copies of all
powers of attorney pursuant to which this
Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information
regarding the amount of cash and a
description and statement of any other
property or services contributed by each
Partner and which each Partner has agreed
to contribute in the future, and the date
on which each became a Partner.
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B. Notice of Conversion Factor. The Partnership shall notify
each Limited Partner upon request of the then current Conversion Factor and
any changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General
Partner Entity. The General Partner Entity shall not make any extraordinary
distributions of cash or property to its shareholders or effect a merger
(including, without limitation, a triangular merger), a sale of all or
substantially all of its assets or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such merger, sale or other extraordinary transaction at
least twenty (20) Business Days prior to the record date to determine
shareholders eligible to receive such distribution or to vote upon the
approval of such merger, sale or other extraordinary transaction (or, if no
such record date is applicable, at least twenty (20) business days before
consummation of such merger, sale or other extraordinary transaction). This
provision for such notice shall not be deemed (i) to permit any transaction
that otherwise is prohibited by this Agreement or requires a Consent of the
Partners or (ii) to require a Consent of the Limited Partners to a transaction
that does not otherwise require Consent under this Agreement. Each Limited
Partner agrees, as a condition to the receipt of the notice pursuant hereto,
to keep confidential the information set forth therein until such time as the
General Partner Entity has made public disclosure thereof and to use such
information during such period of confidentiality solely for purposes of
determining whether to exercise the Redemption Right; provided, however, that
a Limited Partner may disclose such information to its attorney, accountant
and/or financial advisor for purposes of obtaining advice with respect to such
exercise so long as such attorney, accountant and/or financial advisor agrees
to receive and hold such information subject to this confidentiality
requirement.
D. Confidentiality. Notwithstanding any other provision of
this Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its
sole and absolute discretion to be reasonable, any information that (i) the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. General. (i) Subject to Section 8.6.C, at any time on or
after fourteen months following the closing of the initial public offering of
Shares by the General Partner, the holder of a Partnership Unit (if other than
the General Partner or the General Partner Entity or any Subsidiary of either
the General Partner or the General Partner Entity) shall have the right (the
"Redemption Right") to require the Partnership to redeem such Partnership
Unit, with such redemption to occur on the Specified Redemption Date and at a
redemption price equal to and in the form of the Cash Amount to be paid by the
Partnership. Any such Redemption Right shall be exercised pursuant to a Notice
of Redemption delivered to the Partnership (with a copy to the General
Partner) by the Limited Partner who is exercising the Redemption Right (the
"Redeeming Partner"). A Limited Partner may exercise the Redemption Right from
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time to time, without limitation as to frequency, with respect to part or all
of the Units that it owns, as selected by the Limited Partner, provided that a
Limited Partner may not exercise the Redemption Right for less than one
thousand (1,000) Partnership Units unless such Redeeming Partner then holds
less than one thousand (1,000) Partnership Units, in which event the Redeeming
Partner must exercise the Redemption Right for all of the Partnership Units
held by such Redeeming Partner, and provided further that, with respect to a
Limited Partner which is an entity, such a Limited Partner may exercise the
Redemption Right for less than one thousand (1,000) Partnership Units without
regard to whether or not such Limited Partner is exercising the Redemption
Right for all of the Partnership Units held by such Limited Partner as long as
such Limited Partner is exercising the Redemption Right on behalf of one or
more of its equity owners in respect of one hundred percent (100%) of such
equity owners' interests in such Limited Partner.
(ii) The Redeeming Partner shall have no
right with respect to any Partnership Units so redeemed to receive any
distributions paid after the Specified Redemption Date with respect to such
Partnership Units.
(iii) The Assignee of any Limited Partner may
exercise the rights of such Limited Partner pursuant to this Section 8.6, and
such Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Limited
Partner's Assignee. In connection with any exercise of such rights by such
Assignee on behalf of such Limited Partner, the Cash Amount shall be paid by
the Partnership directly to such Assignee and not to such Limited Partner.
(iv) If the General Partner provides notice to the
Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall
be exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the date
on which the General Partner provides such notice and ending on the record
date to determine shareholders eligible to receive such distribution or to
vote upon the approval of such merger, sale or other extraordinary transaction
(or, if no such record date is applicable, at least twenty (20) business days
before the consummation of such merger, sale or other extraordinary
transaction). If this subparagraph (iv) applies, the Specified Redemption Date
is the date on which the Partnership and the General Partner receive notice of
exercise of the Redemption Right, rather than ten (10) Business Days after
receipt of the notice of redemption.
(v) Notwithstanding anything contained herein to the
contrary, the Partners hereby agree that immediately following the
recapitalization of the Partnership as provided in Section 4.1 hereof, Edward
B. Romanov, Jr. and Michael R. Walker shall be permitted to redeem certain
Partnership Units which they will own as of the Effective Time for Shares on a
one-for-one basis, as provided in the section captioned "Formation
Transactions" in the final prospectus of the General Partner in connection
with the initial public offering of the Shares.
B. General Partner Assumption of Right. (i) If a Limited
Partner has delivered a Notice of Redemption, the General Partner may, in its
sole and absolute discretion (subject to the limitations on ownership and
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transfer of Shares set forth in the Declaration of Trust), elect to assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner
either the Cash Amount or the Shares Amount, as the General Partner determines
in its sole and absolute discretion (provided that payment of the Redemption
Amount in the form of Shares shall be in Shares registered for resale under
Section 12 of the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded, and provided further
that, if the Shares are not Publicly Traded at the time a Redeeming Partner
exercises its Redemption Right, the Redemption Amount shall be paid only in
the form of the Cash Amount unless the Redeeming Partner, in its sole and
absolute discretion, consents to payment of the Redemption Amount in the form
of the Shares Amount), on the Specified Redemption Date, whereupon the General
Partner shall acquire the Partnership Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement as
the owner of such Partnership Units. Unless the General Partner, in its sole
and absolute discretion, shall exercise its right to assume directly and
satisfy the Redemption Right, the General Partner shall not have any
obligation to the Redeeming Partner or to the Partnership with respect to the
Redeeming Partner's exercise of the Redemption Right. If the General Partner
shall exercise its right to satisfy the Redemption Right in the manner
described in the first sentence of this Section 8.6.B and shall fully perform
its obligations in connection therewith, the Partnership shall have no right
or obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership and the General Partner shall, for federal
income tax purposes, treat the transaction between the General Partner and the
Redeeming Partner as a sale of the Redeeming Partner's Partnership Units to
the General Partner. Nothing contained in this Section 8.6.B shall imply any
right of the General Partner to require any Limited Partner to exercise the
Redemption Right afforded to such Limited Partner pursuant to Section 8.6.A.
(ii) If the General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total
number of Shares to be paid to the Redeeming Partner in exchange for the
Redeeming Partner's Partnership Units shall be the applicable Shares Amount.
If this amount is not a whole number of Shares, the Redeeming Partner shall be
paid (i) that number of Shares which equals the nearest whole number less than
such amount plus (ii) an amount of cash which the General Partner determines,
in its reasonable discretion, to represent the fair value of the remaining
fractional Share which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute
such documents as the General Partner may reasonably require in connection
with the issuance of Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right.
Notwithstanding the provisions of Sections 8.6.A and 8.6.B, a Partner shall
not be entitled to exercise the Redemption Right pursuant to Section 8.6.A if
(but only as long as) the delivery of Shares to such Partner on the Specified
Redemption Date (i) would be prohibited under the Declaration of Trust or (ii)
would be prohibited under applicable federal or state securities laws or
regulations (in each case regardless of whether the General Partner would in
fact assume and satisfy the Redemption Right).
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D. No Liens on Partnership Units Delivered for Redemption.
Each Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
liens, and, notwithstanding anything contained herein to the contrary, neither
the General Partner nor the Partnership shall be under any obligation to
acquire Partnership Units which are or may be subject to any liens. Each
Limited Partner further agrees that, if any state or local property transfer
tax is payable as a result of the transfer of its Partnership Units to the
Partnership or the General Partner, such Limited Partner shall assume and pay
such transfer tax.
E. Additional Partnership Interests. If the Partnership
issues Partnership Interests to any Additional Limited Partner pursuant to
Article IV, the General Partner shall make such revisions to this Section 8.6
as it determines are necessary to reflect the issuance of such Partnership
Interests (including setting forth any restrictions on the exercise of the
Redemption Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including, without limitation, all books and
records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 9.3. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written
form within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar
year.
Section 9.3 Reports
A. Annual Reports. As soon as practicable, but in no event
later than the date on which the General Partner Entity mails its annual
report to its shareholders, the General Partner Entity shall cause to be
mailed to each Limited Partner an annual report, as of the close of the most
recently ended Partnership Year, containing financial statements of the
Partnership, or of the General Partner Entity if such statements are prepared
solely on a consolidated basis with the Partnership, for such Partnership
Year, presented in accordance with generally accepted accounting principles,
such statements to be audited by a nationally recognized firm of independent
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public accountants selected by the General Partner Entity.
B. Quarterly Reports. If and to the extent that the General
Partner Entity mails quarterly reports to its shareholders, as soon as
practicable, but in no event later than the date on such reports are mailed,
the General Partner Entity shall cause to be mailed to each Limited Partner a
report containing unaudited financial statements, as of the last day of such
calendar quarter, of the Partnership, or of the General Partner Entity if such
statements are prepared solely on a consolidated basis with the Partnership,
and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing of all returns of Partnership income, gains, deductions, losses
and other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably
required by Limited Partners for federal and state income tax reporting
purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code (including, without limitation, the
election under Section 754 of the Code). The General Partner shall have the
right to seek to revoke any such election upon the General Partner's
determination in its sole and absolute discretion that such revocation is in
the best interests of the Partners.
Section 10.3 Tax Matters Partner
A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to
Section 6223(c)(3) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership, the
tax matters partner shall furnish the IRS with the name, address, tax payer
identification number and profit interest of each of the Limited Partners and
any Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners.
B. Powers. The tax matters partner is authorized, but
not required:
(1) to enter into any settlement with the IRS
with respect to any administrative or
judicial proceedings for the adjustment of
Partnership items required to be taken
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into account by a Partner for income tax
purposes (such administrative proceedings
being referred to as a "tax audit" and such
judicial proceedings being referred to as
"judicial review"), and in the settlement
agreement the tax matters partner may
expressly state that such agreement shall
bind all Partners, except that such
settlement agreement shall not bind any
Partner (i) who (within the time prescribed
pursuant to the Code and Regulations) files
a statement with the IRS providing that the
tax matters partner shall not have the
authority to enter into a settlement
agreement on behalf of such Partner or (ii)
who is a "notice partner" (as defined in
Section 6231(a)(8) of the Code) or a member
of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(2) if a notice of a final administrative
adjustment at the Partnership level of any
item required to be taken into account by
a Partner for tax purposes (a "final
adjustment") is mailed to the tax matters
partner, to seek judicial review of such
final adjustment, including the filing of
a petition for readjustment with the Tax
Court or the filing of a complaint for
refund with the United States Claims Court
or the District Court of the United States
for the district in which the
Partnership's principal place of business
is located;
(3) to intervene in any action brought by any
other Partner for judicial review of a
final adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and,
if any part of such request is not allowed
by the IRS, to file an appropriate
pleading (petition or complaint) for
judicial review with respect to such
request;
(5) to enter into an agreement with the IRS to
extend the period for assessing any tax
which is attributable to any item required
to be taken into account by a Partner for
tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the
Partners of the Partnership in connection
with any tax audit or judicial review
proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 shall be fully applicable to the tax
matters partner in its capacity as such.
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C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an
accounting firm and/or law firm to assist the tax matters partner in
discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a sixty (60) month
period as provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Section 1441, 1442, 1445 or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from
the General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to
the Limited Partner or (ii) the General Partner determines, in its sole and
absolute discretion, that such payment may be satisfied out of the available
funds of the Partnership which would, but for such payment, be distributed to
the Limited Partner. Any amounts withheld pursuant to the foregoing clauses
(i) or (ii) shall be treated as having been distributed to such Limited
Partner. Each Limited Partner hereby unconditionally and irrevocably grants to
the Partnership a security interest in such Limited Partner's Partnership
Interest to secure such Limited Partner's obligation to pay to the Partnership
any amounts required to be paid pursuant to this Section 10.5. If a Limited
Partner fails to pay any amounts owed to the Partnership pursuant to this
Section 10.5 when due, the General Partner may, in its sole and absolute
discretion, elect to make the payment to the Partnership on behalf of such
defaulting Limited Partner, and in such event shall be deemed to have loaned
such amount to such defaulting Limited Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Limited Partner
(including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the base
rate on corporate loans at large United States money center commercial banks,
as published from time to time in The Wall Street Journal, plus four (4)
percentage points (but not higher than the maximum lawful rate under the laws
of the Commonwealth of Pennsylvania) from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each
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Limited Partner shall take such actions as the Partnership or the General
Partner shall request to perfect or enforce the security interest created
hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The term "transfer," when used in this
Article XI with respect to a Partnership Interest or a Partnership Unit, shall
be deemed to refer to a transaction by which a General Partner purports to
assign all or any part of its General Partnership Interest to another Person
or by which a Limited Partner purports to assign all or any part of its
Limited Partnership Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or
any other disposition by law or otherwise. The term "transfer" when used in
this Article XI does not include any redemption or repurchase of Partnership
Units by the Partnership from a Partner or acquisition of Partnership Units
from a Limited Partner by the General Partner pursuant to Section 8.6 or
otherwise. No part of the interest of a Limited Partner shall be subject to
the claims of any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
B. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article XI. Any transfer or purported transfer of a Partnership
Interest not made in accordance with this Article XI shall be null and void.
Section 11.2 Transfers of Partnership Interests of General Partner
A. The General Partner may not transfer any of its
Partnership Interest (including both its General Partnership Interest and its
Limited Partnership Interest) except in connection with a transaction
described in Section 11.2.B, as permitted pursuant to Section 11.2.C or as
otherwise expressly permitted under this Agreement, nor shall the General
Partner withdraw as General Partner except in connection with a transaction
described in Section 11.2.B.
B. The General Partner shall not engage in any merger
(including a triangular merger), consolidation or other combination with or
into another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of outstanding Shares (other than
a change in par value, or from par value to no par value, or as a result of a
subdivision or combination as described in the definition of "Conversion
Factor") ("Termination Transaction"), unless the Termination Transaction has
been approved by the Consent of the Partners holding at least a majority of
the then outstanding Partnership Units (including any Partnership Units held
by the General Partner) and in connection with which all Limited Partners
either will receive, or will have the right to elect to receive, for each
Partnership Unit an amount of cash, securities, or other property equal to the
product of the Conversion Factor multiplied by the greatest amount of cash,
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securities or other property paid to a holder of Shares corresponding to such
Partnership Unit in consideration of one such Share at any time during the
period from and after the date on which the Termination Transaction is
consummated; provided that, if, in connection with the Termination
Transaction, a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than fifty percent (50%) of the outstanding
Shares, each holder of Partnership Units shall receive, or shall have the
right to elect to receive without any right of Consent set forth above in this
subsection B, the greatest amount of cash, securities, or other property which
such holder would have received had it exercised the Redemption Right and
received Shares in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon
accepted such purchase, tender or exchange offer.
C. Notwithstanding the foregoing, with the consent of the
Partners holding at least a majority of the outstanding Partnership Units
(including any Partnership Units held by the General Partner), the General
Partner may transfer all or a portion of its Partnership Interest pursuant to
a grant of a security interest or other encumbrance effected in a bona fide
transaction or as a result of the exercise of remedies related thereto;
provided, that the Partners hereby agree that, effective as of the Effective
Date, the General Partner may pledge any or all of its Partnership Interest to
one or more lenders in connection with the execution and delivery of the
Credit Agreement.
Section 11.3 Limited Partners' Rights to Transfer
A. General. Except to the extent expressly permitted in
Sections 11.3 B, 11.3.C and 11.3.D or in connection with the exercise of a
Redemption Right pursuant to Section 8.6, a Limited Partner may not transfer
all or any portion of its Partnership Interest, or any of such Limited
Partner's rights as a Limited Partner, without the prior written consent of
the General Partner. Any transfer otherwise permitted under Sections 11.3B,
11.3C or 11.3D shall be subject to the conditions set forth in Section 11.3E,
11.3 F and 11.3G, and all permitted transfers shall be subject to Section
11.4.
B. Incapacitated Limited Partners. If a Limited Partner is
subject to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate and
such power as the Incapacitated Limited Partner possessed to transfer all or
any part of its interest in the Partnership. The Incapacity of a Limited
Partner, in and of itself, shall not dissolve or terminate the Partnership.
C. Permitted Transfers. A Limited Partner may transfer, with
or without the consent of the General Partner, all or a portion of its
Partnership Interest (i) in the case of a Limited Partner who is an
individual, to a member of his Immediate Family, any trust formed for the
benefit of himself and/or members of his Immediate Family, or any partnership,
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limited liability company, joint venture, corporation or other business entity
comprised only of himself and/or members of his Immediate Family and entities
the ownership interests in which are owned by or for the benefit of himself
and/or members of his Immediate Family, (ii) in the case of a Limited Partner
which is a trust, to the beneficiaries of such trust, (iii) in the case of a
Limited Partner which is a partnership, limited liability company, joint
venture, corporation or other business entity to which Partnership Units were
transferred pursuant to (i) above, to its partners, owners, or stockholders,
as the case may be, who are members of the Immediate Family of or are actually
the Person(s) who transferred Partnership Units to it pursuant to (i) above,
(iv) in the case of a Limited Partner which acquired Partnership Units as of
the Effective Date and which is a partnership, limited liability company,
joint venture, corporation or other business entity, to its partners, owners,
or stockholders, as the case may be, or the Persons owning the beneficial
interests in any of its partners, owners or stockholders which are entities,
(v) pursuant to a gift or other transfer without consideration, (vi) pursuant
to applicable laws of descent or distribution, (vii) to another Limited
Partner, and (vii) pursuant to a grant of security interest or other
encumbrance effected in a bona fide transaction or as a result of the exercise
of remedies related thereto, subject to the provisions of Section 11.3G
hereof. A trust or other entity will be considered formed "for the benefit" of
a Partner's Immediate Family even though some other Person has a remainder
interest under or with respect to such trust or other entity.
D. Transfers After One Year From Closing of Initial Public
Offering. A Limited Partner may transfer, with or without the consent of the
General Partner, all or a portion of his Partnership Units at any time after
the date that is twelve (12) months after the closing of the initial public
offering of Shares by the General Partner.
E. No Transfers Violating Securities Laws. The General
Partner may prohibit any transfer of Partnership Units by a Limited Partner
unless it receives a written opinion of legal counsel (which opinion and
counsel shall be reasonably satisfactory to the Partnership) to such Limited
Partner that such transfer would not require filing of a registration
statement under the Securities Act or would not otherwise violate any federal,
or state securities laws or regulations applicable to the Partnership or the
Partnership Unit or, at the option of the Partnership, an opinion of legal
counsel to the Partnership to the same effect.
F. No Transfers Affecting Tax Status of Partnership. No
transfer of Partnership Units by a Limited Partner (including a redemption or
exchange pursuant to Section 8.6) may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation for
federal income tax purposes or would result in a termination of the
Partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Partnership Units held by all Limited
Partners other than the General Partner or the General Partner Entity or any
Subsidiary of either the General Partner or the General Partner Entity or
pursuant to a transaction expressly permitted under Section 7.11.B or Section
11.2), (ii) in the opinion of legal counsel for the Partnership, it would
adversely affect the ability of the General Partner Entity to continue to
qualify as a REIT or would subject the General Partner Entity to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning
of Section 7704 of the Code.
G. No Transfers to Holders of Nonrecourse Liabilities. No
pledge or transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
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constitutes a Nonrecourse Liability without the consent of the General
Partner, in its sole and absolute discretion; provided that, as a condition to
such consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such
lender under Section 752 of the Code.
Section 11.4 Substituted Limited Partners
A. Consent of General Partner. No Limited Partner shall have
the right to substitute a transferee as a Limited Partner in its place. The
General Partner shall, however, have the right to consent to the admission of
a transferee of the interest of a Limited Partner pursuant to this Section
11.4 as a Substituted Limited Partner, which consent may be, given or withheld
by the General Partner in its sole and absolute discretion. The General
Partner's failure or refusal to permit a transferee of any such interests to
become a Substituted Limited Partner shall not give rise to any cause of
action against the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee who
has been admitted as a Substituted Limited Partner in accordance with this
Article XI shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this Agreement. The
admission of any transferee as a Substituted Limited Partner shall be
conditioned upon the transferee executing and delivering to the Partnership an
acceptance of all the terms and conditions of this Agreement (including,
without limitation, the provisions of Section 15.11) and such other documents
or instruments as may be required to effect the admission.
C. Amendment of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend Exhibit A to
reflect the name, address, Capital Account, number of Partnership Units, and
Percentage Interest of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address, Capital Account and Percentage
Interest and interest of the predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion,
does not consent to the admission of any permitted transferee under Section
11.3 as a Substituted Limited Partner, as described in Section 11.4, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive
distributions from the Partnership and the share of Net Income, Net Losses,
gain, loss and Recapture Income attributable to the Partnership Units assigned
to such transferee, and shall have the rights granted to the Limited Partners
under Section 8.6, but shall not be deemed to be a holder of Partnership Units
for any other purpose under this Agreement, and shall not be entitled to vote
such Partnership Units in any matter presented to the Limited Partners for a
vote (such Partnership Units being deemed to have been voted on such matter in
the same proportion as all other Partnership Units held by Limited Partners
are voted). If any such transferee desires to make a further assignment of any
such Partnership Units, such transferee shall be subject to all the provisions
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of this Article XI to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
A. Withdrawal of Limited Partner. No Limited Partner may
withdraw from the Partnership other than as a result of a permitted transfer
of all of such Limited Partner's Partnership Units in accordance with this
Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6.
B. Termination of Status as Limited Partner. Any Limited
Partner who shall transfer all of its Partnership Units in a transfer
permitted pursuant to this Article XI or pursuant to redemption of all of its
Partnership Units under Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article
XI may only be made upon three business days prior notice, unless the General
Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred
during any quarterly segment of the Partnership's fiscal year in compliance
with the provisions of this Article XI or redeemed or transferred pursuant to
Section 8.6, Net Income, Net Losses, each item thereof and all other items
attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner by taking
into account their varying interests during the fiscal year in accordance with
Section 706(d) of the Code, using the interim closing of the books method
(unless the General Partner, in its sole and absolute discretion, elects to
adopt a daily, weekly, or a monthly proration period, in which event Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such fiscal year shall be prorated based upon the applicable
method selected by the General Partner). Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer
or redemption occurs shall be allocated to the Person who is a Partner as of
midnight on the last day of said month. All distributions of Available Cash
attributable to any Partnership Unit with respect to which the Partnership
Record Date is before the date of such transfer, assignment or redemption
shall be made to the transferor Partner or the Redeeming Partner, as the case
may be, and, in the case of a transfer or assignment other than a redemption,
all distributions of Available Cash thereafter attributable to such
Partnership Unit shall be made to the transferee Partner.
E. Additional Restrictions. In addition to any other
restrictions on transfer herein contained, including without limitation the
provisions of this Article XI, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including pursuant to Section 8.6) be
made without the express consent of the General Partner, in its sole and
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absolute discretion, (i) to any person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of
applicable law; (iii) of any component portion of a Partnership Interest, such
as the Capital Account, or rights to distributions, separate and apart from
all other components of a Partnership Interest; (iv) if in the opinion of
legal counsel to the Partnership such transfer would cause a termination of
the Partnership for federal or state income tax purposes (except as a result
of the redemption or exchange for Shares of all Partnership Units held by all
Limited Partners or pursuant to a transaction expressly permitted under
Section 7.11.B or Section 11.2); (v) if in the opinion of counsel to the
Partnership, such transfer would cause the Partnership to cease to be
classified as a partnership for federal income tax purposes (except as a
result of the redemption or exchange for Shares of all Partnership Units held
by all Limited Partners or pursuant to a transaction expressly permitted under
Section 7.11.B or Section 11.2); (vi) if such transfer would cause the
Partnership Interests of "benefit plan investors" to become "significant," as
those terms are used in 29 C.F.R. ss. 2510.3-101(f), or any successor
regulation thereto, or would cause the Partnership to become, with respect to
any employee benefit plan subject to Title I of ERISA, a "party-in-interest"
(as defined in Section 3(14) of ERISA) or, with respect to any plan defined in
Section 4975(e) of the Code, a "disqualified person" (as defined in Section
4975(e) of the Code); (vii) if such transfer would, in the opinion of counsel
to the Partnership, cause any portion of the assets of the Partnership to
constitute assets of any ERISA Plan Investor pursuant to 29 C.F.R. ss.
2510.3-101, or any successor regulation thereto; (viii) if such transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (ix) if such transfer is
effectuated through an "established securities market" or a "secondary market"
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code or such transfer causes the Partnership to become a "publicly traded
partnership," as such term is defined in Section 469(k)(2) or Section 7704(b)
of the Code (provided that this clause (ix) shall not be the basis for
limiting or restricting in any manner the exercise of the Redemption Right
under Section 8.6 unless, and only to the extent that, outside tax counsel
provides to the General Partner an opinion to the effect that, in the absence
of such limitation or restriction, there is a significant risk that the
Partnership will be treated as a "publicly traded partnership" and, by reason
thereof, taxable as a corporation); (x) if such transfer subjects the
Partnership or the activities of the Partnership to regulation under the
Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA,
each as amended; (xi) such transfer could adversely affect the ability of the
General Partner Entity to remain qualified as a REIT; or (xii) if in the
opinion of legal counsel for the transferring Partner (which opinion and
counsel shall be reasonably satisfactory to the Partnership) or legal counsel
for the Partnership, such transfer would adversely affect the ability of the
General Partner Entity to continue to qualify as a REIT or subject the General
Partner Entity to any additional taxes under Section 857 or Section 4981 of
the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The
General Partner shall monitor the transfers of interests in the Partnership to
determine (i) if such interests are being traded on an "established securities
market" or a "secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code and (ii) whether additional transfers
of interests would result in the Partnership being unable to qualify for at
least one of the "safe harbors" set forth in Regulations Section 1.7704-1 (or
such other guidance subsequently published by the IRS setting forth safe
harbors under which interests will not be treated as "readily tradable on a
secondary market (or the substantial equivalent thereof)" within the meaning
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of Section 7704 of the Code) (the "Safe Harbors"). The General Partner shall
take all steps reasonably necessary or appropriate to prevent any trading of
interests or any recognition by the Partnership of transfers made on such
markets and, except as otherwise provided herein, to insure that at least one
of the Safe Harbors is met; provided, however, that the foregoing shall not
authorize the General Partner to limit or restrict in any manner the right of
any holder of a Partnership Unit to exercise the Redemption Right in
accordance with the terms of Section 8.6 unless, and only to the extent that,
outside tax counsel provides to the General Partner an opinion to the effect
that, in the absence of such limitation or restriction, there is a significant
risk that the Partnership will be treated as a "publicly traded partnership"
and, by reason thereof, taxable as a corporation.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of a Successor General Partner
A successor to all of the General Partner's General
Partnership Interest pursuant to Section 11.2 who is proposed to be admitted
as a successor General Partner shall be admitted to the Partnership as the
General Partner, effective upon such transfer. Any such transferee shall carry
on the business of the Partnership without dissolution. In each case, the
admission shall be subject to such successor General Partner executing and
delivering to the Partnership an acceptance of all of the terms and conditions
of this Agreement and such other documents or instruments as may be required
to effect the admission.
Section 12.2 Admission of Additional Limited Partners
A. General. No Person shall be admitted as an Additional
Limited Partner without the consent of the General Partner, which consent
shall be given or withheld in the General Partner's sole and absolute
discretion. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement, including without limitation, under Section
4.1.C, or who exercises an option to receive Partnership Units shall be
admitted to the Partnership as an Additional Limited Partner only with the
consent of the General Partner and only upon furnishing to the General Partner
(i) evidence of acceptance in form satisfactory to the General Partner of all
of the terms and conditions of this Agreement, including, without limitation,
the power of attorney granted in Section 15.11 and (ii) such other documents
or instruments as may be required in the discretion of the General Partner to
effect such Person's admission as an Additional Limited Partner. The admission
of any Person as an Additional Limited Partner shall become effective on the
date upon which the name of such Person is recorded on the books and records
of the Partnership, following the consent of the General Partner to such
admission.
B. Allocations to Additional Limited Partners. If any
Additional Limited Partner is admitted to the Partnership on any day other
than the first day of a Partnership Year, then Net Income, Net Losses, each
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item thereof and all other items allocable among Partners and Assignees for
such Partnership Year shall be allocated among such Additional Limited Partner
and all other Partners and Assignees by taking into account their varying
interests during the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method (unless the General
Partner, in its sole and absolute discretion, elects to adopt a daily, weekly
or monthly proration method, in which event Net Income, Net Losses, and each
item thereof would be prorated based upon the applicable period selected by
the General Partner). Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners and Assignees
including such Additional Limited Partner. All distributions of Available Cash
with respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act
to amend the records of the Partnership and, if necessary, to prepare as soon
as practical an amendment of this Agreement (including an amendment of Exhibit
A) and, if required by law, shall prepare and file an amendment to the
Certificate and may for this purpose exercise the power of attorney granted
pursuant to Section 15.11 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor General Partner in accordance with the terms of this
Agreement. Upon the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. The Partnership shall
dissolve, and its affairs shall be wound up, upon the first to occur of any of
the following ("Liquidating Events") :
(i) the expiration of its term as provided in
Section 2.4 hereof;
(ii) an event of withdrawal of the General
Partner, as defined in the Act (other than an event of bankruptcy), unless,
within ninety (90) days after the withdrawal a "majority in interest" (as
defined below) of the remaining Partners Consent in writing to continue the
business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a substitute General Partner;
(iii) through December 31, 2046, an election to
dissolve the Partnership made by the General Partner with the consent of
Limited Partners who hold ninety percent (90%) of the outstanding Units held
by Limited Partners (including Units held by the General Partner);
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(iv) an election to dissolve the Partnership made
by the General Partner, in its sole and absolute discretion after December 31,
2046;
(v) entry of a decree of judicial dissolution of
the Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for marketable
securities; or
(vii) a final and non-appealable judgment is
entered by a court of competent jurisdiction ruling that the General Partner
is bankrupt or insolvent, or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General Partner,
in each case under any federal or state bankruptcy or insolvency laws as now
or hereafter in effect, unless prior to or at the time of the entry of such
order or judgment a "majority in interest" (as defined below) of the remaining
Partners Consent in writing to continue the business of the Partnership and to
the appointment, effective as of a date prior to the date of such order or
judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to
Partners (excluding the General Partner) who hold more than fifty percent
(50%) of the outstanding Percentage Interests not held by the General Partner.
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs
in an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, if there is no
remaining General Partner, any Person elected by a majority in interest of the
Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of
the Partnership's liabilities and property and the Partnership property shall
be liquidated as promptly as is consistent with obtaining the fair value
thereof, and the proceeds therefrom (which may, to the extent determined by
the General Partners, include equity or other securities of the General
Partners or any other entity) shall be applied and distributed in the
following order:
(1) First, to the payment and discharge of
all of the Partnership's debts and
liabilities to creditors other than the
Partners;
(2) Second, to the payment and discharge of
all of the Partnership's debts and
liabilities to the General Partners;
(3) Third, to the payment and discharge of all
of the Partnership's debts and liabilities
to the Limited Partners; and
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(4) The balance, if any, to the Partners in
accordance with their Capital Accounts,
after giving effect to all contributions,
distributions, and allocations for all
periods.
The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of
Section 13.2.A which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate
sale of part or all of the Partnership's assets would be impractical or would
cause undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as
the Liquidator deems reasonable and equitable and to any agreements governing
the operation of such properties at such time. The Liquidator shall determine
the fair market value of any property distributed in kind using such
reasonable method of valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of Regulations
Subject to Section 13.4, if the Partnership is "liquidated"
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made under this Article XIII to the General Partner and Limited
Partners who have positive Capital Accounts in compliance with Regulations
Section 1.704-1(b)(2)(ii)(b)(2). Except for those Partners listed on Exhibit G
who have entered into one or more Deficit Restoration Obligation Agreements
and have agreed thereby to contribute an amount of cash up to the amount
listed next to each such Partner's name on Exhibit 4.6 in the event of the
liquidation of the Partnership pursuant to this Article XIII, if any Partner
has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed
to the Partnership or to any other Person for any purpose whatsoever. In the
discretion of the General Partner, a pro rata portion of the distributions
that would otherwise be made to the General Partner and Limited Partners
pursuant to this Article XIII may be: (A) distributed to a trust established
for the benefit of the General Partner and Limited Partners for the purposes
of liquidating Partnership assets, collecting amounts owed to the Partnership
and paying any contingent or unforeseen liabilities or obligations of the
Partnership or of the General Partner arising out of or in connection with the
Partnership (in which case the assets of any such trust shall be distributed
to the General Partner and Limited Partners from time to time, in the
reasonable discretion of the General Partner, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
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distributed to the General Partner and Limited Partners pursuant to this
Agreement); or (B) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such
withheld amounts shall be distributed to the General Partner and Limited
Partners as soon as practicable.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article XIII, if
the Partnership is deemed liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B, the Partnership shall be deemed to
have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets subject to
all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets
subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of
its Capital Contributions and shall have no right or power to demand or
receive property other than cash from the Partnership. Except as otherwise
expressly provided in this Agreement, no Limited Partner shall have priority
over any other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
Section 13.6 Notice of Dissolution
If a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of
the General Partner).
Section 13.7 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership
cash and property as provided in Section 13.2, the Partnership shall be
terminated and the Certificate and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the State of Delaware
shall be canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
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Section 13.8 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding
up of the business and affairs of the Partnership and the liquidation of its
assets pursuant to Section 13.2, to minimize any losses otherwise attendant
upon such winding-up, and the provisions of this Agreement shall remain in
effect among the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
Section 13.10 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. General. Amendments to this Agreement may be proposed by
a General Partner or by any Limited Partners holding twenty-five percent (25%)
or more of the Partnership Interests. Following such proposal (except an
amendment pursuant to Section 14.1.B), the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek the
written vote of the Partners on the proposed amendment or shall call a meeting
to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute
a vote which is consistent with the General Partner's recommendation with
respect to the proposal. Except as provided in Section 14.1.B, 14.1.C or
14.1.D, a proposed amendment shall be adopted and be effective as an amendment
hereto if it is approved by the General Partner and it receives the Consent of
Partners holding a majority of the Percentage Interests of the Limited
Partners (including Limited Partnership Interests held by the General
Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or 14.1.C, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power
granted to the General Partner or any
Affiliate of the General Partner for the
benefit of the Limited Partners;
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(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in
accordance with this Agreement (which may
be effected through the replacement of
Exhibit A with an amended Exhibit A);
(3) to set forth the designations, rights,
powers, duties, and preferences of the
holders of any additional Partnership
Interests issued pursuant to Article IV;
(4) to reflect a change that does not
adversely affect the Limited Partners in
any material respect, or to cure any
ambiguity, correct or supplement any
provision in this Agreement not
inconsistent with law or with other
provisions of this Agreement, or make
other changes with respect to matters
arising under this Agreement that will not
be inconsistent with law or with the
provisions of this Agreement; and
(5) to satisfy any requirements, conditions,
or guidelines contained in any order,
directive, opinion, ruling or regulation
of a federal, state or local agency or
contained in federal, state or local law.
The General Partner shall notify the Limited Partners when
any action under this Section 14.1.B is taken in the next regular
communication to the Limited Partners.
C. Amendments Requiring Limited Partner Approval (Excluding
General Partners). Notwithstanding Section 14.1.A, without the Consent of the
Outside Limited Partners, the General Partner shall not amend Section 4.2.A,
Section 5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6,
Section 7.8, Section 7.11.B, Section 11.2, Section 13.1 (other than Section
13.1(iii) which can be amended only with a Consent of 90% of the Partnership
Units (including Partnership Units held by the General Partner), this Section
14.1.C or Section 14.2.
D. Other Amendments Requiring Certain Limited Partner
Approval. Notwithstanding anything in this Section 14.1 to the contrary, this
Agreement shall not be amended with respect to any Partner adversely affected
without the Consent of such Partner adversely affected if such amendment would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest, (ii) modify the limited liability of a Limited Partner,
(iii) amend Section 7.11.A, (iv) amend Article V or Article VI (except as
permitted pursuant to Sections 4.2, 5.1.E, 5.4, 6.2 and 14.1(B)(3)), (v) amend
Section 8.6 or any defined terms set forth in Article I that relate to the
Redemption Right (except as permitted in Section 8.6.E), or (vi) amend this
Section 14.1.D. This Section 14.1.D does not require unanimous consent of all
Partners adversely affected unless the amendment is to be effective against
all Partners adversely affected.
E. Amendment and Restatement of Exhibit A or Exhibit G Not
An Amendment. Notwithstanding anything in this Article XIV or elsewhere in
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this Agreement to the contrary, any amendment and restatement of Exhibit A or
Exhibit G hereto by the General Partner to reflect events or changes otherwise
authorized or permitted by this Agreement, whether pursuant to Section
7.1.A(21) or Section 7.1A(22) hereof or otherwise, shall not be deemed an
amendment of this Agreement and may be done at any time and from time to time,
as necessary by the General Partner without the Consent of the Limited
Partners.
Section 14.2 Meetings of the Partners
A. General. Meetings of the Partners may be called by the
General Partner and shall be called upon the receipt by the General Partner of
a written request by Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days prior to
the date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in
Section 14.1.A. Except as otherwise expressly provided in this Agreement, the
Consent of holders of a majority of the Percentage Interests held by Limited
Partners (including Limited Partnership Interests held by the General Partner)
shall control.
B. Actions Without a Meeting. Any action required or
permitted to be taken at a meeting of the Partners may be taken without a
meeting if a written consent setting forth the action so taken is signed by a
majority of the Percentage Interests of the Partners (or such other percentage
as is expressly required by this Agreement). Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of a majority of the Percentage Interests of the Partners (or such
other percentage as is expressly required by this Agreement). Such consent
shall be filed with the General Partner. An action so taken shall be deemed to
have been taken at a meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or its attorney-in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the Limited Partner
executing it, such revocation to be effective upon the Partnership's receipt
of written notice thereof.
D. Conduct of Meeting. Each meeting of Partners shall be
conducted by the General Partner or such other Person as the General Partner
may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deem appropriate.
61
<PAGE>
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted
to be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when
sent by first class United States mail or by other means of written
communication to the Partner or Assignee at the address set forth in Exhibit A
or such other address as the Partners shall notify the General Partner in
writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and
in no way define, limit, extend or describe the scope or intent of any
provisions hereof. Except as specifically provided otherwise, references to
"Articles" "Sections" and "Exhibits" are to Articles, Sections and Exhibits of
this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural
and vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
62
<PAGE>
Section 15.7 Waiver
No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
Section 15.11 Power of Attorney
A. General. Each Limited Partner and each Assignee who
accepts Partnership Units (or any rights, benefits or privileges associated
therewith) is deemed to irrevocably constitute and appoint the General
Partner, any Liquidator and authorized officers and attorneys-in-fact of each,
and each of those acting singly, in each case with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver,
file and record in the appropriate public
offices (a) all certificates, documents
and other instruments (including, without
limitation, this Agreement and the
Certificate and all amendments or
restatements thereof) that the General
Partner or any Liquidator deems
63
<PAGE>
appropriate or necessary to form, qualify or
continue the existence or qualification of
the Partnership as a limited partnership (or
a partnership in which the limited partners
have limited liability) in the State of
Delaware and in all other jurisdictions in
which the Partnership may conduct business
or own property, (b) all instruments that
the General Partner or any Liquidator deem
appropriate or necessary to reflect any
amendment, change, modification or
restatement of this Agreement in accordance
with its terms, (c) all conveyances and
other instruments or documents that the
General Partner or any Liquidator deems
appropriate or necessary to reflect the
dissolution and liquidation of the
Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation, (d) all
instruments relating to the admission,
withdrawal, removal or substitution of any
Partner pursuant to, or other events
described in, Article XI, XII or XIII hereof
or the Capital Contribution of any Partner
and (e) all certificates, documents and
other instruments relating to the
determination of the rights, preferences and
privileges of Partnership Interests; and
(2) execute, swear to, acknowledge and file
all ballots, consents, approvals, waivers,
certificates and other instruments
appropriate or necessary, in the sole and
absolute discretion of the General Partner
or any Liquidator, to make, evidence,
give, confirm or ratify any vote, consent,
approval, agreement or other action which
is made or given by the Partners hereunder
or is consistent with the terms of this
Agreement or appropriate or necessary, in
the sole discretion of the General Partner
or any Liquidator, to effectuate the terms
or intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed
as authorizing the General Partner or any Liquidator to amend this Agreement
except in accordance with Article XIV hereof or as may be otherwise expressly
provided for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is
hereby declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying upon the
power of the General Partner or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner or any Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available
to contest, negate or disaffirm the action of the General Partner or any
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case
may be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.
64
<PAGE>
Section 15.12 Entire Agreement
This Agreement contains the entire understanding and
agreement among the Partners with respect to the subject matter hereof and
supersedes any prior written oral understandings or agreements among them with
respect thereto.
Section 15.13 No Rights as Shareholders
Nothing contained in this Agreement shall be construed as
conferring upon the holders of the Partnership Units any rights whatsoever as
partners or shareholders of the General Partner Entity, including, without
limitation, any right to receive dividends or other distributions made to
shareholders of the General Partner Entity or to vote or to consent or receive
notice as shareholders in respect to any meeting of shareholders for the
election of trustees of the General Partner Entity or any other matter.
Section 15.14 Limitation to Preserve REIT Status
To the extent that any amount paid or credited to the
General Partner or any of its officers, directors, trustees, employees or
agents pursuant to Section 7.4 or Section 7.7 would constitute gross income to
the General Partner for purposes of Section 856(c)(2) or 856(c)(3) of the Code
(a "General Partner Payment") then, notwithstanding any other provision of
this Agreement, the amount of such General Partner Payment for any fiscal year
shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a)
4.20% of the General Partner's total gross income (but not including the
amount of any General Partner Payments) for the fiscal year which is described
in subsections (A) though (H) of Section 856(c)(2) of the Code over (b) the
amount of gross income (within the meaning of Section 856(c)(2) of the Code)
derived by the General Partner from sources other than those described in
subsections (A) through (H) of Section 856(c)(2) of the Code (but not
including the amount of any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a)
25% of the General Partner's total gross income (but not including the amount
of any General Partner Payments) for the fiscal year which is described in
subsections (A) through (I) of Section 856(c)(3) of the Code over (b) the
amount of gross income (within the meaning of Section 856(c)(3) of the Code)
derived by the General Partner from sources other than those described in
subsections (A) through (I) of Section 856(c)(3) of the Code (but not
including the amount of any General Partner Payments);
provided, however, that General Partner Payments in excess
of the amounts set forth in subparagraphs (i) and (ii) above may be made if
the General Partner, as a condition precedent, obtains an opinion of tax
counsel that the receipt of such excess amounts would not adversely affect the
General Partner's ability to qualify as a REIT. To the extent General Partner
Payments may not be made in a year due to the foregoing limitations, such
General Partner Payments shall carry over and be treated as arising in the
following year, provided, however, that such amounts shall not carry over for
65
<PAGE>
more than five years, and if not paid within such five year period, shall
expire; provided further, that (i) as General Partner Payments are made, such
payments shall be applied first to carry over amounts outstanding, if any, and
(ii) with respect to carry over amounts for more than one Partnership Year,
such payments shall be applied to the earliest Partnership Year first.
66
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
ELDERTRUST
By: /s/ Edward B. Romanov, Jr.
--------------------------
Name: Edward B. Romanov, Jr.
Title: President and Chief Executive
Officer
LIMITED PARTNERS:
/s/ D. Lee McCreary, Jr.
------------------------
D. Lee McCreary, Jr.
MGI Limited Partnership
By: MGI, Inc.
By: /s/ Michael R. Walker
-------------------------
Michael R. Walker
President
/s/ Edward B. Romanov, Jr.
--------------------------------
Edward B. Romanov, Jr.
Thomas W. Balderston
Gregory H. Doyle
Richard R. Howard
Senior LifeChoice Corp.
Michael R. Walker
Joseph A. Williamson
By: /s/ Edward B. Romanov, Jr.
-----------------------------------
Edward B. Romanov, Jr.
Attorney-in-Fact
67
<PAGE>
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Class A Class B Agreed Initial Percentage
Name and Address of Partner Partnership Partnership Capital Account Interest
- --------------------------- ----------- ----------- --------------- ----------
GENERAL PARTNER:
<S> <C> <C> <C> <C>
ElderTrust 7,873 -- $ 141,714 0.100%
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
LIMITED PARTNERS:
Thomas W. Balderston 8,330 -- $ 149,940 0.106%
1972 Thatch Palm Drive
Boca Raton, FL 33432
Gregory H. Doyle 13,545 -- $ 243,810 0.172%
2462 River Road
New Hope, PA 18938
ElderTrust 7,382,227 -- $ 132,880,086 93.777%
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
Richard R. Howard 5,215 -- $ 93,870 0.066%
c/o Genesis Health
Ventures, Inc.
148 West State Street
Kennett Square, PA 19348
D. Lee McCreary, Jr. 12,000 -- $ 216,000 0.152%
c/o ElderTrust
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
MGI Limited Partnership 131,250 -- $ 2,362,500 1.667%
c/o Genesis Health
Ventures, Inc.
148 West State Street
Kennett Square, PA 19348
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Agreed Initial Percentage
Name and Address of Partner Partnership Partnership Capital Account Interest
- --------------------------- ------------ ----------- --------------- ----------
<S> <C> <C> <C> <C>
Edward B. Romanov, Jr. 118,750 -- $ 2,137,500 1.509%
c/o ElderTrust
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
Senior LifeChoice Corp. 165,850 -- $ 2,985,300 2.107%
2393 Kimberton Road
Suite 200
Kimberton, PA 19442
Michael R. Walker 21,875 -- $ 393,750 0.278%
c/o ElderTrust
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
Joseph A. Williamson 5,215 -- $ 93,870 0.066%
P.O. Box 450
Unionville, PA 19375
TOTAL 7,872,130 -- $ 141,698,340 100.000%
============ =========== ============= ==========
</TABLE>
A-2
<PAGE>
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership
income and gain (including income and gain exempt from tax) computed in
accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1 of the Agreement and Exhibit C thereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash
or property made to such Partner pursuant to this Agreement and (y) all items
of Partnership deduction and loss computed in accordance with Section 1.B
hereof and allocated to such Partner pursuant to Section 6.1 of the Agreement
and Exhibit C thereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items
of income, gain, loss and deduction shall be made
without regard to any election under Section 754 of
the Code which may be made by the Partnership,
provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership
made pursuant to Section 734 of the Code as a
result of the distribution of property by the
Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in
the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in
Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact
that items described in Sections 705(a)(l)(B) or
705(a)(2)(B) of the Code are not includable in
gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the
taxable disposition of any Partnership property
shall be determined as if the adjusted basis of
such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value
with respect to such property as of such date.
<PAGE>
(4) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account
in computing such taxable income or loss, there
shall be taken into account Depreciation for such
fiscal year.
(5) In the event the Carrying Value of any Partnership
Asset is adjusted pursuant to Section 1.D hereof,
the amount of any such adjustment shall be taken
into account as gain or loss from the disposition
of such asset.
(6) Any items specially allocated under Section 2 of
Exhibit C hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor; provided, however, that, if the transfer causes a termination of
the Partnership under Section 708(b)(l)(B) of the Code, the Partnership's
properties shall be deemed, solely for federal income tax purposes, to have
been distributed in liquidation of the Partnership to the holders of the
Partnership units (including the transferee) and recontributed by such Persons
in reconstitution of the Partnership. In such event, the Carrying Values of
the Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 1.D(2) hereof. The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the
principles of this Exhibit B.
D. (1) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in
Section 1.D(2), the Carrying Values of all
Partnership assets shall be adjusted upward or
downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership
property, as of the times of the adjustments
provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property
and allocated pursuant to Section 6.1 of the
Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition of
an additional interest in the Partnership by any
new or existing Partner in exchange for more than a
de minimis Capital Contribution; (b) immediately
prior to the distribution by the Partnership to a
Partner of more than a de minimis amount of
property as consideration for an interest in the
Partnership; and (c) immediately prior to the
liquidation of the Partnership within the meaning
of Regulations Section 1.704-l(b)(2)(ii)(g),
provided however that adjustments pursuant to
clauses (a) and (b) above shall be made only if the
General Partner determines that such adjustments
are necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership.
B-2
<PAGE>
(3) In accordance with Regulations Section 1.704-
l(b)(2)(iv)(e), the Carrying Value of Partnership
assets distributed in kind shall be adjusted upward
or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership
property, as of the time any such asset is
distributed.
(4) In determining Unrealized Gain or Unrealized Loss
for purposes of this Exhibit B, the aggregate cash
amount and fair market value of all Partnership
assets (including cash or cash equivalents) shall
be determined by the General Partner using such
reasonable method of valuation as it may adopt, or
in the case of a liquidating distribution pursuant
to Article XIII of the Agreement, shall be
determined and allocated by the Liquidator using
such reasonable methods of valuation as it may
adopt. The General Partner, or the Liquidator, as
the case may be, shall allocate such aggregate fair
market value among the assets of the Partnership in
such manner as it determines in its sole and
absolute discretion to arrive at a fair market
value for individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In
the event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which are assumed
by the Partnership, the General Partner, or the Limited Partners) are computed
in order to comply with such Regulations, the General Partner may make such
modification without regard to Article XIV of the Agreement, provided that it
is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article XIII of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section l.704-l(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section l.704-1(b).
2. No Interest
-----------
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
-------------
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
B-3
<PAGE>
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this
Exhibit C, the following special allocations shall be made in the following
order:
A. Minimum Gain Chargeback. Notwithstanding the provisions
of Section 6.1 of the Agreement or any other provisions of this Exhibit C, if
there is a net decrease in Partnership Minimum Gain during any Partnership
Year, each Partner shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Partner's share of the net decrease in Partnership Minimum Gain,
as determined under Regulations Section 1.704-2(g). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Section
1.704-2(f)(6). This Section 1.A is intended to comply with the minimum gain
chargeback requirements in Regulations Section 1.704-2(f) and for purposes of
this Section 1.A only, each Partner's Adjusted Capital Account Deficit shall
be determined prior to any other allocations pursuant to Section 6.1 of this
Agreement with respect to such Partnership Year and without regard to any
decrease in Partner Minimum Gain during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any
other provision of Section 6.1 of this Agreement or any other provisions of
this Exhibit C (except Section 1.A hereof), if there is a net decrease in
Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any
Partnership Year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i) (5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Partner's share of the net decrease in
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i) (5). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each General Partner and Limited Partner pursuant
thereto. The items to be so allocated shall be determined in accordance with
Regulations Section 1.704-2(i) (4). This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith. Solely for
purposes of this Section 1.B, each Partner's Adjusted Capital Account Deficit
shall be determined prior to any other allocations pursuant to Section 6.1 of
the Agreement or this Exhibit with respect to such Partnership Year, other
than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions described
in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704- l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income
<PAGE>
and gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership Year) shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, its Adjusted Capital
Account Deficit created by such adjustments, allocations or distributions as
quickly as possible. This Section 1.C is intended to constitute a "qualified
income offset" under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
D. Gross Income Allocation. In the event that any Partner
has an Adjusted Capital Account Deficit at the end of any Partnership Year
(after taking into account allocations to be made under the preceding
paragraphs hereof with respect to such Partnership Year), each such Partner
shall be specially allocated items of Partnership income and gain (consisting
of a pro rata portion of each item of Partnership income, including gross
income and gain for the Partnership Year) in an amount and manner sufficient
to eliminate, to the extent required by the Regulations, its Adjusted Capital
Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of the
Regulations promulgated under Section 704(b) of the Code, the General Partner
is authorized, upon notice to the Limited Partners, to revise the prescribed
ratio for such Partnership Year to the numerically closest ratio which would
satisfy such requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the
Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or 743(b) of the Code is required, pursuant to Regulations Section
1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such item of gain
or loss shall be specially allocated to the Partners in a manner consistent
with the manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Regulations.
2. Allocations for Tax Purposes
----------------------------
A. Except as otherwise provided in this Section 2, for
federal income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its correlative
item of "book" income, gain, loss or deduction is allocated pursuant to
Section 6.1 of the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, and deduction shall be allocated for federal income tax purposes
among the Partners as follows:
C-2
<PAGE>
(1) (a) In the case of a Contributed Property,
such items attributable thereto shall be
allocated among the Partners consistent
with the principles of Section 704(c) of
the Code to take into account the
variation between the 704(c) Value of such
property and its adjusted basis at the
time of contribution (taking into account
Section 2.C of this Exhibit C); and
(b) any item of Residual Gain or Residual
Loss attributable to a Contributed
Property shall be allocated among the
Partners in the same manner as its
correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted Property,
such items shall
(i) first, be allocated among the
Partners in a manner consistent with the
principles of Section 704(c) of the Code
to take into account the Unrealized Gain
or Unrealized Loss attributable to such
property and the allocations thereof
pursuant to Exhibit B;
(ii) second, in the event such
property was originally a Contributed
Property, be allocated among the Partners
in a manner consistent with Section 2.B(1)
of this Exhibit C; and
(b) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property
shall be allocated among the Partners in the
same manner its correlative item of "book"
gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(3) all other items of income, gain, loss and
deduction shall be allocated among the Partners the
same manner as their correlative item of "book"
gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section
704(c) of the Code permit a Partnership to utilize alternative methods to
eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall, subject to the following, have the
authority to elect the method to be used by the Partnership and such election
shall be binding on all Partners. With respect to the Contributed Property
transferred to the Partnership as of the Effective Date, the Partnership shall
elect to use the "traditional method" set forth in Treasury Regulation ss.
1.704-3(b).
C-3
<PAGE>
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________
Partnership Units in ElderTrust Operating Limited Partnership in accordance
with the terms of the Agreement of Limited Partnership of ElderTrust Operating
Limited Partnership, as amended, and the Redemption Right referred to therein,
(ii) surrenders such Partnership Units and all right, title and interest
therein and (iii) directs that the Cash Amount or Shares Amount (as determined
by the General Partner) deliverable upon exercise of the Redemption Right be
delivered to the address specified below, and if Shares are to be delivered,
such Shares be registered or placed in the name(s) and at the address(es)
specified below. The undersigned hereby represents, warrants, and certifies
that the undersigned (a) has marketable and unencumbered title to such
Partnership Units, free and clear of the rights of or interests of any other
person or entity, (b) has the full right, power and authority to redeem and
surrender such Partnership Units as provided herein and (c) has obtained the
consent or approval of all persons or entities, if any, having the right to
consult or approve such redemption and surrender.
Dated:________ Name of Limited Partner:___________________
------------------------------------
(Signature of Limited Partner)
------------------------------------
(Street Address)
------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------------
If Shares are to be issued, issue to:
Name:
Please insert social security or identifying number:
<PAGE>
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
<TABLE>
<CAPTION>
Partner Underlying Property 704(c) Value Agreed Value
- ------- ------------------- ------------ ------------
<S> <C> <C> <C>
ElderTrust Cash $ 133,021,800 $ 133,021,800
Thomas W. Balderston Interest in Windsor Office $ 435,940 $ 149,940
Building and Windsor Clinic and
Training Facility Properties
Gregory H. Doyle Interest in Windsor Office $ 435,940 $ 149,940
Building and Windsor Clinic and
Training Facility Properties
General Partnership Interest in $ 213,537 $ 93,870
Salisbury Medical Office Building
General Partnership
Richard R. Howard General Partnership Interest in $ 213,537 $ 93,870
Salisbury Medical Office Building
General Partnership
D. Lee McCreary, Jr. Restatement of Pre-existing $ 216,000 $ 216,000
Equity Interest in Partnership
MGI Limited Partnership Restatement of Pre-existing $ 2,362,500 $ 2,362,500
Equity Interest in Partnership
Edward B. Romanov, Jr. Restatement of Pre-existing $ 2,137,500 $ 2,137,500
Equity Interest in Partnership
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Partner Underlying Property 704(c) Value Agreed Value
- ------- ------------------- ------------ ------------
<S> <C> <C> <C>
Senior LifeChoice Corp. General Partner Interest in $ 21,081,450 $ 2,985,300
Senior LifeChoice of Paoli, L.P.
and General Partner and Limited
Partner Interests in Senior
LifeChoice of Kimberton, L.P.
Michael R. Walker Interest in Windsor Office $ 299,880 $ 299,880
Building and Windsor Clinic and
Training Facility Properties
General Partnership Interest in $ 93,870 $ 93,870
Salisbury Medical Office Building
General Partnership
Joseph A. Williamson General Partnership Interest in $ 213,537 $ 93,870
Salisbury Medical Office Building
General Partnership
</TABLE>
E-2
<PAGE>
EXHIBIT F
FORM OF UNIT CERTIFICATE
<PAGE>
================================================================================
ELDERTRUST OPERATING LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
CERTIFICATE NUMBER Number Of Class A Units
A-___ _________
THIS CERTIFIES THAT
[PARTNER]
is the owner of record of the number of Class A Partnership
Units of limited partnership interest ("Partnership Units") indicated above in
ElderTrust Operating Limited Partnership, a Delaware limited partnership (the
"Partnership"). This Certificate has been issued solely to evidence that the
above named partner appears as a signatory to, and that the above number of
Partnership Units stand in such partner's name in the Second Amended and
Restated Agreement of Limited Partnership of the Partnership, as amended (the
"Partnership Agreement"). This Certificate does not grant or carry with it any
rights to the income, profits or assets of the Partnership, such rights and
interests being derived solely from the Partnership Agreement. The interest
represented by all or any of the Partnership Units may not be transferred
except in accordance with the terms of the Partnership Agreement.
ELDERTRUST OPERATING LIMITED PARTNERSHIP
Dated: January 30, 1998 By: ELDERTRUST
General Partner
By ___________________________
D. Lee McCreary, Jr.
Vice President and Chief
Financial Officer
================================================================================
F-2
<PAGE>
EXHIBIT G
DEFICIT RESTORATION OBLIGATIONS
The following Partners have made one or more Deficit Restoration
Obligation Agreements which have been accepted by the Partnership whereby each
such Partner has agreed to contribute the aggregate amount of cash set forth
next to such Partner's name below in the event of the liquidation of the
Partnership:
Partner Aggregate Deficit Restoration Obligation
------- ----------------------------------------
[TO BE COMPLETED FOLLOWING COMPLETION OF FINAL TAX RETURNS
FOR PROPERTY PARTNERSHIPS]
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made and entered into as of January 30, 1998 by and between ElderTrust, a
Maryland real estate investment trust (the "Company"), and the holders of
Units listed on Schedule A hereto (each, individually, a "Holder," and,
collectively, the "Holders").
WHEREAS, on the date hereof, the Holders are receiving Class
A units of limited partnership interest ("Units") in the ElderTrust Operating,
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership");
WHEREAS, in connection therewith, the Company has agreed to
grant to the Holders the Registration Rights (as defined in Section 1 hereof);
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, hereby agree as follows:
Section 1. Registration Rights
If a Holder receives common shares of beneficial interest
("Common Shares") of the Company upon redemption of Units (the "Redemption
Shares") pursuant to the terms of the First Amended and Restated Agreement of
Limited Partnership of the Operating Partnership (the "Operating Partnership
Agreement"), then unless such Redemption Shares are issued to such Holder
pursuant to an Issuer Registration Statement as provided in Section 2 below,
Holder shall be entitled to offer for sale pursuant to a Registration
Statement (as defined in Section 3 hereof) the Redemption Shares at any time
after the date which is 14 months following the date of the closing of the
Company's initial public offering of Common Shares (the "Effective Date"),
subject to the terms and conditions set forth in Section 3 hereof (the
"Registration Rights").
Section 2. Issuer Registration Statement
Anything contained herein to the contrary notwithstanding,
in the event that Redemption Shares are issued by the Company to a Holder
pursuant to an effective registration statement (an "Issuer Registration
Statement") filed with the Securities and Exchange Commission (the "SEC"), the
Company shall be deemed to have satisfied all of its registration obligations
under this Agreement.
Section 3. Demand Registration Rights
3.1(a) Registration Procedure. Unless such Redemption Shares
are issued pursuant to an Issuer Registration Statement as provided in Section
2 hereof, then subject to Sections 3.1(c) and 3.2 hereof, if any Holder
desires to exercise its Registration Rights with respect to any Redemption
Shares issued to such Holder, the Holder shall deliver to the Company a
<PAGE>
written notice (a "Registration Notice") informing the Company of such
exercise and specifying the number of shares to be offered by such Holder
(such shares to be offered being referred to herein as the "Registrable
Securities"). Such notice may be given at any time on or after the later of
(i) the Effective Date or (ii) the date a notice of redemption is delivered by
the Holder to the Operating Partnership pursuant to the Operating Partnership
Agreement, but must be given at least fifteen (15) business days prior to the
consummation of any sale of Registrable Securities. Upon receipt of the
Registration Notice, the Company, if it has not already caused the Registrable
Securities to be included as part of an existing shelf registration statement
and related prospectus (the "Shelf Registration Statement") that the Company
then has on file with the SEC (in which event the Company shall be deemed to
have satisfied its registration obligation under this Section 3), will cause
to be filed with the SEC as soon as reasonably practicable after receiving
such Registration Notice a new registration statement and related prospectus
(a "New Registration Statement") that complies as to form in all material
respects with applicable SEC rules providing for the sale by the Holder of the
Registrable Securities, and agrees (subject to Section 3.2 hereof) to use its
best efforts to cause such New Registration Statement to be declared effective
by the SEC as soon as practicable. (As used herein, "Registration Statement"
and "Prospectus" refer to the Shelf Registration Statement and related
prospectus (including any preliminary prospectus) or the New Registration
Statement and related prospectus (including any preliminary prospectus),
whichever is utilized by the Company to satisfy each Holder's Registration
Rights pursuant to this Section 3, including in each case any documents
incorporated therein by reference.) Each Holder agrees to provide in a timely
manner information regarding the proposed distribution by such Holder of the
Registrable Securities and such other information reasonably requested by the
Company in connection with the preparation of and for inclusion in the
Registration Statement. The Company agrees (subject to Section 3.2 hereof) to
use its best efforts to keep the Registration Statement effective (including
the preparation and filing of any amendments and supplements thereto necessary
for that purpose) until the earlier of (i) the date on which the applicable
Holder or Holders consummate the sale of all of the Registrable Securities
registered under the Registration Statement or (ii) the date on which all of
the Registrable Securities are eligible for sale pursuant to Rule 144(k) (or
any successor provision) or in a single transaction pursuant to Rule 144(e)
(or any successor provision) under the Securities Act of 1933, as amended (the
"Securities Act"). The Company agrees to provide to each Holder a reasonable
number of copies of the final Prospectus and any amendments or supplements
thereto relating to Registrable Securities held by such Holder.
Notwithstanding the foregoing, the Company may at any time, in its sole
discretion and prior to receiving any Redemption Notice from any Holder,
include all of the Redemption Shares or any portion thereof in any Shelf
Registration Statement. In connection with any Registration Statement utilized
by the Company to satisfy any Holder's Registration Rights pursuant to this
Section 3, each Holder agrees that it will respond within three (3) Business
Days to any request by the Company to provide or verify information regarding
such Holder or such Holder's Registrable Securities as may be required to be
included in such Registration Statement pursuant to the rules and regulations
of the SEC.
3.1(b) Offers and Sales. All offers and sales by a Holder
pursuant to a Registration Statement referred to in this Section 3 shall be
completed within the period during which such Registration Statement is
required to remain effective pursuant to Section 3.1(a), and upon expiration
2
<PAGE>
of such period no Holder will offer or sell any Registrable Securities
pursuant to such Registration Statement. If directed by the Company, a Holder
will return all undistributed copies of any Prospectus in its possession upon
the expiration of such period.
3.1(c) Limitations on Registration Rights. Each exercise of
the Registration Right shall be effected with respect to a minimum of the
lesser of (i) Ten Thousand (10,000) Common Shares or (ii) the total number of
Redemption Shares held by the exercising Holder at such time plus the number
of Redemption Shares that may be issued to such Holder upon redemption of
Units by such Holder; provided, however, that, with respect to a Holder which
is an entity, such a Holder may exercise the Registration Right for less than
Ten Thousand (10,000) Common Shares without regard to whether or not such
Holder is exercising the Registration Right for all of the Redemption Shares
held by such Holder as long as such Holder is exercising the Registration
Right on behalf of one or more of its direct equity owners (e.g.,
shareholders, partners or members) or beneficiaries in respect of one hundred
percent (100%) of such equity owners' interest in such Holder. The right of
any Holder to deliver a Registration Notice commences upon the later of (i)
the Effective Date or (ii) the date such Holder is permitted to redeem Units
pursuant to the Operating Partnership Agreement. The right of a Holder to
deliver a Registration Notice shall expire on the date on which all of the
Redemption Shares held by such Holder or issuable upon redemption of Units
held by such Holder are eligible for sale pursuant to Rule 144(k) (or any
successor provision) or in a single transaction pursuant to Rule 144(e) (or
any successor provision) under the Securities Act. The Registration Rights
granted pursuant to this Section 3.1 may not be exercised in connection with
any underwritten public offering by the Company or by any Holder without the
prior written consent of the Company.
3.2 Suspension of Offering. Upon any notice by the Company,
either before or after a Holder has delivered a Registration Notice, that a
negotiation or consummation of a transaction by the Company or its
subsidiaries is pending or an event has occurred, which negotiation,
consummation or event would require additional disclosure by the Company in
the Registration Statement of material information which the Company has a
bona fide business purpose for keeping confidential and the nondisclosure of
which in the Registration Statement might cause the Registration Statement to
fail to comply with applicable disclosure requirements (a "Materiality
Notice"), such Holder agrees that it will immediately discontinue offers and
sales of the Registrable Securities under the Registration Statement until
Holder receives copies of a supplemented or amended Prospectus that corrects
the misstatement(s) or omission(s) referred to above and receives notice that
any post-effective amendment has become effective; provided, that the Company
may delay, suspend or withdraw the Registration Statement for such reason for
no more than sixty (60) days after delivery of the Materiality Notice at any
one time. If so directed by the Company, such Holder will deliver to the
Company all copies of the Prospectus covering the Registrable Securities
current at the time of receipt of any Materiality Notice.
3.3 Qualification. The Company agrees to use its best
efforts to register or qualify the Registrable Securities by the time the
applicable Registration Statement is declared effective by the SEC under all
applicable state securities or "blue sky" laws of such jurisdictions as the
applicable Holder shall reasonably request in writing, to keep each such
registration or qualification effective during the period such Registration
3
<PAGE>
Statement is required to be kept effective or during the period offers or
sales are being made by such Holder after delivery of a Registration Notice to
the Company, whichever is shorter, and to do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of the Registrable
Securities owned by such Holder; provided, however, that the Company shall not
be required to (x) qualify generally to do business in any jurisdiction or to
register as a broker or dealer in such jurisdiction where it would not
otherwise be required to qualify but for this Section 3.3, (y) subject itself
to taxation in any such jurisdiction or (z) submit to the general service of
process in any such jurisdiction.
3.4 Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder and each person, if any, who controls
any Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred,
arising out of or based upon any untrue statement
or alleged untrue statement of a material fact
contained in any Registration Statement (or any
amendment thereto) pursuant to which the
Registrable Securities were registered under the
Securities Act, including all documents
incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact
required to be stated therein or necessary to make
the statements therein not misleading or arising
out of or based upon any untrue statement or
alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or
supplement thereto), including all documents
incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact
necessary in order to make the statements therein,
in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or
proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission,
or any such alleged untrue statement or omission,
if such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense
whatsoever, as incurred (including reasonable fees
and disbursements of counsel), reasonably incurred
in investigating, preparing or defending against
any litigation, or investigation or proceeding by
any governmental agency or body, commenced or
threatened, in each case whether or not a party, or
any claim whatsoever based upon any such untrue
4
<PAGE>
statement or omission, or any such alleged untrue
statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that the indemnity provided pursuant to this Section 3.4
does not apply to any Holder with respect to any loss, liability, claim,
damage or expense to the extent arising out of (A) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto), or (B) such Holder's
failure to deliver an amended or supplemental Prospectus if such loss,
liability, claim, damage or expense would not have arisen had such delivery
occurred.
3.5 Indemnification by Each Holder. Each Holder (and each
permitted assignee of a Holder, on a several basis) agrees to indemnify and
hold harmless the Company, and each of its trustees and officers (including
each trustee and officer of the Company who signed a Registration Statement),
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, as
follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of
or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which the
Registrable Securities were registered under the Securities
Act, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out
of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or
any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation,
or investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such
settlement is effected with the written consent of such
Holder; and
(iii) against any and all expense whatsoever, as
incurred (including reasonable fees and disbursements of
counsel), reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, in each case whether or not a party, or any
claim whatsoever based upon any such untrue statement or
5
<PAGE>
omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section 3.5
shall only apply with respect to any loss, liability, claim, damage or expense
to the extent arising out of (A) any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by such Holder expressly for use
in the Registration Statement (or any amendment thereto) or the Prospectus (or
any amendment or supplement thereto) or (B) such Holder's failure to deliver
an amended or supplemental Prospectus if such loss, liability, claim, damage
or expense would not have arisen had such delivery occurred. Notwithstanding
the provisions of this Section 3.5, a Holder and any permitted assignee shall
not be required to indemnify the Company, its officers, trustees or control
persons with respect to any amount in excess of the amount of the total
proceeds to such Holder or such permitted assignee, as the case may be, from
sales of the Registrable Securities of such Holder under the Registration
Statement, and no Holder shall be liable under this Section 3.5 for any
statements or omissions of any other Holder.
3.6 Conduct of Indemnification Proceedings. The indemnified
party hereunder shall give reasonably prompt notice to the indemnifying party
of any action, suit, proceeding or investigation or written threat thereof (a
"Proceeding") commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify the indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in Section 3.4 or 3.5 above, unless and to the extent it did not
otherwise learn of such Proceeding and the lack of notice by the indemnified
party results in the forfeiture by the indemnifying party of substantial
rights and defenses, and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to the indemnified party other than
the indemnification obligation provided under Section 3.4 or 3.5 above. If the
indemnifying party so elects within a reasonable time after receipt of such
notice, the indemnifying party may assume the defense of such Proceeding at
such indemnifying party's own expense with counsel chosen by the indemnifying
party and approved by the indemnified party, which approval shall not be
unreasonably withheld; provided, however, that the indemnifying party will not
settle any such Proceeding without the written consent of the indemnified
party unless, as a condition to such settlement, the indemnifying party
secures the unconditional release of the indemnified party; and provided
further, that if the indemnified party reasonably determines that a conflict
of interest exists where it is advisable for the indemnified party to be
represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to it which are different from or in addition to
those available to the indemnifying party, then the indemnifying party shall
not be entitled to assume such defense and the indemnified party shall be
entitled to separate counsel at the indemnifying party's expense. If the
indemnifying party is not entitled to assume the defense of such Proceeding as
a result of the second proviso to the preceding sentence, the indemnifying
party's counsel shall be entitled to conduct the indemnifying party's defense
and counsel for the indemnified party shall be entitled to conduct the defense
of the indemnified party, it being understood that both such counsel will
cooperate with each other to conduct the defense of such Proceeding as
efficiently as possible. If the indemnifying party is not so entitled to
assume the defense of such Proceeding or does not assume such defense, after
6
<PAGE>
having received the notice referred to in the first sentence of this
paragraph, the indemnifying party will pay the reasonable fees and expenses of
counsel for the indemnified party. In such event, however, the indemnifying
party will not be liable for any settlement effected without the written
consent of the indemnifying party. If an indemnifying party is entitled to
assume, and assumes, the defense of such Proceeding in accordance with this
paragraph, the indemnifying party shall not be liable for any fees and
expenses of counsel for the indemnified party incurred thereafter in
connection with such Proceeding.
3.7 Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 3.4 and 3.5 above is for any reason held to be unenforceable by the
indemnified party although applicable in accordance with its terms, the
Company and the relevant Holder shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and such Holder, (i) in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and such Holder on the other, in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities or
expenses, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative fault of but also the relative benefits to the Company
on the one hand and such Holder on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits to the indemnifying party and
indemnified party shall be determined by reference to, among other things, the
total proceeds received by the indemnifying party and indemnified party in
connection with the offering to which such losses, claims, damages,
liabilities or expenses relate. The relative fault of the indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, the
indemnifying party or the indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action.
The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 3.7 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 3.7, a
Holder shall not be required to contribute any amount in excess of the amount
of the total proceeds to such Holder from sales of the Registrable Securities
of such Holder under the Registration Statement.
Notwithstanding the foregoing, no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 3.7,
each person, if any, who controls a Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Holder, and each trustee of the Company, each
officer of the Company who signed a Registration Statement and each person, if
7
<PAGE>
any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company.
Section 4. Expenses
The Company shall pay all expenses incident to the
performance by it of its registration obligations under Sections 2 and 3,
including (i) all stock exchange, SEC and state securities registration,
listing and filing fees, (ii) all expenses incurred in connection with the
preparation, printing and distributing of the Registration Statement and
Prospectus and (iii) fees and disbursements of counsel for the Company and of
the independent public accountants of the Company. Each Holder shall be
responsible for the payment of (i) any brokerage and sales commissions, (ii)
fees and disbursements of such Holder's counsel, accountants and other
advisors and (iii) any transfer taxes relating to the sale or disposition of
the Registrable Securities by such Holder pursuant to Section 3 or otherwise.
Section 5. Rule 144 Compliance
The Company covenants that it will use its best efforts to
file in a timely manner the reports required to be filed by the Company under
the Securities Act and the Exchange Act so as to enable each Holder to sell
Registrable Securities pursuant to Rule 144 under the Securities Act. In
connection with any sale, transfer or other disposition by a Holder of any
Registrable Securities pursuant to Rule 144 under the Securities Act, the
Company shall cooperate with the Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
and not bearing any Securities Act legend, and to enable certificates for such
Registrable Securities to be for such number of shares and registered in such
names as such Holder may reasonably request at least ten (10) business days
prior to any sale of Registrable Securities hereunder.
Section 6. Miscellaneous
6.1 Integration; Amendment. This Agreement constitutes the
entire agreement among the parties hereto with respect to the matters set
forth herein and supersedes and renders of no force and effect all prior oral
or written agreements, commitments and understandings among the parties with
respect to the matters set forth herein. Except as otherwise expressly
provided in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by the Company and each Holder against whom such amendment,
modification or discharge is sought to be enforced.
6.2 Waivers. No waiver by a party hereto shall be effective
unless made in a written instrument duly executed by the party against whom
such waiver is sought to be enforced, and only to the extent set forth in such
instrument. Neither the waiver by any of the parties hereto of a breach or a
default under any of the provisions of this Agreement, nor the failure of any
of the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder shall
thereafter be construed as a waiver of any subsequent breach or default of a
similar nature, or as a waiver of any such provisions, rights or privileges
hereunder.
8
<PAGE>
6.3 Assignment; Successors and Assigns. This Agreement and
the rights granted hereunder may not be assigned by any Holder without the
written consent of the Company; provided, however, that any Holder may assign
its rights and obligations hereunder, in whole or in part, following at least
ten (10) days prior written notice to the Company, (i) to such Holder's direct
equity owners (e.g., shareholders, partners or members) or beneficiaries in
connection a distribution of such Holder's Units to its direct equity owners
or beneficiaries and (ii) to a permitted transferee in connection with a
transfer of the Units in accordance with the terms of the Operating
Partnership Agreement, if, in the case of either (i) or (ii) above, such
persons agree in writing to be bound by all of the provisions hereof.
6.4 Burden and Benefit. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and, subject to
Section 6.3 above, assigns.
6.5 Notices. All notices called for under this Agreement
shall be in writing and shall be given by hand delivery, registered first
class mail, telecopier or any courier guaranteeing overnight delivery, and
shall be addressed (return receipt requested), postage prepaid, (i) if to the
Company, at its address appearing on the signature page hereto, or (ii) if to
a Holder, to the addresses set forth opposite its name in Schedule A hereto,
or to any other address or addressee as any party entitled to receive notice
under this Agreement shall designate, from time to time, to others in the
manner provided in this Section 6.5 for the service of notices. All such
notices shall be deemed to have been given: at the time delivered by hand, if
personally delivered; three (3) business days after being deposited in the
mail, if mailed; when receipt is acknowledged, if telecopied; or at the time
delivered, if delivered by a courier guaranteeing overnight delivery.
6.6 Specific Performance. The parties hereto acknowledge
that the obligations undertaken by them hereunder are unique and that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to (i) compel specific performance of the obligations, covenants and
agreements of any other party under this Agreement in accordance with the
terms and conditions of this Agreement and (ii) obtain preliminary injunctive
relief to secure specific performance and to prevent a breach or contemplated
breach of this Agreement in any court of the United States or any State
thereof having jurisdiction.
6.7 Governing Law. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating
thereto, shall be governed by and construed in accordance with the laws of the
State of Maryland, but not including the choice of law rules thereof.
6.8 Headings. Section and subsection headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any
way define or affect the meaning, construction or scope of any of the
provisions hereof.
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6.9 Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the person or entity may require.
6.10 Execution in Counterparts. To facilitate execution,
this Agreement may be executed in as many counterparts as may be required. It
shall not be necessary that the signature of or on behalf of each party
appears on each counterpart, but it shall be sufficient that the signature of
or on behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It shall not be
necessary in any proof of this Agreement to produce or account for more than a
number of counterparts containing the respective signatures of or on behalf of
all of the parties.
6.11 Severability. If fulfillment of any provision of this
Agreement, at the time such fulfillment shall be due, shall transcend the
limit of validity prescribed by law, then the obligation to be fulfilled shall
be reduced to the limit of such validity; and if any clause or provision
contained in this Agreement operates or would operate to invalidate this
Agreement, in whole or in part, then such clause or provision only shall be
held ineffective, as though not herein contained, and the remainder of this
Agreement shall remain operative and in full force and effect.
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be duly executed on its behalf as of the date first
hereinabove set forth.
COMPANY:
Address: ElderTrust
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
By: /s/ D. Lee McCreary, Jr.
---------------------------------------
Name: D. Lee McCreary, Jr.
---------------------------------------
Title: Vice President and Secretary
---------------------------------------
HOLDERS:
/s/ D. Lee McCreary, Jr.
---------------------------------------
D. Lee McCreary, Jr.
MGI Limited Partnership
By: MGI, Inc.
By: /s/ Michael R. Walker
----------------------------
Michael R. Walker
President
/s/ Edward B. Romanov, Jr.
---------------------------------------
Edward B. Romanov, Jr.
Thomas W. Balderston
Gregory H. Doyle
Richard R. Howard
Senior LifeChoice Corp.
Michael R. Walker
Joseph A. Williamson
By: /s/ Edward B. Romanov, Jr.
----------------------------
Edward B. Romanov, Jr.
Attorney-in-Fact
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SCHEDULE A
-----------
HOLDERS
Thomas W. Balderston
Gregory H. Doyle
Richard R. Howard
D. Lee McCreary, Jr.
MGI Limited Partnership
Edward B. Romanov, Jr.
Senior LifeChoice Corp.
Michael R. Walker
Joseph A. Williamson
<PAGE>
ELDERTRUST
1998 SHARE OPTION AND INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS...........................1
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS..............3
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; RECAPITALIZATIONS;
MERGERS; SUBSTITUTE AWARDS.........................................4
SECTION 4. ELIGIBILITY........................................................6
SECTION 5. SHARE OPTIONS......................................................6
SECTION 6. RESTRICTED SHARE AWARDS............................................9
SECTION 7. DEFERRED SHARE AWARDS..............................................11
SECTION 8. UNRESTRICTED SHARE AWARDS..........................................12
SECTION 9. PERFORMANCE SHARE AWARDS...........................................12
SECTION 10. DISTRIBUTION EQUIVALENT RIGHTS....................................13
SECTION 11. TAX WITHHOLDING...................................................13
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC...................................14
SECTION 13. AMENDMENTS AND TERMINATION........................................14
SECTION 14. STATUS OF PLAN....................................................14
SECTION 15. CHANGE OF CONTROL PROVISIONS......................................15
SECTION 16. GENERAL PROVISIONS................................................15
SECTION 17. EFFECTIVE DATE OF PLAN............................................16
SECTION 18. GOVERNING LAW.....................................................16
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ELDERTRUST
1998 SHARE OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
The name of the plan is the ElderTrust 1998 Share Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and
enable the officers, employees, Non-Employee Trustees and other key persons of
ElderTrust (the "Company"), and the employees and other key persons of
ElderTrust Operating Limited Partnership (the "Operating Partnership") and the
Company's other Subsidiaries, upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire
a proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby
stimulating their efforts on the Company's behalf and strengthening their
desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Administrator" means either the Board or the Committee, to
the extent the Committee has been delegated authority pursuant to Section 2.
"Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Share Options,
Non-Qualified Share Options, Restricted Share Awards, Deferred Share Awards,
Unrestricted Share Awards, Performance Share Awards and Distribution
Equivalent Rights.
"Board" means the Board of Trustees of the Company as
constituted from time to time.
"Change of Control" is defined in Section 15.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor Code, and related rules, regulations and
interpretations.
"Committee" means the Committee of the Board referred to in
Section 2(b).
"Company" means ElderTrust, a Maryland real estate
investment trust, and any successor thereto.
"Deferred Share Award" means Awards granted pursuant to
Section 7.
<PAGE>
"Distribution Equivalent Right" means Awards granted
pursuant to Section 10.
"Effective Date" means the date on which the Plan is
initially approved by Shareholders as set forth in Section 17.
"Fair Market Value" on any given date means the last
reported sale price at which Shares are traded on such date or, if no Shares
are traded on such date, the next preceding date on which Shares were traded,
as reflected on the principal stock exchange or, if applicable, any other
national stock exchange on which the Shares are traded or admitted to trading.
Notwithstanding the foregoing, the Fair Market Value on the first day of the
Company's initial public offering of Shares shall be the initial public
offering price as set forth in the final prospectus for the Company's initial
public offering.
"Incentive Share Option" means any Share Option that
qualifies as and is designated in writing in the related Option agreement as
constituting an "incentive stock option" as defined in Section 422 of the
Code.
"Non-Employee Trustee" means a member of the Board who is
not also an employee of the Company or any Subsidiary.
"Non-Qualified Share Option" means any Share Option that is
not an Incentive Share Option.
"Operating Partnership" means ElderTrust Operating Limited
Partnership, a Delaware limited partnership, and any successor thereto.
"Option" or "Share Option" means any option to purchase
Shares granted pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to
Section 9.
"Restricted Share Award" means Awards granted pursuant to
Section 6.
"Shares" means the common shares of beneficial interest, par
value $.01 per share, of the Company, subject to adjustments pursuant to
Section 3.
"Subsidiary" means any corporation or other entity (other
than the Company) in any unbroken chain of corporations or other entities
beginning with the Company if each of the corporations or entities (other than
the last corporation or entity in the unbroken chain) owns Shares or other
interests possessing 50 percent or more of the economic interest or the total
combined voting power of all classes of Shares or other interests in one of
the other corporations or entities in the chain.
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"Unrestricted Share Award" means any Award granted pursuant
to Section 8.
SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(a) The Plan shall be administered by the Board, which shall
have the full power and authority to take all actions and to make all
determinations required or provided for under the Plan or any Award granted or
agreement entered into hereunder and all such other actions and determinations
not inconsistent with the specific terms and provisions of the Plan deemed by
the Board to be necessary or appropriate to the administration of the Plan or
any Award granted or agreement entered into hereunder.
(b) The Board from time to time may appoint a Committee
consisting of two or more members of the Board who, in the sole discretion of
the Board, may be the same trustees who serve on the Compensation Committee,
or may appoint the Compensation Committee to serve as the Committee. The
Board, in its sole discretion, may provide that the role of the Committee
shall be limited to making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board pursuant to or
with respect to the Plan, or the Board may delegate to the Committee such
powers and authorities related to the administration of the Plan, as set forth
in Section 2(a) above, as the Board shall determine, consistent with the
By-Laws of the Company and applicable law. In the event that the Plan or any
Award granted or agreement entered into hereunder provides for any action to
be taken by or determination to be made by the Board, such action may be taken
by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as
provided for in this Section 2.
(c) Powers of Administrator. The Administrator shall have
the power and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:
(i) to select the individuals to whom Awards may
from time to time be granted;
(ii) to determine the time or times of grant, and
the extent, if any, of Incentive Share Options,
Non-Qualified Share Options, Restricted Share Awards,
Deferred Share Awards, Unrestricted Share Awards,
Performance Share Awards and Distribution Equivalent Rights,
or any combination of the foregoing, granted to any one or
more participants;
3
<PAGE>
(iii) to determine the number of Shares to be
covered by any Award;
(iv) to determine and modify from time to time the
terms and conditions, including restrictions, not
inconsistent with the terms of the Plan, of any Award, which
terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability
or vesting of all or any portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii),
to extend at any time the post-termination period in which
Share Options may be exercised;
(vii) to determine at any time whether, to what
extent, and under what circumstances Shares and other
amounts payable with respect to an Award shall be deferred
either automatically or at the election of the participant
and whether and to what extent the Company shall pay or
credit amounts constituting deemed interest (at rates
determined by the Administrator) or distributions or deemed
distributions on such deferrals; and
(viii) at any time to adopt, alter and repeal such
rules, guidelines and practices for administration of the
Plan and for its own acts and proceedings as it shall deem
advisable; to interpret the terms and provisions of the Plan
and any Award (including related written instruments); to
make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising
in connection with the Plan; and to otherwise supervise the
administration of the Plan.
All decisions and interpretations of the Administrator shall
be made in the Administrator's sole and absolute discretion and shall be final
and binding on all persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; RECAPITALIZATIONS;
MERGERS; SUBSTITUTE AWARDS
(a) Shares Issuable. The maximum number of Shares reserved
and available for issuance under the Plan shall be such aggregate number of
Shares as does not exceed the sum of (i) 779,340 Shares; plus (ii) as of
January 1, 1999, 9.9 percent of any net increase since the Company's initial
public offering in the total number of Shares actually outstanding (assuming
all units of partnership interests in the Operating Partnership that are
subject to redemption rights are converted into Shares); plus (iii) as of each
4
<PAGE>
January 1 thereafter, 9.9 percent of any net increase since the preceding
January 1 in the total number of Shares actually outstanding (assuming all
units of partnership interests in the Operating Partnership that are subject
to redemption rights are converted into Shares). Notwithstanding the
foregoing, the maximum number of Shares for which Incentive Share Options may
be granted under the Plan shall not exceed 779,340 Shares, reduced by the
aggregate number of Shares subject to outstanding Awards granted under the
Plan. For purposes of this limitation, if any portion of an Award is
forfeited, canceled, reacquired by the Company, satisfied without the issuance
of Shares or otherwise terminated, the Shares underlying such portion of the
Award shall be added back to the Shares available for issuance under the Plan.
Subject to such overall limitation, Shares may be issued up to such maximum
number pursuant to any type or types of Award; provided, however, that on and
after the date the Company is first subject to the provisions of Section
162(m) of the Code with respect to grants made or compensation earned under
the Plan, Shares Options with respect to no more than 500,000 Shares may be
granted to any one individual participant during any one calendar year period.
The Shares available for issuance under the Plan may be authorized but
unissued Shares or Shares reacquired by the Company.
(b) Recapitalizations. If, through, or as a result of any
merger, consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, share dividend,
share split, reverse share split or other similar transaction, the outstanding
Shares are increased or decreased or are exchanged for a different number or
kind of shares or other securities of the Company, or additional shares or new
or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such Shares or other securities, the
Administrator may make an appropriate or proportionate adjustment in (i) the
maximum number of Shares reserved for issuance under the Plan, (ii) the number
of Share Options that can be granted to any one individual participant, (iii)
the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan, (iv) the maximum number of Shares for which
Incentive Share Options may be granted under the Plan, and (v) the price for
each share subject to any then outstanding Share Options under the Plan,
without changing the aggregate exercise price (i.e., the exercise price
multiplied by the number of Share Options) as to which such Share Options
remain exercisable. The adjustment by the Administrator shall be final,
binding and conclusive. No fractional Shares shall be issued under the Plan
resulting from any such adjustment, but the Administrator in its discretion
may make a cash payment in lieu of fractional shares.
(c) Mergers. In contemplation of and subject to the
consummation of a consolidation or merger or sale of all or substantially all
of the assets of the Company in which outstanding Shares are exchanged for
securities, cash or other property of an unrelated corporation or business
entity or in the event of a liquidation of the Company (in each case, a
"Transaction"), the Board, or the board of directors of any entity assuming
the obligations of the Company, may, in its discretion, take any one or more
of the following actions, as to outstanding Awards: (i) provide that such
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<PAGE>
Awards shall be assumed or equivalent awards shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), and/or (ii)
upon written notice to the participants, provide that all Awards will
terminate immediately prior to the consummation of the Transaction. In the
event that, pursuant to clause (ii) above, Awards will terminate immediately
prior to the consummation of the Transaction, all vested Awards, other than
Share Options, shall be fully settled in cash or in kind at such appropriate
consideration as determined by the Administrator in its sole discretion after
taking into account the consideration payable per Share pursuant to the
business combination (the "Merger Price") and all Share Options shall be fully
settled, in cash or in kind, in an amount equal to the difference between (A)
the Merger Price times the number of Shares subject to such outstanding Share
Options (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such outstanding Share
Options; provided, however, that each participant shall be permitted, within a
specified period determined by the Administrator prior to the consummation of
the Transaction, to exercise all outstanding Share Options, including those
that are not then exercisable, subject to the consummation of the Transaction.
(d) Substitute Awards. The Administrator may grant Awards
under the Plan in substitution for Shares and Share based awards held by
employees of another corporation who become employees of the Company or a
Subsidiary as the result of a merger or consolidation of the employing
corporation with the Company or a Subsidiary or the acquisition by the Company
or a Subsidiary of property or Shares of the employing corporation. The
Administrator may direct that the substitute awards be granted on such terms
and conditions as the Administrator considers appropriate in the
circumstances.
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time
officers and other employees, Non-Employee Trustees and key persons of the
Company, the Operating Partnership and the Company's other Subsidiaries who
are responsible for or contribute to the management, growth or profitability
of the Company, the Operating Partnership and the Company's other Subsidiaries
as are selected from time to time by the Administrator in its sole discretion.
SECTION 5. SHARE OPTIONS
Any Share Option granted under the Plan shall be in such
form as the Administrator may from time to time approve.
Share Options granted under the Plan may be either Incentive
Share Options or Non-Qualified Share Options. Incentive Share Options may be
granted only to employees of the Company or any Subsidiary that is a
"subsidiary corporation" within the meaning of Section 424(f) of the Code. To
the extent that any Option does not qualify as an Incentive Share Option, it
6
<PAGE>
shall be deemed a Non-Qualified Share Option.
No Incentive Share Option shall be granted under the Plan
after January 26, 2008.
(a) Share Options Granted to Employees and Key Persons and
Non-Employee Trustees. The Administrator in its discretion may grant Share
Options to eligible employees and key persons of the Company or any Subsidiary
and to Non-Employee Trustees. Share Options granted pursuant to this Section
5(a) shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable. If the Administrator so
determines, Share Options may be granted in lieu of cash compensation at the
participant's election, subject to such terms and conditions as the
Administrator may establish, as well as in addition to other compensation.
(i) Exercise Price. The exercise price per share
for the Shares covered by a Share Option granted pursuant to
this Section 5(a) shall be determined by the Administrator
at the time of grant but shall not be less than 100 percent
of the Fair Market Value on the date of grant in the case of
Incentive Share Options, or par value in the case of
Non-Qualified Share Options. If an employee owns or is
deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10 percent of the combined
voting power of all classes of Shares of the Company or any
parent or subsidiary corporation and an Incentive Share
Option is granted to such employee, the exercise price of
such Incentive Share Option shall be not less than 110
percent of the Fair Market Value on the grant date.
(ii) Option Term. The term of each Share Option
shall be fixed by the Administrator, but no Incentive Share
Option shall be exercisable more than ten years after the
date the Share Option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10 percent of the combined
voting power of all classes of Shares of the Company or any
parent or subsidiary corporation and an Incentive Share
Option is granted to such employee, the term of such Share
Option shall be no more than five years from the date of
grant.
(iii) Exercisability; Rights of a Shareholder.
Share Options shall become exercisable at such time or
times, whether or not in installments, as shall be
determined by the Administrator at or after the grant date;
provided, however, that Share Options granted in lieu of
compensation shall be exercisable in full as of the grant
date unless the Administrator otherwise provides in the
Option Award agreement. The Administrator may at any time
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<PAGE>
accelerate the exercisability of all or any portion of any
Share Option. A participant shall have the rights of a
Shareholder only as to Shares acquired upon the exercise of
a Share Option and not as to unexercised Share Options.
(iv) Method of Exercise. Share Options may be
exercised in whole or in part, by giving written notice of
exercise to the Company, specifying the number of shares to
be purchased. Payment of the purchase price may be made by
one or more of the following methods to the extent provided
in the Option Award agreement:
(A) In cash, by certified or bank check
or other instrument acceptable to the Administrator;
(B) In the form of Shares that are not
then subject to restrictions under any Company plan
and that have been beneficially owned by the
participant for at least six months, if permitted
by the Administrator in its discretion. Such
surrendered Shares shall be valued at Fair Market
Value on the exercise date;
(C) By the participant delivering to the
Company a properly executed exercise notice
together with irrevocable instructions to a broker
to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the
purchase price; provided that in the event the
participant chooses to pay the purchase price as so
provided, the participant and the broker shall
comply with such procedures and enter into such
agreements of indemnity and other agreements as the
Administrator shall prescribe as a condition of
such payment procedure; or
(D) By the participant delivering to the
Company a promissory note if the Administrator has
expressly authorized the loan of funds to the
participant for the purpose of enabling or
assisting the participant to effect the exercise of
his Share Option; provided that at least so much of
the exercise price as represents the par value of
the Shares shall be paid other than with a
promissory note.
Payment instruments will be received subject to collection.
The delivery of certificates representing the Shares to be
purchased pursuant to the exercise of a Share Option will be
contingent upon receipt from the participant (or a purchaser
acting in his stead in accordance with the provisions of the
Share Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements
contained in the Share Option or applicable provisions of
laws.
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(v) Annual Limit on Incentive Share Options. To the
extent required for "incentive stock option" treatment under
Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the Shares with
respect to which Incentive Share Options granted under this
Plan and any other plan of the Company or its parent and
subsidiary corporations become exercisable for the first
time by a participant during any calendar year shall not
exceed $100,000. To the extent that any Share Option exceeds
this limit, it shall constitute a Non-Qualified Share
Option.
(b) Reload Options. At the discretion of the Administrator
and subject to such restrictions, terms and conditions as the Administrator
may establish, Options granted under the Plan may include a "reload" feature
pursuant to which a participant exercising a Share Option by the delivery of a
number of Shares in accordance with Section 5(a)(iv)(B) hereof would
automatically be granted an additional Share Option (with an exercise price
equal to the Fair Market Value of the Shares on the date the additional Share
Option is granted and with such other terms as the Administrator may provide)
to purchase that number of Shares equal to the number delivered to exercise
the original Share Option with an Option term equal to the remainder of the
original Option term unless the Administrator otherwise determines in the
Option Award agreement for the original grant.
(c) Non-transferability of Share Options. No Share Option
shall be transferable by the participant otherwise than by will or by the laws
of descent and distribution and all Share Options shall be exercisable, during
the participant's lifetime, only by the participant. Notwithstanding the
foregoing, the Administrator, in its sole discretion, may provide in the Award
agreement regarding a given Share Option that the participant may transfer,
without consideration for the transfer, his Non-Qualified Share Options to
members of his family, to trusts for the benefit of such family members, or to
partnerships in which such family members are the only partners, provided that
the transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable Option Award agreement.
(d) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement, or, subject to Section 13 below,
in writing after the Award agreement is issued, a participant's rights in all
Share Options shall automatically terminate upon the participant's termination
of employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.
SECTION 6. RESTRICTED SHARE AWARDS
(a) Nature of Restricted Share Awards. A Restricted Share
Award is an Award entitling the recipient to acquire, at par value or such
other higher purchase price determined by the Administrator, Shares subject to
such restrictions and conditions as the Administrator may determine at the
time of grant ("Restricted Shares"). Conditions may be based on continuing
employment (or other business relationship) and/or achievement of
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<PAGE>
pre-established performance goals and objectives. Such performance goals and
objectives shall be established in writing by the Administrator prior to the
ninetieth day of the year in which the grant is made and while the outcome is
substantially uncertain. Performance goals and objectives shall be based on
Share price, market share, sales, earnings per Share, return on equity, costs,
or any combination of these factors. Performance goals and objectives may
include positive results, maintaining the status quo or limiting economic
losses. The grant of a Restricted Share Award is contingent on the participant
executing the Restricted Share Award agreement. The terms and conditions of
each such agreement shall be determined by the Administrator, and such terms
and conditions may differ among individual Awards and participants.
(b) Rights as a Shareholder. Upon execution of the
Restricted Share Award agreement and paying any applicable purchase price, a
participant shall have the rights of a Shareholder with respect to the voting
of the Restricted Share, subject to such terms and conditions as may be
contained in the Restricted Share Award agreement. Unless the Administrator
shall otherwise determine, certificates evidencing the Restricted Shares shall
remain in the possession of the Company until such Restricted Shares are
vested as provided in Section 6(d) below, and the participant shall be
required, as a condition of the grant, to deliver to the Company a Share power
endorsed in blank.
(c) Restrictions. Restricted Shares may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except
as specifically provided herein or in the Restricted Share Award agreement. If
a participant's employment (or other business relationship) with the Company
and its Subsidiaries terminates for any reason, the Company shall have the
right to repurchase Restricted Shares that have not vested at the time of
termination at their original purchase price, from the participant or the
participant's legal representative.
(d) Vesting of Restricted Shares. The Administrator at the
time of grant shall specify the date or dates and/or the attainment of
pre-established performance goals, objectives and other conditions on which
the non-transferability of the Restricted Shares and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer
be Restricted Shares and shall be deemed "vested." Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 13 below, in writing after the Award agreement is issued, a
participant's rights in any shares of Restricted Shares that have not vested
shall automatically terminate upon the participant's termination of employment
(or other business relationship) with the Company and its Subsidiaries and
such shares shall be subject to the Company's right of repurchase as provided
in Section 6(c) above.
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(e) Waiver, Deferral and Reinvestment of Distributions. The
Restricted Share Award agreement may require or permit the immediate payment,
waiver, deferral or reinvestment (in the form of additional Restricted Shares)
of distributions paid on the Restricted Shares.
SECTION 7. DEFERRED SHARE AWARDS
(a) Nature of Deferred Share Awards. A Deferred Share Award
is an Award of phantom Share units to a participant, subject to restrictions
and conditions as the Administrator may determine at the time of grant.
Conditions may be based on continuing employment (or other business
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Deferred Share Award is contingent on the
participant executing the Deferred Share Award agreement. The terms and
conditions of each such agreement shall be determined by the Administrator,
and such terms and conditions may differ among individual Awards and
participants. At the end of the deferral period, the Deferred Share Award, to
the extent vested, shall be paid to the participant in the form of Shares.
(b) Election to Receive Deferred Share Awards in Lieu of
Compensation. The Administrator may, in its sole discretion, permit a
participant to elect to receive a portion of the cash compensation or
Restricted Share Award otherwise due to such participant in the form of a
Deferred Share Award. Any such election shall be made in writing and shall be
delivered to the Company no later than the date specified by the Administrator
and in accordance with rules and procedures established by the Administrator.
The Administrator shall have the sole right to determine whether and under
what circumstances to permit such elections and to impose such limitations and
other terms and conditions thereon as the Administrator deems appropriate.
(c) Rights as a Shareholder. During the deferral period, a
participant shall have no rights as a Shareholder; provided, however, that the
participant may be credited with Distribution Equivalent Rights with respect
to the phantom Share units underlying his Deferred Share Award, subject to
such terms and conditions as the Administrator may determine.
(d) Restrictions. A Deferred Share Award may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of during
the deferral period.
(e) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below,
in writing after the Award agreement is issued, a participant's right in all
Deferred Share Awards that have not vested shall automatically terminate upon
the participant's termination of employment (or cessation of business
relationship) with the Company and its Subsidiaries for any reason.
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SECTION 8. UNRESTRICTED SHARE AWARDS
Grant or Sale of Unrestricted Shares. The Administrator may,
in its sole discretion, grant (or sell at par value or such other higher
purchase price determined by the Administrator) an Unrestricted Share Award to
any participant pursuant to which such participant may receive Shares free of
any restrictions ("Unrestricted Shares") under the Plan. Unrestricted Share
Awards may be granted or sold as described in the preceding sentence in
respect of past services or other valid consideration, or in lieu of any cash
compensation due to such participant.
SECTION 9. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A Performance Share
Award is an Award entitling the recipient to acquire Shares upon the
attainment of specified performance goals. The Administrator may make
Performance Share Awards independent of or in connection with the granting of
any other Award under the Plan. The Administrator in its sole discretion shall
determine whether and to whom Performance Share Awards shall be made, the
performance goals applicable under each such Award, the periods during which
performance is to be measured, and all other limitations and conditions
applicable to the awarded Performance Shares; provided, however, that the
Administrator may rely on the performance goals and other standards applicable
to other performance unit plans of the Company in setting the standards for
Performance Share Awards under the Plan.
(b) Rights as a Shareholder. A participant receiving a
Performance Share Award shall have the rights of a Shareholder only as to
shares actually received by the participant under the Plan and not with
respect to shares subject to the Award but not actually received by the
participant. A participant shall be entitled to receive a Share certificate
evidencing the acquisition of Shares under a Performance Share Award only upon
satisfaction of all conditions specified in the written instrument evidencing
the Performance Share Award (or in a performance plan adopted by the
Administrator).
(c) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below,
in writing after the Award agreement is issued, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.
(d) Acceleration, Waiver, Etc. At any time prior to the
participant's termination of employment (or other business relationship) by
the Company and its Subsidiaries, the Administrator may in its sole discretion
accelerate, waive or, subject to Section 13, amend any or all of the goals,
restrictions or conditions imposed under any Performance Share Award.
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SECTION 10. DISTRIBUTION EQUIVALENT RIGHTS
(a) Distribution Equivalent Rights. A Distribution
Equivalent Right is an Award entitling the recipient to receive credits based
on cash distributions that would have been paid on the Shares specified in the
Distribution Equivalent Right (or other award to which it relates) if such
shares had been issued to and held by the recipient. A Distribution Equivalent
Right may be granted hereunder to any participant as a component of another
Award or as a freestanding award. The terms and conditions of Distribution
Equivalent Rights shall be specified in the grant. Distribution equivalents
credited to the holder of a Distribution Equivalent Right may be paid
currently or may be deemed to be reinvested in additional Shares, which may
thereafter accrue additional equivalents. Any such reinvestment shall be at
Fair Market Value on the date of reinvestment. Distribution Equivalent Rights
may be settled in cash or Shares or a combination thereof, in a single
installment or installments, all determined in the sole discretion of the
Administrator. A Distribution Equivalent Right granted as a component of
another Award may provide that such Distribution Equivalent Right shall be
settled upon exercise, settlement, or payment of, or lapse of restrictions on,
such other award, and that such Distribution Equivalent Right shall expire or
be forfeited or annulled under the same conditions as such other award. A
Distribution Equivalent Right granted as a component of another Award may also
contain terms and conditions different from such other award.
(b) Interest Equivalents. Any Award under this Plan that is
settled in whole or in part in cash on a deferred basis may provide in the
grant for interest equivalents to be credited with respect to such cash
payment. Interest equivalents may be compounded and shall be paid upon such
terms and conditions as may be specified by the grant.
(c) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below,
in writing after the Award agreement is issued, a participant's rights in all
Distribution Equivalent Rights or interest equivalents shall automatically
terminate upon the participant's termination of employment (or cessation of
business relationship) with the Company and its Subsidiaries for any reason.
SECTION 11. TAX WITHHOLDING
(a) Payment by Participant. Each participant shall, no later
than the date as of which the value of an Award or of any Shares or other
amounts received thereunder first becomes includable in the gross income of
the participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such income. The Company and its Subsidiaries shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
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any kind otherwise due to the participant. The Company's obligation to deliver
Share certificates to any participant is subject to and conditioned on tax
obligations being satisfied by the participant.
(b) Payment in Shares. Subject to approval by the
Administrator, a participant may elect to have such tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold
from Shares to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
Shares owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount
due.
SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
(a) a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to
another; or
(b) an approved leave of absence for military service or
sickness, or for any other purpose approved by the Company, if the employee's
right to reemployment is guaranteed either by a statute or by contract or
under the written policy pursuant to which the leave of absence was granted or
if the Administrator otherwise so provides in writing.
SECTION 13. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan
and the Administrator may, at any time, amend or cancel any outstanding Award
for the purpose of satisfying changes in law or for any other lawful purpose,
but no such action shall adversely affect rights under any outstanding Award
without the holder's written consent. The Administrator may provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise
or purchase price in a manner not inconsistent with the terms of the Plan, but
such price, if any, must satisfy the requirements which would apply to the
substitute or amended Award if it were then initially granted under this Plan,
but no such action shall adversely affect rights under any outstanding Award
without the holder's written consent. Nothing in this Section 13 shall limit
the Board's authority to take any action permitted pursuant to Section 3(c).
SECTION 14. STATUS OF PLAN
Unless the Administrator shall otherwise expressly determine
in writing, with respect to the portion of any Award which has not been
exercised and any payments in cash, Shares or other consideration not received
by a participant, a participant shall have no rights greater than those of a
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general creditor of the Company. In its sole discretion, the Administrator may
authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Shares or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is
consistent with the foregoing sentence.
SECTION 15. CHANGE OF CONTROL PROVISIONS
(a) Upon the occurrence of a Change of Control as defined in
this Section 15 or as otherwise defined in the Award agreement, each Award
shall be subject to such terms, if any, with respect to a Change of Control as
have been provided by the Administrator either in the Award agreement or,
subject to Section 13 above, in writing after the Award agreement is issued.
(b) "Change of Control" shall mean the occurrence of any one
of the following events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act), becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company's then outstanding securities; (ii) during any two (2) year period,
individuals who at the beginning of such period constitute the Board of
Trustees, including for this purpose any new trustee whose election resulted
from a vacancy on the Board of Trustees caused by the mandatory retirement,
death, or disability of a trustee and was approved by a vote of at least
two-thirds (2/3rds) of the trustees then still in office who were trustees at
the beginning of the period, cease for any reason to constitute a majority
thereof; (iii) notwithstanding clauses (i) or (v) of this Section 15(b), the
Company consummates a merger or consolidation of the Company with or into
another corporation or trust, the result of which is that the shareholders of
the Company at the time of the execution of the agreement to merge or
consolidate own less than eighty percent (80%) of the total equity of the
entity surviving or resulting from the merger or consolidation or of a entity
owning, directly or indirectly, one hundred percent (100%) of the total equity
of such surviving or resulting entity; (iv) the sale in one or a series of
transactions of all or substantially all of the assets of the Company; (v) any
person, has commenced a tender or exchange offer, or entered into an agreement
or received an option to acquire beneficial ownership of fifty percent (50%)
or more of the total number of voting shares of the Company unless the Board
of Trustees has made a determination that such action does not constitute and
will not constitute a change in the persons in control of the Company; or (vi)
there is a change of control in the Company of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Act other than in circumstances specifically covered by
clauses (i) - (v) above.
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SECTION 16. GENERAL PROVISIONS
(a) No Distribution; Compliance with Legal Requirements. The
Administrator may require each person acquiring Shares pursuant to an Award to
represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof.
No Shares shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Shares and Awards
as it deems appropriate.
(b) Delivery of Share Certificates. Share certificates to be
delivered to participants under this Plan shall be deemed delivered for all
purposes when the Company or a Share transfer agent of the Company shall have
mailed such certificates in the United States mail, addressed to the
participant, at the participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights.
Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including trusts, and such arrangements
may be either generally applicable or applicable only in specific cases. The
adoption of this Plan and the grant of Awards shall not confer upon any
employee any right to continued employment with the Company or any Subsidiary
and shall not interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of any of its employees at any time.
(d) Trading Policy Restrictions. Option exercises and other
Awards under the Plan shall be subject to such Company
insider-trading-policy-related restrictions, terms and conditions as may be
established by the Administrator, or in accordance with policies set by the
Administrator, from time to time.
SECTION 17. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the
holders of a majority of the votes cast at a meeting of Shareholders at which
a quorum is present or by a unanimous written consent of Shareholders. Subject
to such approval by the Shareholders and to the requirement that no Share may
be issued hereunder prior to such approval, Share Options and other Awards may
be granted hereunder on and after adoption of this Plan by the Board.
SECTION 18. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall
be governed by, and construed in accordance with, the laws of the State of
Maryland, applied without regard to conflict of law principles.
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 30th day of January, 1998, by and between
Edward B. Romanov, Jr. ("Employee") and ElderTrust, a Maryland real estate
investment trust ("Employer").
BACKGROUND
The Board of Trustees of the Employer (the "Board of Trustees")
recognizes that the Employee's contribution to the growth and success of the
Employer will be substantial. The Board desires to provide for the employment
of the Employee. The Employee is willing to commit himself to serve the
Employer, on the terms and conditions herein provided.
In order to effect the foregoing, the Employer and the Employee wish to
enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment and Duties. Employer shall employ Employee as Employer's
President and Chief Executive Officer during the term of employment set forth
in Section 2 hereof. Employee shall perform the duties of the President and
Chief Executive Officer of Employer and shall provide to Employer such other
services befitting Employee's position as are reasonably requested of him from
time to time by the Board of Trustees of Employer, including responsibility
for the following: (i) implementation of the Company's investment and growth
strategies including establishment of investment policies; (ii) review,
analysis and execution of investment decisions; (iii) maximization of return
on portfolio; (iv) procurement of capital; (v) oversight of investor
relations; (vi) assurance of proper financial reporting and securities law
compliance; and (vii) establishment of corporate governance and employee
policies. Employee shall have supervision and control over, and responsibility
for, the business and affairs of Employer as provided in the Bylaws of
Employer, subject to the direction of Employer's Board of Trustees. Employee
shall report only to the Board of Trustees of Employer and his powers and
authority shall be superior to those of any officer or employee of Employer.
Employee shall devote his full time, energy, skill and best efforts to the
business and affairs of Employer provided, however, that nothing herein shall
preclude Employee from serving as a director, trustee, officer of, or partner
in, any other firm, trust, corporation or partnership or from pursuing
personal investments, as long as such activities do not interfere with
Employee's performance of his duties hereunder. Employee agrees to serve,
without additional compensation, as a
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trustee of the Employer and a trustee or director of any of its subsidiaries
and in one or more executive offices of any of the Employer's subsidiaries.
2. Term. The term of Employee's employment under this Agreement shall be
a three year period commencing on the closing date (the "Effective Date") of
the Company's initial public offering of its common shares of beneficial
interest, par value $.01 per share ("Common Shares") and ending on the third
anniversary of the Effective Date, unless further extended or sooner
terminated in accordance with the other provisions hereof (the "Term"). On the
third anniversary of the Effective Date and on the last day of every second
contract year thereafter, the Term shall be automatically extended for two
years. The last day of the Term, as from time to time extended, is hereinafter
referred to as the "Expiration Date." Employer or Employee may elect to
terminate the automatic extension of the Term set forth in this section by
giving written notice of such election not less than one ( 1 ) year prior to
the end of the then current term. The Effective Date shall be confirmed by the
parties in writing.
3. Compensation.
3.1 Base Salary. Employer shall pay to Employee as his base compensation
for all services rendered hereunder an annual base salary of $250,000 per year
("Base Salary"), for the first contract year, increasing to such higher rate
as may from time to time be determined by the Board of Trustees, payable in
accordance with Employer's normal payroll practices for employees. Employer
shall deduct or cause to be deducted from the Base Salary all taxes and
amounts required by law to be withheld. Employee's Base Salary shall be
reviewed by the Board of Trustees no less frequently than annually, with the
first such review to be made one year after the Effective Date.
3.2 Benefits. During the Term, subject to the other provisions of this
Agreement, Employee shall be entitled to participate and shall be included in
any savings, 401(k), pension, profit-sharing, group medical, group life, group
disability or similar plan adopted by Employer now existing, or established
hereafter, to the extent he is eligible under the general provisions thereof.
3.3 Discretionary Bonuses. During the term of this Agreement, Employee
shall be entitled to such bonuses as may be authorized, declared, and paid by
the Board of Trustees in its sole discretion. The Board of Trustees shall
review Employee's entitlement to a bonus no less frequently than annually,
with the first such review to be made one year after the Effective Date.
3.4 Distribution Equivalent Rights. Employee will participate in
Employer's 1998 Share Option and Incentive Plan (the "Plan") and will receive
a grant of 37,500 Distribution Equivalent Rights ("Rights"). Employee will be
assigned an account under the Plan (the "Distribution Equivalent Account")
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which will be credited with distribution equivalents as and when distributions
on the Common Shares are declared and paid by the Board of Trustees, which
distribution equivalents will be in an amount equal to the distribution amount
per Common Share declared and paid by the Board of Trustees at any time,
multiplied by the number of Rights credited to Employee as of such time. Any
such distribution equivalents credited to Employee's Distribution Equivalent
Account will be deemed to be reinvested in Common Shares upon receipt at a
rate equal to the distribution yield rate on the Common Shares as of the first
day of each fiscal year, compounded quarterly. Employee's interest in the
Distribution Equivalent Account will vest at a rate of 20% per year over five
years; provided, however, that Employee's interest in the Distribution
Equivalent Account will become fully vested on a Change in Control (as defined
below). Notwithstanding the foregoing, during the first year following the
Effective Date, the distribution yield rate shall be deemed to equal the Prime
Rate as determined from time to time by Mellon Bank, N.A.
3.5 Share Options. On the Effective Date, Employee will be granted
options to purchase 300,000 Common Shares pursuant to the Plan (the "Initial
Options"). The option exercise price for the Initial Options will be the
offering price per Common Share in Employer's initial public offering. Of the
Initial Options, Options for 150,000 Common Shares will vest immediately and
Options for 150,000 Common Shares will vest at a rate of 50,000 per year
beginning on the first anniversary of the Effective Date; provided, however,
that these latter Initial Options will become fully vested on a Change in
Control. Employee may be granted additional options to purchase Common Shares
pursuant to the Plan at any time and from time to time as the Board of
Trustees determines in its sole discretion. Any such additional options
granted to Employee will be subject to the terms of the Plan.
3.6 Fringe Benefits.
3.6.1 Vacation. Employee shall be entitled to five weeks of vacation
during each year.
3.6.2 Reimbursement of Expenses. Employee is authorized to incur
ordinary, necessary and reasonable expenses in the course of Employer's
business. Employer shall reimburse Employee for such expenses upon
presentation by Employee of an itemized account of such expenditures in
accordance with Employer's established policy, unless such expenses have been
paid directly by Employer.
3.7 Entire Compensation. The compensation provided for in this Section 3
shall be the full consideration for the services to be rendered by Employee to
Employer hereunder.
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4. Termination.
4.1 Notice of Termination. Any termination by Employer or by Employee
shall be communicated by written Notice of Termination to the other party
hereto. As used in this Agreement, "Notice of Termination" means a notice
specifying the termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision specified.
As used in this Agreement, "Date of Termination" shall mean the date specified
in the Notice of Termination.
4.2 Grounds for Termination.
4.2.1 Termination upon Death. Employee's employment with Employer and
all of Employee's rights to compensation and benefits hereunder shall
automatically terminate upon his death, except that Employee's heirs, personal
representatives or estate shall be entitled to any unpaid portion of his
Salary and accrued benefits up to the Date of Termination and shall also be
entitled to reimbursement for any expenses incurred by Employee hereunder. In
addition, Employee's heirs, personal representatives or estate shall be
entitled to receive the bonus, if any, earned by Employee prior to death (in
accordance with Section 3.3 hereof); all of Employee's Initial Options shall
vest; and if the termination event occurs (a) prior to the third anniversary
of the Effective Date, they will receive 60% or (b) after the third
anniversary, they will receive 100% of Employee's Distribution Equivalent
Account.
4.2.2 Termination Upon Disability. If Employee becomes disabled,
Employee shall continue to receive all of his compensation and benefits in
accordance with Section 3 for a period of six (6) months following the Onset
of Disability (as defined in this Section 4.2.2). Any amounts due to Employee
as compensation under this Section 4.2.2 shall be reduced, dollar-for-dollar,
by any amounts received by Employee under any disability insurance policy or
plan provided to Employee by Employer. "Onset of Disability" means the first
day on which Employee shall be unable to attend to the regular affairs of
Employer on a full time basis by reason of physical or mental incapacity,
sickness or infirmity. If Employee's disability continues for more than six
(6) months after the Onset of Disability or for periods aggregating more than
nine (9) months during any twenty-four (24) month period, then Employer shall
have the right to terminate Employee's employment immediately upon notice, and
all of his rights to compensation and benefits hereunder shall simultaneously
terminate, except that Employee shall be entitled to any unpaid portion of his
Salary, bonus and accrued benefits up to the Date of Termination and to any
benefits which are to be continued or paid after the Date of Termination in
accordance with the terms of the corresponding benefit plans.
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4.2.3 Termination for Cause. At any time during the Term, Employer
may terminate Employee's employment hereunder for Cause (as defined herein),
effective immediately upon notice to Employee, if at a duly convened meeting
of the Board of Trustees of which Employee was given reasonable advance notice
and at which Employee and his counsel had the opportunity to be heard, a
resolution was duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board of Trustees finding that, in
the good faith judgment of the Board of Trustees, (1) an event (which is
described in the resolution in reasonable detail) constituting Cause has
occurred, and (2) either Employee had a reasonable opportunity to take
remedial action but failed or refused to do so, or an opportunity to take
remedial action would not have been meaningful or appropriate under the
circumstances. For purposes of this Agreement, Cause shall mean: (1) Employee
willfully breaches or fails to diligently perform any or all of his duties
under this Agreement (other than such failure resulting from Employee's
incapacity due to physical or mental illness) and Employee continues to do so
after demand for substantial performance is delivered by the Employer that
specifically identifies the manner in which the Employer believes the Employee
has not diligently performed his duties under this Agreement, (2) Employee
commits an act of dishonesty or breach of trust, (3) Employee willfully
violates or breaches any of the material provisions of this Agreement, (4)
Employee's act or omission to act results in or is intended to result directly
in unjust gain to or personal enrichment of Employee at Employer's expense, or
(5) Employee is indicted for or convicted of a felony, including, without
limitation, involving larceny, embezzlement or moral turpitude.
Notwithstanding anything to the contrary contained herein, except for
an act set forth in subsection (5) above, the term "Cause" shall not include
any act or omission to act of the Employee:
(1) if such act or omission has been approved by the Board of
Trustees of Employer; or
(2) which is the result of bad judgment or negligence on the part of
the Employee.
On termination of this Agreement pursuant to this Section 4.2.3, all
rights to compensation and benefits of Employee shall cease as of the Date of
Termination, except Employee shall be entitled to any unpaid portion of his
Salary and benefits earned to the Date of Termination. The Employee shall have
the option to have assigned to him at no cost and with no apportionment of
prepaid premiums any assignable insurance policy owned by the Employer and
relating specifically to the Employee.
4.2.4 Termination without Cause. This Agreement may be terminated by
the corporation upon thirty (30) days' prior written notice without Cause
being assigned therefor upon affirmative vote of a majority of the members of
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the Board of Trustees entitled to vote on the matter. On termination of this
Agreement without Cause, Employee shall be entitled to the payments he would
have received had the Agreement been terminated under the provisions of
Section 4.2.3, all of his Initial Options shall vest, and shall, in addition,
be entitled to severance compensation equal to two times his then current Base
Salary and most recent annual bonus, if any. In addition, if the Agreement is
terminated without cause (a) prior to the third anniversary of the Effective
Date, Employee will receive 60% or (b) after the third anniversary Employee
will receive 100%, of his Distribution Equivalent Account.
4.2.5 Termination for "Good Reason". Employee may, upon thirty (30)
days' prior written notice, terminate this Agreement for Good Reason if (1)
Employer elects to terminate the automatic extension of the Term, (2) if
Employer significantly changes Employee's duties or reduces Employee's
responsibility or authority or (3) other than at the request of Employee,
Employer transfers Employee to a location that results in a commuting distance
for Employee that is more than ten (10) miles greater than Employee's commute
as of the Effective Date. If Employee terminates this Agreement for Good
Reason, he shall be entitled to the payments he would have received under
Section 4.2.3, all of his Initial Options shall vest and shall, in addition,
be entitled to receive severance compensation equal to two (2) times his then
current Base Salary and most recent annual bonus, if any. In addition, if the
Agreement is terminated for Good Reason (a) prior to the third anniversary of
the Effective Date, Employee will receive 60% or (b) after the third
anniversary, Employee will receive 100% of his Distribution Equivalent
Account.
4.3 Mitigation. Employee shall not be required to mitigate the amount of
any payment provided-for in Section 4 by seeking employment or otherwise.
Employer shall not be entitled to set off against the amounts payable to
Employee hereunder any amounts earned by Employee in other employment after
termination of his employment with Employer hereunder or any amounts which
might have been earned by Employee in other employment had he sought such
other employment. The amounts payable to Employee hereunder shall not be
treated as damages but as severance compensation to which Employee is entitled
by reason of termination of his employment in the circumstances contemplated
by this Agreement.
4.4 Procedure Upon Termination. On termination of employment regardless
of the reason, Employee shall promptly return to Employer all documents
(including copies) and other property of Employer, including without
limitation, customer lists, manuals, letters, materials, reports, and records
in his possession or control no matter from whom or in what manner acquired.
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5. Employee's Covenants.
5.1 Discoveries. Employee shall communicate to Employer and preserve as
confidential information of Employer each discovery, idea, design, invention
and improvement relating in any manner to Employer's business, whether or not
patentable and whether or not reduced to practice, which is conceived,
developed or made by Employee, whether alone, or jointly with others, at any
time during the Term hereof (such discoveries, ideas, designs, inventions and
improvements are referred to as "Employee's Discoveries"). All of Employee's
Discoveries shall be Employer's exclusive property, and all of Employee's
right, title and interest therein are hereby irrevocably assigned to Employer,
Employee shall not, except with Employer's express prior written consent, or
except in the proper course of his employment with Employer, use any of
Employee's Discoveries for his own benefit or the benefit of any Person (as
defined herein), or disclose any of Employee's Discoveries to any outside
Person through publication or in any other manner.
For purposes of this Agreement, the term "Person" means a natural person,
corporation, partnership, trust, estate, joint venture, sole proprietorship,
government (and any branch or subdivision thereof), governmental agency,
association, cooperative or other entity.
5.2 Nondisclosure. At all times during and after the Term, Employee shall
keep confidential and shall not, except with Employer's express prior written
consent, or except in the proper course of his employment with Employer,
directly or indirectly, communicate, disclose, divulge, publish or otherwise
express, to any Person, or use for his own benefit or the benefit of any
Person, any trade secrets, confidential or proprietary knowledge or
information, no matter when or how acquired, concerning the conduct and
details of Employer's business, including without limitation names of
customers and suppliers, marketing methods, unique financing methods, trade
secrets, policies, prospects and financial condition. For purposes of this
Section 5.2, confidential information shall not include any information which
is now known by or readily available to the general public or which becomes
known by or readily available to the general public other than as a result of
any improper act or omission of Employee.
5.3 Non-competition. During the Term hereof and for a period of two (2)
years thereafter, Employee shall not, except with Employer's express prior
written consent, directly or indirectly, in any capacity, for the benefit of
any Person:
(1) communicate with or solicit any Person who is or during such period
becomes a customer, supplier, employee, salesman, agent or representative of
Employer, in any manner which interferes or might interfere with
-7-
<PAGE>
such Person's relationship with Employer, or in an effort to obtain such
Person as customer, supplier, employee, salesman, agent, or representative of
any business in competition with Employer within 100 miles of any office or
facility owned, leased or operated by Employer.
(2) Establish, engage, own, manage, operate, join or control, or
participate in the establishment, ownership (other than as the owner of less
than 1% of the stock of a corporation whose shares are publicly traded),
management, operation or control of, or be a director, trustee, officer,
employee, salesman, agent or representative of, or be a consultant to, any
Person in any business in competition with Employer, at any location within
100 miles of any office or facility owned, leased or operated by Employer, or
act or conduct himself in any manner which he would have reason to believe
inimical or contrary to the best interests of Employer.
5.4 Enforcement. Employee acknowledges that any breach by him of any of
the covenants and agreements of this Section 5 ("Covenants") will result in
irreparable injury to Employer for which money damages could not adequately
compensate Employer, and therefore, in the event of any such breach, Employer
shall be entitled, in addition to all other rights and remedies which Employer
may have at law or in equity, to have an injunction issued by any competent
court enjoining and restraining Employee and/or all other Persons involved
therein from continuing such breach. The existence of any claim or cause of
action which Employee or any such other Person may have against Employer shall
not constitute a defense or bar to the enforcement of any of the Covenants. If
Employer is obliged to resort to litigation to enforce any of the Covenants
which has a fixed term, then such term shall be extended for a period of time
equal to the period during which a material breach of such Covenant was
occurring, beginning on the date of a final court order (without further right
of appeal) holding that such a material breach occurred or, if later, the last
day of the original fixed term of such Covenant.
5.5 Consideration. Employee expressly acknowledges that the Covenants are
a material part of the consideration bargained for by Employer and, without
the agreement of Employee to be bound by the Covenants, Employer would not
have agreed to enter into this Agreement.
5.6 Scope. If any portion of any Covenant or its application is construed
to be invalid, illegal, or unenforceable, then the other portions and their
application shall not be affected thereby and shall be enforceable without
regard thereto. If any of the Covenants is determined to be unenforceable
because of its scope, duration, geographical area or similar factor, then the
court making such determination shall have the power to reduce or limit such
scope, duration, area or other factor, and such Covenant shall then be
enforceable in its reduced or limited form.
-8-
<PAGE>
6. Miscellaneous.
6.1 Notices. All notices, requests, demands, consents or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if and when (1)
delivered personally, (2) mailed by first class certified mail, return receipt
requested, postage prepaid, or (3) sent by a nationally recognized express
courier service postage or delivery charges prepaid, to the parties at their
respective addresses stated below or to such other addresses of which the
parties may give notice in accordance with this Section.
If to Employer, to:
ElderTrust
415 McFarlan Road, Suite 202
Kennett Square, PA 19348
Attention: Chairman of the Board
If to Employee, to:
Edward B. Romanov, Jr.
c/o ElderTrust
415 McFarlan Road, Suite 202
Kennett Square, PA 19348
6.2 Entire Understanding. This Agreement, sets forth the entire
understanding between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous, written, oral, expressed or
implied, communications, agreements and understandings with respect to the
subject matter hereof.
6.3 Modification. This Agreement shall not be amended, modified,
supplemented or terminated except in writing signed by both parties. No action
taken by Employer hereunder, including without limitation any waiver, consent
or approval, shall be effective unless approved by a majority of the Board of
Trustees.
6.4 Prior Agreements. Employee represents to Employer (1) that there are
no restrictions, agreements understandings whatsoever to which Employee is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (2) that his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement
or understanding, oral or written to which he is a party or by which he is
bound and (3) that he is free and able to execute this Agreement and to enter
into employment by Employer.
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<PAGE>
6.5 Parties in Interest. This Agreement and all rights of Employee
hereunder shall inure to the benefit of, bind and be enforceable by Employee
and his heirs, personal representatives, estate and beneficiaries, and
Employer and its successors and assigns. This Agreement is a personal
employment contract of Employer, being for the personal services of Employee,
and shall not be assignable by Employee.
6.6 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
6.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original hereof and it shall not be necessary in making proof of this
Agreement to produce or account for more than one counterpart hereof.
6.8 Section Headings. Section and subsection headings in this Agreement
are inserted for convenience of reference only, and shall neither constitute a
part of this Agreement nor affect its construction, interpretation, meaning or
effect.
6.9 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits.
6.10 Controlling Law. This Agreement is made under, and shall be governed
by, construed and enforced in accordance with, the substantive laws of
Pennsylvania applicable to agreements made and to be performed entirely
therein.
6.11 Settlement of Disputes. Any claims, controversies, demands, disputes
or differences between or among the parties hereto or any persons bound hereby
arising out of, or by virtue of, or in connection with, or relating to this
Agreement shall be submitted to and settled by arbitration in Philadelphia
Pennsylvania, before and in accordance with the rule, then obtaining of the
American Arbitration Association ("AAA"). In the event AAA does not exist for
settlement of disputes at the time either or both of the parties desire to
submit a claim, controversy, demand, dispute or difference to arbitration,
then such claim, controversy, demand, dispute or difference shall be submitted
to and settled by arbitration in Philadelphia, Pennsylvania before a single
arbitrator who shall be knowledgeable in the field of business law and
employment relations and such arbitration shall be in accordance with the
rules then obtaining of the American Arbitration Association. The parties
agree to bear joint and equal responsibility for all fees of the arbitrator,
abide by any decision rendered as final and binding, and
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<PAGE>
waive the right to submit the dispute to a public tribunal for a jury or
non-jury trial.
6.12 Approval and Authorizations. The execution and the implementation of
the terms and conditions of this Agreement have been fully authorized by the
Board of Trustees.
6.13 Indulgences, Etc. Neither the failure nor delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall the single or partial
exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.
6.14 Legal Expenses. In the event that the Employee institutes any legal
action to enforce his rights under, or to recover damages for breach of this
Agreement, the Employee, if he is the prevailing party, shall be entitled to
recover from the Employer any actual expenses for attorney's fees and
disbursements incurred by him.
6.15 Definition of "Change in Control". A "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), becomes, after the date hereof, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Employer representing fifty percent (50%) or more of the
combined voting power of the Employer's then outstanding securities; (ii)
during any two (2) year period, individuals who at the beginning of such
period constitute the Board of Trustees, including for this purpose any new
trustee whose election resulted from a vacancy on the Board of Trustees caused
by the mandatory retirement, death, or disability of a trustee and was
approved by a vote of at least two-thirds (2/3rds) of the trustees then still
in office who were trustees at the beginning of the period, cease for any
reason to constitute a majority thereof, (iii) notwithstanding clauses (i) or
(v) of this Section 6.15, the Employer consummates a merger or consolidation
of the Employer with or into another corporation or trust, the result of which
is that the shareholders of the Employer at the time of the execution of the
agreement to merge or consolidate own less than eighty percent (80%) of the
total equity of the entity surviving or resulting from the merger or
consolidation or of a entity owning, directly or indirectly, one hundred
percent (100%) of the total equity of such surviving or resulting entity; (iv)
the sale in one or a series of transactions of all or substantially all of the
assets of the Employer; (v) any person, has commenced a tender or exchange
offer, or entered into an agreement or received an option to
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<PAGE>
acquire beneficial ownership of fifty percent (50%) or more of the total
number of voting shares of the Employer unless the Board of Trustees has made
a determination that such action does not constitute and will not constitute a
change in the persons in control of the Employer; or (vi) there is a change of
control in the Employer of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act other than in circumstances specifically covered by clauses (i) -
(v) above.
6.16 Notwithstanding anything else in this Agreement, solely in the event
of a Change of Control, the amount of severance compensation paid to Employee
under this Agreement, shall not include any amount that the Corporation is
prohibited from deducting for federal income tax purposes by virtue of Section
280 G of the Internal Revenue Code or any successor provision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above mentioned.
EMPLOYER:
ELDERTRUST
By: /s/ D. Lee McCreary, Jr.
-----------------------------
D. Lee McCreary, Jr.
Vice President &
Chief Financial Officer
Date of execution: 3/4/98
------
EMPLOYEE:
/s/ Edward B. Romanov, Jr.
---------------------------
Edward B. Romanov, Jr.
Date of execution: 3/4/98
------
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<PAGE>
As contemplated by the last sentence of Section 2, the parties hereto
hereby confirm in writing that the "Effective Date" for purposes of this
Agreement means January 30, 1998.
EMPLOYER:
ELDERTRUST
By: /s/ D. Lee McCreary, Jr.
-------------------------
D. Lee McCreary, Jr.
Vice President &
Chief Financial Officer
Date of execution: 3/4/98
------
EMPLOYEE:
/s/ Edward B. Romanov, Jr.
---------------------------
Edward B. Romanov, Jr.
Date of execution: 3/4/98
------
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<PAGE>
EXHIBIT 10.6
NON-COMPETITION AGREEMENT
AGREEMENT made this 30th day of January, 1998, between ElderTrust, a
Maryland real estate investment trust (the "Company"), and Michael R. Walker,
Chairman of the Board of Trustees of the Company ("Walker").
WHEREAS, the Company and Walker are interested in entering into this
Agreement governing, non-competition;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements of the parties contained herein and other good and
valuable consideration the receipt of which is hereby acknowledged, the
parties hereby agree as follows:
Section 1. Non-competition. During the period during which Walker
serves as a trustee of the Company, Walker shall not, except with the
Company's express prior written consent, directly or indirectly, in any
capacity, for the benefit of any Person:
(1) communicate with or solicit any Person who is or during
such period becomes a customer, supplier, employee, salesman, agent
or representative of Company, in any manner which interferes or might
interfere with such Person's relationship with the Company, or, in an
effort to obtain such Person as a customer, supplier, employee,
salesman, agent or representative of any business in competition with
the Company within 10 miles of any office or facility owned, leased
or operated by the Company;
(2) Establish, engage, own, manage, operate, join or control
or participate in the establishment, ownership (other than as the
owner of less than 1% of the stock of a corporation whose shares are
publicly traded), management, operation or control of, or be a
director, trustee, officer, employee, salesman, agent or
representative of, or be a consultant to, any Person in any business
in competition with the Company, at any location within 10 miles of
any office or facility owned, leased or operated by Company, or act
or conduct himself in any manner which he would have reason to
believe inimical or contrary to the best interests of the Company;
<PAGE>
provided, however, that any activity engaged in by Walker as an officer,
director or employee of, or any interest of Walker as a stockholder in,
Genesis Health Ventures, Inc. shall not be limited in any way by this
Agreement; and provided further that, notwithstanding the foregoing
provisions, Walker shall be entitled to retain his position on the Board of
Trustees of Universal Health Realty Income Trust and to develop office and
similar development projects not related to the healthcare business.
For purposes of this Agreement, the term "Person" means a natural
person, corporation, limited liability company, partnership, trust, estate,
joint venture, sole proprietorship, government (and any branch or subdivision
thereof), governmental agency, association, cooperative or other entity.
Section 2. Enforcement. Walker acknowledges that any breach by him of
any of the covenants and agreements of this Agreement ("Covenants") will
result in irreparable injury to the Company for which money damages could not
adequately compensate the Company, and therefore, in the event of any such
breach, the Company shall be entitled, in addition to all other rights and
remedies which the Company may have at law or in equity, to have an injunction
issued by any competent court enjoining and restraining Walker and/or all
other Persons involved therein from continuing such breach. The existence of
any claim or cause of action which Walker or any such other Person may have
against the Company shall not constitute a defense or bar to the enforcement
of any of the Covenants. If the Company is obliged to resort to litigation to
enforce any of the Covenants which has a fixed term, then such term shall be
extended for a period of time equal to the period during which a material
breach of such Covenant was occurring, beginning on the date of a final court
order (without further right of appeal) holding that such a material breach
occurred or, if later, the last day of the original fixed term of such
Covenant.
Section 3. Consideration. Walker expressly acknowledges that the
Covenants are a material part of the consideration bargained for by the
Company.
Section 4. Scope. If any portion of any Covenant or its application is
construed to be invalid, illegal, or unenforceable, then the other portions and
their application shall not be affected thereby and shall be enforceable without
regard thereto. If any of the Covenants is determined to be unenforceable
because of its scope, duration, geographical area or similar factor, then the
court making such determination shall have the power to reduce or limit such
scope, duration, area or other factor, and such Covenant shall then be
enforceable in its reduced or limited form.
Section 5. Assignment. The rights and obligations of the Company under
this Agreement shall be binding upon its successors and assigns and may be
assigned by the Company to the successors in interest of the Company. The rights
and obligations of Walker under this Agreement shall be binding upon his heirs,
legatees, personal representatives, executors or administrators.
Section 6. Notice. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when hand delivered, sent by overnight
courier, or mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or transmitted by telegram, telecopy, or
telex, addressed as follows:
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<PAGE>
if to the Company:
ElderTrust
415 McFarlan Road, Suite 202
Kennett Square, Pennsylvania 19348
Attention: President
Telecopy No.: (610) 444-0815; and
if to Walker: at the address specified under Walker's signature
below; or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
Section 7. Headings. Section headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect
the meaning, construction or scope of any of the provisions hereof.
Section 8. Severability. If any part of any provision of this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability
only, without in any way affecting the remaining parts of such provision or
the remaining provisions of this Agreement.
Section 9. Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania (without reference to the choice of law rules thereof).
Section 10. Amendment; Modification; Waiver. No amendment,
modification or waiver of the terms of this Agreement shall be valid unless
made in writing and duly executed by Walker and the Company. No delay or
failure at any time on the part of the Company in exercising any right, power
or privilege under this Agreement, or in enforcing any provision of this
Agreement, shall impair any such right, power, or privilege, or be construed
as a waiver of any default or as any acquiescence therein, or shall affect the
right of the Company thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
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<PAGE>
Section 11. Gender and Number. Throughout this Agreement, the
masculine and neuter genders shall be deemed to include all genders, and the
singular, the plural and vice versa, except where such construction would be
unreasonable.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on January 30, 1998 to be effective as of such date.
ELDERTRUST
By: /s/ Edward B. Romanov, Jr.
-------------------------------------
Edward B. Romanov, Jr.
President and Chief Executive Officer
Date of execution: 3/9/98
-----------------------
/s/ Michael R. Walker
-----------------------------------------
Michael R. Walker
c/o Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Telecopy Number: (610) 444-3365
Date of execution:
-----------------------
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement")
is made and entered into as of January 30, 1998, among (i) Genesis Health
Ventures, Inc., a Pennsylvania corporation, in its capacity as the assigning
lender hereunder ("Genesis"), (ii) ET Capital Corp., a Delaware corporation
("ET Capital", together with Genesis and their successors and assigns, the
"Lenders") and in its capacity as agent for the Lenders (the "Agent") and
(iii) Age Institute of Florida, Inc., a Florida non-profit corporation
(together with its successors and assigns, the "Borrower").
WHEREAS, Genesis and the Borrower entered into that certain
Working Capital Loan and Security Agreement, dated as of August 31, 1996 (as
may be amended or assigned from time to time, the "Loan Agreement"), pursuant
to which Genesis agreed to make a loan to the Borrower in the aggregate
principal amount of $10,000,000 (the "Loan") and the Borrower granted Genesis
a security interest in certain collateral to secure its obligations in
connection with the Loan;
WHEREAS, the Loan was evidenced by that certain Promissory
Note, dated August 31, 1996 (the "Note"), payable to the order of Genesis in
the principal amount of $10,000,000;
WHEREAS, simultaneously with the execution and delivery of
the Loan Agreement, the Borrower and Genesis entered into that certain
Security Agreement, dated as of August 31, 1996 (the "Security Agreement"),
whereby the Borrower granted Genesis a security interest in all of its
accounts, inventory, equipment and general intangibles to secure the
obligations of the Borrower in connection with, among other things, the Loan;
WHEREAS, ET Capital has agreed to purchase, and Genesis has
agreed to sell, a portion of the principal amount of the Note equal to
$7,500,000 on the terms and conditions set forth herein;
WHEREAS, ET Capital wishes to become a party to the Loan
Agreement as a lender and is willing to assume the rights and obligations of a
lender therein contained;
WHEREAS, Genesis and ET Capital, as lenders, wish to appoint
ET Capital to act as their Agent under the Loan Agreement, the Security
Agreement and the other agreements, instruments and documents executed and
delivered in connection therewith;
WHEREAS, Genesis has agreed to grant ET Capital an option to
purchase the remaining principal amount of the Note on the terms and
conditions set forth herein; and
<PAGE>
WHEREAS, in connection with this Agreement, (i) the Lenders
and the Borrower are entering into an Amendment to Working Capital Loan
Agreement, dated as of the date hereof, (ii) the Lenders and the Borrower are
entering into an Assignment and Amendment to Security Agreement, dated as of
the date hereof; and (iii) the Borrower is granting a mortgage and security
interest in the Facilities (as defined in the Loan Agreement) and related
property pursuant to a Second Mortgage, Assignment of Rents and Security
Interest, dated as of the date hereof (the "Mortgage").
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the
following meanings:
"$2,500,000 Amended and Restated Note" means the Amended and
Restated Promissory Note executed by the Borrower payable to the order of
Genesis in the principal amount of $2,500,000, in substantially the form
attached hereto as Exhibit A.
"$7,500,000 Amended and Restated Note" means the Amended and
Restated Promissory Note executed by the Borrower payable to the order of ET
Capital in the principal amount of $7,500,000, in substantially the form
attached hereto as Exhibit B.
"Amended and Restated Notes" means, collectively, the
$2,500,000 Amended and Restated Note and the $7,500,000 Amended and Restated
Note.
"Collateral" means, collectively, the "Collateral" as
defined in the Loan Agreement, the "Collateral" as defined in the Security
Agreement and the "Property" as defined in the Mortgage.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of the date hereof, among Genesis, in its capacity as
senior lender, junior lender and agent, ET Capital and the Borrower.
"Loan Documents" means the Loan Agreement, the Amended and
Restated Notes, the Security Agreement, the Mortgage and all other agreements,
instruments and documents executed in connection therewith, as such documents
may be amended, renewed, modified, extended, assigned, refinanced or replaced
from time to time.
2
<PAGE>
Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Loan Agreement.
2. ASSIGNMENT AND ASSUMPTION.
2.1 At or before 12:00 noon on January 30, 1998, ET Capital
shall pay to Genesis, in immediately available funds, an amount equal to Seven
Million Five Hundred Thousand Dollars ($7,500,00.00) (the "Purchase Price").
Effective upon the date of receipt by Genesis of the Purchase Price (the
"Transfer Effective Date"), Genesis hereby irrevocably sells, assigns and
transfers to ET Capital, without recourse, and ET Capital hereby irrevocably
purchases, takes and assumes from Genesis a portion of the outstanding
principal amount under the Loan equal to seventy-five percent (75%). Genesis
shall retain a twenty-five percent (25%) portion of such outstanding principal
amount of the Loan.
2.2 From and after the Transfer Effective Date, ET Capital
shall be a party to the Loan Agreement as a lender for all purposes thereof.
2.3 All principal payments that would otherwise be payable
from and after the Transfer Effective Date to or for the account of Genesis
pursuant to the Working Capital Loan Agreement or the Note shall instead be
payable to Genesis and ET Capital, on a pari passu basis, in accordance with
their respective interests as reflected in Section 2.1 hereof.
2.4 All interest, fees and other amounts that otherwise
accrue for the account of Genesis from and after the Transfer Effective Date
pursuant to the Loan Agreement and the Note shall, instead, accrue for the
account of, and be payable to, Genesis and ET Capital, as the case may be, on
a pari passu basis, in accordance with their respective interests as reflected
in Section 2.1 hereof.
2.5 As a condition to the obligation to purchase, and on or
prior to the Transfer Effective Date, the Borrower shall execute and deliver
to the Agent the Amended and Restated Notes reflecting the interests set forth
in Section 2.1 hereof, and shall have executed and delivered an amendment of
the Loan Documents as contemplated hereby and an amendment of any and all
management agreements pertaining to the Facilities in form satisfactory to the
Lenders which provides for subordination of certain management fees in the
event of default under the Loan Documents as agreed between the parties.
Promptly after the Transfer Effective Date, the Agent will deliver to Genesis
the $2,500,000 Amended and Restated Note and will deliver to ET Capital the
$7,500,000 Amended and Restated Note, and Genesis will surrender the Note to
the Borrower, marked "Canceled by Substitution."
2.6 Each of the Lenders shall be secured by the security
interests granted under the Security Agreement, the Loan Agreement and the
Mortgage to secure the obligations of the Borrower in connection with the Loan
3
<PAGE>
on a pro rata basis in proportion to the portion of the outstanding principal
amount of the Loan owed to each Lender. Each of the Lenders and the Agent
acknowledges that in accordance with the terms of the Intercreditor Agreement,
the security interests granted under the Loan Agreement, the Security
Agreement and the Mortgage to secure the obligations of the Borrower in
connection with the Loan are subordinated to the security interests granted by
the Borrower to secure the obligations of the Borrower in connection with the
Acquisition Loan (as defined in the Security Agreement).
2.7 Concurrently with the execution of this Agreement, Genesis
will provide to ET Capital conformed copies of all of the Loan Documents.
2.8 By executing and delivering this Agreement, Genesis and
ET Capital confirm and agree as follows:
(a) other than the representation and warranty that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim, Genesis makes no representation
and warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Agreement
or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement, the
Note or any other Loan Document;
(b) Genesis makes no representation and warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under any of the Loan Documents;
(c) ET Capital has received a copy of each of the
Loan Documents together with such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Agreement; and
(d) ET Capital will, independently and without
reliance upon Genesis, continue to make its own credit decisions in taking or
not taking action under the Loan Documents.
3. AGENCY.
3.1 The Lenders hereby appoint and authorize the Agent to
act as their agent under the Loan Agreement, the Security Agreement, the
Mortgage and each of the other Loan Documents, and the Agent hereby accepts
such appointment and authorization. Each of the Lenders and any subsequent
holder of the Amended and Restated Notes by its acceptance thereof,
irrevocably authorizes the Agent to execute and take such action on its behalf
4
<PAGE>
under the provisions of the Loan Documents and to exercise such powers
hereunder and thereunder as are specifically delegated to the Agent by the
terms hereof and thereof and such powers as are reasonably incidental thereto.
The Agent is hereby expressly authorized on behalf of the Lenders, without
limiting any implied authority, (i) to execute any and all Loan Documents on
behalf of the Lenders, except where Lenders are parties thereto, (ii) to
distribute to each Lender copies of all notices, agreements and other material
as provided for in the Loan Agreement, the Security Agreement or in the other
Loan Documents, (iii) to hold and apply any and all Collateral, and the
proceeds thereof, on behalf of the Lenders on a pari passu basis, subject to
the terms of and rights set forth in the Intercreditor Agreement, (iv) to
exercise any and all rights, powers and remedies of the Lenders under the Loan
Documents, (v) to execute and deliver and file and possess instruments and
documents, including without limitation financing statements, financing
statement amendments and continuation statements, on behalf of any or all of
the Lenders; and (vi) in the event of any acceleration of the Loan or any
amounts due under the Amended and Restated Notes, to use its best efforts to
sell or otherwise liquidate or dispose of the Collateral and otherwise
exercise the rights of the Lenders under the Loan Agreement, the Security
Agreement and the Mortgage.
3.2 Each Lender agrees (a) to reimburse the Agent in the
amount of such Lender's pro rata share based on its percentage of the
outstanding principal amount of the Loan for any expenses incurred by the
Agent for the benefit of the Lenders, including counsel fees and compensation
of agents and employees, and all other amounts paid by the Agent respectively,
for services rendered on behalf of the Lenders and (b) to indemnify and hold
harmless the Agent and any of its directors, officers, employees or agents, on
demand, in the amount of its pro rata share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as the
Agent or any of its directors, officers, employees or agents in any way
relating to or arising out of the Loan Documents or any action taken or
omitted by the Agent or any of its directors, officers, employees or agents
under the Loan Documents, to the extent not reimbursed by the Borrower;
provided, however, that no Lender shall be liable to the Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgment, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of the Agent, or any of its directors,
officers, employees or agents.
3.3 Neither the Agent nor any of its officers, directors,
employees or agents will be liable to the Lenders for any action taken or
omitted hereunder or in connection herewith or in connection with any document
or instrument now or hereafter executed in connection herewith unless caused
by its gross negligence or willful misconduct. The Agent will not be
responsible for any recitals, warranties or representations in the Loan
Agreement, the Mortgage or any other Loan Document. The Lenders acknowledge
that they have reviewed the Loan Agreement, the Amended and Restated Notes,
the Security Agreement, the Mortgage and all of the other Loan Documents and
5
<PAGE>
are fully aware of the terms hereof and thereof. The Agent may execute any of
its duties by or through agents or employees and will be entitled to advice of
counsel, accountants or other professionals of its selection concerning all
matters pertaining to the Loan Documents and its duties hereunder and
thereunder. The Agent will be entitled to rely upon any writing or other
document, telegram or telephone conversation believed by it to have been
signed, sent or made by the proper person or persons and, in respect of legal
matters, upon the advice of counsel selected by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under the Loan
Agreement and the other Loan Documents unless it shall first receive such
advice or concurrence of all the Lenders as it deems appropriate or it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action except for its own gross negligence or
willful misconduct. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of all the Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Amended and Restated Notes.
3.4 Each Lender acknowledges that the Agent has not made any
representation or warranty to it and that no act taken by the Agent will be
deemed to constitute a representation or warranty by the Agent to any Lender.
Each Lender further acknowledges that it has taken and will continue to take
such action and to make such investigation as it deems necessary to inform
itself of the affairs of the Borrower and that it has made and will continue
to make its own independent investigation of the creditworthiness and the
business and operations of the Borrower. In making an advance hereunder, each
Lender represents that it has not relied and will not rely upon any
information or representations furnished or given by the Agent. The Agent will
be under no duty or responsibility to the Lenders to ascertain or to inquire
into the performance or observance by the Borrower of any of the provisions of
this Agreement or any document or instrument now or hereafter executed in
connection herewith. The Agent will not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrower or any affiliate
thereof which may come into the possession of the Agent. The Lenders
understand and agree that the Agent will not be deemed to have knowledge of
the existence, occurrence or continuance of any event of default under any of
the Loan Documents, unless the officers of the Agent immediately responsible
for matters concerning this Agreement will have actual knowledge of such
occurrence or will have been notified in writing by any Lender or Borrower
that the Lender or the Borrower, as applicable, considers that such event of
default has occurred and is continuing and specifying the nature thereof.
6
<PAGE>
3.5 Upon the occurrence and during the continuation of an
Event of Default (as defined in the Loan Agreement), and following a
declaration by a Lender that a Amended and Restated Note is due and payable,
the Agent upon the request of the Lender, will proceed to enforce the rights
of the Lender under the Amended and Restated Note by such proceedings as the
Agent may deem appropriate, whether at law or in equity. The Agent, on behalf
of all the Lenders, will hold in accordance with the Loan Agreement, the
Security Agreement and the Mortgage, subject to the provisions of the
Intercreditor Agreement, all items of Collateral received or held by the
Agent. Subject to the Agent's rights to reimbursement for its costs and
expenses hereunder and, subject to the provisions of the Intercreditor
Agreement, each Lender will have an interest in any Collateral in the same
proportions that the aggregate outstanding principal obligations owed such
Lender pursuant to the Loan Agreement bear to the aggregate outstanding
principal obligations owed to all the Lenders, without priority or preference
among the Lenders.
3.6 The Agent, in all cases, will be fully protected in
acting, or in refraining from acting, hereunder or in connection with any
other documents or instruments now or hereafter executed in connection
herewith in accordance with written instructions of the Lenders.
3.7 Subject to the appointment and acceptance of a successor
Agent as provided below, the Agent may resign at any time by notifying the
Lenders and the Borrower. Upon any such resignation, the Lenders will have the
right to appoint a successor Agent. If no successor Agent will have been so
appointed by the Lenders and will have accepted such appointment within thirty
(30) days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon
the acceptance of any appointment as Agent hereunder by a successor, such
successor will thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring Agent
will be discharged from its duties and obligations hereunder and under the
Loan Documents. After any Agent's resignation hereunder, the provisions of
this Section 3 will continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
4. PURCHASE OPTION
At any time prior to the close of business on January 30,
1999, ET Capital shall have the right to purchase from Genesis all, but not
part, of the outstanding principal amount of the Loan held by Genesis
evidenced by the $2,500,000 Amended and Restated Note (the "Option Asset") by
delivering to Genesis written notice (the "Exercise Notice") on or prior to
said date. The Exercise Notice shall state ET Capital's intention to exercise
the purchase option pursuant to this Section 4 and shall further specify the
closing date of such purchase (the "Closing Date"); provided, however, that
7
<PAGE>
such Closing Date shall not be sooner than five (5) business days nor later
than twenty (20) business days after the date of delivery of the Exercise
Notice. The purchase price for the Option Asset shall be an amount (the
"Purchase Price") equal to the outstanding principal amount of the $2,500,000
Amended and Restated Note on the date of such purchase, together with any
accrued and unpaid interest thereon. On the Closing Date, (i) ET Capital shall
deliver the Purchase Price to Genesis in immediately available funds, (ii)
Genesis shall deliver the $2,500,000 Amended and Restated Note to the Agent,
the Borrower shall issue a new promissory note in favor of ET Capital in the
amount of the outstanding principal amount of the Loan being purchased and the
Agent shall surrender the $2,500,000 Amended and Restated Note to the Borrower
marked "Canceled by Substitution," (iii) ET Capital, Genesis and the Borrower
shall execute and deliver an Assignment and Assumption Agreement containing
provisions substantially similar to the provisions contained in Section 2
hereof; and the agency relationship hereunder shall terminate. Notwithstanding
any provision herein to the contrary, in the event an Exercise Notice is not
delivered on or before January 30, 1999, the provisions of this Section 4
shall be of no further force and effect.
5. MISCELLANEOUS.
5.1 This Agreement shall be binding and inure to the benefit
of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
5.2 If any of the provisions or terms of this Agreement
shall for any reason be held to be invalid or unenforceable, such invalidity
or unenforceability shall not affect any of the other terms hereof, and this
Agreement shall be construed as if such unenforceable term had never been
contained herein.
5.3 This Agreement may be executed in one or more
counterparts, each of which shall constitute an original Agreement but all of
which together shall constitute one and the same instrument.
5.4 The descriptive headings herein are for convenience only
and shall not affect the meaning or construction of any of the provisions
hereof. Words used herein, regardless of the number and gender specifically
used shall be deemed and construed to include any other number, singular, or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.
8
<PAGE>
5.5 All notices, requests, consents, demands, approvals and
other communications hereunder shall be deemed to have been duly
given, made or served if in writing and when delivered personally (including
without limitation by means of telex, telecopies or telefax systems), or the
day following delivery to a nationally recognized, reputable overnight courier
service which guarantees delivery within twenty-four hours, charges prepaid,
to the respective parties to this Agreement as follows:
(a) If to the Borrower, to:
Age Institute of Florida, Inc.
Professional Arts Building
25 Penncraft Avenue
Chambersburg, Pennsylvania 17201
Attention: Carol A. Tschop, President
With a copy (which shall not constitute notice) to:
Blank, Rome, Comisky & McCauley
1 Logan Square
Philadelphia, Pennsylvania 19103
Attention: Harry A. Madonna, Esq.
(b) If to Genesis, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: President
With a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attention: George P. Barsness, Esq.
(c) If to the Agent or to ET Capital, to:
ET Capital Corporation
415 McFarlan Road
Suite 202
Kennett Square, Pennsylvania 19348
Attention: President
10
<PAGE>
with a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
555 Thirteenth Street, N.W.
Washington, D. C. 20004
Attention: George P. Barsness, Esq.
The designation of the person to be so notified or the
address of such person for the purposes of such notice may be changed from
time to time by similar notice in writing, except that any communication with
respect to a change of address shall be deemed to be given and made when
received by the party to whom such communication was sent.
5.6 The validity, meaning and effect of this Agreement shall
be determined in accordance with the laws of the State of Florida without
regard to conflicts of laws principles thereof.
5.7 No provision of this Agreement may be amended, modified,
terminated or waived except by a writing duly executed by each party sought to
be bound by such amendment, modification, termination or waiver.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
11
<PAGE>
IN WITNESS WHEREOF, each party hereto has duly executed or
caused this Assignment and Assumption Agreement to be duly executed on such
party's behalf as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
as a Lender
By: /s/ Ira C. Gubernick
------------------------------------------------
Name: Ira C. Gubernick
------------------------------------------------
Title: General Counsel -Corporate and Secretary
------------------------------------------------
ET CAPITAL CORPORATION
as a Lender and as Agent
By: /s/ Edward B. Romanov, Jr.
------------------------------------------------
Name: Edward B. Romanov, Jr.
------------------------------------------------
Title: President & CEO
------------------------------------------------
AGE INSTITUTE OF FLORIDA
Borrower
By: /s/ Carol A. Tschop
------------------------------------------------
Name: Carol A. Tschop
------------------------------------------------
Title: President
------------------------------------------------
<PAGE>
AMENDMENT TO WORKING CAPITAL LOAN AND SECURITY AGREEMENT
--------------------------------------------------------
This AMENDMENT TO WORKING CAPITAL LOAN AND SECURITY
AGREEMENT (this "Amendment") is made and entered into as of this 30th day of
January 1998, by and among AGE INSTITUTE OF FLORIDA, INC., a Florida
non-profit corporation (together with its successors in interest and assigns,
"Borrower"), GENESIS HEALTH VENTURES, INC., a Pennsylvania business
corporation (together with its successors in interest and assigns, "Genesis"),
and ET CAPITAL CORP., a Delaware corporation (together with its successors in
interest and assigns, "ET Capital"; Genesis and ET Capital are sometimes
collectively referred to herein as "Lenders").
BACKGROUND
----------
A. On August 31, 1996, Borrower acquired from Edgemont
Partners, L.P. eleven (11) health care facilities located in the State of
Florida (the "Facilities").
B. Borrower and Genesis entered into that certain Working
Capital Loan and Security Agreement, dated as of August 31, 1996 (the
"Agreement"), whereby Genesis agreed to provide Borrower with a loan in the
maximum principal amount of $10,000,000 (the "Loan") for the working capital
needs of the Facilities.
C. The Loan was evidenced by a Promissory Note, dated as of
August 31, 1995 (the "Note"), payable to the order of Genesis in the maximum
principal amount of $10,000,000.
D. Pursuant to that certain Assignment and Assumption
Agreement, dated as of the date hereof (the "Assignment"), among Genesis, ET
Capital and Borrower, Genesis sold and ET Capital purchased a portion of the
principal amount of the Note equal to $7,500,000, and ET Capital assumed the
rights and obligations of a lender under the Agreement.
E. Contemporaneously with the execution and delivery hereof,
Borrower is executing and delivering (i) the Amended and Restated Promissory
Note, dated the date hereof, payable to the order of ET Capital in the
principal amount of $7,500,000 (the "ET Capital Note") and (ii) the Amended
and Restated Promissory Note, dated the date hereof, payable to the order of
Genesis in the principal amount of $2,500,000 (the "Genesis Note").
F. Borrower and Lenders have agreed to amend certain
provisions of the Agreement as set forth herein.
<PAGE>
G. As security for Borrower's obligations to Lenders,
Borrower has agreed to execute and deliver a Second Mortgage, Assignment of
Rents and Security Agreement in favor of Genesis, as agent on behalf of the
Lenders.
TERMS
-----
NOW, THEREFORE, in consideration of the terms and conditions
set forth herein, and of any loans, advances, or extensions of credit
heretofore, now or hereafter made to or for the benefit of Borrower by
Lenders, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Definitions.
------------
1.1 All capitalized terms used and not otherwise defined
herein shall have the meanings set forth in the Agreement.
1.2 The Agreement is hereby amended such that all references
in the Agreement to "Lender" shall be deemed to be references to "Lenders", as
such term is defined in this Amendment.
1.3 The Agreement is hereby amended such that all references
in the Agreement to "Note" shall be deemed to refer collectively to the ET
Capital Note and the Genesis Note.
2. Amendment to Expiration Date.
-----------------------------
Section 1.1 of the Agreement is hereby amended by deleting
in the first sentence thereof "August 31, 2001" as the Expiration Date, and
replacing it with "August 31, 2007."
3. Elimination of Revolving Nature of the Loan.
--------------------------------------------
Section 1.1 of the Agreement is further amended by deleting
the last sentence of such Section in its entirety and replacing it with the
following sentence:
"Borrower shall be permitted to repay amounts drawn
hereunder, but shall not be permitted to draw again upon such amounts repaid."
4. Amendment to Security Interest Provisions.
------------------------------------------
4.1 The parties hereto acknowledge that, pursuant to the
Assignment, Lenders have appointed ET Capital to act as their agent under the
Agreement, including, without limitation, with respect to the security
interests granted thereunder.
2
<PAGE>
4.2 Section 1.5(a) of the Agreement is hereby amended by
deleting the first sentence of such sentence in its entirety and replacing it
with the following:
"Borrower hereby grants to ET Capital, as agent on behalf of
Lenders, a second priority lien and security interest on all of Borrower's
Gross Patient Accounts Receivable and other personal property utilized in the
Facilities or in connection with the operation thereof, tangible or
intangible, whether now owned or hereafter acquired, documents, contracts,
guarantees, books and records, processing cards, tapes, tabulating runs,
programs and similar material related thereto, together with all products and
replacements thereof and all proceeds of any of the foregoing (collectively,
"Personal Property" and the "Collateral"). Such lien and security interest
shall be held by ET Capital for the benefit of the Lenders in accordance with
the provisions of the Assignment."
5. Amendment to Notice Provision.
------------------------------
Section 9.1 of the Agreement is amended by adding the following to
the end of subsection (B) of such Section:
"and a copy to:
ET Capital Corp.
415 McFarlan Rd., Suite 202
Kennett Square, Pennsylvania 19348
Attention: President"
6. Successors and Assigns.
-----------------------
This Amendment shall be binding upon and inure to the
benefit of Borrower and Lenders and their respective successors and assigns,
except that Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of Lenders.
7. Ratification of Agreement.
--------------------------
Other than as specifically amended hereby and pursuant to
the Assignment, the Agreement is and shall continue to be in full force and
effect and is hereby ratified and confirmed in all respects.
8. Counterparts.
-------------
This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
3
<PAGE>
9. Governing Law.
--------------
This Amendment and the rights and obligation of the parties
hereunder shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
ATTEST: AGE INSTITUTE OF FLORIDA, INC.
/s/ Harry D. Madonna /s/ Carol A. Tschop
- -------------------------------------- ------------------------------
Name: Harry D. Madonna Name: Carol A. Tschop
Title: Secretary Title: President
ATTEST: GENESIS HEALTH VENTURES, INC.
/s/ Ira C. Gubernick /s/ Michael R. Walker
- -------------------------------------- ------------------------------
Secretary Name: Michael R. Walker
Title: Chairman & CEO
WITNESS: ET CAPITAL CORP.
/s/ Deborah Gianoulis /s/ Edward B. Romanov, Jr.
- --------------------------------------- ------------------------------
Name: Deborah Gianoulis Name: Edward B. Romanov, Jr.
Title: President & CEO
4
<PAGE>
[Governing rights between
Senior Lender and Junior
Lenders]
Exhibit 10.19
INTERCREDITOR AGREEMENT
-----------------------
THIS INTERCREDITOR AGREEMENT (this "Agreement") is made and
entered into as of January 30, 1998, among (i) Genesis Health Ventures, Inc.,
a Pennsylvania corporation ("Genesis"), in its capacity as a senior lender
(together with its successors and assigns, the "Senior Lender"), (ii) ET
Capital Corp., a Delaware corporation ("ET Capital"), (iii) Genesis, in its
capacity as a junior lender (together with ET Capital and their successors and
assigns, the "Junior Lenders"), (iv) ET Capital, in its capacity as agent for
the Junior Lenders (the "Junior Agent"), (v) Genesis, in its capacity as
collateral agent for the Senior Lender and the Junior Lenders (the "Master
Collateral Agent"), (vi) Age Institute of Florida, Inc., a Florida non-profit
corporation (the "Borrower") and (vii) Genesis Eldercare Network Services,
Inc., a Pennsylvania corporation (the "Manager") (with respect to Section 31
hereof).
WHEREAS, Genesis, as Senior Lender, and the Borrower entered
into that certain Acquisition Loan and Security Agreement, dated as of August
31, 1996, as amended (the "Acquisition Loan Agreement"), pursuant to which the
Senior Lender agreed to make a loan to the Borrower in the original principal
amount of $45,000,000 (the "Acquisition Loan") and the Borrower granted the
Senior Lender a first priority security interest in the Facilities Collateral
(as hereinafter defined) and a second priority security interest in the
Accounts Receivable Collateral (as hereinafter defined) to secure its
obligations in connection with the Acquisition Loan;
WHEREAS, the Acquisition Loan was evidenced by a Promissory
Note dated August 31, 1996 by Borrower payable to the order of the Senior
Lender in the principal amount of $45,000,000;
WHEREAS, Genesis, as Junior Lender, and the Borrower also
entered into that certain Working Capital Loan and Security Agreement, dated
as of August 31, 1996, as amended (the "Working Capital Loan Agreement"),
pursuant to which Genesis agreed to make loans to the Borrower in the
aggregate principal amount of $10,000,000 (the "Working Capital Loan") and the
Borrower granted Genesis a first priority security interest in the Accounts
Receivable Collateral to secure its obligations in connection with the Working
Capital Loan;
WHEREAS, the Working Capital Loan was evidenced by a
Promissory Note, dated August 31, 1996, made by Borrower payable to the order
of Genesis in the principal amount of $10,000,000 (the "Working Capital
Note");
WHEREAS, simultaneously with the execution and delivery of
the Acquisition Loan Agreement and the Working Capital Loan Agreement, the
Borrower and Genesis also entered into a separate Security Agreement, dated as
of August 31, 1996, as amended (the "Security Agreement"), whereby the
Borrower granted Genesis a security interest in all of its accounts,
inventory, equipment and general intangibles to secure the obligations of the
Borrower under both the Acquisition Loan and the Working Capital Loan
(collectively, the "Working Capital Loan Documents");
<PAGE>
WHEREAS, the Borrower also entered into that certain
Mortgage, Assignment of Rents and Security Agreement, dated as of August 31,
1996, as amended (the "Senior Mortgage"), whereby the Borrower granted the
Senior Lender a mortgage and security interest in the Facilities (as
hereinafter defined) and in certain other property to secure the obligations
of the Borrower in connection with the Acquisition Loan;
WHEREAS, the Manager performs management services to the
Facilities (as hereinafter defined) pursuant to that certain Management
Agreement, dated as of August 31, 1996 (as amended, modified, renewed,
restated or substituted from time to time, the "Management Agreement"), among
Genesis, the Borrower and the Manager;
WHEREAS, pursuant to an Assignment and Assumption Agreement,
dated as of the date hereof (the "Assignment"), among the Junior Lenders, the
Junior Agent and the Borrower, ET Capital agreed to purchase, and Genesis
agreed to sell, an interest in the Working Capital Note in the amount of
$7,500,000, and ET Capital was appointed as agent for the Junior Lenders;
WHEREAS, in connection with the Assignment, the Borrower is
amending and restating the Working Capital Note so that it is evidenced by (i)
an Amended and Restated Promissory Note payable to the order of Genesis in the
principal amount of $2,500,000 (the "$2.5 Million Note") and (ii) an Amended
and Restated Promissory Note payable to the order of ET Capital in the
principal amount of $7,500,000 (the "$7.5 Million Note"), each of which
continues to be secured as set forth in the Working Capital Loan Documents and
in the Assignment;
WHEREAS, the Borrower and the Junior Lenders have also
entered into an Amendment to Working Capital Loan and Security Agreement,
dated as of the date hereof, pursuant to which the Junior Lenders have agreed
to extend the maturity date of the Working Capital Loan;
WHEREAS, in consideration thereof and for other good and
valuable consideration, the Borrower has entered into that certain Second
Mortgage, Assignment of Rents and Security Agreement, dated as of the date
hereof (the "Junior Mortgage"), whereby the Borrower granted the Junior Agent
for the benefit of the Junior Lenders a second priority mortgage and security
interest in the Facilities and certain other property to secure the
obligations of the Borrower in connection with the Working Capital Loan;
2
<PAGE>
WHEREAS, on the date hereof, the Borrower and the Senior
Lender entered into an Amendment to Acquisition Loan and Security Agreement,
which, among other things, reduced the principal amount of the Acquisition
Loan to $40,000,000, and Borrower executed and delivered an Amended and
Restated Promissory Note, dated the date hereof, payable to the order of the
Senior Lender in the principal amount of $40,000,000 (the "Acquisition Note");
WHEREAS, Genesis, the Borrower and the Master Collateral
Agent have entered into an Assignment and Amendment to the Security Agreement,
dated as of the date hereof (the "Amendment to Security Agreement") pursuant
to which Genesis has assigned all of its rights and obligations as a secured
party under the Security Agreement to the Master Collateral Agent for the
benefit of the Senior Lender and the Junior Lenders, subject to the terms and
provisions of this Agreement;
WHEREAS, the parties are entering into this Agreement in
order to define the existing relative rights and security interest priorities
between the Senior Lender and the Junior Lenders and to appoint Genesis as the
Master Collateral Agent to act on behalf of the Senior Lender, the Junior
Lenders, and the Junior Agent; and
WHEREAS, in connection with all of the foregoing, the
Manager has agreed to subordinate its rights to the payment of a portion of
its management fees upon a default of any of the Borrowers' obligations under
the Senior Note or the Subordinated Notes.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the
following meanings:
"Accounts Receivable Collateral" means all of Borrower's
Gross Patients Accounts Receivable and other personal property utilized in the
Facilities or in connection with the operation thereof, tangible or
intangible, whether now or hereafter acquired, and all proceeds and products
thereof, together with all documents, contracts, guarantees, books and
records, processing cards, tapes, tabulating runs, programs and similar
material related thereto.
"Acquisition Loan Documents" means the Acquisition Loan
Agreement, the Senior Note, the Security Agreement, the Senior Mortgage and
all other agreements, instruments and documents executed and/or delivered in
connection therewith, as such documents may be amended, renewed, modified,
extended, assigned, refinanced or replaced from time to time.
3
<PAGE>
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Collateral" means, collectively, the Accounts Receivable
Collateral, the Facilities Collateral, the "Collateral" as defined in the
Security Agreement, which includes all of the Borrower's existing or hereafter
acquired Accounts, Inventory, Equipment and General Intangibles (all as
defined in the Security Agreement) and proceeds thereof and all of the
"Property" as defined in the Senior Mortgage and the Junior Mortgage, and any
and all proceeds of the foregoing.
"Facilities" means the eleven health care facilities located
in the Counties of Pinellas, Polk, Volusia, Bay and Okaloosa in the State of
Florida owned by Borrower and as described in the Acquisition Loan Agreement.
"Facilities Collateral" means the Facilities and all
proceeds and products thereof, together with all documents, contracts,
guarantees, books and records, processing cards, tapes, tabulating runs,
programs and similar material related thereto.
"Gross Patients Accounts Receivable" means all accounts
receivable of Borrower, including all rights of Borrower, if any, arising from
the payment for goods sold or leased or for services rendered with respect to
the Facilities, including, without limitation, (i) all accounts arising from
the operation of the Facilities and (ii) all rights to payment from the
Medicare program, Medicaid program or similar state or federal programs,
boards, bureaus or agencies and rights to payments from patients or private
insurers and others arising from the operation of their businesses, including
rights to payment from Reimbursement Contracts. Gross Patients Accounts
Receivable shall include the proceeds of the foregoing (whether cash or
noncash, movable or immovable, tangible or intangible) received from the sale,
exchange, transfer, collection or other disposition or substitution thereof
but, shall not include, (i) gifts, grants, bequests, donations and/or
contributions made to Borrower and (ii) with respect to reimbursements from
Medicare or Medicaid or like programs, not those accounts receivable in excess
of allowable reimbursement amounts.
"Person" means any individual, corporation, association,
partnership, limited liability company, joint venture, cooperative,
foundation, trust or other organization, any individual, and any government,
any political subdivision thereof, and any agency of any such government or
political subdivision.
4
<PAGE>
"Senior Indebtedness" means all present and future
obligations, liabilities and indebtedness of the Borrower of every type and
nature, currently or hereafter due, incurred or created, arising under or in
connection with the Acquisition Loan Documents, including, without limitation,
all principal and interest provided for in the Acquisition Loan Documents
(including, without limitation, interest arising prior to and after the
commencement of any bankruptcy or similar proceeding in which the Borrower is
the debtor, whether or not such interest is an allowed claim in such
proceeding) and all fees, premiums, charges, expenses, indemnities and other
amounts payable under or incidental to the Acquisition Loan Documents,
including as such obligations, liabilities and indebtedness may be amended,
renewed, modified, extended, assigned, refinanced or replaced from time to
time.
"Senior Note" means the Acquisition Note and any amendments,
renewals, replacements, extensions, modifications, refinancings or assignments
thereof.
"Senior Noteholder" means the Senior Lender, in its capacity
as holder of the Senior Note and the Senior Indebtedness, and any other Person
acquiring all or any part of the Senior Note or the Senior Indebtedness;
provided, however, that neither the Borrower nor any Affiliate of the Borrower
or their successors or assigns shall have any rights otherwise available to
the Senior Noteholder under this Agreement in the event that any such party
acquires all or any part of the Senior Note or the Senior Indebtedness.
"Subordinated Indebtedness" means all present and future
obligations, liabilities and indebtedness of the Borrower of every type and
nature, currently or hereafter due, incurred or created, arising under or in
connection with the Working Capital Loan Documents, including, without
limitation, all principal and interest provided for in the Working Capital
Loan Documents and all fees, premiums, charges, expenses, indemnities and
other amounts arising under or incidental to the Working Capital Loan
Documents, as such obligations, liabilities and indebtedness may be amended,
renewed, modified, extended, assigned, refinanced or replaced from time to
time, subject to the provisions of this Agreement.
"Subordinated Noteholders" means the Junior Lenders, in
their capacity as holders of the Subordinated Notes and the Subordinated
Indebtedness, and any other Person acquiring all or any part of the
Subordinated Notes or the Subordinated Indebtedness; provided, however, that
neither the Borrower nor any Affiliate of the Borrower or their successors or
assigns shall have any rights otherwise available to the Subordinated
Noteholders under this Agreement in the event that any such party acquires all
or any part of the Subordinated Notes or the Subordinated Indebtedness.
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"Subordinated Notes" means, collectively, the $2.5 Million
Note and the $7.5 Million Note, and any amendments, renewals, replacements,
extensions, modifications or assignments thereof.
"Working Capital Loan Documents" means the Working Capital
Loan Agreement, the Subordinated Notes, the Security Agreement, the Junior
Mortgage and all other agreements, instruments and documents executed in
connection therewith, as such documents may be amended, renewed, modified,
extended, assigned, refinanced or replaced from time to time.
2. CONSENTS OF HOLDERS.
Notwithstanding any of the terms or provisions of the
Working Capital Loan Documents, each Subordinated Noteholder, by its
acceptance of a Subordinated Note, does hereby ratify and acknowledge the
existence of the Senior Indebtedness and the liens securing the Senior
Indebtedness and the obligations of the Borrower in connection with the
Acquisition Loan Documents. Each Subordinated Noteholder further agrees that
(i) such Subordinated Noteholder will not challenge the liens and security
interests securing payment of the Senior Indebtedness, (ii) as between the
Senior Noteholders and such Subordinated Noteholder, the terms of this
Agreement shall govern, even if part or all of the Senior Indebtedness or any
liens or security interest securing payment thereof are avoided, disallowed,
set aside or otherwise invalidated, and (iii) to the extent that any of the
terms and provisions of this Agreement may be inconsistent with any of the
terms or provisions of the Acquisition Loan Documents or the Working Capital
Loan Documents, such terms and provisions shall be deemed to be superseded,
and the terms of this Agreement shall govern.
3. PRIORITY OF LIENS.
As long as all or any portion of the Senior Indebtedness
remains outstanding, unpaid, defeasible or unsatisfied, each of the
Subordinated Noteholders agrees that, notwithstanding any provision to the
contrary in any of the Acquisition Loan Documents or the Working Capital Loan
Documents and irrespective of the time, order or method of perfection,
creation or attachment of any security interests or liens in the Collateral,
(i) the interests and liens of the Senior Noteholders in all of the Collateral
are, and shall be deemed to be, prior and senior to any interests or liens the
Subordinated Noteholders or the Junior Agent may have in the Collateral, (ii)
the interests and liens of the Subordinated Noteholders and the Junior Agent
in the Collateral are, and shall be deemed to be, junior, subject and
subordinate in all respects to the interests and liens of the Senior
Noteholders in the Senior Note and (iii) the Subordinated Noteholders shall
refrain from exercising any remedy under the Working Capital Loan Documents,
including acceleration of the indebtedness under said Notes, and shall refrain
from taking any action to foreclose upon, acquire title to (by bidding at
foreclosure or otherwise), take possession of, liquidate or proceed against
any of the Collateral.
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4. SUBORDINATION OF PAYMENT AND OTHER RIGHTS.
Each of the Borrower and the Subordinated Noteholders
covenants and agrees (and each such Subordinated Noteholder by its acceptance
of a Subordinated Note confirms) that all rights of each present and future
Subordinated Noteholder to payments or distributions of any kind or character
under or in respect of the Subordinated Indebtedness are hereby expressly
subordinated, to the extent and in the manner set forth in this Agreement, to
the prior indefeasible payment in full in cash or cash equivalents of all
Senior Indebtedness in accordance with the terms thereof. Each of the Borrower
and Subordinated Noteholders confirm all of the Senior Noteholder's rights
under the Acquisition Loan Documents, and specifically, the right to control
the application of any insurance and condemnation proceeds as set forth more
fully therein, and acknowledge that, to the extent Borrower is required to
obtain Senior Lender's consent to any act under the Acquisition Loan
Documents, the decision of the Senior Lender with respect thereto shall be
binding on the Junior Lenders.
5. LIQUIDATION, ETC.
(a) Upon any payment or distribution of any assets of the
Borrower of any kind or character, whether in cash, property or securities
(including, without limitation, payments or distributions payable to the
Subordinated Noteholders by virtue of the terms of any indebtedness which is
subordinated in right of payment to Subordinated Indebtedness (a "Junior
Subordinated Payment")), by set-off or otherwise, to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Borrower, as the case may be, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other similar proceedings or upon an
assignment for the benefit of creditors, or any other marshaling of its assets
and liabilities (referred to herein as a "Proceeding"), the holders of Senior
Indebtedness shall first be entitled to receive payment in full in cash or
cash equivalents, in accordance with the terms of the Senior Indebtedness, of
all amounts payable under or in respect of the Senior Indebtedness, before any
payment or distribution is made on, or in respect of, any Subordinated
Indebtedness; and, upon any such Proceeding, any distribution or payment to
which the Subordinated Noteholders would be entitled except for the provisions
hereof, shall be paid by the Borrower, or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution directly to the Master Collateral Agent for the benefit of the
Senior Noteholders to the extent necessary to pay all such Senior Indebtedness
in full, after giving effect to any concurrent payment or distribution to the
Senior Noteholders, and notwithstanding whether all or any portion of the
Senior Indebtedness is deemed to be unsecured in any such proceeding.
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(b) If, notwithstanding the foregoing, in any Proceeding any
Junior Subordinated Payment or other payment or distribution of any assets of
the Borrower, as the case may be, of any kind or character, whether in cash,
property or securities, by set-off or otherwise, shall be received by any
Subordinated Noteholder before all Senior Indebtedness is indefeasibly paid in
full in cash or cash equivalents, such payment or distribution shall be
received (whether or not such payment or distribution shall have been made in
accordance with a plan of reorganization or arrangement approved in bankruptcy
or other proceedings) in trust on behalf of the Senior Noteholders and shall
be paid over to the Master Collateral Agent on behalf of the Senior
Noteholders for application to the payment of all Senior Indebtedness
remaining unpaid until such Senior Indebtedness shall have been indefeasibly
paid in full in cash or cash equivalents, after giving effect to any
concurrent payment or distribution to the Senior Noteholders. In the event of
the failure of any Subordinated Noteholder to endorse or assign to the Master
Collateral Agent any such payment or distribution, the Master Collateral Agent
is hereby irrevocably authorized to endorse or assign the same on behalf of
such holder.
(c) For purposes of this Section 5 only, the words "any
payment or distribution of any assets of the Borrower of any kind or
character, whether in cash, property or securities" shall not be deemed to
include a distribution of securities of the Borrower provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
bankruptcy law or of any other corporation provided for by such plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction which securities are subordinate in right of payment to
all then outstanding Senior Indebtedness at least to the same extent as the
Subordinated Indebtedness is so subordinate as provided in this Agreement.
(d) Notwithstanding any statute, including, without
limitation, the United States Bankruptcy Code and any state bankruptcy law,
any rule of law or any bankruptcy procedure to the contrary, to the extent
permitted by applicable usury limitations, the right of the holders of Senior
Indebtedness to have all of the Senior Indebtedness indefeasibly paid and
satisfied in full prior to the payment of any of the Subordinated Indebtedness
shall include, without limitation, the right of Senior Noteholders to be paid
in full all interest accruing (or that would have accrued in the absence of
such statute, rule, law or procedure at any time) on such obligations prior to
any payment or distribution to the Subordinated Noteholders by or out of the
assets of the Borrower. To the extent that the Senior Noteholders would not be
entitled to the interest referenced in the preceding sentence under such
statute, rule or procedure, then the difference between the amount to which
they are entitled under this paragraph and the amount to which they otherwise
would be entitled under such statute, rule or procedure, shall be paid from
amounts otherwise due to the Subordinated Noteholders, and the total amounts
to be paid to the Subordinated Noteholders shall be reduced accordingly.
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(e) To enable the Master Collateral Agent to enforce the
rights of the Senior Noteholders hereunder in any Proceeding, the Master
Collateral Agent is hereby irrevocably authorized and empowered, in its
discretion (i) to make and present such proofs of claim against the Borrower
on account of the Subordinated Indebtedness as it may deem expedient or
proper, and (ii) to receive and collect on behalf of the Senior Noteholders
any and all dividends and other payments or distributions made thereon in
whatever form the same may be paid; and upon the request of the Master
Collateral Agent, each Subordinated Noteholder shall execute and deliver to
the Master Collateral Agent, Senior Noteholders or their authorized
representatives such powers of attorney, assignments and other documents and
instruments as such holders or representatives may request, consistent with
this Agreement. Nothing contained in this Section 5(e) or elsewhere in this
Agreement shall be construed to give the Master Collateral Agent or the Senior
Noteholders any right to vote with respect to the treatment of the
Subordinated Indebtedness or any claim thereunder, or any portion of such
Subordinated Indebtedness or such claim, in any Proceeding, whether in
connection with any resolution, arrangement, plan of reorganization,
compromise, settlement, election of a trustee or otherwise.
6. DEFAULT.
(a) In the event that any Senior Payment Default (as defined
below) shall have occurred and shall be continuing, then, effective at such
time as the Borrower first receives notice or acquires actual knowledge of the
occurrence of such Senior Payment Default, no payment or distribution of any
kind, whether in cash, property or securities (including, without limitation,
any Junior Subordinated Payment), by set-off or otherwise, shall be made on,
or in respect of, any Subordinated Indebtedness or for the acquisition,
retirement, repurchase, redemption or defeasance thereof unless and until the
Senior Noteholder provides written notice to the Junior Noteholders that such
Senior Payment Default shall have been cured or waived in accordance with the
terms of the Senior Indebtedness, or that all amounts then due and payable in
respect of Senior Indebtedness shall have been paid in full, or provision
shall have been made for such payment in cash or cash equivalents in a manner
satisfactory to the Senior Noteholders. "Senior Payment Default" means any
default in the payment when due of any Senior Indebtedness, whether at its
stated maturity, upon acceleration or otherwise.
(b) In the event that any Senior Nonmonetary Default (as
defined below) shall have occurred and shall be continuing, then, upon receipt
by the Borrower of written notice (a "Nonmonetary Default Notice") of such
Senior Nonmonetary Default from any Senior Noteholder or any representative of
such a holder, no Junior Subordinated Payment or other payment or distribution
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of any kind, whether in cash, property or securities, by set-off or otherwise,
shall be made on, or in respect of, any Subordinated Indebtedness or for the
acquisition, retirement, repurchase, redemption or defeasance of any
Subordinated Indebtedness during the period (the "Payment Blockage Period")
commencing on the date such Nonmonetary Default Notice is given and ending on
the earlier of (i) the date on which the Senior Noteholders that issued such
Nonmonetary Default Notice provide written notice to the Borrower that such
Senior Nonmonetary Default has been cured or waived in accordance with the
terms of the Senior Indebtedness or has been rescinded or annulled or the
Senior Indebtedness to which such Senior Nonmonetary Default relates has been
fully discharged in a manner satisfactory to the Senior Noteholders (which
notice shall be provided promptly by the applicable Senior Noteholders), or
(ii) the 179th day after the date such Nonmonetary Default Notice is given,
after which date ordinary, periodic payments to the Junior Noteholders as
provided for in the Working Capital Loan Documents may resume in accordance
with the terms thereof. "Senior Nonmonetary Default" means the occurrence or
existence and continuance of any event of default, other than a Senior Payment
Default, permitting one or more Senior Noteholder to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable.
(c) If, notwithstanding the foregoing, any Subordinated
Noteholder shall receive any payment or distribution of any assets of the
Borrower of any kind or character, whether in cash, property or securities
(including, without limitation, any Junior Subordinated Payment), by set-off
or otherwise, in violation of this Section 6, then such cash, property or
securities shall be held in trust by the recipient thereof on behalf of the
Senior Noteholders and shall be paid over to the Master Collateral Agent
acting for the benefit of the Senior Noteholders for application to the
payment of all Senior Indebtedness until all Senior Indebtedness shall have
been indefeasibly paid in full in cash or cash equivalents, after giving
effect to any concurrent payment or distribution to the Senior Noteholders. In
the event of the failure of any Subordinated Noteholders to endorse or assign
to the Master Collateral Agent any such payment or distribution, the Master
Collateral Agent is hereby irrevocably authorized to endorse or assign the
same on behalf of any Subordinated Noteholder.
(d) The provisions of this Section 6 shall not apply to any
payment or distribution by the Borrower in any Proceeding (such amounts and
distributions being subject to Section 5).
7. PERMITTED PAYMENTS; LIMITS ON RECOURSE FOR PAYMENT
OF SUBORDINATED INDEBTEDNESS.
Until and unless a Senior Payment Default has occurred or a
Payment Blockage Period is in effect, the Borrower may make and the
Subordinated Noteholders may receive Interest Payments (as hereinafter
defined) as the same become due and payable. For purposes of this Section 7,
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"Interest Payments" means the payments of interest which are due on the
outstanding principal amount of the Working Capital Loan, and shall in no
event be deemed to refer to any late charges or default interest or any other
premium, fees, costs or other payments. Until such time as all Senior
Indebtedness is indefeasibly paid in full in cash or cash equivalents, and
regardless of whether all or any portion of the Subordinate Debt is due and
payable by maturity, acceleration or otherwise, neither the Borrower nor any
Affiliate of the Borrower shall pay, and no Subordinated Noteholder shall ask,
demand, claim, take or receive from the Borrower, any Affiliate of the
Borrower or any other Person, any payment of the principal of the Subordinated
Indebtedness or any other payment of the Subordinated Indebtedness or any
other premium, fee or cost other than Interest Payments as permitted by this
Section 7.
8. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Agreement are and are intended solely
for the purpose of defining the relative rights of the Subordinated
Noteholders, on the one hand, and the Senior Noteholders, on the other hand.
Nothing contained in this Agreement is intended to or shall (a) impair the
obligation of the Borrower, which is absolute and unconditional, to pay to the
Subordinated Noteholders the principal of and interest on the Subordinated
Indebtedness and all other amounts payable thereunder as and with the terms
hereof and of the Subordinated Indebtedness, (b) affect the relative rights
against the Borrower of creditors of the Borrower other than the Senior
Noteholders and the Subordinated Noteholders, or (c) increase the total
obligations of the Borrower under the Senior Indebtedness or the Subordinated
Indebtedness.
9. APPOINTMENT OF MASTER COLLATERAL AGENT.
(a) Each of the Senior Noteholders, the Subordinated
Noteholders and the Junior Agent hereby irrevocably appoints and authorizes
Genesis as the Master Collateral Agent to act on behalf of such person
hereunder and under the Acquisition Loan Documents and the Working Capital
Loan Documents with respect to the Collateral and Genesis hereby accepts such
appointment and authorization. The Master Collateral Agent is hereby
specifically authorized to enter into the Amendment to Security Agreement as
the secured party thereunder, it being understood and agreed that the security
interests granted under the Security Agreement to the Master Collateral Agent
are held by the Master Collateral Agent for the benefit of the Senior
Noteholders and Subordinated Noteholders. It is further understood and agreed
that, with respect to any Collateral as to which perfection is accomplished by
possession, the Master Collateral Agent is holding such Collateral for the
benefit of the Senior Noteholders and the Subordinated Noteholders, thereby
perfecting the security interests in such Collateral on behalf of each of
them. However, each of Subordinated Noteholders and the Junior Agent also
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understand and agree that, so long as any Senior Indebtedness shall not have
been fully and indefeasibly paid, the Master Collateral Agent shall accept
directions only from the Senior Noteholders with respect to any matter
relating to the Collateral and shall have no duty to the Subordinated
Noteholders or the Junior Agent other than (i) the safekeeping of Collateral
or (ii) the perfection of liens on behalf of the Subordinated Noteholder and
the Junior Agent, and the Subordinated Noteholders and the Junior Agent shall
not have any rights to require the Master Collateral Agent to take or omit to
take any other action with respect to the Collateral. Upon the indefeasible
payment in full of the Senior Indebtedness, if the Master Collateral Agent
shall then be in possession of any Collateral at any time any Subordinated
Indebtedness shall be outstanding, then the Master Collateral Agent's sole
responsibility or obligation shall be, upon notice to the Junior Agent, to
turn over same to the Junior Agent or to whomever a court of competent
jurisdiction directs.
(b) Each Senior Noteholder and each Subordinated Noteholder
agrees (which agreement shall survive the termination of this Agreement) to
indemnify the Master Collateral Agent, pro rata, according to such Senior
Noteholder's or such Subordinated Noteholder's ratable percentage of the
aggregate principal amount of the aggregate Senior Indebtedness and the
Subordinated Indebtedness, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against it in its capacity as the Master
Collateral Agent or any of its directors, officers, employees or agents in any
way relating to or arising out of the Acquisition Loan Documents or the
Working Capital Loan Documents or any action taken or omitted by the Master
Collateral Agent or any of its directors, officers, employees or agents under
the Acquisition Loan Documents or the Working Capital Loan Documents, to the
extent not reimbursed by the Borrower; provided, however, that the Senior
Noteholders and the Subordinated Noteholders shall not be liable to the Master
Collateral Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgment, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of the Master
Collateral Agent, or any of its directors, officers, employees or agents.
(c) Neither the Master Collateral Agent nor any of its
officers, directors, employees or agents will be liable to the Senior
Noteholders or the Subordinated Noteholders for any action taken or omitted
hereunder or in connection herewith or in connection with any document or
instrument now or hereafter executed in connection herewith unless caused by
its gross negligence or willful misconduct. The Master Collateral Agent will
not be responsible for any recitals, warranties or representations in the
Acquisition Loan Documents or the Working Capital Loan Documents. The Master
Collateral Agent may execute any of its duties by or through agents or
employees and will be entitled to advice of counsel, accountants or other
professionals of its selection concerning all matters pertaining to its duties
hereunder and thereunder. The Master Collateral Agent will be entitled to rely
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upon any writing or other document, telegram or telephone conversation
believed by it to have been signed, sent or made by the proper person or
persons and, in respect of legal matters, upon the advice of counsel selected
by the Master Collateral Agent. The Master Collateral Agent shall be fully
justified in failing or refusing to take any action under the Acquisition Loan
Documents or the Working Capital Loan Documents unless it shall first receive
such advice or concurrence of all the Senior Noteholders or the Subordinated
Noteholders, as it deems appropriate, or it shall first be indemnified to its
satisfaction by the Senior Noteholders and the Subordinated Noteholders
against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action except for its own
gross negligence or willful misconduct.
(d) Each of the Senior Noteholders and the Subordinated
Noteholders acknowledges that the Master Collateral Agent has not made any
representation or warranty to it and that no act taken by the Master
Collateral Agent will be deemed to constitute a representation or warranty by
the Master Collateral Agent to any of the Senior Noteholders or the
Subordinated Noteholders. Each Senior Noteholder and Subordinated Noteholder
further acknowledges that it has taken and will continue to take such action
and to make such investigation as it deems necessary to inform itself of the
affairs of the Borrower and that it has made and will continue to make its own
independent investigation of the creditworthiness and the business and
operations of the Borrower. In making an advance hereunder, each Senior
Noteholder and Subordinated Noteholder represents that it has not relied and
will not rely upon any information or representations furnished or given by
the Master Collateral Agent. The Master Collateral Agent will be under no duty
or responsibility to any Senior Noteholder or Subordinated Noteholder to
ascertain or to inquire into the performance or observance by the Borrower of
any of the provisions of this Agreement or any document or instrument now or
hereafter executed in connection herewith. The Master Collateral Agent will
not have any duty or responsibility to provide any Senior Noteholder or
Subordinated Noteholder with any credit or other information concerning the
affairs, financial condition or business of the Borrower or any affiliate
thereof which may come into the possession of the Master Collateral Agent. The
Senior Noteholders and Subordinated Noteholders understand and agree that the
Master Collateral Agent will not be deemed to have knowledge of the existence,
occurrence or continuance of any event of default under any of the Acquisition
Loan Documents or the Working Capital Loan Documents, unless the officers of
the Master Collateral Agent immediately responsible for matters concerning
this Agreement will have actual knowledge of such occurrence or will have been
notified in writing by any Senior Noteholder or Subordinated Noteholder or
Borrower that such person or the Borrower, as applicable, considers that such
event of default has occurred and is continuing and specifying the nature
thereof.
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(e) Subject to the appointment and acceptance of a successor
Master Collateral Agent as provided below, the Master Collateral Agent may
resign at any time by notifying the Senior Noteholders, the Subordinated
Noteholders and the Borrower. Upon any such resignation, the Senior
Noteholders and the Subordinated Noteholders will have the right to appoint a
successor Master Collateral Agent. If no successor Master Collateral Agent
will have been so appointed by the Senior Noteholders and the Subordinated
Noteholders and will have accepted such appointment within thirty (30) days
after the retiring Master Collateral Agent gives notice of its resignation,
then the retiring Master Collateral Agent may, on behalf of the Senior
Noteholders and Subordinated Noteholders, appoint a successor Master
Collateral Agent. Upon the acceptance of any appointment as Master Collateral
Agent hereunder by a successor, such successor will thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Master Collateral Agent and the retiring Master Collateral Agent will
be discharged from its duties and obligations hereunder and under the
Acquisition Loan Documents and the Working Capital Loan Documents. After any
Master Collateral Agent's resignation hereunder, the provisions of this
Section 9 will continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
10. SUPPLEMENTAL ASSIGNMENTS, POWER OF ATTORNEY.
(a) Each Subordinated Noteholder agrees to execute and
deliver to the Master Collateral Agent such assignments or other instruments
as may be reasonably requested by the Master Collateral Agent in order to
enable it to enforce their rights hereunder and to collect, to the extent
entitled thereto under this Agreement, any and all dividends or other payments
or disbursements which may be made at any time on account of all or any of the
Subordinated Indebtedness so long as any Senior Indebtedness remains unpaid.
(b) Each Subordinated Noteholder hereby irrevocably
constitutes and appoints the Master Collateral Agent, and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in its place and
stead, in its own name or otherwise, from time to time (i) to receive, endorse
or assign payments and distributions made with respect to such Subordinated
Noteholder's Subordinated Indebtedness to the extent that such payments and
distributions are required to be made or turned over to the Senior Noteholders
and (ii) to execute and deliver such documents and instruments necessary to
enable the Senior Noteholders to enforce their rights under this Agreement.
Each Subordinated Noteholder hereby ratifies any and all lawful actions taken
pursuant to the foregoing power of attorney and confirms and agrees that such
power of attorney is coupled with an interest and is irrevocable.
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11. NO OBLIGATIONS OF SENIOR NOTEHOLDERS; BENEFIT OF
SUBORDINATION PROVISIONS.
(a) Each Subordinated Noteholder agrees that the Senior
Noteholder shall not be liable for any action or failure to act under or in
connection with any of the Acquisition Loan Documents, it being understood
that the decisions as to whether or not to act and the manner of proceeding
under such instruments and documents are within the sole discretion of the
Senior Noteholder and shall not be affected in any manner by the existence of
the Subordinated Indebtedness. It is further agreed that such obligations as
may be imposed under the Acquisition Loan Documents shall run exclusively to
the benefit of the Senior Noteholder and may be enforced or waived only by the
Senior Noteholder.
(b) The powers conferred on Genesis as Senior Lender and
Senior Noteholder under this Agreement are solely to protect its interests
under this Agreement and shall not impose any duty upon Genesis or any other
holders to exercise any such powers. In particular, neither Genesis nor any
other Senior Noteholder shall be required to make any demand or to make any
inquiry as to the nature of sufficiency of any payment received by it. Genesis
and such other holders shall be accountable only for amounts actually received
as a result of the exercise of such powers, and neither Genesis nor any other
Senior Noteholder, nor any of their respective officers, directors, employees,
agents or participants shall be responsible to the Borrower or any
Subordinated Noteholder, for any act or failure to act by it or them under
this Agreement, except for its or their own gross negligence or willful
misconduct. Genesis and each such other holder shall be entitled to rely upon
any paper, instrument or document which it in good faith believes to be
genuine and correct and to have been signed or sent by the proper person or
persons.
12. NO PAYMENTS IN VIOLATION OF AGREEMENT.
The Borrower agrees that no payments or distributions, by
set-off or otherwise, will be made by or on behalf of the Borrower in
violation of the terms of this Agreement; and each Subordinated Noteholder
agrees that it will not receive or accept any such payment or distribution.
13. AVOIDED PAYMENTS.
Without limiting any other provision of this Agreement,
Senior Indebtedness shall not be deemed to have been paid for purposes of this
Agreement if any payment in respect thereof (i) shall have been avoided or
recovered by the payor or its trustee or other representative or successor in
accordance with the order of any court of competent jurisdiction in any
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
payor, or as required upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with respect to the payor or any
substantial part of its property or otherwise, or (ii) is the subject of a
pending or threatened proceeding in which such avoidance or recovery is (or
would be) sought. For purposes of this Section 13, a payment in respect of
Senior Indebtedness shall be deemed to be the subject of a "threatened
proceeding" only if the payor or a trustee for or other authorized
representative of the payor or its estate has expressly informed the Senior
Noteholders that such payment will be sought to be avoided or recovered in
whole or in part.
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14. NOTICE OF DEFAULT.
Each Subordinated Noteholder agrees to notify the Master
Collateral Agent and the Senior Noteholder in writing promptly upon any
default under any of the Working Capital Loan Documents and shall notify the
Master Collateral Agent and the Senior Noteholder in writing at least two (2)
business days prior to taking any action to accelerate such Subordinated
Indebtedness, subject to the standstill and subordination provisions of this
Agreement.
15. CERTAIN POWERS OF SENIOR NOTEHOLDERS.
Each Subordinated Noteholder agrees that, without notice to
or further consent by it, (a) the liability of the Borrower in respect of the
Senior Indebtedness, the Acquisition Loan and the liens of the Senior
Noteholders may, in whole or in part, be amended, supplemented, renewed,
extended, modified, released, replaced, refinanced or refunded by the Senior
Noteholders, as the Senior Noteholders may deem advisable, (b) any Collateral
and/or security interests in respect of the Senior Indebtedness may, from time
to time, in whole or in part, be exchanged, sold or surrendered by the Master
Collateral Agent, (c) the amount of the Senior Indebtedness may, from time to
time, be increased through further loans, or otherwise, (d) any deposit
balance or balances to the credit of the Borrower may, from time to time, in
whole or in part, be surrendered or released by the Master Collateral Agent or
the Senior Noteholders to the Borrower and (e) any of the provisions hereof
may be waived partially or entirely by the Master Collateral Agent or the
Senior Noteholders as to some Subordinated Indebtedness but not other
Subordinated Indebtedness, all without impairing or in any way affecting the
subordination contained in this Agreement; nor shall the subordination herein
contained be impaired or affected in any way by any other action, inaction or
omission in respect of the Senior Indebtedness or the liens of the Senior
Noteholder.
16. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future Master Collateral Agent or
Senior Noteholder to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Borrower or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Borrower with the terms,
provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
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17. SUBROGATION TO RIGHTS OF THE SENIOR NOTEHOLDERS.
If, in any Proceeding or otherwise, the Senior Noteholder
receives distributions or payments which, but for this Agreement, would have
been made to the Subordinated Noteholders, then, subject to the indefeasible
payment in full of all amounts due or to become due on or in respect of Senior
Indebtedness, or the provision for such payment in cash or cash equivalents in
a manner satisfactory to the Senior Noteholder, the Subordinated Noteholders
shall be subrogated to the rights of the Senior Noteholder to receive payments
and distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of and any interest on the Subordinated
Indebtedness and all other amounts payable in respect of Subordinated
Indebtedness shall be paid in full. For purposes of such subrogation, no
payments or distributions to the Senior Noteholder of any cash, property or
securities to which the Subordinated Noteholders would be entitled except for
the provisions of this Agreement, and no payment over pursuant to the
provisions of this Agreement to the Senior Noteholder by the Subordinated
Noteholders, shall, as among the Borrower and their creditors (other than
Senior Noteholder and Subordinated Noteholders), be deemed to be a payment or
distribution by the Borrower to or on account of the Senior Indebtedness. At
such time as the Subordinated Noteholders become subrogated to the rights of
the Senior Noteholder to receive payments and distributions of cash, property
and securities applicable to Senior Indebtedness as set forth in this Section
17, the Senior Noteholder shall execute and deliver to the Subordinated
Noteholders such assignments of the Acquisition Loan Documents (without
recourse and without representation or warranty of any kind, other than the
ability of such holders to execute and deliver such assignments) to the
Subordinated Noteholders, as such Subordinated Noteholders may reasonably
request.
18. RELIANCE BY MASTER COLLATERAL AGENT.
Upon any payment or distribution of assets of the Borrower
referred to in this Agreement (whether such payment or distribution is made in
a Proceeding or otherwise), the Master Collateral Agent shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction
in which such Proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Subordinated Noteholders for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the Senior
Noteholder and holders of other indebtedness of the Borrower, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Agreement.
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<PAGE>
19. NO CHANGES TO SUBORDINATED INDEBTEDNESS.
None of the Subordinated Noteholders shall, without the
prior written consent of the Senior Noteholder, (a) make or agree to make any
loans or any advances of money or property to the Borrower other than the
Working Capital Loan, (b) amend, supplement, renew, extend, modify, replace or
refinance in any respect any of the Working Capital Loan Documents or any
documents or instruments creating, evidencing, securing or exchangeable for or
convertible into the Subordinated Indebtedness, (c) sell, assign or transfer
all or any portion of its interest in the Subordinated Indebtedness unless the
buyer, assignee or transferee thereof shall agree in writing to become bound
by the provisions of this Agreement and the Senior Noteholder shall have been
furnished with original counterparts of such agreements, together with
opinions of counsel or other appropriate confirmation of the validity and
binding effect of such agreements, all in form and substance reasonably
satisfactory to the Senior Noteholder, or (d) subordinate any Subordinated
Indebtedness to any existing or future indebtedness other than the Senior
Indebtedness.
20. NO OFFSET.
Each Subordinated Noteholder hereby covenants and agrees
that as long as any Senior Indebtedness remains outstanding, unpaid or
unsatisfied, if such Subordinated Noteholder at any time incurs any obligation
to pay money to the Borrower, such Subordinated Noteholder shall not set off
or credit or otherwise apply such obligation against any amount owed (or
claimed to be owed) to such Subordinated Noteholder with respect to
Subordinated Indebtedness.
21. BINDING NATURE.
This Agreement shall be binding and inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors and assigns.
22. SEVERABILITY.
If any of the provisions or terms of this Agreement shall
for any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any of the other terms hereof, and this
Agreement shall be construed as if such unenforceable term has never been
contained herein.
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23. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall constitute an original Agreement but all of which together
shall constitute one and the same instrument.
24. HEADINGS.
The descriptive headings herein are for convenience only and
shall not affect the meaning or construction of any of the provisions hereof.
Words used herein, regardless of the number and gender specifically used shall
be deemed and construed to include any other number, singular, or plural, and
any other gender, masculine, feminine or neuter, as the context requires.
25. NOTICES.
All notices, requests, consents, demands, approvals and
other communications hereunder shall be deemed to have been duly given, made
or served if in writing and when delivered personally (including without
limitation by means of telex, telecopies or telefax systems), or the day
following delivery to a nationally recognized, reputable overnight courier
service which guarantees delivery within twenty-four hours, charges prepaid,
to the respective parties to this Agreement as follows:
(a) If to the Borrower, to:
Age Institute of Florida, Inc.
Professional Arts Building
25 Penncraft Avenue
Chambersburg, Pennsylvania 17201
Attention: Carol A. Tschop, President
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With a copy (which shall not constitute notice) to:
Blank, Rome, Comisky & McCauley
1 Logan Square
Philadelphia, Pennsylvania 19103
Attention: Harry D. Madonna, Esq.
(b) If to the Senior Noteholders, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Chief Financial Officer
With a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention:
(c) If to the Junior Agent or the Subordinated
Noteholders, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Chief Financial Officer
and
ET Capital Corporation
415 McFarlan Road
Suite 202
Kennett Square, Pennsylvania 19348
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention:
20
<PAGE>
(d) If to the Master Collateral Agent, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention:
with a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention:
The designation of the person to be so notified or the
address of such person for the purposes of such notice may be changed from
time to time by similar notice in writing, except that any communication with
respect to a change of address shall be deemed to be given and made when
received by the party to whom such communication was sent.
26. GOVERNING LAW.
The validity, meaning and effect of this Agreement shall be
determined in accordance with the substantive laws of the State of Florida
without regard to conflicts of laws principles thereof.
27. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION, ETC.
EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR THE
VALIDITY, PROTECTION, INTERPRETATION, OR ENFORCEMENT HEREOF. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
THE COURTS OF THE STATE OF FLORIDA AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, OF ANY FEDERAL COURT LOCATED IN THE STATE OF FLORIDA IN CONNECTION WITH
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
VALIDITY, PROTECTION INTERPRETATION OR ENFORCEMENT HEREOF. Each Subordinated
Noteholder irrevocably consents to the service of process on such Subordinated
Noteholder in any such proceeding by certified mail or overnight courier,
postage prepaid, to such Subordinated Noteholder at the address referred to in
Section 25. Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may effectively do so, any objection to the
venue of any such action or proceeding brought in any such court and any
defense that any such court is an inconvenient forum for any such action or
proceeding.
21
<PAGE>
28. ENTIRE AGREEMENT.
This Agreement represents the entire agreement among the
parties hereto with respect to the subject matter hereof and, except as
expressly provided herein, shall not be affected by reference to any other
documents.
29. AMENDMENT.
No provision of this Agreement may be amended, modified,
terminated or waived except by a writing duly executed by each party sought to
be bound by such amendment, modification, termination or waiver.
30. NO BENEFIT TO THE BORROWER.
The Borrower is not a beneficiary of any portion of this
Agreement and shall not have any rights arising under this Agreement or the
right to enforce any provision hereof.
31. MANAGER'S AGREEMENTS.
(a) The Manager hereby acknowledges the existence of the
Senior Indebtedness, the Subordinated Indebtedness and the liens securing such
obligations. The Manager agrees that, upon notice from the Master Collateral
Agent, upon the occurrence and during the continuance of an Event of Default
under any of the Subordinated Notes or the Senior Note, the Manager shall not
accept or receive, or take any action to collect or enforce, the payment of
41.67% of the management fee owed to it under the Management Agreement, and
hereby agrees that any amount received in excess of 58.33% of such fee
subsequent to such notice shall be held in trust for the Senior and
Subordinated Noteholders. The foregoing subordination shall not constitute a
release of the obligations of the Borrower to the Manager under the Management
Agreement and shall not affect the Manager's rights and remedies under the
Management Agreement against Borrower for non-payment of fees at such times as
such Event of Default has not occurred or is not continuing or at any time the
Senior Indebtedness and Subordinated Indebtedness is indefeasbly paid in full;
22
<PAGE>
provided, however, that, notwithstanding any provision to the contrary
contained herein, the Manager shall not take any action which causes the
filing of a petition in bankruptcy against Borrower unless and until the
Senior Indebtedness and the Subordinated Indebtedness is indefeasibly paid in
full.
(b) The Manager agrees that for so long as at least 58.33%
of its management fees is being paid on a current basis, the Manager shall not
terminate the Management Agreement without the prior written consent of the
Master Collateral Agent. In the event the Management Agreement is terminated,
the Manager shall promptly assign and transfer all accounts, permits,
licenses, approvals and consent (to the extent assignable) with respect to the
Facilities to the Person designated by the Master Collateral Agent in its sole
discretion, and shall use its best efforts to cooperate with the Master
Collateral Agent.
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<PAGE>
IN WITNESS WHEREOF, each party hereto has duly executed or
caused this Intercreditor Agreement to be duly executed on such party's behalf
as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
as Senior Lender
By: /s/ Ira C. Gubernick
---------------------------------------------
Name: Ira C. Gubernick
------------------------------------------
Title: General Counsel - Corporate and Secretary
------------------------------------------
GENESIS HEALTH VENTURES, INC.,
as Junior Lender
By: /s/ Ira C. Gubernick
---------------------------------------------
Name: Ira C. Gubernick
------------------------------------------
Title: General Counsel - Corporate and Secretary
------------------------------------------
ET CAPITAL CORP.,
as Junior Lender and as Junior Agent
By: /s/ Edward B. Romanov, Jr.
---------------------------------------------
Name: Edward B. Romanov, Jr.
------------------------------------------
Title: President & CEO
------------------------------------------
AGE INSTITUTE OF FLORIDA, INC.
as Borrower
By: /s/ Carol A. Tschop
---------------------------------------------
Name: Carol A. Tschop
------------------------------------------
Title: President
------------------------------------------
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<PAGE>
GENESIS HEALTH VENTURES, INC.,
as Master Collateral Agent
By: /s/ Ira C. Gubernick
---------------------------------------------
Name: Ira C. Gubernick
-------------------------------------------
Title: General Counsel - Corporate and Secretary
------------------------------------------
With respect to Section 31:
GENESIS ELDERCARE NETWORK
SERVICES, INC.,
as Manager
By: /s/ Ira C. Gubernick
---------------------------------------------
Name: Ira C. Gubernick
-------------------------------------------
Title: General Counsel - Corporate and Secretary
------------------------------------------
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<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement ("Agreement") is entered into
and is effective as of the 30th day of January 1998, by and among Genesis
Health Ventures, Inc. ("Genesis"), ElderTrust, a Maryland real estate
investment trust (which expects to qualify as a real investment trust for
federal income tax purposes) ("ElderTrust") and ElderTrust Operating Limited
Partnership, a Delaware limited partnership ("ETOLP") (ElderTrust and ETOLP
are sometimes collectively referred to in this Agreement as the "REIT").
BACKGROUND:
A. The REIT has undertaken, or concurrently with the offering of
shares in ElderTrust (the "Offering"), will undertake, a series of
transactions involving the REIT, Genesis and certain properties, including
certain assisted living facilities, one independent living facility and
certain skilled nursing facilities owned or managed by Genesis or certain of
its subsidiaries.
B. The REIT and Genesis have determined that is in their mutual best
interest to grant to each other certain rights of first refusal with respect
to the sale, financing, leasing or management of assisted living facilities,
independent living facilities and skilled nursing facilities now owned or to
be acquired by Genesis or the REIT.
NOW, THEREFORE, in consideration of the mutual covenants and promises
of the parties, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings (applicable to both the singular and plural terms
of the words defined):
1.1. "Affiliate" means: (i) any other Person (as defined below)
directly or indirectly controlling, controlled by, or under common control
with the Person to which such term applies; or (ii) as to any natural Person,
such Person's spouse, child, grandchild, sibling, parent, aunt, uncle or
cousin, as well as the spouse of any of the foregoing. In addition, (1) as to
any corporation, real estate investment trust or business trust, any Person
with any of the foregoing relationships to any Person in control of such
corporation, real estate investment trust or business trust shall be deemed to
be an Affiliate of such corporation, real estate investment trust or business
trust, and (2) as to any partnership or limited liability company, any Person
with any of the foregoing relationships to any Person in control of such
partnership or limited liability company as a general partner or managing
member or otherwise shall be deemed to be an Affiliate of such partnership or
limited liability company. For purposes of this Agreement, "control" as
applied to any Person means the possession either directly or indirectly, of
the power to direct or cause the direction of the management, policies and
decision-making of such Person whether through the ownership of voting
interest, by contract or otherwise. "Control" also shall include, without
limitation, the possession of direct or indirect equity or beneficial interest
in more than fifty percent (50%) of the profits or voting control of any
entity.
<PAGE>
1.2. "Basic Business Terms" shall mean, at a minimum, the
following terms: (i) the sales price and/or rent; (ii) the amount and terms of
any assumable third party financing; (iii) the state of title to be
transferred; (iv) the date of closing; (v) the proration of closing costs and
the allocation between buyer and seller of any brokerage commissions; (vi) the
lease term (if applicable); (vii) the form of consideration; (viii) the
security deposit required, if any; (ix) the interest rates, if applicable; and
(x) all other material business terms and conditions, including, without
limitation, any rights of first refusal, options or renewal rights.
1.3. "Covered Facility" means an assisted living, an independent
living (i.e., (in each case) a residential facility providing limited medical
and daily living assistance to its elderly residents) or a skilled nursing
facility.
1.4. "Developer" means any Person who or which is, at any time
during the Term of this Agreement, developing an assisted living facility or
an independent living facility.
1.5. "Finance" shall mean to provide or the providing of funds to
finance the construction, acquisition or refinancing of one or more Covered
Facilities (whether individually or together with one or more other Covered
Facilities), including, without limitation, any off-balance sheet financing of
a skilled nursing facility as described in Section 3.3 hereof, and "Financing"
and "Financed" shall have meanings correlative to the foregoing.
1.6. "Financing Notice" shall mean a written notice delivered to
the REIT by Genesis stating that Genesis, a Genesis Affiliate or a Developer
desires to obtain Financing for one or more assisted living facilities or
independent living facilities, which notice sets forth (i) the location and,
if applicable, the name of each facility, (ii) the proposed use of the
Financing (e.g., construction, acquisition or refinancing) and (iii) the
estimated amount of such Financing.
1.7. "Genesis Market" shall mean the counties in which Genesis or
one of its Affiliates, or The Multicare Companies, Inc. or one of its
Affiliates, now or during the term of this Agreement owns or operates assisted
living, independent living or skilled nursing facilities and any counties
contiguous to such counties, but shall not include counties in the states of
Illinois or Wisconsin unless Genesis acquires additional Covered Facilities in
such states after the date hereof.
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<PAGE>
1.8. "Lease Offer" shall mean a bona fide offer made to, or
acceptance of an offer made by, the REIT by a Person who or which is not an
Affiliate of Genesis to lease one or more Covered Facilities owned or to be
acquired by the REIT (whether individually or together with one or more other
Covered Facilities or any other properties or assets) which the REIT intends
to accept.
1.9. "Lease Notice" means a written notice delivered to Genesis by
the REIT stating that it has received or made a Lease Offer, which notice sets
forth (i) the name of the proposed lessee and (ii) the Basic Business Terms of
the proposed lease, and which is accompanied by a copy of the Lease Offer (if
in writing) and a copy of the proposed lease, if available.
1.10. "Management Notice" shall mean a written notice delivered to
Genesis by the REIT stating that an Owner of one or more Covered Facilities in
the Genesis Market Financed by the REIT intends to enter into one or more
management agreements with respect to such Covered Facilities and/or has
received a Management Offer with respect to such Covered Facilities, which
notice sets forth (i) the name of any proposed manager (if applicable) and
(ii) the material terms of any proposed management agreement, and which is
accompanied by a copy of any Management Offer (if in writing) and a copy of
any proposed management agreement, if available.
1.11. "Management Offer" shall mean a bona fide offer made to, or
by, an Owner by, or to, a Person who or which is not an Affiliate of such
Owner proposing to manage one or more existing or proposed Covered Facilities
in the Genesis Market which are Financed by the REIT (whether individually or
together with one or more other Covered Facilities or any other properties or
assets).
1.12. "Off-Balance Sheet Financing Notice" shall mean a written
notice delivered to the REIT by Genesis stating that Genesis or a Genesis
Affiliate desires to undertake a transaction involving off-balance sheet
Financing of one or more skilled nursing facilities presently owned by Genesis
or a Genesis Affiliate, which notice sets forth (i) the location and, if
applicable, the name of each skilled nursing facility with respect to which
Genesis or such Genesis Affiliate desires to obtain off-balance sheet
Financing and (ii) the proposed financing structure to be used for such
off-balance sheet Financing.
1.13. "Owner" shall mean the owner of one or more Covered
Facilities in the Genesis Market Financed by the REIT.
1.14. "Person" shall mean a natural person or a corporation, real
estate investment trust, business trust, partnership, trust, limited liability
company or other entity.
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<PAGE>
1.15. "Purchase Offer" shall mean a bona fide offer made to, or
acceptance of an offer made by, Genesis or a Genesis Affiliate by a Person who
or which is not an Affiliate of Genesis proposing to purchase from Genesis or
a Genesis Affiliate and lease back to Genesis or a Genesis Affiliate one or
more Covered Facilities, which Genesis or a Genesis Affiliate intends to
accept.
1.16. "Transfer" means the sale, ground lease for a term of not
less than 29 years, transfer of control or conveyance by deed, assignment,
quitclaim or otherwise, whereby a Person or its Affiliate transfers its
interest in a Covered Facility, but shall not include (i) a transfer by a
Person to an Affiliate of such Person or (ii) any change in control of
Genesis, and "Transferring" and "Transferred" shall have meanings correlative
to the foregoing.
1.17. "Transfer Notice" means a written notice delivered to the
REIT by Genesis stating that Genesis or a Genesis Affiliate intends to
Transfer one or more Covered Facilities and/or has received a Purchase Offer
with respect to one or more Covered Facilities, which notice sets forth (i)
the name and identity of the proposed Transferee and (ii) the Basic Business
Terms of the Purchase Offer, together with a copy of the Purchase Offer (if in
writing) and any written notice of the Purchase Offer.
1.18. "Transferee" means any Person who or which has made a
Purchase Offer to Genesis or a Genesis Affiliate.
2. Term. The term of this Agreement ("Term") shall commence as of the
date first above written and shall continue for three years. Thereafter, this
Agreement shall automatically renew for successive one-year renewal Terms
unless Genesis or the REIT shall have given notice to the other, not less than
six months prior to the end of the initial Term or any such renewal Term, that
it has elected to terminate this Agreement as of the end of the then current
Term.
3. First Refusal and Other Rights of the REIT. Genesis hereby grants
to the REIT the following rights:
3.1. If, during the Term, Genesis or a Genesis Affiliate desires
to Transfer one or more Covered Facilities owned by Genesis or a Genesis
Affiliate in a transaction or transactions where Genesis or a Genesis
Affiliate will lease back the Transferred Covered Facilities from the
Transferee, Genesis shall first offer to the REIT (or at the election of the
REIT, to an Affiliate of the REIT) the opportunity to purchase and lease back
to Genesis or a Genesis Affiliate designated by Genesis the subject Covered
Facilities on the same terms and conditions as contained in any Purchase Offer
by giving a Transfer Notice to the REIT. Upon the written request of the REIT,
Genesis shall deliver to the REIT copies of all material contracts affecting
the subject Covered Facility which will survive any Transfer. The REIT shall
have twenty (20) days after the receipt of the Transfer Notice to deliver to
Genesis a written acceptance of the Purchase Offer on the terms and conditions
set forth in the Transfer Notice. The parties shall enter into a definitive
acquisition agreement within fifteen (15) business days after the acceptance
of a Purchase Offer by the REIT. Notwithstanding anything set forth in this
Section 3.1, the right of first refusal set forth herein shall not apply to
any proposed Transfer and lease of a Covered Facility by Genesis or a Genesis
Affiliate involving a commercial bank or an Affiliate of a commercial bank or
any similar financial institution.
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<PAGE>
3.2. If, during the Term, a Developer desires to enter into a real
estate secured-Financing to Finance one or more assisted living facilities or
independent living facilities to be operated by Genesis or a Genesis
Affiliate, Genesis or its Affiliates shall use its reasonable business efforts
to cause the Developer to provide a Financing Notice to the REIT and to grant
to the REIT (or at the election of the REIT, to an Affiliate of the REIT) the
opportunity to make a proposal to the Developer to Finance one or more of the
subject assisted living facilities or independent living facilities. The
Developer shall not be obligated to accept any such Financing proposal of the
REIT, even if the terms and conditions of such Financing proposal are more
favorable than the terms and conditions of other Financing proposals received
by the Developer with respect to the Financing of the subject assisted living
facilities or independent living facilities.
3.3. If, during the Term, Genesis or a Genesis Affiliate
determines to Finance one or more skilled nursing facilities presently owned
by Genesis or a Genesis Affiliate in a transaction where the liability
resulting from such Financing would not be reflected on the balance sheet of
Genesis, (i.e., an off-balance sheet Financing), Genesis or the Genesis
Affiliate, as the case may be, shall provide an Off-Balance Sheet Financing
Notice to the REIT and grant to the REIT (or at the election of the REIT, to
an Affiliate of the REIT) the opportunity to make a proposal to Genesis or to
such Genesis Affiliate to provide off-balance sheet Financing with respect to
such skilled nursing facilities. Neither Genesis nor any Genesis Affiliate
shall be obligated to accept any such off-balance sheet Financing proposal of
the REIT, even if the terms and conditions of such off-balance sheet Financing
proposal are more favorable than the terms and conditions of other off-balance
sheet Financing proposals received by Genesis or any Genesis Affiliate.
4. First Refusal and Other Rights of Genesis. The REIT hereby grants
to Genesis the following rights of first refusal:
4.1. If, during the Term, the REIT (or an Affiliate of the REIT)
acquires a Covered Facility located in the Genesis Market from a third party,
and desires to lease such Covered Facility (or if, due to the termination of
any lease with respect to a Covered Facility between the REIT and any Person
who or which is not an Affiliate of Genesis by reason of expiration,
termination, default or otherwise, the REIT intends to enter into a new lease
with respect to such Covered Facility) (whether, in any such case, such
Covered Facility is to be leased individually or together with one or more
other properties or assets, provided that at least thirty-three percent (33%)
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<PAGE>
of such properties are located in the Genesis Market), the REIT shall first
offer to Genesis (or at Genesis' election an Affiliate of Genesis) the
opportunity to lease the Covered Facilities from the REIT on the same terms
and conditions as contained in any Lease Offer by giving a Lease Notice to
Genesis. Genesis shall have twenty (20) days after the receipt of the Lease
Notice to deliver to the REIT a written acceptance of the Lease Offer, which
written acceptance shall set forth the agreement of Genesis to all of the
terms and conditions set forth in the Lease Notice. The parties shall enter
into a definitive lease agreement within fifteen (15) business days after the
acceptance of the Lease Offer by Genesis. The foregoing right of first refusal
shall not apply if the proposed lessee of the Covered Facilities is the Person
who or which developed the Covered Facility or Transferred the Covered
Facility to the REIT or an Affiliate of such Person.
4.2. If, during the Term, the REIT Finances one or more Covered
Facilities located in the Genesis Market and a manager is to be engaged by the
Owner (or if there is a default under an existing management agreement
relating to one or more Covered Facilities and a new manager is to be engaged
by the Owner) (whether, in any such case, any such Covered Facility is to be
managed individually or together with one or more other Covered Facilities or
any other properties or assets), the REIT shall deliver a Management Notice to
Genesis. The REIT shall use reasonable business efforts to cause the Owner to
enter into a management agreement with Genesis or a Genesis Affiliate, or, if
applicable, to permit Genesis to manage the Covered Facility upon the same
terms and conditions as set forth in any Management Offer. Genesis shall have
twenty (20) days after receipt of a Management Notice to deliver to the REIT
and the Owner a written management proposal, or, if applicable, an acceptance
of the Management Offer, which acceptance shall set forth the agreement of
Genesis to all of the terms of the Management Notice. The foregoing obligation
shall not apply if the proposed manager of the Covered Facility is an
Affiliate of the Owner or an Affiliate of the developer of the Covered
Facility.
5. Failure to Exercise Right of First Refusal. If a party hereto does
not elect to exercise a right of first refusal granted under this Agreement on
the terms and conditions set forth herein, then, during the six-month period
("Six-Month Unrestricted Period") following the expiration of the right of
first refusal, Genesis or the REIT, as applicable, may Transfer, Finance or
lease the subject Covered Facility, free and clear of the terms and conditions
contained in the most recently delivered Transfer Notice, Lease Notice or
Management Notice, as the case may be. If, upon the expiration of the
Six-Month Unrestricted Period, Genesis or the REIT, as applicable, has not
consummated a Transfer or leasing of, or a management agreement with respect
to, the subject Covered Facility, then such other party may not Transfer or
lease, or enter into a management agreement with respect to a subject Covered
Facility without giving a new Transfer Notice, Lease Notice or Management
Notice, as the case may be, in accordance with the terms and conditions of
this Agreement.
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<PAGE>
6. Miscellaneous.
6.1. Complete Agreement; Construction. This Agreement, and the
other agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter thereof and
shall supersede all previous negotiations, commitments and writings with
respect to such subject matter.
6.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the jurisdiction of the Commonwealth
of Pennsylvania without regard to the principles of conflicts of laws thereof.
6.3. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed to be duly given upon
actual receipt, and shall be delivered (i) in person, (ii) by registered or
certified mail, postage prepaid, (iii) by nationally recognized overnight
delivery service or (iv) by facsimile or other generally accepted means of
electronic transmission, provided that a copy of any notice delivered pursuant
to this clause (iv) shall also be sent contemporaneously pursuant to clause
(ii), addressed as follows (or to such other address(es) as may be specified
by like notice to the other parties):
To Genesis and any of its Affiliates: Genesis Health Ventures, Inc.
148 W. State Street
Kennett Square, PA 19348
Attn.: Chief Executive Officer
Attn.: Law Department
To the REIT: ElderTrust
415 McFarlan Road
Suite 202
Kennett Square, PA 19348
Attn.: President
6.4. Amendments. No amendment, modification or supplement to this
Agreement shall be binding on any party hereto unless it is in writing and
signed by the parties in interest.
6.5. Successors and Assigns. Neither this Agreement nor any rights
or obligations hereunder shall be assignable by a party to this Agreement
without the prior, express written consent of the other parties. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective successors
and permitted assigns.
6.6. No Third-Party Beneficiaries. This Agreement is solely for
the benefit of the parties to this Agreement and shall not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, claims or
action or other right in excess of those existing without reference to this
Agreement.
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<PAGE>
6.7. Titles and Headings. Titles and headings to paragraphs and
sections in this Agreement are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning of this
Agreement.
6.8. Maximum Legal Enforceability; Time of Essence. The provisions
hereof shall be considered severable such that if any provision or part hereof
is ever held to be invalid, void or illegal under any law or ruling, all
remaining provisions hereof shall remain in full force and effect to the
maximum extent permitted by law. Any non-material provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating or rendering unenforceable any of the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. Without prejudice to any rights or remedies
otherwise available to any party to this Agreement, each party hereto
acknowledges that damages would not be an adequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the
parties hereunder shall be specifically enforceable. Time shall be of the
essence as to each and every provision of this Agreement.
6.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.
6.10. Further Assurances. The parties to this Agreement will
execute and deliver or cause the execution and delivery of such further
instruments and documents, and will take such other actions, as any other
party to the Agreement may reasonably request in order to effectuate the
purpose of this Agreement and to carry out the terms hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first written above.
GENESIS HEALTH VENTURES, INC. ELDERTRUST
By: /s/ Ira C. Gubernick By: /s/ Edward B. Romanov, Jr.
-------------------------------- ---------------------------------
ELDERTRUST OPERATING LIMITED PARTNERSHIP
By its General Partner, ElderTrust
By: /s/ Edward B. Romanov, Jr.
--------------------------------
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<PAGE>
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (this "Agreement"), is made as of this
___ day of January, 1998, by and between MCKERLEY HEALTH FACILITIES, a New
Hampshire limited partnership ("Optionor") and ELDERTRUST OPERATING LIMITED
PARTNERSHIP, a Delaware limited partnership or its permitted assignees or
contributees (collectively, "Optionee").
BACKGROUND
WHEREAS, Optionor owns and operates an assisted living
facility known as Holton Point (the "Facility") which Facility consists of
certain real property described in Exhibit A hereto (the "Real Property"), the
improvements thereon and certain other real and personal property associated
therewith, all as more particularly described below.
WHEREAS, Optionor wishes to grant unto Optionee the option
to purchase the Facility, including said real and personal property, and
Optionee wishes to accept such option to purchase upon the terms and subject
to the conditions contained herein.
NOW, THEREFORE, Optionor, for and in consideration of the
Option Payment (hereinafter defined) and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound, hereby grants unto Optionee, its successors
and assigns, the option to purchase the Property on the terms hereinafter set
forth.
ARTICLE I
OPTION
1.1 Grant of Option.
Optionor hereby irrevocably grants unto Optionee, its
successors and assigns, and Optionee hereby accepts from Optionor, the
exclusive and irrevocable right and option (the "Option") to purchase the
Property (as hereinafter defined) upon the terms and conditions set forth
herein (the "Transaction").
1.2 Consideration for Option.
In consideration for the Option granted herein, Optionee
has, among other things, simultaneous with the execution hereof, paid to
Optionor the sum of One Thousand Dollars ($1,000.00) (the "Option Payment"),
receipt of which is hereby acknowledged by Optionor.
1.3 Term; Exercise of Option.
<PAGE>
Optionee, and its successors and assigns, shall have the
right to exercise the Option by delivering written notice thereof (the
"Exercise Notice") to Optionor at any time on or after the first anniversary
of the date on which the Facility reaches Stabilized Occupancy (as defined in
Section 1.6). In no event shall the Option be exercised after the later of (i)
the date which is thirty-six (36) months after the date hereof, or (ii) if the
Facility reaches Stabilized Occupancy between the twenty-fourth (24th) month
and thirty-sixth (36th) month after the date hereof, the first anniversary of
the date on which the Facility reaches Stabilized Occupancy (the "Expiration
Date"). Optionor shall deliver written notice to Optionee within thirty (30)
days after Optionor's determination that the Facility has reached Stabilized
Occupancy. In the event that Optionee makes an earlier determination that the
Facility has reached Stabilized Occupancy from review of the occupancy reports
received pursuant to Section 4.10 hereinbelow, Optionee shall deliver written
notice of the same to Optionor. In the event that any controversy shall arise
between the parties hereto regarding the determination whether the Facility
has reached Stabilized Occupancy, which controversy the parties are unable to
settle by agreement, such controversy shall be determined by arbitration to be
initiated and conducted as provided in Exhibit C hereto. It is hereby
acknowledged and agreed that the Option hereby granted constitutes a present
and absolute grant of option as of the date hereof notwithstanding the fact
that it will not be exercised prior to the date set forth above. The Exercise
Notice shall specify the date (the "Closing Date") on which settlement
hereunder shall occur (the "Closing"); provided, however, that the Closing
Date shall be at least ninety (90) days after the date of the Exercise Notice.
The Closing shall be held at the offices of Hogan & Hartson, L.L.P., 8300
Greensboro Drive, Suite 1100, McLean, Virginia 22012, or at such other
location as the parties may mutually agree upon. Upon Optionee's exercise of
the Option as above provided, this Agreement will automatically become an
agreement by Optionor to sell and convey the Property to Optionee and an
agreement by Optionee (or its successor or assign) to purchase the Property
from Optionor, in each case upon the terms and conditions set forth herein.
1.4 Assets Subject to Option. On the Closing Date, upon the
terms and subject to the conditions set forth herein, Optionor shall transfer
to Optionee, and Optionee shall acquire from Optionor, the following assets:
(i) the Real Property, the buildings situated thereon and
all of the other improvements, easements, covenants and other rights
appurtenant thereto;
(ii) all furniture, furnishings, fixtures, machinery,
equipment, inventory and other tangible personal property, and
replacements thereof, owned by Optionor and now or hereafter affixed
to or located at the Facility or used or useful in connection with
the operation, maintenance or repair of the Facility (the "Personal
Property"); and
(iii) the intangible property now or hereafter owned or held
by Optionor in connection with the Facility, including, without
limitation, (a) all licenses, permits, authorizations, approvals,
certificates of occupancy and all other approvals necessary for the
current use and operation of the Facility (to the extent assignable),
and (b) all right, title and interest of Optionor in all books and
records (including computer discs, software and similar data), trade
names and development rights related to the Facility, or any part
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thereof (collectively, the "Intangible Property") (items (i) through
(iii) are hereinafter referred to collectively as the "Property").
Notwithstanding the foregoing, the term "Property" shall not be
deemed to include, and Optionor shall not convey to Optionee hereunder, the
assets of Optionor listed on Schedule 1.4 hereof (the assets listed on
Schedule 1.4 shall be known as the "Excluded Assets").
1.5 Purchase Price. The total consideration (the "Purchase
Price") to be paid by Optionee to Optionor for the Property shall be equal to
the Fair Market Value of the Property (as defined in Section 1.6) as of the
date of Optionee's Exercise Notice. At Closing, Optionee shall pay to Optionor
the Purchase Price by wire transfer of immediately available funds. The
Purchase Price shall be allocated between real and personal property as
Optionor and Optionee shall agree; provided that Optionor and Optionee hereby
agree that not less than ninety percent (90%) of the Purchase Price shall be
allocated to the Real Property and the improvements thereon.
1.6 Certain Defined Terms. For purposes of this
Agreement, the following defined terms shall have the following meanings:
"Facility Revenues" shall mean for any period all
revenues (determined in accordance with generally accepted accounting
principles applied on a consistent basis, except as provided below) whether or
not directly or indirectly received or receivable from or by reason of the
operation of the Facility, including, without limitation, all resident or
client revenues received or receivable for the use of or otherwise by reason
of all rooms, beds and other facilities provided, meals served, services
performed or provided (including, without limitation, personal care, nursing
or physical therapy services when provided by an employee of Optionor), space
or facilities subleased or goods sold at or from the Facility, or any other
use of the Property, including, without limitation, subleases, licenses or any
other arrangements with third parties relating to the possession or use of any
portion of the Facility; provided, however, that Facility Revenues shall not
include:
(a) revenues from professional fees or charges
by physicians and unaffiliated providers
of ancillary services, when and to the
extent such charges are paid over to such
physicians or unaffiliated providers of
ancillary services, or are separately
billed and not included in comprehensive
fees paid by a resident or a client to
Optionor;
(b) non-operating revenues such as interest
income or income from the sale of assets
not sold in the ordinary course of
business;
(c) federal, state or local excise taxes
imposed upon, and any tax based upon or
measured by, such revenues which is added
to or made a part of the amount billed to
the resident, client or other recipient of
such services or goods, whether included
in the billing or stated separately;
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(d) contractual allowances for billings not
paid by or received from the appropriate
governmental agencies or third party
providers; and
(e) all proper patient billing credits and
adjustments (including, without
limitation, allowances for uncollectable
accounts) according to generally accepted
accounting principles relating to health
care accounting.
"Fair Market Value" shall mean the fair market
value of the Property as determined in accordance with the procedures set
forth in Exhibit F hereto.
"Net Operating Income" shall mean, for any period,
Facility Revenues for such period less Operating Expenses for such period.
"Operating Expenses" shall mean, for any period,
the total of expenses, computed in accordance with generally accepted
accounting principles applied on a consistent basis, of whatever kind relating
to the operation, maintenance and management of the Facility that are incurred
on a regular monthly or other periodic basis, including, without limitation,
utilities, ordinary repairs and maintenance, insurance, license fees, property
taxes and assessments, advertising expenses, management fees, payroll and
related taxes, computer processing charges, operational equipment or other
lease payments and other similar costs, but excluding depreciation, debt
service, capital expenditures and required reserves.
"Stabilized Occupancy" shall mean an average
monthly occupancy for the Facility of at least ninety percent (90%) for three
(3) consecutive months.
1.7 No Liabilities to be Assumed by Optionee. Optionee shall
not assume any obligations of Optionor, except obligations arising out of
Permitted Liens (as hereinafter defined), but not including the Mortgage Debt
(as hereinafter defined).
1.8 Lease of Property to Optionor. At Closing, Optionee and
Genesis Health Ventures, Inc. ("Genesis") or an affiliate of Genesis (the
"Genesis Affiliate") shall enter into a lease agreement (the "Lease
Agreement"), substantially in the form of Exhibit B attached hereto and
incorporated herein, which shall provide for the lease of the Property by
Optionee to Genesis or the Genesis Affiliate, as applicable, upon the terms
and subject to the conditions set forth therein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF OPTIONEE
Optionee hereby represents and warrants to Optionor as
follows:
2.1 Organization, Power and Authority, and Qualification.
Optionee is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. Optionee has the requisite
4
<PAGE>
power and authority to carry on its business as it is now being conducted and
to engage in the Transaction. Optionee has made available to Optionor complete
and correct copies of the governing documents of Optionee, with all amendments
as in effect on the date of this Agreement. Optionee is qualified to do
business and is in good standing in each jurisdiction where the character of
Optionee's property owned or leased or the nature of Optionee's activities
makes such qualification necessary, except where the failure to be so
qualified and in good standing would not have a material adverse effect on the
business or financial condition of Optionee.
2.2 Authority Relative to this Agreement. All action of
Optionee necessary to authorize the execution, delivery and performance of
this Agreement by Optionee has been taken, and no other proceedings on the
part of Optionee are necessary to authorize the execution and delivery of this
Agreement by Optionee and the consummation by Optionee of the Transaction.
None of the execution and delivery of this Agreement by
Optionee, the consummation by Optionee of the Transaction or compliance by
Optionee with any of the provisions hereof will (i) conflict with or result in
any breach of any provisions of the partnership agreement of Optionee, (ii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Optionee is a party or by which it or
any of Optionee's properties or assets may be bound, or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Optionee or any of the properties or assets of Optionee.
2.3 Binding Obligation. This Agreement has been duly and
validly executed and delivered by Optionee to Optionor and constitutes a valid
and binding agreement of Optionee, enforceable against Optionee in accordance
with its terms, except that such enforcement may be subject to bankruptcy,
conservatorship, receivership, insolvency, moratorium or similar laws
affecting creditors' rights generally or the rights of creditors of limited
partnerships and to general principles of equity.
2.4 Brokers. Optionee has not employed any broker or finder,
or incurred any liability therefor, in connection with the transactions
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OPTIONOR
Optionor hereby represents and warrants to Optionee as
follows:
3.1 Organization and Qualification. Optionor is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of New Hampshire. Optionor has the requisite power and
authority to carry on its business as it is now being conducted and to engage
in the Transaction. Optionor has made available to Optionee complete and
5
<PAGE>
correct copies of the governing documents of Optionor, with all amendments as
in effect on the date of this Agreement. Optionor is qualified to do business
and is in good standing in each jurisdiction where the character of Optionor's
property owned or leased or the nature of Optionor's activities makes such
qualification necessary, except where the failure to be so qualified and in
good standing would not have a material adverse effect on the business or
financial condition of Optionor or on the Transaction. Optionor is not a
"foreign person" under Section 1445 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
3.2 Authority Relative to this Agreement. All action
necessary to authorize the execution, delivery and performance of this
Agreement by Optionor has been taken, and no other proceedings are necessary
to authorize the execution and delivery by Optionor of this Agreement and the
consummation by Optionor of the Transaction.
None of the execution and delivery of this Agreement by
Optionor, the consummation by Optionor of the Transaction or compliance by
Optionor with any of the provisions hereof will (i) conflict with or result in
any breach of any provisions of the organizational documents of Optionor, (ii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, permit, contract,
agreement, easement, restriction or other instrument or obligation to which
Optionor is a party or by which Optionor or the Property may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Optionor or the Property, except in the case of (ii) or (iii)
for violations, breaches, or defaults (A) which would not in the aggregate
have a material adverse effect on the business or financial condition of
Optionor, the Transaction or the Property or (B) for which waivers or consents
have been obtained or, as listed on Schedule 3.2, will be obtained prior to
the Closing Date.
3.3 Binding Obligation. This Agreement has been duly and
validly executed and delivered by Optionor to Optionee and constitutes a valid
and binding agreement of Optionor, enforceable against Optionor in accordance
with its terms, except that such enforcement may be subject to bankruptcy,
conservatorship, receivership, insolvency, moratorium or similar laws
affecting creditors' rights generally or the rights of creditors of Optionor
and to general principles of equity.
3.4 Brokers. Optionor has not employed any broker or finder,
or incurred any liability therefor, in connection with the transactions
contemplated by this Agreement.
3.5 Title to Property. Optionor has good and valid title to
the Personal Property. To Optionor's knowledge, the Property is not subject to
any imperfections in title, easements, liens, mortgages, encumbrances,
pledges, claims, charges, options, defects, preferential purchase rights or
other encumbrances (collectively referred to herein as "Liens") except for the
following ("Permitted Liens"):
(i) Liens for real property taxes and assessments
or for fire dues, library dues or similar assessments not yet delinquent;
6
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(ii) Liens that are not material in character, amount,
or extent and do not materially detract from the
value, or interfere with the use of, the Optionor's
assets subject thereto or affected thereby or
otherwise materially impair the business operations
being conducted or proposed to be conducted
thereon;
(iii) the Mortgage Debt (as hereinafter defined); and
(iv) Liens shown on Schedule 3.5 hereto.
3.6 Debt. The Property is encumbered by the mortgage
indebtedness described on Schedule 3.6 hereto (the "Mortgage Debt"). To
Optionor's knowledge, there exists no default, or event which with the passage
of time or notice or both would constitute a default, with respect to the
Mortgage Debt or any other debt of Optionor that has not been cured or that
would have a material adverse effect on the business or financial condition of
Optionor, the Transaction or the Property.
3.7 [INTENTIONALLY DELETED]
3.8 [INTENTIONALLY DELETED]
3.9 Leases. Except as set forth on Schedule 3.9 hereto,
Optionor has not entered into any leases, tenancies or other rights of
occupancy in effect on the date hereof with respect to the Property. Each of
the leases referenced in Schedule 3.9 (the "Leases") has been delivered to or
made available to Optionee and is presently unamended (or with respect to each
such lease that has been amended, all amendments thereto have been delivered
or made available to Optionee) and, to Optionor's knowledge, are in full force
and effect without material default.
3.10 Contracts. To the knowledge of Optionor, Schedule 3.10
hereto sets forth all of the contracts or other understandings, written or
oral, to which Optionor is a party or by which Optionor is bound that relate
to the Property excluding contracts which are terminable on thirty (30) days
or less notice (collectively, the "Contracts", which term shall not be
construed to include any Leases). Each of the Contracts is valid and binding
on Optionor and is in full force and effect in all material respects. Except
as set forth in Schedule 3.10, neither Optionor nor, to Optionor's knowledge,
any other party thereto has breached or defaulted under the terms of any
Contract, except for such breaches or defaults that would not have a material
adverse effect on the business or operations of Optionor or the Property.
3.11 Permits. To the knowledge of Optionor, Optionor has all
such franchises, certificates, licenses, permits and other authorizations from
government political subdivisions, regulatory authorities or any other person
or entity (collectively "Permits") as are necessary for the ownership, use,
operation and licensing of the Property as it is currently being used, except
where the failure to possess such Permits would not have a material adverse
effect on the business or financial condition of Optionor or the Property,
and, to Optionor's knowledge, Optionor is not in violation of any Permit and
all Permits relating to the Property are valid and in full force and effect.
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3.12. Litigation. Other than as set forth on Schedule 3.12
attached hereto, there are no claims, actions, suits, proceedings or
investigations pending or, to Optionor's knowledge, threatened against
Optionor or any properties or rights of Optionor, that would have a material
adverse effect on the business or financial condition of Optionor, the
Transaction or the Property before any court or administrative, governmental
or regulatory authority or body, domestic or foreign, or any properties or
rights of Optionor. Neither Optionor nor the Property is subject to any order,
judgment, injunction or decree of any court, tribunal or other governmental
authority (other than generally applicable laws, rules and regulations) that
would have a material adverse effect on the business or financial condition of
Optionor or the Property.
3.13 Compliance with Laws. Optionor has not received any
written or other actual notice of any material violation of any applicable
zoning regulation or ordinance, or of any employment, environmental, or other
regulatory law, order, regulation or requirement, including applicable
subdivision laws, relating to the Property or the business or operations
thereon, which remains uncured and, to Optionor's knowledge, there are no such
violations which, individually or in the aggregate, would have a material
adverse effect on the business or financial condition of Optionor or the
Property.
3.14 Taxes. Except for such matters as in the aggregate
shall not result in a material adverse effect on the business or financial
condition of Optionor, (i) all tax or information returns required to be filed
on or before the date hereof by or on behalf of Optionor have been filed
through the date hereof or will be filed on or before the Closing Date in
accordance with all applicable laws, (ii) there is no action, suit or
proceeding pending against, or with respect to, Optionor or the Property in
respect of any tax nor is any claim for additional tax asserted by any such
authority, and (iii) all taxes (including related penalties, interest and
additional amounts) imposed upon Optionor and required to be reported on a
return required to be filed (without regard to any applicable extensions) on
or before the date hereof have been paid or will be paid prior to the
delinquency thereof.
3.15 Insurance. Optionor currently has in place the public
liability, casualty and other insurance coverage with respect to the Property
as is set forth in Schedule 3.15 attached hereto. To the knowledge of
Optionor, each of Optionor's insurance policies with respect to the Property
is in full force and effect and all premiums due and payable thereunder have
been fully paid when due. Optionor has not received from any insurance company
notice of any material defects or deficiencies affecting the insurability of
the Property or notices of cancellation or intent to cancel any such
insurance.
3.16 Utilities. To the knowledge of Optionor, usable public
sanitary and storm sewers, public water, and gas and electrical utilities
(collectively, the "Public Utilities"), of adequate capacity for the operation
of the Property, are installed in, and are duly connected to, the Property and
can be used without any charge except the normal and usual metered charges
imposed for such Public Utilities. No amounts due and owing with respect to
the Property in connection with utilities, insurance, assessments or other
charges customarily prorated in real estate transactions have been outstanding
more than thirty (30) days.
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3.17 Environmental. For the purpose of this Section 3.17,
the term "Hazardous Substances" shall mean substances defined as a "hazardous
waste," "hazardous substance," or "toxic substance" under any Environmental
Laws, including, without limitation, oil, petroleum, or any petroleum-derived
substance or waste, asbestos or asbestos-containing materials, PCBs,
pesticides, explosives, radioactive materials, dioxins, urea formaldehyde
insulation or any constituent of any such substance, pollutant or waste. As
used herein, "Environmental Laws" shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. ss. 9601, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss. 6901, et seq., the Clean Air Act, 42 U.S.C. ss. 7401, et
seq., the Clean Water Act, 33 U.S.C. ss. 1251, et seq., the Toxic Substance
Control Act, 15 U.S.C. ss. 2601, et seq. and the Occupational Safety and
Health Act, 29 U.S.C. ss. 651, et seq., as any of the preceding have been
amended prior to the date of the Closing, and any other federal, state or
local law, ordinance, regulation, rule, order, decision or permit relating to
the protection of human health from environmental effects of Hazardous
Substances and which are applicable to the Property.
To Optionor's knowledge and except as may be revealed in the
Phase I Environmental Report prepared for the Property by Roy F. Weston, Inc.,
dated July, 1997, (i) no Hazardous Substances are present in, on or under the
Property that require remediation under Environmental Law or would have a
material adverse affect on the condition (financial or otherwise), earnings,
assets, business affairs or business prospects of the Property, Optionor or
the Transaction, (ii) no liability under or violation of any Environmental
Laws or condition that could give rise to such liability or violation exists
with respect to the Property, except for liabilities that would not have a
material adverse effect on the business or financial condition of Optionor or
the Property, and (iii) Optionor has not caused or allowed any discharge or
disposal of any Hazardous Substances at the Property except in compliance with
Environmental Laws. Optionor has not received any written notice from any
governmental agency or instrumentality having jurisdiction thereof of any
violation of any Environmental Laws which remains uncured or unremediated.
3.18 [INTENTIONALLY DELETED]
3.19 Pending Assessments and Eminent Domain. Optionor has no
knowledge and has received no notice of any pending proceeding for the
imposition of any special assessment, or the formation of a special assessment
district, or for a condemnation proceeding which would materially affect in
any manner any portion of the Property.
3.20 Compliance with Law; Approvals.
Except as set forth on Schedule 3.20:
(a) Optionor has operated the Property in compliance with
all applicable laws and regulations, including, without limitation, all laws,
regulations, orders and requirements promulgated by any governmental authority
or relating to consumer protection, equal opportunity, health, health care
industry regulation, third-party reimbursement (including, if applicable,
Medicare, Medicaid, fraud and abuse and workers compensation), environmental
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protection, fire, zoning and building and occupational safety matters, except
for noncompliance that individually or in the aggregate would not, and in the
future will not, have a material adverse effect on the business or operations
of Optionor or the Property;
(b) Optionor has not received notice of any material
violation (or of any investigation, inspection, audit, or other proceeding by
any governmental authority involving allegations of any violation) of any
applicable law, or is in material default with respect to any applicable law
and to the knowledge of Optionor, no investigation, inspection, audit, or
other proceeding by any governmental authority involving allegations of
violation of any applicable law is threatened or contemplated.
3.21 Governmental Proceedings. There is no governmental
action or governmental proceeding (zoning or otherwise) or governmental
investigation pending or, to Optionor's knowledge, threatened against or
relating to the Property or the transactions contemplated by this Agreement.
3.22 No Agreements. Except as set forth in Optionor's
organizational documents or as set forth on Schedule 3.22, other than the
Leases, the Property is not subject to any outstanding agreement of sale or
lease, option to purchase or other right of any third party to acquire any
interest therein.
ARTICLE IV
COVENANTS AND AGREEMENTS OF OPTIONOR
Optionor hereby covenants and agrees with Optionee that
prior to the date of the Closing:
4.1 Actions Affecting Assets. Except in the ordinary course
of business, Optionor shall not sell, assign, pledge, transfer or encumber the
Property or any portion thereof, or enter into any other material consent,
commitment, understanding or other agreement, or incur any material obligation
or liability (contingent or absolute) with respect to the Property. Optionor
shall not merge or consolidate with or into any other entity or enter into any
agreements relating thereto without Optionee's prior consent.
4.2 Access to Property and Records. Upon reasonable notice
and during regular business hours, Optionor shall give Optionee and Optionee's
authorized representatives full access to the Property and Optionor's
personnel and all properties, documents, contracts, facilities, books,
equipment and records of Optionor relating to the Property to conduct
Optionee's investigations, including, without limitation, surveys, site
analyses, soil tests, engineering studies, and other investigations.
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4.3 Permits. Optionor shall maintain all Permits in full
force and effect, and will file timely all reports, statements, renewal
applications and other filings, and will pay timely all fees and charges in
connection therewith that are required to keep the Permits in full force and
effect.
4.4 Contracts. Optionor will not enter into any new
Contracts with respect to the Property except in the ordinary course of the
business of the operation of the Facility.
4.5 Insurance. Optionor shall maintain in full force and
effect substantially the same public liability and casualty insurance coverage
now in effect with respect to the Property.
4.6 Taxes and Assessments. Optionor shall pay or discharge
before delinquent all tax liabilities and obligations, including without
limitation those for federal, state or local income, property, unemployment,
withholding, sales, transfer, stamp, documentary, use and other taxes.
4.7 Binding Commitments. Optionor shall not make any
commitments or representations to any applicable government authorities, any
adjoining or surrounding property owners, any civic association, any utility
or any other similar person or entity that would in any manner be binding upon
Optionee or the Property without Optionee's prior consent, except such
agreements that would not have a material adverse effect on the Property.
4.8 Compliance with Law. The operations of Optionor and the
Property will be conducted in compliance with all applicable laws, including,
without limitation, all such laws regulations, orders and requirements
promulgated by any governmental authority or relating to consumer protection,
equal opportunity, health, health care industry regulation, third party
reimbursement (including, if applicable, Medicare, Medicaid, fraud and abuse
and workers compensation), environmental protection, fire, zoning and building
and occupational safety matters, except for noncompliance that individually or
in the aggregate would not and, insofar as may reasonably be foreseen, in the
future will not, have a material adverse effect on the business or operations
of Optionor or the Property.
4.9 Operation of Facility. Optionor shall operate and
maintain the Facility in the same manner as Optionor has heretofore operated
the Facility and consistent with other assisted living facilities operated or
managed by Genesis or affiliates thereof.
4.10 Occupancy Report; Financial Information. Between the
date of this Agreement and the earlier of (i) the Closing Date and (ii) the
Expiration Date, Optionor agrees to furnish Optionee with the following:
(i) within twenty (20) days following the end of each
calendar month, an occupancy report, in form and substance satisfactory to
Optionee, with respect to the Facility for such period; said occupancy report
shall be accompanied by a calculation of Net Operating Income for the twelve
(12) month period that ended on the last day of said calendar month, together
with supporting documentation.
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(ii) within forty-five (45) days following the end of each
calendar quarter, a balance sheet of Optionor as of the close of such calendar
quarter and statements of income and expense, changes in stockholder's equity
and changes in financial position of Optionor for such quarter-fiscal year, as
certified by the chief financial officer of Optionor; and
(iii) within one hundred twenty (120) days following the end
of each calendar year of Optionor, an audited balance sheet of Optionor as of
the close of such calendar year and audited statements of income and expense,
changes in stockholder's equity and changes in financial position of Optionor
for such calendar year, each accompanied by the related report of a nationally
recognized independent accounting firm.
ARTICLE V
CONDITIONS TO CONSUMMATION OF TRANSACTION BY OPTIONEE
The obligation of Optionee to consummate the Transaction
shall be subject to fulfillment (or waiver) at or prior to the date of the
Closing of the following conditions:
5.1 Representations, Warranties and Covenants. The
representations, warranties and covenants made by Optionor in this Agreement
or in any document delivered by Optionor pursuant to this Agreement shall be
true and correct in all material respects when made and on and as of the
Closing Date with the same force and effect as though such representations,
warranties and covenants were made on and as of such date. No later than ten
(10) days prior to the Closing Date, Optionor shall deliver to Optionee a
certification that sets forth any changes to the representations and
warranties made by Optionor in this Agreement or in any schedule hereto or in
any document delivered by Optionee since the Closing Date, but the delivery of
such Certification shall not be deemed to remedy any breach of a
representation or warranty or covenant.
5.2 Performance of Covenants and Agreements. Optionor shall
have performed all covenants and agreements contained in this Agreement to be
performed or complied with by it on or before the Closing Date.
5.3 No Material Adverse Change. There shall have been no
material adverse change in the value or condition of the Property since the
date hereof, except for changes contemplated by this Agreement and changes in
the ordinary course of business which do not have a material adverse effect on
the business or financial condition of the Property.
5.4 Title Insurance. Commonwealth Land Title Insurance
Company (the "Title Company") shall have issued to Optionee an ALTA owners
title insurance policy effective as of the date of the Closing or an
unconditional commitment therefor insuring fee simple title to the Property to
be vested in Optionee in the full amount of the Purchase Price, subject to no
exceptions other than Permitted Liens, with such endorsements and otherwise in
a form acceptable to Optionee in its sole and absolute discretion.
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5.5 No Order or Injunction. The consummation of the
Transaction shall not have been restrained, enjoined or prohibited by any
order or injunction of any court or governmental authority of competent
jurisdiction nor shall there be any pending or threatened condemnation
proceeding with respect to the Property or any portion thereof.
5.6 Optionor Deliverables. Optionee shall have received the
instruments referred to in Section 7.1.
5.7 Consents. All consents listed on Schedule 3.2 or
otherwise necessary for the consummation of the Transaction by Optionor shall
have been obtained.
ARTICLE VI
CONDITIONS TO CONSUMMATION
OF TRANSACTION BY OPTIONOR
The obligation of Optionor to consummate the Transaction
shall be subject to fulfillment (or waiver) at or prior to the date of the
Closing of the following conditions:
6.1 Representations, Warranties and Covenants. The
representations, warranties and covenants made by Optionee in this Agreement
or in any document delivered by Optionee pursuant to this Agreement shall be
true and correct in all material respects when made and on and as of the date
of the Closing as though such representations, warranties and covenants were
made on and as of such date.
6.2 Consents. All consents necessary for the consummation of
the Transaction by Optionee shall have been obtained.
6.3 Optionee Deliverables. Optionor shall have received the
instruments and other items referred to in Section 7.2.
ARTICLE VII
THE CLOSING
Subject to the terms and conditions of this Agreement, the
Closing shall take place promptly after satisfaction or waiver of the
conditions set forth in Articles V and VI hereof.
7.1 Closing Deliveries by Optionor. At Closing, Optionor
shall deliver or cause to be delivered the following items, each (if
appropriate) properly executed by Optionor and dated as of the Closing Date:
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(a) a special warranty deed conveying good and
marketable fee simple title to the Property (subject only to the
Permitted Liens);
(b) a bill of sale pursuant to which Optionor shall
convey to Optionee good title to all the Personal Property, free and
clear of all liens and encumbrances (other than Permitted Liens);
(c) a certification duly executed by Optionor under
penalty of perjury, setting forth Optionor's address and Federal tax
identification number and certifying that Optionor is not a "foreign
person" under Section 1445 (as may be amended) of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated
thereunder;
(d) such assignment agreements as may be deemed
necessary and appropriate by Optionee and Optionor pursuant to which
Optionor shall assign to Optionee other assets (other than the
Excluded Assets) owned by Optionor that comprise the Property,
including, without limitation, the Permits (to the extent assignable)
and the Intangible Property;
(e) a certificate from a duly authorized agent of
Optionor certifying that the representations and warranties of
Optionor set forth herein are true and correct in all material
respects as of the Closing Date;
(f) the Lease Agreement duly executed by Genesis, or
the Genesis Affiliate, as applicable;
(g) a payoff letter or other instrument from the
holder of the Mortgage Debt sufficient to enable the Title Company to
issue the title insurance policy required by Section 5.4 hereof
without any exception for the Mortgage Debt;
(h) the indemnification agreement and, if
applicable, the guaranty referenced in Section 10.13, duly executed by
Genesis; and
(i) such other documents and instruments as Optionee
and Optionor agree are necessary or appropriate.
7.2 Closing Deliveries by Optionee. At Closing, Optionee
shall deliver or cause to be delivered the following items, each (if
appropriate) properly executed by Optionee and dated as of the Closing Date:
(a) the Purchase Price;
(b) a certificate, in form satisfactory to counsel
for Optionee, from a duly authorized officer of Optionee certifying
that the representations and warranties of Optionee set forth herein
are true and correct in all material respects as of the Closing Date;
(c) the assignment agreements referenced in Section
7.1(d) above;
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(d) the Lease Agreement, duly executed by Optionee;
and
(e) such other documents and instruments as
Optionor and Optionee agree are necessary or appropriate.
7.3 Closing Costs. Optionee and Optionor shall each pay
one-half (1/2) of the documentary and transfer fees imposed on or in
connection with the Transaction. Optionee agrees to pay all other costs
associated with the Closing, including (i) survey costs, (ii) costs of
obtaining a title insurance policy for the benefit of Optionee, and (iii) all
recording fees and charges. Each party shall pay its own legal fees.
7.4 Adjustments. Optionor and Optionee agree that charges,
credits and adjustments shall be made as of the Closing Date, and a statement
setting forth such adjustments shall be initialed by the parties. The subject
areas of such adjustments shall include:
(a) Real estate, personal property and similar
taxes and assessments (general and special, ordinary and
extraordinary) that have become or may become a lien on the Property;
(b) Charges for public utilities servicing the
Property, payments under the Contracts, charges under easements and
similar agreements affecting the Property;
(c) Insurance premiums, if any, to the extent
policies are assumed by Optionee;
(d) All other charges and fees customarily prorated
and adjusted in similar transactions.
The parties shall prorate on the best available
information; all adjustments that cannot be determined precisely as of the
Closing Date shall be readjusted as soon as practicable. Optionor shall use its
best efforts to have all utility meters read as of the Closing Date. To the
extent practicable, as Optionor and Optionee agree as appropriate, such
prorations may occur outside the Closing by arrangement with the vendor or
supplier of services (e.g., utilities). Any prorations which are the obligation
of Optionee will be assumed by the lessee under the Lease Agreement.
7.5 Possession. At Closing, Optionor shall deliver
possession of the Property to Optionee (subject to the rights of tenants under
the Leases), the Property to be in the same condition and repair as on the
date hereof, reasonable wear and tear excepted.
ARTICLE VIII
REMEDIES ON DEFAULT
8.1 Optionor's Remedies. Except for any breaches waived in
writing by Optionor, if Optionee fails to consummate the Transaction when
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required to do so pursuant to the provisions hereof, then Optionor shall be
entitled to terminate this Agreement whereupon this Agreement shall terminate
and in addition thereto, Optionee shall reimburse Optionor for all reasonable
costs incurred by Optionor in connection with the Transaction, provided that
the amount to be reimbursed by Optionee shall not exceed One Hundred Thousand
Dollars ($100,000.00).
8.2 Optionee's Remedies. Except for any breaches waived in
writing by Optionee, if Optionor has breached any of Optionor's covenants or
obligations under this Agreement or has failed, refused or is unable to
consummate the Transaction by the date of the Closing when and as required to
do so hereunder, then Optionee shall have the right to bring an action at law
or in equity seeking the specific performance of the obligations of Optionor
hereunder and in addition thereto or in lieu thereof, Optionee may avail
itself of any other remedies available at law or in equity on account of such
breach, provided, however, the amount of money damages that Optionee may
recover from Optionor on account of such breach shall not exceed One Hundred
Thousand Dollars ($100,000.00).
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by Optionor. Optionor hereby indemnifies
and agrees to defend and hold harmless Optionee, and its officers, directors,
employees, agents and successors and assigns, and its general partners and any
officers, trustees, directors, employees, agents and successors and assigns of
such general partners ("Optionee Indemnitees"), from and against any and all
demands, claims, actions or causes of action, assessments, expenses, costs,
damages, losses and liabilities (including attorneys' fees and other charges)
which may at any time be asserted against or suffered by any Optionee
Indemnitee, the Property, or any part thereof, whether before or after the
date of the Closing, as a result of, on account of or arising from (a) the
failure of Optionor to perform any of Optionor's obligations hereunder or, to
the extent provided in Section 10.1, the breach by Optionor of any of
Optionor's representations and warranties made herein, (b) events, contractual
obligations, acts or omissions of Optionor that occurred in connection with
the ownership or operation of the Property prior to the Closing, (c) damage to
property or injury to or death of any person or any claims for any debts or
obligations occurring on or about or in connection with the Property or any
portion thereof or with respect to the operation of the Property at any time
or times prior to the Closing, or (d) any obligation, claim, suit, liability,
contract, agreement, debt or encumbrance (other than Permitted Liens) created,
arising or accruing prior to the date of the Closing, regardless of when
asserted, relating to the Property or its operation, including, without
limitation, any and all liabilities for federal or state income taxes or other
taxes, which shall not have been set forth or specifically described in this
Agreement or the Schedules and the Exhibits hereto. The obligations of
Optionor under this Section 9.1 shall survive the Closing.
9.2 Indemnification by Optionee. Optionee hereby indemnifies
and agrees to defend and hold harmless Optionor, and its officers, directors,
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employees, agents and successors and assigns ("Optionor Indemnitees"), from
and against any and all demands, claims, actions or causes of action,
assessments, expenses, costs, damages, losses and liabilities (including
attorneys' fees and other charges) which may at any time be asserted against
or suffered by any Optionor Indemnitee, whether before or after the date of
the Closing, as a result of, on account of or arising from (a) the failure of
Optionee to perform any of Optionee's obligations hereunder or, to the extent
provided in Section 10.1, the breach by Optionee of any of Optionee's
representations and warranties made herein, (b) events, contractual
obligations, acts or omissions of Optionee that occurred in connection with
the ownership or operation of the Property subsequent to the Closing, (c)
damage to property or injury to or death of any person or any claims for any
debts or obligations occurring on or about or in connection with the Property
or any portion thereof or with respect to the operation of the Property at any
time or times subsequent to the Closing, or (d) any damage to the Property
caused by Optionee in connection with any studies, investigations or tests
conducted by Optionee pursuant to Section 4.2 hereof. The obligations of
Optionee under this Section 9.2 shall survive the Closing.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Liability with Respect to Representations
and Warranties. It is the express intention and agreement of the parties that
the representations and warranties of Optionee and Optionor set forth in this
Agreement shall survive the consummation of the Transaction for a period of
one (1) year from the date of the Closing except in the case of the
representations and warranties of Optionor set forth in Section 3.17 hereof
which shall survive the consummation of the Transaction for a period of two
(2) years from the date of the Closing. Such representations and warranties
shall expire and be terminated and extinguished forever at the expiration of
such period except where written notice of a claim for breach shall have been
delivered prior to the expiration of such period. Any written notice given
within such period setting forth a claim must set forth the nature and details
of the claim with specificity. Optionor's liability for a breach of a
representation and warranty shall not be subject to the limitation of
liability set forth in Section 8.2 hereof; provided, however, the maximum
amount that Optionee or its assigns may recover for a breach of a
representation or warranty by Optionor hereunder shall not exceed twenty
percent (20%) of the amount of the Purchase Price.
10.2 Notices. All notices, demands, requests or other
communications which may be or are required to be given or made by either
Optionor or Optionee to the other pursuant to this Agreement shall be in
writing and shall be hand delivered or transmitted by certified mail, express
overnight mail or delivery service, telegram, telex or facsimile transmission
to the parties at the following addresses:
If to Optionor: McKerley Health Facilities
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Michael R. Walker
Chairman and Chief Executive Officer
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Attention: Law Department - Ira C. Gubernick, Esq.
If to Optionee: ElderTrust Operating Limited Partnership
c/o ElderTrust
415 McFarlan Road, Suite 202
Kennett Square, Pennsylvania 19348
Attention: Edward B. Romanov, Jr.
President and Chief Executive Officer
or such other address as the addressee may indicate by written notice to the
other party.
Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee
(with the delivery receipt, the affidavit of messenger or (with respect to a
telex) the answerback being deemed conclusive but not exclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.
10.3 Governing Law. This Agreement, the rights and
obligations of the parties hereto and any claims or disputes relating thereto
shall be governed by and construed under the laws of the State of New
Hampshire (but not including the choice of law rules thereof).
10.4 Recording. At the option of Optionee, Optionor and
Optionee shall execute a memorandum of this Agreement in recordable form (the
"Memorandum of Option") and shall cause such Memorandum of Option to be
recorded in the public records of Coos County, New Hampshire. In the event the
Option is not exercised by Optionee by the Expiration Date, Optionee shall, at
Optionor's request, execute a termination of option in recordable form.
10.5 Assignment. No party hereto shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of Optionor (if the assignor is Optionee) or
Optionee (if the assignor is Optionor), which consent shall not be
unreasonably withheld, and any purported assignment contrary to the terms
hereof shall be null, void and of no force and effect; provided, that Optionee
may (i) assign this Agreement and Optionee's rights hereunder, to a
corporation, partnership, limited liability company or other entity of which
the entire ownership interest is owned directly or indirectly by Optionee or
its affiliates without the consent of Optionor, or (ii) contribute the
Property, or any portion thereof, to a partnership, limited liability company
or other entity in exchange for 100% of the ownership interests in such
entity, but no such assignment or contribution shall relieve Optionee of its
obligations hereunder.
10.6 Parties in Interest. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity other than
the parties hereto is or shall be entitled to bring any action to enforce any
provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
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benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
10.7 Severability. If any part of any provision of this
Agreement or any other agreement, document or writing given pursuant to or in
connection with this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the
remaining parts of such provisions or the remaining provisions of said
agreement so long as the economic and legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
10.8 Entire Agreement; Amendment. This Agreement and the
Exhibits and Schedules attached hereto (each of which shall be deemed
incorporated herein and made a part hereof) contain the final and entire
agreement between the parties hereto with respect to the Transaction and are
intended to be an integration of all prior negotiations and understandings.
Optionor and Optionee shall not be bound by any terms, conditions, statements,
warranties or representations, oral or written, not contained or referred to
herein or therein. No amendment, change or modification of this Agreement
shall be valid unless the same is in writing and signed by the parties hereto.
10.9 No Waiver. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or
under any other instrument or document given in connection with or pursuant to
this Agreement shall impair any such right, power or privilege or be construed
as a waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege. No waiver shall be valid against
any party hereto unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent expressly
specified therein.
10.10 Headings. Section and subsection headings contained in
this Agreement have been inserted for convenience of reference only, shall not
be deemed to be a part of this Agreement for any purpose, and shall not in any
way define or affect the meaning, construction or scope of any of the
provisions hereof.
10.11 Risk of Loss. The risk of loss or damage to all or any
part of the Property by fire or other casualty prior to the Closing shall be
borne by Optionor. In the event of such damage to all or part of the Property,
Optionee may, at Optionee's election, (i) terminate this Agreement whereupon
neither party shall have any further liability to the other hereunder or (ii)
consummate the Transaction, in which event Optionor shall assign to Optionee
at Closing all of Optionor's right, title and interest in and to all of the
proceeds of insurance payable by virtue of such casualty.
10.12 Counterparts. To facilitate execution, this Agreement
may be executed in as many counterparts as may be required. It shall not be
necessary that the signature of or on behalf of each party appears on each
counterpart, but it shall be sufficient that the signature of or on behalf of
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each party appears on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of
the parties.
10.13 Guaranty. Genesis shall indemnify Optionee for any
loss or damage due to a breach by Optionor of one or more of the
representations and warranties made by Optionor herein on the terms set forth
in a certain Indemnification Agreement to be executed and delivered by Genesis
at Closing to and for the benefit of Optionee, which Indemnification Agreement
shall be substantially in the form of Exhibit D attached hereto and made a
part hereof. In addition thereto, provided that the Genesis Affiliate, and not
Genesis, enters into the Lease Agreement, then at Closing Genesis shall
execute and deliver for the benefit of Optionee a guaranty of the obligations
of the Genesis Affiliate under the Lease Agreement, which guaranty shall be
substantially in the form of Exhibit E attached hereto and made a part hereof.
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IN WITNESS WHEREOF, Optionor and Optionee have caused this
Option Agreement to be duly executed on their behalf as of the date first above
written.
OPTIONEE:
ELDERTRUST OPERATING LIMITED PARTNERSHIP
By: ElderTrust,
general partner
By: /s/ D. Lee McCreary
--------------------------------------
Name: D. Lee McCreary
Title: Vice President
OPTIONOR:
MCKERLEY HEALTH FACILITIES
By: Meridian Health, Inc., general partner
By: /s/ Ira C. Gubernick
-------------------------------------
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
EXHIBITS AND SCHEDULES
Exhibit A - Legal Description of Real Property
Exhibit B - Form of Lease
Exhibit C - Arbitration Procedures
Exhibit D - Indemnification Agreement
Exhibit E - Guaranty of Lease
Exhibit F - Appraisal Procedure
Schedule 1.4 - Excluded Assets
Schedule 3.2 - Required Consents
Schedule 3.5 - Liens
Schedule 3.6 - Mortgage Debt
Schedule 3.9 - Leases
Schedule 3.10 - Contracts
Schedule 3.12 - Litigation
Schedule 3.15 - Insurance
Schedule 3.20 - Non-Compliance
Schedule 3.22 - Agreements
<PAGE>
EXHIBIT A
DESCRIPTION OF THE REAL PROPERTY
<PAGE>
EXHIBIT B
FORM OF LEASE AGREEMENT
<PAGE>
EXHIBIT C
ARBITRATION
Any controversy or dispute or claim relating to the
calculation of Substantial Occupancy hereunder shall be settled exclusively by
arbitration, in Philadelphia, Pennsylvania in accordance with the rules of the
American Arbitration Association then in force (the "Rules"). The party
requesting arbitration shall serve upon the other party to the controversy or
dispute a written demand for arbitration stating the substance of the
controversy or dispute and the contention of the party requesting arbitration
and the name and address of the arbitrator appointed by it. The recipient of
such demand shall within twenty (20) days after such receipt appoint an
arbitrator, and the two arbitrators shall appoint a third. The decision of any
two arbitrators shall be final and binding upon the parties. In the event that
the two arbitrators fail to appoint a third arbitrator within twenty (20) days
of the appointment of the second arbitrator, either arbitrator, or either
party to the arbitration, may apply to a judge of the United States District
Court for the Eastern District of Pennsylvania for the appointment of the
third arbitrator, and the appointment of such arbitrator by such judge on such
application shall have precisely the same force and effect as if such
arbitrator had been appointed by the two arbitrators. If for any reason the
third arbitrator cannot be appointed in the manner prescribed by the preceding
sentence, either regularly appointed arbitrator, or either party to the
arbitration, may apply to the American Arbitration Association for appointment
of the third arbitrator in accordance with the Rules. Should the party upon
whom the demand for arbitration has been served fail or refuse to appoint an
arbitrator within twenty (20) days, the single arbitrator shall have the right
to decide alone, and such arbitrator's decision or award shall be final and
binding upon the parties.
Each arbitrator chosen by a party shall be a fit person, and
the third arbitrator however chosen shall be a fit and impartial person, in
each case having at least ten (10) years experience in litigating,
adjudicating or otherwise administering cases and controversies related to the
subject matter of the controversy, dispute or claim being submitted to
arbitration.
The parties hereto agree to abide by all decisions rendered
in an arbitration proceeding in accordance with the foregoing, and all such
decisions may be filed by the prevailing party with any court having
jurisdiction over the person or property of the other party as a basis for
judgment and the issuance of execution thereon. The fees of each arbitrator
and related expenses of arbitration shall be apportioned among the parties as
determined by the arbitrators. The parties to the arbitration shall bear
equally the fees of each arbitrator and related expenses of arbitration.
Unless otherwise agreed by the parties to the arbitration,
all hearings shall be held, and all submissions shall be made by the parties,
within ten (10) days of the date of the selection of the third arbitrator, and
the decisions of the arbitrators shall be made within thirty (30) days of the
later of the date of the closing of the hearings or the date of the final
submissions by the parties.
<PAGE>
The parties consent to the jurisdiction of the Supreme Court
of the Commonwealth of Pennsylvania and of the United States District Court
for the Eastern District of Pennsylvania for all purposes in connection with
the arbitration. The parties consent that any process or notice of motion or
other application to either of said courts, and any paper in connection with
arbitration, may be served by certified mail, return receipt requested, or by
personal service, or in such other manner as may be permissible under the
rules of the applicable court or arbitration tribunal, provided a reasonable
time for appearance is allowed.
<PAGE>
EXHIBIT D
INDEMNIFICATION AGREEMENT
<PAGE>
EXHIBIT E
GUARANTY OF LEASE
<PAGE>
EXHIBIT F
APPRAISAL PROCESS
If Optionor and Optionee are unable to agree upon the fair
market value of the Property, each shall within ten (10) days after written
demand by the other select one MAI Appraiser (as defined below) to participate
in the determination of fair market value. Within ten (10) days of such
selection, the MAI Appraisers so selected by Optionor and Optionee shall
select a third MAI Appraiser ("Third MAI Appraiser"). The three (3) selected
MAI Appraisers shall each determine the fair market value of the Property
within thirty (30) days of the selection of the third appraiser. To the extent
consistent with sound appraisal practices as then existing at the time of any
such appraisal. The fees and expenses of any MAI Appraiser retained pursuant
to this Exhibit F shall be borne by the party retaining such MAI Appraiser,
with the exception of the Third MAI Appraiser whose fees and expenses shall be
borne by the Optionor and Optionee equally.
In the event either Optionor or Optionee fails to select an
MAI Appraiser within the time period set forth in the foregoing paragraph, the
MAI Appraiser selected by the other party shall alone determine the fair
market value of the Property in accordance with the provisions of this Exhibit
F and the fair market value so determined shall be binding upon Optionor and
Optionee.
In the event the MAI Appraisers selected by Optionor and
Optionee are unable to agree upon a third MAI Appraiser within the time period
set forth in the first paragraph of this Exhibit F, either Optionor or
Optionee shall have the right to apply, at the parties' shared expense, to the
presiding judge of the court of original trial jurisdiction in the
jurisdiction in which the Property is located to name the third MAI Appraiser.
Within five (5) days after completion of the third MAI
Appraiser's appraisal, all three MAI Appraisers shall meet and a majority of
the MAI Appraisers shall attempt to determine the fair market value of the
Property. If a majority are unable to determine the fair market value at such
meeting, the three appraisals shall be added together and their total divided
by three. The resulting quotient shall be the fair market value of the
Property. If, however, either or both of the low appraisal or the high
appraisal are more than ten percent (10%) lower or higher than the middle
appraisal, any such lower or higher appraisal shall be disregarded. If only
one appraisal is disregarded, the remaining two appraisals shall be added
together and their total divided by two, and the resulting quotient shall be
such fair market value. If both the lower appraisal and higher appraisal are
disregarded as provided herein, the middle appraisal shall be such fair market
value. In any event, the result of the foregoing appraisal process shall be
final and binding.
For purposes hereof, "MAI Appraiser" shall mean an appraiser
licensed or otherwise qualified to do business in the State where the Property
is located and who has substantial experience in performing appraisals of
facilities similar to the Property and is certified as a member of the
American Institute of Real Estate Appraisers or certified as a SRPA
<PAGE>
by the Society of Real Estate Appraisers, or, if such organizations no longer
exist or certify appraisers, such successor organization or such other
organization as is approved by Optionee.
<PAGE>
================================================================================
CREDIT AGREEMENT
among
ELDERTRUST,
ELDERTRUST OPERATING LIMITED PARTNERSHIP,
VARIOUS BANKS,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as ISSUING BANK
and
GERMAN AMERICAN CAPITAL CORPORATION,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of January 30, 1998
----------------------------------
$140,000,000
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SECTION 1.1. Amount and Terms of Credit; Letters of Credit.......................................................1
1.01 The Commitments....................................................................................1
1.02 Minimum Amount of Each Borrowing...................................................................1
1.03 Notice of Borrowing................................................................................1
1.04 Disbursement of Funds..............................................................................2
1.05 Notes..............................................................................................3
1.06 Conversions........................................................................................3
1.07 Pro Rata Borrowings................................................................................4
1.08 Interest...........................................................................................4
1.09 Interest Periods...................................................................................5
1.10 Increased Costs, Illegality, etc. in Respect of Loans..............................................5
1.11 Compensation.......................................................................................7
1.12 Change of Lending Office...........................................................................8
1.13 Letters of Credit..................................................................................8
1.14 Maximum Letter of Credit Outstandings; Final Maturities............................................9
1.15 Letter of Credit Requests; Minimum Stated Amount...................................................9
1.16 Letter of Credit Participations...................................................................10
1.17 Agreement to Repay Letter of Credit Drawings......................................................12
1.18 Increased Costs in Respect of Letters of Credit...................................................12
SECTION 2. Fees; Reductions of Commitment.....................................................................13
2.01 Fees..............................................................................................13
2.02 Voluntary Termination of Unutilized Commitments...................................................14
2.03 Mandatory Termination of Commitments; Extension of Maturity Date..................................14
SECTION 3. Prepayments; Payments; Taxes......................................................................15
3.01 Voluntary Prepayments.............................................................................15
3.02 Mandatory Repayments..............................................................................16
3.03 Method and Place of Payment.......................................................................17
3.04 Net Payments; Taxes...............................................................................17
SECTION 4. Conditions Precedent to Effective Date............................................................20
4.01 Execution of Agreement, Notes ....................................................................20
4.02 Fees, etc.........................................................................................20
4.03 Opinions of Counsel...............................................................................20
4.04 Corporate and Partnership Documents; Proceedings; etc.............................................20
4.05 Debt Agreements...................................................................................21
4.06 Pledge Agreement..................................................................................21
</TABLE>
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4.07 Pledge and Security Agreement and Security Agreement..............................................21
4.08 Subsidiaries Guaranty.............................................................................22
4.09 Collateral Assignments; Mortgages; Title Insurance; Surveys; etc..................................22
4.10 IPO...............................................................................................24
4.11 Adverse Change, etc...............................................................................24
4.12 Litigation........................................................................................24
4.13 Initial Borrowing Base Properties, etc............................................................24
4.14 Solvency Certificate..............................................................................25
4.15 Pro Forma Balance Sheets..........................................................................25
4.16 Initial Borrowing Base Certificate................................................................26
4.17 No Default; Representations and Warranties........................................................26
4.18 REIT Equity Interests Widely Held.................................................................26
SECTION 5. Conditions Precedent to All Loans and Letters of Credit...........................................26
5.01 No Default; Representations and Warranties........................................................26
5.02 Notice of Borrowing...............................................................................27
5.03 Property Information; etc.........................................................................27
5.04 Certain Requirements with Respect to Loans and Letters of Credit..................................27
5.05 Subsequent Legal Opinions.........................................................................28
SECTION 6. Representations and Warranties....................................................................28
6.01 Status............................................................................................29
6.02 Power and Authority...............................................................................29
6.03 No Violation......................................................................................29
6.04 Governmental Approvals............................................................................30
6.05 Financial Statements; Financial Condition; Undisclosed Liabilities; Projections; etc..............30
6.06 Litigation........................................................................................32
6.07 True and Complete Disclosure......................................................................32
6.08 Use of Proceeds; Margin Regulations...............................................................32
6.09 Tax Returns and Payments..........................................................................32
6.10 Compliance with ERISA.............................................................................33
6.11 The Security Documents............................................................................34
6.12 Status as REIT....................................................................................36
6.13 Properties........................................................................................36
6.14 Healthcare Matters................................................................................36
6.15 Subsidiaries......................................................................................38
6.16 Compliance with Statutes, etc.....................................................................38
6.17 Investment Company Act............................................................................38
6.18 Public Utility Holding Company Act................................................................38
6.19 Environmental Matters.............................................................................38
6.20 Labor Relations...................................................................................39
6.21 Intellectual Property.............................................................................39
6.22 Indebtedness......................................................................................39
</TABLE>
(ii)
<PAGE>
<TABLE>
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6.23 Operating Leases; Management Agreements; Ground Leases............................................40
SECTION 7. Affirmative Covenants.............................................................................40
7.01 Information Covenants.............................................................................40
7.02 Books, Records and Inspections....................................................................44
7.03 Maintenance of Property; Insurance................................................................45
7.04 Corporate Franchises..............................................................................47
7.05 Compliance with Statutes, etc.....................................................................47
7.06 Compliance with Environmental Laws................................................................48
7.07 ERISA.............................................................................................48
7.08 End of Fiscal Years; Fiscal Quarters..............................................................50
7.09 Performance of Obligations........................................................................50
7.10 Payment of Taxes..................................................................................50
7.11 Certain Requirements with Respect to Acquisitions of Borrowing Base Properties
and Provision or Purchase of Borrowing Base Pledged Mortgage Loans................................50
7.12 Certain Partnerships..............................................................................55
7.13 Operating Leases; Management Agreements and Pledged Mortgage Loan Documents.......................56
7.14 Lien Waivers; etc.................................................................................56
7.15 Appraisals........................................................................................56
7.16 Casualty and Condemnation; Restoration............................................................56
7.17 REIT Requirements.................................................................................64
7.18 Syndication Cooperation...........................................................................64
SECTION 8. Negative Covenants................................................................................64
8.01 Liens.............................................................................................65
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc............................................67
8.03 Dividends.........................................................................................71
8.04 Indebtedness......................................................................................72
8.05 Advances, Investments and Loans...................................................................73
8.06 Transactions with Affiliates......................................................................74
8.07 Capital Expenditures..............................................................................74
8.08 Minimum Equity Value; Minimum Tangible Net Worth..................................................75
8.09 Total Leverage Ratio..............................................................................75
8.10 Minimum Interest Coverage Ratio...................................................................75
8.11 Public REIT Status................................................................................75
8.12 Limitation on Creation of Subsidiaries............................................................75
8.13 Limitation on Payments of Certain Indebtedness; Modifications of Certain
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Agreements; etc...................................................................................76
8.14 Limitation on Certain Restrictions on Subsidiaries................................................76
8.15 Limitation on Issuance of Capital Stock...........................................................77
8.16 Business..........................................................................................77
</TABLE>
(iii)
<PAGE>
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8.17 Borrowing Base....................................................................................77
SECTION 9. Events of Default................................................................................77
9.01 Payments.........................................................................................77
9.02 Representations, etc.............................................................................78
9.03 Covenants........................................................................................78
9.04 Default Under Other Agreements...................................................................78
9.05 Bankruptcy, etc..................................................................................78
9.06 ERISA............................................................................................79
9.07 Security Documents...............................................................................79
9.08 Guaranty.........................................................................................80
9.09 Judgments........................................................................................80
9.10 Change of Control................................................................................80
9.11 Initial Borrowing Base Collateral................................................................80
SECTION 10. Definitions and Accounting Terms.................................................................81
10.01 Defined Terms.............................. .....................................................81
SECTION 11. The Administrative Agent........................................................................105
11.01 Appointment.....................................................................................105
11.02 Nature of Duties................................................................................105
11.03 Lack of Reliance on the Administrative Agent....................................................106
11.04 Certain Rights of the Administrative Agent......................................................106
11.05 Reliance........................................................................................106
11.06 Indemnification.................................................................................107
11.07 The Administrative Agent in its Individual Capacity.............................................107
11.08 Holders.........................................................................................107
11.09 Resignation by the Administrative Agent; Removal of the Administrative Agent....................107
SECTION 12. Miscellaneous...................................................................................108
12.01 Payment of Expenses, etc........................................................................108
12.02 Right of Setoff.................................................................................109
12.03 Notices.........................................................................................110
12.04 Benefit of Agreement............................................................................110
12.05 No Waiver; Remedies Cumulative..................................................................112
12.06 Payments Pro Rata...............................................................................112
12.07 Calculations; Computations......................................................................113
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL..........................113
12.09 Counterparts....................................................................................114
12.10 Effectiveness...................................................................................114
12.11 Headings Descriptive............................................................................115
12.12 Amendments or Waiver, etc.......................................................................116
12.13 Survival........................................................................................116
12.14 Domicile of Loans...............................................................................116
12.15 Confidentiality.................................................................................116
12.16 Register........................................................................................117
12.17 Commercial Loan Transactions....................................................................117
12.18 Servicing of Loans..............................................................................117
(iv)
</TABLE>
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Section 13. Parent Guaranty.................................................................................118
13.01 The Guaranty....................................................................................118
13.02 Bankruptcy......................................................................................118
13.03 Nature of Liability.............................................................................118
13.04 Independent Obligation..........................................................................118
13.05 Authorization...................................................................................119
13.06 Reliance........................................................................................120
13.07 Subordination...................................................................................120
13.08 Waiver..........................................................................................120
13.09 Nature of Liability.............................................................................121
13.10 Interest Rate Protection Agreements and
Other Agreements................................................................................121
(v)
</TABLE>
<PAGE>
<TABLE>
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<S> <C> <C>
Page
----
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property; Initial Borrowing Base Properties
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Insurance
SCHEDULE VII Existing Liens
SCHEDULE VIII Existing Mortgage Loans; Initial Borrowing Base Pledged Mortgage Loans
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Note
EXHIBIT B-2 Form of Letter of Credit Request
EXHIBIT C Section 3.04(b)(ii) Certificate
EXHIBIT D Opinion of Hogan & Hartson L.L.P.
EXHIBIT E Officers' Certificate
EXHIBIT F-1 Pledge Agreement
EXHIBIT F-2 Pledge and Security Agreement
EXHIBIT G Security Agreement
EXHIBIT H Subsidiaries Guaranty
EXHIBIT I Mortgage
EXHIBIT J Officer's Solvency Certificate
EXHIBIT K Collateral Assignment
EXHIBIT L Borrowing Base Certificate
EXHIBIT M-1 Quarterly Borrowing Base Property Financial Report
EXHIBIT M-2 Quarterly Borrowing Base Pledged Mortgage Loan Financial Report
EXHIBIT N Quarterly Cash Flow Report
EXHIBIT O Subordination Provisions
EXHIBIT P Assignment and Assumption Agreement
EXHIBIT Q Intercompany Note
EXHIBIT R Completion Certificate
EXHIBIT S Notice of Renovation/Restoration
</TABLE>
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of January 30, 1998, among
ELDERTRUST, a Maryland real estate investment trust (the "REIT"), ELDERTRUST
OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Borrower"), the Banks party hereto from time to time, DEUTSCHE BANK AG, NEW
YORK BRANCH, as Issuing Bank (the "Issuing Bank") and GERMAN AMERICAN CAPITAL
CORPORATION, as Administrative Agent (all capitalized terms used herein and
defined in Section 10 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set
forth herein, the Banks and the Issuing Bank are willing to make available to
the Borrower the respective credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1.1. Amount and Terms of Credit; Letters of Credit.
1.0 The Commitments. Subject to and upon the terms and
conditions set forth herein, each Bank severally agrees, at any time and from
time to time on and after the Effective Date and prior to the Maturity Date,
to make a revolving loan or revolving loans (each, a "Loan" and, collectively,
the "Loans") to the Borrower, which Loans (i) shall, at the option of the
Borrower, be Base Rate Loans or Eurodollar Loans, provided that, except as
otherwise specifically provided in Section 1.10(b), all Loans comprising the
same Borrowing shall at all times be of the same Type, (ii) may be repaid and
reborrowed at any time in accordance with the provisions hereof, (iii) shall
not exceed for any Bank at any time outstanding that aggregate principal
amount which, when added to the product of (x) such Bank's Loan Percentage and
(y) the aggregate amount of all Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Loans) then outstanding,
equals the Commitment of such Bank at such time and (iv) shall not exceed for
all Banks at any time outstanding that aggregate principal amount which, when
added to the sum of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Loans) at such time, equals the
lesser of (x) the Total Commitment at such time and (y) the Borrowing Base at
such time.
1.02 Minimum Amount of Each Borrowing. The aggregate
principal amount of each Borrowing of Loans shall not be less than the Minimum
Borrowing Amount. Not more than one Borrowing may occur on the same date and
at no time shall there be outstanding more than ten Borrowings of Eurodollar
Loans.
1.03 Notice of Borrowing. a) (a) Whenever
the Borrower desires to incur a Borrowing of Loans, the Borrower shall give
the Administrative Agent at the Notice Office at least three Business Days'
<PAGE>
prior written notice (or telephonic notice promptly confirmed in writing) of
each Eurodollar Loan and at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of each Base Rate Loan to be
made hereunder, provided that any such notice shall be deemed to have been
given on a certain day only if given before 11:00 A.M. (New York time) on such
day. Each such written notice or written confirmation of telephonic notice
(each a "Notice of Borrowing"), except as otherwise expressly provided in
Section 1.10, shall be irrevocable and shall be given by the Borrower in the
form of Exhibit A, appropriately completed to specify (i) the aggregate
principal amount of the Loans to be incurred pursuant to such Borrowing, (ii)
the date of such Borrowing (which shall be a Business Day), (iii) the specific
uses to be made of the proceeds of such Loans and (iv) whether the Loans being
incurred pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans. The Administrative Agent shall promptly give
each Bank facsimile or other written notice of such proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters required by
the immediately preceding sentence to be specified in the Notice of Borrowing.
Notwithstanding anything to the contrary contained in this Agreement, unless
the Administrative Agent otherwise agrees, no more than four Notices of
Borrowing may be given in any 30 consecutive day period.
(b) Without in any way limiting the obligation of the
Borrower to confirm in writing any telephonic notice of any Borrowing of
Loans, the Administrative Agent may act without liability upon the basis of
telephonic notice of such Borrowing believed by the Administrative Agent in
good faith to be from an Authorized Officer of the Borrower prior to receipt
of written confirmation. In each such case, the Borrower hereby waives the
right to dispute the Administrative Agent's record of the terms of such
telephonic notice of such Borrowing.
1.04 Disbursement of Funds. No later than 2:00 P.M. (New
York time) on the date specified in each Notice of Borrowing, each Bank which
has received the notice referred to in the next to last sentence of Section
1.03(a) will disburse its pro rata portion of each Borrowing requested to be
made on such date. All such amounts shall be disbursed in Dollars and in
immediately available funds at the Payment Office, and the Administrative
Agent will promptly disburse to the Borrower at the Payment Office, in Dollars
and in immediately available funds, the aggregate of the amounts so made
available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to disburse to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that
such Bank has disbursed such amount to the Administrative Agent on such date
of Borrowing and the Administrative Agent may, in reliance upon such
assumption, disburse to the Borrower a corresponding amount. If such
corresponding amount is not in fact disbursed to the Administrative Agent by
such Bank, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify the Borrower and the
Borrower shall within one Business Day thereafter pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was disbursed by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
2
<PAGE>
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Bank, the overnight Federal Funds Rate and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Bank as a result
of any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the
principal of, and interest on, the Loans made by each Bank to the Borrower
shall be evidenced by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-1 with blanks appropriately
completed in conformity herewith (each, a "Note" and, collectively, the
"Notes"). The Note issued by the Borrower to each Bank shall (i) be executed
by the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the Effective Date (or, if issued after the Effective Date, be dated the
date of the issuance thereof), (iii) be in a stated principal amount equal to
the Commitment of such Bank (or, if issued after the termination of such
Commitment, be in a stated principal amount equal to the outstanding Loans of
such Bank at such time) and be payable in the principal amount of the
outstanding Loans evidenced thereby, (iv) mature on the Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to voluntary prepayment as provided in Section 3.01,
or mandatory repayment as provided in Section 3.02 and (vii) be entitled to
the benefits of this Agreement and the other Credit Documents.
(b) Each Bank will note on its internal records the amount
of each Loan made by it and each payment in respect thereof and will prior to
any transfer of its Note properly endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation (or any error in such notation) shall not affect the Borrower's
obligations to the holder from time to time of such Note in respect of such
Loans.
1.06 Conversions. The Borrower shall have the option to
convert, on any Business Day occurring after the Effective Date, all or a
portion equal to at least the Minimum Borrowing Amount of the outstanding
principal amount of Loans made to the Borrower into a Borrowing or Borrowings
of another Type of Loan, provided that (i) except as otherwise provided in
Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only
on the last day of an Interest Period applicable to the Loans being converted
and no partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a
single Borrowing to less than the Minimum Borrowing Amount, (ii) Base Rate
Loans may only be converted into Eurodollar Loans if no Default or Event of
Default is in existence on the date of the conversion, and (iii) no conversion
pursuant to this Section 1.06 shall result in a greater number of Borrowings
3
<PAGE>
of Eurodollar Loans than is permitted under Section 1.02. Each such conversion
shall be effected by the Borrower by giving the Administrative Agent at the
Notice Office prior to 11:00 A.M. (New York time) at least three Business
Days' prior written notice (or two Business Day's prior written notice in the
case of a conversion of Eurodollar Loans into Base Rate Loans) (each a "Notice
of Conversion") specifying the Loans to be so converted and the Borrowing(s)
pursuant to which such Loans were made. The Administrative Agent shall give
each Bank prompt notice of any such proposed conversion affecting any of its
Loans.
1.07 Pro Rata Borrowings. All Borrowings of Loans shall be
incurred from the Banks pro rata on the basis of their respective Commitments.
It is understood that no Bank shall be responsible for any default by any
other Bank of its obligation to make Loans hereunder and that each Bank shall
be obligated to make the Loans provided to be made by it hereunder, regardless
of the failure of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date
the proceeds thereof are made available to the Borrower until the earlier of
(i) the maturity (whether by acceleration or otherwise) of such Base Rate Loan
and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant
to Section 1.06, at a rate per annum which shall be equal to the sum of the
Applicable Margin plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan and
(ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which shall,
during each Interest Period applicable thereto, be equal to the sum of the
Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder or under any of the other Credit Documents shall, in each case, bear
interest at a rate per annum equal to the greater of (x) 5% per annum in
excess of the rate otherwise applicable to Base Rate Loans from time to time
and (y) the rate which is 5% in excess of the rate then borne by such Loans
(without giving effect to any increase in the rate borne by such Loans as a
result of the operation of this clause (c)), in each case with such interest
to be payable on demand. Borrower shall pay an amount equal to 5% of any
amount due hereunder or under any other Credit Document that is not paid prior
to the fifth day after the date on which it is due, to defray the expenses
incurred by the Administrative Agent and the Banks in handling and processing
the delinquent payment and to compensate the Banks for the loss of the use of
the delinquent payment, and the payment of such amount shall be secured by the
Security Documents.
(d) Accrued (and theretofore unpaid) interest shall be
payable in respect of each Loan, (i) monthly in arrears through the last day
of the calendar month on the first Business Day of each subsequent calendar
month and (ii) on any repayment or prepayment thereof (on the amount repaid or
prepaid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) Upon each Interest Determination Date, the
Administrative Agent shall determine the Eurodollar Rate for each Interest
4
<PAGE>
Period applicable to Eurodollar Loans and shall promptly notify the Borrower
and the Banks thereof. Each such determination shall, absent manifest error,
be final and conclusive and binding on all parties hereto.
1.09 Interest Periods. The interest period (each an
"Interest Period") applicable to each Eurodollar Loan shall be a one-month
period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Loan of a different Type) and
each Interest Period occurring thereafter in respect of such
Eurodollar Loan shall commence on the day on which the next preceding
Interest Period applicable thereto expires;
(iii)if any Interest Period relating to a Eurodollar Loan
begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, such Interest
Period shall end on the last day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided, however, that if any Interest
Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day; and
(v) no Interest Period in respect of any Borrowing of
Eurodollar Loans shall extend beyond the Maturity Date.
1.10 Increased Costs, Illegality, etc. in Respect of Loans.
(a) In the event that any Bank shall have determined (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto but, with respect to clause (i) below, may be made only by the
Administrative Agent):
(i) on any Interest Determination Date that, by reason of
any changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the
date of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any
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Bank of the principal of or interest on such Eurodollar Loan or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or net profits of
such Bank, or any franchise tax based on the net income or net profits
of a Bank, in either case pursuant to the laws of the jurisdiction in
which such Bank is organized or in which such Bank's principal office
or applicable lending office is located or any subdivision thereof or
therein), or (B) a change in official reserve requirements, but, in
all events, excluding reserves required under Regulation D to the
extent included in the computation of the Eurodollar Rate and/or (y)
other circumstances since the date of this Agreement affecting such
Bank or the interbank Eurodollar market or the position of such Bank
in such market; or
(iii)at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone confirmed
in writing) to the Borrower and, except in the case of clause (i) above, to
the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Administrative Agent notifies the
Borrower and the Banks that the circumstances giving rise to such notice by
the Administrative Agent no longer exist, and any Notice of Borrowing or
Notice of Conversion given by the Borrower with respect to Eurodollar Loans
which have not yet been incurred (including by way of conversion) shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased
costs or reductions in amounts received or receivable hereunder (a written
notice as to the additional amounts owed to such Bank, showing the basis for
the calculation thereof, submitted to the Borrower by such Bank in good faith
shall, absent manifest error, be final and conclusive and binding on all the
parties hereto) and (z) in the case of clause (iii) above, the Borrower shall
take one of the actions specified in Section 1.10(b) as promptly as possible
and, in any event, within the time period required by law. Each of the
Administrative Agent and each Bank agrees that if it gives notice to the
Borrower of any of the events described in clause (i) or (iii) above, it shall
promptly notify the Borrower and, in the case of any such Bank, the
Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations
of such Bank to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated. In addition, if the Administrative Agent gives notice to the
Borrower that the events described in clause (i) above cease to exist, then
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the obligations of the Banks to make Eurodollar Loans and to convert Base Rate
Loans into Eurodollar Loans on the terms and conditions contained herein (but
subject to clause (iii) above) shall also be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) the Borrower shall) either (x) if the affected Eurodollar
Loan is then being made initially or pursuant to a conversion, cancel the
respective Borrowing by giving the Administrative Agent telephonic notice
(confirmed in writing) on the same date that the Borrower was notified by the
affected Bank or the Administrative Agent pursuant to Section 1.10(a)(ii) or
(iii) or (y) if the affected Eurodollar Loan is then outstanding, upon at
least three Business Days' written notice to the Administrative Agent, require
the affected Bank to convert such Eurodollar Loan into a Base Rate Loan,
provided that, if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that, after the date
of this Agreement, the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law and including, without limitation, those
announced or published prior to the Effective Date) concerning capital
adequacy, or any change in interpretation or administration thereof by any
governmental authority, central bank or comparable agency, will have the
effect of increasing the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank based on the
existence of such Bank's Commitment hereunder or its obligations hereunder,
then the Borrower shall pay to such Bank, upon its written demand therefor,
such additional amounts as shall be required to compensate such Bank or such
other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and will
use averaging and attribution methods which are reasonable, provided that such
Bank's reasonable good faith determination of compensation owing under this
Section 1.10(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower and the Administrative Agent,
which notice shall show the basis for calculation of such additional amounts.
In addition, each such Bank, upon determining that the circumstances giving
rise to the payment of additional amounts pursuant to this Section 1.10(c)
cease to exist, will give prompt written notice thereof to the Borrower.
1.11 Compensation. The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding any
loss of anticipated profit) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank) a Borrowing or continuation of, or
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conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment (including any repayment made pursuant to Section 3.01
or 3.02 or as a result of an acceleration of the Loans pursuant to Section 9)
or conversion of any Eurodollar Loans occurs on a date which is not the last
day of an Interest Period with respect thereto; (iii) if any prepayment of any
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by
the Borrower to repay the Loans when required by the terms of this Agreement
or the Note held by such Bank or (y) any election made pursuant to Section
1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 1.18 or Section 3.04 with respect to such
Bank, it will, if requested by the Borrower, use reasonable efforts (subject
to overall policy considerations of such Bank) to designate another lending
office for any Loans or Letters of Credit affected by such event, provided
that such designation is made on such terms that such Bank and its lending
office suffer no economic, legal or regulatory disadvantage, with the object
of avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of the Borrower or the right of any Bank provided in Sections 1.10
and 3.04.
1.13 Letters of Credit (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that the Issuing Bank
issue, at any time and from time to time on and after the Effective Date and
prior to the 30th day prior to the Maturity Date, for the account of the
Borrower and for the benefit of any holder (or any trustee, agent or other
similar representative for any such holders) of L/C Supportable Obligations of
the Borrower or any of its Subsidiaries, an irrevocable standby letter of
credit, in a form customarily used by the Issuing Bank or in such other form
as has been approved by the Issuing Bank (each such standby letter of credit,
a "Letter of Credit"), in support of such L/C Supportable Obligations. All
Letters of Credit shall be denominated in Dollars and shall be issued on a
sight basis only.
(b) Subject to and upon the terms and conditions set forth
herein, the Issuing Bank agrees that it will, at any time and from time to
time on and after the Effective Date and prior to the 30th day prior to the
Maturity Date, following its receipt of the respective Letter of Credit
Request, issue for the account of the Borrower, one or more Letters of Credit
in support of such L/C Supportable Obligations of the Borrower or any of its
Subsidiaries as are permitted to remain outstanding without giving rise to a
Default or an Event of Default hereunder, provided that the Issuing Bank shall
be under no obligation to issue any Letter of Credit of the types described
above if at the time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit or any
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requirement of law applicable to the Issuing Bank or any request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over the Issuing Bank shall
prohibit, or request that the Issuing Bank refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular
or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which
the Issuing Bank is not otherwise compensated under Section 1.18 or
otherwise) not in effect on the date hereof, or any unreimbursed
loss, cost or expense which was not applicable or in effect with
respect to the Issuing Bank as of the date hereof and which the
Issuing Bank reasonably and in good faith deems material to it; or
(ii) the Issuing Bank shall have received notice from the
Borrower, any other Credit Party or the Required Banks prior to the
issuance of such Letter of Credit of the type described in the second
sentence of Section 1.15(b).
1.14 Maximum Letter of Credit Outstandings; Final
Maturities. Notwithstanding anything to the contrary contained in this
Agreement, (i) no Letter of Credit shall be issued the Stated Amount of which,
when added to the Letter of Credit Outstandings (exclusive of Unpaid Drawings
which are repaid on the date of, and prior to the issuance of, the respective
Letter of Credit) at such time would exceed either (x) $4,500,000 or (y) when
added to the aggregate principal amount of all Loans then outstanding, an
amount equal to the lesser of (A) the Borrowing Base at such time (based on
the Borrowing Base Certificate last delivered) and (B) the Total Commitment at
such time and (ii) each Letter of Credit shall by its terms terminate on or
before the earlier of (x) the date which occurs 12 months after the date of
the issuance thereof (although any such Letter of Credit may be extendible for
successive periods of up to 12 months, but not beyond the third Business Day
prior to the Maturity Date, on terms acceptable to the Issuing Bank) and (y)
three Business Days prior to the Maturity Date.
1.15 Letter of Credit Requests; Minimum Stated Amount. (a)
Whenever the Borrower desires that a Letter of Credit be issued for its
account, the Borrower shall give the Administrative Agent and the Issuing Bank
at least five Business Days' (or such shorter period as is acceptable to the
Issuing Bank) written notice thereof. Each notice shall be in the form of
Exhibit B-2 appropriately completed (each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 1.14. Unless the Issuing Bank has received notice from the
Borrower, any other Credit Party or the Required Banks before it issues a
Letter of Credit that one or more of the conditions specified in Section 4 or
5 are not then satisfied, or that the issuance of such Letter of Credit would
violate Section 1.14, then the Issuing Bank shall, subject to the terms and
conditions of this Agreement, issue the requested Letter of Credit for the
account of the Borrower in accordance with the Issuing Bank's usual and
customary practices. Upon its issuance of or amendment or modification to any
Letter of Credit, the Issuing Bank shall promptly notify the Borrower and the
Administrative Agent of such issuance, amendment or modification and such
notification shall be accompanied by a copy of the issued Letter of Credit or
amendment or modification. Notwithstanding anything to the contrary contained
in this Agreement, in the event that a Bank Default exists, the Issuing Bank
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shall not be required to issue any Letter of Credit unless the Issuing Bank
has entered into an arrangement satisfactory to it and the Borrower to
eliminate the Issuing Bank's risk with respect to the participation in Letters
of Credit by the Defaulting Bank or Banks, including by cash collateralizing
such Defaulting Bank's or Banks' Loan Percentage of the Letter of Credit
Outstandings.
(c) The initial Stated Amount of each Letter of Credit shall
not be less than $250,000 or such lesser amount as is reasonably acceptable to
the Issuing Bank.
1.16 Letter of Credit Participations. (a) Immediately upon
the issuance by the Issuing Bank of any Letter of Credit, the Issuing Bank
shall be deemed to have sold and transferred to each Bank, other than the
Issuing Bank (each such Bank, in its capacity under this Section 1.16, a
"Participant"), and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from the Issuing Bank, without
recourse or warranty, an undivided interest and participation, to the extent
of such Participant's Loan Percentage, in such Letter of Credit, each drawing
or payment made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor or guaranty
pertaining thereto. Upon any change in the Commitments or Loan Percentages of
the Banks pursuant to Section 12.04, it is hereby agreed that, with respect to
all outstanding Letters of Credit and Unpaid Drawings, there shall be an
automatic adjustment to the participations pursuant to this Section 1.16 to
reflect the new Loan Percentages of the assignor and assignee Bank, as the
case may be.
(b) In determining whether to pay under any Letter of
Credit, the Issuing Bank shall not have an obligation relative to the other
Banks other than to confirm that any documents required to be delivered under
such Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by the Issuing Bank under or
in connection with any Letter of Credit if taken or omitted in the absence of
gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction), shall not create for the Issuing Bank any resulting
liability to the Borrower, any other Credit Party, any Bank or any other
Person.
(c) In the event that the Issuing Bank makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Issuing Bank pursuant to Section 1.17(a), the Issuing
Bank shall promptly notify the Administrative Agent, which shall promptly
notify each Participant of such failure, and each Participant shall promptly
and unconditionally pay to the Issuing Bank the amount of such Participant's
Loan Percentage of such unreimbursed payment in Dollars and in same day funds.
If the Administrative Agent so notifies, prior to 11:00 A.M. (New York time)
on any Business Day, any Participant required to fund a payment under a Letter
of Credit, such Participant shall make available to the Issuing Bank in
Dollars such Participant's Loan Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Loan Percentage of the amount of such payment
available to the Issuing Bank, such Participant agrees to pay to the Issuing
Bank, forthwith on demand such amount, together with interest thereon, for
each day from such date until the date such amount is paid to the Issuing Bank
at the overnight Federal Funds Rate for the first three days and at the
interest rate applicable to Loans maintained as Base Rate Loans for each day
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thereafter. The failure of any Participant to make available to the Issuing
Bank its Loan Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make available to
the Issuing Bank its Loan Percentage of any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to the Issuing Bank such
other Participant's Loan Percentage of any such payment.
(d) Whenever the Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, the Issuing Bank shall pay to each
Participant which has paid its Loan Percentage thereof, in Dollars and in same
day funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of
the respective participations.
(e) Upon the request of any Participant, the Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such
Participant.
(f) The obligations of the Participants to make payments to
the Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, any Participant,
or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transaction between
the Borrower or any Subsidiary of the Borrower and the beneficiary
named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
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1.17 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower agrees to reimburse the Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by the Issuing Bank under any Letter of
Credit (each such amount, so paid until reimbursed, an "Unpaid Drawing"), not
later than one Business Day following receipt by the Borrower of notice of
such payment or disbursement (provided that no such notice shall be required
to be given if a Default or an Event of Default under Section 9.05 shall have
occurred and be continuing, in which case the Unpaid Drawing shall be due and
payable immediately without presentment, demand, protest or notice of any kind
(all of which are hereby waived by the Borrower)), with interest on the amount
so paid or disbursed by the Issuing Bank, to the extent not reimbursed prior
to 1:00 P.M. (New York time) on the date of such payment or disbursement, from
and including the date paid or disbursed to but excluding the date the Issuing
Bank was reimbursed by the Borrower therefor at a rate per annum which shall
be the Base Rate in effect from time to time plus the Applicable Margin;
provided, however, to the extent such amounts are not reimbursed prior to 1:00
P.M. (New York time) on the third Business Day following the receipt by the
Borrower of notice of such payment or disbursement or following the occurrence
of a Default or an Event of Default under Section 9.05, interest shall
thereafter accrue on the amounts so paid or disbursed by the Issuing Bank (and
until reimbursed by the Borrower) at a rate per annum which shall be the Base
Rate in effect from time to time plus the Applicable Margin plus 5%, in each
such case, with interest to be payable on demand. The Issuing Bank shall give
the Borrower prompt written notice of each Drawing under any Letter of Credit,
provided that the failure to give any such notice shall in no way affect,
impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 1.17
to reimburse the Issuing Bank with respect to Unpaid Drawings (including, in
each case, interest thereon) shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against any Bank (including in
its capacity as Participant), including, without limitation, any defense based
upon the failure of any drawing under a Letter of Credit (each a "Drawing") to
conform to the terms of the Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such Drawing; provided,
however, that the Borrower shall not be obligated to reimburse the Issuing
Bank for any wrongful payment made by the Issuing Bank under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or
gross negligence on the part of the Issuing Bank (as finally determined by a
court of competent jurisdiction).
1.18 Increased Costs in Respect of Letters of Credit. (a) If
at any time after the date of this Agreement, the introduction of or any
change in any applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by
the Issuing Bank or any Participant with any request or directive by any such
authority (whether or not having the force of law), shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against letters of credit issued by the Issuing Bank or
participated in by any Participant, or (ii) impose on the Issuing Bank or any
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Participant any other conditions relating, directly or indirectly, to this
Agreement; and the result of any of the foregoing is to increase the cost to
the Issuing Bank or any Participant of issuing, maintaining or participating
in any Letter of Credit, or reduce the amount of any sum received or
receivable by the Issuing Bank or any Participant hereunder or reduce the rate
of return on its capital with respect to Letters of Credit (except for changes
in the rate of tax on, or determined by reference to, the net income or
profits of the Issuing Bank or such Participant pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein),
then, within 30 days after the delivery of the certificate referred to below
to the Borrower by the Issuing Bank or any Participant (a copy of which
certificate shall be sent by the Issuing Bank or such Participant to the
Administrative Agent), the Borrower shall pay to the Issuing Bank or such
Participant such additional amount or amounts as will compensate such Bank for
such increased cost or reduction in the amount receivable or reduction on the
rate of return on its capital. The Issuing Bank or any Participant, upon
determining that any additional amounts will be payable pursuant to this
Section 1.18, will give prompt written notice thereof to the Borrower, which
notice shall include a certificate submitted to the Borrower by the Issuing
Bank or such Participant (a copy of which certificate shall be sent by the
Issuing Bank or such Participant to the Administrative Agent), setting forth
in reasonable detail the basis for the calculation of such additional amount
or amounts necessary to compensate the Issuing Bank or such Participant. The
certificate required to be delivered pursuant to this Section 1.18 shall,
absent manifest error, be final and conclusive and binding on the Borrower.
(b) Notwithstanding anything to the contrary contained in
this Section 1.18, unless the Issuing Bank or a Participant gives notice to
the Borrower that the Borrower is obligated to pay any amount under this
Section 1.18 within 180 days after the later of (x) the date the Issuing Bank
or such Participant incurs the respective increased costs or reduction in
return the rate of return or (y) the date the Issuing Bank or such Participant
has actual knowledge of its incurrence of the respective increased costs or
reduction in the rate of return, then the Issuing Bank or such Participant
shall only be entitled to be compensated for such amount by the Borrower
pursuant to this Section 1.18 to the extent the respective increased costs or
reduction in the rate of return are incurred or suffered on or after the date
which occurs 180 days prior to the Issuing Bank or such Participant giving
notice to the Borrower that the Borrower is obligated to pay the respective
amounts pursuant to this Section 1.18.
SECTION 2. Fees; Reductions of Commitment.
2.01 Fees. a) MERGEFORMAT (a) The Borrower agrees to pay to
the Administrative Agent the "Draw Fee" under and as defined in a side
agreement of even date herewith between the Borrower and the Administrative
Agent in connection with each Borrowing, such Draw Fee to be payable on the
date of each such Borrowing.
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, such other fees as have been agreed to in writing by the
Borrower with the Administrative Agent.
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2.02 Voluntary Termination of Unutilized Commitments. Upon
at least two Business Days' prior written notice to the Administrative Agent
at the Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks), the Borrower shall have the right, at any time
or from time to time, without premium or penalty, to terminate or partially
reduce the Total Unutilized Commitment, in integral multiples of $1,000,000;
provided that each such reduction shall apply proportionately to permanently
reduce the Commitment of each Bank.
2.03 Mandatory Termination of Commitments; Extension of
Maturity Date. (a) The Total Commitment (and the Commitment of each
Bank) shall terminate in its entirety on February 15, 1998, unless the
Effective Date shall have occurred on or prior to such date.
(b) At 9:00 A.M. (New York time) on January 29, 1999
(subject to extension as provided in this Section 2.03(b), the "Maturity
Date"), the Total Commitment (and the Commitment of each Bank) shall terminate
in its entirety. All Loans shall be due and payable in full on the Maturity
Date, together with all accrued and unpaid interest, fees and other amounts
due and payable hereunder.
(i) Not less than 60 days and not more than 90 days prior to
the Maturity Date then in effect, the Borrower may make a written request
(each an "Extension Request") to the Administrative Agent, who shall forward a
copy of each such request to each of the Banks, that the Maturity Date then in
effect be extended to the date which occurs 364 days after the Requested
Extension Effective Date specified by the Borrower in its Extension Request.
Each Extension Request shall specify a date (the "Requested Extension
Effective Date"), which shall be not earlier than 15 days after the giving of
the respective notice and not later than 5 days prior to the Maturity Date
then in effect, which would be the date of the effectiveness of the changes to
the Maturity Date. Each Extension Request shall also be accompanied by a
certificate of an Authorized Officer of the Borrower stating that no Default
or Event of Default has occurred and is continuing. Each Bank, acting in its
sole discretion and with no obligation to grant any extension pursuant to this
Section 2.03(b)(i), shall, by written notice to the Borrower and the
Administrative Agent, such notice to be given on or prior to the earlier of
(x) the Requested Extension Effective Date and (y) the 30th day following
receipt by such Bank of such Extension Request by the Borrower, advise the
Borrower and the Administrative Agent whether or not such Bank agrees to such
extension, provided that any Bank which fails to so notify the Borrower and
the Administrative Agent as provided above shall be deemed to have elected not
to grant such extension. In giving any extensions pursuant to the immediately
preceding sentence, any Bank, at its option, may specify that its extension is
conditioned upon each other Bank agreeing to the extension of the Maturity
Date or, in lieu thereof, may specify that Banks with a certain minimum
aggregate amount of Commitments (to be specified by such Bank) shall have
agreed to such extension. The Administrative Agent shall notify the Borrower
and each of the Banks as to which Banks have agreed to such extension and as
to the new Maturity Date as a result thereof.
(ii) If one or more Banks do not consent to the extension of
the Maturity Date pursuant to subpart (i) of this Section 2.03(b), and the
Borrower has been so informed by the Administrative Agent (it being understood
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that any Bank that has not responded to an Extension Request shall be deemed
to have elected not to extend its Commitment), then, on or prior to the tenth
(10th) day prior to the then Maturity Date, the Borrower may, upon such
failure to extend, (1)(A) request each Bank that is willing to extend the
Maturity Date to assume all or a portion of each non-extending Bank's
Commitment and (B) after first making the request pursuant to clause (A), as
to any portion of any non-extending Bank's Commitment not assumed pursuant to
such clause within ten (10) days after the date of such request (but in any
event on or prior to the tenth (10th) day prior to the then Maturity Date),
obtain a successor bank or banks, in each case approved in advance in writing
by the Administrative Agent to assume such Bank's Commitment (it being
understood that in such case the successor bank or banks shall be responsible
for paying the Administrative Agent's assignment fee referred to in Section
12.04) or (2) so long as the aggregate pro rata share of all such
non-extending Banks does not exceed fifty percent (50%) of the Total
Commitment, terminate the Commitments of the non-extending Banks, and the
Total Commitment, as so reduced by the pro rata share of such non-extending
Banks, shall be extended pursuant to Section 2.03(b)(i). All Loans made by any
non-extending Bank shall be due and payable in full on the Maturity Date then
in effect, together with all accrued and unpaid interest, fees and other
amounts due and payable hereunder.
The Borrower, the extending Banks, the Administrative Agent
and such successor bank or banks, if any, shall sign such documents and
instruments as shall be appropriate to evidence the extension of the Maturity
Date and such successor bank's or banks' assumption (without recourse to, or
warranty by, such non-extending Bank, except as to the amount due thereon, its
title to such Notes and its right to sell the same) of each non-extending
Bank's Commitment (including, without limitation, any adjustment to all such
pro rata shares). Upon the execution and delivery of such documents and
instruments, the Maturity Date shall as of the date of such execution and
delivery be extended as provided in Section 2.03(b)(i).
Each such successor bank shall be deemed to be a "Bank" for
all purposes hereunder, and the non-extending Banks shall have no further
obligations hereunder but shall continue to be entitled to the benefit of
Sections 1.10 and 12.01. If such successor bank or banks is or are not
obtained, or the Borrower elects not to extend the Total Commitment as reduced
in accordance with this Section 2.03(b)(ii) by the tenth (10th) day prior to
the Maturity Date then in effect, or such documents and instruments are not
signed by such date, the Maturity Date shall not be extended and all Loans
made by the Banks shall be due and payable in full on the Maturity Date then
in effect, together with all accrued and unpaid interest, fees and other
amounts due and payable hereunder and under the other Credit Documents.
SECTION 3. Prepayments; Payments; Taxes.
3.01 Voluntary Prepayments. The Borrower shall have the
right to prepay the Loans, without premium or penalty, in whole or in part at
any time and from time to time on the following terms and conditions: (i) the
Borrower shall give the Administrative Agent prior to 12:00 Noon (New York
time) at the Notice Office (x) at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of the Borrower's
intent to prepay Base Rate Loans and (y) at least five Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of the
Borrower's intent to prepay Eurodollar Loans, which notice shall specify the
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amount of such prepayment and the Types of Loans to be prepaid and, in the
case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to
which made, and which notice the Administrative Agent shall promptly transmit
to each of the Banks; (ii) each prepayment of Loans shall be in an aggregate
principal amount of at least $1,000,000, provided that if any partial
prepayment of Eurodollar Loans made pursuant to any Borrowing shall reduce the
outstanding Eurodollar Loans made pursuant to such Borrowing to an amount less
than the Minimum Borrowing Amount applicable thereto, then such Borrowing may
not be continued as a Borrowing of Eurodollar Loans; and (iii) each prepayment
in respect of any Loans made pursuant to a Borrowing shall be applied pro rata
among such Loans, provided that at the Borrower's election in connection with
any prepayment of Loans pursuant to this Section 3.01, such prepayment shall
not be applied to any Loans of a Defaulting Bank.
3.02 Mandatory Repayments. a) (i) On any day on which the
aggregate outstanding principal amount of Loans and the Letter of Credit
Outstandings exceeds the Total Commitment then in effect, the Borrower shall
prepay on such day principal of Loans in an amount equal to such excess. If,
after giving effect to the prepayment of all Loans, the aggregate amount of the
Letter of Credit Outstandings exceeds the Total Commitment as then in effect,
the Borrower shall pay to the Administrative Agent at the Payment Office on such
day an amount of cash and/or Cash Equivalents equal to the amount of such excess
(up to a maximum amount equal to the Letter of Credit Outstandings at such
time), such cash and/or Cash Equivalents to be held as security for all
obligations of the Borrower to the Issuing Bank and the Banks hereunder in a
cash collateral account to be established by the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal
amount of Loans and the Letter of Credit Outstandings exceeds the Borrowing
Base then in effect, the Borrower shall prepay or repay on such day principal
of Loans and thereafter cash collateralize Letters of Credit in the manner
described above, in each case in an amount equal to such excess.
(b) On any day on which any refinancing or any sale or
other disposition of a Borrowing Base Property or a Borrowing Base Pledged
Mortgage Loan occurs, an amount equal to the Release Price with respect thereto
shall be applied as a mandatory repayment of principal of outstanding Loans.
(c) If there shall occur a Casualty Event
or a Taking with respect to any Borrowing Base Property (or any portion
thereof), the Borrower shall be required to repay principal of outstanding
Loans as and to the extent required by Section 7.16(e) or 7.16(g).
(d) On any day on which any voluntary or
mandatory prepayment or repayment (inclusive of scheduled amortization
payments, if any) is made in respect of a Borrowing Base Pledged Mortgaged
Loan, the Borrower shall prepay or repay on such day principal of Loans in an
amount equal to such prepayment or repayment.
(e) If an event of default under and as
defined or described in the Pledged Mortgage Loan Documents for any Borrowing
Base Pledged Mortgaged Loan occurs, an amount equal to the amount necessary to
ensure that the sum of (i) the aggregate principal amount of Loans outstanding
and (ii) the Letter of Credit Outstandings shall not exceed the Borrowing Base
then in effect, after giving effect to the reduction in the Borrowing Base as
a result of the release from the Borrowing Base of such Borrowing Base Pledged
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Mortgage Loan, shall be applied as a mandatory repayment of principal of
outstanding Loans.
(f) If a Special Mandatory Repayment Event occurs, an amount
equal to the amount necessary to ensure that the sum of (i) the aggregate
principal amount of Loans outstanding and (ii) the Letter of Credit
Outstandings shall not exceed the Borrowing Base then in effect, after giving
effect to the reduction in the Borrowing Base as a result of the release from
the Borrowing Base of such Borrowing Base Pledged Mortgage Loan, shall be
applied as a mandatory repayment of principal of outstanding Loans.
(g) If a Casualty Event or a Taking occurs with respect to
any Mortgage Loan Property securing a Borrowing Base Pledged Mortgage Loan, an
amount equal to the amount necessary to ensure that the sum of (i) the
aggregate principal amount of Loans outstanding and (ii) the Letter of Credit
Outstandings shall not exceed the Borrowing Base then in effect, after giving
effect to the reduction in the Borrowing Base as a result of the release from
the Borrowing Base of such Borrowing Base Pledged Mortgage Loan, shall be
applied as a mandatory repayment of principal of outstanding Loans.
(h) With respect to each repayment of Loans required by this
Section 3.02, the Borrower may designate the Types of Loans which are to be
repaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, provided that: (i) repayments of Eurodollar
Loans pursuant to this Section 3.02 may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to
a single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant
to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto, such Borrowing shall be converted at the end of the then
current Interest Period into a Borrowing of Base Rate Loans; and (iii) each
repayment of Loans made pursuant to the same Borrowing shall be applied pro
rata among such Loans. In the absence of a designation by the Borrower as
described in the preceding sentence, the Administrative Agent shall, subject
to the above, make such designation in its sole discretion.
3.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Administrative Agent for the account of the Bank or Banks
entitled thereto or for the account of the Issuing Bank, as the case may be,
not later than 12:00 Noon (New York time) on the date when due and shall be
made in Dollars in immediately available funds at the Payment Office. Whenever
any payment to be made hereunder or under any Note shall be stated to be due
on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.
3.04 Net Payments; Taxes. (a) All payments made by
the Borrower hereunder or under any Note will be made without setoff,
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counterclaim or other defense. Except as provided in Section 3.04(b), all such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments
or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in
the second succeeding sentence, any tax imposed on or measured by the net
income or net profits of a Bank or the Issuing Bank, or any franchise tax
based on the net income or net profits of a Bank or the Issuing Bank, in
either case pursuant to the laws of the jurisdiction in which such Bank or the
Issuing Bank, as the case may be, is organized or the jurisdiction in which
the principal office or applicable lending office of such Bank or the Issuing
Bank, as the case may be, is located or any subdivision thereof or therein)
and all interest, penalties or similar liabilities with respect to such
non-excluded taxes, levies, imposts, duties, fees or other charges (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, the Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Note, after withholding or deduction for
or on account of any Taxes, will not be less than the amount provided for
herein or in such Note. If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, the Borrower agrees to reimburse each Bank
or the Issuing Bank, as the case may be, upon the written request of such Bank
or the Issuing Bank, as the case may be, for taxes imposed on or measured by
the net income or net profits of such Bank or the Issuing Bank, as the case
may be, or any franchise tax based on the net income or net profits of such
Bank or the Issuing Bank, as the case may be, in either case pursuant to the
laws of the jurisdiction in which such Bank or the Issuing Bank, as the case
may be, is organized or in which the principal office or applicable lending
office of such Bank or the Issuing Bank, as the case may be, is located or
under the laws of any political subdivision or taxing authority of any such
jurisdiction in which such Bank or the Issuing Bank, as the case may be, is
organized or in which the principal office or applicable lending office of
such Bank or the Issuing Bank, as the case may be, is located and for any
withholding of income or similar taxes imposed by the United States of America
as such Bank or the Issuing Bank, as the case may be, shall reasonably
determine are payable by, or withheld from, such Bank or the Issuing Bank in
respect of such amounts so paid to or on behalf of such Bank or the Issuing
Bank pursuant to the preceding sentence and in respect of any amounts paid to
or on behalf of such Bank or the Issuing Bank pursuant to this sentence. The
Borrower will furnish to the Administrative Agent within 45 days after the
date the payment of any Taxes is due pursuant to applicable law certified
copies of tax receipts or other documentation reasonably acceptable to the
Administrative Agent, evidencing such payment by the Borrower. The Borrower
agrees to indemnify and hold harmless each Bank and the Issuing Bank, and
reimburse such Bank or the Issuing Bank, as the case may be, upon its written
request, for the amount of any Taxes so levied or imposed and paid by such
Bank or the Issuing Bank.
(b) Each Bank that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code), and the Issuing Bank, if
the Issuing Bank is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code), agrees to deliver to the Borrower and the
Administrative Agent on or prior to the Effective Date, or in the case of a
Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 12.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of
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such assignment or transfer to such Bank, (i) two accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) certifying to such Bank's or, as the case may be, the Issuing
Bank's entitlement as of such date to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement
and/or under any Note, or (ii) if such Bank or the Issuing Bank is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause
(i) above, (x) a certificate substantially in the form of Exhibit C (any such
certificate, a "Section 3.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Bank's or, as the case may be, the Issuing
Bank's entitlement to a complete exemption from United States withholding tax
with respect to payments of interest to be made under this Agreement and/or
under any Note. In addition, each Bank and the Issuing Bank agrees that from
time to time after the Effective Date, when a lapse in time or change in
circumstances renders the previous certification invalid or inaccurate in any
material respect, such Bank or the Issuing Bank, as the case may be, will
promptly deliver to the Borrower and the Administrative Agent two new accurate
and complete original signed copies of Internal Revenue Service Form 4224 or
1001 (or successor forms), or Form W-8 (or successor form) and a Section
3.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Bank or the
Issuing Bank, as the case may be, to a continued exemption from or reduction
in United States withholding tax with respect to payments under this Agreement
and/or any Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or Certificate,
in which case such Bank or the Issuing Bank, as the case may be, shall not be
required to deliver any such Form or Certificate pursuant to this Section
3.04(b). Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 12.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from interest, Fees or other amounts payable hereunder for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) or for the account of the Issuing
Bank, if the Issuing Bank is not a United States person (as such term is
defined in Section 7701 (a)(30) of the Code), for U.S. Federal income tax
purposes to the extent that such Bank or the Issuing Bank, as the case may be,
has not provided to the Borrower U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to any provision of Section 3.04(a)
to gross-up payments to be made to a Bank or the Issuing Bank, as the case may
be, in respect of income or similar taxes imposed by the United States if (I)
such Bank or the Issuing Bank, as the case may be, has not provided to the
Borrower the Internal Revenue Service Forms required to be provided to the
Borrower pursuant to this Section 3.04(b) or (II) in the case of a payment,
other than interest, to a Bank or the Issuing Bank, as the case may be,
described in clause (ii) above, to the extent that such Forms do not establish
a complete exemption from withholding of such taxes. Notwithstanding anything
to the contrary contained in the preceding sentence or elsewhere in this
Section 3.04 and except as set forth in Section 12.04(b), the Borrower agrees
to pay additional amounts and to indemnify each Bank and the Issuing Bank in
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the manner set forth in Section 3.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any Taxes
deducted or withheld by it as described in the immediately preceding sentence
as a result of any changes that are effective after the Effective Date in any
applicable law, treaty, governmental rule, regulation, guideline or order, or
in the interpretation thereof, relating to the deducting or withholding of
such Taxes.
SECTION 4. Conditions Precedent to Effective Date. The
occurrence of the Effective Date pursuant to Section 12.10 is subject to the
satisfaction of the following conditions:
4.01 Execution of Agreement; Notes. (i) This Agreement shall
have been executed and delivered as provided in Section 12.10 and (ii) there
shall have been delivered to the Administrative Agent for the account of each
of the Banks the appropriate Note executed by the Borrower, in each case in
the amount and maturity and with other terms as otherwise provided herein.
4.02 Fees, etc. The Borrower shall have paid to the
Administrative Agent, the Banks and the Issuing Bank all costs, fees and
expenses (including, without limitation, reasonable legal fees and expenses)
payable to the Administrative Agent, the Banks and the Issuing Bank to the
extent due on the Effective Date.
4.03 Opinions of Counsel. The Administrative Agent shall
have received: (i) from Hogan & Hartson L.L.P., counsel to the REIT, the
Borrower and the Subsidiary Guarantors, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Effective Date
covering the matters set forth in Exhibit D and such other matters incident to
the transactions contemplated herein as the Administrative Agent may
reasonably request; (ii) from local counsel in all relevant jurisdictions
reasonably satisfactory to the Administrative Agent, opinions addressed to the
Administrative Agent and the Banks, dated the Effective Date, which shall be
in form and substance reasonably satisfactory to the Administrative Agent and
shall cover the security interests granted pursuant to the Security Agreement,
the Collateral Assignments and the Mortgages and such other matters incident
to the transactions contemplated herein as the Administrative Agent may
reasonably request; and (iii) from Hogan & Hartson L.L.P., counsel to the
REIT, the Borrower and the Subsidiary Guarantors, an opinion addressed to the
REIT and dated the Effective Date stating that equity interests (as defined in
DOL Regulation Section 2510.3-101(b)(1)) in the REIT are freely transferable
within the meaning of DOL Regulation Section 2510.3-101(b)(4) and that the
Administrative Agent and the Banks may rely upon such opinion.
4.04 Corporate and Partnership Documents; Proceedings; etc.
(a) On the Effective Date, the Administrative Agent shall have received a
certificate, dated the Effective Date, signed by the Secretary or an Assistant
Secretary of the REIT on behalf of each Credit Party, in the form of Exhibit E
with appropriate insertions, together with copies of the declaration of trust,
the certificate of incorporation and by-laws or other organizational documents
(including limited partnership agreements and certificates of limited
partnership) of each Credit Party and the resolutions of each Credit Party
referred to in such certificate, and the foregoing shall be reasonably
acceptable to the Administrative Agent.
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(b) All trust, corporate, partnership and legal proceedings
and all instruments and agreements in connection with the transactions
contemplated by this Agreement and the other Credit Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent and
the Required Banks, and the Administrative Agent shall have received all
information and copies of all documents and papers, including records of
corporate and partnership proceedings, governmental approvals, good standing
certificates and bring-down telegrams, if any, which the Administrative Agent
may have reasonably requested in connection therewith, such documents and
papers where appropriate to be certified by proper trust, corporate,
partnership or governmental authorities.
4.05 Debt Agreements. On the Effective Date, there shall
have been delivered to the Administrative Agent true and correct copies,
certified as true and complete by an Authorized Officer of the Borrower, of
all agreements evidencing or relating to all Existing Indebtedness of the REIT
or of any of its Subsidiaries (collectively, "Debt Agreements"), all of which
Debt Agreements shall be in full force and effect and shall be reasonably
satisfactory to the Administrative Agent.
4.06 Pledge Agreement. On the Effective Date, each Credit
Party shall have duly authorized, executed and delivered a Pledge Agreement in
the form of Exhibit F-1 (as modified, supplemented or amended from time to
time, the "Pledge Agreement") and shall have delivered to the Collateral
Agent, as pledgee, all the certificated Pledged Securities, if any, referred
to therein then owned by such Credit Party, (x) endorsed in blank in the case
of promissory notes constituting Pledged Securities and (y) together with
executed and undated stock powers in blank, in the case of capital stock
constituting Pledged Securities.
4.07 Pledge and Security Agreement and Security Agreement.
On the Effective Date, each Credit Party shall have duly authorized, executed
and delivered (i) a Pledge and Security Agreement in the form of Exhibit F-2
(as modified, supplemented or amended from time to time, the "Pledge and
Security Agreement") covering all of such Credit Party's present and future
Pledge and Security Agreement Collateral and (ii) a Security Agreement in the
form of Exhibit G (as modified, supplemented or amended from time to time, the
"Security Agreement") covering all of the such Credit Party's present and
future Security Agreement Collateral, in each case together with:
(a) proper financing statements (Form UCC-1) fully executed
for filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported
to be created by the Pledge and Security Agreement and the Security
Agreement, as the case may be;
(b) certified copies of requests for information or copies
(Form UCC-11), or equivalent reports, listing all effective financing
statements that name any such Credit Party existing prior to the
Effective Date as debtor and that are filed in the jurisdictions
referred to in clause (a) above, together with copies of such other
financing statements that name any such Credit Party as debtor (none of
which shall cover the Collateral except to
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the extent evidencing Permitted Liens or in respect of which the
Collateral Agent shall have received termination statements (Form
UCC-3 or such other termination statements as shall be required by
local law) fully executed for filing);
(c) evidence of the completion of all other recordings and
filings of, or with respect to, the Pledge and Security Agreement and
the Security Agreement as may be necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by the Pledge and Security Agreement
and the Security Agreement;
(d) executed copies of Pledged Entity Notices delivered to
each Pledged Partnership Entity and Pledged Limited Liability Company
and executed copies of Control Agreements executed by each Pledged
Partnership Entity and Pledged Limited Liability Company, together
with evidence that such other actions have been taken as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect the security interests purported to be created by
the Pledge and Security Agreement; and
(e) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Pledge
and Security Agreement and the Security Agreement have been taken.
Notwithstanding the foregoing provisions of this Section 4.07, the Pledge and
Security Agreement shall not cover the partnership interests and limited
liability company interests owned by the Borrower in the Excluded
Subsidiaries.
4.08 Subsidiaries Guaranty. On the Effective Date, each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Subsidiaries Guaranty in the form of Exhibit H (as modified, amended or
supplemented from time to time, the "Subsidiaries Guaranty").
4.09 Collateral Assignments; Mortgages; Title Insurance;
Surveys; etc. On the Effective Date, the Collateral Agent shall have received
the following items, all of which shall be satisfactory to the Administrative
Agent:
(a) in respect of each Initial Borrowing Base Pledged
Mortgage Loan, (i) the original Pledged Mortgage Loan Documents,
including, without limitation, the mortgage note evidencing such
Initial Borrowing Base Pledged Mortgage Loan duly endorsed in blank,
and (ii) fully executed counterparts of a Collateral Assignment,
together with evidence that a fully executed counterpart of such
Collateral Assignment has been delivered to the title insurance
company insuring the lien of such Initial Borrowing Base Pledged
Mortgage Loan for recording in all places to the extent necessary, or
in the reasonable judgment of the Administrative Agent, desirable, to
create a valid and enforceable first priority lien on such Initial
Borrowing Base Pledged Mortgage Loan in favor of the Collateral Agent
(or such other trustee as may be required or desired under local law)
for the benefit of the Secured Creditors;
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(b) in respect of each Initial Borrowing Base Property,
fully executed counterparts of a Mortgage, together with evidence that
a fully executed counterpart of such Mortgage has been delivered to
the title insurance company insuring the lien of such Mortgage for
recording in all places to the extent necessary, or in the reasonable
judgment of the Administrative Agent, desirable, to create a valid and
enforceable first priority mortgage lien on such Initial Borrowing
Base Property in favor of the Collateral Agent (or such other trustee
as may be required or desired under local law) for the benefit of the
Secured Creditors;
(c) Mortgage Policies for each of the Initial Borrowing Base
Properties issued by Commonwealth Land Title Insurance Company or
other title insurers reasonably satisfactory to the Collateral Agent
in amounts reasonably satisfactory to the Administrative Agent
insuring the Collateral Agent that the Mortgage on each Initial
Borrowing Base Property is a valid and enforceable first priority lien
thereon, free and clear of all defects and encumbrances except
Permitted Liens applicable thereto, and such Mortgage Policies shall
otherwise be in form and substance reasonably satisfactory to the
Administrative Agent and shall include, as appropriate, an endorsement
for future advances under this Agreement and the Notes and covering
any other matter that the Collateral Agent in its reasonable
discretion may request, shall not include an exception for mechanics'
liens or creditors' rights, and shall provide for affirmative
insurance and such reinsurance as the Collateral Agent in its
reasonable discretion may request;
(d) an endorsement to each mortgagee title insurance policy
insuring each Initial Borrowing Base Pledged Mortgage Loan, listing
the Collateral Agent as collateral assignee of the related Initial
Borrowing Base Pledged Mortgage Loan and an additional insured (as its
interests may appear);
(e) surveys, in form and substance reasonably satisfactory
to the Administrative Agent, of the Initial Borrowing Base Properties
and the Mortgage Loan Properties securing the Initial Borrowing Base
Pledged Mortgage Loans, in each case, certified by a licensed
professional surveyor reasonably satisfactory to the Administrative
Agent and in form and substance reasonably satisfactory to the
Administrative Agent;
(f) properly executed financing statements under the UCC, in
form and substance satisfactory to the Administrative Agent, for
filing in each jurisdiction as the Administrative Agent has determined
to be necessary or desirable to perfect the security interests created
by the Collateral Assignments and the Mortgages in the Initial
Borrowing Base Properties and the Initial Borrowing Base Pledged
Mortgage Loans; and
(g) evidence reasonably satisfactory to the Administrative
Agent that all other filings, recordings and other actions the
Administrative Agent deems necessary or desirable to establish,
preserve and perfect the liens and security interests granted to the
Collateral Agent on behalf of the Banks in the Initial Borrowing Base
Properties and the Initial Borrowing Base Pledged Mortgage Loans have
been made or taken, as applicable.
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4.10 IPO. On or prior to the Effective Date, the IPO shall
have been consummated in a manner reasonably satisfactory to the
Administrative Agent and the net proceeds to the REIT and its Subsidiaries in
connection with the IPO shall be an amount equal to or greater than
$90,000,000.
4.11 Adverse Change, etc. (a) On the Effective Date,
nothing shall have occurred (and none of the Banks shall have become aware of
any facts, conditions or other information not previously known) which the
Administrative Agent or the Required Banks believe could reasonably be
expected to have a material adverse effect (i) on the rights or remedies of
the Administrative Agent, the Banks or the Issuing Bank, or on the ability of
any Credit Party to perform its respective obligations to the Administrative
Agent, the Banks or the Issuing Bank or (ii) on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the REIT, the Borrower, the REIT and its Subsidiaries taken as a whole or
the Borrower and its Subsidiaries taken as a whole.
(b) On or prior to the Effective Date, all necessary
governmental (domestic and foreign) and third party approvals in connection
with the making of the Loans, the issuance of the Letters of Credit and the
transactions contemplated by the Credit Documents and otherwise referred to
herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being taken
by any competent authority which restrains, prevents or imposes materially
adverse conditions upon the making of the Loans, the issuance of the Letters
of Credit and the transactions contemplated by the Credit Documents.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the making of the Loans or the transactions contemplated by
the Credit Documents.
4.12 Litigation. On the Effective Date, no litigation by any
entity (private or governmental) shall be pending or, to the best knowledge of
the REIT and the Borrower, threatened (i) with respect to the making of the
Loans, the issuance of the Letters of Credit or the Credit Documents or any
documentation executed in connection therewith or the transactions
contemplated thereby or (ii) which the Administrative Agent or the Required
Banks believe could reasonably be expected to have a materially adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the REIT, the Borrower, the REIT and
its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken
as a whole.
4.13 Initial Borrowing Base Properties, etc. (a) To
the extent not required by the other provisions of this Section 4 and except
as provided in Section 4.13(c), the Borrower shall have delivered to the
Administrative Agent all information and documentation (which shall be
satisfactory to the Administrative Agent in its sole discretion) with respect
to each Initial Borrowing Base Property which would be required pursuant to
Section 7.11 if such Initial Borrowing Base Property was a subsequently
acquired Borrowing Base Property.
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(b) To the extent not required by the other provisions of
this Section 4 and except as provided in Section 4.13(c), the Borrower shall
have delivered to the Administrative Agent all information and documentation
(which shall be satisfactory to the Administrative Agent in its sole
discretion) with respect to each Initial Borrowing Base Pledged Mortgage Loan
which would be required pursuant to Section 7.11 if such Initial Borrowing
Base Pledged Mortgage Loan was a subsequently acquired Borrowing Base Pledged
Mortgage Loan.
(c) Notwithstanding the foregoing provisions of this Section
4.13, the Borrower acknowledges and agrees that it has not, as of the
Effective Date, delivered satisfactory Environmental Reports and Engineering
Reports for the Initial Borrowing Base Properties and the Mortgage Loan
Properties securing the Initial Borrowing Base Pledged Mortgage Loans. The
Administrative Agent will, at the expense of the Borrower, commission such
Environmental Reports and Engineering Reports, and the REIT, the Borrower and
the Subsidiary Guarantors will, promptly upon demand by the Administrative
Agent, either (x) take all actions the Administrative Agent reasonably deems
to be necessary or desirable to correct, cure or otherwise remediate any
adverse matters disclosed in any of such Environmental Reports or Engineering
Reports, including, without limitation, any deferred maintenance items
identified in any of such Engineering Reports or the presence of any Hazardous
Materials identified in any of such Environmental Reports or (y) remove from
the Borrowing Base any affected Initial Borrowing Base Property or Initial
Borrowing Base Pledged Mortgage Loan. In addition, the Administrative Agent
shall have the right to remove from the Borrowing Base any Initial Borrowing
Base Property or Initial Borrowing Base Pledged Mortgage Loan the
Environmental Report or Engineering Report in respect of which discloses items
which the Administrative Agent determines could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the REIT, the
REIT and its Subsidiaries taken as a whole, the Borrower or the Borrower and
its Subsidiaries taken as a whole, or which the Administrative Agent
determines to be materially adverse to the interests of the Banks or the
Issuing Bank under any Credit Document or otherwise in respect of the Loans or
the Letters of Credit. In the event of any removal from the Borrowing Base of
an Initial Borrowing Base Property or an Initial Borrowing Base Pledged
Mortgage Loan, the Administrative Agent shall adjust the Borrowing Base
accordingly and shall notify the Borrower of such adjustment. Any failure by
the REIT, the Borrower or any Subsidiary Guarantor to comply in any material
respect with this Section 4.13(c) shall constitute an Event of Default. This
Section 4.13(c) shall survive the Effective Date and the making of Loans and
the issuance of Letters of Credit hereunder.
4.14 Solvency Certificate. On or prior to the Effective
Date, there shall have been delivered to the Administrative Agent a solvency
certificate in the form of Exhibit J, addressed to the Administrative Agent
and each of the Banks and dated the Effective Date from an Authorized
Financial Officer of the REIT providing the opinion of such Authorized
Financial Officer as to the solvency of the REIT and its Subsidiaries taken as
a whole and the Borrower on a stand-alone basis.
4.15 Pro Forma Balance Sheets. On or prior to the Effective
Date, the Administrative Agent shall have received unaudited pro forma
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consolidated balance sheets and projections of the REIT and of the Borrower
and its Subsidiaries, in each case prepared on a basis consistent with the
financial statements referred to in Section 6.05(a) and in accordance with
GAAP except as specifically set forth in the notes to such balance sheets,
after giving effect to the transactions contemplated hereby, which
consolidated balance sheets and projections shall be in form and substance
reasonably satisfactory to the Administrative Agent.
4.16 Initial Borrowing Base Certificate. On the Effective
Date, the Borrower shall have delivered to the Administrative Agent the
initial Borrowing Base Certificate in the form of Exhibit L.
4.17 No Default; Representations and Warranties. On the
Effective Date, (i) there shall exist no Default or Event of Default and (ii)
all representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on the
Effective Date (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such specified
date).
4.18 REIT Equity Interests Widely Held. On the Effective
Date, the equity interests (as defined in DOL Regulation Section
2510.3-101(b)(1)) in the REIT shall be widely held within the meaning of DOL
Regulation Section 2510.3-101(b)(3).
The occurrence of the Effective Date shall constitute a
representation and warranty by the REIT and the Borrower to the Administrative
Agent, each of the Banks and the Issuing Bank that all the conditions
specified in this Section 4 exist as of the Effective Date (except to the
extent that any of the conditions specified in this Section 4 are required to
be satisfactory to or determined by any Bank, the Required Banks, the
Collateral Agent and/or the Administrative Agent or otherwise expressly calls
for a subjective determination to be made by any Bank, the Required Banks, the
Collateral Agent and/or the Administrative Agent). All of the Notes,
certificates, legal opinions and other documents and papers referred to in
this Section 4, unless otherwise specified, shall be delivered to the
Administrative Agent at the Notice Office for the benefit of each of the Banks
and shall be in form and substance reasonably satisfactory to the Banks.
SECTION 5. Conditions Precedent to All Loans and Letters of
Credit. The obligation of each Bank to make Loans (including any Loans made on
the Effective Date), and the obligation of the Issuing Bank to issue Letters
of Credit, is subject, at the time of the making of each such Loan or the
issuance of each such Letter of Credit (except as hereinafter indicated), to
the satisfaction of the following conditions:
5.01 No Default; Representations and Warranties. At the time
of the making of each such Loan or the issuance of each such Letter of Credit
and also after giving effect thereto (i) there shall exist no Default or Event
of Default and (ii) all representations and warranties contained herein and in
the other Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on the date of the making of such Loan or the issuance of such Letter of
Credit (it being understood and agreed that any representation or warranty
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which by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date).
5.02 Notice of Borrowing. (a) Prior to the making of
each Loan, the Administrative Agent shall have received a Notice of Borrowing
meeting the requirements of Section 1.03(a).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the Issuing Bank shall have received a Letter of
Credit Request meeting the requirements of Section 1.15.
5.03 Property Information; etc. Prior to the making of any
Loan or the issuance of any Letter of Credit, neither the Administrative Agent
nor the Required Banks shall have become aware of any negative facts,
conditions or other information which would reasonably lead the Administrative
Agent or the Required Banks to believe that the information provided in any
Information Package or otherwise pursuant to Sections 7.11 and 8.02(viii) with
respect to any Borrowing Base Property or any Borrowing Base Pledged Mortgage
Loan is not true and accurate in all material respects (or was not true and
accurate in all material respects at the time such Information Package was
furnished pursuant to this Agreement) or is incomplete by omitting to state
any fact necessary to make such information not misleading in any material
respect (or was incomplete by omitting to state any fact necessary to make
such information not misleading in any material respect at the time such
Information Package was furnished pursuant to this Agreement).
5.04 Certain Requirements with Respect to Loans and Letters
of Credit. (a) Prior to the making of any Loan or the issuance of any
Letter of Credit, the Administrative Agent shall have received a certificate
from an Authorized Financial Officer of the Borrower certifying as to the
specific uses to be made of the proceeds of such Loan or Letter of Credit,
which certificate shall be in form and detail reasonably satisfactory to the
Administrative Agent.
(b) Prior to or contemporaneously with (as applicable) the
incurrence of any Loan or the issuance of any Letter of Credit the proceeds of
which are to be used either (x) to acquire a Borrowing Base Property
(including by purchasing the capital stock or other equity interests of the
Person(s) owning such Borrowing Base Property) or (y) to purchase or provide a
Borrowing Base Pledged Mortgage Loan, the Borrower shall have satisfied the
relevant requirements of Sections 7.11 and 8.02(viii).
(c) Prior to the incurrence of any Loan or the issuance of
any Letter of Credit, the Borrower shall have delivered to the Administrative
Agent a Borrowing Base Certificate from an Authorized Financial Officer of the
Borrower, showing that, after giving effect to the incurrence of such Loan or
the issuance of such Letter of Credit, the total outstanding principal amount
of all Loans and Letter of Credit Outstandings will not exceed the Borrowing
Base as then in effect.
(d) Prior to or contemporaneously with the incurrence of any
Loan or, to the extent applicable, the issuance of any Letter of Credit, the
Borrower shall have delivered to the Administrative Agent (x) evidence, in
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form and substance reasonably satisfactory to the Administrative Agent,
demonstrating that all mortgage recording taxes and similar taxes and charges
have been paid (or funds sufficient therefor have been deposited with the
title insurance company insuring the lien of the respective Mortgages and
Collateral Assignments for payment to the applicable taxing authorities) in
all jurisdictions as may be necessary with respect to such Loan or Letter of
Credit or that, in the reasonable opinion of the Administrative Agent, are
desirable to maintain the priority and/or enforceability of the Mortgages and
Collateral Assignments with respect to the Loans to be made or Letters of
Credit to be issued and all Loans theretofore made and all Letters of Credit
theretofore issued and (y) to the extent requested by the Administrative
Agent, a title update and endorsement as necessary to increase, or confirm,
the coverage (as applicable) of those Mortgage Policies for the respective
Borrowing Base Properties as may be necessary under applicable law to maintain
the priority of the mortgage lien as to the Loan to be made or the Letter of
Credit to be issued.
5.05 Subsequent Legal Opinions. If, at the time of the
making of any Loan or the issuance of any Letter of Credit subsequent to the
Effective Date, the Administrative Agent or the Required Banks shall have
reasonably determined that any facts, circumstances or conditions exist which
could reasonably be expected to adversely affect either (x) the ability of
counsel to issue at such time the legal opinions originally delivered pursuant
to Section 4.03 or (y) the perfection of any of the security interests created
pursuant to any Security Document, and the Administrative Agent or the
Required Banks shall have requested the Borrower to deliver one or more
opinions of counsel covering such of the matters set forth in the opinions of
counsel theretofore delivered pursuant to Section 4.03 as the Administrative
Agent or the Required Banks shall specify, then prior to the incurrence of
such Loan or the issuance of such Letter of Credit the Administrative Agent
shall have received from counsel (who shall be reasonably satisfactory to the
Administrative Agent) an opinion in form and substance reasonably satisfactory
to the Administrative Agent, addressed to the Administrative Agent and each of
the Banks and dated the date of such Loan or Letter of Credit, covering the
matters so specified.
The acceptance of the proceeds of each Loan and the issuance
of each Letter of Credit shall constitute a representation and warranty by the
REIT and the Borrower to the Administrative Agent, each of the Banks and the
Issuing Bank that all the conditions specified in this Section 5 and
applicable to such Loan exist as of that time (except to the extent that any
of the conditions specified in this Section 5 are required to be satisfactory
to or determined by any Bank, the Required Banks, the Collateral Agent and/or
the Administrative Agent or otherwise expressly calls for a subjective
determination to be made by any Bank, the Required Banks, the Collateral Agent
and/or the Administrative Agent). All of the certificates and other documents
and papers referred to in this Section 5, unless otherwise specified, shall be
delivered to the Administrative Agent at the Notice Office for the benefit of
each of the Banks.
SECTION 6. Representations and Warranties. In order to
induce the Banks and the Issuing Bank to enter into this Agreement and in
order to induce the Banks to make the Loans and participate in the Letters of
Credit and the Issuing Bank to issue the Letters of Credit as provided herein,
each of the REIT and the Borrower makes (as to itself and each of its
Subsidiaries), the following representations, warranties and agreements, all
of which shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loans and the issuance of the Letters of Credit,
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with the occurrence of the Effective Date and the incurrence of each Loan and
the issuance of each Letter of Credit on or after the Effective Date being
deemed to constitute a representation and warranty that the matters specified
in this Section 6 are true and correct in all material respects on and as of
the Effective Date and on the date of the making of each such Loan and the
issuance of each such Letter of Credit (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such specified date).
6.01 Status. Each of the REIT and each of its Subsidiaries
(i) is a duly organized and validly existing real estate investment trust,
corporation, partnership or limited liability company, as the case may be, in
good standing (if applicable) under the laws of the jurisdiction of its
formation, (ii) has the trust, corporate, partnership or limited liability
company power and authority, as the case may be, to own or lease its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the REIT and
its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken
as a whole.
6.02 Power and Authority. Each Credit Party has the trust,
corporate, partnership or limited liability company power and authority, as
the case may be, to execute, deliver and perform the terms and provisions of
each of the Credit Documents to which it is a party and has taken all
necessary trust, corporate, partnership or limited liability company action,
as the case may be, to authorize the execution, delivery and performance by it
of each of such Credit Documents. Each Credit Party has duly executed and
delivered each of the Credit Documents to which it is a party, and each of
such Credit Documents constitutes the legal, valid and binding obligation of
such Credit Party enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
6.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Credit Documents to which it is a
party, nor compliance by it with the terms and provisions thereof, (i) will
contravene any provision of any applicable law, statute, rule or regulation or
any applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under,
or result in the creation or imposition of (or the obligation to create or
impose) any Lien (except pursuant to the Security Documents) upon any of the
properties or assets of the REIT or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument, to which
the REIT or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will
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violate any provision of the declaration of trust, certificate of
incorporation, partnership agreement, certificate of partnership, limited
liability company agreement or by-laws, as the case may be, of the REIT or any
of its Subsidiaries.
6.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made and which remain in full force and
effect), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Credit Document or
(ii) the legality, validity, binding effect or enforceability of any Credit
Document.
6.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. (a) (i) To the best knowledge of the
REIT and the Borrower, the unaudited operating statements for each Initial
Borrowing Base Property and each Mortgage Loan Property securing an Initial
Borrowing Base Pledged Mortgage Loan for the year ended June 30, 1997 or
September 30, 1997, as applicable, and (ii) the unaudited pro forma
consolidated balance sheet of the REIT and its Subsidiaries as of September
30, 1997 and the unaudited pro forma consolidated statement of operations of
the REIT for the year ended December 31, 1996 and the nine month period ended
September 30, 1997 (which statements have been prepared based on the
assumption that (x) in the case of the balance sheet, the Initial Borrowing
Base Properties and Initial Borrowing Base Pledged Mortgage Loans were
acquired by the Borrower or its Subsidiaries on September 30, 1997 and (y) in
the case of the statements of operations for each of the year ended December
31, 1997 and the nine months ended September 30, 1997, the Initial Borrowing
Base Properties and Initial Borrowing Base Pledged Mortgage Loans were
acquired by the Borrower or its Subsidiaries on January 1, 1996 and January 1,
1997, respectively and each present fairly the pro forma historical financial
results of the Initial Borrowing Base Properties and each Mortgage Loan
Property securing an Initial Borrowing Base Pledged Mortgage Loan (and the
combined results which would have applied on the basis of the assumptions
provided above). All information contained in each Information Package
furnished to the Banks pursuant to Section 4.13 (with respect to the Initial
Borrowing Base Properties and Initial Borrowing Base Pledged Mortgage Loans)
or Section 7.11 (with respect to subsequently acquired Borrowing Base
Properties and Borrowing Base Pledged Mortgage Loans) is, to the best
knowledge of the Borrower, true and accurate in all material respects and not
incomplete by omitting to state any fact necessary to make such information
not misleading in any material respect. Since September 30, 1997 (but assuming
that the Initial Borrowing Base Properties and Initial Borrowing Base Pledged
Mortgage Loans had been acquired by the Borrower or its Subsidiaries on such
date), there has been no material adverse change in the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the REIT, the REIT and its Subsidiaries taken as a whole, the Borrower or
the Borrower and its Subsidiaries taken as a whole. The pro forma financial
statements described in this Section 6.05(a) are consistent with the financial
information set forth in the Form S-11 Registration Statement filed with the
SEC in connection with the IPO.
(b) On and as of the Effective Date and on the date on which
each Loan is made and each Letter of Credit is issued, on a Pro Forma Basis
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after giving effect to all Indebtedness (including the Loans) being incurred
or assumed and Liens created by each Credit Party in connection therewith, (x)
the sum of the assets, at a fair valuation, of the REIT and its Subsidiaries
(taken as a whole) and the Borrower (on a stand-alone basis) will exceed their
respective debts (with contingent liabilities being valued with respect to
each such entity at the estimated amount for which such entity is reasonably
likely to be liable), (y) the REIT and its Subsidiaries (taken as a whole) and
the Borrower (on a stand-alone basis) have not incurred and do not intend to
incur, and do not believe that they will incur, debts beyond their ability to
pay such debts as such debts mature and (z) the REIT and its Subsidiaries
(taken as a whole) and the Borrower (on a stand-alone basis) have sufficient
capital with which to conduct its business. For purposes of this Section
6.05(b) "debt" means any liability on a claim, and "claim" means (i) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (ii) right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 6.05(a), there were as of the Effective Date no
liabilities or obligations with respect to the REIT or any of its Subsidiaries
of any nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether or not due) which, either individually or in aggregate, would be
material to the REIT, the Borrower or the Borrower and its Subsidiaries taken
as a whole. As of the Effective Date, neither the REIT nor the Borrower knows
of any basis for the assertion against it or any of its Subsidiaries of any
liability or obligation of any nature that is not fully disclosed in the
financial statements delivered pursuant to Section 6.05(a) which, either
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the REIT, the REIT and its Subsidiaries taken as a
whole, the Borrower or the Borrower and its Subsidiaries taken as a whole.
(d) On and as of the Effective Date, the financial
projections for the 12 month period commencing on the Effective Date,
including those prepared on a combined basis and those prepared for the
individual Initial Borrowing Base Properties and Initial Borrowing Base
Pledged Mortgage Loans (the "Projections") previously delivered to the
Administrative Agent and the Banks have been prepared on a basis consistent in
all material respects with the financial statements referred to in Section
6.05(a) (other than as set forth or presented in such Projections), and there
are no statements or conclusions in any of the Projections which are based
upon or include information known to the REIT or the Borrower to be misleading
in any material respect or which fail to take into account known material
information regarding the matters reported therein. On the Effective Date,
each of the REIT and the Borrower believed that the Projections were
reasonable and attainable. On the date of the delivery of any projections
contained in the Information Package with respect to each subsequently
acquired Borrowing Base Property or Borrowing Base Pledged Mortgage Loan,
there shall be no statements or conclusions in any of such projections which
are based upon or include information known by the REIT or the Borrower to be
misleading in any material respect or which fail to take into account known
material information regarding the matters reported therein. On the date any
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such projections are furnished pursuant to Section 7.11, each of the REIT and
the Borrower shall believe that such projections are reasonable and
attainable.
6.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of the REIT or the Borrower, threatened (i)
with respect to any Credit Document, (ii) with respect to any material
Indebtedness of the REIT or any of its Subsidiaries or (iii) that could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the REIT and its Subsidiaries taken as a whole, or the
Borrower and its Subsidiaries taken as a whole.
6.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of the REIT or any of its
Subsidiaries in writing to the Administrative Agent or any Bank, including,
without limitation, all information contained in the Credit Documents and all
information contained in each Information Package furnished to the Banks
pursuant to Section 4.13 (with respect to the Initial Borrowing Base
Properties and Initial Borrowing Base Pledged Mortgage Loans) or 7.11 (with
respect to subsequently acquired Borrowing Base Properties and Borrowing Base
Pledged Mortgage Loans), for purposes of or in connection with this Agreement,
the other Credit Documents or any transaction contemplated herein or therein
is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of the REIT, or any of the its Subsidiaries in
writing to the Administrative Agent or any Bank, for purposes of or in
connection with this Agreement, will be, true and accurate in all material
respects on the date as of which such information is dated or certified and,
to the best of the REIT's and the Borrower's knowledge, not incomplete by
omitting to state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light of the
circumstances under which such information is or was provided.
6.08 Use of Proceeds; Margin Regulations. (a) The
proceeds of all Loans shall be used by the Borrower and its Subsidiaries,
subject to the other restrictions set forth in this Agreement, (i) to acquire
Borrowing Base Properties and to provide or purchase Borrowing Base Pledged
Mortgage Loans, (ii) for working capital in connection with the acquisition of
Borrowing Base Properties, (iii) to pay fees and expenses incurred in
connection with the acquisition of Borrowing Base Properties and the provision
or purchase of Borrowing Base Pledged Mortgage Loans, (iv) to repay
Indebtedness, (v) to make acquisitions pursuant to Section 8.02(ix) and/or
Investments pursuant to Sections 8.05(vi) and (vi) for working capital and
other general corporate purposes.
(b) No part of the proceeds of any Loan or Letter of Credit
will be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the making of any
Loan nor the issuance of any Letter of Credit nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulation G,
T, U or X of the Board of Governors of the Federal Reserve System.
6.09 Tax Returns and Payments. Each of the REIT and each of
its Subsidiaries has timely filed or caused to be timely filed, on the due
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dates thereof or within applicable grace periods, with the appropriate taxing
authority, all Federal, state and other material returns, statements, forms
and reports for taxes (the "Returns") required to be filed by or with respect
to the income, properties or operations of the REIT and/or its Subsidiaries.
The Returns accurately reflect in all material respects all liability for
taxes of the REIT and its Subsidiaries for the periods covered thereby. Each
of the REIT and each of its Subsidiaries has paid all material taxes payable
by them other than taxes which are not delinquent, and other than those
contested in good faith and for which adequate reserves have been established
in accordance with generally accepted accounting principles. There is no
material action, suit, proceeding, investigation, audit, or claim now pending
or, to the best knowledge of the REIT or the Borrower, threatened by any
authority regarding any material taxes relating to the REIT or any of its
Subsidiaries. As of the Effective Date, neither the REIT nor any of its
Subsidiaries has entered into an agreement or waiver or been requested to
enter into an agreement or waiver extending any statute of limitations
relating to the payment or collection of taxes of the REIT or any of its
Subsidiaries.
6.10 Compliance with ERISA. Each Plan that is a single
employer plan as defined in Section 4001(a)(15) of ERISA (a "Single Employer
Plan") is in substantial compliance with ERISA and the Code; no Reportable
Event has occurred with respect to a Single Employer Plan; to the best
knowledge of the REIT or the Borrower, no Multiemployer Plan is insolvent or
in reorganization; no Single Employer Plan has an Unfunded Current Liability;
no Single Employer Plan which is subject to Section 412 of the Code or Section
302 of ERISA has an accumulated funding deficiency, within the meaning of such
Sections of the Code or ERISA, or has applied for or received an extension of
any amortization period within the meaning of Section 412 of the Code or
Section 303 or 304 of ERISA; all contributions required to be made by the REIT
or any of its Subsidiaries or any ERISA Affiliate with respect to a Plan have
been timely made; neither the REIT nor any of its Subsidiaries nor any ERISA
Affiliate has incurred any material liability to or on account of a Plan
pursuant to ERISA or the Code or reasonably expects to incur any material
liability (including any indirect, contingent, or secondary liability) under
ERISA or the Code with respect to any Plan except for contributions to such
Plans and benefit payments from such Plans in the ordinary course of business;
no proceedings have been instituted to terminate or appoint a trustee to
administer any Single Employer Plan; to the best knowledge of the REIT or the
Borrower, no proceedings have been instituted to terminate or appoint a
trustee to administer any Multiemployer Plan; no action, suit, proceeding,
hearing or regulatory agency investigation with respect to the administration,
operation or the investment of assets of any Single Employer Plan (other than
claims for benefits) is pending, expected or threatened; to the best knowledge
of the REIT or the Borrower, no action, suit, proceeding, hearing or
regulatory agency investigation with respect to the administration, operation
or the investment of assets of any Multiemployer Plan (other than claims for
benefits) is pending, expected or threatened; no condition exists which
presents a substantial risk to the REIT or any of its Subsidiaries or any
ERISA Affiliate of incurring a material liability to or on account of a Single
Employer Plan pursuant to ERISA and the Code except for contributions to such
Plans and benefit payments from such Plans in the ordinary course of business;
to the best knowledge of the REIT or the Borrower, no condition exists which
presents a substantial risk to the REIT or any of its Subsidiaries or any
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ERISA Affiliate of incurring any material liability to or on account of a
Multiemployer Plan pursuant to ERISA and the Code except for contributions to
such Plans and benefit payments from such Plans in the ordinary course of
business; the REIT and the Borrower believe that the aggregate liabilities of
the REIT and its Subsidiaries and its ERISA Affiliates to all Multiemployer
Plans in the event of a withdrawal therefrom, as of the close of the most
recent fiscal year of each such plan ended prior to the date of the incurrence
of any Loan or the issuance of any Letter of Credit, could not reasonably be
expected to have a material adverse effect on the ability of the REIT or any
of its Subsidiaries to perform its obligations under this Agreement or the
other Credit Documents to which it is a party; each group health plan (as
defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which
covers or has covered employees or former employees of the REIT or any of its
Subsidiaries or any ERISA Affiliate has at all times been operated in
substantial compliance with the provisions of Part 6 of subtitle B of Title I
of ERISA and Section 4980B of the Code; no lien imposed under the Code or
ERISA on the assets of the REIT or any of its Subsidiaries or any ERISA
Affiliate exists or, to the best knowledge of the REIT or the Borrower is
likely to arise on account of any Plan; and the REIT and its Subsidiaries do
not maintain or contribute to (A) any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) which provides benefits to retired employees
or other former employees (other than as required by Section 601 of ERISA) or
(B) any Plan, the obligations with respect to which could reasonably be
expected to have a material adverse effect on the ability of the REIT or any
of its Subsidiaries to perform its obligations under this Agreement or the
other Credit Documents to which it is a party.
6.11 The Security Documents. (a) With respect to the
Security Agreement Collateral that consists of cash, Cash Equivalents and
property in which a security interest may be perfected by the filing of a
financing statement under the UCC, upon (i) possession by the Collateral Agent
or its designee in the case of cash, (ii) the taking of all action required
under Article 8 or Article 9, as applicable, of the UCC in the case of Cash
Equivalents and instruments and (iii) the filing of appropriate financing
statements under the UCC in the case of such other Security Agreement
Collateral (all of the foregoing actions described in preceding clauses (i),
(ii) and (iii) having been done and being in full force and effect with
respect to such Security Agreement Collateral owned by such Credit Party on
any date on which this representation and warranty is made or deemed made or,
(x) in the case of the Effective Date, will have been done within 10 days
following the Effective Date or (y) in the case of any Security Agreement
Collateral acquired on any Addition Date, within 10 days following such
Addition Date), the Collateral Agent has been granted, for the benefit of the
Secured Creditors and pursuant to the Security Agreement, a legal, valid and
enforceable security interest in all right, title and interest of such Credit
Party in such Security Agreement Collateral, which security interest is a
fully perfected first lien on, and security interest in, all right, title and
interest of such Credit Party in all of such Security Agreement Collateral,
subject to no other Liens other than Permitted Liens. Each Credit Party has
good and marketable title to all Security Agreement Collateral, free and clear
of all Liens except those described above in this clause (a).
(b) Upon delivery to the Collateral Agent of any
certificated Pledged Securities referred to in the Pledge Agreement and upon
the taking of all actions required by Article 8 or Article 9, as applicable,
of the UCC (which delivery and/or such other actions have been done and remain
in full force and effect as to all such Pledge Agreement Collateral owned by
any Credit Party on any date on which this representation and warranty is made
or deemed made), the security interests created in favor of the Collateral
Agent, as Pledgee, for the benefit of the Secured Creditors under the Pledge
Agreement constitute first priority perfected security interests in the
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Pledged Securities described in the Pledge Agreement and owned by the Credit
Parties party thereto on any date on which this representation and warranty is
made or deemed made, subject to no security interests of any other Person. No
filings or recordings (except as have been done in connection with any
uncertificated Pledged Stock) are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Securities and the proceeds thereof under the Pledge Agreement.
(c) The Mortgages create (upon recordation in all relevant
jurisdictions, which recordations have been made and remain in full force and
effect as to all Borrowing Base Properties owned or leased by any Credit Party
on any date on which this representation is made or deemed made (or, in the
case of any Borrowing Base Property included in the Borrowing Base subsequent
to the Effective Date, such recordation will have been made within 10 days
following the related Addition Date)), as security for the obligations
purported to be secured thereby, a valid and enforceable perfected first
priority security interest in and mortgage lien on all of the Borrowing Base
Properties owned by any Credit Party on any date on which this representation
and warranty is made or deemed made and in favor of the Collateral Agent (or
such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, superior to and prior to the rights of all
third Persons (except that the security interest and mortgage lien created in
each Borrowing Base Property may be subject to the Permitted Encumbrances
related thereto) and subject to no other Liens (other than Permitted Liens).
Schedule III contains a true and complete list of each parcel of Real Property
owned or leased by the REIT and its Subsidiaries on the Effective Date, the
type of interest therein held by the REIT or any such Subsidiary and indicates
which of such Real Properties constitute Initial Borrowing Base Properties.
Each of the Borrower or the respective Subsidiary Guarantor, as the case may
be, has good and marketable title in fee, or a valid ground leasehold
interest, in and to all Borrowing Base Properties owned or ground leased by it
on any date on which this representation and warranty is made or deemed made,
free and clear of all Liens except those described in the first sentence of
this subsection (c). On and as of any date on which this representation and
warranty is made or deemed made, each Borrowing Base Property is a Qualified
Property.
(d) The Pledge and Security Agreement creates (after all
steps required under Article 8 or Article 9, as applicable, of the UCC have
been taken) in favor of the Collateral Agent for the benefit of the Secured
Creditors a legal, valid and enforceable security interest in all right, title
and interest of each Credit Party in the Pledge and Security Agreement
Collateral described therein and owned by such Credit Party on any date on
which this representation and warranty is made or deemed made, which security
interest shall, (i) upon delivery to the Collateral Agent of any certificates
evidencing equity interests in a Pledged Partnership Entity or Pledged Limited
Liability Company, (ii) upon the filing of appropriate financing statements
under the UCC in respect of any Partnership Interest or Limited Liability
Company Interest that is not represented by a certificate and (iii) upon the
taking of all steps required under Article 8 or Article 9, as applicable, of
the UCC (which delivery, filings and/or steps have been done and remain in
full force and effect as to the Pledge and Security Agreement Collateral owned
by any Credit Party on any date on which this representation and warranty is
made or deemed made), constitute a fully perfected first lien on, and security
interest in, all right, title and interest of such Credit Party in all of the
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Pledge and Security Agreement Collateral described therein, subject to no
security interests of any other Person.
(e) The Collateral Assignments create (upon recordation in
all relevant jurisdictions, which recordations have been made and remain in
full force and effect as to all Borrowing Base Pledged Mortgage Loans owned by
any Credit Party on any date on which this representation is made or deemed
made (or, in the case of any Borrowing Base Pledged Mortgage Loan included in
the Borrowing Base subsequent to the Effective Date, such recordation will
have been made within 10 days following the related Addition Date)), as
security for the obligations purported to be secured thereby, a valid and
enforceable perfected first priority security interest in all of the Borrowing
Base Pledged Mortgage Loans owned by the Borrower on any date on which this
representation and warranty is made or deemed made and in favor of the
Collateral Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Secured Creditors, superior to and prior to
the rights of all third Persons and subject to no other Liens (other than
Permitted Liens). Schedule VIII contains a true and complete list of each
Mortgage Loan owned by the Borrower and its Subsidiaries on the Effective Date
and indicates which of such Mortgage Loans constitute Initial Borrowing Base
Pledged Mortgage Loans. The Borrower has good title to all Borrowing Base
Pledged Mortgage Loans owned by it on any date on which this representation
and warranty is made or deemed made, free and clear of all Liens except those
described in the first sentence of this subsection (e). On and as of any date
on which this representation and warranty is made or deemed made, each
Borrowing Base Pledged Mortgage Loan is a Qualified Mortgage Loan.
6.12 Status as REIT. The REIT is organized in conformity
with the requirements for qualification as a real estate investment trust
under the Code. The REIT is in a position to qualify for its current Fiscal
Year as a real estate investment trust under the Code and its proposed methods
of operation will enable it to so qualify.
6.13 Properties. Each of the REIT and each of its
Subsidiaries has good and marketable title to all material properties owned by
them, including, in the case of the Borrower and its Subsidiaries, all
material property reflected in the consolidated balance sheet of the Borrower
and its Subsidiaries referred to in Section 6.05(a) and in the pro forma
balance sheet referred to in Section 4.15 (except as sold or otherwise
disposed of since the date of such balance sheet in the ordinary course of
business, free and clear of all Liens, other than (i) as referred to in such
balance sheet or in the notes thereto or in such pro forma balance sheet or
(ii) Permitted Liens). Except as may be disclosed in the Engineering Reports,
each Borrowing Base Property and each Mortgage Loan Property securing a
Borrowing Base Pledged Mortgage Loan is free of material structural defects
and is in good repair (ordinary wear and tear excepted) and all building
systems contained therein are in good working order in all material respects
subject to ordinary wear and tear, and is free and clear of any damage that
could reasonably be expected to materially and adversely affect the value of
such Borrowing Base Property or such Mortgage Loan Property as to the use
thereof for its intended purposes.
6.14 Healthcare Matters. (a) To the best knowledge of
the REIT and the Borrower after reasonable investigation, each Operating
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Lessee (i) has, with respect to each of the Properties it leases, all licenses
required under applicable law to operate each of such Properties and to
conduct the business in which it is currently engaged, (ii) has, with respect
to each Property it leases, received any certificate of need, determination of
need or similar approval required under applicable law, and any amendments or
supplements with respect thereto, and such approvals are in full force and
effect, and (iii) with respect to Properties that are operated as nursing
facilities (except where participation in Medicare or Medicaid is deemed
undesirable in the reasonable business judgment of the Operating Lessee) is a
party to provider agreements with respect to the participation of such
Properties in Medicare and Medicaid, which provider agreements are in full
force and effect, and are not, and for the past five calendar years have not
been, the subject of any proceedings that have been initiated or notices
issued by any Person to suspend, revoke, limit or otherwise modify any such
provider agreement, except, with respect to foregoing clauses (i), (ii) and
(iii), such licenses, approvals, certifications and provider agreements as to
which any lack thereof could not reasonably be expected to materially and
adversely affect the value of any Borrowing Base Property or Mortgage Loan
Property or the aggregate value of any other Properties, and except such
proceedings which could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect upon the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the REIT and its Subsidiaries, taken as a whole, or the Borrower and its
Subsidiaries, taken as a whole.
(b) To the best knowledge of the REIT and the Borrower after
reasonable investigation, each Property (i) complies with all applicable
federal, state and local laws, regulations, quality and safety standards,
building and fire codes, accreditation standards and health care, nursing
facility or other requirements of any state department of health or other
federal, state or local governmental authorities, (ii) complies with all
requirements for participation in, and is in conformity with, all insurance,
reimbursement and cost reporting requirements imposed by law or regulation and
has a current provider agreement which is in full force and effect under,
Medicare and Medicaid, and (iii) is not, and for the past five calendar years
has not been, the subject of any proceedings that have been initiated or
notices issued by any Person to suspend, revoke, limit or otherwise modify any
such provider agreement, except, with respect to foregoing clauses (i), (ii)
and (iii), such failures to comply and failures to conform which could not
reasonably be expected to materially and adversely affect the value of any
Borrowing Base Property or Mortgage Loan Property or the aggregate value of
any other Properties, and except such proceedings which could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect upon the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the REIT and its
Subsidiaries taken as a whole, or the Borrower and its Subsidiaries taken as a
whole. To the best knowledge of the REIT and the Borrower, in the event that
the Collateral Agent or any purchaser at foreclosure or similar proceeding
acquires any Property through foreclosure or similar proceeding or otherwise,
or in the event that the Operating Lease relating to a Property is terminated,
neither the Collateral Agent, such purchaser, any subsequent lessee, manager
or operator, nor the Borrower or any of its Subsidiaries, would be required to
obtain any certificate of need, determination of need, or other similar
approval relating solely to operation of the Property as a health care
facility (a "CON"), from any applicable health care regulator or authority or
any other governmental authority prior to applying for, or receiving,
applicable licenses and certifications to continue to operate such Property as
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a health care facility except to the extent that (i) the facility has made any
capital improvements or instituted any new institutional health services since
the date of the Closing and has applied for, but not yet received, any
applicable CON, or (ii) such health care regulator or authority or
governmental authority requires the issuance or transfer of a CON in the event
of a change of ownership or control of a health care facility.
6.15 Subsidiaries. The REIT has no Subsidiaries other than
the Borrower and the Borrower's Subsidiaries. The Borrower has no Subsidiaries
other than (i) those Subsidiaries listed on Schedule IV and (ii) new
Subsidiaries created in compliance with Section 8.12.
6.16 Compliance with Statutes, etc. (a) Each of the
REIT and each of its Subsidiaries is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed
by, all governmental bodies, domestic or foreign, in respect of the conduct of
its business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the REIT and its Subsidiaries taken as a whole, or
the Borrower and its Subsidiaries taken as a whole.
(b)(i) Each Borrowing Base Property and each Mortgage Loan
Property securing a Borrowing Base Pledged Mortgage Loan complies in all
material respects with all Legal Requirements, (ii) all material consents,
licenses, certificates and permits required by all Legal Requirements for the
construction or the operation, as applicable, of each Borrowing Base Property
and each Mortgage Loan Property securing a Borrowing Base Pledged Mortgage
Loan have been obtained and are in full force and effect and (iii) all utility
services and facilities necessary for the operation of each Borrowing Base
Property and each Mortgage Loan Property securing a Borrowing Base Pledged
Mortgage Loan are available at such Borrowing Base Property or Mortgage Loan
Property, as applicable.
6.17 Investment Company Act. Neither the REIT nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.18 Public Utility Holding Company Act. Neither the REIT
nor any of its Subsidiaries is a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.19 Environmental Matters. (a) Each of the REIT and each of
its Subsidiaries has complied with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws. There are no
pending or, to the best knowledge of the REIT and the Borrower, threatened
Environmental Claims against the REIT or any of its Subsidiaries or any Real
Property owned or operated by the REIT or any of its Subsidiaries. To the best
knowledge of the REIT and the Borrower, there are no pending or
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threatened Environmental Claims against any borrower under a Mortgage Loan or
any Mortgage Loan Property. To the best knowledge of the REIT and the
Borrower, there are no facts, circumstances, conditions or occurrences on any
Real Property owned or operated by the REIT or any of its Subsidiaries or on
any Mortgage Loan Property or on any property adjoining any such Real Property
or Mortgage Loan Property that could reasonably be expected (i) to form the
basis of an Environmental Claim against the REIT or any of its Subsidiaries or
any such Real Property or any such Mortgage Loan Property or the borrower
under any such Mortgage Loan or (ii) to cause any such Real Property or
Mortgage Loan Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Property or Mortgage Loan
Property under any applicable Environmental Law.
(b) To the best knowledge of the REIT and the Borrower,
except as otherwise set forth in the environmental reports delivered to the
Administrative Agent prior to the Effective Date, Hazardous Materials have not
at any time been generated, used, treated or stored on, or transported to or
from, or Released on or from, any Real Property owned or operated by the REIT
or any of its Subsidiaries or any Mortgage Loan Property except in compliance
with all applicable Environmental Laws and reasonably required in connection
with the operation, use and maintenance of any such Real Property or Mortgage
Loan Property.
6.20 Labor Relations. To the best knowledge of the REIT and
the Borrower, no Operating Lessee or Manager is engaged in any unfair labor
practice with respect to any Property that could reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the REIT and
its Subsidiaries taken as a whole, or the Borrower and its Subsidiaries taken
as a whole. To the best knowledge of the REIT and the Borrower, there is (i)
no unfair labor practice complaint pending or reasonably expected to arise
against any Operating Lessee or Manager before the National Labor Relations
Board and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so pending or
reasonably expected to arise against any Operating Lessee or Manager, (ii) no
strike, labor dispute, slowdown or stoppage is pending or reasonably expected
to arise against any Operating Lessee or Manager and (iii) no union
representation question exists with respect to the employees of any Operating
Lessee or Manager, in each case with respect to the Properties operated by the
Operating Lessees or Managers, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate) such
as could not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the REIT and its Subsidiaries taken as a whole, or
the Borrower and its Subsidiaries taken as a whole.
6.21 Intellectual Property. Each of the REIT and each of its
Subsidiaries, and, to the best knowledge of the REIT and the Borrower, each
Operating Lessee, owns or has the right to use all material trademarks,
permits, service marks, trade names, licenses and franchises necessary for the
conduct of its respective businesses.
6.22 Indebtedness. Schedule V sets forth a true and complete
list of all Indebtedness (excluding Indebtedness of the type described in
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Section 8.04(iii)) of the REIT and its Subsidiaries as of the Effective Date
(excluding the Loans and the Letters of Credit, the "Existing Indebtedness"),
in each case showing the aggregate principal amount thereof and the name of
the respective borrower and any other entity which directly or indirectly
guaranteed such debt.
6.23 Operating Leases; Management Agreements; Ground Leases.
(a) Each Operating Lease with respect to any Borrowing Base Property
and each Management Agreement with respect to any Borrowing Base Property that
is not leased to an Operating Lessee is in full force and effect and no party
thereto has denied or disaffirmed any of its material obligations thereunder
or has defaulted in the due performance or observance of any material term,
covenant or agreement on its part to be performed or observed pursuant
thereto.
(b) Each ground lease with respect to any Borrowing Base
Property which is a Leasehold and each ground lease with respect to any
Mortgage Loan Property securing a Borrowing Base Pledged Mortgage Loan which
is a Leasehold is in full force and effect and no party thereto has denied or
disaffirmed any of its material obligations thereunder or has defaulted in the
due performance or observance of any material term, covenant or agreement on
its part to be performed or observed pursuant thereto.
SECTION 7. Affirmative Covenants. Each of the REIT and the
Borrower hereby covenants and agrees (as to itself and each of its
Subsidiaries) that on and after the Effective Date and until the Total
Commitment has terminated and all Letters of Credit have terminated and the
Loans, Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
7.01 Information Covenants. The REIT and/or the Borrower
will furnish to the Administrative Agent (with sufficient copies for each of
the Banks, and the Administrative Agent will promptly forward to each of the
Banks):
(a) Quarterly Financial Statements and Reports. (A) Within
45 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower (i) the
consolidated balance sheet of each of the REIT and its Subsidiaries
and the Borrower and its Subsidiaries as at the end of such quarterly
accounting period, (ii) the related consolidated statements of income
for such quarterly accounting period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly accounting
period and (iii) the related consolidated statements of cash flows for
the elapsed portion of the fiscal year ended with the last day of such
quarterly accounting period, in each case setting forth comparative
figures for the corresponding fiscal periods in the prior fiscal year,
as applicable, all of which shall be in reasonable detail and
certified by an Authorized Financial Officer of the Borrower that, to
the best of such officer's knowledge, they fairly present the
financial condition of each of the REIT and its Subsidiaries and the
Borrower and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flows for the
periods indicated, subject to normal year-end audit adjustments.
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(B)(i)i) Within 45 days after the end of each of the first
three quarterly accounting periods, and within 90 days after the end
of the fourth quarterly accounting period, in each fiscal year of the
Borrower, certificates in the forms of (x) Exhibit M-1 (with such
changes thereto as are reasonably acceptable to the Administrative
Agent) for each Borrowing Base Property on an individual basis, and,
at any time that the Borrower or any of its Subsidiaries owns or
leases any non-Borrowing Base Properties, for all such Properties on a
combined basis, and (y) Exhibit M-2 (with such changes thereto as are
reasonably acceptable to the Administrative Agent) for each Borrowing
Base Pledged Mortgage Loan on an individual basis, and, at any time
that the Borrower or any of its Subsidiaries owns any non-Borrowing
Base Mortgage Loans, for all such Mortgage Loans on a combined basis,
in each case signed by an Authorized Financial Officer of the Borrower
setting forth the required financial and other information for such
quarterly accounting period as set forth in such Exhibits and for the
elapsed portion of the fiscal year ended with the last day of such
quarterly accounting period, and setting forth comparative figures for
the corresponding quarterly accounting period in the prior fiscal year
and the budgeted figures for such quarterly accounting period.
(ii) Within 45 days after the end of each of the first three
quarterly accounting periods, and within 90 days after the end of the
fourth quarterly accounting period, in each fiscal year of the
Borrower, a certificate in the form of Exhibit N (with such changes
thereto as are reasonably acceptable to the Administrative Agent) for
the Borrower and its Subsidiaries on a consolidated basis, in each
case signed by an Authorized Financial Officer of the Borrower setting
forth the required financial and other information for the elapsed
portion of the fiscal year ended with the last day of such quarterly
accounting period.
(b) Annual Financial Statements. Within 90 days after the
close of each fiscal year of the Borrower, the consolidated balance
sheet of each of the REIT and its Subsidiaries and the Borrower and
its Subsidiaries, as of the end of such fiscal year and the related
consolidated statements of income and shareholders' equity and of cash
flows for such fiscal year setting forth comparative figures for the
preceding fiscal year and certified by independent certified public
accountants of recognized national standing reasonably acceptable to
the Administrative Agent, together with a report of such accounting
firm stating that in the course of its regular audit of the financial
statements of each of the REIT and its Subsidiaries and the Borrower
and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm obtained
no knowledge of any Default or Event of Default which has occurred and
is continuing under any of Sections 8.08 through 8.10, inclusive, or,
if in the opinion of such accounting firm such a Default or Event of
Default has occurred and is continuing, a statement as to the nature
thereof.
(c) Borrowing Base Certificate. (i) Within 45 days after the
close of each quarterly accounting period in each fiscal year of the
Borrower, a Borrowing Base Certificate, signed by an Authorized
Financial Officer of the Borrower, calculating (in reasonable detail)
the Borrowing Base as of the last day of such quarterly accounting
period, (ii) at the time of the delivery of any Notice of Borrowing or
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Letter of Credit Request or any notice pursuant to Section 7.01(j), a
revised Borrowing Base Certificate signed by an Authorized Financial
Officer of the Borrower calculating (in reasonable detail) the
Borrowing Base as of the date of such Notice of Borrowing or Letter of
Credit Request (and after giving effect thereto) or such other notice
and (iii) on any Addition Date or Release Date, a revised Borrowing
Base Certificate signed by an Authorized Financial Officer of the
Borrower calculating (in reasonable detail) the Borrowing Base as of
such Addition Date or Release Date, as the case may be (in each case
after giving effect thereto).
(d) Budgets. No later than 30 days prior to the first day of
each fiscal year of the Borrower, budgets in form reasonably
satisfactory to the Administrative Agent (including, in any event,
budgeted statements of cash flow and Capital Expenditures and budgeted
debt and cash balances) for such fiscal year prepared in detail, with
respect to (x) the Borrower and its Subsidiaries, (y) each Borrowing
Base Property and (z) all the Borrowing Base Properties, in each case
accompanied by a statement of an Authorized Financial Officer of the
Borrower to the effect that, to the best of such officer's knowledge,
the budget is a reasonable estimate of the period covered thereby.
(e) Officer's Certificates. At the time of the delivery of
the financial statements provided for in Sections 7.01(a) and (b), a
certificate of an Authorized Financial Officer of the Borrower to the
effect that, to the best of such officer's knowledge, no Default or
Event of Default has occurred and is continuing or, if any Default or
Event of Default has occurred and is continuing, specifying the nature
and extent thereof, which certificate shall set forth the calculations
required to establish whether the REIT and its Subsidiaries were in
compliance with the provisions of Sections 8.03, 8.04, 8.05 and 8.07
through 8.10, inclusive, at the end of such fiscal quarter or year, as
the case may be.
(f) Notice of Default or Litigation. Promptly, and in any
event within three Business Days after the President, the Chief
Executive Officer, any Vice President or any Authorized Financial
Officer of the REIT or any of its Subsidiaries obtains knowledge
thereof, notice of (i) the occurrence of any event which constitutes a
Default or an Event of Default and (ii) any litigation or governmental
investigation or proceeding pending or threatened (x) against the REIT
or any of its Subsidiaries which could reasonably be expected to
materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects
of the REIT and its Subsidiaries taken as a whole, or the Borrower and
its Subsidiaries taken as a whole, (y) with respect to any material
Indebtedness of the REIT or any of its Subsidiaries or (z) with
respect to any Credit Document.
(g) Management Letters. Promptly after the receipt thereof
by any Credit Party, a copy of any "management letter" received by
such Credit Party from its certified public accountants and
management's responses thereto.
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(h) Other Reports and Filings. Promptly, and without
duplication of any documents or information delivered pursuant to
another clause of this Section 7.01, copies of all financial
information, proxy materials and other information and reports, if
any, which the REIT or any of its Subsidiaries shall file with the
Securities and Exchange Commission or any successor thereto (the
"SEC") (it being understood, however, that with respect to any
preliminary filings made with the SEC, the REIT need only deliver a
certificate describing such filing) and copies of all notices and
reports which the REIT or any of its Subsidiaries shall deliver to
holders of its material Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or
other representative therefor).
(i) Environmental Matters. Promptly upon, and in any event
within ten Business Days after the President, the Chief Executive
Officer, any Vice President or any Authorized Financial Officer of the
REIT or any of its Subsidiaries obtains knowledge thereof, notice of
one or more of the following environmental matters:
(i) any pending or threatened Environmental Claim
against the REIT or any of its Subsidiaries or any borrower
under a Mortgage Loan or any Real Property owned or operated
by the REIT or any of its Subsidiaries or any Mortgage Loan
Property;
(ii) any condition or occurrence on or arising from
any Real Property owned or operated by the REIT or any of
its Subsidiaries or any Mortgage Loan Property that (a)
results in non-compliance by the REIT or any of its
Subsidiaries or any borrower under a Mortgage Loan with any
applicable Environmental Law or (b) could reasonably be
expected to form the basis of an Environmental Claim against
the REIT or any of its Subsidiaries or any borrower under a
Mortgage Loan or any Real Property owned or operated by the
REIT or any of its Subsidiaries or any Mortgage Loan
Property;
(iii) any condition or occurrence on any Real
Property owned or operated by the REIT or any of its
Subsidiaries or any Mortgage Loan Property that could
reasonably be expected to cause such Real Property to be
subject to any restrictions on the ownership, occupancy, use
or transferability thereof under any Environmental Law; and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous
Material on any Real Property owned or operated by the REIT
or any of its Subsidiaries or any Mortgage Loan Property as
required by any Environmental Law or any governmental or
other administrative agency.
All such notices shall describe in reasonable detail the nature of
the claim, investigation, condition, occurrence or removal or
remedial action and the response or proposed response thereto.
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(j) Reduction of Borrowing Base Amounts. Promptly and in any
event within five Business Days after the President, the Chief
Executive Officer, any Vice President or any Authorized Financial
Officer of the REIT or any of its Subsidiaries obtains knowledge
thereof, notice of the occurrence or effectiveness of any event or
condition that has caused, or could reasonably be expected to cause,
the Borrowing Base Amount of any Borrowing Base Property or Borrowing
Base Pledged Mortgage Loan to be reduced by more than the lesser of
(x) $1,000,000 and (y) 5% of such Borrowing Base Amount, in each case
together with a certificate of an Authorized Financial Officer of the
Borrower setting forth (in reasonable detail) the nature of the
respective event and/or condition.
(k) Annual Meetings with Banks. At the request of the
Administrative Agent or the Required Banks, the Borrower shall, at
least once during each fiscal year of the Borrower, hold a meeting (at
a mutually agreeable location and time) with all of the Banks at which
meeting the financial results of the previous fiscal year and the
financial condition of the REIT and its Subsidiaries and the budgets
presented for the current fiscal year of the REIT and its Subsidiaries
shall be reviewed, with each Bank bearing its own travel, lodging,
food and other costs associated with attending any such meeting.
(l) Mortgage Loan Defaults. Promptly and in any event within
three Business Days after the President, the Chief Executive Officer,
any Vice President or any Authorized Financial Officer of the REIT or
any of its Subsidiaries obtains knowledge thereof, notice of the
occurrence of any default or event of default under and as defined or
described in any of the Pledged Mortgage Loan Documents.
(m) Borrowing Base Pledged Mortgage Loans. Promptly, and in
any event within five Business Days of receipt of any financial
information, including budgets, relating to any Mortgage Loan securing
a Borrowing Base Pledged Mortgage Loan, copies of such financial
information.
(n) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to the
REIT and/or any of its Subsidiaries as the Administrative Agent or any
Bank (through the Administrative Agent) may reasonably request.
7.02 Books, Records and Inspections. The REIT will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. The REIT
will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Administrative Agent or any Bank to visit
and inspect, upon reasonable advance notice, during regular business hours and
under guidance of officers of the REIT or such Subsidiary, any of the
properties of the REIT or any of its Subsidiaries, and to examine the books of
account of the REIT and any of its Subsidiaries and discuss the affairs,
finances and accounts of the REIT and any of its Subsidiaries with, and be
advised as to the same by, its and their respective Presidents, Chief
Executive Officers, Vice Presidents, Authorized Financial Officers and
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independent accountants, all at such reasonable times and intervals and to
such reasonable extent as the Administrative Agent or any Bank may reasonably
request, provided that any Bank's rights under this Section 7.02 may not be
exercised more than once in any fiscal quarter of the Borrower.
7.03 Maintenance of Property; Insurance. (a) Schedule
VI sets forth a true and complete listing of all insurance maintained by, or
on behalf of, the REIT and its Subsidiaries as of the Effective Date. The REIT
will, and will cause each of its Subsidiaries and the Operating Lessees and
Managers to, (i) keep all property necessary in its business (including, in
any event, each Borrowing Base Property) in good working order and condition
and (ii) furnish to the Administrative Agent, upon written request,
information evidencing the insurance carried. In addition to the requirements
of the immediately preceding sentence, the REIT will, and will cause each of
its Subsidiaries and the Operating Lessees and Managers to, at all times cause
(I) insurance coverage to be issued by an insurer (x) authorized to issue such
insurance in all applicable jurisdictions and (y) having an "A-" or better
rating as established by A.M. Best Company and with a financial size rating of
VII or larger as established by A.M. Best Company (or another financial size
rating reasonably acceptable to the Administrative Agent considering market
conditions) and (II) insurance with at least the coverages set forth below to
be continuously maintained:
(i) Property insurance including coverage for business
interruption and/or rental income covering all Borrowing Base
Properties including, but not limited to, any alterations,
Improvements or additions thereto. All such insurance coverage shall
be written on the so-called "All Risk of Physical Loss" basis and
include the perils of fire, lightning, windstorm, sprinkler leakage,
hail, explosion, riot, riot attending a strike, civil commotion,
vandalism, malicious mischief, terrorist acts, aircraft, vehicle,
smoke, sinkhole (which in the case of a Borrowing Base Property
located in the State of California, is covered by earthquake
insurance) and collapse in an amount equal to at least 100% of the
full replacement cost of the respective property (other than in
respect of the foundation and excavation);
(ii) Boiler and machinery insurance covering all boilers,
boiler tanks, pressure vessels, auxiliary piping, heating and air
conditioning equipment and similar apparatus located in or about the
Borrowing Base Properties in such amounts as are generally carried by
risks of the nature of the respective property;
(iii) Flood insurance to the extent available under the
National Flood Insurance Program, against damage or loss by flood if
any Borrowing Base Property is located in an area now or in the future
designated "A" or "V" FIRM Zones as defined in the National Flood
Insurance Act of 1968, or the Flood Disaster Protection Act of 1973,
or the National Flood Insurance Reform Act of 1994 and any
modifications of such acts to the full amount available under such
acts or programs;
(iv) Earthquake insurance against the peril of earthquake
and earth movement if any Borrowing Base Property is located in
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California or any other area at high risk of earthquake on such basis
and amounts as shall be reasonably determined by the Administrative
Agent;
(v) Liability insurance on a Comprehensive General Liability
Occurrence format in an amount of at least $1,000,000 combined bodily
injury and property damage per occurrence and $3,000,000 in the annual
aggregate amount per Borrowing Base Property. Such insurance coverage
shall protect both the REIT and its Subsidiaries and the Collateral
Agent against claims for bodily injury including death, property
damage, personal injury, advertising injury, contractual liability,
products and completed operations liability arising out of or
connected with the possession, use, operation, leasing, maintenance,
construction, alteration or renovation of each Borrowing Base
Property. If any of the coverages referred to in this clause (v) are
obtained under a so-called "blanket" policy with more than one
property covered, the policy shall contain a so-called "individual
aggregate per location or project" endorsement;
(vi) Umbrella or excess liability insurance on an occurrence
basis in the amount of at least $100,000,000 per occurrence covering
both the REIT and its Subsidiaries and the Collateral Agent against
claims for damages in excess of all primary liability policies;
(vii) Statutory workers' compensation insurance or a
qualified self insurer (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by,
or on behalf of, the REIT and its Subsidiaries), in statutory amounts
as required by law (including employer's liability insurance); and
(viii) Such other insurance against loss or damage of the
kinds from time to time customarily insured against and in such
amounts as are generally available and required by institutional
lenders for properties comparable to the respective Borrowing Base
Property.
With respect to insurance of the types described above in this Section 7.03(a)
for non-Borrowing Base Properties and Mortgage Loan Properties (including
Mortgage Loan Properties securing Borrowing Base Pledged Mortgage Loans), such
insurance shall be in at least such amounts and insure against at least such
risks as are consistent with industry practice for similarly situated
properties.
(b) The REIT and the Borrower will, and will cause each of
the Subsidiary Guarantors and/or each Operating Lessee or Manager to, at all
times keep the respective Borrowing Base Properties (and all equipment,
fixtures, improvements and other personalty relating thereto) insured in favor
of the Collateral Agent, and all policies or certificates with respect to such
insurance (and any other insurance maintained by, or on behalf of, the REIT,
the Borrower or any Subsidiary Guarantor) (i) shall name the Collateral Agent
as loss payee or as an additional insured, as its respective interest may
appear, (ii) shall state that such insurance policies shall not be canceled or
materially changed without at least 30 days' prior written notice thereof (or
at least 10 days' prior written notice thereof in the case of non-payment of
premium) by the respective insurer to the Collateral Agent, (iii) shall
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provide that the respective insurers irrevocably waive any and all rights of
subrogation with respect to the Collateral Agent and the Secured Creditors,
(iv) shall contain the standard non-contributory mortgagee clause endorsement
in favor of the Collateral Agent with respect to hazard insurance coverage,
(v) shall, with respect to first party property insurance and business
interruption insurance, provide that any losses shall be payable to the
Collateral Agent notwithstanding (A) any act or neglect of the REIT, the
Borrower, any Subsidiary Guarantor or any Operating Lessee or Manager, (B) the
occupation or use of the properties for purposes more hazardous than those
permitted by the terms of the respective policy if such coverage is obtainable
at commercially reasonable rates and is of the kind from time to time
customarily insured against by Persons owning or using similar property and in
such amounts as are customary, (C) any foreclosure or other proceeding
relating to the insured properties or (D) any change in the title to or
ownership or possession of the insured properties and (vi) shall be deposited
with the Collateral Agent.
(c) If the REIT, the Borrower, any of the Subsidiary
Guarantors or any Operating Lessee or Manager shall fail to maintain all
insurance in accordance with this Section 7.03, or if the REIT, the Borrower,
any of the Subsidiary Guarantors or any Operating Lessee or Manager shall fail
to so name the Collateral Agent as an additional insured or as a loss payee or
so deposit all certificates with respect thereto, the Administrative Agent
and/or the Collateral Agent shall have the right (but shall be under no
obligation), upon at least 10 days' notice to the Borrower, to procure such
insurance, and the REIT and the Borrower agree to reimburse the Administrative
Agent or the Collateral Agent, as the case may be, for all costs and expenses
of procuring such insurance.
7.04 Corporate Franchises. The REIT will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
this Section 7.04 shall prevent (i) any of the transactions permitted in
accordance with Section 8.02 or (ii) the withdrawal by the REIT or any of its
Subsidiaries of its qualification as a foreign corporation, partnership or
limited liability company, as the case may be, in any jurisdiction where such
withdrawal could not reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the REIT, the REIT and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its
Subsidiaries taken as a whole.
7.05 Compliance with Statutes, etc. The REIT will, and will
cause each of its Subsidiaries and each Operating Lessee and each Manager to,
comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, including, without limitation, any requirements of any federal,
state or local department of health, except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the REIT, the REIT and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its
Subsidiaries taken as a whole. The REIT will, and will cause each of its
Subsidiaries and each Operating Lessee and each Manager to, (x) maintain in
good standing all licenses, certifications, accreditations and other approvals
applicable to it or to any Property which it owns, leases, manages or operates
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and (y) maintain a standard of care for the patients or residents of each such
Property at all times at the level necessary to ensure quality care for such
patients or residents.
7.06 Compliance with Environmental Laws. (a) The REIT
will comply, and will cause each of its Subsidiaries and each Operating Lessee
and each Manager to comply, with all Environmental Laws applicable to the
ownership or use of its Real Property now or hereafter owned or operated by
the REIT or any of its Subsidiaries, except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the REIT, the REIT and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its
Subsidiaries taken as a whole, and will promptly pay or cause to be paid all
costs and expenses incurred in connection with such compliance, and will keep
or cause to be kept all such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws.
(b) At the written request of the Administrative Agent or
the Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after (i) the Obligations have
been declared due and payable pursuant to Section 9, (ii) the Administrative
Agent receives notice under Section 7.01(i) of any event for which notice is
required to be delivered for any Real Property or (iii) the REIT or any of its
Subsidiaries are not in compliance with Section 7.06(a) with respect to any
Real Property, the REIT and the Borrower will provide, at their sole cost and
expense, an environmental site assessment report concerning any such Real
Property now or hereafter owned or operated by the REIT or any of its
Subsidiaries, prepared by an environmental consulting firm reasonably approved
by the Administrative Agent, indicating the presence or absence of Hazardous
Materials and the potential cost of any removal or remedial action in
connection with any Hazardous Materials on such Real Property. If the REIT or
the Borrower fails to provide the same within 90 days after such request was
made, the Administrative Agent may order the same, and the REIT and the
Borrower shall grant and hereby grant to the Administrative Agent and the
Banks and their agents access to such Real Property and specifically grant the
Administrative Agent and the Banks an irrevocable non-exclusive license,
subject to the rights of tenants, to undertake such an assessment, all at the
Borrower's expense.
7.07 ERISA. Except to the extent that a different reporting
obligation is set forth elsewhere in this Agreement in connection with the
events described in this Section 7.07, within 15 Business Days after the REIT,
any Subsidiary of the REIT or any ERISA Affiliate knows or has reason to know
of the occurrence of any of the following events, the REIT will deliver to the
Administrative Agent a certificate of an Authorized Financial Officer of the
REIT setting forth the material details as to such occurrence and the action,
if any, that the REIT, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given
to or filed with or by the REIT, the Borrower, such Subsidiary, such ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with respect
thereto: (i) except as would not be material, that a Reportable Event has
occurred (except to the extent that the REIT has previously delivered to the
Administrative Agent a certificate and notices (if any) concerning such event
pursuant to the next clause hereof); (ii) that a contributing sponsor (as
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defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of
ERISA is subject to the advance reporting requirement of PBGC Regulation
Section 4043.61 (without regard to subparagraph (b)(1) thereof), and a
material event described in subsection .62,.63,.64,.65,.66,.67 or .68 of PBGC
Regulation Section 4043 is reasonably expected to occur with respect to such
Plan within the following 30 days, provided, however, that with respect to the
obligation to report under this clause 7.07(ii), the REIT is not required to
report to the Administrative Agent earlier than the REIT, Subsidiary or ERISA
Affiliate is required to report to the PBGC; (iii) that an accumulated funding
deficiency, within the meaning of Section 412 of the Code or Section 302 of
ERISA, has been incurred or an application may reasonably be expected to be or
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code or
Section 303 or 304 of ERISA with respect to a Single Employer Plan; (iv)
except as would not be material, that any contribution required to be made by
the REIT, any Subsidiary of the REIT or any ERISA Affiliate to a Plan has not
been timely made; (v) that a Plan or, to the best knowledge of the REIT or the
Borrower, Multiemployer Plan has been or may reasonably be expected to be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; (vi) except as would not be material, that a Plan has an Unfunded
Current Liability; (vii) that proceedings may reasonably be expected to be or
have been instituted by the PBGC to terminate or appoint a trustee to
administer a Plan or to the best knowledge of the REIT or the Borrower, a
Multiemployer Plan; (viii) except as would not be material, that a proceeding
has been instituted against the REIT, the Borrower, any Subsidiary of the REIT
or the Borrower or any ERISA Affiliate pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan; (ix) that the REIT, any
Subsidiary of the REIT or any ERISA Affiliate will or will reasonably be
expected to incur or has incurred any material liability (including any
indirect, contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan or Multiemployer Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA, or with respect to a Plan
or Multiemployer Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code
or Section 409 or 502(i) or 502(l) of ERISA, or with respect to a group health
plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code
under Section 4980B of the Code; or (x) that the REIT, the Borrower, or any
Subsidiary of the REIT or the Borrower may incur any material liability
pursuant to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee pension
benefit plan (as defined in Section 3(2) of ERISA) of the REIT or any of its
Subsidiaries that is not tax-qualified under Section 401(a) of the Code. The
REIT will deliver to the Administrative Agent (with sufficient copies for each
Bank) (i) a complete copy of the annual report (Form 5500) of each Single
Employer Plan (including, to the extent required, the related financial and
actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed by the REIT or
any of its Subsidiaries with the Internal Revenue Service and (ii) copies of
any records, documents or other information that must be furnished to the PBGC
with respect to any Plan pursuant to Section 4010 of ERISA. In addition to any
certificates or notices delivered to the Administrative Agent pursuant to the
first sentence hereof, copies of annual reports and any material notices
received by the REIT, the Borrower, any Subsidiary of the REIT or the Borrower
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or any ERISA Affiliate with respect to any Plan or Multiemployer Plan shall be
delivered to the Administrative Agent (with sufficient copies for each Bank)
no later than 15 Business Days after the date such report has been filed with
the Internal Revenue Service or such notice has been received by the REIT, the
Borrower, such Subsidiary or such ERISA Affiliate, as applicable.
7.08 End of Fiscal Years; Fiscal Quarters. The REIT and the
Borrower will cause (i) the fiscal year of each Credit Party to end on
December 31 and (ii) the fiscal quarter of each Credit Party to end on March
31, June 30, September 30 and December 31.
7.09 Performance of Obligations. The REIT will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each Operating Lease, Management Agreement, Pledged Mortgage Loan
Document, ground lease, mortgage, deed of trust, indenture, loan agreement or
credit agreement and each other material agreement, contract or instrument by
which it or any Real Property owned or leased by the REIT or any of its
Subsidiaries is bound, except such non-performances as could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the REIT, the REIT and its
Subsidiaries taken as a whole, the Borrower or the Borrower and its
Subsidiaries taken as a whole.
7.10 Payment of Taxes. The REIT will, and will cause each of
its Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which any penalties attach
thereto, and all lawful claims for sums that have become due and payable
which, if unpaid, might become a lien or charge upon any properties of the
REIT or any such Subsidiary; provided that neither the REIT nor any such
Subsidiary shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings as long
as it maintains adequate reserves with respect thereto in accordance with
generally accepted accounting principles.
7.11 Certain Requirements with Respect to Acquisitions of
Borrowing Base Properties and Provision or Purchase of Borrowing Base Pledged
Mortgage Loans. Unless the Required Banks otherwise agree in writing with
respect to any Borrowing Base Property acquired after the Effective Date or
any Borrowing Base Pledged Mortgage Loan provided or purchased after the
Effective Date, prior to or, if specified below, concurrently with the
Addition Date for any (x) Property which shall constitute a Borrowing Base
Property or (y) Mortgage Loan which shall constitute a Borrowing Base Pledged
Mortgage Loan, and in any event within the time periods specified below, the
Borrower shall furnish to the Administrative Agent (with sufficient copies for
each of the Banks, which the Administrative Agent will promptly forward to
each of the Banks):
(i) at least 15 days prior to the Addition Date for such
Borrowing Base Property or such Borrowing Base Pledged Mortgage Loan,
an Information Package relating to such Borrowing Base Property or
such Borrowing Base Pledged Mortgage Loan, together with an Appraisal
dated not more than 90 days prior to the Addition Date of such
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Borrowing Base Property or the Mortgage Loan Property securing such
Borrowing Base Pledged Mortgage Loan, as applicable;
(ii) on the Addition Date for such Borrowing Base Property
or Borrowing Base Pledged Mortgage Loan, (x) with respect to a Borrowing Base
Property, fully executed counterparts of a Mortgage, in form and substance
satisfactory to the Administrative Agent, encumbering such Borrowing Base
Property and securing the full amount of the Total Commitment (or, after the
termination thereof, all outstanding Loans and Letter of Credit Outstandings
at such time) (provided, that in any jurisdiction in which there is a mortgage
recording tax, such Mortgage shall secure the Loans and Letter of Credit
Outstandings in an amount equal to 125% of the Appraised Value of such
Borrowing Base Property), together with evidence that counterparts of such
Mortgage have been delivered to the title insurance company insuring the Lien
thereof on such Borrowing Base Property for recording in all places to the
extent necessary to effectively create a valid and enforceable first priority
mortgage lien on such Borrowing Base Property in favor of the Collateral Agent
(or such other trustee as may be required or desired under local law) for the
benefit of the Secured Creditors, or (y) with respect to a Borrowing Base
Pledged Mortgage Loan, fully executed counterparts of a Collateral Assignment,
in form and substance satisfactory to the Administrative Agent, encumbering
such Borrowing Base Pledged Mortgage Loan and securing the full amount of the
Total Commitment (or, after termination thereof, all outstanding Loans and
Letter of Credit Outstandings at such time) (provided, that in any
jurisdiction in which there is a recording tax imposed on the Collateral
Assignment, such Collateral Assignment shall secure the Loans and Letter of
Credit Outstandings in an amount equal to at least the original principal
amount of such Borrowing Base Pledged Mortgage Loan), together with evidence
that counterparts of such Collateral Assignment have been delivered to the
title insurance company insuring the Lien of the related Pledged Mortgage Loan
Documents for recording in all places to the extent necessary to effectively
create a valid and enforceable first priority lien on such Borrowing Base
Pledged Mortgage Loan in favor of the Collateral Agent (or such other trustee
as may be required or desired under local law) for the benefit of the Secured
Creditors;
(iii) on the Addition Date for (x) such Borrowing Base
Property, a Mortgage Policy on such Borrowing Base Property issued by title
insurers (and with such endorsements, reinsurance and co-insurance as is)
satisfactory to the Administrative Agent, in amounts satisfactory to the
Administrative Agent, insuring to the Collateral Agent that the Mortgage on
such Borrowing Base Property is a valid and enforceable first priority
mortgage lien on such Borrowing Base Property, free and clear of all defects
and encumbrances except Permitted Encumbrances and such Mortgage Policy shall
otherwise be in form and substance satisfactory to the Administrative Agent,
or (y) any such Borrowing Base Pledged Mortgage Loan, an endorsement to the
mortgagee title insurance policy covering such Borrowing Base Pledged Mortgage
Loan, in form and substance satisfactory to the Administrative Agent, showing
the Collateral Agent as first priority collateral assignee of such Borrowing
Base Pledged Mortgage Loan and an additional insured under such policy (as its
interests may appear);
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(iv) on the Addition Date for such Borrowing Base Property
or Borrowing Base Pledged Mortgage Loan, a recent survey of such Borrowing
Base Property or the Mortgage Loan Property securing such Borrowing Base
Pledged Mortgage Loan, as applicable, certified by a licensed professional
surveyor, which survey, certification and surveyor shall be satisfactory to
the Administrative Agent;
(v) in the case of any Borrowing Base Property that is a
Leasehold or any Mortgage Loan Property securing a Borrowing Base Pledged
Mortgage Loan that is a Leasehold, at least 15 days prior to the Addition Date
for such Borrowing Base Property or Borrowing Base Pledged Mortgage Loan, as
the case may be, a true and correct copy of such ground lease, which shall be
satisfactory to the Administrative Agent, and on the Addition Date for such
Borrowing Base Property or Borrowing Pledged Mortgage Loan, an estoppel
certificate and, to the extent required by the Administrative Agent, a
landlord waiver, in each case from the fee owner/ground lessor, which ground
lease, estoppel certificate and landlord waiver shall be in form and substance
satisfactory to the Administrative Agent;
(vi) at least 15 days prior to the Addition Date for such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan (other than a
construction loan), a certificate of occupancy (together with such other proof
of compliance with Legal Requirements as the Administrative Agent shall
reasonably require) in form and substance satisfactory to the Administrative
Agent with respect to such Borrowing Base Property or the Mortgage Loan
Property securing such Borrowing Base Pledged Mortgage Loan, as applicable;
(vii) at least 15 days prior to the Addition Date for such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan, Phase I (and
to the extent reasonably determined to be necessary by the Administrative
Agent, Phase II) environmental assessments dated no more than ninety days
prior to the Addition Date on such Borrowing Base Property or the Mortgage
Loan Property securing such Borrowing Base Pledged Mortgage Loan, as
applicable, from an independent environmental firm, certified to and in form,
scope and substance satisfactory to the Administrative Agent (each, an
"Environmental Report");
(viii) at least 15 days prior to the Addition Date for such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan (other than a
construction loan), engineering reports dated no more than ninety days prior
to the Addition Date on such Borrowing Base Property or the Mortgage Loan
Property securing such Borrowing Base Pledged Mortgage Loan, as applicable,
prepared by an independent engineering firm, certified to and in form, scope
and substance satisfactory to the Administrative Agent (each, an "Engineering
Report");
(ix) at least 15 days prior to the Addition Date for such
Borrowing Base Property, (A) if such Borrowing Base Property is not a medical
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office building, a true and correct copy of the Operating Lease for such
Borrowing Base Property and (B) the Management Agreement, if any, for such
Borrowing Base Property, which Operating Lease and/or Management Agreement
shall be in form and substance satisfactory to the Administrative Agent (it
being understood and agreed by the parties hereto that each Borrowing Base
Property that is not a medical office building shall be leased to an Operating
Lessee pursuant to an Operating Lease);
(x) in the case of a Borrowing Base Pledged Mortgage Loan,
(A) at least 15 days prior to the Addition Date for such Borrowing Base
Pledged Mortgage Loan, copies of the Pledged Mortgage Loan Documents relating
thereto, which shall be satisfactory to the Administrative Agent, and (B) on
the Addition Date for such Borrowing Base Pledged Mortgage Loan, the original
Pledged Mortgage Loan Documents, including, without limitation, the mortgage
note evidencing such Borrowing Base Pledged Mortgage Loan duly endorsed in
blank;
(xi) on the Addition Date for such Borrowing Base Property
or Borrowing Base Pledged Mortgage Loan, an opinion of local counsel
reasonably satisfactory to the Administrative Agent, which shall cover the
enforceability and perfection of the security interests granted pursuant to
the related Mortgage or Collateral Assignment, as applicable, and such other
matters incident to the transactions contemplated thereby as the
Administrative Agent may reasonably request;
(xii) on the Addition Date for such Borrowing Base Property
or Borrowing Base Pledged Mortgage Loan, true and correct copies of all
material contracts, licenses and permits for such Borrowing Base Property or
for the Mortgage Loan Property securing such Borrowing Base Pledged Mortgage
Loan, as applicable;
(xiii) on the Addition Date (A) with respect to a Borrowing
Base Property, a certificate of an Authorized Officer of the Borrower
certifying (x) the cost to acquire the respective Borrowing Base Property, (y)
the purchase of related working capital in connection with the acquisition of
such Borrowing Base Property, and (z) the amount expected to be used to pay
fees and expenses in connection with the acquisition of such Borrowing Base
Property, and (B) with respect to a Borrowing Base Pledged Mortgage Loan, a
certificate of an Authorized Officer of the Borrower certifying (w) the
identity of the borrower under and the guarantor of such Borrowing Base
Pledged Mortgage Loan, (x) the original principal balance and, if different,
the maximum principal balance of such Borrowing Base Pledged Mortgage Loan,
(y) the maturity date, the interest rate and amortization schedule, if any,
applicable to such Borrowing Base Pledged Mortgage Loan and (z) the amount
expected to be used to pay fees and expenses in connection with the provision
or purchase of such Borrowing Base Pledged Mortgage Loan;
(xiv) with respect to a Borrowing Base Property or a
Mortgage Loan Property securing a Borrowing Base Pledged Mortgage Loan that,
in either case, is a medical office building or otherwise contains space
tenants, not less than 15 days prior to the Addition Date for such Borrowing
Base Property or Borrowing Base Pledged Mortgage Loan, a rent roll for such
Borrowing Base Property or the Mortgage Loan Property securing such Borrowing
Base Pledged Mortgage Loan, as applicable, certified by an Authorized Officer
of the Borrower to be true, complete and correct, together with true and
correct copies of all leases or other occupancy agreements listed thereon,
which rent roll and leases shall be satisfactory to the Administrative Agent;
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(xv) either (1) evidence reasonably satisfactory to the
Administrative Agent (which may be included as part of the survey delivered
pursuant to clause (iv) of this Section 7.11) indicating that such Borrowing
Base Property or the Mortgage Loan Property securing such Borrowing Base
Pledged Mortgage Loan is not located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other applicable
agency, or (2) if any such Borrowing Base Property or the Mortgage Loan
Property securing such Borrowing Base Pledged Mortgage Loan is located in an
area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then a copy of the certificate
of insurance evidencing the underlying flood insurance policy, which
underlying policy shall be in accordance with Section 7.03 and in accordance
with the National Flood Insurance Act of 1968, as amended;
(xvi) a certificate of insurance evidencing that there has
been obtained insurance coverage for such Borrowing Base Property or the
Mortgage Loan Property securing such Borrowing Base Pledged Mortgage Loan
which satisfies the requirements of Section 7.03 and all of such coverage is
in full force and effect;
(xvii) in the case of any Borrowing Base Property that is
not wholly-owned by the Borrower or by any wholly-owned Subsidiary of the
Borrower, a consent, in form and substance satisfactory to the Administrative
Agent, from each of the minority owners of such Borrowing Base Property (or in
the Subsidiary of the Borrower that owns such Borrowing Base Property)
consenting to the granting of a Mortgage on such Borrowing Base Property and
in the related personal property and, to the extent that such Borrowing Base
Property is owned by a Subsidiary of the Borrower, to the entering into by
such Subsidiary of the Security Agreement, the Pledge Agreement, the Pledge
and Security Agreement, the Subsidiaries Guaranty and any documents related to
the foregoing;
(xviii) not less than 15 days prior to the Addition Date for
any Borrowing Base Pledged Mortgage Loan that is a construction loan, (i) all
construction budgets, plans and specifications, construction contracts,
As-Built Appraisals, Pro forma cash flows, architects agreements, construction
management agreements and other material construction-related documents and
materials relating thereto as the Administrative Agent or any Bank (through
the Administrative Agent) may reasonably request, all of which materials shall
be satisfactory to the Administrative Agent and (ii) evidence satisfactory to
the Administrative Agent that a construction consultant satisfactory to the
Administrative Agent has been engaged by the Borrower to manage the
construction of the related Mortgage Loan Property through completion thereof;
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(xix) not less than 15 days prior to the Addition Date for
such Borrowing Base Pledged Mortgage Loan, an estoppel certificate
from the borrower under such Borrowing Base Pledged Mortgage Loan (i)
identifying each of the related Pledged Mortgage Loan Documents and
any amendments thereto, and stating that such Pledged Mortgage Loan
Documents have not been modified or amended, (ii) stating that the
Pledged Mortgage Loan Documents are in full force and effect in
accordance with their terms, and that no default exists thereunder,
(iii) setting forth the outstanding principal balance of such
Borrowing Base Pledged Mortgage Loan and the date through which
interest has been paid thereon, and (iv) addressing such other matters
with respect to such Borrowing Base Pledged Mortgage Loan as the
Administrative Agent may reasonably request;
(xx) not less than 15 days prior to the Addition Date for
such Borrowing Base Property or Borrowing Base Pledged Mortgage Loan,
all of such other documents, instruments and information relating
thereto as the Administrative Agent or any Bank (acting through the
Administrative Agent) may reasonably request in order to complete its
credit underwriting and due diligence review of such Borrowing Base
Property or Borrowing Base Pledged Mortgage Loan to its satisfaction
in its sole discretion, all of which documents, instruments and
information shall be satisfactory to the Administrative Agent and the
Banks;
(xxi) on the Addition Date for such Borrowing Base Property
or Borrowing Base Pledged Mortgage Loan, (A) a certificate of an
Authorized Officer of the Borrower certifying that, as of the Addition
Date and after giving effect to (x) the acquisition of such Borrowing
Base Property or the provision or purchase of such Borrowing Base
Pledged Mortgage Loan, as applicable, (y) the inclusion of such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan in the
Borrowing Base and (z) the incurrence of Loans or the issuance of
Letters of Credit, if any, on the Addition Date, the representations
and warranties of the REIT and its Subsidiaries set forth in Section 6
and elsewhere in the Credit Documents are true, complete and correct
in all material respects, and (B) a Borrowing Base Certificate from an
Authorized Financial Officer of the Borrower certifying that, as of
the Addition Date and after giving effect to (x) the acquisition of
such Borrowing Base Property or the provision or purchase of such
Borrowing Base Pledged Mortgage Loan, as applicable, (y) the inclusion
of such Borrowing Base Property or Borrowing Base Pledged Mortgage
Loan in the Borrowing Base and (z) the incurrence of Loans or the
issuance of Letters of Credit, if any, on the Addition Date, the total
outstanding principal amount of all Loans and Letter of Credit
Outstandings will not exceed the Borrowing Base then in effect; and
(xxii) the Required Banks and the Administrative Agent shall
have approved the inclusion of such Borrowing Base Property or
Borrowing Base Pledged Mortgage Loan in the Borrowing Base.
7.12 Certain Partnerships. The REIT and the Borrower will
ensure that at all times either the Borrower or a wholly-owned Subsidiary of
the Borrower that is a Subsidiary Guarantor is the sole general partner of any
Subsidiary Guarantor that is a partnership.
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7.13 Operating Leases; Management Agreements and Pledged
Mortgage Loan Documents. The REIT will take, and will cause each of its
Subsidiaries to take, all action necessary to ensure that all Operating
Leases, Management Agreements and Pledged Mortgage Loan Documents remain in
full force and effect in accordance with their terms. The REIT will not, and
will cause each of its Subsidiaries not to, suffer or permit any modification,
amendment or termination of any Operating Lease, Management Agreement or
Pledged Mortgage Loan Document without obtaining the prior consent of the
Administrative Agent (which consent will not be unreasonably withheld or
delayed), except in the case of a termination of an Operating Lease or a
Management Agreement in accordance with its terms following a default by the
Operating Lessee or Manager thereunder. In the event of a termination of an
Operating Lease or a Management Agreement in accordance with the preceding
sentence, the REIT will take, and will cause each of its Subsidiaries to take,
all action necessary to obtain, prior to the effective date of such
termination, a replacement Operating Lessee or Manager, as the case may be,
satisfactory to the Administrative Agent, who shall be engaged pursuant to an
Operating Lease or Management Agreement, as the case may be, satisfactory to
the Administrative Agent. The REIT will, and will cause each of its
Subsidiaries to, enforce all material terms and provisions of the Operating
Leases, the Management Agreements and the Pledged Mortgage Loan Documents. Any
breach by the REIT or any of its Subsidiaries of the provisions of this
Section 7.13 constitutes a Special Mandatory Repayment Event.
7.14 Lien Waivers; etc. Within 60 days after the making of
any Loan or the issuance of any Letter of Credit the proceeds of which were
used to pay contractors for renovations or improvements theretofore made on
any Borrowing Base Property, the Borrower shall deliver to the Administrative
Agent (x) lien waivers in form and substance reasonably satisfactory to the
Administrative Agent from the contractor or contractors that have made such
renovations or improvements and (y) at the reasonable request of the
Administrative Agent, an endorsement to such Mortgage Policy insuring that the
priority of the Mortgage on such Borrowing Base Property is not affected by
such renovations or improvements.
7.15 Appraisals. If the Administrative Agent or the Required
Banks shall advise the Borrower by written notice that the Administrative
Agent or the Required Banks reasonably believe that the value of one or more
Borrowing Base Properties or Mortgage Loan Properties securing Borrowing Base
Pledged Mortgage Loans has been materially and adversely affected, for any
reason, since the date of the most recent Appraisal thereof, promptly
thereafter the Borrower will cause the preparation and delivery to the
Administrative Agent of a new Appraisal of each such Borrowing Base Property
or Mortgage Loan Property dated not more than 30 days prior to the date of
such delivery.
7.16 Casualty and Condemnation; Restoration. (a) Upon
the occurrence of any Casualty Event affecting all or any portion of any
Borrowing Base Property, whether or not covered by insurance, which will cost
(or may reasonably be expected to cost) 25% or more of the Borrowing Base
Amount for such Borrowing Base Property to Restore, as reasonably determined
by the Borrower and so certified by an Authorized Officer of the Borrower in a
certificate delivered to the Administrative Agent, (i) the Borrower shall
promptly deliver to the Administrative Agent written notice of the same which
shall, among other things, describe such Casualty Event, and (ii) to the
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extent that the respective Credit Party elects to Restore such Borrowing Base
Property, as soon as practicable but in any event prior to the commencement of
Restoration of such Borrowing Base Property, the Borrower shall deliver to the
Administrative Agent a Notice of Renovation/Restoration in the form of Exhibit
S.
(b) The Administrative Agent, on behalf of the Secured
Creditors, is hereby authorized, at its option, to collect and receive all
Insurance Proceeds in respect of a Borrowing Base Property (other than
Insurance Proceeds attributable to workers' compensation and liability
insurance) and to give proper receipts and acquittances therefor; provided,
however, that (x) if no Event of Default shall have occurred and be
continuing, the Borrower shall have the right to direct the Administrative
Agent to apply Insurance Proceeds in accordance with Sections 7.16(e) and (f)
and (y) if no Event of Default shall have occurred and be continuing, to the
extent not inconsistent with the requirements of Sections 7.16 (e) and (f),
the Borrower shall have the right to direct the Administrative Agent (1) to
pay to the Borrower or the other applicable Credit Party all Insurance
Proceeds with respect to any Casualty Event affecting a Borrowing Base
Property which will cost (or may reasonably be expected to cost) less than 25%
of the Borrowing Base Amount for such Borrowing Base Property to Restore and
(2) to pay to the Borrower or the other applicable Credit Party all proceeds
of any related business interruption insurance as, and to the extent,
requested by the Borrower. If, prior to the receipt by the Administrative
Agent of such Insurance Proceeds, any Borrowing Base Property shall have been
transferred upon foreclosure of the applicable Mortgage (or by deed in lieu
thereof) or other Security Document, the Administrative Agent shall have the
right to receive such Insurance Proceeds to the extent (x) such Insurance
Proceeds are attributable to a Casualty Event occurring prior to foreclosure
or delivery of any deed in lieu thereof and (y) of any deficiency attributable
to such Borrowing Base Property found to be due upon such sale, with legal
interest thereon, and reasonable counsel fees, costs and disbursements
incurred by the Administrative Agent in connection with the collection of such
Insurance Proceeds. The Administrative Agent may, but shall not be obligated
to, make proof of loss if not made promptly by the applicable Credit Party.
During the continuance of any Event of Default, the Administrative Agent is
hereby authorized and empowered by the Borrower and each other Credit Party to
settle, adjust or compromise any claims for damage, destruction or loss
thereunder in good faith, with or without the consent of any Credit Party (and
each of the Borrower and each other Credit Party hereby irrevocably appoints
and constitutes the Administrative Agent as its lawful attorney-in-fact,
coupled with an interest and with full power of substitution, for the purpose
of settling, adjusting or compromising any such claims with respect to any
Borrowing Base Property). In no event shall any Credit Party settle, adjust or
compromise any claim for Insurance Proceeds in respect of any Borrowing Base
Property of 25% or more of the Borrowing Base Amount for such Borrowing Base
Property without the prior written consent of the Administrative Agent, which
shall not be unreasonably withheld, conditioned or delayed; provided, that
this provision shall not restrict the right of the lessor under any ground
lease applicable to such Borrowing Base Property (1) to settle, adjust or
compromise any claim for Insurance Proceeds to the extent such lessor is
granted the power to do so under such ground lease or (2) to approve any
settlement, adjustment or compromise of any claim for Insurance Proceeds to
the extent the approval of such lessor is required under such ground lease.
Subject to the requirements of any ground lease affecting any Borrowing Base
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Property, each insurance company concerned is hereby authorized and directed
to make payment of all Insurance Proceeds in respect of each of the Borrowing
Base Properties payable by it directly to the Administrative Agent. If any
Credit Party receives any Insurance Proceeds resulting from such Casualty
Event in respect of any Borrowing Base Property, such Credit Party shall
(subject to the requirements of any ground lease affecting such Borrowing Base
Property) promptly endorse and transfer such Insurance Proceeds to the
Administrative Agent and each Credit Party covenants that until so paid over
to the Administrative Agent, such Credit Party shall hold such Insurance
Proceeds in trust for the benefit of the Administrative Agent and shall not
commingle such Insurance Proceeds with any other funds or assets of such
Credit Party or any other Person.
(c) The Borrower will promptly deliver written notice to the
Administrative Agent upon obtaining knowledge of the institution, or the
proposed institution, of any bona fide action or proceeding for the Taking of
all or any portion of any Borrowing Base Property. The Administrative Agent
shall have the right to participate in any negotiation, action or proceeding
relating to any such action or proceeding affecting any Borrowing Base
Property, and no settlement or compromise of any claim of 25% or more of the
Borrowing Base Amount for such Borrowing Base Property in connection with any
such action or proceeding shall be made without the consent of the
Administrative Agent, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, that this provision shall not restrict the
right of the lessor under any ground lease applicable to such Borrowing Base
Property (1) to settle or compromise any such claim to the extent such lessor
is granted the power to do so under such ground lease or (2) to approve any
settlement or compromise of any such claim to the extent the approval of such
lessor is required under such ground lease. Upon the occurrence of any partial
Taking with respect to a Borrowing Base Property which will cost (or may
reasonably be expected to cost) 25% or more of the Borrowing Base Amount for
such Borrowing Base Property to Restore, as reasonably determined by the
Borrower and so certified by an Authorized Officer of the Borrower in a
certificate delivered to the Administrative Agent, as soon as practicable
thereafter but in any event prior to the commencement of any Restoration of
such Borrowing Base Property, the Borrower shall deliver to the Administrative
Agent a Notice of Renovation/Restoration in the form attached hereto as
Exhibit S.
(d) The Administrative Agent, on behalf of the Secured
Creditors, is hereby authorized, at its option, to collect and receive all
Condemnation Proceeds in respect of each of the Borrowing Base Properties and
to give proper receipts and acquittances therefor; provided that, (x) if no
Event of Default shall have occurred and be continuing, the Borrower shall
have the right to direct the Administrative Agent to apply Condemnation
Proceeds in accordance with Sections 7.16(e) and (f), and (y) if no Event of
Default shall have occurred and be continuing, to the extent not inconsistent
with the requirements of Sections 7.16(e) and (f), the Borrower shall have the
right to direct the Administrative Agent to pay to the Borrower or the other
applicable Credit Party all Condemnation Proceeds with respect to a Taking
affecting a Borrowing Base Property which will cost (or may reasonably be
expected to cost) less than 25% of the Borrowing Base Amount for such
Borrowing Base Property to Restore. If, prior to the receipt by the
Administrative Agent of such Condemnation Proceeds, the portion of the
Borrowing Base Property subject to such action or proceeding shall have been
sold upon foreclosure of the applicable Mortgage (or by deed in lieu thereof)
or other Security Document, the Administrative Agent shall have the right to
receive such Condemnation Proceeds to the extent (x) such Condemnation
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Proceeds are attributable to a Taking occurring prior to foreclosure or
delivery of any deed in lieu thereof and (y) of any deficiency attributable to
such Borrowing Base Property found to be due upon such sale, with legal
interest thereon, and reasonable counsel fees, costs and disbursements
incurred by the Administrative Agent in connection with the collection of such
Condemnation Proceeds. The Administrative Agent may, but shall not be
obligated to, make proof of loss if not made promptly by the applicable Credit
Party. During the continuance of any Event of Default, the Administrative
Agent is hereby authorized and empowered by the Borrower and each other Credit
Party to settle, adjust or compromise any claims for Condemnation Proceeds
with or without the consent of any Credit Party (and each of the Borrower and
each other Credit Party hereby irrevocably appoints and constitutes the
Administrative Agent as its lawful attorney-in-fact, coupled with an interest
and with full power of substitution, for the purpose of settling, adjusting or
compromising any such claims with respect to any Borrowing Base Property). In
no event shall any Credit Party settle, adjust or compromise any claim for
Condemnation Proceeds in respect of any Borrowing Base Property of 25% or more
of the Borrowing Base Amount for such Borrowing Base Property or more without
the prior written consent of the Administrative Agent, which shall not be
unreasonably withheld, conditioned or delayed; provided, that this provision
shall not restrict the right of the lessor under any ground lease applicable
to such Borrowing Base Property (1) to settle or compromise any claim for
Condemnation Proceeds to the extent such lessor is granted the power to do so
under such ground lease or (2) to approve any settlement or compromise of any
claim for Condemnation Proceeds to the extent the approval of such lessor is
required under such ground lease. Subject to the requirements of any ground
lease affecting any Borrowing Base Property, each condemnor concerned is
hereby authorized and directed to make payment of all Condemnation Proceeds in
respect of each of the Borrowing Base Properties payable by it directly to the
Administrative Agent. If any Credit Party receives any Condemnation Proceeds
resulting from such condemnation in respect of any Borrowing Base Property,
such Credit Party shall (subject to the requirements of any ground lease
affecting such Borrowing Base Property) promptly endorse and transfer such
Condemnation Proceeds to the Administrative Agent and each Credit Party
covenants that until so paid over to the Administrative Agent, such Credit
Party shall hold such Condemnation Proceeds in trust for the benefit of the
Administrative Agent and shall not commingle such Condemnation Proceeds with
any other funds or assets of such Credit Party or any other Person.
(e) In the event of any Casualty Event or Taking with
respect to a Borrowing Base Property which will cost (or may reasonably be
expected to cost) 25% or more of the Borrowing Base Amount for such Borrowing
Base Property to Restore, as reasonably determined by the Borrower and so
certified by an Authorized Officer of the Borrower in a certificate delivered
to the Administrative Agent, the Borrower shall elect by written notice
delivered to the Administrative Agent as soon as practicable thereafter, but
in any event before the earlier of (x) 30 days after the occurrence of such
Casualty Event or Taking and (y) the commencement of the Restoration of such
Borrowing Base Property, either:
(i) to remove such Borrowing Base Property from the
calculation of the Borrowing Base, prepay the Loans in an amount equal
to the Release Price with respect to such Borrowing Base Property
pursuant to Section 3.02(d) in the manner set forth in Sections
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3.02(e) and (f) (which prepayment may be made with the respective Net
Insurance/Condemnation Proceeds to the extent same are available to
the Borrower or any of its Subsidiaries or the Collateral Agent) and
not Restore such Borrowing Base Property (or Restore such Borrowing
Base Property to the extent then permitted by Section 8.07 in respect
of non-Borrowing Base Properties); or
(ii) if all the following conditions shall be satisfied, to
Restore such Borrowing Base Property pursuant to subsection 7.16(f):
(A) the Maturity Date shall not have occurred;
(B) no Default or Event of Default shall have
occurred and be continuing or would be caused by such
Restoration;
(C) the Borrower is in compliance in all respects
with the provisions of Section 7.16(f);
(D) the Administrative Agent shall have determined,
in its reasonable discretion and after considering such
written opinions of architects and engineers and other
written information as the Borrower shall timely deliver to
the Administrative Agent, that Restoration of such Borrowing
Base Property is, under the circumstances then existing,
physically and economically feasible and can be completed in
accordance with Section 7.16(f) on or before a date not
later than six months prior to the Maturity Date;
(E) the Credit Parties shall have business
interruption insurance complying with Section 7.03 in an
amount at least equal to the reduction in revenues of such
Borrowing Base Property, if any, which the Borrower
reasonably expects to suffer during the period of
Restoration;
(F) the Credit Parties shall have complied with all
notices and other requirements under any Operating Lease or
ground lease affecting such Borrowing Base Property that
must be satisfied in respect of such Restoration, such
Restoration is permitted under the terms of such Operating
Lease or ground lease and such Operating Lease or ground
lease remains in full force and effect; and
(G) either (1) the Net Insurance/Condemnation
Proceeds shall be sufficient to complete the costs of such
Restoration, as determined by the Administrative Agent in
its reasonable discretion, or (2) in the event that the
Administrative Agent determines that such Net
Insurance/Condemnation Proceeds are insufficient to complete
the costs of such Restoration, the Credit Parties shall have
provided a cash deposit for the amount of any shortfall in
the amount of Net Insurance/Condemnation Proceeds necessary
to cover the costs to complete such Restoration.
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If the Credit Parties shall fail to satisfy the conditions set forth in clause
(ii) of the preceding sentence or in Section 7.16(f) with respect to the
related Borrowing Base Property, or shall fail to diligently and continuously
prosecute the Work to completion (other than as a result of Excusable Delay),
as determined by the Administrative Agent, in its reasonable discretion, then
such Borrowing Base Property shall be removed from the calculation of the
Borrowing Base, the Borrower shall prepay the Loans in an amount equal to the
Release Price with respect to such Borrowing Base Property and, subject to the
terms of any ground lease, the Administrative Agent shall apply any or all
remaining Insurance Proceeds or Condemnation Proceeds, as applicable, towards
such prepayment.
(f) In the event of any Casualty Event or Taking with
respect to a Borrowing Base Property which will cost (or may reasonably be
expected to cost) 25% or more of the Borrowing Base Amount for such Borrowing
Base Property to Restore, as reasonably determined by the Borrower and so
certified by an Authorized Officer of the Borrower in a certificate delivered
to the Administrative Agent, if any of the Credit Parties elects to Restore a
Borrowing Base Property pursuant to this Section 7.16(f) and the conditions
set forth in clause (ii) of the first sentence of Section 7.16(e) are
satisfied, all Net Insurance/Condemnation Proceeds shall be held by the
Administrative Agent (subject to the requirements of any ground lease
affecting such Borrowing Base Property) in an interest-bearing account with
the Administrative Agent, with all interest to be held therein until
completion and final inspection of the Work, and shall be applied by the
Administrative Agent to the payment of the cost of Restoring such Borrowing
Base Property so damaged or destroyed or of the portion or portions of such
Borrowing Base Property not so Taken (the "Work") and shall be paid out from
time to time to the Borrower as the Work progresses, subject to retainage as
reasonably determined by the Administrative Agent in accordance with customary
construction lending practices and otherwise in accordance with any conditions
reasonably imposed by the Administrative Agent but subject to each of the
following conditions:
(i) Subject to Excusable Delays, the Borrower shall promptly
(and in any event within 60 days after the applicable Casualty Event
or Taking) commence, or cause the commencement of, Restoration of such
Borrowing Base Property.
(ii) If the Work is structural or if the cost of the Work,
as estimated by the Borrower, shall exceed 10% of the Borrowing Base
Amount with respect to such Borrowing Base Property, the Work shall be
in the charge of an architect or engineer reasonably acceptable to the
Administrative Agent, and before any Credit Party commences any Work,
other than temporary work to protect property or prevent interference
with business, the Administrative Agent shall have approved the plans
and specifications and the general contract for the Work to be
submitted by such Credit Party, which approval shall not be
unreasonably withheld. Such plans and specifications shall provide for
such Work that, upon completion thereof, the Improvements shall (x) be
in compliance in all material respects with all Legal Requirements
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such that all representations or warranties of the Credit Parties
relating to the compliance of such Borrowing Base Property with
applicable laws as set forth in this Agreement and in the other Credit
Documents would then be true and correct in all material respects, and
(y) be reasonably equivalent in value and general utility to the
Improvements which were on such Borrowing Base Property prior to the
Casualty Event or Taking. Such plans and specifications shall be
accompanied by (1) a signed estimate of the Borrower, or, if an
architect or engineer is required to supervise the Work, such
architect or engineer, stating the estimated cost of completing the
Work, which estimate shall bear the architect's or engineer's seal if
not made by the Borrower and (2) to the extent necessary at such stage
of the Work, certified copies of all authorizations required in
connection with the commencement and performance of the Work.
(iii) Each request for payment shall be made on five days'
prior notice to the Administrative Agent and shall be accompanied by
invoices and by (a) a certificate to be made by such architect or
engineer, if one be required under clause (ii) above, otherwise by a
certificate of an Authorized Officer of the Borrower, stating that (1)
all of the Work completed has been done in substantial compliance with
the approved plans and specifications, if any be required under said
clause (ii) above, and (2) the sum requested is required to reimburse
any of the Credit Parties for payments made by the applicable Credit
Party to, or is due to, the contractor, subcontractors, materialmen,
laborers, engineers, architects or other Persons rendering services or
materials for the Work (giving a brief description of such services
and materials), and that when added to all sums previously paid out by
the Administrative Agent does not exceed the cost of the Work done to
the date of such certificate, and (b) a certificate of an Authorized
Officer of the Borrower stating either that (x) the amount of such
proceeds remaining in the hands of the Administrative Agent, or (y)
the amount of such funds, in the hands of the applicable Credit Party
from other sources irrevocably committed to the completion of the Work
in a manner reasonably satisfactory to the Administrative Agent
(including delivery of such funds to the Administrative Agent for
application to pay the costs of the Restoration), will be sufficient
on completion of the Work to pay for the same in full (giving in such
reasonable detail as the Administrative Agent may require an estimate
of the cost of such completion). The Administrative Agent may require
that any such statements be independently verified by an inspector
approved by the Administrative Agent to the extent that any such costs
for the Work equal or exceed 10% of the Borrowing Base Amount for such
Borrowing Base Property.
(iv) Each request shall be accompanied by lien waivers
satisfactory to the Administrative Agent covering that part of the
Work for which payment or reimbursement has been made (or other
evidence as shall be satisfactory to the Administrative Agent in its
sole discretion confirming that no rights of mechanics, contractors,
subcontractors, materialmen or suppliers are outstanding in respect of
such Work) and by a search prepared by a title company reasonably
satisfactory to the Administrative Agent establishing that there has
not been filed with respect to such Borrowing Base Property any
mechanics' or other lien or instrument for the retention of title in
respect of any part of the Work not discharged of record or bonded to
the reasonable satisfaction of the Administrative Agent and evidencing
the continued priority of the Mortgage on such Borrowing Base
Property.
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(v) The available property Insurance Proceeds or
Condemnation Proceeds which are paid or will be payable by the
insurance company, together with other cash proceeds available to the
Borrower and held in a reserve by the Administrative Agent are, in the
reasonable judgment of the Administrative Agent, sufficient to pay in
full costs of the Restoration.
(vi) There shall be no Default or Event of Default.
(vii) The request for any payment after the Work has been
completed shall be accompanied by (a) a copy of any certificate or
certificates required by law to render occupancy of the improvements
being rebuilt, repaired or restored legal and (b) final lien waivers
for all labor, materials and supplies from all contractors,
subcontractors and materialmen, except with respect to claims or
rights being contested or bonded in accordance with the provisions of
Section 8.01(ii).
(viii) After commencing the Work, the Borrower or its
applicable Subsidiary shall, subject to Excusable Delays, cause such
Work to be performed diligently and in good faith in a good and
workmanlike manner to completion in accordance with the approved plans
and specifications, if any.
(ix) The Administrative Agent shall have received
"agreements to complete" of the general contractor and any independent
architects or engineers, which agreements to complete shall be in form
and substance reasonably satisfactory to the Administrative Agent.
(x) The Borrower shall have obtained and maintained, or
shall have caused the applicable Credit Party to obtain and maintain,
"all risks" insurance in accordance with Section 7.03.
All costs and expenses of any Restoration, including,
without limitation, any Work, engineer's fees, architect's fees or
contractor's fees and the cost and expense of complying with this Section
7.16(f), shall be for the account of the Borrower and/or its applicable
Subsidiary. Upon completion of the Work and payment in full therefor, the
Borrower shall promptly deliver to the Administrative Agent a Completion
Certificate with respect thereto, and the Administrative Agent shall return to
the Borrower the amount of any unspent Insurance Proceeds or Condemnation
Proceeds then or thereafter in the hands of the Administrative Agent on
account of the Casualty Event or Taking that created the need for such Work,
together with all undisbursed accrued interest thereon. Subject to the terms
of any ground lease, nothing in this Section 7.16 shall prevent the
Administrative Agent from applying at any time all or any part of the
Insurance Proceeds or Condemnation Proceeds to the curing of any Event of
Default.
(g) In the event of any Casualty Event or Taking with respect
to a Borrowing Base Property which will cost (or may reasonably be expected to
cost) 25% or more of the Borrowing Base Amount for such Borrowing Base Property
to Restore (as reasonably determined by the Borrower and so certified in a
certificate delivered to the Administrative Agent) which a Credit Party has
elected to Restore, upon completion of the
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Restoration and delivery to the Administrative Agent of a Completion
Certificate, (i) the Administrative Agent may hire an independent engineer to
inspect the applicable Borrowing Base Property and the Administrative Agent
may deem any related Restoration not complete unless the engineer determines
that the Restoration was completed in accordance with this Agreement and (ii)
to the extent that the remaining Net Insurance/Condemnation Proceeds from such
Casualty Event or Taking equals or exceeds 25% of the Borrowing Base Amount
for such Borrowing Base Property, such remaining Net Insurance/Condemnation
Proceeds shall be applied at such time to prepay the Loans pursuant to Section
3.02(d) in the manner set forth in Section 3.02(e) and (f). The cost of such
inspection shall be for the account of the Borrower or the applicable
Subsidiary.
7.17 REIT Requirements. The REIT shall operate its business
at all times so as to satisfy all requirements necessary to qualify as a real
estate investment trust under Section 856 through 860 of the Code. The REIT
will maintain adequate records so as to comply with all record-keeping
requirements relating to the qualification of the REIT as a real estate
investment trust as required by the Code and applicable regulations of the
Department of the Treasury promulgated thereunder and will properly prepare
and timely file with the IRS all returns and reports required thereby. The
REIT will request from its shareholders all shareholder information required
by the Code and applicable regulations of the Department of Treasury
promulgated thereunder.
7.18 Syndication Cooperation. GACC and its Affiliates
(collectively, the "Original Lender") reserve the right, after the Effective
Date, to syndicate all or part of the Total Commitment, from time to time, to
one or more Banks, as more particularly provided in Section 12.04. Such
syndication will be accomplished by a variety of means, including direct
contact during the syndication between senior management and advisors of the
REIT and its Subsidiaries and the proposed syndicate members. To assist the
Original Lender in its syndication efforts, the REIT and its Subsidiaries
hereby agree (a) to provide to the Original Lender and the other syndicate
members upon request with all reasonable information reasonably deemed
necessary by the Original Lender to complete syndication, including, but not
limited to, information and evaluations prepared by the REIT and its
Subsidiaries or on their behalf relating to the transactions contemplated
hereby and (b) to assist the Original Lender upon request in the preparation
of an Information Memorandum to be used in connection with the syndication of
the credit facilities contemplated herein, including making available, upon
reasonable advance notice, the officers of the REIT and its Subsidiaries from
time to time and to attend and make presentations regarding the business and
prospects of the REIT and its Subsidiaries, as appropriate, at a meeting or
meetings of Banks or prospective Banks. The Original Lender will provide the
REIT with a copy of the Information Memorandum for review prior to the
distribution thereof to prospective Banks.
SECTION 8. Negative Covenants. Each of the REIT and the
Borrower hereby covenants and agrees (as to itself and each of its
Subsidiaries) that on and after the Effective Date and until the Total
Commitment has terminated and all Letters of Credit have terminated and the
Loans, Notes and Unpaid Drawings, together with interest, Fees and all other
Obligations incurred hereunder and thereunder, are paid in full:
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8.01 Liens. The REIT will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of the REIT or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
the REIT or any of its Subsidiaries), or assign any right to receive income or
permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, provided
that the provisions of this Section 8.01 shall not prevent the creation,
incurrence, assumption or existence of the following Liens (collectively,
"Permitted Liens"):
(i) inchoate Liens (other than Liens created or imposed
under ERISA) for taxes, assessments or governmental charges or levies
not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles;
(ii) Liens in respect of property or assets of the Borrower
or any of its Subsidiaries imposed by law, which were incurred in the
ordinary course of business and do not secure Indebtedness for
borrowed money, such as carriers', warehousemen's, materialmen's and
mechanics' liens and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of the Borrower's or such Subsidiary's property
or assets or materially impair the use thereof in the operation of the
business of the Borrower or such Subsidiary or (y) which are being
contested in good faith by appropriate proceedings and for which
adequate reserves have been established, which proceedings have the
effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) Liens in existence on the Effective Date which are
listed, and the property subject thereto described, in Schedule VII
(which Schedule VII need not set forth Permitted Encumbrances and the
Liens created pursuant to the Security Documents), but only to the
respective date, if any, set forth in such Schedule VII for the
removal and termination of any such Liens, but no renewals or
extensions of such Liens shall be permitted;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) Operating Leases and leases or subleases to tenants
(including merchants, vendors or other providers of services) to be
located in the respective Property or granted by the Borrower or any
of its Subsidiaries to other Persons in the ordinary course of
business not materially interfering with the conduct of business at
the respective Property;
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(vii) (A) Liens upon equipment or machinery subject to
Capitalized Lease Obligations, provided that (x) such Liens only serve
to secure the payment of Indebtedness arising under such Capitalized
Lease Obligations and (y) the Lien encumbering the asset giving rise
to such Capitalized Lease Obligation does not encumber any other asset
of the REIT or any of its Subsidiaries and (B) Liens placed upon
equipment or machinery used in the ordinary course of business of the
Borrower or any of its Subsidiaries at the time of acquisition thereof
by the Borrower or any such Subsidiary or within 60 days thereafter to
secure Indebtedness incurred to pay all or a portion of the purchase
price thereof, provided further that the Lien encumbering the asset
giving rise to the purchase money Indebtedness does not encumber any
other asset of the REIT or any of its Subsidiaries, provided further
that the aggregate outstanding principal amount of all Indebtedness
secured by Liens permitted by this clause (vii) shall not at any time
exceed $5,000,000;
(viii) Liens securing Permitted Non-Recourse Indebtedness of
Specified Subsidiaries permitted under Section 8.04(viii) so long as
such Liens only encumber the Property (including the furniture,
fixtures and equipment related thereto) of the Specified Subsidiary
that has assumed or incurred such Permitted Non-Recourse Indebtedness;
(ix) easements, rights-of-way, restrictions, encroachments
and other similar charges or encumbrances, and minor title
deficiencies, in each case not securing Indebtedness and not
materially interfering with the conduct of the business of the
Borrower or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings in respect of Operating Leases;
(xi) statutory and common law landlords' liens under leases
to which the Borrower or any of its Subsidiaries is a party;
(xii) Liens (other than Liens created or imposed under
ERISA) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of
tenders, statutory obligations, surety bonds, bids, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money);
(xiii) Liens arising out of judgments or awards in respect
of which the REIT or any of its Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review in respect of which
there shall have been secured a subsisting stay of execution pending
such appeal or proceedings, provided that the aggregate amount of all
such judgments or awards (and the aggregate amount of any cash and the
fair market value of any property pledged by the REIT or any of its
Subsidiaries in connection therewith) does not exceed $2,000,000 at
any time outstanding; and
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(xiv) Liens evidenced by the documentation for the Existing
Indebtedness.
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
The REIT will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part
of its property or assets, or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related transactions) any
part of the property or assets (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:
(i) Capital Expenditures (including payments in respect of
Capitalized Lease Obligations) by the Borrower and its Subsidiaries
shall be permitted to the extent not in violation of Sections
8.01(vii)(B) and 8.07;
(ii) the Borrower and each of its Subsidiaries may in the
ordinary course of business, (x) sell or otherwise dispose of
equipment and materials which, in the reasonable opinion of such
Person, are obsolete, uneconomic or no longer useful in the conduct of
such Person's business and (y) sell or exchange other items of
equipment and materials so long as the purpose of each such sale or
exchange is to acquire (and results within 30 days of such sale or
exchange in the acquisition of) replacement items of equipment or
materials which are the functional equivalent of the item of equipment
or material so sold or exchanged and is at least of equivalent value
and quality;
(iii) Investments may be made to the extent permitted by
Section 8.05;
(iv) the Borrower and each of its Subsidiaries may lease (as
lessee) real or personal property in the ordinary course of business
(so long as any such lease does not create a Capitalized Lease
Obligation unless permitted by Section 8.01(vii)); provided that
Leaseholds of Borrowing Base Properties which do not constitute
Capitalized Lease Obligations shall be permitted (x) with respect to
the Initial Borrowing Base Properties and Mortgage Loan Properties
securing the Initial Borrowing Base Pledged Mortgage Loans that are
Leaseholds and (y) with respect to subsequently acquired Borrowing
Base Properties and the Mortgage Loan Properties securing subsequently
acquired Borrowing Base Pledged Mortgage Loans, to the extent provided
in Section 8.02(viii);
(v) the Borrower and each of its Subsidiaries may make sales
of inventory in the ordinary course of business;
(vi) the Borrower and each of its Subsidiaries may sell
Borrowing Base Pledged Mortgage Loans and Borrowing Base Properties
(or in the case of a Borrowing Base Property owned or leased by a
Subsidiary of the Borrower, all of the capital stock or other equity
interests of the respective Subsidiary which owns such Borrowing Base
Property) so long as (i) no Default or Event of Default then exists or
would result therefrom, (ii) each such sale is at fair market value
(as determined in good faith by the general partner of the Borrower or
such Subsidiary), (iii) the total cash consideration received by the
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Borrower or such Subsidiary for any such sale (x) equals at least the
Release Price for such Borrowing Base Property or Borrowing Base
Pledged Mortgage Loan and (y) is received at the time of the
consummation of any such sale, and with the balance of such
consideration to be in the form of promissory notes which shall be
pledged to the Collateral Agent pursuant to the Pledge Agreement
(although in no event shall more than 20% of the total consideration
be in the form of promissory notes), (iv) the Borrowing Base shall be
reduced in accordance with the definition thereof at the time of the
consummation of such sale, (v) the Borrower shall have delivered to
the Administrative Agent a new Borrowing Base Certificate signed by an
Authorized Financial Officer of the Borrower, calculating (in
reasonable detail) the Borrowing Base after giving effect to such
sale, and the aggregate outstanding principal amount of Loans and
Letter of Credit Outstandings after giving effect to such sale (and
any repayment required under Section 3.02) shall not exceed the
revised Borrowing Base, (vi) the Borrower or such Subsidiary
concurrently makes any payments required under Section 3.02 as a
result of such sale, (vii) at least 10 Business Days prior written
notice of such sale is given by the Borrower to the Administrative
Agent (or such shorter notice as may be acceptable to the
Administrative Agent), and (viii) the aggregate amount of all sales
made pursuant to this Section 8.02(vi) shall not, when added to the
aggregate amount of all sales made pursuant to Section 8.02(vii),
exceed 25% of the Book Value in any fiscal year of the REIT;
(vii) the Borrower and each of its Subsidiaries may sell
other assets (other than the capital stock or other equity interests
of any Subsidiary Guarantor) so long as (i) no Default or Event of
Default then exists or would result therefrom, (ii) each such sale is
at fair market value (as determined in good faith by the Borrower),
(iii) the consideration received by the Borrower or such Subsidiary is
at least 80% cash and is received at the time of the consummation of
such sale, and with the balance of such consideration to be in the
form of promissory notes which shall be pledged to the Collateral
Agent pursuant to the Pledge Agreement to the extent such promissory
notes are held by a Credit Party and (iv) the aggregate amount of all
sales made pursuant to this Section 8.02(vii) shall not, when added to
the aggregate amount of all sales made pursuant to Section 8.02(vi),
exceed 25% of the Book Value in any fiscal year of the REIT;
(viii) the Borrower and each of its Subsidiaries may acquire
Borrowing Base Properties (including by purchasing the capital stock
or other equity interests of the Person or Persons that own such
Borrowing Base Properties), and may provide or purchase Borrowing Base
Pledged Mortgage Loans, so long as (i) such Borrowing Base Property or
Borrowing Base Pledged Mortgage Loan constitutes a Qualified Property
or Qualified Mortgage Loan, as applicable (it being understood that to
the extent the Property or Mortgage Loan in question is not a
Qualified Property or a Qualified Mortgage Loan, as applicable, and
the Borrower desires to have such Property or Mortgage Loan constitute
Borrowing Base Collateral, the Required Banks shall use their
reasonable efforts to vote on whether such Property or Mortgage Loan
shall constitute Borrowing Base Collateral within 15 Business Days
after receiving the Information Package and other materials to be
delivered pursuant to Section 7.11 in respect of such Property or
Mortgage Loan (although the Required Banks' decision as to whether or
not to treat such Property or Mortgage Loan as a Borrowing Base
Property or a Borrowing Base Pledged Mortgage Loan, as applicable,
shall be made in their sole discretion)), (ii) (A) each Borrowing Base
Pledged Mortgage Loan is 100% owned by the Borrower, and (B) each
Borrowing Base Property (or the capital stock or other equity
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interests of the Person owning such Borrowing Base Property) is at
least 51% owned by the Borrower or a wholly-owned Subsidiary thereof,
provided that not more than 30% of the Borrowing Base may be comprised
of Borrowing Base Properties owned by non-wholly-owned Subsidiaries of
the Borrower, (iii) such Borrowing Base Properties and the Mortgage
Loan Properties securing such Borrowing Base Pledged Mortgage Loans
are located in the United States, (iv) the Collateral Agent is able to
obtain a first priority mortgage lien on such Borrowing Base Property
or a first priority collateral assignment of such Borrowing Base
Pledged Mortgage Loan, as the case may be, subject only to Permitted
Liens, and all of the actions specified in Section 7.11, in Section
8.12 and in the respective Security Documents with respect to such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan shall
have been taken by the Borrower and/or its respective Subsidiary, (v)
with respect to the acquisition of any Borrowing Base Property subject
to a Leasehold or the provision or purchase of any Borrowing Base
Pledged Mortgage Loan to be secured by a Mortgage Loan Property that
is subject to a Leasehold, (A) the respective Leasehold shall be
mortgageable with appropriate mortgagee protections (as reasonably
determined by the Administrative Agent, including but not limited to,
notice of defaults, cure rights, successor rights and transfer rights
upon foreclosure), (B) the respective Leasehold shall have a remaining
term of at least 25 years, and (C) the respective Leasehold shall
otherwise be reasonably satisfactory to the Administrative Agent, (vi)
in the case of a Borrowing Base Pledged Mortgage Loan, (A) if such
Borrowing Base Pledged Mortgage Loan is a construction loan, all of
the payment and performance obligations of the borrower thereunder
shall be guaranteed by an Eligible Guarantor pursuant to a Borrowing
Base Guaranty (except with respect to the Specified Mortgage Loan),
(B) such Borrowing Base Pledged Mortgage Loan shall be provided
pursuant to Pledged Mortgage Loan Documents which expressly permit the
collateral assignment thereof to the Collateral Agent as security for
the Obligations and obligate the borrower thereunder to recognize the
Collateral Agent or its successor as the "lender" thereunder following
realization on the security interest granted pursuant to the related
Collateral Assignment, and which Pledged Mortgage Loan Documents shall
otherwise be satisfactory to the Administrative Agent, (C) such
Borrowing Base Pledged Mortgage Loan shall be on market rates and
terms, as determined by the Administrative Agent or the Required
Banks, and shall have a maturity that exceeds the Maturity Date by at
least two years, (D) such Borrowing Base Pledged Mortgage Loan shall
be a term loan secured by a Mortgage Loan Property that (x) is not
under construction or material renovation, (y) has a valid, permanent
certificate of occupancy (or, if approved by the Administrative Agent,
a valid, temporary certificate of occupancy), and (z) is an operating
senior living care facility or medical office building generating
stabilized revenues; provided, that not more than 30% of the Borrowing
Base may be comprised of Borrowing Base Pledged Mortgage Loans which
are construction loans provided to borrowers approved by the
Administrative Agent for the purpose of constructing senior living
care facilities and medical office buildings (so long as such
construction loans satisfy all of the other requirements contained in
this Section 8.02(viii) and Section 7.11 for Borrowing Base Pledged
Mortgage Loans), (vii) based on calculations made by the Borrower on a
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Pro Forma Basis after giving effect to the respective acquisition of a
Borrowing Base Property or provision or purchase of a Borrowing Base
Pledged Mortgage Loan, no Default or Event of Default will exist
under, or would have existed during the Test Period last reported (or
required to be reported pursuant to Section 7.01(a) or (b), as the
case may be) prior to the date of the respective acquisition of such
Borrowing Base Property or provision or purchase of such Borrowing
Base Pledged Mortgage Loan under, the financial covenants contained in
Sections 8.08 through 8.10, inclusive, (viii) based on good faith
projections prepared by the Borrower for the period from the date of
the consummation of the respective acquisition of such Borrowing Base
Property or provision or purchase of such Borrowing Base Pledged
Mortgage Loan to the date which is one year thereafter (calculated
after giving effect to the respective acquisition, provision or
purchase), the level of financial performance measured by the
covenants set forth in Sections 8.08 through 8.10, inclusive, shall be
better than or equal to such level as would be required to provide
that no Default or Event of Default will exist under the financial
covenants contained in Sections 8.08 through 8.10, inclusive, as
compliance with such covenants will be required through the date which
is one year from the date of the consummation of the respective
acquisition of such Borrowing Base Property or provision or purchase
of such Borrowing Base Pledged Mortgage Loan, (ix) the proposed
acquisition could not reasonably be expected to result in materially
increased tax and ERISA liabilities with respect to the REIT and its
Subsidiaries taken as a whole, and (x) the Borrower shall have
delivered to the Administrative Agent an officer's certificate
executed by an Authorized Financial Officer of the Borrower,
certifying, to the best of such officer's knowledge, compliance with
the requirements of the preceding clauses (i) through (xi) (and
containing all calculations required to demonstrate such compliance);
(ix) the Borrower and its Subsidiaries may acquire
Properties and may provide or purchase Mortgage Loans which do not
constitute Borrowing Base Collateral (or may acquire the capital stock
or other equity interests of the Person or Persons owning such
Properties and/or Mortgage Loans) so long as (i) no Default or Event
of Default then exists or would result therefrom, (ii) based on
calculations made by the Borrower on a Pro Forma Basis after giving
effect to such acquisition, no Default or Event of Default will exist
under, or would have existed during the Test Period last reported (or
required to be reported pursuant to Section 7.01(a) or (b), as the
case may be) prior to the date of the respective acquisition of a
Property or purchase or provision of a Mortgage Loan under, the
financial covenants contained in Sections 8.08 through 8.10,
inclusive, (iii) based on good faith projections prepared by the
Borrower for the period from the date of the consummation of such
acquisition of a Property or purchase or provision of a Mortgage Loan
to the date which is one year thereafter calculated after giving
effect to the respective acquisition of a Property or purchase or
provision of a Mortgage Loan, the level of financial performance
measured by the covenants set forth in Sections 8.08 through 8.10,
inclusive, shall be better than or equal to such level as would be
required to provide that no Default or Event of Default will exist
under the financial covenants contained in Sections 8.08 through 8.10,
inclusive, as compliance with such covenants will be required through
the date which is one year from the date of the consummation of the
respective acquisition of a Property or purchase or provision of a
Mortgage Loan, and (iv) the Borrower shall have delivered to the
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Administrative Agent an officer's certificate executed by an
Authorized Financial Officer of the Borrower, certifying to the best
of such officer's knowledge, compliance with the requirements of
preceding clauses (i) through (iii) (and containing all calculations
required to demonstrate such compliance);
(x) any Subsidiary Guarantor may be merged with and into the
Borrower or any other Subsidiary Guarantor so long as (i) in the case
of any merger involving the Borrower, the Borrower is the surviving
corporation, (ii) in the case of any merger between two Subsidiary
Guarantors one of which is a wholly-owned Subsidiary, such
wholly-owned Subsidiary is the surviving corporation, (iii) in the
case of any merger involving a non-wholly-owned Subsidiary, the only
consideration paid to third parties in connection therewith is cash,
provided that any such cash payment shall be treated as an Investment
made (and shall reduce the aggregate amount of Investments permitted
to be made) under Section 8.05(vi) and such payment may only be made
to the extent that an Investment may be made at such time under such
Section 8.05(vi), (iv) all Liens granted pursuant to the Security
Documents on any property or assets of any Subsidiary Guarantor shall
remain in full force and effect and with at least the same priority as
such Lien would have had if such merger had not occurred and (v) at
least 10 Business Days prior written notice of any such merger is
given by the Borrower to the Administrative Agent; and
(xi) any Subsidiary of the Borrower (other than a Specified
Subsidiary) that is not a Subsidiary Guarantor may be merged with and
into any other Subsidiary of the Borrower (other than a Specified
Subsidiary) that is not a Subsidiary Guarantor so long as in the case
of any merger involving a non-wholly-owned Subsidiary of the Borrower,
the only consideration paid to third parties in connection therewith
is cash, provided that any such cash payment shall be treated as an
Investment made (and shall reduce the aggregate amount of Investments
permitted to be made) under Section 8.05(vi) and such cash payment may
only be made to the extent that an Investment may be made at such time
under such Section 8.05(vi).
8.03 Dividends. Except to the extent required in order for
the REIT to maintain its status as an entity taxed as a real estate investment
trust in accordance with the written advice of counsel, the REIT will not, and
will not permit any of its Subsidiaries to, authorize, declare or pay any
Dividends with respect to the REIT or any of its Subsidiaries, except that (i)
any Subsidiary of the Borrower may pay cash Dividends to the Borrower or to a
wholly-owned Subsidiary of the Borrower, (ii) any non-wholly-owned Subsidiary
of the Borrower may pay cash Dividends to its shareholders, partners or other
equity holders generally so long as (x) the Borrower or its respective
Subsidiary which owns the equity interest or interests in the Subsidiary
paying such Dividends receives at least its proportionate share thereof (based
upon its relative holdings of equity interests in the Subsidiary paying such
Dividends and taking into account the relative preferences, if any, of the
various classes of equity interests in such Subsidiary) and (y) no Dividends
may be paid by any non wholly-owned Subsidiary of the Borrower (other than ET
Capital Corp.) at any time that any intercompany loans are outstanding to such
Subsidiary, and (iii) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may pay cash Dividends to the REIT, which
in turn may pay cash Dividends to its shareholders to the extent of any
Dividends received by the REIT from the Borrower, provided that the aggregate
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amount of cash Dividends paid by the REIT pursuant to this clause (iii) in any
fiscal quarter of the REIT shall not exceed 89% of the REIT's estimated funds
from operations for such fiscal quarter, and provided further that no
Dividends shall be paid by the REIT pursuant to this clause (iii) in any
fiscal quarter of the REIT prior to the release by the REIT of its quarterly
earnings report.
8.04 Indebtedness. The REIT will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Existing Indebtedness to the extent the same is listed
on Schedule V (although any Existing Indebtedness of the type
described in clause (iii) of this Section 8.04 does not have to be
listed on such Schedule V), but no refinancings or renewals thereof;
(iii) accrued expenses and trade accounts payable incurred
in the ordinary course of business;
(iv) Indebtedness of the Borrower and its Subsidiaries
evidenced by Capitalized Lease Obligations and/or purchase money
Indebtedness to the extent permitted under Section 8.01(vii);
(v) intercompany Indebtedness among the Borrower and the
Subsidiary Guarantors to the extent permitted by Section 8.05(iv);
(vi) intercompany Indebtedness owed by Subsidiaries of the
Borrower which are not Subsidiary Guarantors to the Borrower or any
Subsidiary Guarantor to the extent permitted by Section 8.05(vi);
(vii) unsecured short-term trade Indebtedness of the
Borrower or any of its Subsidiaries incurred in the ordinary course of
business; and
(viii) Permitted Non-Recourse Indebtedness of a Specified
Subsidiary incurred to finance the provision or purchase of a Mortgage
Loan or the purchase of (or assumed at the time of the purchase of),
or to finance the renovation of, a Property, so long as (i) no Default
or Event of Default then exists or would result therefrom, (ii) based
on calculations made by the Borrower on a Pro Forma Basis as if the
incurrence of such Indebtedness had occurred on the first day of the
respective Calculation Period relating to such incurrence, no Default
or Event of Default will exist under, or would have existed during the
period beginning on the first day of the respective Calculation Period
and ended on the Determination Date under, the financial covenants
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contained in Sections 8.08 through 8.10, inclusive, (iii) based on
good faith projections prepared by the Borrower for the period from
the date that such Indebtedness is incurred to the date which is one
year thereafter, the level of financial performance measured by the
covenants set forth in Sections 8.08 through 8.10, inclusive, shall be
better than or equal to such level as would be required to provide
that no Default or Event of Default will exist under the financial
covenants contained in Sections 8.08 through 8.10, inclusive, as
compliance with such covenants will be required through the date which
is one year from the date of the incurrence of such Indebtedness, (iv)
the amount of any such Permitted Non-Recourse Indebtedness does not
exceed 75% of the Market Value of the Property or Mortgage Loan, as
the case may be, at such time, (v) the aggregate principal amount of
all Permitted Non-Recourse Indebtedness outstanding at any one time
shall not exceed $25,000,000, (vi) the Borrower shall have delivered
to the Administrative Agent an officer's certificate executed by an
Authorized Financial Officer of the Borrower, certifying to the best
of such officer's knowledge, compliance with the requirements of this
Section 8.04(viii) and containing the calculations required by the
preceding clauses (ii), (iii), (iv) and (v), and (vii) if the asset to
be financed with such Permitted Non-Recourse Indebtedness is a
Borrowing Base Property or a Borrowing Base Pledged Mortgage Loan, (A)
the net refinancing proceeds received by the Borrower or such
Subsidiary from any such financing (x) equal at least the Release
Price for such Borrowing Base Property or Borrowing Base Pledged
Mortgage Loan and (y) are received at the time of the consummation of
any such financing, (B) the Borrowing Base shall be reduced in
accordance with the definition thereof at the time of the consummation
of such financing, (C) the Borrower shall have delivered to the
Administrative Agent a new Borrowing Base Certificate signed by an
Authorized Financial Officer of the Borrower, calculating (in
reasonable detail) the Borrowing Base after giving effect to such
financing, and the aggregate outstanding principal amount of Loans and
Letter of Credit Outstandings after giving effect to such financing
(and any repayment required under Section 3.02) shall not exceed the
revised Borrowing Base, (D) the Borrower or such Subsidiary
concurrently makes any payments required under Sections 2.01 and 3.02
as a result of such financing, and (E) at least 10 Business Days prior
written notice of such financing is given by the Borrower to the
Administrative Agent (or such shorter notice as may be acceptable to
the Administrative Agent).
8.05 Advances, Investments and Loans. The REIT will not, and
will not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents (each of the foregoing an "Investment" and,
collectively, "Investments"), except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in
the ordinary course of business and payable or dischargeable in
accordance with customary terms;
(ii) the Borrower and its Subsidiaries may acquire and hold
cash and Cash Equivalents;
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(iii) the Borrower and the Subsidiary Guarantors may
purchase or provide Borrowing Base Pledged Mortgage Loans in
accordance with Section 8.02(viii) and Subsidiaries of the Borrower
that are not Subsidiary Guarantors may purchase or provide Mortgage
Loans that are not Borrowing Base Pledged Mortgage Loans in accordance
with Section 8.02(ix);
(iv) the Borrower and the Subsidiary Guarantors may make
intercompany loans to one another so long as (i) each such
intercompany loan is evidenced by an Intercompany Note which shall be
pledged to the Collateral Agent pursuant to the Pledge Agreement, and
(ii) any intercompany loan made by any Subsidiary Guarantor that is
not a wholly-owned Subsidiary of the Borrower shall contain the
subordination provisions set forth in Exhibit O;
(v) The REIT may make cash equity contributions to the
Borrower;
(vi) subject to the restrictions set forth in Section 8.16,
the Borrower and its Subsidiaries may make additional Investments so
long as (i) no Default or Event of Default then exists or would result
therefrom, (ii) after giving effect to any such Investment, the
aggregate principal amount of Loans then outstanding and Letter of
Credit Outstandings shall not exceed the Borrowing Base then in effect
and (iii) any Investments that are made by the Borrower or a
Subsidiary Guarantor pursuant to this Section 8.05(vi) in the form of
a loan shall be evidenced by a promissory note and shall be pledged to
the Collateral Agent pursuant to the Pledge Agreement;
(vii) the REIT and its Subsidiaries may hold the stock or
other interests in their respective Subsidiaries; and
(viii) the REIT may make the Specified Loans.
8.06 Transactions with Affiliates. The REIT will not, and
will not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions with any Affiliate of the REIT or any of its
Subsidiaries, other than in the ordinary course of business and on terms and
conditions substantially as favorable to the REIT or such Subsidiary as would
reasonably be obtained by the REIT or such Subsidiary at that time in a
comparable arm's-length transaction with a Person other than an Affiliate,
except that:
(i) Dividends may be paid to the extent provided in Section
8.03; and
(ii) loans may be made and other transactions may be entered
into by the REIT and its Subsidiaries to the extent permitted by
Section 8.04 or 8.05.
8.07 Capital Expenditures. The REIT will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures if after
giving effect thereto a Default or an Event of Default would exist.
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8.08 Minimum Equity Value; Minimum Tangible Net Worth. The
REIT will not permit its Equity Value to be less than $70,000,000 at any time
and the REIT will not permit the Tangible Net Worth of the REIT and its
Subsidiaries to be less than $100,000,000 at any time.
8.09 Total Leverage Ratio. The REIT will not permit the
ratio of Consolidated Indebtedness to Book Value to exceed 70.0% at any time.
8.10 Minimum Interest Coverage Ratio. The REIT will not
permit the ratio of Consolidated EBITDA to Consolidated Interest Expense for
the Test Period then ended to be less than 2.0:1.0 at any time.
8.11 Public REIT Status. The REIT will not cease, for any
reason, to maintain (i) its qualification as a real estate investment trust
under Sections 856 through 860 of the Code or (ii) its status as a publicly
traded, stock exchange listed company.
8.12 Limitation on Creation of Subsidiaries. The REIT will
not, and will not permit any of its Subsidiaries to, establish, create or
acquire any additional Subsidiaries, except that the Borrower and its
wholly-owned Subsidiaries shall be permitted to establish, create or acquire
wholly-owned Subsidiaries and, to the extent permitted by Section 8.02(viii),
Section 8.02(ix) and Section 8.05(vi), non-wholly-owned Subsidiaries, in each
case in connection with the acquisition of new Properties and the provision or
purchase of Mortgage Loans that are not Borrowing Base Pledged Mortgage Loans
permitted by Section 8.02(viii) and Section 8.02 (ix) and Investments
permitted by Section 8.05(vi), as the case may be, so long as (i) the capital
stock of such new Subsidiary (to the extent that same is a corporation and is
owned by a Credit Party) is pledged pursuant to the Pledge Agreement and any
certificates representing such stock, together with undated stock powers duly
executed in blank, are delivered to the Collateral Agent, (ii) the partnership
or limited liability company interests of such new Subsidiary (to the extent
that same is a partnership or limited liability company and is owned by a
Credit Party) are pledged and assigned pursuant to the Pledge and Security
Agreement and (iii) any such new Subsidiary which owns a Borrowing Base
Property or a Borrowing Base Pledged Mortgage Loan and/or an equity interest
(both directly and indirectly) in any other Subsidiary which owns a Borrowing
Base Property or a Borrowing Base Pledged Mortgage Loan executes a counterpart
of the Subsidiaries Guaranty, the Pledge Agreement, the Pledge and Security
Agreement and the Security Agreement, and (iv) any such new Subsidiary which
owns a Borrowing Base Property or a Borrowing Base Pledged Mortgage Loan
and/or an equity interest in any other Subsidiary which owns a Borrowing Base
Property or a Borrowing Base Pledged Mortgage Loan shall take all actions
required pursuant to Section 7.11. In addition, each such new Subsidiary which
owns a Borrowing Base Property or a Borrowing Base Pledged Mortgage Loan
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and/or an equity interest in any other Subsidiary which owns a Borrowing Base
Property or a Borrowing Base Pledged Mortgage Loan shall execute and deliver,
or cause to be executed and delivered, all other relevant documentation of the
type described in Section 4 as such new Subsidiary would have had to deliver
if such new Subsidiary were a Credit Party on the Effective Date.
Notwithstanding the foregoing provisions of this Section 8.12, the Credit
Parties shall not be required to pledge their shareholder, partnership or
limited liability company interests in a new Subsidiary which does not own a
Borrowing Base Property or a Borrowing Base Pledged Mortgage Loan and/or an
equity interest in any other Subsidiary which owns a Borrowing Base Property
or a Borrowing Base Pledged Mortgage Loan if each of the following conditions
are satisfied: (i) such Subsidiary is formed for the purpose of acquiring a
Property or providing or purchasing a Mortgage Loan, which transaction is to
be financed with Permitted Non-Recourse Indebtedness, (ii) the lender
providing such Permitted Non-Recourse Indebtedness has not agreed (after
commercially reasonable request made by the relevant Credit Party) to permit
the pledge of equity in such Subsidiary, and (iii) each Credit Party owning a
shareholder, partnership or limited liability company interest in such
Subsidiary agrees that it will not cause, suffer or permit the encumbrance of
such shareholder, partnership or limited liability company interest by any
Lien (other than Permitted Liens), whether voluntarily, by operation of law or
otherwise.
8.13 Limitation on Payments of Certain Indebtedness;
Modifications of Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Agreements; etc. The REIT will not, and
will not permit any of its Subsidiaries to, (i) make (or give any notice in
respect of) any voluntary or optional payment or prepayment on or redemption
or acquisition for value of, or any prepayment or redemption as a result of
any change of control or similar event of, including, in each case without
limitation, by way of depositing with the trustee with respect thereto money
or securities before due for the purpose of paying when due, any Permitted
Non-Recourse Indebtedness, (ii) make (or give any notice in respect of) any
payment or prepayment on or redemption or acquisition for value of, including,
in each case without limitation, by way of depositing with any trustee with
respect thereto money or securities before due for the purpose of paying when
due, any principal, premium, interest or other amounts on the Existing
Indebtedness, provided that, so long as no Default or Event of Default then
exists, the Borrower may make the scheduled principal and interest payments on
the Existing Indebtedness, (iii) amend or modify, or permit the amendment or
modification of, any provision of any Permitted Non-Recourse Indebtedness or
any agreement (including, without limitation, any purchase agreement,
indenture or loan agreement) related thereto (other than any amendment or
modification thereto which would not violate or be inconsistent with any of
the terms or provisions of this Agreement and could not reasonably be expected
to be adverse to the interests of the Banks in any material respect), (iv)
amend or modify, or permit the amendment or modification of, any provision of
the Debt Agreements, or (v) amend, modify or change its declaration of trust,
certificate of incorporation (including, without limitation, by the filing or
modification of any certificate of designation), by-laws, certificate of
partnership, partnership agreement or any equivalent organizational document,
or any agreement entered into by it, with respect to its capital stock or
other equity interests, or enter into any new agreement with respect to its
capital stock or other equity interests, other than any amendments,
modifications or changes pursuant to this clause (v) or any such new
agreements which are not adverse in any material respect to the interests of
the Banks, provided that in no event shall any amendments, modifications or
changes to the terms of the capital stock of the REIT, or any Subsidiary of
the REIT be permitted, other than any amendments which change the number of
authorized shares of capital stock.
8.14 Limitation on Certain Restrictions on Subsidiaries. The
REIT will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
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any encumbrance or restriction on the ability of any Subsidiary of the
Borrower to (a) pay dividends or make any other distributions on its capital
stock or any other interest or participation in its profits owned by the
Borrower or any of its Subsidiaries, or pay any Indebtedness owed to the
Borrower or any Subsidiary of the Borrower, (b) make loans or advances to the
Borrower or any Subsidiary of the Borrower or (c) transfer any of its
properties or assets to the Borrower or any Subsidiary of the Borrower, except
in each case for such encumbrances or restrictions existing under or by reason
of (i) applicable law, (ii) this Agreement and the other Credit Documents,
(iii) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Borrower or any Subsidiary of the
Borrower, (iv) customary provisions restricting assignment of any licensing
agreement entered into by the Borrower or any Subsidiary of the Borrower in
the ordinary course of business, (v) customary provisions restricting the
transfer of assets subject to Liens permitted under Section 8.01(vii) and (vi)
restrictions existing in any document executed in connection with any
Permitted Non-Recourse Indebtedness so long as such restrictions only apply to
the Specified Subsidiary that has incurred such Permitted Non-Recourse
Indebtedness.
8.15 Limitation on Issuance of Capital Stock. The REIT will
not permit any of its Subsidiaries other than the Borrower to issue any
capital stock (including by way of sales of treasury stock) or other equity
interests or any options or warrants to purchase, or securities convertible
into, capital stock or other equity interests, except (i) for transfers and
replacements of then outstanding shares of capital stock or other equity
interests, (ii) for stock splits, stock dividends and similar or additional
issuances which do not decrease the percentage ownership of the REIT or any of
its Subsidiaries in any class of the capital stock or other equity interests
of such Subsidiary and (iii) to qualify directors to the extent required by
applicable law.
8.16 Business. The REIT will not, and will not permit any of
its Subsidiaries to, engage (directly or indirectly) in any business other
than the business of the REIT and its Subsidiaries described in the
Registration Statement.
8.17 Borrowing Base. The Borrower will not permit the
outstanding balance of Loans and Letter of Credit Outstandings at any time to
exceed the Borrowing Base. The Administrative Agent may, at any time and from
time to time in its sole discretion, recalculate the Borrowing Base (by
recalculating the Borrowing Base amounts attributable to any or all of the
Borrowing Base Collateral), and shall notify the Borrower in writing if,
following any such recalculation, the outstanding principal balance of Loans
and Letter of Credit Outstandings exceeds the Borrowing Base. The Borrower
shall repay Loans and Letter of Credit Outstandings in accordance with Section
3.02 upon receipt of any such notice from the Administrative Agent.
SECTION 9. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for five or more Business Days, in the
payment when due of any interest on any Loan or Note, any Unpaid Drawing or
any Fees or any other amounts owing hereunder or under any other Credit
Document; or
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9.02 Representations, etc. Any representation, warranty or
statement made or deemed made by any Credit Party herein or in any other
Credit Document or in any certificate delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made
or deemed made; or
9.03 Covenants. Any Credit Party shall (i) default in the
due performance or observance by it of any term, covenant or agreement
contained in Section 7.01(f)(i), 7.03 or 7.08 or Section 8 or (ii) default in
the due performance or observance by it of any other term, covenant or
agreement contained in this Agreement (other than as provided in Section 9.01)
and such default shall continue unremedied for a period of 30 days after
written notice to the Borrower by the Administrative Agent or the Required
Banks, except that any default under Section 7.13 shall constitute a Special
Mandatory Repayment Event and shall not constitute an Event of Default unless
there is also a default under Section 3.02(f); or
9.04 Default Under Other Agreements. (i) The REIT or any of
its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y)
default in the observance or performance of any agreement or condition
relating to any Indebtedness (other than the Obligations) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or (ii) any
Indebtedness (other than the Obligations) of the REIT or any of its
Subsidiaries shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, provided that it shall not be a Default or an Event
of Default under clauses (i) or (ii) of this Section 9.04 unless the aggregate
outstanding principal amount of all Indebtedness as described in such clauses
(i) and (ii) is at least $10,000,000; or
9.05 Bankruptcy, etc. The REIT or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the REIT or any of its Subsidiaries and the petition is not
controverted within 30 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code)
is appointed for, or takes charge of, all or substantially all of the property
of the REIT or any of its Subsidiaries or the REIT or any of its Subsidiaries
commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating
to the REIT or any of its Subsidiaries, or there is commenced against the REIT
or any of its Subsidiaries any such proceeding which remains undismissed for a
period of 60 days, or the REIT or any of its Subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered and is not vacated or stayed within 60
days; or the REIT or any of its Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to
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continue undischarged or unstayed for a period of 60 days; or the REIT or any
of its Subsidiaries makes a general assignment for the benefit of creditors;
or any partnership and/or corporate action is taken by the REIT or any of its
Subsidiaries for the purpose of effecting any of the foregoing; provided,
however, that the occurrence of any of the events described in this Section
9.05 with respect to a Subsidiary of the REIT that is not the Borrower or a
Subsidiary Guarantor and is not a Subsidiary of the REIT to which more than
$25,000,000 of Book Value is attributable shall not be a Default or an Event
of Default; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof under Section 412
of the Code or Section 302 of ERISA or a waiver of such standard or extension
of any amortization period is sought or granted under Section 412 of the Code
or Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation 4043.61 (without regard to subparagraph (b)(1)
thereof) and an event described in subsection .62, .63, .64., .65, .66, .67 or
.68 or PBGC Regulation Section 4043 shall be reasonably expected to occur with
respect to such Plan within the following 30 days, any Plan or Multiemployer
Plan shall have had or is likely to have the PBGC seek to appoint a trustee to
administer such Plan, any Plan or Multiemployer Plan is, shall have been or is
likely to be terminated or to be the subject of termination proceedings under
ERISA, any Plan shall have an Unfunded Current Liability, a contribution
required to be made by the REIT, any Subsidiary of the REIT or any ERISA
Affiliate to a Plan has not been timely made, the REIT or any of its
Subsidiaries or ERISA Affiliates has incurred or is likely to incur a
liability to or on account of a Plan or Multiemployer Plan under ERISA or the
Code, or on account of a group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code, or
the REIT or any of its Subsidiaries or ERISA Affiliates has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA)
of the REIT or any of its Subsidiaries that is not tax-qualified under Section
401(a) of the Code or Plans; and (b) there shall result from any such event or
events the imposition of a lien, the granting of a security interest, or a
liability or a material risk of incurring a liability; and (c) such lien,
security interest or liability, individually and/or in the aggregate, in the
reasonable opinion of the Required Banks, has had, or could reasonably be
expected to have, a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the REIT, the REIT and its Subsidiaries taken as a whole, the Borrower or
the Borrower and its Subsidiaries taken as a whole; or
9.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full
force and effect, or shall cease to give the Collateral Agent for the benefit
of the Secured Creditors the Liens, rights, powers and privileges purported to
be created thereby (including, without limitation, a perfected security
interest in, and Lien on, all of the Collateral), in favor of the Collateral
Agent, superior to and prior to the rights of all third Persons (except as
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permitted by Section 8.01), and subject to no other Liens (except as permitted
by Section 8.01), or any Credit Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any of the Security Documents and such default shall
continue beyond any grace period specifically applicable thereto pursuant to
the terms of such Security Document; or
9.08 Guaranty. Any Guaranty shall cease to be in full force
or effect as to the relevant Guarantor, or any Guarantor or Person acting by
or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under the relevant Guaranty, or any Guarantor shall default in the
due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to the relevant Guaranty and such default
shall continue beyond any grace period specifically applicable thereto
pursuant to the terms of such Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be
entered against the REIT or any of its Subsidiaries involving in the aggregate
for the REIT and its Subsidiaries a liability (not paid or not fully covered
by a reputable and solvent insurance company) and such judgments and decrees
either shall be final and non-appealable or shall not be vacated, discharged
or stayed or bonded pending appeal for any period of 30 consecutive days, and
the aggregate amount of all such judgments equals or exceeds $10,000,000; or
9.10 Change of Control. A Change of Control shall occur; or
9.11 Initial Borrowing Base Collateral. An Event of Default
shall occur under Section 4.13(c); then, and in any such event, and at any time
thereafter, if any Event of Default shall then be continuing, the Administrative
Agent, upon the written request of the Required Banks, shall by written notice
to the Borrower, take any or all of the following actions, without prejudice to
the rights of the Administrative Agent, any Bank, the Issuing Bank or the holder
of any Note to enforce its claims against any Credit Party (provided, that, if
an Event of Default specified in Section 9.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Administrative Agent to the Borrower as specified in clauses (i) and (ii) below
shall occur automatically without the giving of any such notice): (i) declare
the Total Commitment terminated, whereupon the Commitment of each Bank shall
forthwith terminate immediately; (ii) declare the principal of and any accrued
interest in respect of all Loans and the Notes and all other Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Credit Party; (iii) terminate any Letter
of Credit which may be terminated in accordance with its terms; (iv) enforce, as
Collateral Agent, all of the Liens and security interests created pursuant to
the Security Documents; and (v) direct the Borrower to pay (and the Borrower
hereby agrees upon receipt of such notice, or upon the occurrence of any Event
of Default specified in Section 9.05, to pay) to the Collateral Agent at the
Payment Office such additional amounts of cash, to be held as security for the
Borrower's reimbursement obligations in respect of Letters of Credit then
outstanding, equal to the aggregate Stated Amount of all Letters of Credit then
outstanding.
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SECTION 10. Definitions and Accounting Terms.
10.01 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Addition Date" shall mean the date upon which a Qualified
Property or a Qualified Mortgage Loan is added to the Borrowing Base, which
date shall be the later to occur of (i) the date on which such Qualified
Property is acquired or such Qualified Mortgage Loan is provided or purchased,
as applicable, and (ii) the date on which all the conditions set forth in
Sections 7.11 and 8.02(viii) shall have been satisfied with respect to such
Qualified Property or Qualified Mortgage Loan.
"Administrative Agent" shall mean German American Capital
Corporation, in its capacity as Administrative Agent for the Banks hereunder,
and shall include any successor to the Administrative Agent appointed pursuant
to Section 11.01 or 11.09.
"Affiliate" shall mean, with respect to any Person, any
other Person (i) directly or indirectly controlling (including, but not
limited to, all directors, officers and general partners of such Person)
controlled by, or under direct or indirect common control with, such Person or
(ii) that directly or indirectly owns more than 10% of any class of the voting
securities or capital stock of or equity interests in such Person. A Person
shall be deemed to control another Person if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the management
and policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed, refinanced or replaced
from time to time.
"Applicable Margin" shall mean: (a) with respect to a
Eurodollar Loan, (i) 1.80%, if the Borrowing Base LTV is greater than 60.0% at
the commencement of the applicable Interest Period; (ii) 1.65%, if the
Borrowing Base LTV is equal to or less than 60.0% and greater than 50.0% at
the commencement of the applicable Interest Period; and (iii) 1.50%, if the
Borrowing Base LTV is equal to or less than 50.0% at the commencement of the
applicable Interest Period; and (b) with respect to a Base Rate Loan, 1.0%.
"Appraisal" shall mean a written appraisal prepared by an
independent MAI appraiser engaged by and acceptable to the Administrative
Agent, prepared in accordance with the Administrative Agent's customary
independent appraisal requirements and in compliance with all applicable
regulatory requirements, including 12 C.F.R. Part 34-Subpart C, and otherwise
in form, scope and substance satisfactory to the Administrative Agent.
"Appraised Value" shall mean, as to any Borrowing Base
Property, the as-is fair market value of such Borrowing Base Property as
reflected in the then most recent Appraisal of such Borrowing Base Property
delivered pursuant to Section 7.11(i) or Section 7.15, as the case may be.
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"Approved Bank" shall have the meaning provided in the
definition of "Cash Equivalents."
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit P
(appropriately completed).
"Authorized Financial Officer" of any Credit Party shall
mean any of the President, the Chief Financial Officer, the Treasurer or the
Chief Accounting Officer of such Credit Party or any other officer of such
Credit Party designated in writing to the Administrative Agent by any of the
foregoing officers of such Credit Party as being authorized to act in such
capacity so long as the other officer is a financial person who works in such
Credit Party's controller's or accounting office.
"Authorized Officer" of any Credit Party shall mean any of
the President, any Authorized Financial Officer or any Vice-President of such
Credit Party or any other officer of such Credit Party which is designated in
writing to the Administrative Agent by any of the foregoing officers of such
Credit Party as being authorized to give such notices under this Agreement.
"Bank" shall mean each financial institution listed on
Schedule I, as well as any Person which becomes a "Bank" hereunder pursuant to
12.04(b).
"Bank Debt" shall mean, at any time, the aggregate
outstanding principal amount of all Loans at such time.
"Bank Default" shall mean (i) the refusal (which has not
been retracted) of a Bank to make available its portion of any Borrowing or to
fund its portion of any unreimbursed payment under Section 1.16(c) in
violation of this Agreement or (ii) a Bank having notified in writing the
Borrower and/or the Administrative Agent that it does not intend to comply
with its obligations under Section 1.01(a), 1.16 or 1.18, including, without
limitation, as a result of any takeover of such Bank by any regulatory
authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" shall mean, as determined by DB on a daily
basis, the higher of (a) the Prime Lending Rate or (b) the sum of the Federal
Funds Rate plus 1/2 of 1% per annum. With reference to clause (a) above, the
Borrower acknowledges that the rate thereunder is a reference rate only and
does not necessarily represent DB's lowest or best rate actually charged to
any customer, and DB may make commercial loans or other loans at rates of
interest at, above or below such rate.
"Base Rate Loan" shall mean each Loan designated or deemed
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
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"Book Value" shall mean, at any time, the aggregate value of
all assets of the REIT and its Subsidiaries, as reflected on the consolidated
balance sheet of the REIT and its Subsidiaries in accordance with GAAP.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan
from all the Banks on a given date (or resulting from a conversion or
conversions on such date) having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of the related Borrowing of Eurodollar Loans.
"Borrowing Base" shall mean, as of any date of
determination, the amount determined by the Administrative Agent to be equal
to the sum of the Borrowing Base Amounts in respect of all Borrowing Base
Properties and all Borrowing Base Pledged Mortgage Loans as of such date of
determination.
"Borrowing Base Amount" shall mean, as of any date of
determination, (i) with respect to any Borrowing Base Property, (x) 60% of the
Market Value of such Borrowing Base Property if the lessee's obligations under
the Operating Lease encumbering such Borrowing Base Property have not been
fully guaranteed by an Eligible Guarantor or (y) 80% of the Market Value of
such Borrowing Base Property if the lessee's obligations under the Operating
Lease encumbering such Borrowing Base Property have been fully guaranteed by
an Eligible Guarantor, (ii) with respect to any Borrowing Base Pledged
Mortgage Loan that is not a construction loan, (x) 60% of the Market Value of
such Borrowing Base Pledged Mortgaged Loan if the obligations of the borrower
under such Mortgage Loan have not been fully guaranteed by an Eligible
Guarantor or (y) 80% of the Market Value of such Borrowing Base Pledged
Mortgage Loan if the obligations of the borrower under such Mortgage Loan have
been fully guaranteed by an Eligible Guarantor, and (iii) with respect to any
Borrowing Base Pledged Mortgaged Loan that is a construction loan, 60% of the
maximum principal balance of such Borrowing Base Pledged Mortgaged Loan,
provided that, except for the Specified Mortgage Loan, no Mortgage Loan that
is a construction loan shall be a Qualified Mortgage Loan unless all of the
obligations of the borrower under such Mortgage Loan have been guaranteed by
an Eligible Guarantor.
"Borrowing Base Certificate" shall mean a certificate signed
by an Authorized Financial Officer of the Borrower in the form of Exhibit L.
"Borrowing Base Collateral" shall mean and include, as of
any date, all Borrowing Base Properties and all Borrowing Base Pledged
Mortgage Loans.
"Borrowing Base Guaranty" shall mean either (x) a guaranty
in form and substance satisfactory to the Administrative Agent of the
obligations of an Operating Lessee under an Operating Lease or (y) a guaranty
in form and substance satisfactory to the Administrative Agent of the
obligations of a borrower under a Borrowing Base Pledged Mortgage Loan, in
either case, provided by an Eligible Guarantor.
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"Borrowing Base LTV" shall mean, as of any date, the ratio
of the outstanding principal balance of Loans and Letter of Credit
Outstandings to the aggregate Market Value of all Borrowing Base Collateral.
"Borrowing Base Pledged Mortgage Loan" shall mean each
Qualified Mortgage Loan that is included in the Borrowing Base.
"Borrowing Base Property" shall mean each Qualified Property
that is included in the Borrowing Base.
"Business Day" shall mean (i) for all purposes other than
as covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) above and which is also a day
for trading by and between banks in the New York interbank Eurodollar market.
"Calculation Period" shall mean the period of four
consecutive fiscal quarters last ended before the date of the respective event
or incurrence which requires calculations to be made on a Pro Forma Basis.
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures by such Person which should be capitalized in
accordance with generally accepted accounting principles and, without
duplication, the amount of Capitalized Lease Obligations incurred by such
Person.
"Capitalized Lease Obligations" shall mean, with respect to
any Person, all rental obligations of such Person which, under generally
accepted accounting principles, are or will be required to be capitalized on
the books of such Person, in each case taken at the amount thereof accounted
for as indebtedness in accordance with such principles.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (ii) U.S.
dollar denominated time deposits, certificates of deposit and bankers
acceptances of (x) any Bank or (y) any bank whose short-term commercial paper
rating from S&P is at least A-1 or the equivalent thereof or from Moody's is
at least P-1 or the equivalent thereof (any such bank or Bank, an "Approved
Bank"), in each case with maturities of not more than six months from the date
of acquisition, (iii) commercial paper issued by any Approved Bank or by the
parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody's, or guaranteed by any
industrial company with a long term unsecured debt rating of at least A or A2,
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or the equivalent of each thereof, from S&P or Moody's, as the case may be,
and in each case maturing within six months after the date of acquisition,
(iv) marketable direct obligations issued by the District of Columbia or any
state of the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within six months from
the date of acquisition thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from either S&P or Moody's and (v)
investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Casualty Event" shall mean any loss, physical destruction,
damage or similar event with respect to any Borrowing Base Property or any
Mortgage Loan Property securing a Borrowing Base Pledged Mortgage Loan (or, in
either case, any portion thereof).
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as the same may be amended
from time to time, 42 U.S.CA. ss. 9601 et seq.
"Change of Control" shall mean (i) any Person or "group"
(within the meaning of rules 13d-3 or 13d-5 under the Exchange Act (as in
effect on the Effective Date)) shall (A) have acquired beneficial ownership of
25% or more on a fully diluted basis of the voting and/or economic interest in
the capital stock of the REIT or (B) have obtained power (whether or not
exercised) to elect a majority of the trustees of the REIT, (ii) the Board of
Trustees of the REIT shall cease to consist of a majority of Continuing
Trustees or (iii) the failure of the REIT or a wholly-owned Subsidiary of the
REIT to be the sole general partner of the Borrower.
"Claims" shall have the meaning provided in the definition
of "Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provision of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been granted (or
purported to be granted) pursuant to any Security Document, including, without
limitation, all Pledge Agreement Collateral, all Pledge and Security Agreement
Collateral, all Security Agreement Collateral and all Borrowing Base
Collateral.
"Collateral Agent" shall mean the Administrative Agent
acting as collateral agent for the Secured Creditors pursuant to the Security
Documents.
"Collateral Assignment" shall mean each Assignment of
Mortgage and Pledge Agreement required to be delivered pursuant to the terms
of this Agreement, substantially in the form of Exhibit K annexed hereto.
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"Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I directly below the column entitled
"Commitment," as same may be (x) reduced from time to time pursuant to
Sections 2.02, 2.03 and/or 9 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 12.04(b).
"Completion Certificate" shall mean a certificate of an
architect or engineer substantially in the form of Exhibit R, delivered to the
Administrative Agent pursuant to Section 7.16(f).
"CON" shall have the meaning set forth in Section 6.14(b).
"Condemnation Proceeds" shall mean all compensation, awards,
damages, rights of action and proceeds awarded to any Credit Party or any of
its Subsidiaries by reason of any Taking at a Borrowing Base Property.
"Consolidated EBIT" shall mean, for any period, Consolidated
Net Income for such period before Consolidated Interest Expense and provision
for taxes for such period and without giving effect (x) to any extraordinary
gains or losses and (y) to any gains or losses from sales of assets other than
from sales of inventory sold in the ordinary course of business.
"Consolidated EBITDA" shall mean, for any period,
Consolidated EBIT for such period, adjusted by adding thereto the amount of
all amortization of intangibles and depreciation that were deducted in
arriving at Consolidated EBIT for such period.
"Consolidated Indebtedness" shall mean, at any time, the
principal amount of all Indebtedness of the REIT and its Subsidiaries at such
time as determined on a consolidated basis.
"Consolidated Interest Expense" shall mean, for any period,
the total consolidated interest expense of the REIT and its Subsidiaries for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, that portion of Capitalized Lease
Obligations of the REIT and its Subsidiaries representing the interest factor
for such period, provided that the amortization of deferred financing, legal
and accounting costs with respect to the IPO shall be excluded from
Consolidated Interest Expense to the extent same would otherwise have been
included therein.
"Consolidated Net Income" shall mean, for any period, the
net income (or loss) of the REIT and its Subsidiaries for such period,
determined on a consolidated basis (after any deduction for minority
interests), provided that in determining Consolidated Net Income, (i) the net
income of any other Person which is not a Subsidiary of the REIT or is
accounted for by the REIT by the equity method of accounting shall be included
only to the extent of the payment of cash dividends or distributions by such
other Person to the REIT or a Subsidiary thereof during such period, (ii) the
net income (or loss) of any other Person acquired by such specified Person or
a Subsidiary of such Person in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iii) the
net income of any Subsidiary of the Borrower shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that
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Subsidiary of its income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument or law applicable to such
Subsidiary.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person as a result of such Person being a general partner
of the other Person, unless the underlying obligation is expressly made
non-recourse as to such general partner, and any obligation of such Person
guaranteeing or intended to guarantee any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (iv) otherwise to assure or hold harmless the
holder of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"Continuing Trustees" shall mean the Trustees of the REIT on
the Effective Date and each other Trustee, if such other Trustee's nomination
for election to the Board of Trustees of the REIT is recommended by a majority
of the then Continuing Trustees or is recommended by a committee of the Board
of Trustees a majority of which is composed of the then Continuing Trustees.
"Control Agreements" shall mean Control Agreements in the
form of Annex D to the Pledge and Security Agreement.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, each Security Document and each Guaranty.
"Credit Parties" shall mean the REIT, the Borrower and each
Subsidiary Guarantor.
"Creditors" shall mean and include the Administrative Agent,
the Collateral Agent, the Issuing Bank, each Bank and each Person (other than
any Credit Party) party to an Interest Rate Protection Agreement or Other
Hedging Agreement to the extent such Person constitutes a Secured Creditor
under the Security Documents.
"DB" shall mean Deutsche Bank AG, New York Branch.
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"Debt Agreements" shall have the meaning provided in Section
4.05.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which
a Bank Default is in effect.
"Determination Date" shall have the meaning provided in the
definition of "Pro Forma Basis."
"Dividends" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to its
shareholders, partners or members or authorized or made any other
distribution, payment or delivery of property (other than common stock, common
shares of beneficial interest or other common equity interests of such Person)
or cash to its shareholders, partners or members as such, or redeemed,
retired, purchased or otherwise acquired, directly or indirectly, for a
consideration any shares of any class of its capital stock, shares of
beneficial interest or any other equity interests outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock, shares of beneficial interest or other equity interest),
or set aside any funds for any of the foregoing purposes, or shall have
permitted any of its Subsidiaries to purchase or otherwise acquire for
consideration any shares of any class of the capital stock, shares of
beneficial interest or any partnership or member interests of such Person
outstanding on or after the Effective Date (or any options or warrants issued
by such Person with respect to its capital stock, shares of beneficial
interest or other equity interest). Without limiting the foregoing,
"Dividends" with respect to any Person shall also include all payments made or
required to be made by such Person with respect to any share appreciation
rights, plans, equity incentive or achievement plans or any similar plans or
setting aside of any funds for the foregoing purposes.
"DOL" shall mean the U.S. Department of Labor.
"Dollars" and the sign "$" shall each mean freely
transferable lawful money of the United States.
"Draw Fee" shall have the meaning provided in Section 2.01.
"Drawing" shall have the meaning provided under Section
1.17(b).
"Effective Date" shall have the meaning provided in Section
12.10.
"Eligible Guarantor" shall mean Genesis, Multicare, Senior
LifeChoice or another Person approved as such by the Required Banks.
"Eligible Transferee" shall mean and include a commercial
bank, financial institution, any fund that invests in bank loans or any other
"accredited investor" (as defined in Regulation D under the Securities Act).
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"Engineering Report" shall have the meaning provided in
Section 7.11(viii).
"Environmental Claims" shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, investigations
or proceedings relating in any way to any Environmental Law (hereafter
"Claims") or any permit issued under any such law, including, without
limitation, (a) any and all Claims by governmental or regulatory authorities
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal,
state, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment relating to the
environment, Hazardous Materials or employee health or safety relating to
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.CA. ss. 2601 et seq.; the Clean Air Act,
42 U.S.CA. ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.CA. ss. 3803
et seq.; the Oil Pollution Act of 1990, 33 U.S.CA. ss. 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.CA. ss.
11001 et seq.; the Hazardous Material Transportation Act, 49 U.S.CA. ss. 1801
et seq.; the Occupational Safety and Health Act, 29 U.S.CA. ss. 651 et seq.
(to the extent it regulates occupational exposure to Hazardous Materials); and
any state and local or foreign counterparts or equivalents, in each case as
amended from time to time.
"Environmental Report" shall have the meaning provided in
Section 7.11(vii).
"Equity Value" shall mean, as of any calculation date, (x)
the current share price of common stock in the REIT, multiplied by (y) the
number of shares of common stock in the REIT then outstanding.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the REIT or any Subsidiary of the
REIT would be deemed to be a "single employer" within the meaning of Section
414(b),(c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.
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"Eurodollar Rate" shall mean (i) the rate determined by the
Administrative Agent to be the arithmetic mean (rounded to the nearest 1/100
of 1%) of the offered rates for deposits in Dollars for the applicable
Interest Period (or the period closest to such applicable Interest Period)
which appear on Telerate Screen 3740 or 3750 with maturities comparable to
such Interest Period, determined as of 10:00 A.M. (London time) on the date
which is two Business Days prior to the commencement of such Interest Period
divided (and rounded upward to the next whole multiple of 1/16 of 1%) by (ii)
a percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in
Section 9.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Excluded Subsidiaries" shall mean (i) ET Sub-Riverview
Ridge Limited Partnership, L.L.P., (ii) ET Sub-Highgate, L.P., (iii) ET
Sub-Woodbridge, L.P., (iv) ET Sub-Belvedere Limited Partnership, L.L.P., (v)
ET Sub-Lacey I, L.L.C., (vi) ET Sub-Willowbrook Limited Partnership, L.L.P.,
and (vii) ET Sub-Phillipsburg I Limited Partnership, L.L.P.
"Excusable Delay" shall mean a delay due to acts of God,
governmental restrictions, enemy actions, war, civil commotion, fire,
casualty, strikes, shortages of supplies or labor, work stoppages or other
causes beyond the reasonable control of the REIT, any of its Subsidiaries or
any Operating Lessee or Manager, but lack of funds shall not be deemed a cause
beyond such reasonable control.
"Existing Indebtedness" shall have the meaning provided in
Section 6.22.
"Extension Request" shall have the meaning provided in
Section 2.03(b).
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate quoted to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or
referred to in Section 2.01.
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"FF&E" shall mean, with respect to any Property, any
furniture, fixtures and equipment, including any beds, lamps, bedding, tables,
chairs, sofas, curtains, carpeting, smoke detectors, mini bars, paintings,
decorations, televisions, telephones, radios, desks, dressers, towels,
bathroom equipment, heating, cooling, lighting, laundry, incinerating,
loading, swimming pool, landscaping, garage and power equipment, machinery,
engines, vehicles, fire prevention, refrigerating, ventilating and
communications apparatus, carts, dollies, elevators, escalators, kitchen
appliances, restaurant equipment, computers, reservation systems, software,
cash registers, switchboards, cleaning equipment or other items of furniture,
fixtures and equipment typically used in senior living care facilities
(including furniture, fixtures and equipment used in patient rooms, lobbies
and common areas (other than those items of furniture, fixtures and equipment
owned by the occupant or tenant in any such room)).
"GAAP" shall have the meaning provided in Section 12.07(a).
"GACC" shall mean German American Capital Corporation in its
individual capacity.
"Genesis" shall mean Genesis Health Ventures, Inc.
"Governmental Authority" shall mean any court, board,
agency, commission, office or authority of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or
otherwise) whether now or hereafter in existence.
"Guaranteed Obligations" shall mean the full and prompt
payment when due (whether at the stated maturity, by acceleration or
otherwise) of the principal of, and interest on each Note issued by, and all
Loans made to, the Borrower under this Agreement and all reimbursement
obligations and Unpaid Drawings with respect to Letters of Credit, together
with all the other obligations and liabilities (including, without limitation,
indemnities, expenses, fees and interest thereon) of the Borrower to the
Creditors now existing or hereafter incurred under, arising out of or in
connection with this Agreement or any other Credit Document and the due
performance and compliance with all the terms, conditions and agreements
contained in the Credit Documents by the Borrower.
"Guarantor" shall mean the REIT and each Subsidiary
Guarantor.
"Guaranty" shall mean the Parent Guaranty and the
Subsidiaries Guaranty.
"Hazardous Materials" shall mean (a) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; and (b) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "restricted hazardous materials," "extremely
hazardous wastes," "restrictive hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar meaning and
regulatory effect under any applicable Environmental Law.
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"Improvements" shall mean all buildings, structures,
fixtures, tenant improvements and other improvements of every kind and
description now or hereafter located in or on or attached to any Real
Property, including all building materials, water, sanitary and storm sewers,
drainage, electricity, steam, gas, telephone and other utility facilities,
parking areas, roads, driveways, walks and other site improvements; and all
additions and betterments thereto and all renewals, substitutions and
replacements thereof.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price
of property or services, (ii) the maximum amount available to be drawn under
all letters of credit issued for the account of such Person and all unpaid
drawings in respect of such letters of credit, (iii) all Indebtedness of the
types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by such Person, whether
or not such Indebtedness has been assumed by such Person (but if not assumed,
then the amount of such Indebtedness shall be deemed to be the lesser of (x)
the fair market value of the property of such Person subject to such Lien and
(y) the amount of such Indebtedness (including principal, interest, fees and
charges)) (iv) the aggregate amount required to be capitalized under leases
under which such Person is the lessee, (v) all obligations of such Person to
pay a specified purchase price for goods or services, whether or not delivered
or accepted, i.e., take-or-pay and similar obligations, (vi) all Contingent
Obligations of such Person, and (vii) all obligations under any Interest Rate
Protection Agreement or Other Hedging Agreement or under any similar type of
agreement or arrangement.
"Information Package" shall mean, with respect to each
Borrowing Base Property and each Borrowing Base Pledged Mortgage Loan (and the
related Mortgage Loan Property), an information package consisting of (i) a
description of such Borrowing Base Property or Borrowing Base Pledged Mortgage
Loan (and the related Mortgage Loan Property), (ii) if available, management's
discussion and analysis of such Borrowing Base Property or Borrowing Base
Pledged Mortgage Loan (and the related Mortgage Loan Property), and discussing
any improvements or changes to be made with respect thereto, (iii) if and to
the extent the relevant Borrowing Base Property or Mortgage Loan Property
securing a Borrowing Base Pledged Mortgage Loan has been operational,
historical financial information (which may be unaudited) for such Borrowing
Base Property or Borrowing Base Pledged Mortgage Loan (and the related
Mortgage Loan Property) for at least the two full fiscal years most recently
ended and the latest 12-month period ended with the last day of the fiscal
quarter last ended (or such shorter period during which the related Property
or Mortgage Loan Property has been operational), (iv) projections for such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan (and the
related Mortgage Loan Property) for the succeeding four years, (v) any
investment memorandum prepared or used in connection with the acquisition of
such Borrowing Base Property or the provision or purchase of such Borrowing
Base Pledged Mortgage Loan and (vi) any other information which the Borrower
determines should be furnished so that the Information Package for such
Borrowing Base Property or Borrowing Base Pledged Mortgage Loan is true and
correct in all material respects and is not incomplete by omitting to state
any fact necessary to make the information (taken as a whole) contained
therein not misleading in any material respect.
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"Initial Borrowing Base Pledged Mortgage Loan" shall mean
each Borrowing Base Pledged Mortgage Loan added to the Borrowing Base on the
Effective Date and identified as such on Schedule VIII.
"Initial Borrowing Base Property" shall mean each Borrowing
Base Property added to the Borrowing Base on the Effective Date and identified
as such on Schedule III.
"Insurance Proceeds" shall mean all insurance proceeds,
damages, claims and rights of action and the right thereto under any insurance
policies relating to any portion of any Borrowing Base Property.
"Intercompany Note" shall mean a promissory note in the form
of Exhibit Q (appropriately completed).
"Interest Determination Date" shall mean, with respect to
any Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedging agreement, interest rate floor agreement or
other similar agreement or arrangement provided by a Bank.
"Investment" shall have the meaning provided in Section 8.05.
"IPO" shall mean the initial public offering of ElderTrust,
to be consummated substantially on the terms described in the Registration
Statement, and otherwise in a manner reasonably satisfactory to the
Administrative Agent.
"Issuing Bank" shall have the meaning provided in the first
paragraph of this Agreement.
"L/C Supportable Obligations" shall mean (i) obligations of
the REIT, the Borrower or any Subsidiary incurred in the ordinary course of
business with respect to insurance obligations and workers' compensation,
surety bonds and other similar statutory obligations, (ii) earnest money or
performance obligations in respect of acquisitions permitted pursuant to the
terms of this Agreement and (iii) such other obligations of the REIT, the
Borrower or any Subsidiary as are permitted to exist pursuant to the terms of
this Agreement.
"Leasehold" of any Person shall mean all of the right, title
and interest of such Person as lessee or licensee in, to and under any lease
or license of land, improvements and/or fixtures.
"Legal Requirements" shall mean, with respect to each
Property and each Mortgage Loan Property, all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
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ordinances, judgments, decrees and injunctions of Governmental Authorities
(including, without limitation, Environmental Laws) affecting such Property or
Mortgage Loan Property (or any part thereof) or the construction, use,
alteration or operation thereof, whether now or hereafter enacted and in
force, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to the REIT or the
Borrower, affecting such Property or Mortgage Loan Property (or any part
thereof), including, without limitation, any such covenants, agreements,
restrictions and encumbrances which may (i) require repairs, modifications or
alterations in or to such Property or Mortgage Loan Property (or any part
thereof), or (ii) in any material way limit the existing use and enjoyment
thereof.
"Letter of Credit" shall have the meaning provided in
Section 1.13.
"Letter of Credit Outstandings" shall mean, at any time, the
sum of the Stated Amount of all Outstanding Letters of Credit and the amount
of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided
in Section 1.15.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Limited Liability Company Interest" shall have the meaning
provided in the Pledge and Security Agreement.
"Loan" shall have the meaning provided in Section 1.01.
"Loan Percentage" of any Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which is the Commitment
of such Bank or such time and the denominator of which is the Total Commitment
at such time, provided that if the Loan Percentage of any Bank is to be
determined after the Total Commitment has been terminated, then the Loan
Percentages of the Banks shall be determined immediately prior (and without
giving effect to) such termination.
"Management Agreement" shall mean (i) in the case of a
Borrowing Base Property that is subject to an Operating Lease, the management
agreement (if any) between the Operating Lessee and a property manager, which
management agreement and manager shall be satisfactory to the Administrative
Agent, or (ii) in the case of a Borrowing Base Property that is not subject to
an Operating Lease, the management agreement between the Borrower or the
Subsidiary Guarantor owning such Borrowing Base Property and a property
manager, which management agreement and manager shall be satisfactory to the
Administrative Agent. Except for the Specified Management Agreements, each
Management Agreement in the nature of that described in clause (i) of the
preceding sentence shall by its terms terminate upon any termination or
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expiration of the related Operating Lease, and each Management Agreement in
the nature of that described in clause (ii) of the preceding sentence shall be
expressly subordinate to the Mortgage encumbering the related Borrowing Base
Property.
"Manager" shall mean a property manager under a Management
Agreement.
"Margin Stock" shall have the meaning provided in Regulation
U.
"Market Value" shall mean, with respect to any Borrowing
Base Collateral at any time, the Administrative Agent's estimate of the
current market value of such Borrowing Base Collateral based upon such method
of analysis as the Administrative Agent shall determine to be reasonable in
its sole discretion; provided, however, that (i) with respect to a Borrowing
Base Property, the Market Value thereof shall not be deemed at any time to
exceed the lesser of (x) the Appraised Value of such Borrowing Base Property
and (y) the purchase price (valued in Dollars) paid by the applicable Credit
Party to acquire such Borrowing Base Property, (ii) with respect to a
Borrowing Base Pledged Mortgage Loan that is not a construction loan, the
Market Value thereof shall not at any time be deemed to exceed the lesser of
(x) the Appraised Value of the Mortgage Loan Property securing such Borrowing
Base Pledged Mortgage Loan and (y) the outstanding principal balance of such
Borrowing Base Pledged Mortgage Loan, and (iii) with respect to a Borrowing
Base Pledged Mortgage Loan that is a construction loan, the Market Value
thereof shall not at any time be deemed to exceed the maximum principal
balance of such Borrowing Base Pledged Mortgage Loan. Whenever a Market Value
determination is required hereunder, the Borrower and its Subsidiaries shall
cooperate with the Administrative Agent in connection with its determination
of such Market Value, including providing all information and documentation
relating thereto reasonably requested by the Administrative Agent.
"Maturity Date" shall have the meaning provided in Section
2.03(b).
"Minimum Borrowing Amount" shall mean $2,000,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each mortgage, deed of trust or deed
to secure debt required to be delivered pursuant to the terms of this
Agreement, together with any assignment of leases and rents to be executed in
connection therewith, substantially in the form of Exhibit I annexed hereto.
"Mortgage Loan" shall mean each loan provided or purchased
by the Borrower or one of its Subsidiaries that is secured by a senior living
care property or medical office building (including the furniture, fixtures
and equipment thereon, except for any furniture, fixtures and equipment which
are owned by individual tenants).
"Mortgage Loan Property" shall mean the senior living care
property or medical office building (including the furniture, fixtures and
equipment thereon, except for any furniture, fixtures and equipment which are
owned by individual tenants) securing a Mortgage Loan.
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"Mortgage Policy" shall mean each mortgage title insurance
policy (and all endorsements thereto) required to be delivered pursuant to
this Agreement.
"Multicare" shall mean The Multicare Companies, Inc.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA subject to Title
IV of ERISA.
"Net Insurance/Condemnation Proceeds" shall mean all
Insurance proceeds on account of any Casualty Event at any Borrowing Base
Property or all Condemnation Proceeds in respect of any Taking of any
Borrowing Base Property, minus the reasonable cost, if any, of recovering such
proceeds and of paying out such proceeds, including reasonable attorneys' fees
and costs allocable to inspecting the Work and the plans and specifications
therefor.
"Non-Defaulting Bank" shall mean and include each Bank other
than a Defaulting Bank.
"Note" shall have the meaning provided in Section 1.05(a).
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice of Renovation/Restoration" shall mean a notice,
substantially in the form of Exhibit S, delivered to the Administrative Agent
pursuant to Sections 7.16(a) and (c).
"Notice Office" shall mean the office of the Administrative
Agent located at 31 West 52nd Street, New York, New York 10019, Attention:
Allison Michaels, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Bank
pursuant to the terms of this Agreement or any other Credit Document.
"Operating Lease" shall mean a lease or sublease relating to
all or substantially all of any Borrowing Base Property between the Borrower
or any Subsidiary Guarantor, as lessor, and an Operating Lessee, as lessee,
which Operating Lease shall be substantially in the form approved by, or
otherwise satisfactory to, the Administrative Agent.
"Operating Lessee" shall mean a lessee under an Operating
Lease satisfactory to the Administrative Agent.
"Original Lender" shall have the meaning provided in Section
7.18.
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"Other Hedging Agreements" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values and that are provided by a Bank.
"Parent Guarantor" shall mean the REIT.
"Parent Guaranty" shall mean the guaranty of the Parent
Guarantor pursuant to Section 13.
"Participant" shall have the meaning provided in Section
1.16(a).
"Partnership Interest" shall have the meaning provided in
the Pledge and Security Agreement.
"Payment Office" shall mean the office of the Administrative
Agent located at 31 West 52nd Street, New York, New York 10019, or such other
office as the Administrative Agent may hereafter designate in writing as such
to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Encumbrances" shall mean, with respect to any
Borrowing Base Property, such exceptions to title as are set forth in the
Mortgage Policy or title commitment delivered with respect thereto, all of
which exceptions must be acceptable to the Administrative Agent in its
reasonable discretion.
"Permitted Liens" shall have the meaning provided in Section
8.01.
"Permitted Non-Recourse Indebtedness" shall mean, with
respect to any Specified Subsidiary, Indebtedness incurred by such Specified
Subsidiary pursuant to Section 8.04(viii) to (x) finance the purchase of (or
assumed at the time of the purchase of) or to finance the renovation of a
Property acquired pursuant to Section 8.02(ix) or (y) to finance the provision
or purchase of a Mortgage Loan pursuant to Section 8.02(ix), which
Indebtedness (i) shall be secured only by such Property or Mortgage Loan, as
the case may be, (ii) shall be made expressly non-recourse to the REIT, the
Borrower and its other Subsidiaries and (iii) shall have (A) a maturity date
of at least two years beyond the Maturity Date, (B) an amortization schedule,
if any, based upon a schedule of no less than 20 years and (C) a market rate
of interest.
"Person" shall mean any individual, partnership, limited
liability company, joint venture, firm, corporation, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section
3(2) of ERISA, which is maintained or contributed to by (or to which there is
an obligation to contribute of) the REIT or any of its Subsidiaries or ERISA
Affiliates, and each such plan for the five-year period immediately following
the latest date on which the REIT or any of its Subsidiaries or ERISA
Affiliates maintained, contributed to or had an obligation to contribute to
such plan.
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"Pledge Agreement" shall have the meaning provided in
Section 4.06.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.
"Pledge and Security Agreement" shall have the meaning
provided in Section 4.07.
"Pledge and Security Agreement Collateral" shall mean all
"Collateral" as defined in the Pledge and Security Agreement.
"Pledged Entity Notices" shall mean Partnership/Limited
Liability Company Notices in the form of Annex C to the Pledge and Security
Agreement.
"Pledged Limited Liability Company" shall have the meaning
provided in the Pledge and Security Agreement.
"Pledged Mortgage Loan Documents" shall mean and include all
documents evidencing and securing a Borrowing Base Pledged Mortgage Loan,
including, without limitation, (i) the mortgage note, (ii) the mortgage, deed
of trust, deed to secure debt or other similar instrument, (iii) the
assignment of leases, if any, (iv) the loan agreement, if any, (v) the
mortgagee title insurance policy relating thereto, and (v) the related
Borrowing Base Guaranty.
"Pledged Partnership Entity" shall have the meaning provided
in the Pledge and Security Agreement.
"Pledged Securities" shall have the meaning provided in the
Pledge Agreement.
"Pledged Stock" shall have the meaning provided in the
Pledge Agreement.
"Prime Lending Rate" shall mean the rate which DB announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. DB may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, with respect to any incurrence
of Indebtedness or acquisition of a Property or a Mortgage Loan (or the equity
interest of the Person or Persons owning such Property or Mortgage Loan), the
calculation of the consolidated results of the Borrower and its Subsidiaries
otherwise determined in accordance with this Agreement as if the respective
Indebtedness or acquisition (and all other Indebtedness incurred or other such
acquisition effected during the respective Calculation Period or thereafter
and on or prior to the date of determination) (each such date, a
"Determination Date") had been effected on the first day of the respective
Calculation Period; provided that all such calculations shall take into
account the following assumptions:
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(i) pro forma effect shall be given to (1) any Indebtedness
incurred subsequent to the end of the Calculation Period and prior to the date
of determination, (2) any Indebtedness incurred during such period to the
extent such Indebtedness is outstanding at the date of determination and (3)
any Indebtedness to be incurred on the date of determination, in each case as
if such Indebtedness had been incurred on the first day of such Calculation
Period and after giving effect to the application of the proceeds thereof;
(ii) with respect to each Property or Mortgage Loan acquired
within one year before the respective Determination Date, and in addition to
any Indebtedness actually incurred and required to be included pursuant to the
other clauses of this definition, it shall be assumed (unless the respective
Property or Mortgage Loan has been sold) either (A) that Loans in an amount
equal to the remainder of (x) the aggregate amount of costs specified with
respect to such Property or Mortgage Loan in the respective officer's
certificate delivered pursuant to Section 7.11(xiii) (including as said
Section is incorporated by reference in Section 4.13) less (y) the amount of
Loans theretofore actually incurred for such purposes on and after the date of
the respective acquisition of such Property or Mortgage Loan, had also been
incurred and were outstanding from the first day of the respective Calculation
Period or (ii) that Capital Expenditures had been made under Section 8.07 in
the amount of Loans referred to in the preceding clause (i) during such period
(and that such Capital Expenditures were not funded with Indebtedness), with
the Borrower to indicate which assumption it has used in making such
calculations;
(iii) interest expense attributable to interest on any
Indebtedness (whether existing or being incurred) bearing a floating interest
rate shall be computed as if the rate in effect on the date of computation
(taking into account any Interest Rate Protection Agreement applicable to such
Indebtedness if such Interest Rate Protection Agreement has a remaining term
in excess of 12 months) had been the applicable rate for the entire period;
(iv) except as provided in the preceding clause (ii), there
shall be excluded from interest expense any interest expense related to any
amount of Indebtedness that was outstanding during such Calculation Period or
thereafter but that is not outstanding or is to be permanently repaid on the
date of determination; and
(v) pro forma effect shall be given to all sales and
acquisitions of Properties and Mortgage Loans, including the capitalization of
the Borrower with the initial Properties and Mortgage Loans (by excluding or
including, as the case may be, the historical financial results for the
respective Properties and Mortgage Loans) that occur during such Calculation
Period or thereafter and on or prior to the Determination Date (including any
Indebtedness assumed or acquired in connection therewith) as if they had
occurred on the first day of such Calculation Period.
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"Projections" shall have the meaning provided in Section
6.05(d).
"Property" shall mean each senior living care property or
medical office building owned or ground leased by the Borrower or any of its
Subsidiaries (including the furniture, fixtures and equipment thereon, except
for any furniture, fixtures and equipment which are owned by individual
tenants).
"Qualified Mortgage Loan" shall mean any Mortgage Loan with
respect to which all of the requirements set forth in Sections 7.11 and
8.02(viii) have been satisfied (or waived by the Required Banks) in accordance
with the provisions of such Sections.
"Qualified Property" shall mean any Property with respect to
which all of the requirements set forth in Sections 7.11 and 8.02(viii) have
been satisfied (or waived by the Required Banks) in accordance with the
provisions of such Sections.
"RCRA" shall mean the Resource Conservation and Recovery
Act, as the same may be amended from time to time, 42 U.S.C.ss. 6901 et seq.
"Real Property" of any Person shall mean all the right,
title and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Register" shall have the meaning provided in Section 12.16.
"Registration Statement" shall mean the Form S-11
Registration Statement for the IPO filed with the SEC on October 8, 1997, as
amended.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"REIT" shall have the meaning provided in the first
paragraph of this Agreement.
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"Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing or migration into the environment.
"Release Date" shall mean (i) with respect to a Borrowing
Base Property, (w) the date of any Special Mandatory Repayment Event with
respect thereto, (x) the date of any refinancing thereof or the date of any
sale or other disposition thereof, or (y) the date of any Casualty Event or
Taking with respect thereto if Restoration thereof is not permitted pursuant
to the Credit Documents, and (ii) with respect to a Borrowing Base Pledged
Mortgage Loan, (w) the date of any Special Mandatory Repayment Event with
respect thereto, (x) the date of any refinancing thereof or the date of any
sale or other disposition thereof, (y) the date of the occurrence of any event
of default under and as defined or described in the Pledged Mortgage Loan
Documents relating thereto, or (z) the date of any Casualty Event or Taking
with respect to the related Mortgage Loan Property.
"Release Price" shall mean, with respect to any Borrowing
Base Property or any Borrowing Base Pledged Mortgage Loan, as of the related
Release Date, the amount that is the greater of:
(i) an amount equal to the Borrowing Base Amount with
respect to such Borrowing Base Property or Borrowing Base Pledged
Mortgage Loan; and
(ii) the amount necessary to ensure that the aggregate
principal amount of Loans outstanding shall not exceed the Borrowing
Base then in effect, after giving effect to the reduction in the
Borrowing Base as a result of the release from the Borrowing Base of
such Borrowing Base Property or Borrowing Base Pledged Mortgage Loan.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Single Employer Plan other than those
events as to which the 30-day notice period is waived under subsection .22,
.23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Requested Extension Effective Date" shall have the meaning
provided in Section 2.03(b)(i).
"Required Banks" shall mean Non-Defaulting Banks the sum of
whose Commitments (or after the termination thereof, outstanding Loans and
Letter of Credit Outstandings) represent an amount greater than 50% of the
Total Commitment (less the Commitments of Defaulting Banks) (or after the
termination thereof, the then total outstanding Loans of Non-Defaulting Banks
and the aggregate Loan Percentages of all Non-Defaulting Banks of the total
Letter of Credit Outstandings at such time).
"Restoration" shall mean the repair, restoration (including
demolition), replacement and rebuilding of all or any portion of a Property
(or the Improvement thereof) following the destruction, damage, loss or Taking
thereof. The term "Restore" used as a verb has a corresponding meaning.
"Returns" shall have the meaning provided in Section 6.09.
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"S&P" shall mean Standard & Poor's Ratings Services.
"SEC" shall have the meaning provided in Section 7.01(h).
"Section 3.04(b)(ii) Certificate" shall have the meaning
provided in Section 3.04(b).
"Secured Creditors" shall have the meaning provided in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in
Section 4.07.
"Security Agreement Collateral" shall mean all "Collateral"
as defined in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the
Pledge and Security Agreement, the Security Agreement, each of the Collateral
Assignments and each of the Mortgages.
"Senior LifeChoice" shall mean Senior LifeChoice, L.L.C.
"Single Employer Plan" shall have the meaning set forth in
Section 6.10.
"Special Mandatory Repayment Event" shall mean the
occurrence of any of the following in respect of a Borrowing Base Property or
a Borrowing Base Pledged Mortgage Loan (or the Mortgaged Property securing a
Borrowing Base Pledged Mortgage Loan): (i) except as otherwise permitted
pursuant to Section 7.13, any Management Agreement or any material provision
thereof shall cease to be in full force and effect or any party thereto shall
deny or disaffirm its material obligations thereunder or shall default in the
due performance or observance of any material term, covenant or agreement on
its part to be performed or observed pursuant thereto after the expiration of
any applicable cure period; (ii) except as otherwise permitted pursuant to
Section 7.13, any Operating Lease or any material provision thereof shall
cease to be in full force and effect or any party thereto shall deny or
disaffirm its material obligations thereunder or shall default in the due
performance or observance of any material term, covenant or agreement on its
part to be performed or observed pursuant thereto after the expiration of any
applicable cure period; (iii) any ground lease with respect to (x) any
Borrowing Base Property which is a Leasehold or (y) any Mortgage Loan Property
which is a Leasehold and which secures a Borrowing Base Pledged Mortgage Loan,
shall cease to be in full force and effect or any party thereto shall deny or
disaffirm any of its material obligations thereunder or shall default in the
due performance or observance of any material term, covenant or agreement on
its part to be performed or observed pursuant thereto after the expiration of
any applicable cure period; (iv) any Borrowing Base Guaranty that existed on
the Addition Date of, and related to, a Borrowing Base Property or a Borrowing
Base Pledged Mortgage Loan shall cease to be in full force or effect as to the
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Eligible Guarantor thereunder, or any Eligible Guarantor or Person acting by
or on behalf of such Eligible Guarantor shall deny or disaffirm such Eligible
Guarantor's obligations under the relevant Borrowing Base Guaranty, or any
Eligible Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant
to the relevant Borrowing Base Guaranty and such default shall continue beyond
any grace period specifically applicable thereto pursuant to the terms of such
Borrowing Base Guaranty; or (v) any breach by the REIT or any of its
Subsidiaries of the provisions of Section .7.13.
"Specified Loans" shall mean (i) an unsecured loan made by
the REIT to Edward B. Romanov, Jr. in the amount of the full purchase price of
200,000 shares of beneficial interest in the REIT at a purchase price per
share equal to the IPO purchase price for the purpose of purchasing such
shares; and (ii) a personal unsecured loan made by the REIT to D. Lee
McCreary, Jr. in the amount of not more than $25,000.
"Specified Management Agreements" shall mean the Management
Agreements relating to the Properties known as (i) Professional Office
Building I, (ii) the DCMH Building, (iii) Pennsburg Manor, and (iv) Harston
Hall.
"Specified Mortgage Loan" shall mean the Initial Borrowing
Base Pledged Mortgage Loan encumbering the Mortgaged Property known as
Sanatoga.
"Specified Subsidiary" shall mean any Subsidiary of the
Borrower (other than any Subsidiary Guarantor) so long as such Subsidiary has
no material assets other than the Property or Mortgage Loan to be financed
with Permitted Non-Recourse Indebtedness incurred (or assumed) pursuant to
Section 8.04(viii).
"Stated Amount" of each Letter of Credit shall mean, at any
time, the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing can then be
met).
"Subsidiary" shall mean, as to any Person, (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any
partnership, limited liability company, association, joint venture or other
entity in which such Person and/or one or more Subsidiaries of such Person has
more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the
Borrower that owns or leases a Borrowing Base Property and/or owns directly or
indirectly an equity interest in a Subsidiary that owns or leases a Borrowing
Base Property.
"Subsidiaries Guaranty" shall have the meaning provided in
Section 4.08.
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"Supermajority Banks" shall mean those Non-Defaulting Banks
which would constitute the Required Banks under, and as defined in, this
Agreement if the percentage "50%" contained therein were changed to "66-2/3%."
"Taking" shall mean the taking or appropriation (including
by deed in lieu of condemnation or by voluntary sale or transfer under threat
of condemnation or while legal proceedings for condemnation are pending) of
any Borrowing Base Property or any Mortgage Loan Property securing a Borrowing
Base Pledged Mortgage Loan, or, in either case, any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain, by
reason of any public improvement or condemnation proceeding, or in any other
manner or any damage or injury or diminution in value through condemnation,
inverse condemnation or other exercise of the power of eminent domain. The
term "Taken" used as a verb has a correlative meaning.
"Tangible Net Worth" shall mean, as of any date of
determination, the consolidated net worth of the REIT and its Subsidiaries at
such time, determined in accordance with GAAP, less the amount of all
intangible items, including, without limitation, goodwill, franchises,
licenses, patents, trade marks, trade names, copyrights, service marks, brand
names, write-ups of assets and any unallocated excess costs of investments in
subsidiaries over equity in underlying net assets at dates of acquisition.
"Taxes" shall have the meaning provided in Section 3.04(a).
"Test Period" shall mean the four consecutive fiscal
quarters of the REIT then last ended, in each case taken as one accounting
period, provided that for purposes of making any financial covenant
calculation which includes periods prior to the Effective Date, such
calculation shall be done on a Pro Forma Basis, even though such period (or
portion thereof) had occurred prior to the Effective Date.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Unutilized Commitment" shall mean, at any time, an
amount equal to the remainder of (x) the Total Commitment then in effect less
(y) the aggregate principal amount of Loans outstanding plus the then
aggregate amount of all Letter of Credit Outstandings.
"Treasury Regulation" shall mean regulations promulgated
under the Code.
"Type" shall mean the type of Loan determined with regard to
the interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated plan
benefits under such Plan as of the close of its most recent plan year exceeds
the fair market value of the assets allocable thereto, each determined in
accordance with Statement of Financial Accounting Standards No. 87, based upon
the actuarial assumptions used by such Plan's actuary in the most recent
annual valuation of such Plan.
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"United States" and "U.S." shall each mean the United States
of America.
"Unpaid Drawing" shall have the meaning provided in Section
1.17.
"Unutilized Commitment" with respect to any Bank at any time
shall mean such Bank's Commitment at such time, if any, less the sum of (i)
the aggregate outstanding principal amount of all Loans made by such Bank at
such time and (ii) such Bank's Loan Percentage of the Letter of Credit
Outstandings at such time.
"Work" shall have the meaning provided in Section 7.16(f).
SECTION 11. The Administrative Agent.
11.01 Appointment. The Banks hereby designate GACC as
Administrative Agent (for purposes of this Section 11, the term
"Administrative Agent" shall include GACC in its capacity as Collateral Agent
pursuant to the Security Documents) to act as specified herein and in the
other Credit Documents, and the Issuing Bank hereby designates GACC as
Administrative Agent to act as specified herein with respect to the issuance
of Letters of Credit and such other matters in connection with such Letters of
Credit as are provided for herein. Each Bank and the Issuing Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Administrative Agent to
take such action on its behalf under the provisions of this Agreement, the
other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Administrative Agent may perform any of
its duties hereunder by or through its respective officers, directors, agents,
employees or affiliates. Without limiting the generality of the preceding
sentence and notwithstanding the provisions of Section 11.09, GACC, in its
capacity as Administrative Agent and Collateral Agent, shall have the right
upon notice to the Borrower, the Banks and the Issuing Bank, to transfer and
assign all of its rights, duties and obligations as Administrative Agent and
Collateral Agent hereunder and under the other Credit Documents to any of its
Affiliates.
11.02 Nature of Duties. The Administrative Agent shall have
no duties or responsibilities except those expressly set forth in this
Agreement and in the other Credit Documents. Neither the Administrative Agent
nor any of its respective officers, directors, agents, employees or affiliates
shall be liable for any action taken or omitted by it or them hereunder or
under any other Credit Document or in connection herewith or therewith, unless
caused by its or their gross negligence or willful misconduct. The duties of
the Administrative Agent shall be mechanical and administrative in nature; the
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Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank, the Issuing
Bank or the holder of any Note; and nothing in this Agreement or any other
Credit Document, expressed or implied, is intended to or shall be so construed
as to impose upon the Administrative Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
11.03 Lack of Reliance on the Administrative Agent.
Independently and without reliance upon the Administrative Agent, each Bank,
the Issuing Bank and the holder of each Note, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Credit Party and
each of their Subsidiaries in connection with the making and the continuance
of the Loans, the issuance of or participation in the Letters of Credit and
the taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of each Credit Party and each of its
Subsidiaries and, except as expressly provided in this Agreement, the
Administrative Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Bank, the Issuing Bank or
the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or
the issuance of the Letters of Credit at any time or times thereafter. The
Administrative Agent shall not be responsible to any Bank, the Issuing Bank or
the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of any Credit Party or any of its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of any Credit Party or any of its
Subsidiaries or the existence or possible existence of any Default or Event of
Default.
11.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with
this Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks
or, if required by Section 12.12, the Supermajority Banks or all of the Banks,
as the case may be; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no Bank
or the holder of any Note shall have any right of action whatsoever against
the Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks or, if required by
Section 12.12, the Supermajority Banks or all of the Banks, as the case may
be.
11.05 Reliance. The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent believed to
be the proper Person, and, with respect to all legal matters pertaining to
this Agreement and any other Credit Document and its duties hereunder and
thereunder, upon advice of counsel selected by the Administrative Agent.
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11.06 Indemnification. To the extent the Administrative
Agent is not reimbursed and indemnified by the Borrower, the Banks will
reimburse and indemnify the Administrative Agent, in proportion to their
respective "percentages" as used in determining the Required Banks, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever
kind or nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its respective duties hereunder or under
any other Credit Document, in any way relating to or arising out of this
Agreement or any other Credit Document; provided that no Bank shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct.
11.07 The Administrative Agent in its Individual Capacity.
With respect to its obligation to make Loans under this Agreement or
participate in Letters of Credit, the Administrative Agent shall have the
rights and powers specified herein for a "Bank" and may exercise the same
rights and powers as though it were not performing the duties specified
herein; and the term "Banks," "Required Banks," "holders of Notes" or any
similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Credit Party or any Affiliate of any
Credit Party as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower or any other Credit
Party for services in connection with this Agreement and otherwise without
having to account for the same to the Banks or the Issuing Bank.
11.08 Holders. The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall
be conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
11.09 Resignation by the Administrative Agent; Removal of
the Administrative Agent. (a) The Administrative Agent may resign from the
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 30 Business Days' prior written notice
to the Borrower, the Banks and the Issuing Bank. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
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(b) Upon any such notice of resignation by the
Administrative Agent, the Required Banks shall appoint a successor
Administrative Agent hereunder or thereunder who shall be a commercial bank or
trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been
so appointed within such 30 Business Day period, the Administrative Agent,
with the consent of the Borrower, shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Required Banks appoint a successor
Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 35th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks shall
thereafter perform all the duties of the Administrative Agent hereunder and/or
under any other Credit Document until such time, if any, as the Required Banks
appoint a successor Administrative Agent as provided above.
(e) In addition, the Required Banks shall have the right to
remove the Administrative Agent and appoint a successor Administrative Agent
who shall be a commercial bank or trust company reasonably acceptable to the
Borrower in the event that the Administrative Agent has been grossly negligent
or has willfully misconducted itself in performing its functions and duties
under this Agreement or any other Credit Document.
SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower agrees that it
shall: (i) whether or not the transactions contemplated herein are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
disbursements of White & Case, LLP, local counsel and due diligence,
environmental, engineering, real estate and insurance independent consultants
retained by the Administrative Agent) in connection with the preparation,
execution, delivery and performance of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein,
any amendment, waiver or consent relating hereto or thereto, of the
Administrative Agent in connection with its syndication efforts with respect
to this Agreement and, upon the occurrence and during the continuance of an
Event of Default, the reasonable costs and expenses of each of the Banks and
the Issuing Bank in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Administrative Agent and, following an Event
of Default, for each of the Banks and the Issuing Bank); (ii) pay and hold
each of the Banks and the Issuing Bank harmless from and against any and all
present and future stamp, excise and other similar taxes with respect to the
foregoing matters and save each of the Banks and the Issuing Bank harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission (other than to the extent attributable to such Bank or the
Issuing Bank) to pay such taxes; and (iii) indemnify the Administrative Agent,
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each Bank and the Issuing Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related
to, or by reason of, (a) any investigation, litigation or other proceeding
(whether or not such Agent, any Bank or the Issuing Bank is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the use of any Letter of Credit or the proceeds of any
Loans hereunder or the consummation of any transactions contemplated herein or
in any other Credit Document or the exercise of any of their rights or
remedies provided herein or in the other Credit Documents, or (b) the actual
or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property owned or at
any time operated by the REIT or any of its Subsidiaries, the Release,
generation, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned or operated by the REIT or any
of its Subsidiaries, the non-compliance of any Real Property with foreign,
federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Claim asserted against the REIT, any of its Subsidiaries or any
Real Property owned or at any time operated by the REIT or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless the Administrative Agent, any Bank or the Issuing Bank set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrower shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
12.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of an Event of Default, each Bank and the Issuing Bank is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held
or owing by such Bank or the Issuing Bank, as the case may be (including,
without limitation, by branches and agencies of such Bank or the Issuing Bank,
as the case may be, wherever located) to or for the credit or the account of
any Credit Party against and on account of the Obligations and liabilities of
such Credit Party to such Bank or the Issuing Bank, as the case may be, under
this Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 12.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank or the Issuing Bank, as the case may
be, shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
Notwithstanding anything to the contrary contained in this Section 12.02,
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neither any Bank nor the Issuing Bank shall exercise any such right of set-off
without the prior consent of the Administrative Agent or the Required Banks so
long as the Obligations shall be secured by any Real Property located in the
State of California, it being understood and agreed, however, that this
sentence is for the sole benefit of the Banks and the Issuing Bank and may be
amended, modified or waived in any respect by the Required Banks without the
requirement of prior notice to or consent by any Credit Party and does not
constitute a waiver of any rights against any Credit Party or against any
Collateral.
12.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be
in writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to the
Borrower, at the Borrower's address specified opposite its signature below; if
to the REIT, at the REIT's address specified opposite its signature below; if
to any Bank, at its address specified opposite its name on Schedule II; if to
the Issuing Bank, at its address specified opposite its signature below; and
if to the Administrative Agent, at the Notice Office; or, as to the Borrower
or the Administrative Agent, at such other address as shall be designated by
such party in a written notice to the other parties hereto and, as to each
Bank or the Issuing Bank, at such other address as shall be designated by such
Bank or the Issuing Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company,
cable company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Administrative Agent
and the Borrower shall not be effective until received by the Administrative
Agent or the Borrower, as the case may be.
12.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, the Borrower
may not assign or transfer any of its rights, obligations or interest
hereunder or under any other Credit Document without the prior written consent
of the Banks and, provided further, that, although any Bank may transfer,
assign or grant participations in its rights hereunder, such Bank shall remain
a "Bank" for all purposes hereunder (and may not transfer or assign all or any
portion of its Commitment hereunder except as provided in Section 12.04(b))
and the transferee, assignee or participant, as the case may be, shall not
constitute a "Bank" hereunder and, provided further, that no Bank shall
transfer or grant any participation under which the participant shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
the final scheduled maturity of any Loan, Note or Letter of Credit (unless
such Letter of Credit is not extended beyond the Maturity Date) in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that
a waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be
permitted without the consent of any participant if the participant's
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participation is not increased as a result thereof), (ii) consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement or (iii) release all or substantially all of the
Collateral under all of the Security Documents (except as expressly provided
in the Credit Documents) supporting the Loans hereunder in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Bank in respect of
such participation to be those set forth in the agreement executed by such
Bank in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Commitment (and related outstanding Obligations hereunder) to (i) its parent
company and/or any affiliate of such Bank which is at least 50% owned by such
Bank or its parent company or to one or more Banks or (ii) in the case of any
Bank that is a fund that invests in bank loans, any other fund that invests in
bank loans and is managed by the same investment advisor of such Bank or by an
Affiliate of such investment advisor or (y) assign all, or if less than all, a
portion equal to at least $5,000,000 in the aggregate for the assigning Bank
or assigning Banks, of such Commitment (and related outstanding Obligations
hereunder) to one or more Eligible Transferees (treating any fund that invests
in bank loans and any other fund that invests in bank loans and is managed by
the same investment advisor of such fund or by an Affiliate of such investment
advisor as a single Eligible Transferee), each of which assignees shall become
a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement, provided that (i) at such time Schedule I shall be
deemed modified to reflect the Commitments (and/or outstanding Loans, as the
case may be) of such new Bank and of the existing Banks, (ii) upon surrender
of the old Notes, new Notes will be issued to such new Bank and to the
assigning Bank, such new Notes to be in conformity with the requirements of
Section 1.05 (with appropriate modifications) to the extent needed to reflect
the revised Commitments (and/or outstanding Loans, as the case may be), (iii)
the consent of the Administrative Agent shall be required in connection with
any such assignment pursuant to clause (y) above (which consent shall not be
unreasonably withheld) and (iv) the Administrative Agent shall receive at the
time of each such assignment, from the assigning or assignee Bank, the payment
of a non-refundable assignment fee of $3,500 and, provided further, that such
transfer or assignment will not be effective until recorded by the
Administrative Agent on the Register pursuant to Section 12.16. The
Administrative Agent will promptly give the Borrower notice of any assignment
to an Eligible Transferee pursuant to clause (y) of the first sentence of this
Section 12.04(b), although the failure to give any such notice shall not
affect such assignment or result in any liability by the Administrative Agent.
To the extent of any assignment pursuant to this Section 12.04(b), the
assigning Bank shall be relieved of its obligations hereunder with respect to
its assigned Commitments. At the time of each assignment pursuant to this
Section 12.04(b) to a Person which is not already a Bank hereunder and which
is not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) for Federal income tax purposes, the respective assignee Bank
shall provide to the Borrower and the Administrative Agent the appropriate
Internal Revenue Service Forms (and, if applicable a Section 3.04(b)(ii)
Certificate) described in Section 3.04(b). To the extent that an assignment of
all or any portion of a Bank's Commitment and related
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outstanding Obligations pursuant to this Section 12.04(b) would, at the time
of such assignment, result in increased costs under Section 1.10, 1.11 or 3.04
from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay or reimburse such
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank and,
with the consent of the Administrative Agent, any Bank which is a fund may
pledge all or any portion of its Loans and Notes to its trustee in support of
its obligations to its trustee. No pledge pursuant to this clause (c) shall
release the transferor Bank from any of its obligations hereunder.
12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent, the Issuing Bank or any Bank or any
holder of any Note in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the Borrower
or any other Credit Party and the Administrative Agent, the Issuing Bank or
any Bank or the holder of any Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any
other Credit Document expressly provided are cumulative and not exclusive of
any rights, powers or remedies which the Administrative Agent, the Issuing
Bank or any Bank or the holder of any Note would otherwise have. No notice to
or demand on any Credit Party in any case shall entitle any Credit Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent, the Issuing
Bank or any Bank or the holder of any Note to any other or further action in
any circumstances without notice or demand.
12.06 Payments Pro Rata. (a) Except as otherwise
provided in this Agreement, the Administrative Agent agrees that promptly
after its receipt of each payment from or on behalf of the Borrower in respect
of any Obligations hereunder, it shall distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
of any such payment) pro rata based upon their respective shares, if any, of
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or
interest on, the Loans, Unpaid Drawings, Commitment Commission or Letter of
Credit Fees, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligation
then owed and due to such Bank bears to the total of such Obligation then owed
and due to all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in the Obligations of the respective
Credit Party to such Banks in such amount as shall result in a proportional
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participation by all the Banks in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 12.06(a) and (b) shall be
subject to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Banks as opposed to Defaulting
Banks.
12.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrower to the Banks) ("GAAP").
(b) All computations of interest and other fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or other fees are payable.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE REIT AND THE BORROWER HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE REIT
AND THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
COURTS LACK JURISDICTION OVER SUCH CREDIT PARTY, AND AGREES NOT TO PLEAD OR
CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH
COURT LACKS JURISDICTION OVER SUCH CREDIT PARTY. EACH OF THE REIT AND THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH
CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF THE REIT AND
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF
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PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY BANK OR THE HOLDER OF
ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
(b) EACH OF THE REIT AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective
on the date (the "Effective Date") on which (i) the REIT, the Borrower, the
Administrative Agent, the Issuing Bank and each of the Banks set forth on
Schedule I shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the
Administrative Agent at the Notice Office or, in the case of the Banks, shall
have given to the Administrative Agent telephonic (confirmed in writing) or
written notice at such office that the same has been signed and mailed to it
and (ii) the conditions contained in Section 4 are met to the satisfaction of
the Administrative Agent, the Issuing Bank and the Required Banks. Unless the
Administrative Agent has received actual notice from the Issuing Bank or any
Bank that the conditions described in clause (ii) of the preceding sentence
have not been met to its satisfaction, upon the satisfaction of the condition
described in clause (i) of the immediately preceding sentence and upon the
Administrative Agent's good faith determination that the conditions described
in clause (ii) of the immediately preceding sentence have been met, then the
Effective Date shall be deemed to have occurred, regardless of any subsequent
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determination that one or more of the conditions thereto had not been met
(although the occurrence of the Effective Date shall not release the Borrower
from any liability for failure to satisfy one or more of the applicable
conditions contained in Section 4). The Administrative Agent will give the
REIT, the Borrower, the Issuing Bank and each Bank prompt written notice of
the occurrence of the Effective Date.
12.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision
of this Agreement.
12.12 Amendment or Waiver; etc. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party
thereto and the Required Banks, provided that no such change, waiver,
discharge or termination shall, without the consent of each Bank (other than a
Defaulting Bank) (with the term "Bank" meaning each Bank having Obligations
being directly affected thereby in the case of following clause (i)), (i)
extend the final scheduled maturity of any Loan or Note or extend the stated
expiration date of any Letter of Credit beyond the Maturity Date, or reduce
the rate or extend the time of payment of interest or Fees thereon, or reduce
the principal amount thereof (except to the extent repaid in cash), (ii)
release all or substantially all of the Collateral (except as expressly
provided in the Credit Documents), (iii) release the REIT from its obligations
under the Parent Guaranty, (iv) amend, modify or waive any provision of this
Section 12.12, (v) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Banks on substantially the same
basis as the extensions of Loans are included on the Effective Date) or (vi)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement; provided further, that no such change,
waiver, discharge or termination shall (A) increase the Commitment of any Bank
over the amount thereof then in effect without the consent of such Bank (it
being understood that waivers or modifications of conditions precedent,
covenants, Defaults or Events of Default or of a mandatory reduction in the
Total Commitment shall not constitute an increase of the Commitment of any
Bank, and that an increase in the available portion of the Commitment of any
Bank shall not constitute an increase in the Commitment of such Bank), (B)
without the consent of the Issuing Bank, modify or waive any provision of
Section 1.13 through Section 1.18 or alter its rights or obligations with
respect to the Letters of Credit, (C) without the consent of the
Administrative Agent, amend, modify or waive any provision of Section 11 or
any other provision as same relates to the rights or obligations of the
Administrative Agent, (D) without the consent of the Collateral Agent, amend,
modify or waive any provision relating to the rights or obligations of the
Collateral Agent or (E) without the consent of the Supermajority Banks, (i)
amend or modify the definition of Supermajority Banks, (ii) amend or modify
any provision of the Agreement which would permit the REIT or any of its
Subsidiaries to pay additional Dividends to, or make additional Investments in
or to, any of its other Subsidiaries, (iii) release any Subsidiary Guarantor
from its obligations under the Subsidiaries Guaranty (in each case, except as
expressly provided in the Credit Documents) or (iv) release any Borrowing Base
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Property or Borrowing Base Pledged Mortgage Loan from the Liens created by the
respective Mortgage or Collateral Assignment (except as expressly provided in
the Credit Documents).
12.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 3.04, 12.01 and 12.06 shall
survive the execution, delivery and termination of this Agreement and the
Notes and the making and repayment of the Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 12.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11, or
3.04 from those being charged by the respective Bank prior to such transfer,
then the Borrower shall not be obligated to pay such increased costs (although
the Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
12.15 Confidentiality. (a) Subject to the provisions
of clause (b) of this Section 12.15, each Bank agrees that it will use its
reasonable efforts not to disclose without the prior consent of the Borrower
(other than to its employees, auditors, advisors or counsel or to another Bank
if such Bank or such Bank's holding or parent company in its reasonable good
faith discretion determines that any such party should have access to such
information, provided such Persons shall be subject to the provisions of this
Section 12.15 to the same extent as such Bank) any information with respect to
any Credit Party or any of its Subsidiaries which has been, is now or in the
future furnished pursuant to this Agreement or any other Credit Document and
which is designated by any Credit Party to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a) as
has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Bank or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in
respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to
such Bank, (e) to the Administrative Agent or the Collateral Agent and (f) to
any prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes or Commitments or
any interest therein by such Bank, provided, that such prospective transferee
agrees with such Bank to be subject to the provisions of this Section
12.15(a).
(b) The REIT and the Borrower hereby acknowledge and agree
that each Bank may share with any of its affiliates any information related to
Credit Parties or any of their respective Subsidiaries (including, without
limitation, any nonpublic customer information regarding the creditworthiness
of the Credit Parties and their respective Subsidiaries, provided such Persons
shall be subject to the provisions of this Section 12.15 to the same extent as
such Bank), it being understood that for purposes of this Section 12.15(b) the
term "affiliate" shall mean any direct or indirect holding company of a Bank
as well as any direct or indirect Subsidiary of such holding company.
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12.16 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 12.16, to maintain a register (the "Register") on which it will
record the Commitments from time to time of each of the Banks, the Loans made
by each of the Banks and each repayment in respect of the principal amount of
the Loans of each Bank. Failure to make any such recordation, or any error in
such recordation, shall not affect the Borrower's obligations in respect of
such Loans. With respect to any Bank, the transfer of the Commitment of such
Bank and the rights to the principal of, and interest on, any Loan made
pursuant to such Commitment shall not be effective until such transfer is
recorded on the Register maintained by the Administrative Agent with respect
to ownership of such Commitment and Loans and prior to such recordation all
amounts owing to the transferor with respect to such Commitment and Loans
shall remain owing to the transferor. The registration of assignment or
transfer of all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 12.04(b). Coincident with the
delivery of such an Assignment and Assumption Agreement to the Administrative
Agent for acceptance and registration of assignment or transfer of all or part
of a Loan, or as soon thereafter as practicable, the assigning or transferor
Bank shall surrender the Note evidencing such Loan, and thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
assigning or transferor Bank and/or the new Bank. The Borrower agrees to
indemnify the Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this
Section 12.16, provided that the Borrower shall have no obligation to
indemnify the Administrative Agent for any loss, claim, damage, liability or
expense which resulted solely from the gross negligence or willful misconduct
of the Administrative Agent.
12.17 Commercial Loan Transactions. Each of the Banks
acknowledges that the making of its Loans and the issuance by the Borrower of
a Note to such Bank are in the nature of a commercial loan transaction, and
that no such Bank shall assert that such actions are a securities transaction
regulated under the Exchange Act, the Securities Act or any other Federal or
state securities laws, it being understood that nothing in this Section 12.17
shall limit the rights of the Banks pursuant to Section 12.04.
12.18 Servicing of Loans. The Administrative Agent may, in
its sole discretion, determine to designate and appoint a servicer to service
the Loans pursuant to a loan servicing agreement in form and substance
satisfactory to Administrative Agent. In connection with such designation and
appointment, the Administrative Agent may, in its sole discretion, delegate
some or all of its rights and obligations under the Credit Documents to such
servicer pursuant to the loan servicing agreement. The Borrower hereby
irrevocably consents to such designation and appointment of a servicer and any
such delegation to such servicer of some or all of the Administrative Agent's
rights and obligations under the Credit Documents.
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SECTION 13. Parent Guaranty.
13.01 The Guaranty. In order to induce the Administrative
Agent, the Issuing Bank and the Banks to enter into this Agreement and to
extend credit hereunder and in recognition of the direct benefits to be
received by the Parent Guarantor from the proceeds of the Loans, the issuance
of the Letters of Credit and the entering into by the Borrower of Interest
Rate Protection Agreements or Other Hedging Agreements, the Parent Guarantor
hereby agrees with the Administrative Agent and the Banks as follows: the
Parent Guarantor hereby absolutely, unconditionally and irrevocably,
guarantees as primary obligor and not merely as surety all of the Guaranteed
Obligations of the Borrower to each Creditor. If any or all of the Guaranteed
Obligations becomes due and payable hereunder, the Parent Guarantor
absolutely, unconditionally and irrevocably promises to pay such indebtedness
to the Creditors or order, on demand, together with any and all reasonable
expenses which may be incurred by the Creditors in collecting any of the
Guaranteed Obligations. This Parent Guaranty shall constitute a guaranty of
payment, and not of collection.
13.02 Bankruptcy. Additionally, the Parent Guarantor,
absolutely, unconditionally and irrevocably guarantees the payment of any and
all of the Guaranteed Obligations of the Borrower to the Creditors whether or
not then due or payable by the Borrower upon the occurrence in respect of the
Borrower of any of the events specified in Section 9.05, and unconditionally
and irrevocably promises to pay such Guaranteed Obligations to the Creditors,
or order, on demand, in lawful money of the United States.
13.03 Nature of Liability. The liability of the Parent
Guarantor hereunder is exclusive and independent of any security for or other
guaranty of the Guaranteed Obligations of the Borrower whether executed by the
Parent Guarantor, any other guarantor or by any other party, and the liability
of the Parent Guarantor hereunder shall not be affected or impaired by (a) any
direction as to application of payment by the Borrower or by any other party,
or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the Guaranteed
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking except to the extent that such payment actually
results in a permanent reduction of the Guaranteed Obligations, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to any Creditor on the indebtedness which
such Creditor repays the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Parent Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
13.04 Independent Obligation. The obligations of the Parent
Guarantor hereunder are independent of the obligations of any other guarantor
or the Borrower, and a separate action or actions may be brought and
prosecuted against the Parent Guarantor whether or not action is brought
against any other guarantor or the Borrower and whether or not any other
guarantor or the Borrower be joined in any such action or actions. The Parent
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
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thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to the Parent Guarantor.
13.05 Authorization. The Parent Guarantor authorizes the
Administrative Agent and the other Creditors without notice or demand or
consent (except as shall be required by applicable statute and cannot be
waived), and without affecting or impairing its liability hereunder, from time
to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate
or alter, any of the Guaranteed Obligations (including any increase or
decrease in the rate of interest thereon), any security therefor, or
any liability incurred directly or indirectly in respect thereof, and
the Guaranty herein made shall apply to the Guaranteed Obligations as
so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, impair, realize
upon or otherwise deal with in any manner and in any order any
property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, the Guaranteed Obligations or any liabilities
(including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and/or any offset there against;
(c) exercise or refrain from exercising any rights against
the Borrower, any other Credit Party or any other Person or otherwise
act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and subordinate the payment of all or any part thereof to the
payment of any liability (whether due or not) of the Borrower to its
creditors other than the Creditors, provided that the Creditors will
not, without the prior written consent of the Parent Guarantor,
contractually subordinate the payment of all or any part of the
Guaranteed Obligations to any other creditor or creditors of the
Borrower, provided further that if any consent required by the
immediately preceding proviso is not obtained and contractual
subordination as described therein is agreed to, then (x) any part of
the Guaranteed Obligations not so subordinated will continue to be
entitled to the full benefits of this Parent Guaranty and (y) with
respect to any part of the Guaranteed Obligations so contractually
subordinated, the Parent Guarantor will be relieved of its obligations
hereunder only to the extent each establishes that it has been
actually damaged by such contractual subordination;
(f) apply any sums by whomsoever paid or howsoever realized
to any liability or liabilities of the Borrower to the Creditors
regardless of what liability or liabilities of the Borrower remain
unpaid;
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(g) consent to or waive any breach of, or any act, omission
or default under, this Agreement or any of the instruments or
agreements referred to herein, or otherwise amend, modify or
supplement this Agreement or any of such other instruments or
agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of the Parent Guarantor from its liabilities under this
Section 13.
13.06 Reliance. It is not necessary for the Administrative
Agent or the other Creditors to inquire into the capacity or powers of the
Borrower or any other Credit Party or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any Guaranteed
Obligations made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
13.07 Subordination. Any of the indebtedness of the Borrower
now or hereafter owing to the Parent Guarantor is hereby subordinated to the
Guaranteed Obligations of the Borrower owing to the Administrative Agent and
the other Creditors; and if the Administrative Agent so requests at a time
when an Event of Default exists, all such indebtedness of the Borrower to the
Parent Guarantor shall be collected, enforced and received by the Parent
Guarantor for the benefit of the Creditors and be paid over to the
Administrative Agent on behalf of the Creditors on account of the Guaranteed
Obligations of the Borrower to the Creditors, but without affecting or
impairing in any manner the liability of the Parent Guarantor under the other
provisions of this Parent Guaranty. Prior to the transfer by the Parent
Guarantor of any note or negotiable instrument evidencing any of the
indebtedness relating to the Guaranteed Obligations of the Borrower to the
Parent Guarantor, the Parent Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.
Without limiting the generality of the foregoing, the Parent Guarantor hereby
agrees with the Creditors that it will not exercise any right of subrogation
which it may at any time otherwise have as a result of this Parent Guaranty
(whether contractual, under Section 509 of the Bankruptcy Code, or otherwise)
until all Guaranteed Obligations have been paid in full in cash (it being
understood that the Parent Guarantor is not waiving any right of subrogation
that it may otherwise have but is only waiving the exercise thereof as
provided above).
13.08 Waiver. (a) The Parent Guarantor waives any right
(except as shall be required by applicable statute and cannot be waived) to
require the Administrative Agent or the other Creditors to (i) proceed against
the Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's or the
other Creditors' power whatsoever. The Parent Guarantor waives any defense
based on or arising out of any defense of the Borrower, the Parent Guarantor,
any other guarantor or any other party, other than payment in full of the
Guaranteed Obligations, based on or arising out of the disability of the
Borrower, any other guarantor or any other party, or the unenforceability of
the Guaranteed Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower other than payment
in full of the Guaranteed Obligations. The Administrative Agent and the other
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Creditors may, at their election, foreclose on any security held by the
Administrative Agent, the Collateral Agent or the other Creditors by one or
more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Administrative
Agent and the other Creditors may have against the Borrower or any other
party, or any security, without affecting or impairing in any way the
liability of the Parent Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid. The Parent Guarantor waives any defense
arising out of any such election by the Administrative Agent and the other
Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of the Parent
Guarantor against the Borrower or any other party or any security.
(b) The Parent Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Parent Guaranty, and notices of the existence, creation or incurring of
new or additional Guaranteed Obligations. The Parent Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which the Parent Guarantor assumes and incurs hereunder, and agrees that
the Administrative Agent and the other Creditors shall have no duty to advise
the Parent Guarantor of information known to them regarding such circumstances
or risks.
The Parent Guarantor warrants and agrees that each of the
waivers set forth above is made with full knowledge of its significance and
consequences and that if any of such waivers is determined to be contrary to
any applicable law or public policy, such waivers shall be effective only to
the maximum extent permitted by law.
13.09 Nature of Liability. It is the desire and intent of
the Parent Guarantor and the Creditors that this Parent Guaranty shall be
enforced against the Parent Guarantor to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. If, however, and to the extent that, the obligations of the Parent
Guarantor under this Parent Guaranty shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations shall be deemed to
be reduced and the Parent Guarantor shall pay the maximum amount of the
Guaranteed Obligations which would be permissible under applicable law.
13.10 Interest Rate Protection Agreements and Other Hedging
Agreements. Notwithstanding anything to the contrary contained in this Parent
Guaranty, no Interest Rate Protection Agreement or Other Hedging Agreement
shall be entitled to the benefits of this Parent Guaranty unless such Interest
Rate Protection Agreement or Other Hedging Agreement is reasonably related to
the Loans (including, in any event, any Interest Rate Protection Agreement
entered into to satisfy the requirements of Section 7.16) or such Interest
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Rate Protection Agreement or Other Hedging Agreement provides that it is to be
entitled to the benefits of this Parent Guaranty or the Security Documents
generally.
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IN WITNESS WHEREOF, the parties hereto have caused their
duly authorized officers to execute and deliver this Agreement as of the date
first above written.
Address: ELDERTRUST
415 McFarlan Road By:/s/ Edward B. Romanov, Jr.
Suite 202 -------------------------------------
Kennett Square Name: Edward B. Romanov, Jr.
Pennsylvania 19348 Title: President and CEO
Address: ELDERTRUST OPERATING LIMITED PARTNERSHIP
415 McFarlan Road By:/s/ Edward B. Romanov, Jr.
Suite 202 -------------------------------------
Kennett Square Name: Edward B. Romanov, Jr.
Pennsylvania 19348 Title: President and CEO
:
Address: GERMAN AMERICAN CAPITAL CORPORATION, as
a Bank and as Administrative Agent
31 West 52nd Street
New York, New York 10019 By:/s/ Allisson Michaels
-------------------------------------
Name: Allisson Michaels
Title: Attorney-in-fact
By:/s/ Janet Whang
-------------------------------------
Name: Janet Whang
Titl: Attorney-in-fact
Address: DEUTSCHE BANK AG, NEW YORK BRANCH, as
Issuing Bank
31 West 52nd Street By:/s/ Allisson Michaels
New York, New York 10019 -------------------------------------
Name: Allisson Michaels
Title: Attorney-in-fact
By:/s/ Janet Whang
-------------------------------------
Name: Janet Whang
Title: Attorney-in-fact
123
<PAGE>
SCHEDULE I
----------
COMMITMENTS
-----------
Bank Commitment
- ---- ------------
German American Capital Corporation $140,000,000
------------
TOTAL: $140,000,000
------------
<PAGE>
SCHEDULE II
------------
BANK ADDRESSES
--------------
Bank Address
- ---- -------
German American Capital Corporation 31 West 52nd Street
New York, New York 10019
<PAGE>
SCHEDULE III
------------
Real Property
Name/Owner Location
Assisted Living Facilities:
Heritage Woods Agawam, MA
(ET Sub-Heritage Woods, L.L.C.)
Willowbrook Clarks Summit, PA
(ET Sub-Willowbrook Limited Partnership, L.L.P.)
Riverview Ridge Wilkes-Barre, PA
(ET Sub-Riverview Ridge Limited Partnership, L.L.P.)
Highgate at Paoli Point Paoli, PA
(ET Sub-Highgate, L.P.)
The Woodbridge Kimberton, PA
(ET Sub-Woodbridge, L.P.)
Independent Living Facility:
Pleasant View Concord, NH
(ET Sub-Pleasant View, L.L.C.)
Skilled Nursing Facilities (9):
Rittenhouse CC Philadelphia, PA
(ET Sub-Rittenhouse Limited Partnership, L.L.P.)
Lopatcong CC Lopatcong, NJ
(ET Sub-Lopatcong, L.L.C.)
Phillipsburg CC Phillipsburg, NJ
(ET Sub-Phillipsburg I, L.L.C.)
Wayne NRC Wayne, PA
(ET Sub-Wayne I Limited Partnership, L.L.P.)
<PAGE>
Belvedere NRC Chester, PA
(ET Sub-Belvedere Limited Partnership, L.L.P.)
Chapel Manor NRC Philadelphia, PA
(ET Sub-Chapel Manor Limited Partnership, L.L.P.)
Harston Hall NCH Flourtown, PA
(ET Sub-Harston Hall Limited Partnership, L.L.P.)
Pennsburg Manor NRC Pennsburg, PA
(ET Sub-Pennsburg Manor Limited Partnership, L.L.P.)
Silverlake NRC Bristol, PA
(ET Sub-Silverlake Limited Partnership, L.L.P.)
Medical Office and Other Buildings:
Professional Office Building I Upland, PA
(ET Sub-POB I Limited Partnership, L.L.P.)
Salisbury Medical Office Building Salisbury, MD
ET Sub-SMOB, L.L.C.
Windsor Office Building Windsor, CT
ET Sub-Windsor I, L.L.C.
Windsor Clinic/Training Facility Windsor, CT
(ET Sub-Windsor II, L.L.C.)
Lacey Branch Office Building Forked River, NJ
ET Sub-Lacey I, L.L.C.
To Be Acquired
Riverview Ridge Wilkes-Barre, PA
(ET Sub-Riverview Ridge Limited Partnership, L.L.P.)
Silverlake NRC Bristol, PA
(ET Sub-Silverlake Limited Partnership, L.L.P.)
DCMH Medical Office Building (23) Drexel Hill, PA
(ET Sub-DCMH Limited Partnership, L.L.P.)
<PAGE>
SCHEDULE IV
-----------
SUBSIDIARIES
<TABLE>
<CAPTION>
Subsidiary Owner Percentage Owned
- ---------- ----- ----------------
<S> <C> <C>
ET GENPAR, L.L.C. Borrower 100%
ET Sub-Heritage Woods, L.L.C. Borrower 100%
ET Sub-Pleasant View, L.L.C. Borrower 100%
ET Sub-Lopatcong, L.L.C. Borrower 100%
ET Sub-Phillipsburg I, L.L.C. Borrower 100%
ET Sub-SMOB, L.L.C. Borrower 100%
ET Sub-Windsor I, L.L.C. Borrower 100%
ET Sub-Windsor II, L.L.C. Borrower 100%
ET Sub-Lacey I, L.L.C. Borrower 100%
ET Sub-Willowbrook Limited Partnership, Borrower 99.9% (LP)
L.L.P. ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Riverview Ridge Limited Partnership, Borrower 99.9% (LP)
L.L.P. ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Highgate, L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Woodbridge, L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Rittenhouse Limited Partnership, Borrower 99.9% (LP)
L.L.P. ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Wayne I Limited Partnership, L.L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Belvedere Limited Partnership, L.L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Pennsburg Manor Limited Partnership, Borrower 99.9% (LP)
L.L.P. ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-POB I Limited Partnership, L.L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Riverview Ridge Limited Partnership, Borrower 99.9% (LP)
L.L.P. ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Silverlake Limited Partnership, L.L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-DCMH Limited Partnership, L.L.P. Borrower 99.9% (LP)
ET GENPAR, L.L.C. 0.1% (GP)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Subsidiary Owner Percentage Owned
- ---------- ----- ----------------
<S> <C> <C>
ET Sub-Chapel Manor Limited Partnership, Borrower 99.9% (LP)
L.L.P.(1) ET GENPAR, L.L.C. 0.1% (GP)
ET Sub-Harston Hall Limited Partnership, Borrower 99.9% (LP)
L.L.P.(2) ET GENPAR, L.L.C. 0.1% (GP)
ET Capital Corp. Borrower 95% Equity
0% Voting
Edward B. Romanov, Jr. 5% Equity
100% Voting
</TABLE>
- --------
(1) This entity will not become operational and will be dissolved promptly
following the Effective Time.
(2) This entity will not become operational and will be dissolved promptly
following the Effective Time.
<PAGE>
SCHEDULE V
----------
INDEBTEDNESS
<TABLE>
<CAPTION>
Aggregate Principal
Borrower Guarantor(s) Amount as of the Effective Date
- -------- ------------ -------------------------------
<S> <C> <C>
ET Sub-Woodbridge, L.P. REIT $9,945,000
ET Sub-Highgate, L.P. REIT $9,680,000
ET Sub-Belvedere Limited Partnership, N/A $9,954,174
L.L.P.
ET Sub-Lacey I, L.L.C. Borrower $494,488
ET Sub-Phillipsburg I, L.L.C. N/A $2,025,000 in the form of bonds
secured by the property owned by the
Subsidiary but not assumed by the
Subsidiary and included herein
pursuant to clause (iii) of the
definition of "Indebtedness" in
Article X of the Agreement
ET Sub-Willowbrook Limited N/A $4,115,000 in the form of bonds
Partnership, L.L.P. secured by the property owned by the
Subsidiary but not assumed by the
Subsidiary and included herein
pursuant to clause (iii) of the
definition of "Indebtedness" in
Article X of the Agreement
ET Sub-Riverview Ridge Borrower $2,739,000
Limited Partnership L.L.P.
</TABLE>
<PAGE>
SCHEDULE VI
-----------
INSURANCE
---------
The Borrower will maintain, at a minimum, the following insurance:
<TABLE>
<CAPTION>
Type of Insurance Limits
<S> <C> <C> ------
A. Property
"All-Risk" property insurance for physical Replacement Cost
damage to real and personal property,
including
a) coverage for the peril of As provided in Section 7.03 of the Credit
flood to the extent available under the Agreement
National Flood Insurance
b) coverage for the peril of As provided in Section 7.03(iv) of the Credit
earthquake Agreement
c) business interruption Actual Loss Sustained basis
insurance for a period of not less than
eighteen months
B. General Liability including Automobile $100,000,000
C. Workers Compensation Statutory
</TABLE>
<PAGE>
SCHEDULE VII
------------
EXISTING LIENS
--------------
NONE
<PAGE>
SCHEDULE VIII
-------------
EXISTING MORTGAGES AND NOTES
Note, dated as of the date hereof, from Philadelphia Avenue Associates to
ElderTrust Operating Limited Partnership, in an amount not to exceed $5,164,000.
Open-End Mortgage and Security Agreement, dated as of the date hereof, between
Philadelphia Avenue Associates and ElderTrust Operating Limited Partnership
(title commitment no. H185775EP).
Note, dated as of the date hereof, from Delm Nursing, Inc. to ElderTrust
Operating Limited Partnership, in an amount not to exceed $6,511,000.
Open-End Mortgage and Security Agreement, dated as of the date hereof, between
Delm Nursing, Inc. and ElderTrust Operating Limited Partnership (title
commitment no. D170198MA).
Note, dated as of the date hereof, from Volusia Meridian Limited Partnership to
Genesis Health Ventures, Inc., in an amount not to exceed $4,577,000.
Mortgage and Security Agreement dated as of the date hereof, between Volusia
Meridian Limited Partnership and ElderTrust Operating Limited Partnership (title
commitment no. OD97864).
Note, dated as of the date hereof, from Wyncote Healthcare Corp. to ElderTrust
Operating Limited Partnership, in an amount not to exceed $5,380,000.
Open-End Mortgage and Security Agreement, dated as of the date hereof, between
Wyncote Healthcare Corp. and ElderTrust Operating Limited Partnership (title
commitment no. D176372JP).
Note, dated as of the date hereof, from Lehigh Nursing Homes, Inc. to ElderTrust
Operating Limited Partnership, in an amount not to exceed $6,665,000.
Open-End Mortgage and Security Agreement, dated as of the date hereof, between
Lehigh Nursing Homes, Inc. and ElderTrust Operating Limited Partnership (title
commitment no. H185814EP).
Note, dated as of the date hereof, from Berks Nursing Homes, Inc. to ElderTrust
Operating Limited Partnership, in an amount not to exceed $6,269,000.
Open-End Mortgage and Security Agreement, dated as of the date hereof, between
Berks Nursing Homes, Inc. and ElderTrust Operating Limited Partnership (title
commitment no. H185801EP).
Construction Mortgage Note, dated as of September 30, 1997, by Senior
LifeChoice, LLC payable to the order of Genesis Health Ventures, Inc., in an
amount not to exceed $9,500,000, as assigned to ElderTrust Operating Limited
Partnership pursuant to an Assignment and Assumption Agreement, dated as of the
date hereof.
Open-End Mortgage and Security Agreement, dated as of September 30, 1997,
between Senior LifeChoice, LLC and Genesis Health Ventures, Inc. , as assigned
to ElderTrust Operating Limited Partnership pursuant to an Assignment and
Assumption Agreement, dated as of the date hereof.
Note, dated as of November 11, 1997, from Geri-Med. Corp. to Philadelphia
Suburban Development Corporation in the principal amount of $800,000, as
assigned to ElderTrust Operating Limited Partnership pursuant to an Assignment
and Assumption Agreement dated as of the date hereof.
Open-End Mortgage and Security Agreement, dated as of November 11, 1997 between
Philadelphia Suburban Development Corporation and Geri-Med Corp., as assigned to
ElderTrust Operating Limited Partnership pursuant to an Assignment Agreement
dated as of the date hereof.
<PAGE>
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
German American Capital Corporation,
as Administrative Agent
for the Banks party
to the Credit Agreement referred
to below
31 West 52nd Street
New York, New York 10019
Attention:
Ladies and Gentlemen:
The undersigned, ElderTrust Operating Limited Partnership, a
Delaware limited partnership (the "Borrower"), refers to the Credit Agreement,
dated as of January 30, 1998 (as amended from time to time, the "Credit
Agreement," the terms defined therein being used herein as therein defined),
among ElderTrust, the Borrower, various Banks (the "Banks"), Deutsche Bank AG,
New York Branch, as Issuing Bank, and you, as Administrative Agent for the Banks
and the Issuing Bank, and hereby gives you irrevocable notice pursuant to
Section 1.03(a) of the Credit Agreement, that the undersigned hereby requests a
Borrowing of Revolving Loans under the Credit Agreement, and in that connection
sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
, .(1)
---------- ---
(ii) The aggregate principal amount of the
Proposed Borrowing is $ .
----------
(iii) The Revolving Loans to be made pursuant to the
Proposed Borrowing shall be initially maintained as [Base Rate Loans]
[Eurodollar Loans].
[(iv) The initial Interest Period for the Proposed
Borrowing is _____ month(s).](2)
- ------------------------
1 Shall be a Business Day at least one Business Day in the case of Base Rate
Loans and three Business Days in the case of Eurodollar Loans, in each case
after the date hereof.
2 To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect
to the Proposed Borrowing and to the application of the proceeds
thereof, as though made on such date (it being understood and agreed
that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date);
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from the
application of the proceeds thereof; and
(C) set forth on Annex A attached hereto is the information
required by Section 5.04(a) of the Credit Agreement, and each of the
applicable conditions referred to in Sections 5.04(b), (c) and (d) of
the Credit Agreement has been satisfied or will be satisfied on or
before the date of the Proposed Borrowing.
Very truly yours,
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By: ElderTrust, its general partner
By:_______________________________
Name:
Title:
<PAGE>
ANNEX A
[Set forth in reasonable detail the specific uses for the
proceeds of such Revolving Loans and show the categories of
such uses]
<PAGE>
EXHIBIT B-1
-----------
NOTE
$_____________ New York, New York
------ ---, ----
FOR VALUE RECEIVED, ELDERTRUST OPERATING LIMITED PARTNERSHIP,
a Delaware limited partnership (the "Borrower"), hereby promises to pay to
GERMAN AMERICAN CAPITAL CORPORATION or its registered assigns (the "Bank"), in
lawful money of the United States of America in immediately available funds, at
the office of German American Capital Corporation (the "Administrative Agent")
located at 31 West 52nd Street, New York, New York 10019 on the Maturity Date
(as defined in the Agreement referred to below) the principal sum of
_______________________ DOLLARS ($____________) or, if less, the unpaid
principal amount of all Loans (as defined in the Agreement) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof until
paid at the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Notes referred to in the Credit
Agreement, dated as of January 30, 1998, among ElderTrust, the Borrower, the
lenders from time to time party thereto (including the Bank), Deutsche Bank AG,
New York Branch, as Issuing Bank, and the Administrative Agent (as amended,
modified or supplemented from time to time, the "Agreement") and is entitled to
the benefits thereof and of the other Credit Documents (as defined in the
Agreement). This Note is secured by the Security Documents (as defined in the
Agreement) and is entitled to the benefits of the Guaranties (as defined in the
Agreement). This Note is subject to voluntary prepayment and mandatory repayment
prior to the Maturity Date, in whole or in part, as provided in the Agreement,
and Loans may be converted from one Type (as defined in the Agreement) into
another Type to the extent provided in the Agreement.
In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be or may become due and payable in the manner and with
the effect provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By: ElderTrust, its general partner
By: _____________________________
Name:
Title:
<PAGE>
EXHIBIT B-2
-----------
LETTER OF CREDIT REQUEST
No. 1 Dated 2
----- -----
German American Capital Corporation, as Administrative Agent under the Credit
Agreement (as amended, modified or supplemented from time to time, the
"Credit Agreement"), dated as of January 30, 1998, among ElderTrust, a
Maryland real estate investment trust (the "REIT"), ElderTrust
Operating Limited Partnership, a Delaware limited partnership (the
"Borrower"), various lenders (the "Banks") from time to time party
thereto, Deutsche Bank AG, New York Branch, as Issuing Bank (the
"Issuing Bank") and the Administrative Agent
31 West 52nd Street
New York, New York 10019.
Attention: ______________________]
Dear Sirs:
We hereby request that Deutsche Bank AG, New York Branch, in
its capacity as Issuing Bank under the captioned Credit Agreement, issue a
standby Letter of Credit for the account of the undersigned on 3 (the "Date of
Issuance") in the aggregate stated amount of 4 . The requested Letter of Credit
shall be denominated in Dollars.
For purposes of this Letter of Credit Request, unless
otherwise defined herein, all capitalized terms used herein which are defined in
the Credit Agreement shall have the respective meanings provided therein.
The beneficiary of the requested Letter of Credit will be 5 ,
and such Letter of Credit will be in support of 6 and will have a stated
expiration date of 7 .
- ------------------------
1 Letter of Credit Request Number.
2 Date of Letter of Credit Request.
3 Date of Issuance which shall be at least five Business Days after the
date of this Letter of Credit Request (or such shorter period as is
acceptable to the Issuing Bank).
4 Aggregate initial stated amount of Letter of Credit.
5 Insert name and address of beneficiary.
6 Insert description of L/C Supportable Obligations.
7 Insert last date upon which drafts may be presented which may not be
later than the earlier of (x) the date which occurs 12 months after the
Date of Issuance, or, if any such standby Letter of Credit is
automatically extendable for successive periods of up to 12 months, a
date not beyond the third Business Day prior to the Maturity Date or
(y) the third Business Day prior to the Maturity Date.
<PAGE>
We hereby certify that:
(1) the representations and warranties contained in the Credit
Documents will be true and correct in all material respects on the Date of
Issuance, both before and after giving effect to the issuance of the Letter of
Credit requested hereby (it being understood and agreed that any representation
or warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such specified date);
and
(2) no Default or Event of Default has occurred and is
continuing nor, after giving effect to the issuance of the Letter of Credit
requested hereby, would such a Default or an Event of Default occur.
ELDERTRUST OPERATING LIMITED PARTNERSHIP
By: ElderTrust, its General Partner
By
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT C
---------
FORM OF SECTION 3.04(b)(ii) CERTIFICATE
Reference is hereby made to the Credit Agreement, dated as of
January 30, 1998, among ElderTrust, ElderTrust Operating Limited Partnership,
the lenders from time to time party thereto, Deutsche Bank AG, New York Branch,
as Issuing Bank, and German American Capital Corporation, as Administrative
Agent (as amended from time to time, the "Credit Agreement"). Pursuant to the
provisions of Section 3.04(b)(ii) of the Credit Agreement, the undersigned
hereby certifies that it is not a "bank" as such term is used in Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended.
[NAME OF BANK]
By______________________________
Name:
Title:
Date: _________________, _____
<PAGE>
EXHIBIT D
---------
January 30, 1998
German American Capital Corporation,
as Administrative Agent
31 W. 52nd Street
New York, New York 10019
Re: Credit Agreement dated as of January 30, 1998 among ElderTrust,
ElderTrust Operating Limited Partnership, the Banks listed
therein, Deutsche Bank AG, New York Branch, as Issuing Bank, and
German American Capital Corporation, as Administrative Agent and
Collateral Agent
Ladies and Gentlemen:
This firm has acted as counsel to ElderTrust, a Maryland real
estate investment trust (the "REIT"), ElderTrust Operating Limited Partnership,
a Delaware limited partnership (the "Borrower"), and the subsidiaries of the
Borrower identified on Schedule I attached hereto (individually, a "Subsidiary"
and collectively, the "Subsidiaries"), in connection with the Credit Agreement,
dated as of January 30, 1998 (the "Credit Agreement"), among the REIT, the
Borrower, the banks listed on the signature pages thereof (the "Banks"),
Deutsche Bank AG, New York Branch, as Issuing Bank, and German American Capital
Corporation, as Administrative Agent and Collateral Agent (the "Agent"). This
opinion letter is furnished to you pursuant to the requirements set forth in
Section 4.03 of the Credit Agreement in connection with the Closing thereunder
on the date hereof. Capitalized terms used herein which are defined in the
Credit Agreement shall have the meanings set forth in the Credit Agreement,
unless otherwise defined herein.
For purposes of this opinion letter, we have examined copies
of the following documents:
1. Executed copy of the Credit Agreement.
2. Executed copy of the Note.
3. Executed copy of the Pledge Agreement.
4. Executed copy of the Pledge and Security Agreement.
5. Executed copy of the Security Agreement.
6. Executed copy of the Subsidiaries Guaranty.
7. Executed copies of the Mortgages identified on Schedule II
attached hereto (the "Mortgages"), including the
Mortgage upon property owned by ET Sub-SMOB, L.L.C.
("SMOB") to be recorded in Wicomico County, Maryland
(the "Maryland Mortgage").
8. Executed copies of the Collateral Assignments identified
on Schedule III attached hereto (the "Collateral
Assignments").
<PAGE>
9. Completed UCC-1 forms naming the Borrower, the REIT
(doing business as "ElderTrust REIT Co.") and each of
the Subsidiaries as debtors and the Agent as secured
party and executed by the Borrower, the REIT and each of
the Subsidiaries, which UCC-1 forms (collectively, the
"Credit Party Financing Statements") have been prepared
for filing in the office of the Pennsylvania Department
of State and in the chattel records of the Prothonotary
of Chester County, Pennsylvania (collectively, the
"Pennsylvania Filing Offices").
10. Completed UCC-1 forms naming SMOB as debtor and the
Agent as secured party and executed by SMOB, which
UCC-1 forms (the "SMOB Financing Statements") have
been prepared for filing in the Pennsylvania Filing
Offices and in the office of the Maryland State
Department of Assessments and Taxation ("MSDAT") (the
"Maryland Filing Office"); and a completed UCC-1 form
naming SMOB as debtor and the Agent as secured party
and executed by SMOB, which UCC-1 form (the "Fixture
Filing") has been prepared for filing in the land
records of Wicomico County, Maryland.
11. The Amended and Restated Certificate of Limited Partnership
of the Borrower, as certified by the Secretary of State of
the State of Delaware on January 30, 1998, and as certified
by the Secretary of the REIT, as general partner of the
Borrower, on the date hereof as being complete, accurate
and in effect.
12. The Second Amended and Restated Agreement of Limited
Partnership of the Borrower, as certified by the Secretary
of the REIT on the date hereof as being complete, accurate
and in effect.
13. A certificate of good standing of the Borrower issued by
the Secretary of State of the State of Delaware dated
January 30, 1998.
14. A letter from CT Corporation System ("CT") dated January
29, 1998 stating that the Borrower's application for
qualification to do business in the Commonwealth of
Pennsylvania was filed on January 27, 1998.
15. The Amended and Restated Declaration of Trust of the REIT
filed with the MSDAT on January 28, 1998, as certified by
the Secretary of the REIT on the date hereof as being
complete, accurate and in effect; and a certificate from
the MSDAT dated January 29, 1998 stating that the REIT's
Amended and Restated Declaration of Trust was accepted and
approved for filing with the MSDAT on January 28, 1998.
16. The Amended and Restated Bylaws of the REIT, as certified
by the Secretary of the REIT on the date hereof as being
complete, accurate and in effect.
17. A certificate of good standing of the REIT issued by the
MSDAT dated January 28, 1998 and a letter from CT dated
January 30, 1998 stating that CT has confirmed by telephone
with the MSDAT that the REIT is active as of such date.
<PAGE>
18. A letter from CT dated January 29, 1998 stating that the
REIT's application for qualification to do business in the
Commonwealth of Pennsylvania (under the name "ElderTrust
REIT Co.") was filed on January 27, 1998.
19. With respect to each of the Subsidiaries that is a limited
liability company, as shown on Schedule I attached hereto
(the "LLC Subsidiaries"), (i) the certificate of formation
of such Subsidiary, as certified by the Secretary of State
of the State of Delaware on January 27, 1998, and as
certified by the Secretary of the REIT, on behalf of the
Borrower, as the sole member of each of such Subsidiaries,
on the date hereof as being complete, accurate and in
effect, and (ii) the limited liability company agreement of
such Subsidiary, as certified by the Secretary of the REIT
on the date hereof as being complete, accurate and in
effect.
20. With respect to each of the Subsidiaries that is a
registered limited liability partnership, as shown on
Schedule I attached hereto (the "Partnership
Subsidiaries"), (i) the certificate of limited partnership
of such Subsidiary, as certified by the Virginia State
Corporation Commission ("VSCC") on January 28, 1998, and as
certified by the Secretary of the REIT, on behalf of the
Borrower, as the sole member of ET GENPAR, L.L.C
("GENPAR"), which is the general partner of each of such
Subsidiaries, on the date hereof as being complete,
accurate and in effect and (ii) the agreement of limited
partnership of such Subsidiary, as certified by the
Secretary of the REIT on the date hereof as being complete,
accurate and in effect.
21. Certificates of good standing of each of the Subsidiaries
issued by the Secretary of State of the State of Delaware
or the VSCC, as applicable, as further described on
Schedule I attached hereto.
22. A letter from CT, dated January 29, 1998 stating that each
Subsidiary's application for qualification to do business
in the Commonwealth of Pennsylvania was filed on January
27, 1998 and, if the Property owned by such Subsidiary is
located in Massachusetts or New Hampshire, that such
Subsidiary's application for qualification to do business
in such jurisdiction was filed on the date set forth in
such letter.
23. A foreign qualification certificate of ET-Sub Lopatcong,
L.L.C. ("Lopatcong") issued by the Secretary of State of
the State of New Jersey dated January 21, 1998; a foreign
qualification certificate of SMOB issued by the MSDAT dated
January 20, 1998; and foreign qualification certificates of
ET Sub-Windsor I, L.L.C. ("Windsor I") and ET Sub-Windsor
II, L.L.C. ("Windsor II") issued by the Secretary of State
of the State of Connecticut dated January 27, 1998.
24. Certain resolutions of the Board of Trustees of the REIT,
adopted by unanimous written consent dated as of January
30, 1998, as certified by the Secretary of the REIT on the
date hereof as being complete, accurate and in effect,
relating to, among other things, authorization of the
Credit Agreement, the Pledge Agreement, the Pledge and
Security Agreement and the Security Agreement and
arrangements in connection therewith.
<PAGE>
25. Action by the REIT, as the sole general partner of the
Borrower, adopting certain resolutions by written consent
dated as of January 30, 1998, as certified by the Secretary
of the REIT on the date hereof as being complete, accurate
and in effect, relating to, among other things,
authorization on behalf of the Borrower of the Credit
Agreement, the Notes, the Pledge Agreement, the Pledge and
Security Agreement, the Security Agreement and the
Collateral Assignments and arrangements in connection
therewith.
26. Action by the Borrower, as the sole member of each of the
LLC Subsidiaries, adopting certain resolutions by written
consent dated as of January 30, 1998, as certified by the
Secretary of the REIT on the date hereof as being complete,
accurate and in effect, relating to, among other things,
authorization on behalf of the LLC Subsidiaries of the
Subsidiaries Guaranty, the Pledge Agreement, the Pledge and
Security Agreement, the Security Agreement and arrangements
in connection therewith.
27. Action by GENPAR, as the sole general partner of each of
the Partnership Subsidiaries, adopting certain resolutions
by written consent dated as of January 30, 1998, as
certified by the Secretary of the REIT on the date hereof
as being complete, accurate and in effect, relating to,
among other things, authorization on behalf of the
Partnership Subsidiaries of the Subsidiaries Guaranty, the
Pledge Agreement, the Pledge and Security Agreement, the
Security Agreement and arrangements in connection
therewith.
28. A certificate of the Secretary of the REIT, dated as of the
date hereof, as to the incumbency and signatures of certain
officers of the REIT.
29. Certain agreements and contracts to which either the
Borrower or the REIT is a party which were filed as
Exhibits to the REIT's Registration Statement on Form S-11
(No. 333-37451), filed with the Securities and Exchange
Commission on October 8, 1997, as amended (the
"Registration Statement").
30. A certificate of certain officers of the REIT, dated as of
the date hereof, as to certain facts relating to the REIT,
the Borrower and the Subsidiaries.
31. Hogan & Hartson L.L.P. litigation docket.
The Pledge Agreement, the Pledge and Security Agreement, the
Security Agreement and the Collateral Assignments are sometimes hereinafter
referred to collectively as the "Security Documents." The Credit Agreement, the
Note, the Security Documents and the Subsidiaries Guaranty are sometimes
hereinafter referred to collectively as the "Financing Documents." The New York
UCC, the Pennsylvania UCC, the Maryland UCC and the District of Columbia UCC (as
each such term is hereinafter defined), as applicable, are hereinafter referred
to as the "UCC."
<PAGE>
We have not, except as specifically identified above, made any
independent review or investigation of factual or other matters, including the
organization, existence, good standing, assets, business or affairs of the
Borrower, the REIT or any of the Subsidiaries (collectively, the "Credit
Parties"). In our examination of the Financing Documents and the aforesaid
certificates, records, documents and agreements, we have assumed the genuineness
of all signatures (other than those on behalf of the Credit Parties on the
Financing Documents and the Mortgages), the legal capacity of all natural
persons, the accuracy and completeness of all documents submitted to us, the
authenticity of all original documents and the conformity to authentic original
documents of all documents submitted to us as copies (including telecopies). We
also have assumed the accuracy, completeness and authenticity of the foregoing
certifications (of public officials, governmental agencies and departments and
corporate officers) and statements of fact, on which we are relying, and have
made no independent investigations thereof. In rendering the following opinions
we have relied as to factual matters, without independent investigation, upon
the representations, warranties and certifications made by the Borrower, the
REIT and the Subsidiaries in or pursuant to the Financing Documents and the
Mortgages and upon the officers' certificates identified in Paragraphs 28 and 30
above. This opinion letter is given, and all statements herein are made, in the
context of the foregoing.
As used in this opinion letter, the phrase "to our knowledge"
means the actual knowledge (that is, the conscious awareness of facts or other
information) of lawyers in the firm who have given substantive legal attention
to representation of the Credit Parties in connection with the Credit Agreement
and the Registration Statement.
For purposes of this opinion letter, we have assumed that (i)
each of the parties to the Financing Documents and the Mortgages (other than the
Credit Parties) has all requisite power and authority under all applicable laws,
regulations and governing documents to execute and deliver the Financing
Documents and the Mortgages and to perform its obligations thereunder, (ii) each
of such parties has duly authorized, executed and delivered the Financing
Documents and the Mortgages to which it is a party, (iii) each of such parties
is validly existing and in good standing in all necessary jurisdictions, (iv)
the Financing Documents and the Mortgages constitute valid and binding
obligations of each such party, as applicable, enforceable against it in
accordance with their respective terms and (v) there has been no material mutual
mistake of fact or misunderstanding or fraud, duress or undue influence, in
connection with the negotiation, execution or delivery of the Financing
Documents and the Mortgages.
For purposes of the opinions expressed in Paragraphs (m)
through (q) below, we have made the following additional assumptions, without
any independent verification or investigation: (i) that each of the Credit
Parties owns the collateral or property described in the Security Documents
purported to be owned by it and the Maryland Mortgage, as applicable, (ii) that
the Credit Party Financing Statements and the SMOB Financing Statements will be
timely filed (and in any event within ten (10) days after the date hereof) in
the Pennsylvania Filing Office and the Maryland Filing Office, (iii) that
pending the completion of the filings of the Credit Party Financing Statements,
the SMOB Financing Statements and the Fixture Filing, operative facts (and
applicable law) will remain unchanged, and (iv) that the Pledged Notes and the
certificates representing the Pledged Stock (as such terms are defined in the
Pledge Agreement) and the Underlying Notes (as defined in the Collateral
Assignments) in existence on the date hereof (collectively, the "Possessory
Collateral") are being delivered to the Agent in the District of Columbia, who
will take such Possessory Collateral to New York, New York and maintain
possession thereof in the State of New York at all times thereafter.
<PAGE>
This opinion letter is based as to matters of law solely on
applicable provisions of (i) the Delaware Revised Uniform Limited Partnership
Act, as amended (the "Delaware Limited Partnership Act"), (ii) the Delaware
Limited Liability Company Act, as amended (the "Delaware LLC Act"), (iii) the
Virginia Revised Uniform Limited Partnership Act, as amended (the "Virginia
Limited Partnership Act"), (iv) the Virginia Revised Uniform Partnership Act, as
amended (the "Virginia Partnership Act"), (v) New York law, including the
Uniform Commercial Code as in effect in the State of New York (the "New York
UCC") (but not including any statutes, ordinances, administrative decisions,
rules or regulations of any political subdivision of the State of New York),
(vi) Maryland law, including Title 8 of the Maryland Corporations and
Associations Code Annotated, as amended (the "Maryland REIT Law"), and the
Uniform Commercial Code as in effect in the State of Maryland (the "Maryland
UCC") (but not including any statutes, ordinances, administrative decisions,
rules or regulations of any political subdivision of the State of Maryland),
(vii) the Uniform Commercial Code as in effect in the Commonwealth of
Pennsylvania (the "Pennsylvania UCC"), (viii) the Uniform Commercial Code as in
effect in the District of Columbia (the "District of Columbia UCC") and (ix)
except as set forth below, federal statutes and regulations, including the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System; it being understood that, with respect to clauses (v), (vi) and (ix)
above, the opinions expressed below are based upon our review of those laws,
statutes and regulations that, in our experience, are normally applicable to
transactions of the type contemplated by the Financing Documents and the
Mortgages. Without limiting the generality of the foregoing, we express no
opinion as to federal or state antitrust or unfair competition laws or
regulations, tax laws or regulations or federal or state securities laws or
regulations, or any other laws, statutes, ordinances, rules or regulations not
expressly identified above.
Based upon, subject to and limited by the foregoing, we are of
the opinion that:
(a) The Borrower is a limited partnership formed, validly
existing and in good standing under the laws of the State of Delaware. The
Borrower has filed an application to qualify as a foreign limited partnership in
the Commonwealth of Pennsylvania on the date specified in the letter referred to
in Paragraph 14 above. The Borrower has the partnership power and partnership
authority under its limited partnership agreement and the Delaware Limited
Partnership Act to transact the business in which it is currently engaged, as
described in the REIT's final Prospectus dated January 26, 1998 (the
"Prospectus").
(b) The Borrower has the partnership power and partnership
authority under its limited partnership agreement and the Delaware Limited
Partnership Act to execute and deliver the Financing Documents to which it is a
party and to perform its obligations thereunder. The execution, delivery and
performance as of the date hereof by the Borrower of the Financing Documents to
which it is a party have been duly authorized by all necessary partnership
action of the Borrower.
(c) The REIT was formed, and is validly existing and in good
standing under the Maryland REIT Law. The REIT has filed an application to
qualify as a foreign real estate investment trust in the Commonwealth of
Pennsylvania under the name "ElderTrust REIT Co." on the date specified in the
letter referred to in Paragraph 18 above. The REIT has the trust power and trust
authority under its declaration of trust and the Maryland REIT Law to transact
the business in which it is currently engaged, as described in the Prospectus.
(d) The REIT has the trust power and trust authority under its
declaration of trust and bylaws and under the Maryland REIT Law to execute and
deliver the Financing Documents to which it is a party and to perform its
obligations thereunder. The execution, delivery and performance as of the date
hereof by the REIT of the Financing Documents to which it is a party have been
duly authorized by all necessary trust action of the REIT.
<PAGE>
(e) Each of the LLC Subsidiaries is a limited liability
company formed, validly existing and in good standing under the laws of the
State of Delaware as of the dates of the certificates referred to in Paragraph
21 above. Each of the LLC Subsidiaries has filed an application to qualify as a
foreign limited liability company in the Commonwealth of Pennsylvania and, if
the Property owned by such Subsidiary is located in Massachusetts or New
Hampshire, such Subsidiary's application to qualify as a foreign limited
liability company in such jurisdiction was filed on the dates specified in the
letter referred to in Paragraph 22 above. Each of Lopatcong and SMOB is
registered as a foreign limited liability company in the States of New Jersey
and Maryland, respectively, as of the dates of the certificates referred to in
Paragraph 23 above. Windsor I and Windsor II are registered as foreign limited
liability companies as of the date of the certificates referred to in Paragraph
23 above. Each of the LLC Subsidiaries has the power and authority as a limited
liability company under its limited liability company agreement and the Delaware
LLC Act to transact the business in which it is currently engaged, as described
in the Prospectus.
(f) Each of the LLC Subsidiaries has the power and authority
as a limited liability company under its limited liability company agreement and
the Delaware LLC Act to execute and deliver, as applicable, the Subsidiaries
Guaranty, the Security Documents and the Mortgage to which it is a party and to
perform its obligations thereunder. The execution, delivery and performance as
of the date hereof by each of the LLC Subsidiaries, as applicable, of the
Subsidiaries Guaranty, the Security Documents and the Mortgage to which it is a
party have been duly authorized by all necessary limited liability company
action of such Subsidiary.
(g) Each of the Partnership Subsidiaries is a limited
partnership formed, validly existing and in good standing under the laws of the
Commonwealth of Virginia as of the dates of the certificates referred to in
Paragraph 21 above. Each of the Partnership Subsidiaries has filed an
application to qualify as a foreign limited partnership in the Commonwealth of
Pennsylvania on the dates specified in the letter referred to in Paragraph 22
above. Each of the Partnership Subsidiaries has the partnership power and
partnership authority under its limited partnership agreement, the Virginia
Limited Partnership Act and the Virginia Partnership Act to transact the
business in which it is currently engaged, as described in the Prospectus.
(h) Each of the Partnership Subsidiaries has the partnership
power and authority under its limited partnership agreement, the Virginia
Limited Partnership Act and the Virginia Partnership Act to execute and deliver,
as applicable, the Subsidiaries Guaranty, the Security Documents and the
Mortgage to which it is a party and to perform its obligations thereunder. The
execution, delivery and performance as of the date hereof by each of the
Partnership Subsidiaries, as applicable, of the Subsidiaries Guaranty, the
Security Documents and the Mortgage to which it is a party have been duly
authorized by all necessary partnership action of such Subsidiary.
(i) Each of the Financing Documents has been duly executed and
delivered on behalf of each of the Credit Parties, as applicable, and
constitutes a valid and binding obligation of such Credit Party, enforceable in
accordance with its terms, except as may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally (including, without limitation, the effect of statutory and other law
regarding fraudulent conveyances, fraudulent transfers and preferential
transfers), (ii) as may be limited by the exercise of judicial discretion and
the application of principles of equity, including, without limitation,
requirements of good faith, fair dealing, conscionability and materiality
(regardless of whether such agreements are considered in a proceeding in equity
<PAGE>
or at law) and (iii) that certain rights, remedies, waivers and other provisions
of the Financing Documents may not be enforceable in accordance with their
terms, but, subject to the exceptions, qualifications and limitations set forth
above and elsewhere in this opinion letter, such unenforceability would not
render the Financing Documents invalid as a whole or (A) preclude the
enforcement of the obligations of the Borrower to pay the principal of the Note
and interest thereon at the rate or rates set forth therein (except that no
opinion is expressed herein with respect to any increase in rate after default
other than as expressly set forth in Paragraph (t) below with respect to usury),
(B) preclude the enforcement of the obligations of the REIT and the Subsidiaries
under the Credit Agreement and the Subsidiaries Guaranty, respectively, to pay
the Guaranteed Obligations (as such term is defined in the Credit Agreement and
the Subsidiaries Guaranty, as applicable), (C) impair the Agent's right to
accelerate and demand payment of the Note upon the occurrence of an Event of
Default in accordance with the Credit Agreement and (D) assuming that the Agent
will comply with all requirements of applicable procedural and substantive law,
preclude the foreclosure of the liens and security interests created under the
Security Documents in accordance with Part 5 of Article 9 of the UCC (except
that no opinion is expressed herein with respect to the creation or perfection
of any liens or security interests under any of the Collateral Assignments other
than as expressly set forth in Paragraph (o) below with respect to the
Underlying Notes).
(j) The Maryland Mortgage has been duly executed and delivered
on behalf of SMOB and constitutes a valid and binding obligation of SMOB
enforceable in accordance with its terms, except as may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally (including, without limitation, the effect of
statutory and other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers), (ii) as may be limited by the exercise of judicial
discretion and the application of principles of equity, including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether such agreements are considered in a
proceeding in equity or at law) and (iii) that certain rights, remedies, waivers
and other provisions of the Maryland Mortgage may not be enforceable in
accordance with their terms, but, subject to the exceptions, qualifications and
limitations set forth above and elsewhere in this opinion letter, such
unenforceability would not render the Maryland Mortgage invalid as a whole or,
assuming that the Agent will comply with all requirements of applicable
procedural and substantive law, preclude the foreclosure of the liens and
security interests created under the Maryland Mortgage.
(k) The execution, delivery and performance as of the date
hereof by each of the Credit Parties of the Financing Documents and the
Mortgages do not, as to each such Credit Party, (i) violate the Maryland REIT
Law, the Delaware Limited Partnership Act, the Delaware LLC Act, the Virginia
Limited Partnership Act or the Virginia Partnership Act, as applicable, or its
declaration of trust, bylaws, limited partnership agreement, limited liability
company agreement, certificate of incorporation or bylaws, as applicable, (ii)
violate any applicable federal or New York or Maryland state statute or
regulation, or, to our knowledge, any order of any court or governmental
authority that is binding upon it, (iii) breach or constitute a default under
any agreement or contract filed as an exhibit to the Registration Statement to
which any Credit Party is a party or (iv) result in or cause the creation of any
lien upon any of its properties pursuant to any agreement or contract referred
to in clause (iii) above.
(l) No approval or consent of, or registration or filing with,
any federal or New York or Maryland state governmental authority is required to
be obtained or made by any of the Credit Parties in connection with the
execution, delivery and performance as of the date hereof by it, as applicable,
of the Financing Documents and the Mortgage to which it is a party.
<PAGE>
The Pledge and Security Agreement and the Security Agreement
create in favor of the Agent security interests in each Credit Party's right,
title and interest in, to and under the collateral specified therein purported
to be owned by such Credit Party, to the extent that (i) such collateral
consists of general intangibles, accounts, documents, chattel paper, equipment,
inventory, instruments and proceeds of the foregoing (as such terms are defined
in the UCC), (ii) the UCC applies to security interests in such collateral and
(iii) creation of security interests in any collateral consisting of
governmental authorizations, licenses or permits, contracts with governmental
organizations or rights (including rights to payment) under such contracts is
permissible under applicable federal law and applicable state law other than the
UCC (to the extent encompassed by the foregoing clauses (i), (ii), and (iii),
the "Collateral"). To the extent that UCC security interests in the Collateral
owned by any of the Credit Parties, other than any such Collateral constituting
fixtures, or constituting equipment or inventory located outside the
Commonwealth of Pennsylvania, can be perfected currently by the filing of
financing statements under the UCC, the filing of the Credit Party Financing
Statements in the Pennsylvania Filing Offices, with the appropriate fees and
recording taxes (if any) paid, will be sufficient to perfect such security
interests. To the extent, if any, that the certificates representing the
partnership interests in the Borrower (the "Units") constitute "instruments"
under the UCC, the taking and retention of possession by the Agent of such
certificates representing the Units held by the REIT in accordance with the
terms of the Pledge and Security Agreement are sufficient to perfect such
security interests in such Units.
(m) The Pledge Agreement creates in favor of the Agent
security interests in each Credit Party's right, title and interest in, to and
under the Pledged Securities (as defined in the Pledge Agreement) pledged by
such Credit Party. The taking and retention of possession by the Agent of the
Notes and the certificate(s) representing the Pledged Stock in accordance with
the terms of the Pledge Agreement are sufficient to perfect such security
interests in the Pledged Securities.
(n) Insofar as New York law is the governing law, the
Collateral Assignments create in favor of the Agent security interests in the
Borrower's right, title, and interest in, to and under the Underlying Notes. The
taking and retention of possession by the Agent of the Underlying Notes in
accordance with the terms of the Collateral Assignments are sufficient to
perfect such security interests in the Underlying Notes.
(o) The Maryland Mortgage creates in favor of the Agent
security interests in SMOB's right, title and interest in, to and under the
property specified in the granting clauses thereof, to the extent that (i) such
property consists of general intangibles, accounts, equipment, inventory and
proceeds of the foregoing (as such terms are defined in the UCC), (ii) the UCC
applies to security interests in such property and (iii) creation of security
interests in any property consisting of governmental authorizations, licenses or
permits, contracts with governmental organizations or rights (including rights
to payment) under such contracts is permissible under applicable federal law and
applicable state law other than the UCC (to the extent encompassed by the
foregoing clauses (i), (ii) and (iii), the "Maryland Collateral"). To the extent
that UCC security interests in the Maryland Collateral owned by SMOB can be
perfected currently by the filing of financing statements under the UCC, the
filing of the SMOB Financing Statements in the Pennsylvania Filing Offices and
the Maryland Filing Office and the filing of the Fixture Filing in the land
records of Wicomico County, Maryland, in each case with the appropriate fees and
recording taxes, if any, paid, are sufficient to perfect such security
interests. Each of the SMOB Financing Statement which has been prepared for
filing in the Maryland Filing Office and the Fixture Filing satisfies the formal
requisites of financing statements set forth in Section 9-402 of the Maryland
UCC.
<PAGE>
(p) The Maryland Mortgage satisfies the requirements relating
to the form of deeds of trust set forth in Section 4-202, Real Property Article,
of the Annotated Code of Maryland, sufficiently so that, upon proper recordation
and indexing of the Maryland Mortgage among the land records of Wicomico County,
Maryland, the Maryland Mortgage will create a valid lien on the Property
described therein in favor of the Agent.
(q) Neither the REIT nor the Borrower is an "investment
company" within the meaning of the Investment Company Act.
(r) The use by the Borrower of the Letters of Credit and of
the proceeds of the Loans as contemplated in the Credit Agreement does not
violate Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
(s) Under applicable New York usury laws, the Banks and the
Issuing Bank are permitted to charge interest with respect to the Loans and any
Unpaid Drawings at the rate or rates set forth in the Credit Agreement and the
Notes. You have also asked us to assume for purposes of the subject matter
addressed in the next sentence that Maryland law is applicable. Based on that
assumption, under Section 12-103(e), Commercial Law Article, of the Annotated
Code of Maryland, the Banks and the Issuing Bank may charge interest with
respect to the Loans and any Unpaid Drawings at the rate or rates set forth in
the Credit Agreement and the Notes.
* * * * *
In addition, you have requested our opinion as to whether the
partnership interests in the Borrower (the "Units") constitute "securities"
within the meaning of Section 8-102 of the Delaware Uniform Commercial Code (the
"Delaware UCC"). Under Section 8-103(c) of the Delaware UCC, an interest in a
partnership is not a security unless it is dealt in or traded on securities
exchanges or in securities markets, its terms expressly provide that it is a
security governed by Article 8 of the Delaware UCC or it is an investment
company security. Because the Units do not satisfy any of these criteria, it is
our opinion that the Units are not "securities" for purposes of Article 8 of the
Delaware UCC.
* * * * *
Based solely upon the officers' certificate identified in
Paragraph 30 above and a review of this firm's litigation docket, we hereby
confirm to you that, to our knowledge, there are no actions, suits or
proceedings pending or threatened against any of the Credit Parties, or in which
any of the Credit Parties is a party, before any court or governmental
department, commission, board, bureau, agency or instrumentality that question
the validity of the Financing Documents or any action taken or to be taken
pursuant thereto, or that seek to enjoin or otherwise prevent the consummation
of the transactions contemplated by the Financing Documents or to recover in
damages or obtain other relief as a result thereof, or that, if determined
adversely to any such Credit Party, would result in any adverse change in the
financial condition of the REIT and its subsidiaries, taken as a whole, or the
Borrower and its subsidiaries, taken as a whole, which the REIT or the Borrower
has advised us is material.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared solely for your use and the use of the Banks and the Issuing
Bank in connection with the Closing under the Credit Agreement on the date
hereof, and should not be quoted in whole or in part or otherwise be referred
to, nor be filed with or furnished to any governmental agency or other person or
entity, without the prior written consent of this firm, except that your
<PAGE>
successors and the Issuing Bank's successors and any transferees of the Notes
may rely upon this opinion letter (it being understood that this opinion letter
speaks only as of the date hereof, and that no such reliance will have any
effect on the scope, phrasing or originally intended use of this opinion
letter).
Very truly yours,
HOGAN & HARTSON L.L.P.
<PAGE>
SCHEDULE I
----------
Borrower Subsidiaries
<TABLE>
<CAPTION>
Type of Entity Date of
and Formation Good Standing
Name Jurisdiction Certificate
- ---- ---------------- -------------
<S> <C> <C>
ET GENPAR, L.L.C. Delaware LLC January 27, 1998
ET Sub-Heritage Woods, L.L.C. Delaware LLC January 27, 1998
ET Sub-Pleasant View, L.L.C. Delaware LLC January 27, 1998
ET Sub-Rittenhouse Limited Partnership, L.L.P. Virginia limited January 28, 1998
liability partnership
ET Sub-Lopatcong, L.L.C. Delaware LLC January 27, 1998
ET Sub-Wayne I Limited Partnership, L.L.P. Virginia limited January 28, 1998
liability partnership
ET Sub-Pennsburg Manor Limited Partnership, Virginia limited January 28, 1998
L.L.P. liability partnership
ET Sub-POB I Limited Partnership, L.L.P. Virginia limited January 28, 1998
liability partnership
ET Sub-SMOB, L.L.C. Delaware LLC January 27, 1998
ET Sub-Windsor I, L.L.C. Delaware LLC January 27, 1998
ET Sub-Windsor II, L.L.C. Delaware LLC January 27, 1998
</TABLE>
<PAGE>
SCHEDULE II
-----------
Mortgages
1. Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement, made by ET Sub-Pennsburg Manor Limited
Partnership, L.L.P., as Mortgagor to German American Capital
Corporation, as Collateral Agent, as Mortgagee, dated as of January 30,
1998 (Harston Hall NRC).
2. Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement, made by ET-Sub Heritage Woods, L.L.C., as
Mortgagor to German American Capital Corporation, as Collateral Agent,
as Mortgagee, dated as of January 30, 1998 (Heritage Woods).
3. Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement, made by ET Sub-Lopatcong, L.L.C., as
Mortgagor to German American Capital Corporation, as Collateral Agent,
as Mortgagee, dated as of January 30, 1998 (Lopatcong Care Center).
4. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing Statement, made by ET Sub-Pennsburg Manor Limited
Partnership, L.L.P., as Mortgagor to German American Capital
Corporation, as Collateral Agent, as Mortgagee, dated as of January 30,
1998 (Pennsburg Manor NRC).
5. Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement, made by ET Sub-Pleasant View, L.L.C., as
Mortgagor to German American Capital Corporation, as Collateral Agent,
as Mortgagee, dated as of January 30, 1998 (Pleasant View Retirement
Center).
6. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing Statement, made by ET Sub-POB I Limited Partnership,
L.L.P., as Mortgagor to German American Capital Corporation, as
Collateral Agent, as Mortgagee, dated as of January 30, 1998
(Professional Office Building I).
7. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing Statement, made by ET Sub-Rittenhouse Limited
Partnership, L.L.P., as Mortgagor to German American Capital
Corporation, as Collateral Agent, as Mortgagee, dated as of January 30,
1998 (Rittenhouse Care Center).
8. Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement, made by ET Sub-SMOB. L.L.C., as Mortgagor to
the Trustee named therein for the benefit of German American Capital
Corporation, as Collateral Agent, as Mortgagee, dated as of January 30,
1998 (Salisbury MOB).
9. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing Statement, made by ET-Sub Wayne I Limited
Partnership, L.L.P., as Mortgagor to German American Capital
Corporation, as Collateral Agent, as Mortgagee, dated as of January 30,
1998 (Wayne NRC).
10. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing Statement, made by ET Sub-Windsor II, L.L.C., as
Mortgagor to German American Capital Corporation, as Collateral Agent,
as Mortgagee, dated as of January 30, 1998 (Windsor Clinic Training
Facility).
11. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement
and Fixture Filing Statement, made by ET Sub-Windsor I, L.L.C., as
Mortgagor to German American Capital Corporation, as Collateral Agent,
as Mortgagee, dated as of January 30, 1998 (Windsor Office Building).
<PAGE>
SCHEDULE III
------------
Collateral Assignments
1. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Coquina Place).
2. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Harbor Place).
3. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Mifflin).
4. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Lehigh Manor).
5. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Berkshire Manor).
6. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Oaks).
7. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Montchanin).
8. Assignment of Mortgage and Pledge Agreement between ElderTrust
Operating Limited Partnership, as Assignor and Pledgor, and German
American Capital Corporation, as Collateral Agent, dated as of January
30, 1998 (Sanatoga).
<PAGE>
EXHIBIT E
---------
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, the [Secretary/Assistant Secretary] of
[NAME OF CREDIT PARTY] [NAME OF GENERAL PARTNER OF THE APPLICABLE PARTNERSHIP
CREDIT PARTY, the General Partner of _____________], a [corporation]
[partnership] [limited liability company] organized and existing under the laws
of the State of ________ (the "Company"), DO HEREBY CERTIFY that:
1. This Certificate is furnished pursuant to the Credit
Agreement, dated as of January 30, 1998 among ElderTrust, ElderTrust Operating
Limited Partnership, the lenders from time to time party thereto, Deutsche Bank
AG, New York Branch, as Issuing Bank, and German American Capital Corporation,
as Administrative Agent (such Credit Agreement, as in effect on the date of this
Certificate, being herein called the "Credit Agreement"). Unless otherwise
defined herein, capitalized terms used in this Certificate shall have the
meanings set forth in the Credit Agreement.
2. The following named individuals are presently the elected
officers of the Company, each holds the office of the Company set forth opposite
his or her name below and has held such office as of the date of signing of any
Credit Document. The signature written opposite the name and title of each such
officer below is his or her correct signature.
Name(1) Office Signature
- -------------------- -------------------- -------------------------
- -------------------- -------------------- -------------------------
- -------------------- -------------------- -------------------------
- -------------------- -------------------- -------------------------
3. Attached hereto as Exhibit A is a true and correct copy of
the [Certificate of Incorporation of the Company] [Certificate of Limited
Partnership of the Company] [Certificate of Limited Liability Company] as filed
in the Office of the Secretary of State of the State of its formation, together
with all amendments thereto adopted through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of
the [By-Laws of the Company] [Partnership Agreement of the Company] [Limited
Liability Company Agreement], together with all amendments thereto, which were
duly adopted and are in full force and effect on the date hereof.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, 1998 by [unanimous written
consent of the Board of [Directors] [Managers] of the Company] [the written
consent of the General Partner of the Company], and said resolutions have not
been rescinded, amended or modified. Except as attached hereto as Exhibit C, no
resolutions have been adopted by the Company which deal with the execution,
delivery or performance of any of the Credit Documents to which the Company is
party.
6. Attached hereto as Exhibit E are true and correct copies of
all Debt Agreements referred to in Section 4.05 of the Credit Agreement. 2
7. I know of no proceeding for the dissolution or liquidation
of the Company or threatening its existence.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day
of _______, 1998.
[NAME OF CREDIT PARTY]
------------------------------
Name:
Title:
- --------
1 Include name, office and signature of each officer who will sign any Credit
Document.
2 Insert for Officers' Certificates of the Borrower only.
<PAGE>
EXHIBIT F-1
-----------
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of January 30, 1998 (as amended,
modified or supplemented from time to time, this "Agreement"), made by each of
the undersigned pledgors (each, a "Pledgor" and, together with any other entity
that becomes a party hereto pursuant to Section 22 hereof, the "Pledgors"), in
favor of GERMAN AMERICAN CAPITAL CORPORATION, as Collateral Agent (the
"Pledgee"), for the benefit of the Secured Creditors (as defined below). Except
as otherwise defined herein, capitalized terms used herein and defined in the
Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, ElderTrust, a Maryland real estate investment trust
(the "REIT"), ElderTrust Operating Limited Partnership (the "Borrower"), various
lenders from time to time party thereto (the "Banks"), Deutsche Bank AG, New
York Branch, as Issuing Bank (the "Issuing Bank"), and German American Capital
Corporation, as Administrative Agent (together with any successor administrative
agent, the "Administrative Agent"), have entered into a Credit Agreement, dated
as of January 30, 1998, providing for the making of Loans to the Borrower and
the issuance of and participation in Letters of Credit for the account of the
Borrower, all as contemplated therein (as amended, modified or supplemented from
time to time, the "Credit Agreement") (the Banks, the Issuing Bank, the
Administrative Agent and the Pledgee are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or affiliates thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, are herein called the "Secured Creditors");
WHEREAS, pursuant to the Parent Guaranty, the Parent Guarantor
has guaranteed to the Secured Creditors the payment when due of all obligations
and liabilities of the Borrower under or with respect to the Credit Documents
and the Interest Rate Protection Agreements and Other Hedging Agreements;
WHEREAS, pursuant to the Subsidiaries Guaranty, each
Subsidiary Guarantor has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements and Other Hedging Agreements;
WHEREAS, it is a condition precedent to the extensions of
credit under the Credit Agreement that each Pledgor shall have executed and
delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to
satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
for the benefit of the Secured Creditors and hereby covenants and agrees with
the Pledgee for the benefit of the Secured Creditors as follows:
<PAGE>
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities (including, without limitation, the principal of and interest on the
Notes (as defined in the Credit Agreement) issued by, and Loans made to, the
Borrower under the Credit Agreement, all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit, and all indemnities, fees, expenses
and interest thereon or owed thereunder) of such Pledgor to the Bank Creditors,
whether now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement and the other Credit Documents (including,
without limitation, in the case of the Guarantor, all of its obligations and
liabilities under its Guaranty) to which such Pledgor is a party and the due
performance and compliance by such Pledgor with all of the terms, conditions and
agreements contained in the Credit Agreement and in such other Credit Documents
(all such principal, interest, obligations and liabilities described in this
clause (i) being herein collectively called the "Credit Agreement Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities of such Pledgor to the Other Creditors, whether now existing or
hereafter incurred under, arising out of or in connection with any Interest Rate
Protection Agreement or Other Hedging Agreement (including, without limitation,
in the case of the Guarantor, all of its obligations and liabilities under its
Guaranty) and the due performance and compliance by such Pledgor with all the
terms, conditions and agreements contained in the Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations and liabilities
described in this clause (ii) being herein collectively called the "Other
Obligations");
(iii) any and all reasonable sums advanced by the Pledgee in
order to preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any obligations or liabilities referred to in clauses (i) and
(ii) above, upon the occurrence and during the continuance of an Event of
Default (such term, as used in this Agreement, shall mean any Event of Default
under, and as defined in, the Credit Agreement, or any payment default (after
the expiration of any applicable grace period) under any Interest Rate
Protection Agreement or Other Hedging Agreement and shall in any event include,
without limitation, any payment default (after the expiration of any applicable
grace period) on any of the Obligations (as hereinafter defined)) shall have
occurred and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee (as defined in Section
11 hereof) as to which such Indemnitee has the right to reimbursement under
Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
<PAGE>
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein, (i) the term "Stock" shall mean all of the issued and outstanding shares
of capital stock at any time owned by any Pledgor of any corporation (other than
Excluded Stock) , (ii) the term "Notes" shall, except as otherwise defined
herein, mean all promissory notes from time to time issued to, or held by, any
Pledgor, (iii) the term "Securities" shall mean all of the Stock and Notes, and
(iv) the term "Excluded Stock" shall mean any shares of capital stock owned by
any Pledgor in any Subsidiary established after the date hereof which does not
own a Borrowing Base Property or a Borrowing Base Pledged Mortgage Loan and/or
an equity interest in any other Subsidiary which owns any Borrowing Base
Property or Borrowing Base Pledged Mortgage Loan, provided that the conditions
set forth in the last sentence of Section 8.12 of the Credit Agreement with
respect to such Subsidiary are satisfied. Each Pledgor represents and warrants
that on the date hereof (i) the Stock held by such Pledgor consists of the
number and type of shares of the stock of the corporations as described in Annex
A hereto, (ii) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex A
hereto, (iii) the Notes held by such Pledgor consist of the promissory notes
described in Annex B hereto where such Pledgor is listed as the lender, and (iv)
such Pledgor owns no other Securities.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of such Pledgor and for
the purposes set forth in Section 1 hereof, each Pledgor hereby: (i) grants to
the Pledgee a first priority security interest in all of the Collateral owned by
such Pledgor; (ii) pledges and deposits as security with the Pledgee the
Securities owned by such Pledgor, and delivers to the Pledgee certificates or
instruments therefor, duly endorsed in blank in the case of Notes and
accompanied by undated stock or other powers duly executed in blank by such
Pledgor in the case of certificated Stock, or such other instruments of transfer
as may be reasonably acceptable to the Pledgee; (iii) assigns, transfers,
hypothecates, mortgages, charges and sets over to the Pledgee all of such
Pledgor's right, title and interest in and to such Securities (and in and to all
certificates or instruments evidencing such Securities), to be held by the
Pledgee upon the terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time to time after the date hereof, such Pledgor will forthwith
(and in any event within five Business Days after receipt by such Pledgor
thereof) pledge and deposit such Securities (or certificates or instruments
evidencing such Securities) as security with the Pledgee and deliver to the
Pledgee certificates therefor or instruments thereof, duly endorsed in blank in
the case of Notes and accompanied by undated stock or other powers duly executed
in blank in the case of certificated Stock, or such other instruments of
transfer as may be reasonably acceptable to the Pledgee, and will promptly
thereafter deliver to the Pledgee a certificate executed by any Authorized
Officer of such Pledgor describing such Securities and certifying that the same
have been duly pledged with the Pledgee hereunder.
3.3. Uncertificated Securities. Notwithstanding anything to
the contrary contained in Sections 3.1 and 3.2 hereof, if any Securities
(whether now owned or hereafter acquired) are uncertificated securities, the
respective Pledgor shall promptly notify the Pledgee thereof, and shall promptly
take all actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Article 8 and Article 9 of the
New York UCC). Each Pledgor further agrees to take such actions as the Pledgee
deems necessary or desirable to effect the foregoing and to permit the Pledgee
to exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Pledgee with respect to any
such pledge of uncertificated Securities promptly upon the reasonable request of
the Pledgee.
<PAGE>
3.4 Definition of Pledged Stock, Pledged Notes, Pledged
Securities and Collateral. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock", all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes", all of the Pledged Stock and Pledged Notes together are
hereinafter called the "Pledged Securities," which together with all proceeds
thereof, including any securities and moneys received with respect thereto and
at the time held by the Pledgee hereunder, are hereinafter called the
"Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held (in
the discretion of the Pledgee) in the name of the Pledgee, as pledgee, or
endorsed or assigned in blank or in favor of the Pledgee, as pledgee, or any
nominee or nominees of the Pledgee or a sub-agent appointed by the Pledgee. The
Pledgee agrees to promptly notify the relevant Pledgor after the appointment of
any sub-agent; provided, however, that the failure to give such notice shall not
affect the validity of such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
an Event of Default shall have occurred and be continuing, each Pledgor shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Securities and to give consents, waivers or ratifications in
respect thereof; provided, that no vote shall be cast or any consent, waiver or
ratification given or any action taken which would violate or be inconsistent
with any of the terms of this Agreement, any other Credit Document or any
Interest Rate Protection Agreement or Other Hedging Agreement (collectively, the
"Secured Debt Agreements"), or which would have the effect of impairing the
position or interests of the Pledgee or any other Secured Creditor. All such
rights of such Pledgor to vote and to give consents, waivers and ratifications
shall cease in case an Event of Default shall occur and be continuing, and
Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of
Default shall have occurred and be continuing, all cash dividends or
distributions payable in respect of the Pledged Stock and all payments in
respect of the Pledged Notes shall be paid to the respective Pledgor; provided,
that all cash dividends or distributions payable in respect of the Pledged Stock
which are determined by the Pledgee to represent in whole or in part an
extraordinary, liquidating or other distribution in return of capital shall be
paid, to the extent so determined to represent an extraordinary, liquidating or
other distribution in return of capital, to the Pledgee and retained by it as
part of the Collateral. The Pledgee shall also be entitled to receive directly,
and to retain as part of the Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or otherwise
in respect of the Pledged Stock;
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged Stock by
way of stock-split, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock or other securities or
property (including cash) which may be paid in respect of the Collateral by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
<PAGE>
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, by any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, and the Pledgee shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable remedies:
(i) to receive as Collateral all amounts payable in respect of
the Collateral payable to such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Securities
into the Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate any Pledged Note which may be accelerated
in accordance with its terms, and take any other action to collect upon any
Pledged Note (including, without limitation, to make any demand for payment
thereon);
(iv) to vote all or any part of the Pledged Stock (whether or
not transferred into the name of the Pledgee) and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with respect
thereto as though it were the outright owner thereof; and
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of performance,
advertisement or notice of intention to sell or of the time or place of sale or
adjournment thereof (except as provided below) or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at least 10 days' prior
written notice of the time and place of any such sale shall be given to such
Pledgor. Each Pledgor hereby waives and releases to the fullest extent permitted
by law any right or equity of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling the
Collateral and any other security for the Obligations or otherwise. The Pledgee
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned. At any such sale, unless prohibited by applicable law,
the Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any other Secured Creditor shall be liable
for failure to collect or realize upon any or all of the Collateral or for any
delay in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Pledgee or any
other Secured Creditor of any one or more of the rights, powers or remedies
provided for in this Agreement or any other Secured Debt Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any other Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any other Secured Creditor to exercise any such
right, power or remedy shall operate as a waiver thereof. By accepting the
benefits of this Agreement, the Secured Creditors agree that this Agreement may
be enforced only by the action of the Pledgee, acting upon the instructions of
the Required Secured Creditors (as defined in the Security Agreement) and that
no other Secured Creditor shall have any right individually to seek to enforce
or to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Pledgee for the benefit of the Secured Creditors in accordance
with the terms of this Agreement.
<PAGE>
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided by Section 5.4 of the
Security Agreement.
(b) It is understood and agreed that the Borrower shall remain
liable, the Parent Guarantor shall remain liable, and the Subsidiary Guarantors
shall remain jointly and severally liable, in each case to the extent of any
deficiency between the amount of the proceeds of the Collateral hereunder and
the aggregate amount of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. (a) Each Pledgor agrees jointly and severally
to indemnify, reimburse and hold harmless the Pledgee, each other Secured
Creditor and their respective successors, assigns, employees, agents and
servants (hereinafter in this Section 11 referred to individually as an
"Indemnitee," and collectively as the "Indemnitees") from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and costs, expenses or disbursements (including
reasonable attorneys' fees and expenses) (for the purposes of this Section 11
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any other Secured Debt Agreement
or any other document executed in connection herewith and therewith or the
enforcement of any of the terms of, or the preservation of any rights under any
such document, or in any way relating to or arising out of the ownership,
control, acceptance, possession, condition, sale or other disposition, or use of
the Collateral; provided that no Indemnitee shall be indemnified pursuant to
this Section 11(a) for expenses to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. Each Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Pledgor shall to the extent requested to do so assume full responsibility for
the defense thereof. Each Indemnitee agrees to promptly notify the relevant
Pledgor of any such assertion of which such Indemnitee has knowledge; provided
that the failure to give such notice shall not affect such Indemnitee's right to
indemnification hereunder except to the extent (but only to the extent) that
such Indemnitee's damages are increased as a result of such failure.
(b) Without limiting the application of Section 11(a) hereof,
each Pledgor agrees jointly and severally to pay or reimburse the Pledgee for
any and all reasonable fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Pledgee's Liens on, and security interest in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Pledgee's interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
<PAGE>
(c) If and to the extent that the obligations of any Pledgor
under this Section 11 are unenforceable for any reason, such Pledgor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12. FURTHER ASSURANCES. Each Pledgor agrees that it will join
with the Pledgee in executing and, at such Pledgor's own expense, file and
refile under the UCC of any jurisdiction such financing statements, continuation
statements and other documents in such offices as the Pledgee may deem necessary
or appropriate and wherever required or permitted by law in order to perfect and
preserve the Pledgee's security interest in the Collateral and hereby authorizes
the Pledgee to file financing statements and amendments thereto relative to all
or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
with this Agreement and the Security Agreement all items of the Collateral at
any time received under this Agreement. It is expressly understood and agreed
that the obligations of the Pledgee as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement and in the
Security Agreement. By accepting the benefits hereof, each Secured Creditor
shall be deemed to have agreed to the terms and conditions set forth in Article
VIII of the Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time, which is incorporated herein by reference
in its entirety; provided that all references therein to "this Agreement" shall
be a reference to this Agreement, provided further that all references therein
to any "Assignor" shall be a reference to any "Pledgor," and provided further
that all references therein to the "Collateral Agent" shall be a reference to
the "Pledgee." The Pledgee shall act hereunder on the terms and conditions set
forth herein and in the Security Agreement.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except pursuant to this
Agreement and as permitted by the Secured Debt Agreements).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
Each Pledgor represents, warrants and covenants that (i) it is the legal, record
and beneficial owner of, and has good and marketable title to, all Securities
pledged by it hereunder, subject to no pledge, lien, mortgage, hypothecation,
security interest, charge, option or other encumbrance whatsoever, except the
liens and security interests created by this Agreement; (ii) it has full power,
authority and legal right to pledge all the Securities pledged by it pursuant to
this Agreement; (iii) this Agreement has been duly authorized, executed and
delivered by such Pledgor and constitutes the legal, valid and binding
obligation of such Pledgor enforceable in accordance with its terms, except to
the extent that the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) except as have been
obtained or made, no consent of any other party (including, without limitation,
any stockholder, partner or creditor of such Pledgor or any of its Subsidiaries)
and no consent, license, permit, approval or authorization of, exemption by,
notice or report to, or registration, filing or declaration with, any
<PAGE>
governmental authority is required to be obtained by such Pledgor in connection
with the execution, delivery or performance of this Agreement; (v) the
execution, delivery and performance of this Agreement by such Pledgor does not
violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of the certificate of incorporation,
certificate of partnership, partnership agreement or by-laws of such Pledgor or
of any securities issued by such Pledgor or any of its Subsidiaries, or of any
mortgage, indenture, lease, deed of trust, agreement, instrument or undertaking
to which such Pledgor or any of its Subsidiaries is a party or which purports to
be binding upon such Pledgor or any of its Subsidiaries or upon any of their
respective assets and will not result in the creation or imposition of (or the
obligation to create or impose) any lien or encumbrance on any of the assets of
such Pledgor or any of its Subsidiaries except as contemplated by this
Agreement; (vi) all the shares of Stock have been duly and validly issued and
are fully paid and nonassessable (it being understood that to the extent any
such Stock is issued by a Person other than a Subsidiary of the REIT, such
representation and warranty is made to the best of such Pledgor's knowledge);
(vii) to the knowledge of such Pledgor, each of the Pledged Notes held by such
Pledgor, when executed by the obligor thereof, will be the legal, valid and
binding obligation of such obligor, enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (viii)
the pledge and assignment of the Securities pursuant to this Agreement, together
with the delivery of the Securities to the Pledgee for the benefit of the
Secured Creditors pursuant to this Agreement and the taking of all other steps
required under Article 8 and Article 9 of the UCC (which delivery has been made
and which steps have been taken as to the Securities owned by the Pledgor on any
date on which the representation and warranty is made), creates a valid and
perfected first priority security interest in such Securities and the proceeds
thereof, subject to no prior or other lien or encumbrance. Each Pledgor
covenants and agrees that it will defend the Pledgee's right, title and security
interest in and to the Securities and the proceeds thereof against the claims
and demands of all persons whomsoever; and such Pledgor covenants and agrees
that it will have like title to and right to pledge any other property at any
time hereafter pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the Pledgee on behalf
of the Secured Creditors. Each of the representations, warranties and covenants
made by each Pledgor hereunder with respect to Securities shall be deemed to be
made with respect to Securities pledged after the date hereof on each date on
which such Pledgor pledges such Securities hereunder.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
each Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such Secured Debt Agreement or other agreement or instrument or this Agreement;
(iii) any furnishing of any additional security to the Pledgee or its assignee
or any acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Pledgor or any Subsidiary
of such Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
<PAGE>
17. REGISTRATION, ETC. (a) If an Event of Default shall have
occurred and be continuing and the REIT shall have received from the Pledgee a
written request or requests that the REIT cause any registration, qualification
or compliance under any Federal or state securities law or laws to be effected
with respect to all or any part of the Pledged Stock of the Borrower and the
REIT as soon as practicable and at their expense will use their best efforts to
cause such registration to be effected (and be kept effective) and will use
their best efforts to cause such qualification and compliance to be effected
(and be kept effective) as may be so requested and as would permit or facilitate
the sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act as then in effect (or any similar statute
then in effect), appropriate qualifications under applicable blue sky or other
state securities laws and appropriate compliance with any other government
requirements; provided, that the Pledgee shall furnish to the REIT such
information regarding the Pledgee as the REIT may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. The REIT will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to the
REIT by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7 hereof, the Pledged Securities or the part thereof to be sold shall
not, for any reason whatsoever, be effectively registered under the Securities
Act, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration; provided, that
at least 10 days' prior notice of the time and place of any such sale shall be
given to such Pledgor. Without limiting the generality of the foregoing, in any
such event the Pledgee, in its sole and absolute discretion and subject to
compliance with any applicable securities laws: (i) may proceed to make such
private sale notwithstanding that a registration statement for the purpose of
registering such Pledged Securities or part thereof shall have been filed under
such Securities Act; (ii) may approach and negotiate with a single possible
purchaser to effect such sale; and (iii) may restrict such sale to a purchaser
who will represent and agree that such purchaser is purchasing for its own
account, for investment, and not with a view to the distribution or sale of such
Pledged Securities or part thereof. In the event of any such sale, the Pledgee
and the other Secured Creditors shall incur no responsibility or liability for
selling all or any part of the Pledged Securities at a price which the Pledgee,
in its sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after registration as
aforesaid.
<PAGE>
18. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all indemnities
set forth herein including, without limitation, in Section 11 hereof shall
survive any such termination) and the Pledgee, at the request and expense of the
respective Pledgor, will promptly execute and deliver to such Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Pledgee and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement. As used in this
Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no Note or Letter of Credit under and as
defined in the Credit Agreement is outstanding (and all Loans have been repaid
in full), and all Obligations then owing have been paid in full.
(b) Notwithstanding anything to the contrary contained above,
upon the presentment of satisfactory evidence to the Pledgee in its sole
discretion that all obligations evidenced by any Pledged Note have been repaid
in full, and that any payments received by the Pledgor were permitted to be
received by the Pledgor pursuant to Section 6 hereof, the Pledgee shall, upon
the request and at the expense of the respective Pledgor, duly assign, transfer
and deliver to such Pledgor (without recourse and without any representation or
warranty) such Pledged Note if the same is then in the possession of the Pledgee
and has not theretofore been sold or otherwise applied or released pursuant to
this Agreement.
(c) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or otherwise released
at the direction of the Required Secured Creditors and the proceeds of such sale
or sales or from such release are applied in accordance with the provisions of
the Credit Agreement, to the extent required to be so applied, the Pledgee, at
the request and expense of the respective Pledgor, will duly assign, transfer
and deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in the possession of the Pledgee and has not theretofore
been released pursuant to this Agreement.
(d) At any time that any Pledgor desires that Collateral be
released as provided in the foregoing sub-section (a), (b) or (c), such Pledgor
shall deliver to the Pledgee a certificate signed by an Authorized Officer of
such Pledgor stating that the release of the respective Collateral is permitted
pursuant to such subsection (a), (b) or (c).
(e) The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 18.
19. NOTICES, ETC. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered in
accordance with Section 12.03 of the Credit Agreement, addressed as follows:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
German American Capital Corporation
31 West 52nd Street
New York, New York 10019
Attention: Allisson Michaels
Telephone: (212) 469-6949
Facsimile: (212) 469-7210
<PAGE>
(c) if to any Bank Creditor, at such address as such Bank
Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor directly affected
thereby and the Pledgee (with the written consent of the Required Secured
Creditors); provided, however, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall require the written consent of the Requisite Creditors (as defined below)
of such affected Class. For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Creditors, i.e., whether (x) the Bank Creditors
as holders of the Credit Agreement Obligations or (y) the Other Creditors as the
holders of the Other Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Agreement Obligations, the Required Banks and (y) with respect to the
Other Obligations, the holders of at least a majority of all obligations
outstanding from time to time under the respective Interest Rate Protection
Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of each Pledgor (although no Pledgor may assign its
rights and obligations hereunder except in accordance with the provisions of the
Secured Debt Agreements) and shall inure to the benefit of and be enforceable by
the Pledgee and the other Secured Creditors and their respective successors and
assigns. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
EXCEPT FOR THE CHOICE OF LAW PROVISIONS OF THE NEW YORK UCC. The headings in
this Agreement are for purposes of reference only and shall not limit or define
the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
22. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement pursuant to the Credit Agreement shall automatically become a Pledgor
hereunder by executing a counterpart hereof and delivering the same to the
Pledgee.
23. RECOURSE. This Agreement is made with full recourse to
each Pledgor (including, without limitation, with full recourse to all assets of
such Pledgor) and pursuant to and upon the representations, warranties,
covenants and the agreements on the part of such Pledgor contained herein, in
the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.
24. INTEREST RATE PROTECTION AGREEMENTS AND OTHER HEDGING
AGREEMENTS. Notwithstanding anything to the contrary contained in this
Agreement, no Interest Rate Protection Agreement or Other Hedging Agreement
shall be entitled to the benefits of this Agreement unless such Interest Rate
Protection Agreement or Other Hedging Agreement is reasonably related to the
Loans or the Letters of Credit or such Interest Rate Protection Agreement or
Other Hedging Agreement provides that it is to be entitled to the benefits of
this Agreement or the Security Documents generally.
<PAGE>
25. PLEDGEE NOT BOUND. (a) The Pledgee and the other Secured
Creditors shall not be obligated to perform or discharge any obligation of any
Pledgor solely as a result of the pledge hereby effected.
(b) The acceptance by the Pledgee of this Agreement, with all
the rights, powers, privileges and authority so created, shall not at any time
or in any event obligate the Pledgee or any other Secured Creditor to appear in
or defend any action or proceeding relating to the Collateral to which it is not
a party, or to take any action hereunder or thereunder, or to expend any money
or incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral except with respect to duties of care in connection with
the Collateral to the extent required by applicable law.
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address: ELDERTRUST, as a Pledgor
415 McFarlan Road By:______________________________
Suite 202 Name:
Kennett Square Title:
Pennsylvania 19348
Address: ELDERTRUST OPERATING LIMITED
PARTNERSHIP, as a Pledgor
415 McFarlan Road By: ElderTrust, general partner
Suite 202
Kennett Square By: ______________________________
Pennsylvania 19348 Name:
Title:
Address: ET GENPAR, L.L.C.
415 McFarlan Road By: ElderTrust Operating Limited Partnership,
Suite 202 sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-HERITAGE WOODS, L.L.C., as a
Pledgor
415 McFarlan Road By: ElderTrust Operating Limited Partnership,
Suite 202 sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
<PAGE>
Address: ET SUB-PLEASANT VIEW, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-RITTENHOUSE LIMITED PARTNERSHIP,
L.L.P., as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-LOPATCONG, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-WAYNE I LIMITED PARTNERSHIP, L.L.P.,
as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-PENNSBURG MANOR LIMITED PARTNERSHIP,
L.L.P., as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited Partnership,
Pennsylvania 19348 sole member
By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-POB I LIMITED PARTNERSHIP, L.L.P.,
as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited Partnership,
Pennsylvania 19348 sole member
By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-SMOB, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
<PAGE>
Address: ET SUB-WINDSOR I, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: ET SUB-WINDSOR II, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:_______________________________
Name:
Title:
Address: GERMAN AMERICAN CAPITAL CORPORATION,
as Collateral Agent, as Pledgee
31 West 52nd Street By: _____________________________
New York, New York 10019 Name:
Title:
By: _____________________________
Name:
Title:
<PAGE>
ANNEX A
to
PLEDGE AGREEMENT
----------------
LIST OF STOCK
-------------
<PAGE>
ANNEX B
to
PLEDGE AGREEMENT
----------------
LIST OF NOTES
-------------
<PAGE>
EXHIBIT F-2
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of January 30, 1998
(as amended, modified or supplemented from time to time, this "Agreement"), made
by each of the undersigned pledgors (each, a "Pledgor" and, together with any
other entity that becomes a party hereto pursuant to Section 23 hereof, the
"Pledgors"), in favor of GERMAN AMERICAN CAPITAL CORPORATION, as Collateral
Agent (the "Pledgee"), for the benefit of the Secured Creditors (as defined
below). Except as otherwise defined herein, capitalized terms used herein and
defined in the Credit Agreement (as defined below) shall be used herein as
therein defined.
W I T N E S S E T H:
WHEREAS, ElderTrust, a Maryland real estate investment trust
(the "REIT"), ElderTrust Operating Limited Partnership, a Delaware limited
partnership (the "Borrower"), various lenders from time to time party thereto
(the "Banks"), Deutsch Bank AG, New York Branch, as Issuing Bank (the "Issuing
Bank"), and German American Capital Corporation, as Administrative Agent
(together with any successor administrative agent, the "Administrative Agent"),
have entered into a Credit Agreement, dated as of January 30, 1998, providing
for the making of Loans and the issuance of and participation in Letters of
Credit for the account of the Borrower, all to the Borrower as contemplated
therein (as amended, modified or supplemented from time to time, the "Credit
Agreement") (the Banks, the Issuing Bank, the Administrative Agent and the
Pledgee are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or any affiliates thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, are herein called the "Secured Creditors");
WHEREAS, pursuant to the Parent Guaranty, the Parent Guarantor
has guaranteed to the Secured Creditors the payment when due of all obligations
and liabilities of the Borrower under or with respect to the Credit Documents
and the Interest Rate Protection Agreements and Other Hedging Agreements;
WHEREAS, pursuant to the Subsidiaries Guaranty, each
Subsidiary Guarantor has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements and Other Hedging Agreements;
<PAGE>
Exhibit F-2
Page 2
WHEREAS, it is a condition precedent to the extensions of
credit under the Credit Agreement that each Pledgor shall have executed and
delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
for the benefit of the Secured Creditors and hereby covenants and agrees with
the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities (including, without limitation, the principal of and
interest on the Notes issued by, and Loans made to, the Borrower under
the Credit Agreement, all reimbursement obligations and unpaid drawings
with respect to Letters of Credit, and all indemnities, fees, expenses
and interest thereon or owed thereunder) of such Pledgor to the Bank
Creditors, whether now existing or hereafter incurred under, arising
out of or in connection with the Credit Agreement and the other Credit
Documents (including, without limitation, in the case of the Guarantor,
all of its obligations and liabilities under its Guaranty) to which
such Pledgor is a party and the due performance and compliance by such
Pledgor with all of the terms, conditions and agreements contained in
the Credit Agreement and such other Credit Documents (all such
principal, interest, obligations and liabilities described in this
clause (i) being herein collectively called the "Credit Agreement
Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities of such Pledgor to the Other Creditors, whether now
existing or hereafter incurred under, arising out of or in connection
with any Interest Rate Protection Agreement or Other Hedging Agreement
(including, without limitation, in the case of the Guarantor, all of
its obligations and liabilities under its Guaranty) and the due
performance and compliance by such Pledgor with all the terms,
conditions and agreements contained in the Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations and
liabilities described in this clause (ii) being herein collectively
called the "Other Obligations");
(iii)any and all reasonable sums advanced by the Pledgee in
order to preserve the Collateral (as hereinafter defined) or preserve
its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any obligations or liabilities referred to in clauses
(i) and (ii) above, upon the occurrence and during the continuance of
an Event of Default (such term, as used in this Agreement, shall mean
<PAGE>
Exhibit F-2
Page 3
any Event of Default under, and as defined in, the Credit Agreement, or
any payment default (after the expiration of any applicable grace
period) under any Interest Rate Protection Agreement or Other Hedging
Agreement and shall in any event include, without limitation, any
payment default (after the expiration of any applicable grace period)
on any of the Obligations (as hereinafter defined)) shall have occurred
and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Pledgee of its
rights hereunder, together with reasonable attorneys' fees and court
costs; and
(v) all amounts paid by any Indemnitee (as defined in Section
11 hereof) as to which such Indemnitee has the right to reimbursement
under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations".
2. DEFINITION OF PARTNERSHIP INTERESTS, LIMITED LIABILITY
COMPANY INTERESTS, ETC. As used herein, (i) the term "Partnership Interest"
shall mean the entire partnership interest (other than any Excluded Interest) at
any time owned by any Pledgor of any partnership (each, a "Pledged Partnership
Entity"); (ii) the term "Limited Liability Company Interest" shall mean the
entire limited liability company and/or membership interest (other than any
Excluded Interest) at any time owned by any Pledgor in any limited liability
company (each, a "Pledged Limited Liability Company"); (iii) the term "Interest"
shall mean all of the Partnership Interests and Limited Liability Company
Interests; and (iv) the term "Excluded Interests" shall mean (A) the
partnership, limited liability company and/or membership interests owned by the
Borrower and/or ET GENPAR, L.L.C., as the case may be, in the Excluded
Subsidiaries and (B) any partnership, limited liability company and/or
membership interests owned by any Pledgor in any Subsidiary established after
the date hereof which does not own a Borrowing Base Property or a Borrowing Base
Pledged Mortgage Loan and/or an equity interest in any other Subsidiary which
owns any Borrowing Base Property or Borrowing Base Pledged Mortgage Loan,
provided that the conditions set forth in the last sentence of Section 8.12 of
the Credit Agreement with respect to such Subsidiary are satisfied. Each Pledgor
represents and warrants that on the date hereof (i) the Partnership Interests
held by such Pledgor consist of those partnership interests as described in
Annex A hereto; (ii) such Partnership Interests constitute that percentage of
the entire partnership interest of each Pledged Partnership Entity as is set
forth in Annex A hereto; (iii) the Limited Liability Company Interests held by
such Pledgor consist of the number and type of limited liability company
interests as described in Annex B hereto; (iv) such Limited Liability Company
Interests constitute that percentage of the issued and outstanding equity
interest of each Pledged Limited Liability Company as is set forth in Annex B
hereto; and (v) such Pledgor owns no other Interests (other than, in the case of
the Borrower and ET GENPAR, L.L.C., the partnership, limited liability company
and/or membership interests owned by the Borrower and/or ET GENPAR, L.L.C., as
the case may be, in the Excluded Subsidiaries).
3. GRANT OF SECURITY INTEREST
<PAGE>
Exhibit F-2
Page 4
3.1. Pledge. (a) To secure the Obligations of such Pledgor and
for the purposes set forth in Section 1 hereof, each Pledgor hereby pledges and
grants to the Pledgee a first priority continuing security interest in, and as
part of such grant and pledge, hereby transfers and assigns to the Pledgee all
of the following, whether now existing or hereafter acquired (the "Collateral"):
(i) such Pledgor's Partnership Interest in each Pledged Partnership Entity and
all of such Pledgor's right, title and interest in each Pledged Partnership
Entity and (ii) such Pledgor's Limited Liability Company Interest in each
Pledged Limited Liability Company and all of such Pledgor's right, title and
interest in each Pledged Limited Liability Company, in each case whether now or
hereafter acquired and including, without limitation:
(A) all the capital thereof and its interest in all
profits, losses, Partnership Assets (as defined below),
Limited Liability Company Assets (as defined below) and other
distributions to which such Pledgor shall at any time be
entitled in respect of such Partnership Interest or Limited
Liability Company Interest, as the case may be;
(B) all other payments due or to become due to such
Pledgor in respect of such Partnership Interest or Limited
Liability Company Interest, as the case may be, whether under
any partnership agreement, limited liability company
agreement, operating agreement or otherwise, whether as
contractual obligations, damages, insurance proceeds or
otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interest, liens and remedies, if
any, under any partnership agreement, limited liability
company agreement or operating agreement or at law or
otherwise in respect of such Partnership Interest or Limited
Liability Company Interest, as the case may be;
(D) all present and future claims, if any, of such
Pledgor against any Pledged Partnership Entity or Pledged
Limited Liability Company for moneys loaned or advanced, for
services rendered or otherwise;
(E) all of such Pledgor's rights under any partner-
ship agreement, limited liability company agreement or
operating agreement or at law to exercise and enforce every
right, power, remedy, authority, option and privilege of such
Pledgor relating to such Partnership Interest or Limited
Liability Company Interest, as the case may be, including any
power to terminate, cancel or modify any partnership
agreement, limited liability company agreement or operating
agreement, to execute any instruments and to take any and all
other action on behalf of and in the name of such Pledgor in
respect of such Partnership Interest or Limited Liability
Company Interest and any Pledged Partnership Entity or Pledged
Limited Liability Company, to make determinations, to exercise
any election (including, but not limited to, election of
remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and
authority to demand, receive, enforce, collect, or receipt for
any of the foregoing or for any Partnership Asset or Limited
Liability Company Asset, to enforce or execute any checks,
or other
<PAGE>
Exhibit F-2
Page 5
instruments or orders, to file any claims and to take any
action in connection with any of the foregoing (with all of
the foregoing rights only to be exercisable upon the
occurrence and during the continuance of an Event of Default);
(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof; and
(G) to the extent not otherwise included, all
proceeds of any or all of the foregoing.
(b) As used herein, (i) the term "Partnership Assets" shall
mean all assets, whether tangible or intangible and whether real, personal or
mixed (including, without limitation, all partnership capital and interests in
other partnerships), at any time owned or represented by any Partnership
Interest; and (ii) the term "Limited Liability Company Assets" shall mean all
assets, whether tangible or intangible and whether real, personal or mixed
(including, without limitation, all limited liability company capital and
interests in other limited liability companies), at any time owned or
represented by any Limited Liability Company Interest.
3.2. Subsequently Acquired Interests. If any Pledgor shall
acquire (by purchase, distribution or otherwise) any additional Interest at any
time or from time to time after the date hereof, such Pledgor (and in any event
within five Business Days after receipt by such Pledgor thereof) shall forthwith
pledge such Interest as security with the Pledgee hereunder and, to the extent
such Interest is certificated, deliver to the Pledgee certificates therefor,
accompanied by such instruments of transfer as are acceptable to the Pledgee,
and shall promptly thereafter deliver to the Pledgee a certificate executed by
any Authorized Officer of such Pledgor describing such Interest and certifying
that the same has been duly pledged with the Pledgee hereunder.
3.3. Uncertificated Interests. Notwithstanding anything to the
contrary contained in Section 3.2 hereof, to the extent any Interest (whether
now owned or hereafter acquired) is uncertificated, the respective Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under the provisions of Articles 8 and 9 of the New
York UCC). Each Pledgor further agrees to take such actions as the Pledgee deems
necessary or desirable to effect the foregoing and to permit the Pledgee to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Pledgee with respect to any
such pledge of uncertificated Interests promptly upon the reasonable request of
the Pledgee.
4. APPOINTMENT OF SUB-AGENTS. The Pledgee shall have the right
to appoint one or more sub-agents for the purpose of retaining physical
possession of the Collateral, which may be held (in the discretion of the
Pledgee) in the name of the Pledgee, as pledgee, or endorsed or assigned in
<PAGE>
Exhibit F-2
Page 6
blank or in favor of the Pledgee, as pledgee, or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee. The Pledgee agrees to promptly
notify the relevant Pledgor after the appointment of any sub-agent; provided,
however, that the failure to give such notice shall not affect the validity of
such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
an Event of Default shall have occurred and be continuing, each Pledgor shall be
entitled to exercise any and all voting, consent, administration, management and
other rights and remedies under any partnership agreement, limited liability
company agreement or operating agreement or otherwise with respect to the
Interests of such Pledgor; provided, that no vote shall be cast or any consent,
waiver or ratification given or any action taken which would violate or be
inconsistent with any of the terms of this Agreement, any other Credit Document
or any Interest Rate Protection Agreement or Other Hedging Agreement
(collectively, the "Secured Debt Agreements"), or which would have the effect of
impairing the position or interests of the Pledgee or any other Secured
Creditor. All such rights of such Pledgor to vote and to give consents, waivers
and ratifications shall cease in case an Event of Default shall occur and be
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of
Default shall have occurred and be continuing, all cash dividends and
distributions payable in respect of the Interests shall be paid to the
respective Pledgor; provided, that all cash dividends payable in respect of the
Interests which are determined by the Pledgee to represent in whole or in part
an extraordinary, liquidating or other distribution in return of capital shall
be paid, to the extent so determined to represent an extraordinary, liquidating
or other distribution in return of capital, to the Pledgee and retained by it as
part of the Collateral. The Pledgee shall also be entitled to receive directly,
and to retain as part of the Collateral:
(i) all other property (other than cash) paid or distributed
by way of dividend, distribution or otherwise in respect of the
Interests;
(ii) all other property (including cash) paid or distributed
in respect of the Limited Liability Company Interests by way of
stock-split, spin-off, split-up, reclassification, combination of
shares or similar arrangement; and
(ii) all other property (including cash) which may be paid in
respect of the Collateral by reason of any consolidation, merger,
exchange of stock, conveyance of assets, liquidation or similar
partnership or corporate reorganization.
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of
Default shall have occurred and be continuing, the Pledgee shall be entitled to
exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, by any other Secured Debt Agreement or by law) for the protection and
enforcement of its rights in respect of the Collateral, and the Pledgee shall be
entitled, without limitation, to exercise the following rights, which each
Pledgor hereby agrees to be commercially reasonable remedies:
<PAGE>
Exhibit F-2
Page 7
(i) to receive as Collateral all amounts payable in respect of
the Collateral payable to such Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Interests into the
Pledgee's name or the name of its nominee or nominees;
(iii)to vote all or any part of the Interests (whether or not
transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof;
and
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof (except as
provided below) or to redeem or otherwise (all of which are hereby
waived by each Pledgor), for cash, on credit or for other property, for
immediate or future delivery without any assumption of credit risk, and
for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at least 10 days'
prior written notice of the time and place of any such sale shall be
given to such Pledgor. Each Pledgor hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with
respect to the Collateral, whether before or after sale hereunder, and
all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise. The Pledgee may, without
notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or
place to which the sale may be so adjourned. At any such sale, unless
prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the
Pledgee nor any other Secured Creditor shall be liable for failure to
collect or realize upon any or all of the Collateral or for any delay
in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Secured Debt Agreement
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Pledgee or any
other Secured Creditor of any one or more of the rights, powers or remedies
provided for in this Agreement or any other Secured Debt Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any other Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any other Secured Creditor to exercise any such
right, power or remedy shall operate as a waiver thereof. By accepting the
benefits of this Agreement, the Secured Creditors agree that this Agreement may
be enforced only by the action of the Pledgee, acting upon the instructions of
the Required Secured Creditors (as defined in the Security Agreement) and that
<PAGE>
Exhibit F-2
Page 8
no other Secured Creditor shall have any right individually to seek to enforce
or to enforce this Agreement or to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Pledgee for the benefit of the Secured Creditors in accordance
with the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied in the manner provided by Section 5.4 of the
Security Agreement.
(b) It is understood and agreed that the Borrower shall remain
liable, the Parent Guarantor shall remain liable, and the Subsidiary Guarantors
shall remain jointly and severally liable, in each case to the extent of any
deficiency between the amount of the proceeds of the Collateral hereunder and
the aggregate amount of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. (a) Each Pledgor agrees jointly and severally to
indemnify, reimburse and hold harmless the Pledgee, each other Secured Creditor
and their respective successors, assigns, employees, agents and servants
(hereinafter in this Section 11 referred to individually as an "Indemnitee," and
collectively as the "Indemnitees") from any and all liabilities, obligations,
damages, injuries, penalties, claims, demands, actions, suits, judgments and
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 11 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement, any other Secured Debt Agreement (as defined in the Security
Agreement) or any other document executed in connection herewith and therewith
or the enforcement of any of the terms of, or the preservation of any rights
under any such document, or in any way relating to or arising out of the
ownership, control, acceptance, possession, condition, sale or other
disposition, or use of the Collateral; provided that no Indemnitee shall be
indemnified pursuant to this Section 11(a) for expenses to the extent caused by
the gross negligence or willful misconduct of such Indemnitee. Each Pledgor
agrees that upon written notice by any Indemnitee of the assertion of such a
liability, obligation, damage, injury, penalty, claim, demand, action, suit or
judgment, the relevant Pledgor shall to the extent requested to do so assume
full responsibility for the defense thereof. Each Indemnitee agrees to promptly
notify the relevant Pledgor of any such assertion of which such Indemnitee has
knowledge; provided that the failure to give such notice shall not affect such
Indemnitee's right to indemnification hereunder except to the extent (but only
to the extent) that such Indemnitee's damages are increased as a result of such
failure.
<PAGE>
Exhibit F-2
Page 9
(b) Without limiting the application of Section 11(a) hereof,
each Pledgor agrees jointly and severally to pay or reimburse the Pledgee for
any and all reasonable fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Pledgee's Liens on, and security interest in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Pledgee's interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of any Pledgor
under this Section 11 are unenforceable for any reason, such Pledgor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12. FURTHER ASSURANCES. Each Pledgor agrees that it will join
with the Pledgee in executing and, at such Pledgor's own expense, file and
refile under the UCC of any jurisdiction such financing statements, continuation
statements and other documents in such offices as the Pledgee may deem necessary
or appropriate and wherever required or permitted by law in order to perfect and
preserve the Pledgee's security interest in the Collateral and hereby authorizes
the Pledgee to file financing statements and amendments thereto relative to all
or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
with this Agreement and the Security Agreement all items of the Collateral at
any time received under this Agreement. It is expressly understood and agreed
that the obligations of the Pledgee as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under this
Agreement, are only those expressly set forth in this Agreement and in the
Security Agreement. By accepting the benefits hereof, each Secured Creditor
shall be deemed to have agreed to the terms and conditions set forth in Article
VIII of the Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time, which is incorporated herein by reference
in its entirety; provided that all references therein to "this Agreement" shall
be a reference to this Agreement, provided further that all references therein
to any "Assignor" shall be a reference to any "Pledgor," and provided further
that all references therein to the "Collateral Agent" shall be a reference to
the "Pledgee." The Pledgee shall act hereunder on the terms and conditions set
forth herein and in the Security Agreement.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except pursuant to this
Agreement and as permitted by the Secured Debt Agreements).
<PAGE>
Exhibit F-2
Page 10
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
(a) Each Pledgor represents, warrants and covenants that (i) it is the legal,
record and beneficial owner of, and has good and marketable title to, all
Interests and other Collateral pledged by it hereunder, or in which it has
granted a security interest pursuant hereto, subject to no pledge, lien,
mortgage, hypothecation, security interest, charge, option or other encumbrance
whatsoever, except the liens and security interests created by this Agreement;
(ii) it has full power, authority and legal right to pledge and grant a security
interest in all the Collateral pledged and assigned by it pursuant to this
Agreement; (iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes the legal, valid and binding obligation of such
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by equitable principles (regardless of whether enforcement is
sought in equity or at law); (iv) except as have been obtained or made, no
consent of any other party (including, without limitation, any stockholder,
partners or creditor of such Pledgor or any of its Subsidiaries or of any
partner of any Pledged Partnership Entity or any member of any Pledged Limited
Liability Company) and no consent, license, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or declaration
with, any governmental authority is required to be obtained by such Pledgor in
connection with the execution, delivery or performance of this Agreement; (v)
the execution, delivery and performance of this Agreement by such Pledgor does
not violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of the certificate of incorporation,
certificate of partnership, partnership agreement or by-laws of such Pledgor or
of any securities issued by such Pledgor or any of its Subsidiaries, or of any
mortgage, indenture, lease, deed of trust, agreement (including any partnership
agreement of any Pledged Partnership Entity or any limited liability company
agreement or operating agreement of any Pledged Limited Liability Company),
instrument or undertaking to which such Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of such Pledgor or any of its Subsidiaries
except as contemplated by this Agreement; (vi) all Interests have been validly
acquired and are fully paid for and validly pledged hereunder (it being
understood that to the extent any such Partnership Interest is issued by a
Person other than a Subsidiary of the REIT, such representation and warranty is
made to the best of such Pledgor's knowledge); (vii) the Interests pledged by it
hereunder are not dealt in or traded on securities exchanges or on securities
markets; (viii) the terms of the Interests pledged by it hereunder do not
provide that such Interests are securities governed by Article 8 of the UCC;
(ix) this Agreement creates (after all steps required under Article 8 of the UCC
have been taken) in favor of the Pledgee for the benefit of the Secured
Creditors a legal, valid and enforceable security interest in all right, title
and interest of each Pledgor in the Collateral owned by such Pledgor on any date
on which this representation and warranty is made or deemed made, which security
interest shall, (A) upon delivery to the Pledgee of any certificates evidencing
equity interests in a Pledged Partnership Entity or in a Pledged Limited
Liability Company, (B) upon the filing of appropriate financing statements under
the UCC in respect of any Pledged Partnership Entity's partnership interest or
Pledged Limited Liability Company's limited liability company or membership
<PAGE>
Exhibit F-2
Page 11
interest that is not represented by a certificate and (C) upon the taking of all
steps required under Article 8 and Article 9 of the UCC (which delivery, filings
and/or steps have been done and remain in full force and effect as to the
Collateral owned by such Pledgor on any date on which this representation and
warranty is made or deemed made), constitute a fully perfected first lien on,
and security interest in, all right, title and interest of such Pledgor in all
of such Collateral, subject to no security interests of any other Person; (x)
there are no currently effective financing statements under the UCC covering any
property which is now or hereafter may be included in the Collateral except
financing statements filed or to be filed in favor of the Pledgee as secured
party; and (xi) the chief executive office and principal place of business of
such Pledgor and the sole location where the records of such Pledgor with
respect to the Collateral are kept are located at the address set forth for such
Pledgor in the Security Agreement and such Pledgor shall not move its chief
executive office, principal place of business or such location of records except
in accordance with the terms of the Security Agreement. Each Pledgor covenants
and agrees that it will defend the Pledgee's right, title and security interest
in and to the Collateral and the proceeds thereof against the claims and demands
of all persons whomsoever; and such Pledgor covenants and agrees that it will
have like title to and right to pledge any other property at any time hereafter
pledged to the Pledgee as Collateral hereunder and will likewise defend the
right thereto and security interest therein of the Pledgee on behalf of the
Secured Creditors. Each of the representations, warranties and covenants made by
each Pledgor hereunder shall be deemed to be repeated on each date on which such
Pledgor pledges any Collateral hereunder.
(b) Each Pledgor shall (i) execute and deliver to each Pledged
Partnership Entity and Pledged Limited Liability Company with respect to which
it has pledged any Interest hereunder a notice substantially in the form of
Annex C to this Agreement at the time such Interest is pledged and (ii) cause
each Pledged Partnership Entity and each Pledged Limited Liability Company with
respect to which it has pledged any Interest hereunder to execute and deliver to
the Pledgee a control agreement substantially in the form of Annex D to this
Agreement with respect to such Interest at the time such Interest is pledged.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
each Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such Secured Debt Agreement or other agreement or instrument or this Agreement;
(iii) any furnishing of any additional security to the Pledgee or its assignee
or any acceptance thereof or any release of any security by the Pledgee or its
assignee; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Pledgor or any Subsidiary
of such Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
<PAGE>
Exhibit F-2
Page 12
17. REGISTRATION, ETC. If at any time when the Pledgee shall
determine to exercise its right to sell all or any part of the Interests
pursuant to Section 7 hereof, such Interests or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act, as then in effect, the Pledgee may, in its sole and absolute
discretion, sell such Interests or part thereof by private sale in such manner
and under such circumstances as the Pledgee may deem necessary or advisable in
order that such sale may legally be effected without such registration;
provided, that at least 10 days' prior notice of the time and place of any such
sale shall be given to such Pledgor. Without limiting the generality of the
foregoing, in any such event the Pledgee, in its sole and absolute discretion
and subject to compliance with any applicable securities laws: (i) may proceed
to make such private sale notwithstanding that a registration statement for the
purpose of registering such Interests or part thereof shall have been filed
under such Securities Act; (ii) may approach and negotiate with a single
possible purchaser to effect such sale; and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Interests or part thereof. In the event of any such sale, the Pledgee and
the other Secured Creditors shall incur no responsibility or liability for
selling all or any part of the Interests at a price which the Pledgee, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might be realized if the sale were deferred until after registration as
aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the respective
Pledgor, will promptly execute and deliver to such Pledgor a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and all
Interest Rate Protection Agreements or Other Hedging Agreements have been
terminated, no Note or Letter of Credit is outstanding (and all Loans have been
repaid in full), and all Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or otherwise released
at the direction of the Required Secured Creditors and the proceeds of such sale
or sales or from such release are applied in accordance with the provisions of
the Credit Agreement, to the extent required to be so applied, the Pledgee, at
the request and expense of the respective Pledgor, will duly assign, transfer
and deliver to such Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in the possession of the Pledgee and has not theretofore
been released pursuant to this Agreement.
(c) At any time that any Pledgor desires that Collateral be
released as provided in the foregoing sub-section (a) or (b), it shall deliver
to the Pledgee a certificate signed by an Authorized Officer of such Pledgor
stating that the release of the respective Collateral is permitted pursuant to
such subsection (a) or (b).
<PAGE>
Exhibit F-2
Page 13
(d) The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 18.
19. NOTICES, ETC. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered in
accordance with the provisions of Section 12.03 of the Credit Agreement,
addressed as follows:
(a) if to any Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
German American Capital Corporation
31 West 52nd Street
New York, New York 10019
Attention: Allisson Michaels
Telephone: (212) 469-6949
Facsimile: (212) 469-7210
(c) if to any Bank Creditor, at such address as such Bank
Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Pledgor directly affected
thereby and the Pledgee (with the written consent of the Required Secured
Creditors); provided, however, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall require the written consent of the Requisite Creditors (as defined below)
of such affected Class. For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Creditors, i.e., whether (x) the Bank Creditors
as holders of the Credit Agreement Obligations or (y) the Other Creditors as the
holders of the Other Obligations. For the purpose of this Agreement, the term
"Requisite Creditors" of any Class shall mean each of (x) with respect to the
Credit Agreement Obligations, the Required Banks and (y) with respect to the
Other Obligations that are secured by this Agreement, the holders of at least a
majority of all obligations outstanding from time to time under the respective
Interest Rate Protection Agreements or Other Hedging Agreements.
21. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed
to make the Pledgee or any other Secured Creditor liable as a general partner or
limited partner of any Pledged Partnership Entity or as a member of any Pledged
Limited Liability Company and neither the Pledgee nor any
<PAGE>
Exhibit F-2
Page 14
other Secured Creditor by virtue of this Agreement or otherwise (except as
referred to in the following sentence) shall have any of the duties, obligations
or liabilities of a general partner or limited partner of any Pledged
Partnership Entity or of a member of any Pledged Limited Liability Company. The
parties hereto expressly agree that, unless the Pledgee shall become the
absolute owner of an Interest pursuant hereto, this Agreement shall not be
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a)
of this Section 21, the Pledgee, by accepting this Agreement, did not intend to
become (and shall not be construed to be) a general partner or limited partner
of any Pledged Partnership Entity or a member of any Pledged Limited Liability
Company or otherwise be deemed to be a co-venturer with respect to any Pledgor,
any Pledged Partnership Entity or any Pledged Limited Liability Company either
before or after an Event of Default shall have occurred. The Pledgee shall have
only those powers set forth herein and, except as provided in the last sentence
of paragraph (a) of this Section 21, the Secured Creditors shall assume none of
the duties, obligations or liabilities of a general partner or limited partner
of any Pledged Partnership Entity or of a member of any Pledged Limited
Liability Company or of any Pledgor.
(c) The Pledgee and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of any Pledgor as a result of
the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all
the rights, powers, privileges and authority so created, shall not at any time
or in any event obligate the Pledgee or any other Secured Creditor to appear in
or defend any action or proceeding relating to the Collateral to which it is not
a party, or to take any action hereunder or thereunder, or to expend any money
or incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral except with respect to duties of care in connection with
the Collateral to the extent required by applicable law.
22. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of each Pledgor (although no Pledgor may assign its
rights and obligations hereunder except in accordance with the provisions of the
Secured Debt Agreements) and shall inure to the benefit of and be enforceable by
the Pledgee and the other Secured Creditors and their respective successors and
assigns. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
EXCEPT FOR THE CHOICE OF LAW PROVISIONS OF THE NEW YORK UCC. The headings in
this Agreement are for purposes of reference only and shall not limit or define
the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument.
23. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement pursuant to the Credit Agreement shall automatically become a Pledgor
hereunder by executing a counterpart hereof and delivering the same to the
Pledgee.
<PAGE>
Exhibit F-2
Page 15
24. RECOURSE. This Agreement is made with full recourse to
each Pledgor (including, without limitation, with full recourse to all assets of
such Pledgor) and pursuant to and upon the representations, warranties,
covenants and the agreements on the part of such Pledgor contained herein, in
the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.
25. INTEREST RATE PROTECTION AGREEMENTS AND OTHER HEDGING
AGREEMENTS. Notwithstanding anything to the contrary contained in this
Agreement, no Interest Rate Protection Agreement or Other Hedging Agreement
shall be entitled to the benefits of this Agreement unless such Interest Rate
Protection Agreement or Other Hedging Agreement is reasonably related to the
Loans or the Letters of Credit or such Interest Rate Protection Agreement or
Other Hedging Agreement provides that it is to be entitled to the benefits of
this Agreement or the Security Documents generally.
<PAGE>
Exhibit F-2
Page 16
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
<TABLE>
<S> <C>
Address: ELDERTRUST, as a Pledgor
415 McFarlan Road
Suite 202 By:______________________
Kennett Square Name:
Pennsylvania 19348 Title:
Address: ELDERTRUST OPERATING LIMITED PARTNERSHIP, as a Pledgor
415 McFarlan Road By: Elder Trust, general partner
Suite 202
Kennett Square By:______________________
Pennsylvania 19348 Name:
Title:
Address: ET GENPAR, L.L.C.
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-HERITAGE WOODS, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit F-2
Page 17
<TABLE>
<S> <C>
Address: ET SUB-PLEASANT VIEW, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-RITTENHOUSE LIMITED PARTNERSHIP, L.L.P., as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-LOPATCONG, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit F-2
Page 18
<TABLE>
<S> <C>
Address: ET SUB-WAYNE I LIMITED PARTNERSHIP, L.L.P., as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-PENNSBURG MANOR LIMITED PARTNERSHIP, L.L.P., as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-POB I LIMITED PARTNERSHIP, L.L.P., as a Pledgor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit F-2
Page 19
<TABLE>
<S> <C>
Address: ET SUB-SMOB, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-WINDSOR I, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-WINDSOR II, L.L.C., as a Pledgor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: GERMAN AMERICAN CAPITAL CORPORATION
51 West 52nd Street By:______________________
New York, New York 10019 Name:
Title:
By:______________________
Name:
Title:
</TABLE>
<PAGE>
EXHIBIT F-2
ANNEX A
to
PLEDGE AND
SECURITY AGREEMENT
LIST OF PARTNERSHIP INTERESTS
<PAGE>
ANNEX B
to
PLEDGE AND
SECURITY AGREEMENT
LIST OF LIMITED LIABILITY COMPANY INTERESTS
<PAGE>
EXHIBIT F-2
ANNEX C
to
PLEDGE AND
SECURITY AGREEMENT
FORM OF PARTNERSHIP/LIMITED LIABILITY COMPANY NOTICE
[Letterhead of Pledgor]
[Date]
TO: [Name of Pledged Entity]
Notice is hereby given that, pursuant to a Pledge and Security
Agreement (a true and correct copy of which is attached hereto), dated as of
January 30, 1998 (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pledge Agreement"), among [NAME OF
PLEDGOR] (the "Pledgor"), the other pledgors from time to time party thereto and
German American Capital Corporation, as Pledgee (the "Pledgee") for the benefit
of the Secured Creditors described therein, the Pledgor has pledged and assigned
to the Pledgee for the benefit of the Secured Creditors, and granted to the
Pledgee for the benefit of the Secured Creditors a continuing security interest
in, all right, title and interest of the Pledgor, whether now existing or
hereafter arising or acquired, as a [[limited] [general] partner][member] in
[NAME OF PLEDGED PARTNERSHIP ENTITY/LIMITED LIABILITY COMPANY] (the "Pledged
Entity"), and in, to and under the [TITLE OF APPLICABLE PARTNERSHIP/LIMITED
LIABILITY COMPANY/OPERATING AGREEMENT] (the "Agreement"), including, without
limitation:
(i) all the capital of the Pledged Entity and the Pledgor's
interest in all profits, losses, [Partnership Assets/Limited Liability
Company Assets] (as defined in the Pledge Agreement) and other
distributions to which the Pledgor shall at any time be entitled in
respect of such partnership interest;
(ii) all other payments due or to become due to the Pledgor in
respect of such interest, whether under the Agreement or otherwise,
whether as contractual obligations, damages, insurance proceeds or
otherwise;
(iii) all of its claims, rights, powers, privileges,
authority, options, security interest, liens and remedies, if any,
under the Agreement or at law or otherwise in respect of such interest;
(iv) all present and future claims, if any, of the Pledgor
against the Pledged Entity for moneys loaned or advanced, for services
rendered or otherwise;
<PAGE>
ANNEX C
Page 2
(v) all of the Pledgor's rights under the Agreement or at law
to exercise and enforce every right, power, remedy, authority, option
and privilege of the Pledgor relating to the interest, including any
power to terminate, cancel or modify the Agreement, to execute any
instruments and to take any and all other action on behalf of and in
the name of the Pledgor in respect of the interest and the Pledged
Entity, to make determinations, to exercise any election (including,
but not limited, election of remedies) or option or to give or receive
any notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for
any of the foregoing or for any [Partnership Asset/Limited Liability
Company Asset], to enforce or execute any checks, or other instruments
or orders, to file any claims and to take any action in connection with
any of the foregoing (with all of the foregoing rights only to be
exercisable upon the occurrence and during the continuance of an Event
of Default);
(vi) all other property hereafter delivered in substitution
for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such other property and all
cash, securities, interest, dividends, rights and other property at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of
any or all of the foregoing.
The Pledgor hereby requests the Pledged Entity to indicate the Pledged Entity's
acceptance of this Notice and consent to and confirmation of its terms and
provisions by signing a copy hereof where indicated on the attached page and
returning the same to the Pledgee on behalf of the Secured Creditors.
[NAME OF PLEDGOR]
By:_______________________________
Title:
<PAGE>
EXHIBIT F-2
ANNEX D
to
PLEDGE AND
SECURITY AGREEMENT
FORM OF CONTROL AGREEMENT
[NAME OF PLEDGED PARTNERSHIP ENTITY/LIMITED LIABILITY COMPANY]
(the "Pledged Entity") hereby acknowledges receipt of a copy of the notice of
the assignment by [NAME OF PLEDGOR] (the "Pledgor") of its interest (the
"Interest") under the [TITLE OF APPLICABLE PARTNERSHIP/LIMITED LIABILITY
COMPANY/OPERATING AGREEMENT] (the "Agreement") pursuant to the terms of the
Pledge and Security Agreement, dated as of January 30, 1998 (as amended,
modified or supplemented from time to time in accordance with the terms thereof,
the "Pledge Agreement"), among the Pledgor, the other pledgors from time to time
party thereto, and German American Capital Corporation, as Pledgee (the
"Pledgee") for the benefit of the Secured Creditors described therein. The
undersigned hereby confirms that it is the issuer of the Interest and that the
Pledgor is the registered owner of such Interest, and hereby irrevocably agrees
that the undersigned will comply with any and all instructions originated by the
Pledgee on behalf of the Secured Creditors in respect of such interest without
further consent from the Pledgor and, in the event of any conflict between any
instructions originated by the Pledgee and any instructions originated by the
Pledgor or any other person (other than a court of competent jurisdiction), the
undersigned shall comply with the instructions originated by the Pledgee. The
undersigned also irrevocably agrees that it shall not register the Interest in
the name of any person other than the Pledgor or the Pledgee (unless otherwise
instructed by the Pledgee) and that it shall not agree to comply with any
instructions originated by any person other than the Pledgor or the Pledgee
without the further consent of the registered owner of the Interest.
Dated: ______________, ____
[NAME OF PLEDGED ENTITY]
By:______________________________________
Title:
ACKNOWLEDGED BY:
[NAME OF PLEDGOR]
By:________________________________________
Title:
<PAGE>
EXHIBIT G
SECURITY AGREEMENT
among
ELDERTRUST,
ELDERTRUST OPERATING LIMITED PARTNERSHIP,
VARIOUS SUBSIDIARIES
of
ELDERTRUST,
and
GERMAN AMERICAN CAPITAL CORPORATION,
as Collateral Agent
Dated as of January 30, 1998
<PAGE>
EXHIBIT G
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of January 30, 1998 made by each
of the undersigned assignors (each, an "Assignor" and, together with any other
entity that becomes a party hereto pursuant to Section 9.10 hereof, the
"Assignors") in favor of German American Capital Corporation, as Collateral
Agent (the "Collateral Agent"), for the benefit of the Secured Creditors (as
defined below). Except as otherwise defined herein, capitalized terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as so defined.
W I T N E S S E T H:
WHEREAS, ElderTrust, a Maryland real estate investment trust
(the "REIT"), ElderTrust Operating Limited Partnership, a Delaware limited
partnership (the "Borrower"), various lenders (the "Banks") from time to time
party thereto, Deutsche Bank AG, New York Branch, as Issuing Bank (the "Issuing
Bank") and German American Capital Corporation, as Administrative Agent
(together with any successor administrative agent, the "Administrative Agent"),
have entered into a Credit Agreement, dated as of January 30, 1998, providing
for the making of Loans to the Borrower and the issuance of and participation in
Letters of Credit for the account of the Borrower, all as contemplated therein
(as amended, modified or supplemented from time to time, the "Credit Agreement")
(the Banks, the Issuing Bank, the Administrative Agent and the Collateral Agent
are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or any affiliate thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, are herein called the "Secured Creditors");
WHEREAS, pursuant to the Parent Guaranty, the Parent Guarantor
has guaranteed to the Secured Creditors the payment when due of all obligations
and liabilities of the Borrower under or with respect to the Credit Documents
and the Interest Rate Protection Agreements and other Hedging Agreements;
WHEREAS, pursuant to the Subsidiaries Guaranty, each
Subsidiary Guarantor has jointly and severally guaranteed to the Secured
Creditors, the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements and Other Hedging Agreements;
WHEREAS, it is a condition precedent to the extensions of
credit under the Credit Agreement that each Assignor shall have executed and
delivered to the Collateral Agent this Agreement;
<PAGE>
Exhibit G
Page 2
WHEREAS, each Assignor desires to execute this Agreement to
satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for all of
the Obligations of such Assignor, each Assignor does hereby pledge, assign and
transfer unto the Collateral Agent, and does hereby grant to the Collateral
Agent, for the benefit of the Secured Creditors, a continuing security interest
of first priority in, all of the right, title and interest of such Assignor in,
to and under all of the following, whether now existing or hereafter from time
to time acquired: (i) each and every Receivable, (ii) all Contracts, together
with all Contract Rights arising thereunder, (iii) all Inventory, (iv) all
Equipment, (v) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such Assignor,
including, but not limited to, trade secrets (to the extent such computer
programs, intellectual property rights and proprietary information are
assignable without violating any agreements governing same), (vi) all other
Goods, General Intangibles, Permits, Chattel Paper, Documents and Instruments,
(vii) the Cash Collateral Account and all monies, securities, instruments and
other Cash Equivalents deposited or required to be deposited in such Cash
Collateral Account, (viii) all present and future bank accounts of such Assignor
including, without limitation, any demand, time savings, passbook, certificates
of deposit, or like accounts maintained by such Assignor with any bank, savings
and loan association, credit union or other organization, all money, cash and
checks, drafts, notes, bills, bills of exchange, securities, investments, bonds
or other instruments, writings or property of such Assignor from time to time
received, receivable or otherwise distributed in respect thereof, in renewal or
extension thereof, or in exchange therefor, whether or not deposited in any such
deposit account (collectively, the "Pledged Accounts"), (ix) all revenues,
receipts, income, accounts, and other Receivables derived or to be derived from
the ownership or operation of any Borrowing Base Properties and Borrowing Base
Pledged Mortgage Loans and related facilities located thereon, including,
without limitation of the generality of the foregoing, all rent, advance
deposits, charges for services and other revenues and income derived or to be
derived from the sale or rental of rooms, apartments, units or other facilities,
the provision of services, the sale of food, beverages and merchandise, the
rental of shops, the leasing of commercial or residential spaces, the granting
of concessions (including concessions for the installation of coin-operated
machines to the extent of such Assignor's interest therein) within or about any
Borrowing Base Properties and related facilities, the rental or operation of
parking facilities and the provision of services to guests of any Borrowing Base
Properties and related facilities located thereon and any other items of
revenue, receipts or other income, (x) all books and records of each Assignor
with respect to any and all of the foregoing and (xi) all Proceeds and products
of any and all of the foregoing (all of each Assignor's right, title and
interest in the above, collectively, the "Collateral").
<PAGE>
Exhibit G
Page 3
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the term of this
Agreement.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. With respect to the Collateral that
consists of cash, Cash Equivalents and property in which a security interest may
be perfected by the filing of a financing statement under the UCC, upon (i)
possession by the Collateral Agent or its designee in the case of cash, (ii) the
taking of all action required under Articles 8 and 9 of the UCC in the case of
Cash Equivalents and Instruments and (iii) the filing of appropriate financing
statements under the UCC in the case of such other Collateral (all of which
actions described in preceding clauses (i), (ii) and (iii) shall have been taken
and be in full force and effect with respect to such Collateral owned by such
Assignor within 10 days following the Effective Date (or 30 days in the case of
cash and Cash Equivalents) or, in the case of any Collateral acquired on an
Addition Date, within 10 days following such Addition Date), the Collateral
Agent has been granted, for the benefit of the Secured Creditors and pursuant to
this Agreement, a legal, valid and enforceable security interest in all right,
title and interest of such Assignor in such Collateral, which security interest
is (with the exception of cash which is not in the possession of the Collateral
Agent) a fully perfected first lien on, and security interest in, all right,
title and interest of such Assignor in all of such Collateral, subject to no
other Liens other than Permitted Liens, provided that it will not be a breach of
the representation and warranty made in this Section 2.1 if the Collateral Agent
does not have a perfected security interest in Cash Equivalents which, in the
aggregate, total less than $100,000.
2.2. No Liens. Such Assignor is, and as to Collateral acquired
by it from time to time after the date hereof such Assignor will be, the owner
of all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens), and such
Assignor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Agent and the other Secured Creditors.
2.3. Other Financing Statements. As of the date hereof, there
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to cover any interest
of any kind in the Collateral (other than financing statements filed in respect
of Permitted Liens), and so long as the Termination Date has not occurred, such
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
<PAGE>
Exhibit G
Page 4
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by such Assignor or in connection with
Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive
office of such Assignor is located at the address indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office except
to such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. No Assignor shall establish new locations for such
offices until (i) it shall have given to the Collateral Agent not less than 30
days' prior written notice of its intention to do so, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new location,
it shall have taken all action, reasonably satisfactory to the Collateral Agent,
to maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect and (iii) at the request of the Collateral Agent, it shall have furnished
an opinion of counsel reasonably acceptable to the Collateral Agent to the
effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions have been taken, in order to perfect (and maintain the
perfection of) the security interest granted hereby in respect of the types of
Collateral referred to in Section 2.1 hereof.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor. Each Assignor agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations shown on Annex B
hereto, or such new location as such Assignor may establish in accordance with
the last sentence of this Section 2.5. Any Assignor may establish a new location
for Inventory and Equipment only if (i) it shall have given to the Collateral
Agent not less than 30 days' prior written notice of its intention so to do,
clearly describing such new location and providing such other information in
connection therewith as the Collateral Agent may request, (ii) with respect to
such new location, it shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect and (iii) at the request of the Collateral Agent, it shall
have furnished an opinion of counsel reasonably acceptable to the Collateral
Agent to the effect that all financing or continuation statements and amendments
or supplements thereto have been filed in the appropriate filing office or
offices, and all other actions have been taken, in order to perfect (and
maintain the perfection of) the security interest granted hereby in respect of
the types of Collateral referred to in Section 2.1 hereof.
2.6. Pledged Accounts. (a) The Pledged Accounts existing on
the date hereof are, and will continue to be, maintained at, and controlled and
directed from, the respective offices of those institutions set forth on Annex C
hereto (such institutions, the "Pledged Account Banks"). No Assignor shall
establish any additional Pledged Accounts until (i) such Assignor shall have
given to the Collateral Agent prior written notice of its intention so to do,
clearly describing such new account and providing such other information in
connection therewith as the Collateral Agent may reasonably request; (ii) with
respect to such new account, it shall have taken all action to maintain the
<PAGE>
Exhibit G
Page 5
security interest of the Collateral Agent in such Collateral intended to be
granted hereby at all times fully perfected and in full force and effect and
(iii) at the request of the Collateral Agent, it shall have furnished an opinion
of counsel reasonably acceptable to the Collateral Agent to the effect that all
actions have been taken in order to perfect (and maintain the perfection of) the
security interest granted hereby.
(b) Upon the occurrence and during the continuance of any
Event of Default, and upon notice by the Collateral Agent to the Borrower
(although no such notice shall be required to be so given in the case of an
Event of Default of the type described in Section 9.05 of the Credit Agreement),
the Assignors shall no longer have the right to withdraw funds from any Pledged
Account, and the Collateral Agent shall have the sole right to make withdrawals
from the Pledged Accounts. All Collateral held in the Pledged Accounts shall be
held therein in accordance with the terms of this Agreement.
2.7. Recourse. This Agreement is made with full recourse to
each Assignor (including, without limitation, with full recourse to all assets
of such Assignor) and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
other Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
2.8. Trade Names; Change of Name. No Assignor has or operates
in any jurisdiction under, or in the preceding 12 months has had or has operated
in any jurisdiction under, any trade names, fictitious names or other names
except its legal name and such other trade or fictitious names as are listed on
Annex D hereto for such Assignor. No Assignor shall change its legal name or
assume or operate in any jurisdiction under any trade, fictitious or other name
except those names listed on Annex D hereto for such Assignor and new names
established in accordance with the last sentence of this Section 2.8. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than 30 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new name, it
shall have taken all action reasonably requested by the Collateral Agent to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect and (iii) at the request of the Collateral Agent, it shall have furnished
an opinion of counsel reasonably acceptable to the Collateral Agent to the
effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions have been taken, in order to perfect (and maintain the
perfection of) the security interest granted hereby in respect of the types of
Collateral referred to in Section 2.1 hereof.
<PAGE>
Exhibit G
Page 6
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER
3.1. Additional Representations and Warranties. As of the time
when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that, to the best of such Assignor's knowledge, such
Receivable, and all records, papers and documents relating thereto (if any) are
what they purport to be, and to the best of such Assignor's knowledge, such
Receivable will evidence true and valid obligations of the account debtor named
therein.
3.2. Maintenance of Records. Each Assignor will keep and
maintain at its own cost and expense accurate records of its Receivables and
Contracts, including, but not limited to, originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Agent for inspection, at such Assignor's
own cost and expense, at any and all reasonable times upon prior notice to such
Assignor. Upon the occurrence and during the continuance of an Event of Default
and at the request of the Collateral Agent, such Assignor shall, at its own cost
and expense, deliver all tangible evidence of its Receivables and Contract
Rights (including, without limitation, all documents evidencing the Receivables
and all Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor).
3.3. Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause
all payments on account of the Receivables and Contracts to be made directly to
the Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (y) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
which application shall be effected in the manner provided in Section 5.4 of
this Agreement. The costs and expenses (including reasonable attorneys' fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the relevant Assignor;
provided, that the failure by the Collateral Agent to so notify such Assignor
shall not affect the effectiveness of such notice or the other rights of the
Collateral Agent created by this Section 3.3; provided further, that the
Collateral Agent will promptly rescind any notice theretofore given under this
Section 3.3 after all Events of Defaults have been cured or waived.
3.4. Modification of Terms; etc. Except in accordance with
such Assignor's ordinary course of business and consistent with sound business
judgment, no Assignor shall rescind or cancel any indebtedness evidenced by any
Receivable or under any Contract, or materially modify any term thereof or make
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Exhibit G
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any material adjustment with respect thereto, or extend or renew the same, or
compromise or settle any material dispute, claim, suit or legal proceeding
relating thereto, or sell any Receivable or Contract, or interest therein,
without the prior written consent of the Collateral Agent. To the extent
consistent with sound business judgment, each Assignor will duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables and Contracts and will do nothing to impair the rights of the
Collateral Agent in the Receivables or Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance
with reasonable business practices to cause to be collected from the account
debtor named in each of its Receivables or obligor under any Contract, as and
when due (including, without limitation, amounts which are delinquent, such
amounts to be collected in accordance with generally accepted lawful collection
procedures) any and all amounts owing under or on account of such Receivable or
Contract, and apply forthwith upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Receivable or under such Contract,
except that, prior to the occurrence of an Event of Default, any Assignor may
allow in the ordinary course of business as adjustments to amounts owing under
its Receivables and Contracts (i) an extension or renewal of the time or times
of payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
of collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Delivery of Instruments. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced by any
Instrument, such Instrument shall be promptly delivered to the Collateral Agent,
duly endorsed in a manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant to this Agreement, provided that, so long as no Event of
Default shall have occurred and be continuing, each Assignor may retain for
collection in the ordinary course of business any Instruments received by such
Assignor in the ordinary course of business, and the Collateral Agent shall,
promptly upon request of such Assignor, make appropriate arrangements for making
any other Instrument pledged by such Assignor available to such Assignor for
purposes of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Collateral Agent, against
trust receipt or like document). Until such Collateral is delivered to the
Collateral Agent, such Assignor shall hold such property in trust for the
Secured Creditors, segregated from other property of such Assignor, as
additional collateral security for the Obligations.
3.7. Assignors Remain Liable Under Receivables. Anything
herein to the contrary notwithstanding, the Assignors shall remain liable under
each of the Receivables to observe and perform all of the conditions and
obligations to be observed and performed by them thereunder, all in accordance
with the terms of any agreement giving rise to such Receivables. Neither the
Collateral Agent nor any other Secured Creditor shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason
of or arising out of this Agreement or the receipt by the Collateral Agent or
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Exhibit G
Page 8
any other Secured Creditor of any payment relating to such Receivable pursuant
hereto, nor shall the Collateral Agent or any other Secured Creditor be
obligated in any manner to perform any of the obligations of any Assignor under
or pursuant to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by them or as to the sufficiency of any performance by any
party under any Receivable (or any agreement giving rise thereto), to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to them or to which they may
be entitled at any time or times.
3.8. Assignors Remain Liable Under Contracts. Anything herein
to the contrary notwithstanding, the Assignors shall remain liable under each of
the Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral Agent nor
any other Secured Creditor shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Creditor of any payment relating to such
contract pursuant hereto, nor shall the Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.9. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, certificates, reports
and other assurances or instruments and take such further steps relating to its
Receivables, Contracts, Instruments and other property or rights covered by the
security interest hereby granted, as the Collateral Agent may reasonably
require.
ARTICLE IV
PROVISIONS CONCERNING ALL COLLATERAL
4.1. Protection of Collateral Agent's Security. Each Assignor
will at all times keep its Inventory and Equipment insured in favor of the
Collateral Agent, at such Assignor's own expense to the extent and in the manner
provided in the Secured Debt Agreements; all policies or certificates with
respect to such insurance (and any other insurance maintained by such Assignor)
(i) shall name the Collateral Agent as additional insured and loss payee as its
respective interest may appear and (ii) shall state that such insurance policies
shall not be cancelled or materially changed without at least 30 days' prior
written notice thereof (or 10 days' prior written notice thereof in the case of
non-payment of premium) by the insurer to the Collateral Agent; and certified
copies of such policies or certificates with respect thereto shall be deposited
with the Collateral Agent. If any Assignor shall fail to insure its Inventory
and Equipment in accordance with the preceding sentence, or if any Assignor
shall fail to so name the Collateral Agent as additional insured and loss payee
or deposit all policies or certificates with respect thereto, the Collateral
<PAGE>
Exhibit G
Page 9
Agent shall have the right (but shall be under no obligation) to procure such
insurance and such Assignor agrees to promptly reimburse the Collateral Agent
for all costs and expenses of procuring such insurance. Except to the extent
otherwise permitted to be retained by such Assignor or applied by such Assignor
pursuant to the terms of the Secured Debt Agreements, the Collateral Agent
shall, at the time any proceeds of such insurance are distributed to the Secured
Creditors, apply such proceeds in accordance with Section 5.4 hereof. Each
Assignor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
4.2. Further Actions. Each Assignor will, at its own expense
and upon the request of the Collateral Agent, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
lists, descriptions and designations of its Collateral, warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps relating to the Collateral
and other property or rights covered by the security interest hereby granted,
which the Collateral Agent deems reasonably appropriate or advisable to perfect,
preserve or protect its security interest in the Collateral.
4.3. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the UCC as
enacted in any and all relevant jurisdictions or any other relevant law. Each
Assignor will pay any applicable filing fees, recordation taxes and related
expenses relating to its Collateral. Each Assignor hereby authorizes the
Collateral Agent to file any such financing statements without the signature of
such Assignor where permitted by law, provided that the Collateral Agent shall
deliver a copy of any said financing statement to the relevant Assignor.
ARTICLE V
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
5.1. Remedies; Obtaining the Collateral Upon Default. Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent, in addition to
any rights now or hereafter existing under applicable law, shall have all rights
as a secured creditor under any UCC, and such additional rights and remedies to
which a secured creditor is entitled under the laws in effect, in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
<PAGE>
Exhibit G
Page 10
without notice or process of law, and for that purpose may enter upon
such Assignor's premises where any of the Collateral is located and
remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts) constituting the Collateral to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent;
(iii) withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations in
accordance with Section 5.4 hereof;
(iv) withdraw all monies, securities and investments in any
Pledged Account for application to the Obligations in accordance with
Section 5.4 hereof, and in connection therewith, deliver to any Pledged
Account Bank written notice directing the Pledged Account Bank to send
each day's deposit to the relevant Pledged Account by wire and in tact
to the account or accounts designated by the Collateral Agent in such
written notice;
(v) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 5.2 hereof,
or direct the relevant Assignor to sell, assign or otherwise liquidate
any or all of the Collateral or any part thereof, and, in each case,
take possession of the proceeds of any such sale or liquidation; and
(vi) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place
or places so designated by the Collateral Agent and there
delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further
action by the Collateral Agent as provided in Section 5.2
hereof;
(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain
them in good condition;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. By
accepting the benefits of this Agreement, the Secured Creditors agree that this
Agreement may be enforced only by the action of the Collateral Agent acting upon
the instructions of the Required Secured Creditors and that no other Secured
<PAGE>
Exhibit G
Page 11
Creditor shall have any right individually to seek to enforce this Agreement or
to realize upon the security to be granted hereby, it being understood and
agreed that such rights and remedies may be exercised only by the Collateral
Agent for the benefit of the Secured Creditors in accordance with the terms of
this Agreement and the Credit Agreement.
5.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 5.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent. Any such disposition which shall be a private sale or other
private proceedings permitted by such requirements shall be made upon not less
than 10 days' prior written notice (which notice shall be deemed reasonable) to
the relevant Assignor specifying the time at which such disposition is to be
made and the intended sale price or other consideration therefor, and shall be
subject, for the 10 days after the giving of such notice, to the right of the
relevant Assignor or any nominee of such Assignor to acquire the Collateral
involved at a price or for such other consideration at least equal to the
intended sale price or other consideration so specified. Any such disposition
which shall be a public sale permitted by such requirements shall be made upon
not less than 10 days' prior written notice (which notice shall be deemed
reasonable) to the relevant Assignor specifying the time and place of such sale
and, in the absence of applicable requirements of law, shall be by public
auction (which may, at the Collateral Agent's option, be subject to reserve),
after publication of notice of such auction (where required by applicable law)
not less than 10 days prior thereto. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned. To the extent permitted by any such requirement of law, the
Collateral Agent may bid for and become the purchaser of the Collateral or any
item thereof, offered for sale in accordance with this Section without
accountability to the relevant Assignor. If, under mandatory requirements of
applicable law, the Collateral Agent shall be required to make disposition of
the Collateral within a period of time which does not permit the giving of
notice to the relevant Assignor as hereinabove specified, the Collateral Agent
need give such Assignor only such notice of disposition as shall be reasonably
practicable in view of such mandatory requirements of applicable law.
5.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby further waives,
to the extent permitted by law:
<PAGE>
Exhibit G
Page 12
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii)all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Subject to applicable law, any sale of, or the grant of options to purchase, or
any other realization upon, any Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the relevant
Assignor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Assignor and against any and all Persons claiming or
attempting to claim the Collateral so sold, optioned or realized upon, or any
part thereof, from, through and under such Assignor.
5.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement, the Partnership Pledge
and Security Agreement, any Collateral Assignment or any Mortgage require
proceeds of collateral under such Security Document to be applied in accordance
with the provisions of this Agreement, the Pledgee, Assignee or Mortgagee under
such other Security Document) upon any sale or other disposition of the
Collateral, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:
(i) first, to the payment of all amounts owing the Collateral
Agent of the type described in clauses (iii) and (iv) of the definition
of "Obligations";
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Primary Obligations shall be paid to the Secured
Creditors as provided in Section 5.4(d) hereof, with each Secured
Creditor receiving an amount equal to such outstanding Primary
Obligations or, if the proceeds are insufficient to pay in full all
such Primary Obligations, its Pro Rata Share of the amount remaining to
be distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii), an amount
equal to the outstanding Secondary Obligations shall be paid to the
Secured Creditors as provided in Section 5.4(d) hereof, with each
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount remaining
to be distributed; and
<PAGE>
Exhibit G
Page 13
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) through (iii),
inclusive, and following the termination of this Agreement pursuant to
Section 9.8(a) hereof, to the relevant Assignor or to whomever may be
lawfully entitled to receive such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the
case of the Credit Agreement Obligations, all principal of, and interest on, all
Loans, all reimbursement obligations and Unpaid Drawings with respect to Letters
of Credit, and all Fees and (ii) in the case of the Other Obligations, all
amounts due under the Interest Rate Protection Agreements or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
reasonable attorneys' fees) and similar obligations and liabilities) and (z)
"Secondary Obligations" shall mean all Obligations other than Primary
Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 5.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) All payments required to be made hereunder shall be made
(x) if to the Bank Creditors, to the Administrative Agent under the Credit
Agreement for the account of the Bank Creditors, and (y) if to the Other
Creditors, to the trustee, paying agent or other similar representative (each a
"Representative") for the Other Creditors or, in the absence of such a
Representative, directly to the Other Creditors.
(e) For purposes of applying payments received in accordance
with this Section 5.4, the Collateral Agent shall be entitled to rely upon (i)
the Administrative Agent under the Credit Agreement and (ii) the Representative
for the Other Creditors or, in the absence of such a Representative, upon the
Other Creditors for a determination (which the Administrative Agent, each
Representative for any Other Creditors and the Secured Creditors agree (or shall
agree) to provide upon request of the Collateral Agent) of the outstanding
Primary Obligations and Secondary Obligations owed to the Bank Creditors or the
Other Creditors, as the case may be. Unless it has actual knowledge (including
by way of written notice from a Bank Creditor or an Other Creditor) to the
contrary, the Administrative Agent and each Representative, in furnishing
information pursuant to the preceding sentence, and the Collateral Agent, in
acting hereunder, shall be entitled to assume that no Secondary Obligations are
outstanding. Unless it has actual knowledge (including by way of written notice
<PAGE>
Exhibit G
Page 14
from an Other Creditor) to the contrary, the Collateral Agent, in acting
hereunder, shall be entitled to assume that no Interest Rate Protection
Agreements or Other Hedging Agreements are in existence.
(f) It is understood that the Borrower shall remain liable,
the Parent Guarantor shall remain liable, and the Subsidiary Guarantors shall
remain jointly and severally liable, in each case to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate amount of the Obligations.
5.5. Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement, the
other Secured Debt Agreements or now or hereafter existing at law, in equity or
by statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Collateral Agent. All such rights, powers and remedies shall be cumulative and
the exercise or the beginning of the exercise of one shall not be deemed a
waiver of the right to exercise any other or others. No delay or omission of the
Collateral Agent in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such right,
power or remedy or shall be construed to be a waiver of any Default or Event of
Default or an acquiescence therein. No notice to or demand on any Assignor in
any case shall entitle it to any other or further notice or demand in similar or
other circumstances or constitute a waiver of any of the rights of the
Collateral Agent to any other or further action in any circumstances without
notice or demand. In the event that the Collateral Agent shall bring any suit to
enforce any of its rights hereunder and shall be entitled to judgment, then in
such suit the Collateral Agent may recover reasonable expenses, including
reasonable attorneys' fees, and the amounts thereof shall be included in such
judgment.
5.6. Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VI
INDEMNITY
6.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Collateral Agent, each other Secured
Creditor and their respective successors, permitted assigns, employees and
<PAGE>
Exhibit G
Page 15
agents (hereinafter in this Section 6.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and costs, expenses or disbursements (including
reasonable attorneys' fees and expenses) (for the purposes of this Section 6.1
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any other Secured Debt Agreement
or any other document executed in connection herewith or therewith or in any
other way connected with the administration of the transactions contemplated
hereby or thereby or the enforcement of any of the terms of, or the preservation
of any rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership or use of the Collateral; provided that no Indemnitee
shall be indemnified pursuant to this Section 6.1(a) for losses, damages or
liabilities to the extent caused by the gross negligence or willful misconduct
of such Indemnitee. Each Assignor agrees that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty, claim, demand, action, suit or judgment, the relevant Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
promptly notify the relevant Assignor of any such assertion of which such
Indemnitee has knowledge; provided that the failure to give such notice shall
not affect such Indemnitee's right to indemnification hereunder except to the
extent (but only to the extent) that such Indemnitee's damages are increased as
a result of such failure.
(b) Without limiting the application of Section 6.1(a) hereof,
each Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of any Assignor
under this Section 6.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
6.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VI shall
continue in full force and effect notwithstanding the full payment of all of the
other Obligations and notwithstanding the discharge thereof.
<PAGE>
Exhibit G
Page 16
ARTICLE VII
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Administrative Agent" shall have the meaning provided in the
recitals of this Agreement.
"Agreement" shall mean this Security Agreement as the same may
be modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first
paragraph of this Agreement.
"Bank Creditors" shall have the meaning provided in the
recitals of this Agreement.
"Banks" shall have the meaning provided in the recitals of
this Agreement.
"Borrower" shall have the meaning provided in the recitals of
this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing
cash collateral account maintained with, and in the sole dominion and control
of, the Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 9.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Collateral Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor under
each Contract to which such Assignor is a party or beneficiary, including,
without limitation, (i) any and all rights to receive and demand payments under
any or all Contracts, (ii) any and all rights to receive and compel performance
under any or all Contracts and (iii) any and all other rights, interests and
claims now existing or in the future arising in connection with any or all
Contracts.
"Contracts" shall mean all contracts between any Assignor and
one or more additional parties (including, without limitation, each Management
Agreement, each franchise agreement, each partnership agreement, each limited
liability company agreement or operating agreement and any Interest Rate
Protection Agreements or Other Hedging Agreements).
<PAGE>
Exhibit G
Page 17
"Credit Agreement" shall have the meaning provided in the
recitals of this Agreement.
"Credit Agreement Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article VII.
"Default" shall mean any event which, with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor and, in any event,
shall include, but shall not be limited to, all machinery, equipment,
furnishings, fixtures, appliances, signs, artwork, office furnishings and
equipment, guest room furnishings, linens, dishware, partitions, screens,
awnings, shades, blinds, floor coverings and vehicles now or hereafter owned by
any Assignor and any and all additions, substitutions and replacements of any of
the foregoing, wherever located, together with all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and
as defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Other Obligations after the expiration
of any applicable grace period.
"General Intangibles" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of New York
and shall in any event include all of any Assignor's claims, rights, powers,
privileges, authority, options, security interests, liens and remedies under any
partnership agreement, limited liability company agreement or operating
agreement to which such Assignor is a party or with respect to any partnership
or limited liability company of which such Assignor is a partner or a member, as
the case may be.
"Goods" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 6.1 of
this Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and
all additions, substitutions and replacements thereof, wherever located,
together with all goods, supplies, incidentals, packaging materials, labels,
materials and any other items used or usable in manufacturing, processing,
packaging or shipping same, in all stages of production -- from raw materials
through work-in-process to finished goods -- and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
<PAGE>
Exhibit G
Page 18
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by any Assignor, provided that
the term inventory shall not include any liquor located in any jurisdiction to
the extent that the laws of such jurisdiction prohibit the creation of a
security interest in liquor.
"Lien" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement, lessor's interest
in a financing lease or analogous instrument, in, of, or on any Assignor's
property.
"Obligations" shall mean (i) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of all
obligations and liabilities (including, without limitation, the principal of and
interest on the Notes issued by, and Loans made to, the Borrower under the
Credit Agreement, all reimbursement obligations and Unpaid Drawings with respect
to Letters of Credit, and all indemnities, fees and interest thereon or owed
thereunder) of each Assignor to the Bank Creditors, whether now existing or
hereafter incurred under, arising out of or in connection with any Credit
Document (including, without limitation, in the case of the Guarantor, all of
its obligations and liabilities under its Guaranty) to which such Assignor is a
party and the due performance and compliance by each Assignor with all of the
terms, conditions and agreements contained in the Credit Agreement and such
other Credit Documents (all such principal, interest, obligations and
liabilities being herein collectively called the "Credit Agreement
Obligations"); (ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and liabilities of
each Assignor to the Other Creditors, whether now existing or hereafter incurred
under, arising out of or in connection with any Interest Rate Protection
Agreement or Other Hedging Agreement (including, without limitation, in the case
of the Guarantor, all of its obligations and liabilities under its Guaranty) and
the due performance and compliance by such Assignor with all the terms,
conditions and agreements contained in such Interest Rate Protection Agreements
or Other Hedging Agreements (all such obligations and liabilities described in
this clause (ii) being herein collectively called the "Other Obligations");
(iii) any and all reasonable sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
obligations or liabilities referred to in clauses (i) and (ii) above, after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable attorneys'
fees and court costs; and (v) all amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement under Section 6.1 of this
Agreement.
"Other Creditors" shall have the meaning provided in the
recitals of this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article VII.
<PAGE>
Exhibit G
Page 19
"Permits" shall mean, to the extent permitted to be assigned
by the terms thereof or by applicable law, all licenses, permits, rights,
orders, variances, franchises or authorizations of or from any governmental
authority or agency in connection with the maintenance or operation of any
Borrowing Base Property owned or leased by any Assignor.
"Pledged Account Banks" shall have the meaning provided in
Section 2.6(a) of this Agreement.
"Pledged Accounts" shall have the meaning provided in Section
1.1(a) of this Agreement.
"Primary Obligations" shall have the meaning provided in
Section 5.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section
5.4(b) of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or any Assignor from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all of such Assignor's rights to payment
for goods sold or leased or services performed by such Assignor, whether now in
existence or arising from time to time hereafter, including, without limitation,
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (a) all
security pledged, assigned, hypothecated or granted to or held by such Assignor
to secure the foregoing, (b) all of any Assignor's right, title and interest in
and to any goods, the sale of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards,
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h) all
other writings related in any way to the foregoing.
"REIT" shall have the meaning provided in the recitals of this
Agreement.
<PAGE>
Exhibit G
Page 20
"Representative" shall have the meaning provided in Section
5.4(d) of this Agreement.
"Required Secured Creditors" shall mean (i) the Required
Banks, or, to the extent required by Section 12.12 of the Credit Agreement, the
Supermajority Banks or each of the Banks under the Credit Agreement, as the case
may be, so long as any Credit Agreement Obligations remain outstanding and (ii)
in any situation not covered by preceding clause (i), the holders of a majority
of the outstanding principal amount of the Other Obligations.
"Requisite Creditors" shall have the meaning provided in
Section 9.2 of this Agreement.
"Secondary Obligations" shall have the meaning provided in
Section 5.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the
recitals of this Agreement.
"Secured Debt Agreements" shall mean and include this
Agreement, the other Credit Documents and the Interest Rate Protection
Agreements and Other Hedging Agreements.
"Termination Date" shall have the meaning provided in Section
9.8 of this Agreement.
ARTICLE VIII
THE COLLATERAL AGENT
8.1. Appointment. The Secured Creditors, by their acceptance
of the benefits of this Agreement, hereby irrevocably designate German American
Capital Corporation, as Collateral Agent, to act as specified herein. Each
Secured Creditor hereby irrevocably authorizes, and each holder of any Note by
the acceptance of such Note and by the acceptance of the benefits of this
Agreement shall be deemed irrevocably to authorize, the Collateral Agent to take
such action on its behalf under the provisions of this Agreement and any other
instruments and agreements referred to herein and to exercise such powers and to
perform such duties hereunder as are specifically delegated to or required of
the Collateral Agent by the terms hereof and such other powers as are reasonably
incidental thereto. The Collateral Agent may perform any of its duties hereunder
by or through its authorized agents or employees. Without limiting the
generality of the preceding sentence and notwithstanding the provisions of
Section 8.9, GACC, in its capacity as Collateral Agent, shall have the right
upon notice to the Borrower, the Banks and the Issuing Bank, to transfer and
assign all of its rights, duties and obligations as Collateral Agent hereunder
and under the other Credit Documents to any of its Affiliates.
8.2. Nature of Duties. (a) The Collateral Agent shall have
no duties or responsibilities except those expressly set forth in this
Agreement. The duties of the Collateral Agent shall be mechanical and
administrative in nature; the Collateral Agent shall not have by reason of this
Agreement or any other Secured Debt Agreement a fiduciary relationship in
<PAGE>
Exhibit G
Page 21
respect of any Secured Creditor; and nothing in this Agreement or any other
Secured Debt Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Collateral Agent any obligations in respect of
this Agreement except as expressly set forth herein.
(b) The Collateral Agent shall not be responsible for
insuring the Collateral or for the payment of taxes, charges or assessments or
discharging of Liens upon the Collateral or otherwise as to the maintenance of
the Collateral.
(c) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by any Assignor of any of the covenants or
agreements contained in this Agreement or any other Secured Debt Agreement.
(d) The Collateral Agent shall be under no obligation or duty
to take any action under this Agreement or any other Credit Document if taking
such action (i) would subject the Collateral Agent to a tax in any jurisdiction
where it is not then subject to a tax or (ii) would require the Collateral Agent
to qualify to do business in any jurisdiction where it is not then so qualified,
unless the Collateral Agent receives security or indemnity satisfactory to it
against such tax (or equivalent liability), or any liability resulting from such
qualification, in each case as results from the taking of such action under this
Agreement or any other Credit Document or (iii) would subject the Collateral
Agent to in personam jurisdiction in any locations where it is not then so
subject.
(e) Notwithstanding any other provision of this Agreement,
neither the Collateral Agent nor any of its officers, directors, employees,
affiliates or agents shall, in its individual capacity, be personally liable for
any action taken or omitted to be taken by it in accordance with this Agreement
except for its own gross negligence or willful misconduct.
8.3. Lack of Reliance on the Collateral Agent. Independently
and without reliance upon the Collateral Agent, each Secured Creditor, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each
Assignor in connection with the making and the continuance of the Obligations
and the taking or not taking of any action in connection therewith, and (ii) its
own appraisal of the creditworthiness of each Assignor, and the Collateral Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Secured Creditor with any credit or other information with
respect thereto, whether coming into its possession before the extension of any
Obligations or the purchase of any Notes or at any time or times thereafter. The
Collateral Agent shall not be responsible in any manner whatsoever to any
Secured Creditor for the correctness of any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or the security interests granted hereunder or the
financial condition of any Assignor or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, or the financial condition of any Assignor, or
the existence or possible existence of any Default or Event of Default. The
Collateral Agent makes no representations as to the value or condition of the
<PAGE>
Exhibit G
Page 22
Collateral or any part thereof, or as to the title of any Assignor thereto or as
to the security afforded by this Agreement.
8.4. Certain Rights of the Collateral Agent. (a) No Secured
Creditor shall have the right to cause the Collateral Agent to take any action
with respect to the Collateral, with only the Required Secured Creditors having
the right to direct the Collateral Agent to take any such action. If the
Collateral Agent shall request instructions from the Required Secured Creditors
with respect to any act or action (including failure to act) in connection with
this Agreement, the Collateral Agent shall be entitled to refrain from such act
or taking such action unless and until it shall have received instructions from
the Required Secured Creditors and to the extent requested, appropriate
indemnification in respect of actions to be taken, and the Collateral Agent
shall not incur liability to any Person by reason of so refraining. Without
limiting the foregoing, no Secured Creditor shall have any right of action
whatsoever against the Collateral Agent as a result of the Collateral Agent
acting or refraining from acting hereunder in accordance with the instructions
of the Required Secured Creditors.
(b) The Collateral Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at the
request or direction of any of the Secured Creditors, unless such Secured
Creditors shall have offered to the Collateral Agent reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction.
8.5. Reliance. The Collateral Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex or telecopier message, cablegram, order or
other document or telephone message signed, sent or made by the proper Person or
entity, and, with respect to all legal matters pertaining to this Agreement and
its duties thereunder, upon advice of counsel selected by it.
8.6. Indemnification. To the extent the Collateral Agent is
not reimbursed and indemnified by any Assignor under this Agreement, the Secured
Creditors will reimburse and indemnify the Collateral Agent, in proportion to
their respective outstanding principal amounts (including, for this purpose, any
unpaid Primary Obligations in respect of Interest Rate Protection Agreements or
Other Hedging Agreements, as outstanding principal) of Obligations, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Collateral Agent in performing its duties hereunder, or in any way relating to
or arising out of its actions as Collateral Agent in respect of this Agreement
(including any amounts required to be returned by the Collateral Agent in
respect of Collateral) except for those resulting solely from the Collateral
Agent's own gross negligence or willful misconduct. The indemnities set forth in
this Article VIII shall survive the repayment of all Obligations, with the
respective indemnification at such time to be based upon the outstanding
principal amounts (determined as described above) of Obligations at the time of
the respective occurrence upon which the claim against the Collateral Agent is
based or, if same is not reasonably determinable, based upon the outstanding
principal amounts (determined as described above) of Obligations as in effect
immediately prior to the termination of this Agreement. The indemnities set
forth in this Article VIII are in addition to any indemnities provided by the
<PAGE>
Exhibit G
Page 23
Banks to the Collateral Agent pursuant to the Credit Agreement, with the effect
being that the Banks shall be responsible for indemnifying the Collateral Agent
to the extent the Collateral Agent does not receive payments pursuant to this
Section 8.6 from the Secured Creditors (although in such event, and upon the
payment in full of all such amounts owing to the Collateral Agent, the
respective Banks who paid same shall be subrogated to the rights of the
Collateral Agent to receive payment from the Secured Creditors).
8.7. The Collateral Agent in its Individual Capacity. With
respect to its obligations as a lender under the Credit Agreement and any other
Credit Documents to which the Collateral Agent is a party, and to act as agent
under one or more of such Credit Documents, the institution acting as Collateral
Agent shall have the rights and powers specified therein and herein for a
"Bank", or an "Agent", as the case may be, and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
terms "Banks," "Required Banks," "holders of Notes," or any similar terms shall,
unless the context clearly otherwise indicates, include the institution acting
as Collateral Agent in its individual capacity. The institution acting as
Collateral Agent may accept deposits from, lend money to, and generally engage
in any kind of banking, trust or other business with any Assignor or any
Affiliate or Subsidiary of any Assignor as if it were not performing the duties
specified herein or in the other Credit Documents, and may accept fees and other
consideration from any Assignor for services in connection with the Credit
Agreement, the other Credit Documents and otherwise without having to account
for the same to the Secured Creditors.
8.8. Holders. The Collateral Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Collateral Agent. Any request, authority
or consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note, shall be final and
conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
8.9. Resignation by the Collateral Agent. a)" \* MERGEFORMAT
(a) The Collateral Agent may resign from the performance of all of its functions
and duties under this Agreement at any time by giving 20 Business Days' prior
written notice to each Assignor and the Secured Creditors. Such resignation
shall take effect upon the appointment of a successor Collateral Agent pursuant
to clause (b) or (c) below.
(b) If a successor Collateral Agent shall not have been
appointed within said 20 Business Day period by the Required Secured Creditors,
the Collateral Agent, with the consent of each Assignor, which consent shall not
be unreasonably withheld, shall then appoint a successor Collateral Agent who
shall serve as Collateral Agent hereunder or thereunder until such time, if any,
as the Required Secured Creditors appoint a successor Collateral Agent as
provided above.
(c) If no successor Collateral Agent has been appointed
pursuant to clause (b) above by the 20th Business Day after the date such notice
of resignation was given by the Collateral Agent, the Required Secured Creditors
shall then appoint a successor Collateral Agent who shall serve as Collateral
<PAGE>
Exhibit G
Page 24
Agent hereunder or thereunder until such time, if any, as the Required Secured
Creditors appoint a successor Collateral Agent as provided above.
8.10. Fees and Expenses of Collateral Agent. (a) The Borrower
(by its execution and delivery hereof) hereby agrees that it shall pay to German
American Capital Corporation, as the initial Collateral Agent, such fees as have
been separately agreed to in writing with German American Capital Corporation
for acting as Administrative Agent and as Collateral Agent hereunder. In the
event a successor Collateral Agent is at any time appointed pursuant to the
preceding Section 8.9, the Borrower hereby agrees to pay such successor
Collateral Agent such reasonable fees for acting as such as would customarily be
charged by such Collateral Agent for acting in such capacity in similar
situations.
(b) In addition, each Assignor agrees jointly and severally to
pay all reasonable out-of-pocket costs and expenses of the Collateral Agent in
connection with this Agreement and any actions taken by the Collateral Agent
hereunder, and agrees to pay all costs and expenses of the Collateral Agent in
connection with the enforcement of this Agreement and the documents and
instruments referred to herein (including, without limitation, reasonable fees
and disbursements of counsel for the Collateral Agent).
ARTICLE IX
MISCELLANEOUS
9.1. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered in
accordance with the provisions of Section 12.03 of the Credit Agreement,
addressed as follows:
(a) if to any Assignor, at it address set forth opposite its
signature below;
(b) if to the Collateral Agent, at:
German American Capital Corporation
31 West 52nd Street
New York, New York 10019
Attention: Allisson Michaels
Telephone No.: (212) 469-6949
Facsimile No.: (212) 469-7210
(c) if to any Bank Creditor, at such address as such Bank
Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to each Assignor and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
<PAGE>
Exhibit G
Page 25
9.2. Waiver; Amendment. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Assignor directly affected
thereby and the Collateral Agent (with the written consent of the Required
Secured Creditors); provided, however, that any change, waiver, modification or
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such affected Class.
For the purpose of this Agreement, the term "Class" shall mean each class of
Secured Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Agreement Obligations or (y) the Other Creditors as the holders of the Other
Obligations. For the purpose of this Agreement, the term "Requisite Creditors"
of any Class shall mean each of (x) with respect to the Credit Agreement
Obligations, the Required Banks and (y) with respect to the Other Obligations,
the holders of at least a majority of all obligations outstanding from time to
time under the Interest Rate Protection Agreements or Other Hedging Agreements.
9.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement; or (c) any amendment to or modification of any Secured Debt Agreement
(other than this Agreement) or any security for any of the Obligations; whether
or not any Assignor shall have notice or knowledge of any of the foregoing.
9.4. Successors and Assigns. This Agreement shall be binding
upon each Assignor and its successors and assigns (although no Assignor may
assign its rights and obligations hereunder except in accordance with the
provisions of the Secured Debt Agreements) and shall inure to the benefit of the
Collateral Agent and the other Secured Creditors and their respective successors
and assigns. All agreements, statements, representations and warranties made by
each Assignor herein or in any certificate or other instrument delivered by such
Assignor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement and the other Secured Debt Agreements regardless of
any investigation made by the Secured Creditors or on their behalf.
9.5. Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
9.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS EXCEPT FOR THE CHOICE OF LAW PROVISIONS OF THE NEW YORK UCC.
9.7. Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that each Assignor shall
remain liable to perform all of the obligations, if any, assumed by it with
<PAGE>
Exhibit G
Page 26
respect to the Collateral and unless the Collateral Agent or any Secured
Creditor shall become the absolute owner of any Collateral pursuant hereto, the
Collateral Agent and the other Secured Creditors shall not have any obligations
or liabilities by reason of or arising out of this Agreement with respect to any
such Collateral, nor shall the Collateral Agent or the other Secured Creditors
be required or obligated in any manner to perform or fulfill any of the
obligations of each Assignor under or with respect to any Collateral.
9.8. Termination; Release. (a) After the Termination Date,
this Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 6.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements or Other Hedging
Agreements have been terminated, no Note or Letter of Credit is outstanding (and
all Loans have been repaid in full), and all Obligations then owing have been
paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 8.02 of the Credit Agreement or
otherwise released at the direction of the Required Secured Creditors and the
proceeds of such sale or sales or from such release are applied in accordance
with the provisions of the Credit Agreement, to the extent required to be so
applied, such Collateral will be sold free and clear of the Liens created by
this Agreement and the Collateral Agent, at the request and expense of the
relevant Assignor, will duly assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of the
Collateral as is then being (or has been) so sold or released and as may be in
the possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.
(c) At any time that an Assignor desires that the Collateral
Agent take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 9.8(a) or (b), it shall deliver to the
Collateral Agent a certificate signed by an Authorized Officer of such Assignor
stating that the release of the respective Collateral is permitted pursuant to
said Section 9.8(a) or (b). The Collateral Agent shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral by
it as permitted by this Section 9.8.
9.9. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with each
Assignor and the Collateral Agent.
9.10. Additional Assignors. It is understood and agreed that
any Subsidiary of the Borrower that is required to execute a counterpart of this
<PAGE>
Exhibit G
Page 27
Agreement pursuant to the Secured Debt Agreements shall automatically become an
Assignor hereunder by executing a counterpart hereof and delivering the same to
the Collateral Agent.
9.11. Interest Rate Protection Agreements and Other Hedging
Agreements. Notwithstanding anything to the contrary contained in this
Agreement, no Interest Rate Protection Agreement or Other Hedging Agreement
shall be entitled to the benefits of this Agreement unless such Interest Rate
Protection Agreement or Other Hedging Agreement is reasonably related to the
Loans or the Letters of Credit or such Interest Rate Protection Agreement or
Other Hedging Agreement provides that it is to be entitled to the benefits of
this Agreement or the Security Documents generally.
<PAGE>
Exhibit G
Page 28
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
<TABLE>
<S> <C>
Address: ELDERTRUST, as an Assignor
415 McFarlan Road By:______________________________
Suite 202 Name:
Kennett Square Title:
Pennsylvania 19348
Address: ELDERTRUST OPERATING LIMITED
PARTNERSHIP, as an Assignor
415 McFarlan Road By: ElderTrust, general partner
Suite 202
Kennett Square By:______________________________
Pennsylvania 19348 Name:
Title:
Address: ET GENPAR, L.L.C.
415 McFarlan Road By: ElderTrust Operating Limited Partnership,
Suite 202 sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit G
Page 29
<TABLE>
<S> <C>
Address: ET SUB-HERITAGE WOODS, L.L.C., as an
Assignor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-PLEASANT VIEW, L.L.C., as an
Assignor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-RITTENHOUSE LIMITED
PARTNERSHIP, L.L.P., as an Assignor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit G
Page 30
<TABLE>
<S> <C>
Address: ET SUB-LOPATCONG, L.L.C., as an Assignor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-WAYNE I LIMITED PARTNERSHIP,
L.L.P., as an Assignor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-PENNSBURG MANOR LIMITED
PARTNERSHIP, L.L.P., as an Assignor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit G
Page 31
<TABLE>
<S> <C>
Address: ET SUB-POB I LIMITED PARTNERSHIP,
L.L.P., as an Assignor
415 McFarlan Road By: ET GENPAR, L.L.C., general partner
Suite 202
Kennett Square By: ElderTrust Operating Limited
Pennsylvania 19348 Partnership, sole member
By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-SMOB, L.L.C., as an Assignor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
Address: ET SUB-WINDSOR I, L.L.C., as an
Assignor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title:
</TABLE>
<PAGE>
Exhibit G
Page 32
<TABLE>
<S> <C>
Address: ET SUB-WINDSOR II, L.L.C., as an
Assignor
415 McFarlan Road By: ElderTrust Operating Limited
Suite 202 Partnership, sole member
Kennett Square
Pennsylvania 19348 By: ElderTrust, general partner
By:______________________
Name:
Title
Address: GERMAN AMERICAN CAPITAL CORPORATION,
as Collateral Agent
31 West 52nd Street By:______________________
New York, New York 10019 Name:
Title
By:______________________
Name:
Title
</TABLE>
<PAGE>
Annex A
TO SECURITY AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
All Assignors
<TABLE>
<S> <C> <C>
1. Chief Executive Office - 415 McFarlan Road
Suite 2002
Kennett Square, Pennsylvania 19348
2. Other Record Locations - See locations for such Assignor set forth on
Annex B
</TABLE>
<PAGE>
Annex B
TO SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location
-------- --------
<PAGE>
ANNEX C
TO SECURITY AGREEMENT
PLEDGED ACCOUNTS
Assignor Location
-------- --------
<PAGE>
ANNEX D
TO SECURITY AGREEMENT
TRADE AND FICTITIOUS NAMES
Assignor Trade/Fictitious Name
-------- ---------------------
1. ElderTrust ElderTrust REIT Co.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
SECURITY INTERESTS.............................................................2
2.1. Necessary Filings................................................3
2.2. No Liens.........................................................3
2.3. Other Financing Statements.......................................3
2.4. Chief Executive Office; Records..................................4
2.5. Location of Inventory and Equipment..............................4
2.6. Pledged Accounts.................................................4
2.7. Recourse.........................................................5
2.8. Trade Names; Change of Name......................................5
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER...........................6
3.1. Additional Representations and Warranties........................6
3.2. Maintenance of Records...........................................6
3.3. Direction to Account Debtors; Contracting Parties; etc...........6
3.4. Modification of Terms; etc.......................................7
3.5. Collection.......................................................7
3.7. Assignors Remain Liable Under Receivables........................7
3.8. Assignors Remain Liable Under Contracts..........................8
3.9. Further Actions..................................................8
ARTICLE IV
PROVISIONS CONCERNING ALL COLLATERAL...........................................8
4.1. Protection of Collateral Agent's Security........................8
4.2. Further Actions..................................................9
4.3. Financing Statements.............................................9
ARTICLE V
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT...................................9
5.1. Remedies; Obtaining the Collateral Upon Default..................9
<PAGE>
5.2. Remedies; Disposition of the Collateral............................11
5.3. Waiver of Claims...................................................11
5.5. Remedies Cumulative................................................14
5.6. Discontinuance of Proceedings......................................14
ARTICLE VI
INDEMNITY.....................................................................15
6.1. Indemnity..........................................................15
6.2. Indemnity Obligations Secured by Collateral; Survival..............16
ARTICLE VII
DEFINITIONS...................................................................16
ARTICLE VIII
THE COLLATERAL AGENT..........................................................20
8.1. Appointment........................................................20
8.2. Nature of Duties...................................................21
8.3. Lack of Reliance on the Collateral Agent...........................21
8.4. Certain Rights of the Collateral Agent.............................22
8.5. Reliance...........................................................22
8.6. Indemnification....................................................22
8.7. The Collateral Agent in its Individual Capacity....................23
8.8. Holders............................................................23
8.9. Resignation by the Collateral Agent................................23
8.10. Fees and Expenses of Collateral Agent.............................24
ARTICLE IX
MISCELLANEOUS.................................................................24
9.1. Notices............................................................24
9.2. Waiver; Amendment..................................................25
9.3. Obligations Absolute...............................................25
9.4. Successors and Assigns.............................................25
9.5. Headings Descriptive...............................................26
9.6. Governing Law......................................................26
9.7. Assignor's Duties..................................................26
9.8. Termination; Release...............................................26
<PAGE>
9.9. Counterparts.......................................................27
9.10. Additional Assignors..............................................27
9.11. Interest Rate Protection Agreements and Other Hedging Agreements..27
ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Pledged Account Banks
ANNEX D Schedule of Trade and Fictitious Names
<PAGE>
EXHIBIT H
SUBSIDIARIES GUARANTY
GUARANTY, dated as of _______, 1998 (as amended, modified or
supplemented from time to time, this "Guaranty"), made by each of the
undersigned guarantors (each, a "Guarantor" and, together with any other entity
that becomes a party hereto pursuant to Section 23 hereof, the "Guarantors").
Except as otherwise defined herein, capitalized terms used herein and defined in
the Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H:
WHEREAS, ElderTrust, a Maryland real estate investment trust,
ElderTrust Operating Limited Partnership, a Delaware limited partnership (the
"Borrower"), various lenders from time to time party thereto (the "Banks"), and
German American Capital Corporation, as Administrative Agent (together with any
successor administrative agent, the "Administrative Agent"), have entered into a
Credit Agreement, dated as of _______, 1998, providing for the making of Loans
to the Borrower as contemplated therein (as amended, modified or supplemented
from time to time, the "Credit Agreement") (the Banks, the Administrative Agent
and the Collateral Agent are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or any affiliate thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, are herein called the "Creditors");
WHEREAS, each Guarantor is a direct or an indirect Subsidiary
of the Borrower;
WHEREAS, it is a condition to the making of Loans under the
Credit Agreement that each Guarantor shall have executed and delivered this
Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans by the Borrower under the Credit Agreement and the entering
into by the Borrower of the Interest Rate Protection Agreements or Other Hedging
Agreements referred to above and, accordingly, desires to execute this Guaranty
in order to satisfy the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Creditors and hereby covenants and agrees with each
Creditor as follows:
1. Each Guarantor, jointly and severally, absolutely,
irrevocably and unconditionally guarantees: (i) to the Bank Creditors the full
and prompt payment when due (whether at the stated maturity, by acceleration or
<PAGE>
Exhibit H
Page 2
otherwise) of (x) the principal of and interest on the Notes issued by, and the
Loans made to, the Borrower under the Credit Agreement and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Bank Creditors under the Credit Agreement and each other
Credit Document (including, without limitation, indemnities, Fees and interest
thereon), whether now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement and each such other Credit Document and the
due performance and compliance by the Borrower with all of the terms, conditions
and agreements contained in the Credit Documents (all such principal, interest,
liabilities and obligations being herein collectively called the "Credit
Agreement Obligations"); and (ii) to each Other Creditor, the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
owing by the Borrower under any Interest Rate Protection Agreement or Other
Hedging Agreement, whether now in existence or hereafter arising, and the due
performance and compliance by the Borrower with all of the terms, conditions and
agreements contained in the Interest Rate Protection Agreements or Other Hedging
Agreements (all such obligations and liabilities being herein collectively
called the "Other Obligations," and together with the Credit Agreement
Obligations are herein collectively called the "Guaranteed Obligations"),
provided that the maximum amount payable by each Guarantor hereunder shall at no
time exceed the Maximum Amount (as hereinafter defined) of such Guarantor. As
used herein, "Maximum Amount" of any Guarantor means an amount equal to 95% of
the amount by which (A) the present fair saleable value of such Guarantor's
assets exceeds (B) the total liabilities of such Guarantor (including the
maximum amount reasonably expected to come due in respect of contingent
liabilities, other than contingent liabilities of such Guarantor hereunder), in
each case determined on the Effective Date (or such other date on which such
Guarantor first becomes a party hereto) or on the day any demand is made under
this Guaranty, whichever date results in a higher Maximum Amount. Subject to the
proviso in the second preceding sentence, each Guarantor understands, agrees and
confirms that the Creditors may enforce this Guaranty up to the full amount of
the Guaranteed Obligations against each Guarantor without proceeding against any
other Guarantor, against the Borrower, against any security for the Guaranteed
Obligations, or under any other guaranty covering all or a portion of the
Guaranteed Obligations. The Guaranteed Obligations may exceed any Guarantor's
Maximum Amount without affecting the liability of such Guarantor hereunder.
2. Additionally, each Guarantor, jointly and severally,
absolutely, unconditionally and irrevocably, guarantees the payment of any and
all Guaranteed Obligations to the Creditors whether or not due or payable by the
Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 9.05 of the Credit Agreement, and absolutely,
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States. This Guaranty shall constitute a guaranty of payment, and not
of collection.
3. The liability of each Guarantor hereunder is exclusive
and independent of any security for or other guaranty of the indebtedness of the
Borrower, whether executed by such Guarantor, any other Guarantor, any other
guarantor or any other party, and the liability of each Guarantor hereunder
<PAGE>
Exhibit H
Page 3
shall not be affected or impaired by any circumstance or occurrence whatsoever,
including, without limitation: (a) any direction as to application of payment by
the Borrower or by any other party, (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
indebtedness of the Borrower, (c) any payment on or in reduction of any such
other guaranty or undertaking except to the extent that any such payment or
reduction results in the actual permanent reduction of the Guaranteed
Obligations, (d) any dissolution, termination or increase, decrease or change in
personnel by the Borrower, (e) any payment made to any Creditor on the
indebtedness which any Creditor repays the Borrower pursuant to court order in
any bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding, (f) any action or
inaction by the Creditors as contemplated in Section 6 hereof, or (g) any
invalidity, irregularity or unenforceability of all or part of the Guaranteed
Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor or the Borrower,
and a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower and whether or not any other Guarantor, any
other guarantor or the Borrower be joined in any such action or actions. Each
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by the Administrative Agent or any other Creditor against, and any other notice
to, any party liable thereon (including such Guarantor, any other guarantor or
the Borrower).
6. Any Creditor may at any time and from time to time
without the consent of, or notice to, any Guarantor, without incurring
responsibility to such Guarantor, and without impairing or releasing the
obligations of such Guarantor hereunder, upon or without any terms or conditions
and in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, impair, realize
upon or otherwise deal with in any manner and in any order any property
by whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
<PAGE>
Exhibit H
Page 4
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party or otherwise act or refrain from
acting;
(d) release or substitute any one or more endorsers,
Guarantors, other guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower to
creditors of the Borrower other than the Creditors provided that the
Creditors will not, without the prior written consent of the respective
Guarantor, contractually subordinate the payment of all or any part of
the Guaranteed Obligations to any other creditor or creditors of the
Borrower, provided further that if any consent required by the
immediately preceding proviso is not obtained and contractual
subordination as described therein is agreed to, then (x) any part of
the Guaranteed Obligations not so subordinated will continue to be
entitled to the full benefits of this Guaranty and (y) with respect to
any part of the Guaranteed Obligations so contractually subordinated,
such Guarantor will be relieved of its obligations hereunder only to
the extent it establishes that it has been actually damaged by such
contractual subordination;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Creditors
regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement any Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of such other instruments or
agreements;
(h) act or fail to act in any manner referred to in this
Guaranty which may deprive such Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of such Guarantor from it liabilities under this Guaranty.
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute, irrevocable and unconditional notwithstanding the occurrence of any
<PAGE>
Exhibit H
Page 5
event or the existence of any other circumstances which might constitute a legal
or equitable discharge of a surety or guarantor except payment in full of the
Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Creditor in exercising any right, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
rights or remedies which any Creditor would otherwise have. No notice to or
demand on any Guarantor in any case shall entitle such Guarantor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for any Creditor to
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness of the Borrower now or hereafter held by
any Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred, so requests at a
time when any Guaranteed Obligations are outstanding, shall be collected,
enforced and received by such Guarantor as trustee for the Creditors and be paid
over to the Creditors on account of the indebtedness of the Borrower to the
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Prior to the
transfer by any Guarantor of any note or negotiable instrument evidencing any
indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with the Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Guaranty
(whether contractual, under Section 509 of the Bankruptcy Code, or otherwise)
until all Guaranteed Obligations have been paid in full in cash (it being
understood that each Guarantor is not waiving any right of subrogation that it
may otherwise have but is only waiving the exercise thereof as provided above).
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors
to: (i) proceed against the Borrower, any other Guarantor, any other guarantor
of the Guaranteed Obligations or any other party; (ii) proceed against or
exhaust any security held from the Borrower, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any
other remedy in the Creditors' power whatsoever. Each Guarantor waives any
defense based on or arising out of any defense of the Borrower, such Guarantor,
any other Guarantor, any other guarantor of the Guaranteed Obligations or any
other party other than payment in full of the Guaranteed Obligations, including,
without limitation, any defense based on or arising out of the disability of the
Borrower, such Guarantor, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
<PAGE>
Exhibit H
Page 6
any cause of the liability of the Borrower other than payment in full of the
Guaranteed Obligations. The Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the other
Creditors by one or more judicial or nonjudicial sales or exercise any other
right or remedy the Creditors may have against the Borrower or any other party,
or any security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such election
by the Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such Guarantor
against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
Each Guarantor warrants and agrees that each of the waivers
set forth above is made with full knowledge of its significance and consequences
and that if any of such waivers are determined to be contrary to any applicable
law or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
11. In order to induce the Bank Creditors to enter into the
Credit Agreement and to make the Loans pursuant to the Credit Agreement, and to
induce the Other Creditors to enter into the Interest Rate Protection Agreements
and Other Hedging Agreements, each Guarantor represents, warrants and covenants
that:
(a) Status. Such Guarantor (i) is a duly organized and validly
existing corporation, partnership or limited liability company, as the
case may be, in good standing (if applicable) under the laws of the
jurisdiction of its organization, (ii) has the corporate, partnership
or limited liability company power and authority, as the case may be,
to own or lease its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly
qualified and is authorized to do business and is in good standing in
each jurisdiction where the conduct of its business requires such
qualification, except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
such Guarantor.
(b) Power and Authority. Such Guarantor has the corporate,
partnership or limited liability company power and authority, as the
case may be, to execute, deliver and perform the terms and provisions
of this Guaranty and each other Credit Document to which it is a party
<PAGE>
Exhibit H
Page 7
and has taken all necessary corporate or partnership action to
authorize the execution, delivery and performance by it of each such
Credit Document. Such Guarantor has duly executed and delivered this
Guaranty and each other Credit Document to which it is a party and each
such Credit Document constitutes the legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms,
except to the extent that the enforceability hereof and thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
(c) No Violation. Neither the execution, delivery or
performance by such Guarantor of this Guaranty or any other Credit
Document to which it is a party, nor compliance by it with the terms
and provisions hereof and thereof (i) will contravene any applicable
provision of any law, statute, rule or regulation, or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of such
Guarantor or any of its Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust, credit agreement or loan agreement
or any other material agreement, contract or instrument to which such
Guarantor or any of its Subsidiaries is a party or by which it or any
of its property or assets is bound or to which it may be subject or
(iii) will violate any provision of the certificate of incorporation,
certificate of partnership, partnership agreement, limited liability
company agreement or by-laws of such Guarantor or any of its
Subsidiaries.
(d) Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made), or exemption
by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with,
(i) the execution, delivery and performance of this Guaranty or any
other Credit Document to which such Guarantor is a party or (ii) the
legality, validity, binding effect or enforceability of this Guaranty
or any other Credit Document to which such Guarantor is a party.
(e) Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of such Guarantor, threatened (i)
with respect to this Guaranty or (ii) that could reasonably be expected
to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
such Guarantor.
12. Each Guarantor covenants and agrees that on and after
the Effective Date and until the Total Commitment and all Interest Rate
Protection Agreements and Other Hedging Agreements have terminated and when no
Note remains outstanding and all Guaranteed Obligations have been paid in full,
such Guarantor shall take, or will refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 7 or 8 of the Credit
<PAGE>
Exhibit H
Page 8
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay
all out-of-pocket costs and expenses of each Creditor in connection with the
enforcement of this Guaranty (including reasonable legal fees and expenses) and
the out-of-pocket costs and expenses of the Administrative Agent in connection
with any amendment, waiver or consent relating hereto (including reasonable
legal fees and expenses).
14. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and with the written consent of the
Required Secured Creditors (as defined in the Security Agreement); provided,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class (as defined below) of Creditors (and not all
Creditors in a like or similar manner) shall require the written consent of the
Requisite Creditors (as defined below) of such Class of Creditors (it being
understood that the addition or release of any Guarantor hereunder shall not
constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released). For the purpose of this Guaranty
the term "Class" shall mean each class of Creditors, i.e., whether (x) the Bank
Creditors as holders of the Credit Agreement Obligations or (y) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Guaranty, the term "Requisite Creditors" of any Class shall mean (x) with
respect to the Credit Agreement Obligations, the Required Banks and (y) with
respect to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the respective Interest Rate
Protection Agreements or Other Hedging Agreements.
15. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents has been made available to such
Guarantor and such Guarantor is familiar with the contents thereof.
16. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement continuing after any applicable grace period), each Creditor
is hereby authorized at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being expressly waived, to set
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by such Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Creditor under this
Guaranty, irrespective of whether or not such Creditor shall have made any
demand hereunder and although said obligations, liabilities, deposits or claims,
or any of them, shall be contingent or unmatured.
17. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
<PAGE>
Exhibit H
Page 9
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement, (ii) in the case of any Guarantor, at its address set forth opposite
its signature below and (iii) in the case of any Other Creditor, at such address
as such Other Creditor shall have specified in writing to the Guarantors; or in
any case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
18. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
19. (A) This Agreement shall be binding upon the successors
and assigns of each Guarantor (although no Guarantor may assign its rights and
obligations hereunder except in accordance with the provisions of the Secured
Debt Agreements) and shall inure to the benefit of and be enforceable by the
Administrative Agent and the other Secured Creditors and their respective
successors and assigns. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty or any other Credit Document to which any
Guarantor is a party may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, each Guarantor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
such Guarantor, and agrees not to plead or claim in any legal action or
proceeding with respect to this Guaranty or any other Credit Document to which
such Guarantor is a party brought in any of the aforesaid courts that any such
court lacks jurisdiction over such Guarantor. Each Guarantor further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each Guarantor at its address set forth
opposite its signature below, such service to become effective 30 days after
such mailing. Each Guarantor hereby irrevocably waives any objection to such
service of process and further irrevocably waives and agrees not to plead or
claim in any action or proceeding commenced hereunder or under any other Credit
Document to which such Guarantor is a party that service of process was in any
way invalid or ineffective. Nothing herein shall affect the right of any of the
Creditors to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against each Guarantor in any other
jurisdiction.
<PAGE>
Exhibit H
Page 10
(B) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty or any other Credit Document to which such Guarantor is a party brought
in the courts referred to in clause (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that such action or
proceeding brought in any such court has been brought in an inconvenient forum.
(C) EACH GUARANTOR AND EACH CREDITOR (BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
20. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of the Credit Agreement (or such sale or other disposition has been
approved in writing by the Required Secured Creditors) and the proceeds of such
sale, disposition or liquidation are applied in accordance with the provisions
of the Credit Agreement, to the extent applicable, such Guarantor shall be
released from this Guaranty and this Guaranty shall, as to each such Guarantor
or Guarantors, terminate, and have no further force or effect (it being
understood and agreed that the sale of one or more Persons that own, directly or
indirectly, all of the capital stock or partnership interests of any Guarantor
shall be deemed to be a sale of such Guarantor for the purposes of this Section
20).
21. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantors and the
Administrative Agent.
22. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense.
23. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Guaranty pursuant to
the Credit Agreement shall automatically become a Guarantor hereunder by
executing a counterpart hereof and delivering the same to the Administrative
Agent.
24. Notwithstanding anything to the contrary contained in this
Guaranty, no Interest Rate Protection Agreement or Other Hedging Agreement shall
be entitled to the benefits of this Guaranty unless such Interest Rate
Protection Agreement or Other Hedging Agreement is reasonably related to the
Loans or such Interest Rate Protection Agreement or Other Hedging Agreement
provides that it is to be entitled to the benefits of this Guaranty or the
Security Documents generally.
<PAGE>
Exhibit H
Page 11
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
Address: ________________,as a
Guarantor
By__________________
Name:
Title:
Accepted and Agreed to:
GERMAN AMERICAN CAPITAL
CORPORATION, as Administrative Agent
By___________________
Name:
Title:
<PAGE>
EXHIBIT I
This document is intended
to be recorded in _______
County, _________________
MORTGAGE, ASSIGNMENT OF
LEASES AND RENTS, SECURITY
AGREEMENT AND
FIXTURE FILING STATEMENT,
made by
[_______________________________________],
as Mortgagor,
to
GERMAN AMERICAN CAPITAL CORPORATION, as Collateral Agent,
as Mortgagee.
LOCATION OF PREMISES:
[ADD PROPERTY ADDRESS]
- --------------------------------------------------------------------------------
THIS DOCUMENT PREPARED BY AND
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
WHITE & CASE LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Barbara J. Goodman, Esq.
-1-
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
WHITE & CASE LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Barbara J. Goodman, Esq.
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING STATEMENT, made as of the [____] day of [____],
1998 (as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time, this "Mortgage"), by [_________________________], a
[limited partnership organized under the laws of Delaware] ("Mortgagor"), having
its principal place of business at 415 McFarlan Road, Suite 202, Kennett Square,
Pennsylvania 19348, Attention: Edward B. Romanov, Jr., to GERMAN AMERICAN
CAPITAL CORPORATION, a corporation organized under the laws of the State of
[_____], in its capacity as Collateral Agent for the benefit of the Secured
Creditors (defined below) (together with its successors and assigns,
"Mortgagee") having its principal place of business at 31 West 52nd Street, New
York, New York 10019.
All capitalized terms used herein shall have the respective
meanings set forth in Section 1 hereof.
W I T N E S S E T H:
WHEREAS, Mortgagor is the owner of the fee simple interest
and/or a valid leasehold interest in the real property described on Exhibit A
annexed hereto and made a part hereof;
WHEREAS, ElderTrust, a Maryland real estate investment trust,
ElderTrust Operating Limited Partnership (the "Borrower"), various lenders from
time to time party thereto (the "Banks"), DEUTSCHE BANK AG, New York Branch, as
Issuing Bank and German American Capital Corporation, as Administrative Agent
(together with any successor administrative agent, the "Administrative Agent"),
have entered into a Credit Agreement, dated as of January 30, 1998, providing
for the making of Loans to the Borrower and the issuance of Letters of Credit
for the account of the Borrower, all as contemplated therein (as amended,
modified or supplemented from time to time, the "Credit Agreement") (the Banks,
the Administrative Agent and the Mortgagee are herein called the "Bank
Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or affiliates thereof (each such Bank or
affiliate, even if the respective Bank subsequently
-2-
<PAGE>
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, if any, collectively, the
"Other Creditors," and together with the Bank Creditors, are herein called the
"Secured Creditors");
[WHEREAS, pursuant to a Subsidiary Guaranty, dated as of
January 30, 1998, made jointly and severally by the Mortgagor and the other
Subsidiary Guarantors for the benefit of the Secured Creditors, the Mortgagor
has guaranteed to the Secured Creditors and the Mortgagee the payment when due
of all obligations and liabilities of the Borrower under or with respect to the
Credit Documents and the Interest Rate Agreements;]
WHEREAS, it is a condition precedent to the extensions of
credit under the Credit Agreement that the Mortgagor shall have executed and
delivered to the Mortgagee this Agreement; and
WHEREAS, Mortgagor desires to execute and deliver this
Mortgage to satisfy the condition described in the preceding paragraph and to
secure the following:
To secure (A) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of the Loans in the
maximum principal amount of One Hundred Forty Million Dollars
($140,000,000), lawful money of the United States of America, to be
paid with interest in accordance with the Credit Agreement and all
obligations and liabilities (including, without limitation, the
principal of and interest on the notes issued, and loans made, under
the Credit Agreement, all reimbursement obligations and Unpaid Drawings
with respect to letters of credit issued under the Credit Agreement,
and all indemnities, fees and interest thereon or owed thereunder), (B)
performance of all of Mortgagor's other obligations under the Credit
Documents, (C) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities of the Mortgagor to the Other Creditors, whether now
existing or hereafter incurred under, arising out of or in connection
with any Interest Rate Agreement and the due performance and compliance
by the Mortgagor with all the terms, conditions and agreements
contained in the Interest Rate Agreements, (D) any and all sums
advanced by the Mortgagee in order to preserve or protect the Mortgaged
Property or preserve or protect its security title and interest in the
Mortgaged Property, (E) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations or
liabilities of the Mortgagor referred to in clauses (A), (B) and (C)
above after an Event of Default shall have occurred and be continuing,
the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Mortgaged
Property, or of any exercise by the Mortgagee of its rights hereunder,
together with reasonable attorneys' fees and court costs, and (F) all
amounts as to which any indemnitee has the right to reimbursement under
paragraph 33 of this Mortgage (said indebtedness, interest and all
other sums due or obligations to be performed hereunder and under the
other Credit Documents, being hereinafter referred to collectively as
the "Obligations"), Mortgagor has mortgaged, given, granted, bargained,
sold, aliened, conveyed, confirmed, pledged, assigned and hypothecated
and by these presents does mortgage, give, grant, bargain, sell, alien,
convey, confirm, pledge, assign and hypothecate unto Mortgagee the real
property described in Exhibit A attached hereto
-3-
<PAGE>
and made a part hereof (the "Premises") and the buildings, structures,
fixtures, additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter located thereon (the
"Improvements");
TOGETHER WITH: all appurtenant right, title, interest and
estate of Mortgagor now owned, or hereafter acquired, in and to the following
property, rights, interests and estates (the Premises, the Improvements and the
following property, rights, interests and estates being hereinafter collectively
referred to as the "Mortgaged Property", which Mortgaged Property constitutes a
"Property" under and as defined in the Credit Agreement):
(a) all easements, rights-of-way, strips and gores of land,
streets, ways, alleys, passages, sewer rights, water, water courses,
water rights and powers, air rights and development rights, licenses,
permits and construction and equipment warranties and all estates,
rights, titles, interests, privileges, liberties, tenements,
hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating or pertaining to the Premises and the Improvements
and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or
proposed, in front of or adjoining the Premises, to the center line
thereof and all the estates, rights, titles, interests, dower and
rights of dower, curtesy and rights of curtesy, property, possession,
claim and demand whatsoever, both at law and in equity, of Mortgagor
of, in and to the Premises and the Improvements and every part and
parcel thereof, with the appurtenances thereto;
(b) all machinery, equipment, fixtures (including, but not
limited to any and all partitions, dynamos, window screens and shades,
drapes, rugs and other floor coverings, awnings, motors, engines,
boilers, furnaces, pipes, plumbing, cleaning, call and sprinkler
systems, fire extinguishing apparatus and equipment, water tanks,
swimming pools, heating, ventilating, plumbing, lighting,
communications and elevator fixtures, laundry, incinerating, air
conditioning and air cooling equipment and systems, gas and electric
machinery, and equipment, disposals, dishwashers, furniture,
refrigerators and ranges, recreational equipment and facilities of all
kinds, and water, gas, electrical, storm and sanitary sewer facilities
of all kinds, and other utilities whether or not situated in easements,
together with all accessions, replacements, betterments and
substitutions for any of the foregoing) and other property of every
kind and nature whatsoever owned by Mortgagor, or in which Mortgagor
has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and in
connection with the present or future operation and occupancy of the
Premises and the Improvements and all building equipment, materials and
supplies of any nature whatsoever owned by Mortgagor, or in which
Mortgagor has or shall have an interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the
Premises and the Improvements (hereinafter collectively called the
"Equipment"), and the right, title and interest of Mortgagor in and to
any of the Equipment which may be subject to any security interests, as
defined in the Uniform Commercial Code, as adopted and enacted by the
state or states where any of the Mortgaged Property is located (the
"Uniform Commercial Code"), superior in lien to the lien of this
Mortgage;
-4-
<PAGE>
(c) all awards or payments, including interest thereon, which
may heretofore or hereafter be made with respect to the Mortgaged
Property, whether from the exercise of the right of eminent domain
(including, but not limited to, any transfer made in lieu of or in
anticipation of the exercise of said right), or for a change of grade,
or for any other injury to or decrease in the value of the Mortgaged
Property;
(d) all leasehold estates, leases, licenses, concession
agreements, franchises and other occupancy agreements and other
agreements, including, without limitation, any operating lease,
demising, leasing or granting rights of possession or use, or, to the
extent of the interest therein of the Mortgagor, any sublease,
subsublease, underletting or sublicense, which now or hereafter may
affect the Mortgaged Property or any part thereof or interest therein,
and all renewals, extensions, subleases or assignments thereof,
(individually, a "Lease" and collectively, the "Leases"), and all
rents, issues, profits, royalties, receipts, revenues, accounts
receivable, security deposits and other deposits (subject to the prior
right of tenants making such deposits) and income, including fixed,
additional and percentage rents, occupancy charges, operating expense
reimbursements, reimbursements for increases in taxes, sums paid by
tenants to the Mortgagor to reimburse the Mortgagor for amounts
originally paid or to be paid by the Mortgagor or its agents or
affiliates for which such tenants were liable, as, for example, tenant
improvement costs in excess of any work letter, lease takeover costs,
moving expenses and tax and operating expense pass-throughs for which a
tenant is solely liable, marketing association dues, late charges,
tenant association dues, administrative cost reimbursements, parking,
maintenance, common area, tax, insurance, utility and service charges
and contributions, proceeds of sale of electricity, gas, heating,
air-conditioning and other utilities and services, deficiency rents and
liquidated damages and other benefits, including all property income
(the "Rents") and all proceeds from the sale or other disposition of
the Leases;
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Mortgaged Property, including, without
limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage
to the Mortgaged Property;
(f) any and all real estate tax refunds payable to Mortgagor
with respect to the Mortgaged Property, and refunds or reimbursements
payable with respect to bonds, escrow accounts, or other sums payable
in connection with the use, development, or ownership of the Mortgaged
Property;
(g) the right, in the name and on behalf of Mortgagor, to
appear in and defend any action or proceeding brought with respect to
the Mortgaged Property and to commence any action or proceeding to
protect the interest of Mortgagee in the Mortgaged Property; and
(h) all (i) general intangibles, contract rights and accounts
receivable arising from any of the foregoing, (ii) any and all
replacements and renewals of or additions and substitutions to any of
the foregoing and (iii) all proceeds of any of the foregoing.
-5-
<PAGE>
TO HAVE AND TO HOLD the above granted and described Mortgaged
Property unto and to the use and benefit of Mortgagee, and the successors and
assigns of Mortgagee, forever and Mortgagor hereby binds itself and its
successors and assigns to warrant and forever defend the Mortgaged Property unto
Mortgagee and its successors and assigns against the claim or claims of all
persons claiming or to claim the same, or any part thereof.
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Mortgagor shall well and truly pay and perform the
Obligations at the time and in the manner provided in the Credit Documents,
these presents and the estate hereby granted shall cease, terminate and be void;
AND, to protect the security of this Mortgage, Mortgagor
represents and warrants to and covenants and agrees with Mortgagee as follows:
1. Definitions and Principles of Construction. Capitalized
terms used herein without definition shall have the respective meanings ascribed
to them in the Credit Agreement. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage may be used interchangeably in singular or plural form and the word
"Mortgagor" shall mean "each Mortgagor and any subsequent owner or owners of the
Mortgaged Property or any part thereof or any interest therein," the word
"Mortgagee" shall mean "Mortgagee and any of its successors and/or assigns," the
word "person" shall include an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged Property" shall
include any portion of the Mortgaged Property and any interest therein.
"Access Laws" has the meaning provided in paragraph 32 hereof.
"Assignment of Leases" has the meaning provided in the fifth
recital hereto.
"Credit Agreement" has the meaning provided in the second
recital hereto.
"Equipment" has the meaning provided in paragraph (b) of the
seventh recital hereto.
"Impositions" means all real estate and personal property
taxes, water, sewer and vault charges and all other taxes, levies, assessments
and other similar charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind or nature whatsoever, which may at any time
prior to, at or after the execution hereof be assessed, levied or imposed by, in
each case a Governmental Authority upon the Mortgaged Property or the property
income or the ownership, use, occupancy or enjoyment thereof, and any interest,
costs and penalties with respect to any of the foregoing.
"Improvements" has the meaning provided in the seventh recital
hereto.
"Leases" has the meaning provided in paragraph (d) of the
seventh recital hereto.
"Mortgage" has the meaning provided in the first paragraph
hereof.
-6-
<PAGE>
"Mortgagee" has the meaning provided in the first paragraph
hereof.
"Mortgaged Property" has the meaning provided in the seventh
recital hereto.
"Mortgagor" has the meaning provided in the first paragraph
hereof.
"Obligations" has the meaning provided in the seventh recital
hereto.
"Other Charges" has the meaning set forth in Section 5 hereof.
"Premises" has the meaning provided in the seventh recital
hereto.
"Rents" has the meaning provided in paragraph (d) of the
seventh recital hereto.
"UCC Collateral" has the meaning provided in paragraph 27
hereof.
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect in the State of [________________].
2. Payment and Performance of Obligations. Mortgagor will pay
and perform the Obligations at the time and in the manner provided in the Credit
Documents without offset or counterclaim.
3. Warranty of Title. Mortgagor represents and warrants that
it has good fee simple title and/or a valid leasehold interest in and to the
Premises and the Improvements and has the full power, authority and right to
execute, deliver and perform its obligations under this Mortgage and to
mortgage, give, grant, bargain, sell, alien, convey, confirm, encumber, pledge,
assign and hypothecate the same and that Mortgagor possesses an unencumbered fee
and/or leasehold estate in the Premises and the Improvements free and clear of
all Liens, encumbrances, defenses, offsets and charges whatsoever except for the
Permitted Encumbrances. Mortgagor shall forever warrant, defend and preserve
such title and the validity and priority of the Lien of this Mortgage and shall
forever warrant and defend the same to Mortgagee against the claims of all
persons and parties whomsoever.
4. Insurance. Mortgagor, at its sole cost and expense, is
required to obtain the insurance coverages set forth in the Credit Agreement in
respect of the Mortgaged Property in accordance with the provisions thereof.
5. Payment of Impositions, etc. Mortgagor shall pay all
Impositions now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof and all ground rents, maintenance charges, other
governmental impositions, and other charges, including without limitation vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Premises, now or hereafter levied or assessed or imposed against
the Mortgaged Property or any part thereof (the "Other Charges") as same become
due and payable. Mortgagor will deliver to Mortgagee, promptly upon Mortgagee's
request, evidence satisfactory to Mortgagee that the Impositions and Other
Charges have been so paid or are not then delinquent. Mortgagor shall not suffer
and shall promptly cause to be paid and discharged any
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Lien or charge whatsoever which may be or become a Lien or charge against the
Mortgaged Property (except that, after prior written notice to Mortgagee,
Mortgagor, at its own expense, may contest the amount or validity or application
in whole or in part of any of the Impositions or Other Charges), and shall
promptly pay for all utility services (including gas, electricity, steam, water,
sewer and any other services or other charges of a similar nature, whether
public or private) provided to the Mortgaged Property. Mortgagor shall furnish
to Mortgagee or its designee receipts for the payment of real estate taxes prior
to the date the same shall become delinquent. Mortgagor will pay all taxes,
charges, filing, registration and recording fees, excises and levies imposed in
connection with the recording of this Mortgage or imposed upon Mortgagee by
reason of its ownership of this Mortgage, other than income, estate,
inheritance, excess profits, franchise and doing business taxes or similar
taxes, and shall pay any and all stamp taxes and other taxes required to be paid
on the Obligations. In the event Mortgagor fails to make any such payment within
thirty (30) days after written notice thereof from Mortgagee, then Mortgagee
shall have the right, but shall not be obligated to, pay the amount due and
Mortgagor shall, on demand, reimburse Mortgagee for said amount.
6. Recourse. Section 2.7 of the Security Agreement is hereby
incorporated herein by reference as if set forth in full.
7. Casualty, Taking and Application of Proceeds. If a Casualty
Event or a Taking occurs, Mortgagor's and Mortgagee's respective rights and
obligations with respect thereto, and the provisions governing the collection
and application of Insurance Proceeds and Condemnation Proceeds received in
connection therewith contained in the Credit Agreement shall be applicable and
are hereby incorporated herein by reference as if set forth in full.
8. Assignment of Leases and Rents. (a) Mortgagor hereby
absolutely unconditionally and irrevocably transfers, assigns, conveys and sets
over unto Mortgagee all of Mortgagor's right, title and interest in and to all
current and future Leases, Rents and other property income, it being intended by
Mortgagor that this assignment constitutes a present, absolute transfer and
assignment and not an assignment for additional security only. Such assignment
to Mortgagee shall not be construed to bind Mortgagee to the performance of any
of the covenants, conditions or provisions contained in any Lease or otherwise
impose any obligation upon Mortgagee. Mortgagor agrees to execute and deliver to
Mortgagee such additional instruments, in form and substance satisfactory to
Mortgagee, as may hereafter be reasonably requested by Mortgagee to further
evidence and confirm such assignment.
(b) Subject to the terms of this paragraph 8, Mortgagee grants
to Mortgagor a revocable license to operate and manage the Mortgaged Property
and to collect the Rents and the other property income; provided, that Mortgagor
shall hold the Rents, or a portion thereof sufficient to discharge all current
sums due on the Obligations, in trust for the benefit of Mortgagee for use in
the payment of such sums.
(c) Upon the occurrence of an Event of Default, the license
granted to Mortgagor in this paragraph 8 shall automatically be revoked, and
Mortgagee shall immediately be entitled to possession of all Rents and other
property income, whether or not Mortgagee enters upon or takes control of the
Mortgaged Property. Mortgagee is hereby granted and assigned by
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Mortgagor the right, at its option, upon revocation of the license granted
herein, to enter upon the Mortgaged Property in person, by agent or by
court-appointed receiver to collect the Rents and the other property income. Any
Rents and other property income collected after the revocation of the license
may be applied toward payment of the Obligations in such priority and
proportions as Mortgagee in its discretion shall deem proper.
9. Maintenance of Mortgaged Property. Mortgagor shall cause
the Mortgaged Property to be maintained in a good and safe condition and repair
(subject to the provisions of the Credit Agreement relating to Casualty Events
and Takings). The Improvements and the Equipment shall not be removed,
demolished or materially altered (except for replacement of the Equipment in the
ordinary course of business) without the consent of Mortgagee. Mortgagor shall
comply in all material respects with all laws, orders and ordinances affecting
the Mortgaged Property, or the use thereof. Mortgagor shall not undertake to
construct any new building or material Improvement on the Mortgaged Property
without Mortgagee's prior written consent. Mortgagor shall not initiate, join
in, acquiesce in, or consent to any change in any private restrictive covenant,
zoning law or other public or private restriction, limiting or defining the uses
which may be made of the Mortgaged Property or any part thereof without
Mortgagee's prior written consent. If under applicable zoning provisions the use
of all or any portion of the Mortgaged Property is or shall become a
nonconforming use, Mortgagor will not cause or permit such nonconforming use to
be discontinued or abandoned without the express written consent of Mortgagee
except as required by applicable law.
10. Operation of the Mortgaged Property. Mortgagor will obtain
and maintain all material licenses, authorizations, permits and/or approvals
necessary for the ownership, operation and management of the Mortgaged Property,
including, without limitation, all required environmental permits.
11. Transfer or Encumbrance of the Mortgaged Property. (a)
Except for transfers permitted pursuant to the Credit Agreement, Mortgagor shall
not sell, convey, alien, mortgage, encumber, pledge or otherwise transfer the
Mortgaged Property or any part thereof. A sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer within the meaning of this paragraph
11 shall be deemed to include any installment sales agreement wherein Mortgagor
agrees to sell the Mortgaged Property or any part thereof for a price to be paid
in installments or any agreement by Mortgagor leasing all or a substantial part
of the Mortgaged Property for other than actual occupancy by a space tenant
thereunder or any sale, assignment or other transfer of, or the grant of a
security interest in, Mortgagor's right, title and interest in and to any Leases
or any Rents or other property income.
(b) Mortgagee shall not be required to demonstrate any actual
impairment of its security or any increased risk of default hereunder in order
to declare the Obligations immediately due and payable upon Mortgagor's sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property in violation of this Mortgage, or any other Mortgage Loan
Document. This provision shall apply to every sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged Property that is not
a transfer permitted pursuant to the terms of the Credit Agreement, regardless
of whether voluntary
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or not, or whether or not Mortgagee has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property.
12. Changes in Laws Regarding Taxation. If any law is enacted
or adopted or amended after the date of this Mortgage which deducts the
Obligations from the value of the Mortgaged Property for the purpose of taxation
or which imposes a tax, either directly or indirectly, on the Obligations or
Mortgagee's interest in the Mortgaged Property, Mortgagor will pay such tax,
with interest and penalties thereon, if any. In the event Mortgagee is advised
by counsel chosen by it that the payment of such tax or interest and penalties
by Mortgagor would be unlawful or taxable to Mortgagee or unenforceable or
provide the basis for a defense of usury, then in any such event, Mortgagee
shall notify Mortgagor thereof and, if Mortgagor shall not have obtained a
release of the Mortgaged Property pursuant to Section 8.02 of the Credit
Agreement within 30 days of receipt of such notice, Mortgagee shall have the
option, upon the expiration of such 30-day period to declare the Obligations
immediately due and payable.
13. No Credits on Account of the Obligations. Mortgagor will
not claim or demand or be entitled to any credit or credits on account of the
Obligations for any part of the Impositions or Other Charges assessed against
the Mortgaged Property, or any part thereof, and no deduction shall otherwise be
made or claimed from the assessed value of the Mortgaged Property, or any part
thereof, for real estate tax purposes by reason of this Mortgage or the
Obligations. In the event such claim, credit or deduction shall be required by
law, Mortgagee shall have the option, by written notice of not less than thirty
(30) days, to require that Mortgagor obtain the release of the Mortgaged
Property pursuant to Section 8.02 of the Credit Agreement prior to the
expiration of such 30-day period, and if Mortgagor does not obtain such release,
Mortgagee shall have the option, upon expiration of such 30-day period, to
declare the Obligations immediately due and payable.
14. Documentary Stamps. Mortgagor shall pay, together with
interest, fines, and penalties, if any, any documentary stamp, recording,
transfer, mortgage, intangibles or other taxes or fees whatsoever due under
applicable laws in connection with the making, execution, delivery, filing of
record, recordation, release, or discharge of this Mortgage.
15. Usury Laws. It is the intent of the Mortgagor and the
Mortgagee in the execution of this Mortgage and all other instruments evidencing
or securing the Obligations to contract in strict compliance with the relevant
usury laws. In furtherance thereof, the Mortgagor and the Mortgagee stipulate
and agree that none of the terms and provisions contained in this Mortgage shall
ever be construed to create a contract for the use, forbearance or detention of
money requiring payment of interest at a rate in excess of the maximum interest
rate permitted to be charged by relevant law.
16. Books and Records. Mortgagor shall keep books and records
of account in accordance with the applicable provisions of the Credit Agreement.
17. Performance of Other Agreements. Mortgagor shall observe
and perform each and every term to be observed or performed by Mortgagor
pursuant to the terms of any material agreement or recorded instrument affecting
or pertaining to the Mortgaged Property.
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18. Further Acts. Mortgagor will, at the expense of Mortgagor,
and without expense to Mortgagee, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, aliened, conveyed, confirmed, pledged, assigned and
hypothecated or intended now or hereafter so to be, or which Mortgagor may be or
may hereafter become bound to convey or assign to Mortgagee, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this Mortgage. Mortgagor, on demand, will
execute and deliver and hereby authorizes Mortgagee to execute in the name of
Mortgagor or without the signature of Mortgagor to the extent Mortgagee may
lawfully do so, one or more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security interest of Mortgagee in
the Mortgaged Property. In the event that the legal description attached hereto
is inaccurate or does not fully describe all of the real property in which the
Mortgagor has an interest, Mortgagor hereby agrees to the amendment of such
legal description and the legal description contained in the corresponding title
policy so that such error is corrected, and Mortgagor shall execute and cause to
be recorded, if applicable, such documentation as may be appropriate for such
purpose. Mortgagor grants to Mortgagee an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Mortgagee at law and in equity, including, without
limitation, such rights and remedies available to Mortgagee pursuant to this
paragraph 18.
19. Recording of Mortgage. Mortgagor forthwith upon the
execution and delivery of this Mortgage and thereafter, from time to time, will
cause this Mortgage, and any security instrument creating a Lien or security
interest or evidencing the Lien hereof upon the Mortgaged Property and each
instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the Lien or security interest
hereof upon, and the interest of Mortgagee in, the Mortgaged Property. Mortgagor
will pay all filing, registration or recording fees, and all expenses incident
to the preparation, execution and acknowledgment of this Mortgage and the Notes,
any mortgage supplemental hereto, any security instrument with respect to the
Mortgaged Property and any instrument of further assurance, and all federal,
state, county and municipal, taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution and delivery of this
Mortgage, any mortgage supplemental hereto, any security instrument with respect
to the Mortgaged Property or any instrument of further assurance, except where
prohibited by law so to do. Mortgagor shall hold harmless and indemnify
Mortgagee, its successors and assigns, against any liability incurred by reason
of the imposition of any tax on the making and recording of this Mortgage.
20. Prepayment. The Loans may only be prepaid in accordance
with the terms of the Credit Agreement and the other Credit Documents.
21. Events of Default. The Obligations shall become
immediately due and payable at the option of Mortgagee upon the occurrence of an
Event of Default (as defined in the Credit Agreement).
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22. Overdue Principal and Interest. Section 1.08 of the Credit
Agreement requires interest to be paid at a higher rate ("Overdue Rate") in
certain circumstances. This charge shall be added to the Obligations, and shall
be deemed secured by this Mortgage. This clause, however, shall not be construed
as an agreement or privilege to extend the date of the payment of the
Obligations, nor as a waiver of any other right or remedy accruing to Mortgagee
by reason of the occurrence of any Event of Default. If the Overdue Rate is
above the maximum rate permitted by applicable law, the Overdue Rate shall be
the maximum rate permitted by applicable law.
23. Right to Cure Defaults. Upon the occurrence of any Event
of Default or if Mortgagor fails to make any payment or to do any act as herein
provided, Mortgagee may, but without any obligation to do so and without notice
to or demand on Mortgagor and without releasing Mortgagor from any obligation
hereunder, make or do the same in such manner and to such extent as Mortgagee
may deem necessary to protect the security hereof. Mortgagee is authorized to
enter upon the Mortgaged Property for such purposes, or appear in, defend, or
bring any action or proceeding to protect its interest in the Mortgaged Property
or to foreclose this Mortgage or collect the Obligations, and the cost and
expense thereof (including reasonable attorneys' fees to the extent permitted by
law), with interest as provided in this paragraph 23, shall constitute a portion
of the Obligations and shall be due and payable to Mortgagee upon demand. All
such costs and expenses incurred by Mortgagee in remedying such Event of Default
or in appearing in, defending, or bringing any such action or proceeding shall
bear interest at the Overdue Rate, for the period after notice from Mortgagee
that such cost or expense was incurred to the date of payment to Mortgagee. All
such costs and expenses incurred by Mortgagee together with interest thereon
calculated at the Overdue Rate shall be deemed to constitute a portion of the
Obligations and be secured by this Mortgage and the other Credit Documents and
shall be immediately due and payable upon demand by Mortgagee therefor.
24. Prepayment After Event of Default. If following the
occurrence of any Event of Default, Mortgagor shall tender payment of an amount
sufficient to satisfy the Obligations at any time prior to a sale of the
Mortgaged Property either through foreclosure or the exercise of other remedies
available under this Mortgage, such tender by Mortgagor shall be deemed to be a
voluntary prepayment under the Credit Agreement and the Notes in the amount
tendered and Mortgagor may be obligated under the Credit Agreement to pay
additional sums to Mortgagee as the result of such voluntary prepayment.
25. Right of Entry. Mortgagee and its agents shall have the
right to enter and inspect the Mortgaged Property at all reasonable times.
26. Remedies. (a) Upon the occurrence of any Event of Default,
Mortgagee may at its election, take such action permitted at law or in equity,
without notice or demand, as it deems advisable to protect and enforce its
rights against Mortgagor and in and to the Mortgaged Property, including, but
not limited to, any one or more of the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such order as Mortgagee
may determine, in its sole discretion, without impairing or otherwise affecting
the other rights and remedies of Mortgagee:
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(i) declare the entire unpaid Obligations to be immediately
due and payable;
(ii) institute proceedings for the complete foreclosure of
this Mortgage in which case the Mortgaged Property or any interest therein may
be sold for cash or upon credit in one or more parcels or in several interests
or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings for
the partial foreclosure of this Mortgage for the portion of the Obligations then
due and payable, subject to the continuing Lien of this Mortgage for the balance
of the Obligations not then due;
(iv) sell for cash or upon credit the Mortgaged Property or
any part thereof and all estate, claim, demand, right, title and interest of
Mortgagor therein and rights of redemption thereof, pursuant to power of sale or
otherwise, at one or more sales, as an entirety or in parcels, at such times and
places, upon such terms and after such notice thereof as may be required or
permitted by law;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained herein,
in the Credit Agreement, in the Notes or in any other Credit Documents;
(vi) recover judgment on the Notes either before, during or
after any proceedings for the enforcement of this Mortgage;
(vii) as a matter of right and without notice to Mortgagor or
anyone claiming under Mortgagor, and without regard to the then value of the
Mortgaged Property or the interest of Mortgagor therein, apply to any court
having jurisdiction to appoint a receiver or receivers of the Mortgaged
Property, and Mortgagor hereby irrevocably consents to such appointment and
waives notice of any application therefor. Any such receiver or receivers shall
have all the usual powers and duties of receivers in like or similar cases and
all the powers and duties of Mortgagee in case of entry as provided in paragraph
25 and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Mortgaged Property unless such receivership is
sooner terminated;
(viii) enforce Mortgagee's interest in the Leases, Rents and
other property income and enter into or upon the Mortgaged Property, either
personally or by its agents, nominees or attorneys and dispossess Mortgagor and
its agents and servants therefrom, and thereupon Mortgagee may (A) use, operate,
manage, control, insure, maintain, repair, restore and otherwise deal with all
and every part of the Mortgaged Property and conduct the business thereat; (B)
complete any construction on the Mortgaged Property in such manner and form as
Mortgagee deems advisable; (C) make alterations, additions, renewals,
replacements and improvements to or on the Mortgaged Property; (D) exercise all
rights and powers of Mortgagor with respect to the Mortgaged Property, whether
in the name of Mortgagor or otherwise, including, without limitation, the right
to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand,
sue for, collect and
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receive all earnings, revenues, Rents, issues, profits and other income of the
Mortgaged Property and every part thereof; and (E) apply the receipts from the
Mortgaged Property to the payment of the Obligations, after deducting therefrom
all expenses (including reasonable attorneys' fees) incurred in connection with
the aforesaid operations and all amounts necessary to pay the taxes,
assessments, insurance and other charges in connection with the Mortgaged
Property, as well as just and reasonable compensation for the services of
Mortgagee, its counsel, agents and employees; and
(ix) pursue such other rights or remedies as may be available
under the Credit Agreement, the Notes, any of the other Credit Documents or
otherwise at law or in equity.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Mortgaged Property, this Mortgage shall continue as a Lien on the remaining
portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this
paragraph, together with any other sums which then may be held by Mortgagee
under this Mortgage, whether under the provisions of this paragraph or
otherwise, shall be applied by Mortgagee to the payment of the Obligations in
such priority and proportions as Mortgagee in its discretion shall deem proper.
(c) Mortgagee may adjourn from time to time any sale to be
made under or by virtue of this Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, Mortgagee, without
further notice or publication, may cause such sale to be made at the time and
place to which the same shall be so adjourned.
(d) Upon the completion of any sale made by Mortgagee under or
by virtue of this paragraph, Mortgagee, or an officer of any court empowered to
do so, shall execute and deliver to the accepted purchaser a good and sufficient
instrument conveying, assigning and transferring all estate, right, title and
interest in and to the property and rights sold. Mortgagee is hereby irrevocably
appointed the true and lawful attorney of Mortgagor, in its name and stead, to
make all necessary conveyances, assignments, transfers and deliveries of the
Mortgaged Property and rights so sold and for that purpose Mortgagee may execute
all necessary instruments of conveyance, assignment and transfer, and may
substitute one or more persons with like power, Mortgagor hereby ratifying and
confirming all that its said attorney or such substitute shall lawfully do by
virtue hereof. Any sale made under or by virtue of this paragraph, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Mortgagor in and to the property and rights so
sold, and shall be a perpetual bar both at law and in equity against Mortgagor
and against any and all persons claiming or who may claim the same, or any part
thereof from, through or under Mortgagor.
(e) Upon any sale made under or by virtue of this paragraph,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged
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Property or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Obligations the net
sales price after deducting therefrom the expenses of the sale and costs of the
action and any other sums which Mortgagee is authorized to deduct under this
Mortgage.
(f) No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent the Lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any Liens,
rights, powers or remedies of Mortgagee hereunder, but such Liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
27. Security Agreement and Fixture Filing. (a) This Mortgage
is both a real property mortgage and a "security agreement" within the meaning
of the Uniform Commercial Code. The Mortgaged Property includes both real and
personal property and all other rights and interests, whether tangible or
intangible in nature, of Mortgagor in the Mortgaged Property. Mortgagor by
executing and delivering this Mortgage has granted and hereby grants to
Mortgagee, as security for the Obligations, a security interest in the Mortgaged
Property to the full extent that the Mortgaged Property may be subject to the
Uniform Commercial Code (said portion of the Mortgaged Property so subject to
the Uniform Commercial Code being called in this paragraph 27 the "UCC
Collateral"). If an Event of Default shall occur, Mortgagee, in addition to any
other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
UCC Collateral or any part thereof, and to take such other measures as Mortgagee
may deem necessary for the care, protection and preservation of the UCC
Collateral. Upon request or demand of Mortgagee, Mortgagor shall at its expense
assemble the UCC Collateral and make it available to Mortgagee at a convenient
place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee on demand any
and all expenses, including legal expenses and attorneys' fees, incurred or paid
by Mortgagee in protecting the interest in the UCC Collateral and in enforcing
the rights hereunder with respect to the UCC Collateral. Any notice of sale,
disposition or other intended action by Mortgagee with respect to the UCC
Collateral sent to Mortgagor in accordance with the provisions hereof at least
ten (10) days prior to such action, shall constitute commercially reasonable
notice to Mortgagor. The proceeds of any disposition of the UCC Collateral, or
any part thereof, may be applied by Mortgagee to the payment of the Obligations
in such priority and proportions as Mortgagee in its discretion shall deem
proper.
(b) Certain of the Mortgaged Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the
Premises, described or referred to in this Mortgage, and this Mortgage, upon
being filed for record in the real estate records of the city or county wherein
such fixtures are situated, shall operate also as a financing statement filed as
a fixture filing in accordance with the applicable provisions of said Uniform
Commercial Code upon such of the Mortgaged Property that is or may become
fixtures.
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(c) The principal place of business of Mortgagor and the place
where Mortgagor's books and records in respect of the Mortgaged Property are
kept is the address of Mortgagor first set forth above.
28. Actions and Proceedings. Mortgagee has the right to appear
in and defend any action or proceeding brought with respect to the Mortgaged
Property and to bring any action or proceeding, in the name and on behalf of
Mortgagor, which Mortgagee, in its discretion, decides should be brought to
protect its interest in the Mortgaged Property. Mortgagee shall, at its option,
be subrogated to the Lien of any deed of trust, mortgage or other security
instrument discharged in whole or in part by the Obligations, and any such
subrogation rights shall constitute additional security for the payment of the
Obligations.
29. Waiver of Counterclaim. Mortgagor hereby waives the right
to assert a counterclaim, other than a mandatory or compulsory counterclaim, in
any action or proceeding brought against it by Mortgagee, and waives trial by
jury in any action or proceeding brought by either party hereto against the
other or in any counterclaim asserted by Mortgagee against Mortgagor, or in any
matters whatsoever arising out of or in any way connected with this Mortgage,
the Credit Agreement, the Notes, any of the other Credit Documents or the
Obligations.
30. Recovery of Sums Required To Be Paid. Mortgagee shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due and without prejudice
to the right of Mortgagee thereafter to bring an action of foreclosure, or any
other action, for a default or defaults by Mortgagor existing at the time such
earlier action was commenced.
31. Marshalling and Other Matters. Mortgagor hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Mortgaged
Property or any part thereof or any interest therein. Further, Mortgagor hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Mortgage on behalf of Mortgagor, and on behalf of
each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage and on behalf of all persons to
the extent permitted by applicable law.
32. Handicapped Access. (a) Mortgagor agrees that the
Mortgaged Property shall comply to the extent applicable with the requirements
of the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act
of 1988, all state and local laws and ordinances related to handicapped access,
and all rules, regulations, and orders issued pursuant thereto including,
without limitation, the Americans with Disabilities Act Accessibility Guidelines
for Buildings and Facilities (collectively "Access Laws").
(b) Notwithstanding any provisions set forth herein or in any
other document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities
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<PAGE>
for compliance with the applicable Access Laws after completion of the
alterations without the prior written approval of Mortgagee. The foregoing shall
apply to tenant improvements constructed by Mortgagor or by any of its tenants.
Mortgagee may condition any such approval upon receipt of a certificate of
Access Law compliance from an architect, engineer, or other person acceptable to
Mortgagee.
(c) Mortgagor agrees to give prompt notice to Mortgagee of the
receipt by Mortgagor of any complaints related to violation of any Access Laws
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.
33. Indemnification. Mortgagor shall protect, defend,
indemnify and save harmless Mortgagee from and against all liabilities,
obligations, claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including without limitation reasonable attorneys'
fees and expenses), imposed upon or incurred by or asserted against Mortgagee by
reason of (a) ownership of this Mortgage, the Mortgaged Property or any interest
therein or receipt of any Rents or other property income; (b) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about the Mortgaged Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(c) any use, nonuse or condition in, on or about the Mortgaged Property or any
part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (d) any failure on the part of Mortgagor to
perform or comply with any of the terms of this Mortgage; (e) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Mortgaged Property or any part thereof; or (f) any failure of the
Mortgaged Property to comply with any Access Laws, except to the extent any of
the foregoing result from, or arise out of, Mortgagee's gross negligence or
willful misconduct. Any amounts payable to Mortgagee by reason of the
application of this paragraph 33 shall be secured by this Mortgage and shall
become immediately due and payable and shall bear interest at the Overdue Rate
from the date loss or damage is sustained by Mortgagee until paid. The
obligations and liabilities of Mortgagor under this paragraph 33 shall survive
any termination, satisfaction, assignment, entry of a judgment of foreclosure,
delivery of a deed in a non-judicial foreclosure or delivery of a deed in lieu
of foreclosure of this Mortgage.
34. Notices. Any notice, demand, statement, request or consent
made hereunder shall be in writing and shall be delivered in the manner
specified for notices in the Credit Agreement to the address, as set forth
above, of the party to whom such notice is to be given, or to such other address
as Mortgagor or Mortgagee, as the case may be, shall in like manner designate in
writing.
35. Authority. (a) Mortgagor represents and warrants that
Mortgagor (and the undersigned representative of Mortgagor, if any) has full
power, authority and right to execute, deliver and perform its obligations
pursuant to this Mortgage, and to mortgage, give, grant, bargain, sell, alien,
convey, confirm, pledge, hypothecate and assign the Mortgaged Property pursuant
to the terms hereof and to keep and observe all of the terms of this Mortgage on
Mortgagor's part to be performed.
-17-
<PAGE>
(b) Mortgagor represents and warrants that Mortgagor is not a
"foreign person" within the meaning of 1445(f)(3) of the Internal Revenue Code
of 1986, as amended and the related Treasury Department regulations, including
temporary regulations.
36. WAIVER OF NOTICE. MORTGAGOR SHALL NOT BE ENTITLED TO ANY
NOTICES OF ANY NATURE WHATSOEVER FROM MORTGAGEE EXCEPT WITH RESPECT TO MATTERS
FOR WHICH THIS MORTGAGE OR THE OTHER CREDIT DOCUMENTS SPECIFICALLY AND EXPRESSLY
PROVIDE FOR THE GIVING OF NOTICE BY MORTGAGEE TO MORTGAGOR AND EXCEPT WITH
RESPECT TO MATTERS FOR WHICH MORTGAGEE IS REQUIRED BY APPLICABLE LAW TO GIVE
NOTICE, AND MORTGAGOR HEREBY EXPRESSLY WAIVES THE RIGHT TO RECEIVE ANY NOTICE
FROM MORTGAGEE WITH RESPECT TO ANY MATTER FOR WHICH THIS MORTGAGE OR THE OTHER
CREDIT DOCUMENTS DOES NOT SPECIFICALLY AND EXPRESSLY PROVIDE FOR THE GIVING OF
NOTICE BY MORTGAGEE TO MORTGAGOR.
37. Sole Discretion of Mortgagee. Wherever pursuant to this
Mortgage, Mortgagee exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
38. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor to take any action to foreclose this Mortgage or otherwise enforce
any of the provisions hereof or of the Credit Agreement, the Notes or the other
Credit Documents, (b) the release, regardless of consideration, of the whole or
any part of the Mortgaged Property, or of any person liable for the Obligations
or any portion thereof, or (c) any agreement or stipulation by Mortgagee
extending the time of payment or otherwise modifying or supplementing the terms
of the Credit Agreement, the Notes, this Mortgage or the other Credit Documents.
Mortgagee may resort for the payment of the Obligations to any other security
held by Mortgagee in such order and manner as Mortgagee, in its discretion, may
elect. Mortgagee may take action to recover the Obligations, or any portion
thereof, or to enforce any covenant hereof without prejudice to the right of
Mortgagee thereafter to foreclose this Mortgage or to pursue other remedies
available in the other Credit Documents or at law or in equity. The rights and
remedies of Mortgagee under this Mortgage shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every right and remedy now or hereafter afforded in the other Credit
Documents or at law or in equity.
39. No Oral Change. This Mortgage, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or
-18-
<PAGE>
failure to act on the part of Mortgagor or Mortgagee, but only by an agreement
in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
40. Headings, etc. The headings and captions of various
paragraphs of this Mortgage and the Table of Contents contained herein are for
convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.
41. Duplicate Originals. This Mortgage may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to be an original.
42. Successors and Assigns. This Mortgage applies to, inures
to the benefit of and binds the parties hereto and their respective successors
and assigns.
43. Assignments. Mortgagee shall have the right to assign or
transfer its rights under this Mortgage without limitation. Any assignee or
transferee shall be entitled to all the benefits afforded Mortgagee under this
Mortgage.
44. Governing Law; Severability. This Mortgage shall be
governed by and construed in accordance with the laws of the State of New York
including, without limitation, Section 5-1401 of the General Obligations Law,
but otherwise without regard to conflict of law principles; provided, however,
that with respect to the creation, attachment, perfection, priority and
enforcement of the Liens created by this Mortgage, this Mortgage shall be
governed by and construed in accordance with the laws of the State of
[________]. In the event that any provision or clause of this Mortgage conflicts
with Applicable Laws, such conflicts shall not affect other provisions of this
Mortgage which can be given effect without the conflicting provision, and to
this end the provisions of this Mortgage are declared to be severable.
45. Priority of this Mortgage. The parties hereto intend that
this Mortgage create a first priority, perfected Lien upon and security interest
in the Premises and all other portions of the Mortgaged Property for so long as
any of the Obligations remain outstanding, subject only to Permitted
Encumbrances. Therefore, notwithstanding the relative priority of recordation of
this Mortgage and any other instrument of record with respect to the Mortgaged
Property or any portion thereof, the Liens and security interests created hereby
in the Mortgaged Property are and shall be superior to the Liens and security
interests created by any such instrument, subject only to Permitted
Encumbrances.
46. Conflicts With Credit Agreement. If any term or provision
of this Mortgage shall contradict or otherwise conflict with any term or
provision of the Credit Agreement, the parties hereto agree that the term or
provision contained in the Credit Agreement shall control for so long as the
Credit Agreement remains in force in respect of Mortgagor.
47. Future Advances. In addition to all other indebtedness
secured by this Mortgage, this Mortgage shall also secure and shall constitute a
first Lien on the Mortgaged Property for all future advances made by Mortgagee
to Mortgagor for any purpose within twenty
-19-
<PAGE>
(20) years from the date of this Mortgage to the same extent as if such advances
were made on the date of the execution of this Mortgage. Any such advances may
be made at the option of Mortgagee. The total amount of the indebtedness,
including future advances, that is secured by this Mortgage, may increase or
decrease from time to time, but shall not exceed a maximum principal amount of
$140,000,000 at any one time, plus accrued and unpaid interest thereon and any
disbursements made by Mortgagee for the payment of taxes, levies or insurance on
all or any part of the Mortgaged Property encumbered by this Mortgage, with
accrued and unpaid interest on such disbursement. [SUBJECT TO REVISION BY LOCAL
COUNSEL]
48. Leasehold Mortgage Provisions. If Exhibit A includes a
leasehold estate, the terms and conditions set forth in Exhibit B attached
hereto are made a part hereof and are incorporated into this Mortgage by
reference.
[LOCAL LAW PROVISIONS TO BE ADDED]
-2-
<PAGE>
IN WITNESS WHEREOF, this Mortgage has been duly executed by
Mortgagor as of the day and year first written above.
WITNESSES MORTGAGOR
[___________________________], [a Delaware
limited partnership]
As to Mortgagor, signed, By: __________________________, its
sealed and delivered in general partner
the presence of
- --------------------
Unofficial Witness By: _______________________
Name:
Title:
- --------------------
Unofficial Witness
-21-
<PAGE>
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
This instrument was acknowledged before me this ____ day of
_______, 1998, by _________________, as _____________ of _____________________,
a ___________, as general partner of [_____________________], [a Delaware
limited partnership], on behalf of the partnership, who is personally known to
me or who has produced __________________________ as identification and who did
(did not) take an oath.
---------------------------
Name:
(Notarial Seal) Notary Public
State of New York at Large
My Commission Expires:
----------------------------
Notary Public
-22-
<PAGE>
EXHIBIT A
Legal Description of Property
-----------------------------
<PAGE>
Exhibit B
Leasehold Mortgage Provisions
Notwithstanding anything contained herein to the contrary, and
in addition to any rights, privileges and remedies granted to Mortgagee
elsewhere in this Mortgage, Mortgagee shall have, and Mortgagor hereby grants to
Mortgagee for the benefit of the Secured Creditors, any and all rights,
privileges and remedies of the leasehold provided for in the ground lease
described in Exhibit A (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the "Ground Lease"),
including without limitation, any renewal rights and options to purchase
contained in the Ground Lease, without the necessity of particularly specifying
any or all of such rights, privileges and remedies that are or could be granted
to Ground Leasehold mortgagees pursuant to the Ground Lease.
Mortgagor hereby represents, covenants and agrees that:
(a) This Mortgage is lawfully executed and delivered in
conformity with the Ground Lease.
(b) Mortgagor will pay when due the rents, taxes and other
sums and charges mentioned in and made payable by Mortgagor under the
Ground Lease.
(c) Mortgagor will promptly, in all material respects, perform
and observe all of the terms, covenants and conditions required to be
performed and observed by it under the Ground Lease, within the periods
(including any grace or cure periods) provided therein, and will do all
things reasonably necessary to preserve and to keep unimpaired its
rights under the Ground Lease. In the event of the failure of Mortgagor
to make any payment required to be made by the lessee pursuant to the
provisions of the Ground Lease or to observe, abide by, discharge or
perform, or cause to be observed, kept, discharged or performed, any of
the terms, obligations, covenants, conditions, agreements, indemnities,
representations, warranties or liabilities of the Ground Lease on the
part of lessee thereunder to be observed, kept, discharged and
performed, Mortgagor does hereby irrevocably appoint and constitute
Mortgagee as its true and lawful attorney in fact, which appointment is
coupled with an interest, in its name, place and stead, to take any and
all actions deemed necessary or desirable by Mortgagee to perform and
comply with all of the obligations of Mortgagor under the Ground Lease,
to do and take, but without any obligation so to do, any action which
Mortgagee deems necessary or desirable to prevent or cure any default
by Mortgagor under the Ground Lease, to enter into and upon the
Mortgaged Property or any part thereof to such extent and as often as
Mortgagee, in its reasonable discretion, deems necessary or desirable
in order to prevent or cure any default of Mortgagor pursuant thereto,
to the end that the rights of Mortgagor in and to the Ground Leasehold
estate created by the Ground Lease shall be kept unimpaired and free
from default, and all sums so expended by Mortgagee, with interest
thereon at the rate set forth in the Credit Agreement from the date of
each such expenditure, shall be paid by Mortgagor to Mortgagee promptly
upon demand by Mortgagee and shall be added to the indebtedness secured
hereby and Mortgagee shall have, in addition to any other remedy of
Mortgagee, the same rights and remedies in the event of non-payment of
any such sum by Mortgagor as in the case of a default by Mortgagor in
the payment of any sums due under
<PAGE>
Exhibit B
Page 2
the Credit Agreement. Mortgagor shall, within seven (7) days after
written request by Mortgagee, execute and deliver to Mortgagee, or to
any person designated by Mortgagee, such further instruments,
agreements, powers, assignments, conveyances or the like as may be
necessary to complete or perfect the interest, rights or powers of
Mortgagee pursuant hereto.
(d) Mortgagor will promptly (i) notify Mortgagee in writing of
the receipt by it of any notice of default from the lessor under the
Ground Lease; (ii) notify Mortgagee in writing of the receipt by it of
any notice under the Ground Lease of the termination of the Ground
Lease; (iii) cause a copy of each such notice received by Mortgagor
from the lessor under the Ground Lease to be delivered to Mortgagee;
and (iv) cause a copy of any notice of election or the exercise of any
rights of option, purchase or renewal under the Ground Lease sent by
Mortgagor to the lessor under Ground Lease, to be delivered to
Mortgagee.
(e) Subject to the terms of and as permitted under the Credit
Agreement, Mortgagor will not, without the prior written consent of
Mortgagee, terminate or surrender or suffer or permit any termination
or surrender of the Ground Lease, nor modify the Ground Lease, if the
modification shall materially impair the Mortgagee's security interest
in the Mortgaged Property or the rights and remedies of Mortgagee under
this Mortgage.
(f) Mortgagor will, within twenty (20) days after written
demand from Mortgagee, use reasonable efforts to obtain from the lessor
under the Ground Lease and deliver to Mortgagee an estoppel certificate
in the form provided for in the Ground Lease, if any.
(g) Mortgagor will furnish to Mortgagee upon demand, proof of
payment of all items which are required to be paid by Mortgagor
pursuant to the Ground Lease and a statement of any such payments which
Mortgagor is contesting or arbitrating pursuant to the terms of the
Ground Lease.
(h) Except as otherwise provided in the Ground Lease,
Mortgagor will not consent to the subordination of the Ground Lease to
any lien on the fee and/or Ground Leasehold estate of the lessor under
the Ground Lease.
(i) Subject to and as permitted under the Credit Agreement, so
long as any of the Obligations shall remain outstanding, and if an
Event of Default has occurred and is continuing, Mortgagor shall not
fail to exercise any option or right to renew or extend the term of the
Ground Lease without the prior written consent of Mortgagee. Mortgagor
shall give Mortgagee simultaneous written notice of the exercise of any
such option or right to renew or extend, together with a copy of the
instrument given to the lessor under the Ground Lease exercising such
option or right, and thereafter, shall promptly deliver to Mortgagee a
copy of any acknowledgment by such lessor with respect to the exercise
of such option or right. If any such option or right has not been
exercised as aforesaid, then, not more than three hundred sixty (360)
and not less than two hundred seventy (270) days
<PAGE>
Exhibit B
Page 3
before the right of Mortgagor to exercise any such option or right,
Mortgagor shall give Mortgagee written notice specifying (i) the date
on which, (ii) the term for which and (iii) the manner in which such
option or renewal is to be exercised. If an Event of Default has
occurred and is continuing, within ten (10) business days of written
demand by Mortgagee, Mortgagor shall exercise any such option or
renewal (to the extent available) which is necessary to extend the term
of the Ground Lease beyond the outside maturity date set forth in the
Credit Agreement.
<PAGE>
Exhibit B
TABLE OF CONTENTS
Page
----
1. Definitions and Principles of Construction..................................6
2. Payment and Performance of Obligations......................................7
3. Warranty of Title...........................................................7
4. Insurance...................................................................7
5. Payment of Impositions, etc.................................................7
6. Recourse....................................................................8
7. Casualty, Taking and Application of Proceeds................................8
8. Assignment of Leases and Rents..............................................8
9. Maintenance of Mortgaged Property...........................................9
10. Operation of the Mortgaged Property........................................9
11. Transfer or Encumbrance of the Mortgaged Property..........................9
12. Changes in Laws Regarding Taxation........................................10
13. No Credits on Account of the Obligations..................................10
14. Documentary Stamps........................................................10
15. Usury Laws................................................................10
16. Books and Records.........................................................10
17. Performance of Other Agreements...........................................10
18. Further Acts..............................................................11
<PAGE>
Page
----
19. Recording of Mortgage.....................................................11
20. Prepayment................................................................11
21. Events of Default.........................................................11
22. Overdue Principal and Interest............................................12
23. Right to Cure Defaults....................................................12
24. Prepayment After Event of Default.........................................12
25. Right of Entry............................................................12
26. Remedies..................................................................12
27. Security Agreement and Fixture Filing.....................................15
28. Actions and Proceedings...................................................16
29. Waiver of Counterclaim....................................................16
30. Recovery of Sums Required To Be Paid......................................16
31. Marshalling and Other Matters.............................................16
32. Handicapped Access........................................................16
33. Indemnification...........................................................17
34. Notices...................................................................17
35. Authority.................................................................17
36. WAIVER OF NOTICE..........................................................18
37. Sole Discretion of Mortgagee..............................................18
38. NonWaiver.................................................................18
(ii)
<PAGE>
Page
----
39. No Oral Change............................................................18
40. Headings, etc.............................................................19
41. Duplicate Originals.......................................................19
42 Successors and Assigns....................................................19
43. Assignments...............................................................19
44. Governing Law; Severability...............................................19
45. Priority of this Mortgage.................................................19
46. Conflicts With Credit Agreement...........................................19
47. Future Advances...........................................................19
48. Leasehold Mortgage Provisions.............................................20
(iii)
<PAGE>
EXHIBIT J
OFFICER'S SOLVENCY CERTIFICATE
I, the undersigned, the Chief [Accounting]
Officer of ElderTrust, a real estate investment trust organized and existing
under the laws of the State of Maryland (the "REIT"), do hereby certify on
behalf of the REIT that:
1. This Certificate is furnished pursuant
to Section [4.14(a)] of the Credit Agreement, dated as of January 30, 1998,
among the REIT, ElderTrust Operating Limited Partnership, a Delaware limited
partnership (the "Borrower"), the lenders from time to time party thereto, and
German American Capital Corporation, as Administrative Agent (such Credit
Agreement, as in effect on the date of this Certificate, being herein called the
"Credit Agreement"). Unless otherwise defined herein, capitalized terms used in
this Certificate shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the
terms below shall have the following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, of each of
(i) the REIT and its Subsidiaries (taken as a whole) and (ii)
the Borrower (on a stand-alone basis) would change hands
between a willing buyer and a willing seller, within a
commercially reasonable period of time, each having reasonable
knowledge of the relevant facts, with neither being under any
compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing
seller from an independent willing buyer if the assets of each
of (i) the REIT and its Subsidiaries (taken as a whole) and
(ii) the Borrower (on a stand-alone basis) are sold with
reasonable promptness under normal selling conditions in a
current market.
(c) "New Financing"
The indebtedness incurred or to be incurred by the REIT and
its Subsidiaries under the Credit Documents and all other
financing contemplated by the Credit Documents.
(d) "Stated Liabilities"
The recorded liabilities (including Contingent Liabilities
that would be recorded in accordance with GAAP consistently
applied) of the REIT, and its Subsidiaries at ___________,
1998, together with (i) the net change in long-term debt
(including current maturities) between ___________, 1998 and
the date hereof and (ii) without duplication, the amount of
all New Financing.
<PAGE>
(e) "Contingent Liabilities"
The maximum estimated amount of liability reasonably likely to
result from pending litigation, asserted claims and
assessments, guaranties, uninsured risks and other contingent
liabilities of the REIT and its Subsidiaries (exclusive of
such Contingent Liabilities to the extent reflected in Stated
Liabilities).
(f) "Will be able to pay its Stated Liabilities, including
Contingent Liabilities, as they mature."
For the period from the date hereof through the stated
maturity of all New Financing, each of (i) the REIT and its
Subsidiaries (taken as a whole) and (ii) the Borrower (on a
stand-alone basis) will have sufficient assets and cash flow
to pay their respective Stated Liabilities and Contingent
Liabilities as those liabilities mature or otherwise become
due.
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated
maturity of all New Financing, each of (i) the REIT and its
Subsidiaries (taken as a whole) and (ii) the Borrower (on a
stand-alone basis), after consummation of all Indebtedness
(including the Loans) being incurred or assumed and Liens
created by the REIT and its Subsidiaries in connection
therewith, is a going concern and has sufficient capital to
ensure that it will continue to be a going concern for such
period and to remain a going concern despite moderately
negative deviations from the Projections discussed below.
3. For purposes of this Certificate, I, or officers of the
REIT and the Borrower under my direction and supervision, have performed the
following procedures as of and for the periods set forth below.
(a) I have reviewed the financial statements and Projections
referred to in [Sections 4.15 and 6.05] of the Credit
Agreement.
(b) I have read:
1. the Credit Documents and the respective Schedules and
Exhibits thereto.
(c) With respect to Contingent Liabilities, I:
1. inquired of certain officials of the REIT and its
Subsidiaries who have responsibility for legal, financial
and accounting matters as to the existence and estimated
liability with respect to all Contingent Liabilities known
to them;
2. confirmed with senior officers of the REIT and its
Subsidiaries that, to the best of such officers' knowledge,
(i) all appropriate items were included in Stated
Liabilities or Contingent Liabilities made known to me in
the course of my inquiry and that (ii) the amounts relating
thereto were the estimated amount of liability reasonably
likely to result therefrom as of the date hereof;
-2-
<PAGE>
3. I hereby certify that, to the best of my knowledge, all
material Contingent Liabilities have been considered in
making the certification set forth in paragraph 4 below,
and with respect to each such Contingent Liability the
estimated amount of liability reasonably likely to result
therefrom was used in making such certification.
(a) I have made inquiries of certain officers of the REIT and its
Subsidiaries which have responsibility for financial reporting
and accounting matters regarding whether they were aware of
any events or conditions that, as of the date hereof, would
cause each of (i) the REIT and its Subsidiaries (taken as
whole) or (ii) the Borrower (on a stand-alone basis) after
giving effect to the financing transactions (including the
incurrence of the New Financing), to (x) have assets with a
Fair Value or Present Fair Salable Value that are less than
the sum of Stated Liabilities and Contingent Liabilities; (y)
have Unreasonably Small Capital; or (z) not be able to pay its
Stated Liabilities and Contingent Liabilities as they mature
or otherwise become due.
4. Based on and subject to the foregoing, I hereby certify on
behalf of the REIT that, after giving effect to the
financing transactions (including the New Financing), it is
my informed opinion that as of the date hereof (x) the Fair
Value and Present Fair Salable Value of the assets of each
of (i) the REIT and its Subsidiaries (taken as a whole) and
(ii) the Borrower (on a stand-alone basis) exceed their
respective Stated Liabilities and Contingent Liabilities;
(y) each of (i) the REIT and its Subsidiaries (taken as a
whole) and (ii) the Borrower (on a stand-alone basis) will
not have Unreasonably Small Capital; and (z) each of (i)
the REIT and its Subsidiaries (taken as a whole) and (ii)
the Borrower (on a stand-alone basis) will be able to pay
each of their respective Stated Liabilities and Contingent
Liabilities as they mature or otherwise become due.
-3-
<PAGE>
IN WITNESS WHEREOF, the REIT has caused its duly authorized
chief accounting officer to execute and deliver this Certificate this _______
day of ___________, 1998.
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By______________________________
Name:
Title:
-4-
<PAGE>
This document is intended EXHIBIT K
to be recorded in___________
County,_____________________
________________________________________________________________________________
ASSIGNMENT OF MORTGAGE AND PLEDGE AGREEMENT
between
[_______________________],
as Assignor and Pledgor,
and
GERMAN AMERICAN CAPITAL CORPORATION,
as Collateral Agent
Dated as of _______, 1998
________________________________________________________________________________
THIS DOCUMENT PREPARED BY AND
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
WHITE & CASE LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: Barbara J. Goodman, Esq.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I SECURITY FOR OBLIGATIONS.......................................... 2
ARTICLE II ASSIGNMENT OF COLLATERAL......................................... 4
Section 2.1. Assignment................................................... 4
Section 2.2. Power of Attorney............................................ 5
Section 2.3. Public or Private Sale....................................... 6
Section 2.4. Application of Proceeds...................................... 8
Section 2.5. Grant of Certain Rights...................................... 8
Section 2.6. Exercise of Remedies......................................... 8
ARTICLE III DELIVERY OF DOCUMENTS .......................................... 9
Section 3.1. Documents Pertaining to the Collateral....................... 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................... 10
Section 4.1. Representations and Warranties............................... 10
ARTICLE V AFFIRMATIVE COVENANTS............................................. 11
Section 5.1. Management and Preservation of Collateral.................... 11
ARTICLE VI NEGATIVE COVENANTS............................................... 11
Section 6.1. No Amendment................................................. 12
Section 6.2. Other Liens.................................................. 12
Section 6.3. Place of Business............................................ 12
ARTICLE VII MISCELLANEOUS................................................... 14
Section 7.1. Expenses; Indemnity.......................................... 14
Section 7.2. Termination of Security Interests; Release of Collateral..... 15
Section 7.3. Amendments................................................... 15
Section 7.4. Notice....................................................... 15
Section 7.5. No Waivers................................................... 16
Section 7.6. Continuing Obligation and Assignments........................ 16
Section 7.7. Counterparts................................................. 16
Section 7.8. Governing Law................................................ 16
Section 7.9. Headings..................................................... 16
Section 7.10. Severability................................................ 16
<PAGE>
EXHIBIT K
THIS DOCUMENT PREPARED BY
AND RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
WHITE & CASE LLP 1155 Avenue of the Americas
New York, New York 10036
Attention: Barbara J. Goodman, Esq.
ASSIGNMENT OF MORTAGE AND PLEDGE AGREEMENT
ASSIGNMENT OF MORTGAGE AND PLEDGE AGREEMENT, dated as of
_______, 1998 (as amended, modified or supplemented from time to time, this
"Agreement"), between [__________________], the undersigned assignor and
pledgor, a [Delaware limited partnership] (the "Pledgor") having offices at 415
McFarlan Road, Suite 202, Kennett Square, Pennsylvania 19348 and German American
Capital Corporation, as Collateral Agent (the "Collateral Agent") for the
Secured Creditors (as defined below), as assignee and pledgee, having offices at
31 West 52nd Street, New York, New York 10019. Except as otherwise defined
herein, capitalized terms used herein and not defined herein shall have the
definitions specified in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, ElderTrust, a Maryland real estate investment trust
(the "REIT"), ElderTrust Operating Limited Partnership (the "Borrower"), various
lenders from time to time party thereto (the "Banks"), Deutsche Bank AG, New
York Branch, as Issuing Bank, and German American Capital Corporation, as
Administrative Agent (together with any successor administrative agent, the
"Administrative Agent"), have entered into a Credit Agreement, dated as of
January 30, 1998, providing for the making of Loans to the Borrower as
contemplated therein (as amended, modified or supplemented from time to time,
the "Credit Agreement") (the Banks, the Administrative Agent and the Collateral
Agent are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or affiliates thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, are herein called the "Secured Creditors");
WHEREAS, the Pledgor is the holder and owner of a mortgage
loan in the principal amount of $_________ (the "Mortgage Loan") encumbering the
real property more particularly described in Exhibit A annexed hereto and made a
part hereof together with the improvements thereon (the "Mortgaged Property");
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[WHEREAS, pursuant to a Subsidiary Guaranty, dated as of
January 30, 1998, made jointly and severally by the Pledgor and the other
Subsidiary Guarantors for the benefit of the Secured Creditors, the Pledgor has
guaranteed to the Secured Creditors the payment when due of all obligations and
liabilities of the Pledgor under or with respect to the Credit Documents and the
Interest Rate Agreements;]
WHEREAS, it is a condition precedent to the extensions of
credit under the Credit Agreement that the Pledgor shall have executed and
delivered to the Collateral Agent this Agreement;
WHEREAS, the Pledgor desires to execute this Agreement to
satisfy the conditions described in the preceding paragraph; and
WHEREAS, as security for the Obligations (as defined below),
the Banks and the Collateral Agent have requested that the Pledgor grant, and
the Pledgor has agreed to grant, certain security interests in and assign and
pledge to the Collateral Agent for the benefit of the Secured Creditors (i) the
mortgage listed in Schedule A hereto (together with all amendments thereto, the
"Mortgage"), (ii) the note or notes secured by the Mortgage listed in Schedule A
hereto (together with all amendments thereto, the "Underlying Note") and (iii)
all other documents and instruments evidencing, securing or otherwise relating
to the Mortgage Loan and listed in Schedule A attached hereto, including,
without limitation, the mortgagee title insurance policy relating to the
Mortgage Loan (collectively, the "Pledged Contracts") (the Mortgage, the
Underlying Note and the Pledged Contracts, together with all proceeds and
products thereof, and of all of the rights, claims, powers, remedies and
privileges set forth in Article II hereof, are collectively referred to herein
as the "Collateral");
NOW, THEREFORE, in consideration of the benefits accruing to
the Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
ARTICLE I
SECURITY FOR OBLIGATIONS
This Agreement is made by the Pledgor to the Collateral Agent for the
benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of the Loans in the
maximum principal amount of One Hundred Forty Million Dollars
($140,000,000), lawful money of the United States of America, to be
paid with interest in accordance with the Credit Agreement and all
obligations and liabilities (including, without limitation, the
principal of and interest on the notes issued, and loans made, under
the Credit Agreement, all reimbursement obligations and unpaid drawings
with respect to letters of credit issued under the Credit Agreement,
and all indemnities, fees and interest thereon or owed thereunder);
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(ii) performance of all of Pledgor's other obligations under
the Credit Documents;
(iii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities of the Pledgor to the Other Creditors, whether now existing
or hereafter incurred under, arising out of or in connection with any
Interest Rate Agreement and the due performance and compliance by the
Pledgor with all the terms, conditions and agreements contained in the
Interest Rate Agreements;
(iv) any and all sums advanced by the Collateral Agent in
order to preserve or protect the Collateral or preserve or protect its
security interest in the Collateral;
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the
Pledgor referred to in clauses (i), (ii) and (iii) above after an Event
of Default shall have occurred and be continuing, the reasonable
expenses of re-taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any
exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and
(vi) all amounts as to which any indemnitee has the right to
reimbursement under this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (vi) of this Section 1 being herein collectively called the
"Obligations".
ARTICLE II
ASSIGNMENT OF COLLATERAL
Section 2.1. Assignment. (a) The Pledgor does hereby assign,
pledge, hypothecate, transfer, set over and deliver unto the Collateral Agent
for the benefit of the Secured Creditors, and does hereby grant to the
Collateral Agent for the benefit of the Secured Creditors a first priority
security interest in, to and under the Collateral, including without limitation,
the Mortgage and the Underlying Note, including the sole right (subject to
Section 2.5 hereof) to receive all moneys, additional documents or instruments
or other property at any time and from time to time payable, receivable or
otherwise distributable in respect of, in exchange for or in substitution for
the Mortgage and the Underlying Note, all rights, claims, powers, privileges and
remedies of the Pledgor whether arising by statute or at law or in equity or
otherwise consequent on the failure of the obligor under the Mortgage Loan to
perform or comply with any term of the Mortgage and the Underlying Note, as
amended, supplemented or modified, together with full and sole power and
authority, in the name of the Pledgor or otherwise, to enforce, collect, receive
and give receipt for all or any of the foregoing and all rights to exercise the
rights, powers and privileges of mortgagee under the Mortgage and payee under
the Underlying Note; and
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(b) The Pledgor does hereby assign, pledge, hypothecate,
transfer, set over and deliver unto the Collateral Agent for the benefit of the
Secured Creditors, and does hereby grant to the Collateral Agent for the benefit
of the Secured Creditors a security interest in, all right, title and interest
of the Pledgor in, to and under the Pledged Contracts, including all moneys,
additional documents or instruments or other property at any time and from time
to time payable, receivable or otherwise distributable in respect of, in
exchange for or in substitution of its interest in, to and under the Pledged
Contracts and all rights, claims, powers, privileges and remedies of the Pledgor
whether arising by statute or at law or in equity or otherwise consequent on the
failure on the part of any party to perform or comply with any term of the
Pledged Contracts, together with full and sole power and authority, in the name
of the Pledgor or otherwise, to enforce, collect, receive and give receipt for
all or any of the foregoing.
Section 2.2. Power of Attorney. In addition to and not in
limitation of any rights, powers or remedies of the Collateral Agent pursuant to
the Mortgage or the Underlying Note, the Pledgor hereby irrevocably appoints the
Collateral Agent its true and lawful attorney, with full power of substitution,
in the name of the Pledgor, the Secured Creditors or otherwise, for the sole use
and benefit of the Secured Creditors but at the Pledgor's expense, to exercise,
upon the occurrence and during the continuance of an Event of Default, all or
any of the following powers, to the extent permitted by law, with respect to all
or any of the Collateral:
(a) to receive and retain and to sue for, collect and give
acquittance for all payments and all other distributions of any kind due or to
become due upon any and all of the Collateral;
(b) to enforce compliance with and performance of all the
terms and provisions of the Collateral, to grant waivers, extensions or
modifications thereto as the Collateral Agent may deem appropriate and to
endorse any checks or other instruments or orders in connection therewith;
(c) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to the Collateral;
(d) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof, or the proceeds or avails thereof, as
fully and effectively as if the Collateral Agent were the absolute
owner thereof;
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(e) to take such action as it deems appropriate with respect
to the foreclosure, sale, assignment, delivery or other disposition of
the whole of, or from time to time any part of, the Pledgor's interest
in the Mortgaged Property which is subject to the lien of the Mortgage
or the Collateral Agent's interest in the Collateral or any part
thereof, including, without limitation, (i) sale, assignment, delivery
or other disposition, after not less than 10 Business Days prior
written notice to the Pledgor, of the whole of, or from time to time
any part of, the Pledgor's interest in the Mortgaged Property or the
Collateral Agent's interest in the Collateral at any private or public
sale, with or without demand on the Pledgor or advertisement of the
time or place of sale or adjournment thereof, or otherwise, for cash,
upon credit or for other property, for immediate or future delivery,
and for such price or prices and on such terms as the Collateral Agent
shall determine, and the Collateral Agent or any of the Secured
Creditors may bid for and purchase the whole or any part of the
Pledgor's interest in the Mortgaged Property or the Collateral Agent's
interest in the Collateral so sold free from any right or equity of
redemption of the Pledgor, and the Pledgor hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have
under any rule of law or statute now existing or hereafter adopted;
(ii) adjourn any such sale or other disposition or cause the same to be
adjourned from time to time to a subsequent time and place announced at
the time and place fixed for the sale, or to cancel such transaction
notwithstanding any notice or advertisement thereof; (iii) carry out
any agreement to sell or otherwise dispose of any of the Pledgor's
interest in the Mortgaged Property or the Pledgor's or Collateral
Agent's interest in the Collateral or any part thereof in accordance
with the terms of such agreement, notwithstanding the fact that after
the Collateral Agent shall have entered into such an agreement the
Obligations may have been paid in full; provided, however, that after
the Obligations have been so paid in full, any proceeds received by the
Collateral Agent shall be paid over to the Pledgor as their interests
may appear (or as a court of competent jurisdiction may otherwise
direct); and (iv) proceed by a suit or suits at law or in equity to
foreclose and to sell or otherwise realize proceeds from the Collateral
Agent's interest in the Collateral or any part thereof, pursuant to a
judgment or decree of a court or courts of competent jurisdiction; and
(f) in addition to, and not by way of limitation of, any of
the rights specified above, to exercise any and all rights and remedies
afforded to it, as a secured party in possession of any or all of the
Collateral or otherwise, under any and all applicable provisions of law
or in equity.
Section 2.3. Public or Private Sale. (a) The Pledgor by its
execution of this Agreement, specifically agrees and consents that the
Collateral Agent shall on the happening and during the continuing of an
Event of Default immediately succeed to all interests, rights and
privileges of the mortgagee under the Underlying Note and the Mortgage
and is entitled and will be entitled on the happening and during the
continuance of any Event of Default to elect, among its other remedies
provided for herein or under applicable law, immediately (if the
Underlying Note is in default ("Underlying Default")) to accelerate the
indebtedness evidenced by the Underlying Note and to sue on the
Underlying Note or immediately to foreclose on the Mortgage in
accordance with this Agreement and the Mortgage, and that neither the
Pledgor nor any person or entity claiming through it will exercise any
rights as mortgagee under the Mortgage or payee under the Underlying
Note unless and until the Termination Date (as hereinafter defined) has
occurred, at which time all interests, rights and privileges of the
mortgagee under the Underlying Note and Mortgage will revert to and be
reassigned to the Pledgor as set forth in Section 7.2 hereof. Without
limiting the foregoing, the Pledgor expressly acknowledges its
understanding that, until such time as the Underlying Note and Mortgage
revert to the Pledgor as provided herein, the Collateral Agent shall
have the sole right to give notices of default, to accelerate the
indebtedness evidenced by the Underlying Note, to sue on the Underlying
Note and to foreclose under the Mortgage, among all of the other sole
rights and remedies of the holder of the Underlying Note and Mortgage.
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(b) Without limiting any other provision of this Agreement,
the Collateral Agent may, upon the occurrence and during the
continuance of any Event of Default, exercise all remedies available to
the Pledgor in the case of an Underlying Default under the Collateral
including, without limitation, the right to foreclose the Mortgage.
Section 2.4. Application of Proceeds. (a) The proceeds of any
sale of, or other realization upon, all or any part of the Collateral Agent's
interest in the Collateral or the Pledgor's interest in the Mortgaged Property
shall be applied by the Collateral Agent as provided in Section 7.4 of the
Security Agreement.
(b) It is understood and agreed that the Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Obligations.
Section 2.5. Grant of Certain Rights. Notwithstanding the
foregoing provisions of this Article II, so long as, but only so long as, no
Event of Default (including no Underlying Default) has occurred and is
continuing, (a) the Collateral Agent authorizes the Pledgor to, subject to the
terms of the Credit Agreement, exercise all rights in, to and under, or arising
out of any or all of the Collateral (including, but not limited to, to the right
to receive all moneys under the Mortgage and the Underlying Note) other than any
right to terminate, amend, modify, waive or supplement the Mortgage, the
Underlying Note or the Pledged Contracts or exercise any remedies under any of
the foregoing Collateral and (b) the Collateral Agent agrees that it will not
exercise the rights granted under Section 2.2 hereof and, subject to the above,
authorizes the Pledgor to exercise all such rights.
Section 2.6. Exercise of Remedies. Notwithstanding the
foregoing provisions of Sections 2.2 and 2.3 hereof, unless and until an Event
of Default has occurred and is continuing, the Collateral Agent shall not
exercise (in the case of an Underlying Default) its right to accelerate the
Underlying Note or foreclose on the Mortgaged Property or on the Collateral
under this Agreement in connection therewith or (in the case of an Underlying
Default) seek judicial appointment of a receiver for the income or revenues of
the Mortgaged Property or (in the case of an Underlying Default) sell, assign or
dispose of or, except temporarily for the sole purpose of curing a default under
the Mortgage requiring work to be performed on the Mortgaged Property, take
possession of the Mortgaged Property under the Mortgage or the Collateral under
this Agreement; provided, however, that the foregoing limitation on sale,
assignment, disposal and possession shall not limit or prevent the Collateral
Agent or the Secured Creditors from enforcing their other rights or remedies
under this Agreement or the other Credit Documents against the Mortgaged
Property (in the case of an Underlying Default) or the Collateral upon the
occurrence and during the continuance of an Event of Default in any action to
enforce or seek damages for breach of the terms and provisions of the Agreement
or the other Credit Documents, or from seeking and obtaining orders of
attachment or from levying or utilizing other remedies in connection therewith,
and, provided further, that except as specifically provided in this sentence,
the Collateral Agent may otherwise from time to time enforce all other rights
and remedies granted to the Collateral Agent pursuant to this Agreement and the
other Credit Documents and otherwise available to the Collateral Agent at law or
in equity. Upon the occurrence of any Event of Default, the Collateral Agent may
exercise all rights and remedies available to it pursuant to this Agreement and
the other Credit Documents and otherwise available to the Collateral Agent at
law or in equity.
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ARTICLE III
DELIVERY OF DOCUMENTS
Section 3.1. Documents Pertaining to the Collateral. (a) On or
prior to the date hereof, the Pledgor shall deliver, or cause to be delivered,
to the Collateral Agent the following documents, to the extent applicable to
each item of the Collateral as determined by the Collateral Agent, each of which
shall be in form and substance satisfactory to the Collateral Agent:
(i) counterparts of this Agreement duly executed and delivered
by the Pledgor and the obligor under the Mortgage Loan, in proper form
for recording so as to effectively grant, convey and perfect the liens
and Security Interests (defined in Section 4.1 hereof), together with
such UCC financing statements as the Collateral Agent may require;
(ii) such additional assignments, instruments or other
documents of conveyance, executed in favor of the Collateral Agent, for
the benefit of the Secured Creditors, as the Collateral Agent deems
necessary or desirable to grant, convey and perfect the liens and
Security Interests, which documents shall be delivered duly executed
and in form for filing or recording, if filing or recording is
necessary or is requested by the Collateral Agent; and
(iii) the originals of the Mortgage, the Pledged Contracts and
the Underlying Note (duly endorsed in blank) (collectively, the
"Pledged Loan Documents").
(b) Promptly and from time to time following request from the
Collateral Agent, the Pledgor shall furnish or cause to be furnished to the
Collateral Agent such other documents related to the Collateral or evidencing an
interest in the Collateral pledged hereunder or intended to be so pledged as the
Collateral Agent may reasonably request (including, without limitation,
documentation of the nature referred to in subsection (a) hereof in respect of
any Collateral acquired after the date hereof) and shall do such acts and things
at its own expense as the Collateral Agent may reasonably request to perfect,
confirm or further assure the interests granted pursuant to this Agreement and
to further the purposes of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties. The Pledgor
represents and warrants as follows:
(a) The Collateral is free of any Liens other than the
Permitted Liens and the security interests (the "Security Interests")
granted hereunder in the Collateral.
(b) The Pledgor is not a party to or otherwise bound by any
agreement, other than this Agreement and the other Credit Documents,
which restricts in any manner the rights of any present or future
holder of any of the Collateral with respect thereto.
(c) Upon the execution of this Agreement and the making of the
filings and recordations contemplated by Article III hereof and the
taking possession by the Collateral Agent of the Underlying Note, the
Collateral Agent will have valid and perfected first priority security
interests in the Collateral, as to the creation of which no consent is
required from any third party other than those which have been obtained
and are in full force and effect.
(d) The Pledgor has not performed any acts which might prevent
the Collateral Agent from enforcing any of the terms and conditions of
this Agreement, the Mortgage or the Underlying Note or which would
limit the ability of the Collateral Agent to enforce any of the same.
(e) This Agreement has been duly executed and delivered by the
Pledgor and constitutes the legal, valid and binding obligation of the
Pledgor, enforceable against it in accordance with the terms hereof,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(f) The Pledged Loan Documents are legal, valid and binding
obligations of the Pledgor.
(g) Schedule A contains a true, complete and correct list of
all documents evidencing and/or securing the Mortgage Loan; true,
complete and correct copies of all of such documents, together with any
amendments thereto and assignments thereof, have been delivered to the
Collateral Agent by the Pledgor; and all of such documents are in full
force and effect in accordance with their terms and no default by any
party thereto exists thereunder.
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ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Management and Preservation of Collateral. The
Pledgor hereby covenants and agrees that, so long as the Security Interests
shall not have terminated in accordance with Section 7.2 hereof, the Pledgor
shall perform all agreements and obligations to be performed by it in connection
with the Collateral and defend the Collateral from the claims or demands of all
third persons (except the parties to the Pledged Contracts (in respect of such
parties rights under the Pledged Contracts) and the Collateral Agent and the
Secured Creditors) asserting any interest therein.
ARTICLE VI
NEGATIVE COVENANTS
The Pledgor hereby covenants and agrees that, so long as the
Security Interests shall not have terminated in accordance with Section 7.2
hereof:
Section 6.1. No Amendment. The Pledgor will not, without the
prior written consent of the Collateral Agent, which consent shall not be
unreasonably withheld, consent to any amendment, modification, waiver,
supplement or termination of any of the terms or provisions of the Underlying
Note, the Mortgage or the Pledged Contracts.
Section 6.2. Other Liens. The Pledgor will not create, assume
or suffer to exist any Lien on any of the Collateral except pursuant to this
Agreement and the other Credit Documents.
Section 6.3. Place of Business. The Pledgor will not change
its principal place of business without 30 days prior written notice to the
Collateral Agent.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Expenses; Indemnity. (a) The Pledgor will,
promptly following written demand by the Collateral Agent, pay to the Collateral
Agent:
(a) the amount of any taxes which the Collateral Agent may
have been required to pay by reason of any assignment, recordation,
filing or perfection of the Security Interests or to free any of the
Collateral from any Lien thereon not permitted by this Agreement and
the other Credit Documents; and
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(b) the amount of any and all out-of-pocket expenses,
including the disbursements and other charges and reasonable fees of
counsel and of any agents or other experts or professional advisors,
which the Collateral Agent may incur in connection with (i) the
administration and enforcement of this Agreement and the Collateral,
(ii) the collection, sale or other disposition of any of the
Collateral, or (iii) the exercise by the Collateral Agent of any of the
rights conferred upon it hereunder.
(c) the Pledgor agrees to indemnify, reimburse and hold the
Collateral Agent, each other Secured Creditor and their respective
successors, assigns, employees, agents and servants (hereinafter in
this 8.1(c) referred to individually as an "Indemnitee, " and
collectively as the "Indemnitees") harmless from and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions,
suits, judgments and any and all costs, expenses or disbursements
(including reasonably attorneys' fees and expenses) (for the purposes
of this Section 7.1(c) the foregoing are collectively called
"expenses") of whatsoever kind and nature imposed on, asserted against
or incurred by any of the Indemnitees in any way relating to or arising
out of this Agreement or any other document executed in connection
herewith or the enforcement of any of the terms of, or the preservation
of any rights under this Agreement or any such other documents, or in
any way relating to or arising out of the ownership, control,
acceptance, possession, condition, sale or other disposition, or use of
the Collateral; provided that no Indemnitee shall be indemnified
pursuant to this Section 7.1(c) for expenses to the extent caused by
the gross negligence or willful misconduct of such Indemnitee. The
Pledgor agrees that upon written notice by any Indemnitee of the
assertion of such a liability, obligation, damage, injury, penalty,
claim, demand, action, suit or judgment, the Pledgor shall to the
extent requested to do so assume full responsibility for the defense
thereof. Each Indemnitee agrees to promptly notify the Pledgor of any
such assertion of which such Indemnitee has knowledge. If and to the
extent that the obligations of the Pledgor under this Section 7.1(c)
are unenforceable for any reason, the Pledgor hereby agrees to make the
maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
Section 7.2. Termination of Security Interests; Release of
Collateral. After the Termination Date, this Agreement shall terminate (provided
that all indemnities set forth herein including, without limitation, in Article
VII hereof shall survive any such termination) and the Collateral Agent, at the
request and expense of the Pledgor, will promptly execute and deliver to the
Pledgor such proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to the
Pledgor (without recourse and without any representation or warranty) such of
the Collateral as may be in the possession of the Collateral Agent and as has
not theretofore been sold or otherwise applied or released pursuant to this
Agreement. As used in this Agreement, "Termination Date" shall mean the date
upon which the Total Commitment and all Interest Rate Protection Agreements or
Other Hedging Agreements have been terminated, no Note is outstanding (and all
Loans have been repaid in full), and all Obligations then owing have been paid
in full.
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Section 7.3. Amendments. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Pledgor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 7.4. Notice. Any notice and other communication
required or permitted to be given to any Person under this Agreement shall be
given by such means and to the addresses for such Person as are specified in
Section 12.03 of the Credit Agreement.
Section 7.5. No Waivers. No failure on the part of the
Collateral Agent or the Secured Creditors to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights in this Agreement are
cumulative and are not exclusive of any other remedies provided by law.
Section 7.6. Continuing Obligation and Assignments. This
Agreement is a continuing obligation and shall (i) be binding upon the Pledgor
and its successors and (ii) inure to the benefit of and be enforceable by the
Secured Creditors, the Collateral Agent and their respective successors and
permitted transferees and assigns; provided, however, the Pledgor may not (by
operation of law or otherwise) sell, transfer or assign any of its rights or
delegate or transfer any of its obligations under this Agreement without the
prior written consent of the Collateral Agent.
Section 7.7. Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
shall constitute an original but all such counterparts, when taken together,
shall constitute one and the same instrument.
Section 7.8. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York including,
without limitation, Section 5-1401 of the General Obligations Law, but otherwise
without regard to conflict of law principles; provided, however, that with
respect to the creation, attachment, perfection, priority and enforcement of the
liens created by this Agreement, this Agreement shall be governed by and
construed in accordance with the laws of the State of [________].
Section 7.9. Headings. Section headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
Section 7.10. Severability. If any provision hereof is invalid
and unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be construed in order to carry out the intentions of
the parties hereto, including, without limitation, Section 2.6 hereof to the
fullest extent permitted by law; and (ii) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[_____________________],
as Assignor and Pledgor
By ________________________, its
general partner
By________________________
Name:
Title:
ACKNOWLEDGED AND AGREED this ______ day of __________________, 199_
[Insert name of obligor under Mortgage and Underlying Note]
By__________________________
Name:
Title:
<PAGE>
EXHIBIT K
Page 15
GERMAN AMERICAN CAPITAL
CORPORATION, as Collateral Agent
By________________________
Name:
Title:
By________________________
Name:
Title:
<PAGE>
EXHIBIT K
Page 16
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
This instrument was acknowledged before me this ____ day of
_______, 1998, by _________________, as _____________ of _____________________,
a ___________, as general partner of [_______________], a [Delaware limited
partnership], on behalf of the partnership, who is personally known to me or who
has produced __________________________ as identification and who did (did not)
take an oath.
____________________________
Name:
(Notarial Seal) Notary Public
State of New York at Large
My Commission Expires:
____________________________
<PAGE>
EXHIBIT K
Page 17
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
This instrument was acknowledged before me this ____ day of
_______, 1998, by _________________, as _____________ of German American Capital
Corporation, a Maryland corporation, on behalf of the corporation, who is
personally known to me or who has produced __________________________ as
identification and who did (did not) take an oath.
___________________________
Name:
(Notarial Seal) Notary Public
State of New York at Large
My Commission Expires:
___________________________
<PAGE>
EXHIBIT K
Page 18
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
This instrument was acknowledged before me this ____ day of
_______, 1998, by _________________, as _____________ of German American Capital
Corporation, a Maryland corporation, on behalf of the corporation, who is
personally known to me or who has produced __________________________ as
identification and who did (did not) take an oath.
___________________________
Name:
(Notarial Seal) Notary Public
State of New York at Large
My Commission Expires:
___________________________
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
This instrument was acknowledged before me this ____ day of
_______, 1998, by _________________, as _____________ of _____________________,
a ___________, on behalf of the [________], who is personally known to me or who
has produced __________________________ as identification and who did (did not)
take an oath.
___________________________
Name:
(Notarial Seal) Notary Public
State of New York at Large
My Commission Expires:
___________________________
<PAGE>
SCHEDULE A
Mortgage Loan Documents
<PAGE>
EXHIBIT A
Legal Description
<PAGE>
EXHIBIT L
BORROWING BASE CERTIFICATE
AS OF [DATE] ISSUED BY
ELDERTRUST OPERATING LIMITED PARTNERSHIP
The undersigned, the [Title] of ElderTrust Operating Limited
Partnership (the "Borrower"), hereby certifies that the figures attached on
Annex A hereto to calculate the Borrowing Base as of [Date] and for the period
ending [Date] are true and correct and have been calculated in accordance with
the Credit Agreement, dated as of January 30, 1998, among ElderTrust, the
Borrower, the lenders from time to time a party thereto, Deutsche Bank AG, New
York Branch, as Issuing Bank, and German American Capital Corporation, as
Administrative Agent (as amended from time to time, the "Credit Agreement").
Capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Credit Agreement.
ELDERTRUST OPERATING
LIMITED PARTNERSHIP
By: ElderTrust, its general partner
By_________________________
Name:
Title:
Date:_________, ____
<PAGE>
Operating Statement Review
Schedule M-1
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
---------
PROPERTY NAME
CITY / STATE
---------
---------
# OF MONTHS
ANNUALIZED (Y/N)
---------
Month-ended YEAR-To-DATE 4 mos. ended, 7/31/97
(INSERT PERIOD ENDED) (INSERT PERIOD ENDED) (INSERT PERIOD ENDED)
--------------------- --------------------- ---------------------
--------- --------- ---------
Total Revenue --------- Total Revenue --------- Total Revenue ---------
Operating Expense --------- Operating Expense --------- Operating Expense ---------
NOI --------- NOI --------- NOI ---------
--------- --------- ---------
Management Fee --------- Management Fee --------- Management Fee ---------
CapEx --------- CapEx --------- CapEx ---------
NET CASH FLOW --------- NET CASH FLOW --------- NET CASH FLOW ---------
--------- --------- ---------
Debt Service --------- Debt Service --------- Debt Service ---------
DSCR --------- DSCR --------- DSCR ---------
LTV --------- LTV --------- LTV ---------
--------- --------- ---------
Occupancy --------- Occupancy --------- Occupancy ---------
As Of --------- As Of --------- As Of ---------
--------- --------- ---------
AVAILABLE BORROWING BASE --------- AVAILABLE BORROWING BASE --------- AVAILABLE BORROWING BASE ---------
LOAN AMOUNT OUTSTANDING --------- LOAN AMOUNT OUTSTANDING --------- LOAN AMOUNT OUTSTANDING ---------
</TABLE>
Page 1
<PAGE>
Schedule M-2
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
Current Period Year To Date Actuals Annualized
- --------------------------------------------------------------------------------------------------------
Property Name Occupancy NOI Net Cash Flow DSCR Occupancy NOI Net Cash Flow DSCR
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO
- --------------------------------------------------------------------------------------------------------
[RESTUBED TABLE]
- --------------------------------------------------------------------------------------------------------
Prior Period Change From Prior Period
- --------------------------------------------------------------------------------------------------------
Property Name Occupancy NOI Net Cash Flow DSCR Occupancy NOI Net Cash Flow DSCR
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO
- --------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
Exhibit N
ELDERTRUST OPERATING LIMITED PARTNERSHIP
QUARTERLY CASH FLOW REPORT
To the Administrative Agent and each of the Banks party to the Credit Agreement,
dated as of January 30, 1998, among ElderTrust, ElderTrust Operating Limited
Partnership, the lenders from time to time party thereto, Deutsche Bank AG, New
York Branch, as Issuing Bank, and German American Capital Corporation, as
Administrative Agent.
EBITDA
Operating profit $
Depreciation and amortization
Interest income
Corporate expenses
Other non-cash charges
EBITDA $
Cash interest payments
FF&E - existing properties
Capex - new units
Cash taxes
Debt maturities, net of new issuances
Debt prepayments
Dividends
Dispositions $
Acquisitions
Changes in other operating accounts
NET CASH FLOW
This Cash Flow Report is for ElderTrust, the Borrower and its
Subsidiaries on a consolidated basis for the period ending __________, is true
and correct in all material respects to the best of my knowledge.
Sincerely,
<PAGE>
EXHIBIT O
ANNEX A
Subordination Provisions to be attached
to each Intercompany Note evidencing
a loan made by a Subsidiary Guarantor
that is not a Wholly-Owned Subsidiary
Section 1.01. Subordination of Liabilities. _________________
(the "Company"), for itself, its successors and assigns, covenants and agrees,
and each holder of the Intercompany Note to which this Annex A is attached (the
"Note") by its acceptance thereof likewise covenants and agrees, that the
payment of the principal of, interest on, and all other amounts owing in respect
of, the Note (the "Subordinated Indebtedness") is hereby expressly subordinated,
to the extent and in the manner hereinafter set forth, to the prior payment in
full in cash of all Senior Indebtedness (as defined in Section 1.07 hereof). The
provisions of this Annex A shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of them
may proceed to enforce such provisions.
Section 1.02. Company not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. a)" \* MERGEFORMAT (a) Upon
the maturity of any Senior Indebtedness (including interest thereon or fees or
any other amounts owing in respect thereof), whether at stated maturity, by
acceleration or otherwise, all Obligations (as defined in Section 1.07 hereof)
owing in respect of such Senior Indebtedness, in each case to the extent due and
owing, shall first be paid in full in cash, before any payment of any kind or
character, whether in cash, property, securities or otherwise, is made on
account of the Subordinated Indebtedness.
(b) If any default or event of default under the Credit
Agreement (as defined in Section 1.07 hereof) is then in existence or would
result therefrom, the Company may not, directly or indirectly, make any payment
of any Subordinated Indebtedness and may not acquire any Subordinated
Indebtedness for cash or property until all Senior Indebtedness has been paid in
full in cash. Each holder of the Note hereby agrees that, so long as any such
default or event of default exists, it will not sue for, or otherwise take any
action to enforce the Company's obligations to pay, amounts owing in respect of
the Note.
(c) In the event that notwithstanding the provisions of the
preceding subsections (a) and (b) of this Section 1.02, the Company shall make
any payment on account of the Subordinated Indebtedness at a time when payment
is not permitted by said subsection (a) or (b), such payment shall be held by
the holder of the Note, in trust for the benefit of, and shall be paid forthwith
over and delivered to, the holders of Senior Indebtedness or their
representative or the trustee under the indenture or other agreement pursuant to
which any instruments evidencing
<PAGE>
EXHIBIT O
Page 2
any Senior Indebtedness may have been issued, as their respective interests may
appear, for application pro rata to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in full
in cash in accordance with the terms of such Senior Indebtedness, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness. Without in any way modifying the provisions hereof or affecting
the subordination effected hereby if the hereafter referenced notice is not
given, the Company shall give the holder of the Note prompt written notice of
any event which would prevent payments under Section 1.02(a) or (b) hereof.
Section 1.03. Subordination to Prior Payment of all Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any
distribution of assets of the Company upon dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness
(including, without limitation, post-petition interest at the rate
(including the default rate) provided in the documentation with respect
to the Senior Indebtedness, whether or not such post-petition interest
is an allowed claim against the debtor in any bankruptcy or similar
proceeding) before the holder of the Note is entitled to receive any
payment of any kind or character on account of the Subordinated
Indebtedness;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property or securities to which
the holder of the Note would be entitled except for the provisions
hereof, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or
agent, directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under
any indenture under which any instruments evidencing any such Senior
Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) In the event that, notwithstanding the foregoing
provisions of this Section 1.03, any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, shall be received by the holder of the Note on account of
Subordinated Indebtedness before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received and held
in trust for and shall be paid over to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative
or representatives, or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in
full in cash, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
<PAGE>
EXHIBIT O
Page 3
Without in any way modifying the provisions hereof or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of the
Note of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in
full in cash of all Senior Indebtedness, the holder of the Note shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness until all amounts owing on the Note shall be paid in full, and for
the purpose of such subrogation no payments or distributions to the holders of
the Senior Indebtedness by or on behalf of the Company or by or on behalf of the
holder of the Note by virtue hereof which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions hereof are and are intended solely for the
purpose of defining the relative rights of the holder of the Note, on the one
hand, and the holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
contained herein or in the Note is intended to or shall impair, as between the
Company and the holder of the Note, the obligation of the Company, which is
absolute and unconditional, to pay to the holder of the Note the principal of
and interest on the Note as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holder of the Note and creditors of the Company other than the
holders of the Senior Indebtedness, nor, except as specifically provided herein,
shall anything herein or therein prevent the holder of the Note from exercising
all remedies otherwise permitted by applicable law upon an event of default
under the Note, subject to the rights, if any, herein of the holders of Senior
Indebtedness in respect of cash, property, or securities of the Company received
upon the exercise of any such remedy. Upon any distribution of assets of the
Company referred to herein, the holder of the Note shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
such dissolution, winding up, liquidation or reorganization proceedings are
pending, or a certificate of the liquidating trustee or agent or other person
making any distribution to the holder of the Note, for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or hereof.
Section 1.06. Subordination Rights not Impaired by Acts or
Omissions of Company or Holders of Senior Indebtedness. No right of any present
or future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act by any
such holder, or by any noncompliance by the Company with the terms and
provisions of the Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
<PAGE>
EXHIBIT O
Page 4
extend the time of payment of, or renew or alter, any Senior Indebtedness or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of default thereunder and
the release of any collateral securing such Senior Indebtedness, all without
notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior
Indebtedness" shall mean all Obligations (as defined below) of the Company under
the Subsidiaries Guaranty (as amended, modified, supplemented, extended,
restated, refinanced, replaced or refunded from time to time) dated as of
January 30, 1998, among the Company and the other Subsidiary Guarantors party
thereto as defined in the Credit Agreement (as amended, modified, supplemented,
extended, restated, refinanced, replaced or referenced from time, the "Credit
Agreement"), dated as of January 30, 1998, by and among ElderTrust, ElderTrust
Operating Limited Partnership, the lenders from time to time party thereto,
Deutsche Bank AG, New York Branch, as Issuing Bank, and German American Capital
Corporation, as Administrative Agent (the "Agent"). As used herein, the term
"Obligation" shall mean any principal, interest, premium, penalties, fees,
expenses, indemnities and other liabilities and obligations (including
guaranties in respect thereof) payable under the documentation governing any
Senior Indebtedness (including interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding at the rate provided
for in the respective documentation, whether or not such interest is an allowed
claim against the debtor in any such proceeding).
<PAGE>
EXHIBIT P
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date: __________, 19__
Reference is made to the Credit Agreement described in Item 2
of Annex I hereto (as such Credit Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Unless defined in Annex I hereto, terms defined in the Credit Agreement are used
herein as therein defined. ___________ (the "Assignor") and __________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I hereto (the "Assigned Share") of all of
the outstanding rights and obligations under the Credit Agreement; including,
without limitation, all rights and obligations with respect to the Assigned
Share of the Total Commitment (if not theretofore terminated) and all
outstanding Loans.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or any other instrument or
document furnished pursuant thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or the
other Credit Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under the Credit Agreement or the other Credit Documents to which it is a party
or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
the Assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) confirms that it
is an Eligible Transferee under Section 12.04(b) of the Credit Agreement; (iv)
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement and the other Credit
Documents as are delegated to such Agent, by the terms thereof, together with
such powers as are reasonably incidental thereto; [and] (v) agrees that it will
perform in accordance with their terms
<PAGE>
Exhibit P
Page 2
all of the obligations which by the terms of the Credit Agreement are required
to be performed by it as a Bank[; and (vi) to the extent legally entitled to do
so, attaches the forms described in Section [12.04(b)] of the Credit
Agreement].(1)
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative Agent.
The effective date of this Assignment and Assumption Agreement shall be the date
of execution hereof by the Assignor and the Assignee, the receipt of the consent
of the Administrative Agent to the extent required by Section 12.04(b) of the
Credit Agreement, the receipt by the Administrative Agent of the administrative
fee referred to in such Section 12.04(b) and the recordation of the assignment
effected hereby on the Register by the Administrative Agent as provided in
Section 12.16 of the Credit Agreement, or such later date, if any, which may be
specified in Item 5 of Annex I hereto (the "Settlement Date").
5. Upon the delivery of a fully executed original hereof to
the Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights
(except in respect of Sections 1.10, 3.04 and 12.01 of the Credit Agreement for
the period prior to the Settlement Date) and be released from its obligations
under the Credit Agreement and the other Credit Documents.
6. It is agreed that the Assignee shall be entitled to (x) all
interest on the Assigned Share of the Loans at the rates specified in Item 6 of
Annex I hereto and (y) all Commitment Commission on the Assigned Share of the
Total Commitment (if not theretofore terminated) at the rate specified in Item 7
of Annex I hereto, which, in each case, accrue on and after the Settlement Date,
such interest and, if applicable, Commitment Commission, to be paid by the
Administrative Agent directly to the Assignee. It is further agreed that all
payments of principal made on the Assigned Share of the Loans which occur on and
after the Settlement Date will be paid directly by the Administrative Agent to
the Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor
an amount specified by the Assignor in writing which represents the Assigned
Share of the principal amount of the respective Loans pursuant to the Credit
Agreement which are outstanding on the Settlement Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Settlement Date directly between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
_________________________
(1) Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE>
Exhibit P
Page 3
<PAGE>
Exhibit P
Page 4
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made on
Annex I hereto.
Accepted this _____ day [NAME OF ASSIGNOR]
of ____________, ____ as Assignor
By_____________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By_____________________________
Title:
Consented to as of _________ ___, ____.
GERMAN AMERICAN CAPITAL CORPORATION,
as Administrative Agent
By________________________________(2)
Name:
Title:
By________________________________
Name:
Title:
__________________________
(2) The consent of the Administrative Agent is required for assignments pursuant
to Section 12.04(b)(y) of the Credit Agreement.
<PAGE>
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower: ElderTrust Operating Limited Partnership
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of January 30, 1998, among ElderTrust, ElderTrust
Operating Limited Partnership, the Banks from time to time party thereto,
Deutsche Bank AG, New York Branch, as Issuing Bank, and German American
Capital Corporation, as Administrative Agent, as amended to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
<S> <C> <C>
[Assigned Commitment](3) Outstanding Principal of Loans
a. Aggregate Amount for all Banks $________ $________
b. Assigned Share(4) ________% ________%
c. Amount of Assigned Share $________ ________%
5. Settlement Date:
6. Rate of Interest
to the Assignee: As set forth in Section 1.08 of the Credit Agreement (unless
otherwise agreed to by the Assignor and the Assignee)(5)
</TABLE>
- --------
(3) For assignments made prior to the of the Total Commitment.
(4) Percentage taken to 12 decimal places.
(5) The Borrower and the Administrative Agent shall direct the entire amount of
the interest to the Assignee at the rate set forth in Section 1.08 of the
Credit Agreement, with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to the Assignor.
<PAGE>
Annex I
Page 2
7. Commitment As set forth in Section 2.01(a) of the Credit Agreement
(unless otherwise agreed to by the Assignor and the
Assignee)(6)
8. Notice:
ASSIGNOR:
---------------------
---------------------
---------------------
---------------------
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
---------------------
---------------------
---------------------
---------------------
Attention:
Telephone:
Telecopier:
Reference:
- ------------------
(6) Insert "Not Applicable" in lieu of text if the Total Commitment has been
terminated. Otherwise, the Borrower and the Administrative Agent shall direct
the entire amount of the Commitment Commission to the Assignee at the rate set
forth in [Section 2.01(a)] of the Credit Agreement, with the Assignor and the
Assignee effecting the agreed upon sharing of Commitment Commission through
payment by the Assignee to the Assignor.
<PAGE>
Annex I
Page 3
Payment Instructions:
ASSIGNOR:
---------------------
---------------------
---------------------
---------------------
Attention:
Reference:
ASSIGNEE:
---------------------
---------------------
---------------------
---------------------
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By___________ By___________
___________ ___________
(Print Name and Title) (Print Name and Title)
<PAGE>
EXHIBIT Q
INTERCOMPANY NOTE
--------, --------
-------- ---, ----
FOR VALUE RECEIVED, ____________, a ____________________ (the
"Company"), hereby promises to pay on demand to the order of _________, or its
assigns (the "Payee"), in lawful money of the United States of America in
immediately available funds, at such location in the United States of America as
the Payee shall from time to time designate, the unpaid principal amount of all
loans and advances made by the Payee to the Company.
The Company promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof until
paid at such rate per annum as shall be agreed upon from time to time by the
Company and the Payee.
Upon the commencement of any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar proceeding of any jurisdiction relating to the Company,
the unpaid principal amount hereof shall become immediately due and payable
without presentment, demand, protest or notice of any kind in connection with
this Note.
This Note is one of the Intercompany Notes referred to in the
Credit Agreement, dated as of January 30, 1998, among ElderTrust, ElderTrust
Operating Limited Partnership, the financial institutions from time to time
party thereto, Deutsche Bank AG, New York Branch, as Issuing Bank, and German
American Capital Corporation, as Administrative Agent (as amended, modified or
supplemented from time to time, the "Credit Agreement") and is subject to the
terms thereof, and shall be pledged by the Payee pursuant to the Pledge
Agreement (as defined in the Credit Agreement). The Company hereby acknowledges
and agrees that the Pledgee pursuant to and as defined in the Pledge Agreement,
as in effect from time to time, may exercise all rights provided therein with
respect to this Note.
[This Note, and all of the Company's obligations hereunder,
shall be subordinate and junior to all Senior Indebtedness (as defined in
Section 1.07 of Annex A hereto) on the terms and conditions set forth in Annex A
hereto, which Annex A is incorporated herein by reference and made a part hereof
as if set forth herein in its entirety.](1)
The Payee is hereby authorized to record all loans and
advances made by it to the Company (all of which shall be evidenced by this
Note), and all repayments or prepayments
- -----------------
(1) Insert in all Intercompany Notes held by a Subsidiary Guarantor that is not
a Wholly-Owned Subsidiary.
<PAGE>
Exhibit Q
Page 2
thereof, in its books and records, such books and records constituting prima
facie evidence of the accuracy of the information contained therein.
All payments under this Note shall be made without offset,
counterclaim or deduction of any kind.
The Company hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
[Company]
By________________________
Name:
Title:
Pay to the order of
____________________________
[Payee]
By__________________________
Title:
<PAGE>
EXHIBIT R
FORM OF COMPLETION CERTIFICATE
This Certificate is delivered pursuant to Section 7.16(f) of
the Credit Agreement, dated as of January 30, 1998 among ElderTrust, ElderTrust
Operating Limited Partnership (the "Borrower"), the lending institutions party
thereto (the "Banks"), Deutsche Bank AG, New York Branch, as Issuing Bank, and
German American Capital Corporation, as Administrative Agent (as amended,
restated, supplemented or otherwise modified to the date hereof, the "Credit
Agreement"). All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.
The undersigned, to the best of [his] or [her] knowledge, does
hereby certify that with respect to the [Renovation/Restoration] of [SPECIFY
PROPERTY] (the "Property"):
(i) all work required to be performed at or about the Property
to complete the [Renovation/Restoration], including all punch list items, has
been performed in substantial accordance with the approved plans and
specifications and otherwise in accordance with the provisions of the Credit
Agreement;
(ii) all necessary inspections by all applicable governmental
authorities for the use, occupancy and operation of the Improvements at the
Property have been satisfactorily completed; and
(iii) a permanent certificate of occupancy for the entire
Improvements and all other certificates, licenses, permits and approvals
necessary for the use, occupancy and operation of the Property as a [senior
living care facility] [medical office building] have been issued, and the
Improvements are undamaged and available for regular use, occupancy and
operation.
DATED:______
[NAME OF ARCHITECT/ENGINEER]
By:_______________________________
Name:
Title:
<PAGE>
Exhibit S
FORM OF NOTICE OF RENOVATION/RESTORATION
This Notice is delivered pursuant to Section 7.16[(a)] [(c)]
of that certain Credit Agreement, dated as of January 30, 1998 as amended,
restated, supplemented or otherwise modified to the date hereof, the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined), among ElderTrust, ElderTrust Operating Limited
Partnership, (the "Borrower"), the Banks party thereto from time to time,
Deutsche Bank AG, New York Branch, as Issuing Bank, and German American Capital
Corporation, as Administrative Agent.
Notice is hereby given that (check all that apply):
__ 1. A Casualty Event with respect to [specify Borrowing Base
Property] has occurred, whether or not covered by insurance,
that will (or may reasonably be expected to) cost $_________
or more to Restore (Section 7.16(a));
__ 2. A Taking with respect to [specify Borrowing Base Property] has
occurred that will (or may reasonably be expected to) cost
$_________ or more to Restore (Section 7.16(c));
Attached hereto is a description of the applicable [Casualty
Event/Taking] (the "Property Event") including, to the extent applicable, (i)
the Borrowing Base Property affected by the Property Event, and (ii) the
Borrower's Restoration plans required by Section 7.16(f) of the Credit
Agreement, including whether the Borrower intends to Restore the Property
pursuant to Sections 7.16(e) and 7.16(f) of the Credit Agreement.
Attached hereto is a Restoration budget, estimated time schedule and
Restoration plans delivered pursuant to Section 7.16(f) of the Credit Agreement.
DATED:_____________
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By: ElderTrust, its general partner
By:_____________________________
Name:
Title:
<PAGE>
EXHIBIT 10.26
CROSS INDEMNIFICATION AND CONTRIBUTION AGREEMENT
------------------------------------------------
THIS CROSS INDEMNIFICATION AND CONTRIBUTION AGREEMENT (this
"Agreement") is made and entered into as of January 26th, 1998, by and among
ELDERTRUST, a Maryland real estate investment trust (the "Company"),
ELDERTRUST OPERATING LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Operating Partnership"), and GENESIS HEALTH VENTURES, INC., a Pennsylvania
corporation ("Genesis").
RECITALS
WHEREAS, the Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-11 (No.
333-37451) (such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information (as hereinafter defined by
reference), as applicable, is herein called the "Form S-11");
WHEREAS, Genesis, as a co-registrant with the Company, has filed with
the Commission a registration statement on Form S-3 (No. 333-37451) (such
registration statement, including the exhibits thereto and schedules thereto
at the time it became effective and including the Rule 430A Information and
the Rule 434 Information (as hereinafter defined by reference), as applicable,
is herein called the "Form S-3"; and the Form S-11 and the Form S-3 are
hereinafter referred to as the "Registration Statement"); and
WHEREAS, all capitalized terms used herein not otherwise defined
herein shall have the meanings ascribed thereto in that certain U.S. Purchase
Agreement of even date herewith among the Company, the Operating Partnership,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, BT
Alex. Brown Incorporated, Goldman, Sachs & Co. and each of the other U.S.
Underwriters named in Schedule A thereto and the related International
Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises and covenants set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
SECTION 1. Indemnification.
(a) Indemnification of Genesis, Directors and Officers. The Company
and the Operating Partnership jointly and severally hereby agree to indemnify
and hold harmless Genesis, its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls Genesis within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
<PAGE>
(i) against any and all loss, liability, claim, damage and
expense whatsoever (including, without limitation, any and all loss,
liability, claim, damage and expense to any Underwriter), as
incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material
fact included in any preliminary prospectus or the Prospectuses (or
any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever (including, without limitation, any and all loss,
liability, claim, damage and expense to any Underwriter), as
incurred, arising out of (A) the violation of any applicable laws or
regulations of foreign jurisdictions where Reserved Securities have
been offered and (B) any untrue statement or alleged untrue statement
of a material fact included in the supplement or prospectus wrapper
material distributed in Canada or in connection with the reservation
and sale of the Reserved Securities to eligible employees and others
having a business relationship with the Company or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever (including, without limitation, any and all loss,
liability, claim, damage and expense to any Underwriter), as
incurred, to the extent of the aggregate amount paid in settlement of
any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of the nature referred to in Section 1(a)(ii)(A) hereof;
provided that (subject to Section 1(d) below) any such settlement is
effected with the written consent of the Company; and
(iv) against any and all expense whatsoever (including,
without limitation, any and all loss, liability, claim, damage and
expense to any Underwriter), as incurred (including the fees and
disbursements of counsel chosen by Genesis), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission or in connection with any violation of the nature referred
to in Section 1(a)(ii)(A) hereof, to the extent that any such expense
is not paid under (i), (ii) or (iii) above;
provided, however, that the indemnity agreement under this Section 1(a) shall
not apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission or alleged untrue statement or
omission with respect to which Genesis agrees to provide indemnification
pursuant to Section 1(b).
-2-
<PAGE>
(b) Indemnification of the Company, the Operating Partnership,
Trustees, Trustee Nominees and Officers. Genesis agrees to indemnify and hold
harmless the Company, its trustees, trustee nominees named in the Registration
Statement, each of its officers who signed the Registration Statement, the
Operating Partnership, and each person, if any, who controls the Company or
the Operating Partnership within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever (including, without limitation, any and all loss,
liability, claim, damage and expense to any Underwriter), as incurred,
arising out of any untrue statement or alleged untrue statement of a
material fact, with respect to Genesis and its subsidiaries, contained
in the Registration Statement (or any amendment thereto), including the
Form S-3 and the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, with respect to Genesis and its subsidiaries,
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto), with respect to
Genesis and its subsidiaries, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; with respect to Genesis and its subsidiaries;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever (including, without limitation, any and all loss,
liability, claim, damage and expense to any Underwriter), as incurred,
arising out of any untrue statement or alleged untrue statement of a
material fact included in the supplement or prospectus wrapper material
distributed in Canada, with respect to Genesis and its subsidiaries, or
the omission or alleged omission therefrom of a material fact necessary
to make the statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading; with respect
to Genesis and its subsidiaries;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever (including, without limitation, any and all loss,
liability, claim, damage and expense to any Underwriter), as incurred,
to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, provided that (subject to Section 1(d)
below) any such settlement is effected with the written consent of
Genesis; and
(iv) against any and all expense whatsoever (including,
without limitation, any and all loss, liability, claim, damage and
expense to any Underwriter), as incurred (including the fees and
disbursements of counsel chosen by the Company), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission to the extent that any such expense is not paid under (i),
(ii) or (iii) above.
-3-
<PAGE>
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 1(a) above, counsel to the indemnified parties shall be selected by
Genesis, and, in the case of parties indemnified pursuant to Section 1(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. Notwithstanding the foregoing, if it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved by the
indemnified parties defendant in such action (which approval shall not be
unreasonably withheld), unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses available to
them which are different from or in addition to those available to such
indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying party shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action, except the indemnifying party shall be liable for the reasonable
costs of investigation subsequently incurred by the indemnified party in
connection with the defense. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of
any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 1 or Section 2 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 1(a)(iii) or Section 1(b)(iii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
-4-
<PAGE>
SECTION 2. Contribution. If the indemnification provided for in
Section 1 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, in such
proportion as is appropriate to reflect the relative fault of the Company and
the Operating Partnership on the one hand and of Genesis on the other hand in
connection with the statements or omissions, or in connection with any
violation of the nature referred to in Section 1(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative fault of the Company and the Operating Partnership on
the one hand and Genesis on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or the Operating Partnership or
by Genesis and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or any
violation of the nature referred to in Section 1(a)(ii)(A) hereof.
The Company and the Operating Partnership and Genesis agree that it
would not be just and equitable if contribution pursuant to this Section 2
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above
in this Section 2. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 2 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 2, each person, if any, who controls
Genesis within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as Genesis, and each
trustee of the Company, each trustee nominee of the Company named in the
Registration Statement, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or
the Operating Partnership within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company and the Operating Partnership, respectively. For purposes of this
Section 2, the Company, the Operating Partnership and its subsidiaries shall
be deemed one party jointly and severally liable for any obligations hereunder
and Genesis and its subsidiaries shall be deemed one party jointly and
severally liable for any obligations hereunder.
-5-
<PAGE>
SECTION 3. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to Genesis
shall be directed to Genesis at 148 West State Street, Kennett Square,
Pennsylvania 19348, attention of Michael R. Walker, Chairman of the Board and
Chief Executive Officer; and notices to the Company or the Operating
Partnership shall be directed to the Company at 415 McFarlan Road, Suite 202,
Kennett Square, Pennsylvania 19348, attention of Edward B. Romanov, Jr.,
President and Chief Executive Officer.
SECTION 4. Parties. This Agreement shall each inure to the benefit of
and be binding upon the parties hereto and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties
hereto and their respective successors and the controlling persons and
officers, trustee and trustee nominees referred to in Sections 1 and 2 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the parties hereto and their respective
successors, and said controlling persons and officers, trustee and trustee
nominees and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 5. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Cross
Indemnification and Contribution Agreement to be executed on their behalf as
of the date first above written.
Very truly yours,
ELDERTRUST
By: /s/ Edward B. Romanov, Jr.
---------------------------------
Edward B. Romanov, Jr.
President and Chief Executive Officer
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By: ElderTrust Realty Group, Inc.
(its general partner)
By: /s/ Edward B. Romanov, Jr.
---------------------------------
Edward B. Romanov, Jr.
Chief Executive Officer
GENESIS HEALTH VENTURES, INC.
By: /s/ Michael R. Walker
---------------------------------
Michael R. Walker
Chairman and Chief Executive Officer
-7-
<PAGE>
<TABLE>
<CAPTION>
Subsidiaries of the Registrant
Name of Subsidiary Jurisdiction of Formation Type of Entity
- ------------------ ------------------------- --------------
<S> <C> <C>
ElderTrust Operating Limited Partnership Delaware Limited partnership
ET Sub-Heritage Woods, L.L.C. Delaware Limited liability company
Et Sub-Pleasant View, L.L.C. Delaware Limited liability company
ET Sub-Lopatcong, L.L.C. Delaware Limited liability company
ET Sub-Phillipsburg-I, L.L.C. Delaware Limited liability company
ET Sub-SMOB, L.L.C. Delaware Limited liability company
ET Sub-Windsor I, L.L.C. Delaware Limited liability company
ET Sub-Windsor II, L.L.C. Delaware Limited liability company
ET Sub-Lacey I, L.L.C. Delaware Limited liability company
ET GENPAR, L.L.C. Delaware Limited liability company
ET Sub-Willowbrook Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Rittenhouse Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Wayne I Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Belvedere Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Pennsburg Manor Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-POB I Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Silverlake Limited Partnership,L.L.P. Virginia Limited liability partnership
ET Sub-Riverview Ridge Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-DCMH Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Harston Hall Limited Partnership, L.L.P. Virginia Limited liability partnership
ET Sub-Chapel Manor Limited Partnership, L.L.P. Virginia Limited liability partnership
Senior LifeChoice of Kimberton, L.P. Pennsylvania Limited partnership
Senior LifeChoice of Paoli, L.P. Pennsylvania Limited partnership
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> SEP-23-1997
<PERIOD-END> DEC-31-1997
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 100
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 99
<TOTAL-LIABILITY-AND-EQUITY> 100
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
