<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Health Care REIT, Inc
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(Exact name of registrantUas specified in its charter)
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<S> <C>
Delaware 34-1096634
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(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One SeaGate, Suite 1500, Toledo, Ohio 43604
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(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) (419) 247-2800
------------------
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(Former name, former address and former fiscal year,
if changed since last report)
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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 X . No .
------ ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes . No .
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class: Shares of Common Stock, $1.00 par value
Outstanding 12,082,519 shares
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HEALTH CARE REIT, INC.
INDEX
Page
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet -
March 31, 1996 and December 31, 1995 _
Consolidated Statements of Income -
Three months ended March 31, 1996
and 1995 _
Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and 1995 _
Consolidated Statements of Shareholders'
Equity - Three months ended March 31, 1996
and 1995 _
Notes to Consolidated Financial Statements _
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations _
Part II. OTHER INFORMATION
Item 5. Other Information __
Item 6. Exhibits and Reports on Form 8-K __
SIGNATURES __
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
HEALTH CARE REIT, INC. AND SUBSIDIARY
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<CAPTION>
March 31 December 31
1996 1995
(Unaudited) (Note)
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ASSETS
Real Estate Related Investments:
Loans receivable:
Mortgage loans $283,033,241 $267,483,683
Construction and other short-term loans 26,247,410 17,735,699
Working capital loans to related parties 5,852,343 6,779,340
------------ ------------
315,132,994 291,998,722
Investment in operating-lease properties 74,218,594 58,628,509
Investment in direct financing leases 10,913,197 11,246,492
------------ ------------
400,264,785 361,873,723
Less allowance for losses 10,100,000 9,950,000
------------ ------------
NET REAL ESTATE RELATED INVESTMENTS 390,164,785 351,923,723
Other Assets:
Deferred loan expenses 1,573,079 1,747,537
Investment securities available for sale 1,569,836 845,297
Cash and cash equivalents 997,785 860,350
Receivables and other assets 3,107,216 2,715,146
------------ ------------
7,247,916 6,168,330
------------ ------------
$397,412,701 $358,092,053
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit arrangements $142,600,000 $106,700,000
Other long-term obligations 56,010,382 56,059,639
Accrued expenses and other liabilities 10,109,361 7,734,618
------------ ------------
TOTAL LIABILITIES 208,719,743 170,494,257
Shareholders' Equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - none
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 12,082,519
in 1996 and 12,034,196 in 1995 12,082,519 12,034,196
Capital in excess of par value 169,704,207 168,800,194
Undistributed net income 5,336,396 5,918,109
Unrealized gains on investment securities
available for sale 1,569,836 845,297
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 188,692,958 187,597,796
------------ ------------
$397,412,701 $358,092,053
============ ============
</TABLE>
See notes to consolidated financial statements
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARY
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<CAPTION>
Three Months Ended
March 31
1996 1995
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<S> <C> <C>
Gross Income:
Interest and other income $ 8,142,240 $ 7,526,250
Operating leases:
Rents 1,960,513 1,541,609
Direct financing leases:
Lease income 367,582 382,164
Loan and commitment fees 420,046 174,970
----------- -----------
10,890,381 9,624,993
Expenses:
Interest:
Senior notes and other long-
term obligations 1,214,588 1,455,976
Line of credit arrangements 2,296,343 1,668,373
Loan expense 187,323 185,689
Management fees 645,658
Provision for depreciation 474,928 389,738
Provision for losses 150,000
Other operating expenses 890,091 414,594
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5,213,273 4,760,028
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NET INCOME $ 5,677,108 $ 4,864,965
=========== ===========
Average number of shares
outstanding 12,052,353 11,619,386
Net income per share $ .47 $ .42
Dividends per share $ .52 $ .515
</TABLE>
See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
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OPERATING ACTIVITIES
Net income $ 5,677,108 $ 4,864,965
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of loan and organization
expenses 187,862 186,228
Provision for losses 150,000
Provision for depreciation 470,010 389,738
Loan and commitment fees earned less than
cash received 957,199 242,086
Direct financing lease income less than cash
received 53,295 57,827
Interest income in excess of cash received (132,633) (45,863)
Increase in accrued expenses and other -------- -------
liabilities 1,417,544 1,495,218
Increase in other receivables and prepaid items (397,527) (22,741)
------------ ------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 8,382,858 7,167,458
INVESTING ACTIVITIES
Increase in investments (532,000)
Investment in loans receivable (32,375,639) (10,063,758)
Investment in operating-lease properties (8,380,095)
Principal collected on loans 1,974,000 2,907,609
Other 4,919
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (38,776,815) (7,688,149)
FINANCING ACTIVITIES
Long-term borrowings under line of credit
arrangements 74,600,000 27,700,000
Principal payments on long-term borrowings under
line of credit arrangements (38,700,000) (22,300,000)
Net proceeds from the issuance of shares 952,336 1,159,916
Principal payments on other long-term obligations (49,257) (194,042)
Increase in deferred loan expense (12,865) (161,858)
Cash distributions to shareholders (6,258,822) (5,971,488)
------------ ------------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 30,531,392 232,528
------------ ------------
Increase (decrease) in cash and cash equivalents 137,435 (288,163)
Cash and cash equivalents at beginning of period 860,350 935,449
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 997,785 $ 647,286
============ ============
Supplemental Cash Flow Information -- Interest Paid $ 1,957,214 $ 1,680,853
============ ============
</TABLE>
See notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
HEALTH CARE REIT, INC. AND SUBSIDIARY
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<CAPTION>
Three Months Ended
March 31
1996 1995
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Balances at beginning of period $187,597,796 $189,179,775
Net income 5,677,108 4,864,965
Proceeds from issuance of shares under the
dividend reinvestment plan - 33,323 in
1996 and 54,610 in 1995 690,586 1,159,916
Proceeds from issuance of shares under the
employee stock incentive plan - 15,000
in 1996 261,750
Unrealized gains on investment securities
available for sale 724,540
Cash distributions to shareholders (6,258,822) (5,971,488)
------------ ------------
Balances at end of period $188,692,958 $189,233,168
============ ============
</TABLE>
See notes to consolidated financial statements
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<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HEALTH CARE REIT, INC. AND SUBSIDIARY
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered for a fair presentation
have been included. Operating results for the three months ended March 31,
1996 are not necessarily an indication of the results that may be expected for
the year ended December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995.
Net income per share has been computed by dividing net income by the
average number of shares outstanding.
NOTE B - INVESTMENTS
Investment securities available for sale are stated at fair value with
unrealized gains and losses reported in a separate component of shareholders'
equity. At March 31, 1996, available-for-sale securities are the common stock
of a corporation, which were obtained by the Company at no cost.
NOTE C - CONTINGENCIES
As disclosed in the financial statements for the year ended December 31,
1995, the Company was contingently liable for certain obligations amounting to
approximately $19,530,000. No significant change in these contingencies has
occurred as of March 31, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 1996, the Company made $16,275,000 of new
mortgage loans, $7,200,000 of new investments in operating leases and continued
to finance 25 construction loans, which construction advances totalled
$15,911,710. The Company received $926,997 of working capital
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<PAGE> 8
loan repayments. The above-mentioned investment activity contributed to
increases in total loans receivable and investments in operating leases of
$23,134,000 and $15,590,000, respectively, in the first quarter of 1996.
With respect to the above-mentioned construction loans, five of the
loans completed the construction phase of the Company's investment process and
were converted to investments in operating leases, with an aggregate investment
of $7,400,000.
The Company's working capital loans, all to related parties, are
expected to slowly decline as the underlying projects continue to improve their
financial performance and thereby pay down these loans.
Since December 31, 1995, borrowings under line of credit arrangements
increased $35,900,000 due to the investment activity discussed above. As of
March 31, 1996, the Company had approximately $211,116,000 in unfunded
commitments and total available funding sources of approximately
$42,400,000. The Company believes that funds provided from operating
activities, together with funds from new equity and debt issuances, present
credit lines, scheduled loan repayments and equity issuances under Company
stock plans, will be sufficient to meet current operating requirements and
existing commitments.
During the first quarter of 1996, the Company received approximately
$691,000 from the sale of its shares under the dividend reinvestment plan.
RESULTS OF OPERATIONS
Gross income for the first quarter of 1996 was $10,890,000 or 13.15%
more than the first quarter of 1995. Interest income on loans receivable and
operating lease rents increased while direct financing lease income declined.
The increase in interest income on loans receivable and operating lease rents
is attributable to the growth in the loan and operating lease portfolios, two
long term trends which the Company anticipates will continue. The decrease in
direct financing lease income is a reflection of another long term trend which
should also continue due to the decreased market acceptance of direct financing
leases.
In the first quarters of 1996 and 1995, the Company did not receive
income from gains on exercise of options. Future gains on exercise of options
are anticipated to be modest, since the Company has only five remaining direct
financing lease investments which total approximately $10,913,000.
Net income totalled $5,677,000 in the first quarter of 1996 versus
$4,865,000 for the comparable period in 1995. The increase in net income was
reflected in the $.47 per share earned in the first quarter of 1996 versus $.42
per share earned in the first quarter of 1995. Contributing factors were
improved earnings on assets, a reduction to the Company's average cost of
borrowing and increased investment activity (as discussed above).
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Average earnings on assets increased 26 basis points in the first
quarter of 1996 versus the first quarter of 1995. The increase in average
earnings on assets was a reflection of the increased investment activity during
the last nine months of 1995 and the first quarter of 1996. Interest on loans
and rents from operating leases increased 7.91% and 27.17%, respectively,
during the first three months of 1996 as compared to the comparable period in
1995. Loan and commitment fees earned during the first quarter of 1996
increased 140.07% as compared to the first quarter of 1995.
Net income was affected by the average quarter end, debt-to-equity ratio
of .98 to 1.00 in 1996 versus .68 to 1.00 in the first quarter of 1995. The
increase is due to additional borrowings on the lines of credit, which have
been utilized to fulfill the Company's investment commitments. At March 31,
1996, outstanding balances under the lines of credit totalled $142,600,000 as
compared to $76,300,000 at March 31, 1995. The increase in debt had the
effect of increasing the Company's interest related expenses.
During the first three months of 1996, the Company experienced a 1.58%
decrease in its average cost of borrowing, as compared to the comparable period
in 1995. This was primarily due to a general decline in interest rates, and
the Company's increased borrowings on its lines of credit, which had the
effect of reducing the average cost of borrowing, as a percentage of
outstanding debt.
The Company's operating expenses decreased 16.05% in the first quarter
of 1996 versus the first quarter of 1995. The 1995 operating expenses included
management fees. The reduction in operating expenses was primarily due to cost
savings realized as a result of the merger of the Company's advisor into the
Company and the achievement of self-administered status.
In addition, net income was affected by the Company's decision to
increase its unallocated allowance for losses by $150,000 during the first
quarter of 1996.
Under the Company's By-Laws, stockholders must be notified when total
operating expenses (for the twelve-month period then ended) exceed 2% of
average invested assets or 25% of adjusted net income, whichever is greater.
For the twelve month period ended March 31, 1996, total operating expenses,
which totalled $10,067,000, exceeded 2% of average invested assets and exceeded
25% of adjusted net income. This was primarily due to costs incurred by the
Company relating to the merger with the Company's former advisor. When
the subject compliance test was adjusted for the expense associated with the
contract settlement, the Company was in compliance.
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<PAGE> 10
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On January 19, 1996, the Company issued a press release in which it
announced that the Board of Directors voted to pay a quarterly dividend of $.52
per share payable to shareholders of record on February 2, 1996.
On February 19, 1996, the Company issued a press release in which it
announced, among other things, that the 1995 net income per share for the year
was down $1.01 or 46.54% less than 1994.
On March 13, 1996, the Company issued a press release in which it
announced, among other things, the appointment Edward F. Lange, Jr. as Chief
Financial Officer, effective March 11, 1996.
In April 1996, the Company issued secured senior notes in the aggregate
principal amount of $30 million which mature in 2001 and 2003 and have a
weighted average interest rate of 7.18%.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
[C] [C]
4 Note Purchase Agreement between
Health Care REIT, Inc. and each of the
Purchasers Party thereto
dated as of April 15, 1996 and the Notes
relating thereto.
99.1 Press release dated January 16, 1996
99.2 Press release dated February 19, 1996
99.3 Press release dated March 13, 1996
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
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Pursuant to the requirement of the Securities and Exchange Act of 1934,
the Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH CARE REIT, INC.
Date: April 29, 1996 By: BRUCE G. THOMPSON
------------------------ -------------------------------------
Bruce G. Thompson, Chairman and
Chief Executive Officer
Date: April 29, 1996 By: EDWARD F. LANGE, JR.
----------------------- -------------------------------------
Edward F. Lange, Jr., Chief
Financial Officer
Date: April 29, 1996 By: KATHLEEN S. PREPHAN
----------------------- -------------------------------------
Kathleen S. Prephan, Chief
Accounting Officer
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<PAGE> 12
Pursuant to the requirement of the Securities and Exchange Act of 1934,
the Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH CARE REIT, INC.
Date: April 29, 1996 By:____________________________________
-------------------------
Bruce G. Thompson, Chairman and
Chief Executive Officer
Date: April 29, 1996 By:____________________________________
-------------------------
Edward F. Lange, Jr., Chief
Financial Officer
Date: April 29, 1996 By:____________________________________
-------------------------
Kathleen S. Prephan, Chief
Accounting Officer
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<PAGE> 13
EXHIBIT INDEX
The following documents are included in this Form 10-Q as Exhibits:
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DESIGNATION
NUMBER UNDER
EXHIBIT ITEM 601 OF PAGE
NUMBER REGULATION S-K EXHIBIT DESCRIPTION NUMBER
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1 4 Note Purchase Agreement between
Health Care REIT, Inc. and each of the
Purchasers Party thereto
dated as of April 15, 1996 and the Notes
relating thereto.
2 99.1 Press release dated January 16, 1996 13
3 99.2 Press release dated February 19, 1996 14
4 99.3 Press release dated March 13, 1996 16
5 27 Financial Data Schedule
</TABLE>
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NOTE PURCHASE AGREEMENT
BETWEEN
HEALTH CARE REIT, INC.
AND
EACH OF THE PURCHASERS PARTY HERETO
Dated as of April 15, 1996
$30,000,000 Senior Notes
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Table of Contents
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SECTION 1. DESCRIPTION OF NOTES AND COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Description of Notes and Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Commitments; Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. PREPAYMENT OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Optional Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Notice of Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Allocation of Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4. No Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Representations of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2. Representations of Each Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1. Company's Closing Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Initial Borrowing Base Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3. Borrowing Base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4. Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5. Collateral Agency and Cash Collateral Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6. Collateral Documents and Other Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.7. Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8. Private Placement Number Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9. Legality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.10. Funding Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.11. No Default or Event of Default; Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.12. Other Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.13. Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14. Opinion of Counsel to the Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.15. Satisfactory Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.16. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5. COMPANY COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1. Financial Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4. Paying Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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5.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.8. Limitation on Consolidation and Merger, Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.9. Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.10. Direct Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.11. Properties Leased to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.12. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.13. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.14. Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.16. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.17. Construction Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.18. Inconsistent Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.19. Credit Enhancements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.20. Other Financings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.21. Psychiatric Hospitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.22. Diversification of Assets and Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.23. Maintenance of REIT Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.24. Collateral Pool. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.25. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.26. Delivery of Certain Construction Financing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.27. Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.28. Modification of Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.29. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.30. Limitation on Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.31. Delivery of Documents After the Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2. Notice to Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.3. Acceleration of Maturities; Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.4. Rescission of Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.1. Consent Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.2. Solicitation of Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.3. Effect of Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2. Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.1. Registered Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.2. Exchange of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.3. Loss, Theft or Mutilation of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.4. Expenses, Stamp Tax, Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.5. Powers and Rights Not Waived; Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.7. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.8. Survival of Covenants and Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.9. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.10. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.11. SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.12. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.13. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.14. Counterparts; Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.15. Interest Rate Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SCHEDULES
- ---------
1.1(a) Purchasers; Commitments
1.1(b) Collateral
3.1(f) Collateral Documents
3.1(r) Environmental Reports
5.12 Ongoing Indebtedness
5.17 Construction Financing
5.19 Credit Enhancements
5.20 Other Financings
5.21 Psychiatric Hospitals
8.1(a) Second Priority Mortgage Loans
</TABLE>
EXHIBITS
A Form of Series A Note
B Form of Series B Note
C Form of Direct Mortgage
D Form of Assignment of Lease
E Form of Assignment of Loan Documents
-iii-
<PAGE> 5
HEALTH CARE REIT, INC.
One SeaGate
Suite 1500
Toledo, Ohio 43604
NOTE PURCHASE AGREEMENT
$30,000,000 Senior Notes
NOTE PURCHASE AGREEMENT, dated as of April 15, 1996, between
HEALTH CARE REIT, INC., a Delaware corporation, and each of the purchasers
identified on Schedule 1.1(a) hereto (each, a "PURCHASER," including its
respective nominees, successors and assigns, and each successive holder or
holders of any Notes or portions thereof purchased by such Purchaser, and
collectively, the "PURCHASERS"). Certain capitalized terms used herein are
defined in Section 8.1.
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENTS.
1.1. DESCRIPTION OF NOTES AND COLLATERAL.
(a) The Company has authorized the issuance and sale of
$10,000,000 aggregate principal amount of its 6.96% Series A Senior Notes due
2001 (the "SERIES A NOTES") and $20,000,000 aggregate principal amount of its
7.29% Series B Senior Notes due 2003 (the "SERIES B NOTES," and together with
the Series A Notes, the "NOTES"), each (i) to be dated the date of issue, (ii)
to bear interest, from (and including) such date of issue to (but excluding)
the date of repayment in full of all amounts due thereunder, at the rate of
6.96% and 7.29% per annum, respectively, payable on the 15th day of the months
of April and October each year (commencing October 15, 1996) and at maturity,
and to bear interest on overdue principal, premium, if any, and installments of
interest at the Overdue Rate, whether at scheduled maturity, upon acceleration
or otherwise, until paid, (iii) to mature on April 15, 2001, and April 15,
2003, respectively, and (iv) to be substantially in the form attached hereto as
Exhibit A and Exhibit B, respectively. Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months. The Notes are subject
to prepayment at the option of the Company prior to their stated maturity date
on the terms and conditions set forth in Section 2 and in the Notes.
<PAGE> 6
(b) Until the Security Release Date, and at all times
thereafter while the Secured Obligations are required to be secured under
Section 5.24(f), the payment and performance of all the Secured Obligations
shall be secured by
(i) with respect to each property set forth on
Schedule 1.1(b) owned in fee simple by the Company and each other
property that may from time to time be added to the Collateral that is
owned in fee simple by the Company (each, a "FEE PROPERTY"), (A) a
first mortgage Lien in favor of the Collateral Agent for the ratable
benefit of the Purchasers (a "DIRECT MORTGAGE") on each such Fee
Property, (B) an assignment of all leases and rents with respect to
each such Fee Property (an "ASSIGNMENT OF LEASE") and (C) a security
interest in all other property and assets owned or leased by the
Company and associated with each such Fee Property, and
(ii) with respect to each mortgage loan set forth
on Schedule 1.1(b) owned by the Company and each other mortgage loan
that may from time to time be added to the Collateral, an assignment
by the Company to the Collateral Agent, for the ratable benefit of the
Purchasers, of all notes, first mortgages and other collateral held by
the Company with respect to such mortgage loans (collectively, the
"ASSIGNED LOANS").
(c) Each Direct Mortgage shall be substantially in the
form of Exhibit C, each Assignment of Lease shall be substantially in the form
of Exhibit D, and each Assigned Loan shall be assigned pursuant to an
assignment document substantially in the form of Exhibit E (an "ASSIGNMENT OF
LOAN DOCUMENTS"). The property, assets or instruments which are subject to the
Liens created by the Collateral Documents shall constitute the "COLLATERAL" for
the Secured Obligations. Each Fee Property and each Assigned Loan included
from time to time in the Collateral shall secure all of the Secured
Obligations, and each Collateral Document with respect to each Fee Property or
Assigned Loan shall be cross-defaulted with each other Collateral Document with
respect to all other Fee Properties and Assigned Loans. The property securing
each Assigned Loan shall be referred to herein as a "MORTGAGE PROPERTY."
1.2. COMMITMENTS; CLOSING DATE.
(a) Subject to the terms and conditions hereof and on the
basis of the representations and warranties hereinafter set forth, the Company
agrees to issue and sell to each Purchaser, and each Purchaser agrees
(severally and not jointly) to purchase from the Company, the principal amount
and Series of Notes set forth beside such Purchaser's name on Schedule 1.1(a)
at a price of 100% of the principal amount thereof (the "PURCHASE PRICE"), on
the Closing Date. The aggregate principal amount of Notes to be issued and
sold by the Company pursuant hereto shall be $30,000,000, of which $10,000,000
aggregate principal amount shall be Series A Notes and $20,000,000 aggregate
principal amount shall be Series B Notes.
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<PAGE> 7
(b) Delivery of the Notes will be made at the offices of
Howard, Darby & Levin, 1330 Avenue of the Americas, New York, New York 10019
against payment therefor in the amount of the Purchase Price at 10:00 A.M., New
York City time, on April 15, 1996 or such date as shall be mutually agreed upon
by the Company and the Purchasers (the "CLOSING DATE"). Payment for the Notes
shall be effected by wire transfer of federal funds to such bank account of the
Company as may be specified by the Company in writing at least two Business
Days before the Closing Date. The Notes delivered to each Purchaser on the
Closing Date will be delivered to such Purchaser in the form of one or more
registered Notes for the full amount of such Purchaser's purchase, registered
in such Purchaser's name or in the name of such nominee(s) or assignee(s) as
such Purchaser shall have specified in writing.
SECTION 2. PREPAYMENT OF NOTES.
2.1. OPTIONAL PREPAYMENT. Upon compliance with Section 2.2 and
subject to Section 2.3, the Company shall have the option at any time and from
time to time to prepay the outstanding Notes, either in whole or in part (but
if in part, then in units of $1,000,000 or an integral multiple of $100,000 in
excess thereof) by payment of the principal amount of the Notes, or portion
thereof to be prepaid, together with accrued interest thereon to but not
including the date of such prepayment and a premium (determined three Business
Days prior to the date of such prepayment) equal to the Make-Whole Premium, if
any (collectively, the "REDEMPTION PRICE").
2.2. NOTICE OF PREPAYMENTS. The Company shall give written notice
of any prepayment of the Notes pursuant to Section 2.1 to each holder thereof
not less than 30 days nor more than 60 days before the date fixed for such
prepayment of the Notes. Notices required by this Section 2.2 shall specify
(a) the date of prepayment, (b) the principal amount of such holder's Notes to
be prepaid on such date, and (c) the estimated Make-Whole Premium and the
accrued interest applicable to the prepayment. Notice of prepayment having
been so given, the aggregate principal amount of the Notes specified in such
notice, together with accrued interest thereon and the Make-Whole Premium,
shall become due and payable on the prepayment date set forth in such notice.
The Company shall give a second written notice to each holder of the Notes, by
telecopy or other same day written communication, setting forth the computation
and amount of the Make-Whole Premium payable in connection with a prepayment
pursuant to Section 2.1, at least three Business Days prior to the date of such
prepayment.
2.3. ALLOCATION OF PREPAYMENTS. All partial prepayments shall be
applied on all outstanding Notes (without regard to Series) ratably in
accordance with the unpaid principal amounts thereof.
2.4. NO PURCHASE OF NOTES. The Company will not, and will not
permit any Affiliate to, purchase, redeem, prepay or otherwise acquire any of
the Notes, except for
-3-
<PAGE> 8
payments or prepayments of the Notes expressly provided for in accordance with
Sections 1, 2 and 6 of this Agreement and the terms of the Notes.
SECTION 3. REPRESENTATIONS.
3.1. REPRESENTATIONS OF THE COMPANY. The Company hereby represents
and warrants for the benefit of each Purchaser that the representations set
forth as follows are true and correct as of the date hereof and shall be true
and correct as of the Closing Date and, as provided in Section 5.24, each
Effective Date:
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Each Subsidiary of the Company is duly incorporated, validly existing and in
good standing under the laws of its state of incorporation. As of the date of
this Agreement, the Company has, and as of the Closing Date, the Company will
have, no Subsidiaries except for HCRI Pennsylvania Properties, Inc., a
Pennsylvania corporation. The Company is the sole shareholder of such
Subsidiary.
(b) The Company and each Subsidiary of the Company is
duly qualified to do business as a foreign corporation in each jurisdiction in
which the conduct of its business or the ownership or leasing of its properties
would require such qualification, except where the failure to so qualify could
not have a Material Adverse Effect.
(c) The execution, delivery and performance of this
Agreement, the Notes and the other Note Documents are within the corporate
powers of the Company and have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been and is, and, on the
Closing Date, the Notes and the other Note Documents will have been and will
be, duly executed by and the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity.
(d) The Company is validly qualified as a real estate
investment trust (a "REIT") under Section 856 of the Code.
(e) No consent, approval or authorization of, or
declaration, registration or filing with, or payment to, any governmental body
or any non-governmental Person is required to be obtained or made in connection
with the execution, delivery and performance by the Company of this Agreement,
the Notes and the other Note Documents or the transactions contemplated hereby
or thereby or as a condition to the legality, validity or enforceability of the
Company's obligations under this Agreement, the Notes or the other Note
Documents, or the offer, issue, sale or delivery of the Notes to the Purchasers
or the fulfillment of or compliance with the terms and provisions of the Notes,
this Agreement or
-4-
<PAGE> 9
the other Note Documents, except for (i) the recording of the Direct Mortgages,
the Assignments of Lease and the Assignments of Loan Documents and the filing
of UCC-1 or other financing statements perfecting the interest of the
Collateral Agent in and to the Collateral or assigning to the Collateral Agent
the interest of the Company in and to the Collateral (all of which shall have
been recorded or filed on or prior to the Closing Date) and (ii) such
additional filings, recordings, payment of filing fees and the like as may be
necessary (x) to continue any assignment or Lien created in respect of the
Collateral or (y) to perfect any Lien on any Additional Collateral.
(f) Set forth on Schedule 3.1(f) is a true and complete
list of each Direct Mortgage, Assignment of Lease, Assignment of Loan Documents
and UCC financing statement relating to the Collateral to be included in the
Borrowing Base on the Closing Date, which identifies each office, if any, in
which each such Collateral Document is required to be filed or recorded to
perfect the interest of the Collateral Agent in and to the Collateral.
(g) Neither the execution and delivery of this Agreement,
the Notes or the other Note Documents by the Company, nor the performance of
the terms and provisions hereof and thereof, nor the issuance and sale of the
Notes by the Company nor the creation or perfection of the Liens nor the
effectuation of the assignments contemplated by the Collateral Documents will
(i) conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, the
certificate of incorporation or by-laws of the Company, any contract,
agreement, mortgage, indenture, credit agreement (including the Credit
Agreement and the 1993 Note Documents), lease or other instrument to which the
Company or any Subsidiary of the Company is a party or by which the Company or
any such Subsidiary or any of their respective assets is bound, or of any
statute, law, rule, regulation or order of the United States of America or of
any State thereof, or any agency, court or other instrumentality of any
thereof, to which the Company is subject, (ii) result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries
(other than the Liens created pursuant to the Collateral Documents), or (iii)
result in the disqualification of the Company as a REIT under the Code.
(h) The Company's annual report on Form 10-K for the
fiscal year ending December 31, 1995 (the "1995 10-K"), the Private Placement
Memorandum, this Agreement and all documents, instruments, certificates and
other writings delivered to any Purchaser by or on behalf of the Company in
connection with the transactions contemplated hereby, taken together, do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances in which they were made, not misleading, on or as of the dates on
which such statements were made. The Company has disclosed to the Purchasers
in writing any and all facts which may (to the extent the Company can
reasonably foresee) have a Material Adverse Effect.
(i) (i) The audited consolidated financial statements
of the Company and its Subsidiaries at and for the fiscal years ended December
31, 1992, 1993, 1994 and
-5-
<PAGE> 10
1995 (the "AUDITED FINANCIALS") are true and complete and have been prepared in
accordance with generally accepted accounting principles in the United States
of America ("GAAP"), consistent with the principles and practices used in the
preparation of the Company's audited consolidated financial statements for the
immediately preceding fiscal year (except as otherwise indicated in the Audited
Financials, including the notes thereto), and present fairly in all material
respects the consolidated financial condition of the Company at the end of each
such fiscal year and the consolidated results of operations and cash flows of
the Company for each of such periods. (ii) The Company and each Subsidiary of
the Company have good and marketable title to all assets reflected in the
consolidated balance sheet included in the Audited Financials for the fiscal
year ended December 31, 1995, except for changes resulting from transactions in
the ordinary course of business occurring after such date, free and clear of
any Lien other than any Lien permitted by Section 5.13.
(j) Since December 31, 1995, there has not been any
material adverse change in the business, value or condition (financial or
otherwise), results of operations or prospects of the Company and its
Subsidiaries, considered as a whole, or in the condition of any of the
Collateral.
(k) The net proceeds from the issuance and sale of the
Notes will be used to fund the acquisition or financing of Health Care
Facilities either directly or through a refinancing or repayment of revolving
credit borrowings under the Credit Agreement or other borrowing arrangements.
No part of the proceeds of the sale of the Notes will be used, directly or
indirectly, for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System. The assets of the Company and its Subsidiaries do not
and will not include an amount of "margin stock" that would cause the
provisions of Rule 207.2(f)(2)(i) of Regulation G or the provisions of Rule
221.2(g)(2)(i) of Regulation U to be inapplicable and the Company and its
Subsidiaries have no present intention of purchasing such an amount of "margin
stock."
(l) Neither the Company nor any Subsidiary of the Company
nor, to the Company's knowledge, anyone acting on its behalf has offered the
Notes or any similar securities to, or solicited any offer to purchase the same
from, any Person, or has taken any other action, which would require the
registration of the Notes under Section 5 of the Act.
(m) (i) The consummation of the transactions
contemplated by this Agreement and compliance by the Company and each
Subsidiary of the Company with the provisions hereof and the Notes issued
hereunder and the other Note Documents will not constitute a prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. (ii) Each Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and (A) no Reportable Event
has occurred and is continuing with respect to any Plan subject to Title IV of
ERISA, (B) neither the Company nor any Subsidiary of the Company nor any ERISA
Affiliate has withdrawn from any Plan subject to Title IV of ERISA or any
Multiemployer Plan or instituted steps to do so, and (C)
-6-
<PAGE> 11
no steps have been instituted to terminate in a distress termination any Plan
subject to Title IV of ERISA. (iii) Neither the Company nor any Subsidiary of
the Company nor any ERISA Affiliate has received notice that any Multiemployer
Plan is in Reorganization or Insolvent where such Reorganization or Insolvency
has resulted, or would be reasonably likely to result in an unpaid liability
that would be reasonably likely to have a Material Adverse Effect nor, to the
best knowledge of the Company, is any such Reorganization or Insolvency
reasonably likely to occur. (iv) No condition exists or event or transaction
has occurred in connection with any Plan that could result in the incurrence by
the Company or any Subsidiary of the Company or any ERISA Affiliate of any
material liability, fine or penalty. (v) No Plan maintained by the Company or
any Subsidiary of the Company or any ERISA Affiliate and no trust created
thereunder has incurred any "ACCUMULATED FUNDING DEFICIENCY" as defined in
Section 302 of ERISA, and the present value of all benefits vested under all
Plans subject to Title IV of ERISA does not exceed the value of the assets of
such Plans allocable to such vested benefits (such present value to be
determined as of, and based on, the most recent valuation of such Plan for
funding purposes). (vi) Neither the Company nor any Subsidiary of the Company
has any material contingent liability with respect to any post-retirement
"welfare plan" (as such term is defined in Section 3(1) of ERISA), other than
as required by Section 4980B of the Code. (vii) No Plan is a multiple employer
plan (within the meaning of Section 413(c) of the Code).
(n) The Company and each Subsidiary of the Company has
filed all tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be owing, except
any such taxes or charges (including interest and penalties) which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been set aside on its books.
The charges, accruals and reserves on the books of the Company and each
Subsidiary of the Company in respect of taxes or other governmental charges, if
any, are adequate. No tax Liens have been filed with respect to the Company or
any Subsidiary of the Company or any of their assets and no claims material to
the Company or any Subsidiary of the Company are being asserted against the
Company or any Subsidiary of the Company with respect to any taxes or
governmental charges, except for Liens for taxes, assessments and governmental
charges which are not yet due and payable or which individually or in the
aggregate could not have a Material Adverse Effect. With respect to each
federal income tax return of the Company and each Subsidiary of the Company,
the statute of limitations for the assessment of such Taxes has expired through
the taxable year ended December 31, 1992 and no audit is in progress and no
extension of time is in force with respect to any date on which any such return
was or is to be filed and no waiver or agreement is in force for the extension
of time for the assessment or payment of any tax.
(o) Neither the Company nor any Subsidiary of the Company
is an "investment company" within the meaning of the Investment Company Act of
1940, as amended. Neither the Company nor any Subsidiary of the Company is a
"holding company" or a "subsidiary" or an "affiliate" of a "holding company" or
a "public utility" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
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(p) There are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary of the Company in any court or before any governmental authority or
arbitration board or tribunal which, if adversely determined, would have a
Material Adverse Effect.
(q) (i) The Company has good and marketable fee title
to each item of real property constituting any part of a Fee Property; is the
sole holder of all notes, mortgages and other documents evidencing or securing
the Assigned Loans (collectively, the "ASSIGNED LOAN DOCUMENTS") and has full
right and authority to assign the Assigned Loans; has good and marketable fee
or leasehold title to all of its other material real property; and has good and
marketable title to all of its other respective material properties and assets
of any nature whatsoever (including patents, trademarks, trade names, service
marks and copyrights) free and clear, in each case, of all Liens (including
infringement claims with respect to patents, trademarks, trade names, service
marks and copyrights), except Liens that are expressly permitted by this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, the provisions of Sections 3.1(q)(iv) and (vi) and
not those of this Section 3.1(q)(i) shall govern with respect to the existence
of Liens on the Mortgage Properties and the Fee Properties, and the Liens
permitted by Sections 3.1(q)(iv) and (vi) shall be the only Liens permitted
with respect to the Mortgage Properties and the Fee Properties.
(ii) The Company and each Subsidiary owns or holds
all licenses and permits as are necessary or desirable in the conduct
of its business, except to the extent that the failure to own or hold
the same would not have a Material Adverse Effect.
(iii) Each Assigned Loan Document and each
Collateral Lease constitutes the legal, valid and binding obligation
of the parties thereto, enforceable against each such party in
accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general principles
of equity. No party to any Assigned Loan Document or any Collateral
Lease is in default in any material respect thereunder and no
condition exists which, with the giving of notice or the passage of
time or both, would constitute a default in any material respect
thereunder. The obligations and indebtedness evidenced by the
Assigned Loan Documents are owing in accordance with their terms and
are not, in whole or in part, subject to any setoff, counterclaim,
defense or right of recoupment, subject to reduction or disallowance
for any other reason or subject to any dispute. No obligation of any
lessee under a Collateral Lease is, in whole or in part, subject to
any setoff, counterclaim, defense or right of recoupment, subject to
reduction or disallowance for any other reason or subject to any
dispute.
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(iv) Each Mortgage Property is free and clear of
all Liens except for the Permitted Mortgage Property Liens. The
Company is assigning the Assigned Loans free and clear of all Liens.
The proceeds of each Assigned Loan have been fully disbursed and there
is no requirement for future advances under any Assigned Loan. The
Assigned Loan Documents constitute all of the documents evidencing or
securing the Assigned Loans. All amounts to be paid or disbursed by
the Company under or in connection with each Collateral Lease have
been fully paid and disbursed and there is no requirement for future
advances or payments under any Collateral Lease.
(v) Each Lien granted to the Company in
connection with the Assigned Loans is a valid and enforceable first
priority Lien, except for such Liens (the "PERMITTED MORTGAGE PROPERTY
LIENS") as are shown on the mortgagee title insurance policies issued
to the Company in connection with the Assigned Loans (collectively,
the "ASSIGNED LOAN TITLE POLICIES"). Each Assigned Loan Title Policy
is in full force and effect, is freely assignable and (subject to the
recordation of the Assignment of Loan Documents) will inure to the
benefit of the Collateral Agent for the ratable benefit of the
Purchasers. No claims have been made under any Assigned Loan Title
Policy since the time of issuance of such Assigned Loan Title Policy,
and the Company does not have any actual knowledge of any Lien not
shown by the public records, the existence of which would be the sole
basis for an exclusion from coverage under any such Assigned Loan
Title Policy. No Assigned Loan is cross-collateralized with any other
loan which is not an Assigned Loan. The Assigned Loan Documents and
the Collateral Leases contain customary and enforceable default and
remedial provisions such that the holder or the landlord, as the case
may be, may timely enforce the rights and exercise the remedies set
forth in such Assigned Loan Documents and Collateral Leases.
(vi) Each Fee Property and each Collateral Lease
is free and clear of all Liens except for such Liens (the "PERMITTED
FEE PROPERTY LIENS") as are shown on the title insurance commitments
being issued to the Collateral Agent in connection with the Direct
Mortgages.
(r) All facilities and property (including underlying
groundwater), directly or indirectly, owned, operated or leased by the Company
or any Subsidiary of the Company are owned, operated or leased by the Company
or such Subsidiary in material compliance with all Environmental Laws. Each
Mortgage Property and all other properties with respect to which the Company or
any Subsidiary of the Company holds a mortgage interest is being operated by
the owners, lessees or operators thereof in material compliance with all
Environmental Laws. Except as disclosed in the environmental reports given to
the Purchasers and identified on Schedule 3.1(r) with respect to each Fee
Property and Mortgage Property (the "ENVIRONMENTAL REPORTS"), there have been
no past, and there are no pending or threatened (i) claims, complaints, notices
or requests for information received by the Company or any Subsidiary of the
Company, and to the best of the Company's knowledge,
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<PAGE> 14
by any lessee under a Collateral Lease, by any mortgagor under an Assigned Loan
or by any lessee of a Mortgage Property with respect to any alleged violation
of any Environmental Law, or (ii) complaints, notices or inquiries to the
Company or any Subsidiary of the Company, and to the best of the Company's
knowledge, any such lessee or any such mortgagor regarding potential liability
under any Environmental Law. Except as disclosed in the Environmental Reports,
there have been no Releases of Hazardous Materials at, on or under any property
now owned, operated or leased, directly or indirectly, by the Company or any
Subsidiary of the Company, or at, on or under any Mortgage Property, that,
singly or in the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect. Except as disclosed in the Environmental Reports, the
Company and each Subsidiary of the Company and each of such lessees and such
mortgagors has been issued and is in material compliance with all permits,
certificates, approvals, licenses and other authorizations relating to
environmental matters and necessary or desirable for their respective
businesses, the failure of which to have or be in compliance with, singly or in
the aggregate, has or may reasonably be expected to have a Material Adverse
Effect. No property now owned, operated, or leased, directly or indirectly by
the Company or any Subsidiary of the Company and no Mortgage Property is listed
or (with respect to Fee Properties only) proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar federal or
state list of sites requiring investigation or clean-up. Except as disclosed
in the Environmental Reports, there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, landfills, lagoons, surface
impoundments, disposal areas or disposal ponds, on or under any property now
owned, operated or leased, directly or indirectly, by the Company or any
Subsidiary of the Company, or on or under any Mortgage Property, that, singly
or in the aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect. Neither the Company nor any Subsidiary of the Company has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for listing on
the National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar federal or state list or which is the subject of any federal, state or
local enforcement actions or other investigations which may lead to material
claims against the Company or any Subsidiary of the Company for any remedial
work, damage to natural resources or personal injury, including claims under
CERCLA. Except as disclosed in the Environmental Reports, there are no
polychlorinated biphenyls or friable asbestos present at any property now
owned, operated or leased, directly or indirectly, by the Company or any
Subsidiary of the Company, or at any Mortgage Property, that, singly or in the
aggregate, have, or may reasonably be expected to have, a Material Adverse
Effect. Except as disclosed in the Environmental Reports, no conditions exist
at, on or under any property now owned, operated, or leased, directly or
indirectly, by the Company or any Subsidiary of the Company, or at, on or under
any Mortgage Property, which, with the passage of time, or the giving of notice
or both, would give rise to liability under any Environmental Law which singly
or in the aggregate have or may reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Environmental Reports, no
generation, manufacture, storage, treatment, transportation or disposal of
Hazardous Material has occurred or is occurring on or from any property owned,
operated, or leased by the Company or any Subsidiary of the Company, or on or
from any Mortgage
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<PAGE> 15
Property, that, singly or in the aggregate, has, or may reasonably be expected
to have, a Material Adverse Effect.
(s) Without limiting the representations made in Section
3.1(r), neither the Company nor any Subsidiary of the Company nor, to the best
knowledge of the Company, any lessee of a Fee Property or any owner or operator
of any Mortgage Property, is in violation of any federal, state, local or
foreign law, ordinance or regulation or any order, judgment, injunction, award
or decree or any other requirement of any governmental or regulatory body,
court or arbitrator applicable to the business or properties of the Company or
any Subsidiary of the Company, except for such minor and isolated violations as
could not in the aggregate have a Material Adverse Effect.
(t) On the date on which the Collateral referred to in
the Collateral Documents is first included in the Borrowing Base, and at all
times thereafter while the Secured Obligations are required to be secured, the
provisions of the Collateral Documents will be effective to create, in favor of
the Collateral Agent for the ratable benefit of the Purchasers, a legal, valid
and enforceable fully perfected first priority Lien in and to all right, title
and interest of the Company in any and all of the Collateral described therein
(except, in the case of the Direct Mortgages, for the Permitted Fee Property
Liens), to secure the Secured Obligations.
(u) There is no condemnation proceeding pending or, to
the best knowledge of the Company, threatened against any Fee Property. There
is no condemnation proceeding pending or, to the best knowledge of the Company,
threatened against any Mortgage Property. The improvements located on each Fee
Property and each Mortgage Property are in good condition and repair. No such
improvement is in material violation of any applicable zoning law or ordinance.
(v) Each of the representations and warranties made or to
be made by the Company in the other Note Documents are incorporated herein on
the Closing Date and on each other date on which the representations set forth
in this Section 3.1 are required to be made, as if set forth herein in their
entirety and shall be true and correct as of each such date.
(w) The Company has delivered to the Purchasers or their
special counsel true, correct and complete copies of (i) the Assigned Loan
Documents, (ii) the Collateral Leases, (iii) the Credit Agreement and the 1993
Note Documents, and (iv) all documents and instruments executed and delivered
by the Company in connection with any thereof (other than UCC-1 financing
statements), each as in effect on the Closing Date.
3.2. REPRESENTATIONS OF EACH PURCHASER. Each Purchaser hereby
represents and warrants, for itself only, as follows:
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<PAGE> 16
(a) Such Purchaser is acquiring the Notes for its own
account (or as trustee for the account of one or more pension or trust funds),
and not with a view to distribution (as such term is used under Section 2(11)
of the Act) thereof; provided that the disposition of each Purchaser's (or such
account's) property shall at all times be and remain within its control.
(b) Such Purchaser acknowledges that (i) the Notes have
not been registered under the Act by reason of their issuance in a transaction
exempt from the registration requirements of the Act pursuant to Section 4(2)
thereof nor have the Notes been registered or qualified under any state
securities laws; (ii) the Notes may be sold in the absence of such registration
only pursuant to an exemption from such registration or qualification; and
(iii) the Notes may bear a legend to such effect.
(c) With respect to each source of funds (a "Source") to
be used by such Purchaser to pay the purchase price of the Notes to be
purchased by it hereunder:
(i) if such Purchaser is an insurance company,
the Source is an "insurance company general account" within the
meaning of the United States Department of Labor's Prohibited
Transaction Exemption ("PTE") 95-60 (issued July 12, 1995) and the
purchase of Notes by such Purchaser is eligible for and satisfies the
requirements of PTE 95-60; or
(ii) the Source is either (x) an insurance company
pooled separate account, within the meaning of PTE 90-1 (issued
January 29, 1990), or (y) a bank collective investment fund, within
the meaning of PTE 91-38 (issued July 12, 1991) and, except as such
Purchaser has disclosed to the Company in writing pursuant to this
subsection (ii), no employee benefit plan or group of plans maintained
by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or
collective investment fund; or
(iii) (A) the Source constitutes assets of an
"investment fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or "QPAM" (within
the meaning of Part V of the QPAM Exemption), (B) no employee benefit
plan's assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning
of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, (C) the conditions of Part
I(c) and (g) of the QPAM Exemption are satisfied, (D) neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "control" in Section V(e) of the QPAM Exemption) owns a
5% or more interest in the Company and (E) both (1) the identity of
such QPAM and (2) the names of all employee benefit plans whose assets
are
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<PAGE> 17
included in such investment fund have been disclosed to the Company in
writing pursuant to this subsection (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or more
employee benefit plans, each of which has been identified to the
Company in writing pursuant to this subsection (v); or
(vi) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the coverage of
ERISA; or
(vii) the Source is a separate account that is
maintained solely in connection with such Purchaser's fixed
contractual obligations, under which the amounts payable, or credited,
to such plan and to any participant or beneficiary of such plan
(including any annuitant) are not affected in any manner by the
investment performance of the separate account.
As used in this Section, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the
respective meanings assigned to such terms in Section 3 of ERISA, and the term
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.
SECTION 4. CLOSING CONDITIONS.
Each Purchaser's several obligation to purchase the Notes on the
Closing Date shall be subject to the execution and delivery by the Company to
each Purchaser of the Notes to be purchased by such Purchaser and the
performance by the Company of its agreements hereunder and under the other Note
Documents that by the terms hereof or thereof are to be performed at or prior
to the time of delivery of the Notes, and to the following further conditions
precedent:
4.1. COMPANY'S CLOSING CERTIFICATE. Such Purchaser shall have
received a certificate of the Company signed by an Executive Officer of the
Company to the effect that (a) the representations and warranties contained in
Section 3.1 and the other Note Documents are true and correct on and as of the
Closing Date, and (b) no Default or Event of Default exists on and as of the
Closing Date (both before and after giving effect to the issuance of the Notes
and the consummation of the other transactions contemplated by this Agreement
and the other Note Documents).
4.2. INITIAL BORROWING BASE CERTIFICATE. Such Purchaser and the
Collateral Agent shall have received a Borrowing Base Certificate which shall
(a) identify each Fee Property
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<PAGE> 18
and Assigned Loan included in the Collateral as of the Closing Date and
included in calculating the Borrowing Base, and (b) set forth a calculation of
the Borrowing Base at the Closing Date.
4.3. BORROWING BASE. The Borrowing Base set forth in the Borrowing
Base Certificate delivered pursuant to Section 4.2 (the "INITIAL BORROWING BASE
CERTIFICATE") shall be not less than $40,000,000.00.
4.4. LEGAL OPINIONS. Such Purchaser shall have received an opinion
dated the Closing Date, in each case in form and substance satisfactory to such
Purchaser, covering such matters relating to the transactions contemplated by
Agreement as such Purchaser may reasonably request, from (i) Shumaker, Loop &
Kendrick, counsel to the Company, (ii) Dorsey & Whitney, special New York
counsel to the Company and (iii) the special local counsel to the Company
required to deliver the opinions described in Section 4.6(j).
4.5. COLLATERAL AGENCY AND CASH COLLATERAL AGREEMENT. The Company,
the Collateral Agent and each Purchaser shall have executed and delivered the
Collateral Agency and Cash Collateral Agreement.
4.6. COLLATERAL DOCUMENTS AND OTHER ACTIONS.
(a) The Company shall have executed and delivered to such
Purchaser:
(i) Assignments of Loan Documents and UCC
financing statements assigning to the Collateral Agent all of the
Company's right, title and interest in, to and under all Assigned Loan
Documents with respect to each Assigned Loan included in the Borrowing
Base, as identified in the Initial Borrowing Base Certificate; and
(ii) a Direct Mortgage and an Assignment of Leases
with respect to each Fee Property included in the Borrowing Base, as
identified in the Initial Borrowing Base Certificate;
(b) Such Purchaser shall have received copies of and
shall have approved all Assigned Loan Documents and all Collateral Leases, and
the Collateral Agent shall have received (i) the executed original of the note
delivered in connection with each Assigned Loan, endorsed by the Company to the
Collateral Agent, and (ii) an executed original of the mortgage and any
separate assignment of rents and leases delivered in connection with each
Assigned Loan;
(c) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received (i) a survey for each Fee Property and each
Mortgage Property, which survey shall show no easements, encroachments or other
title defects, except those easements, encroachments and title defects that do
not have a Material Adverse Effect or that the Purchaser has notified the
Company are acceptable, (ii) a mortgage title insurance policy
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<PAGE> 19
with respect to each Fee Property satisfactory in amount, form and substance to
such Purchaser from Lawyers Title Insurance Corporation, Chicago Title
Insurance Company or another nationally recognized title insurance company
satisfactory to such Purchaser and (iii) an original endorsement to, and a copy
of, the Assigned Loan Title Policies, which shall be in amount, form and
substance satisfactory to such Purchaser, and shall be issued by Lawyers Title
Insurance Corporation, Chicago Title Insurance Company or another nationally
recognized title insurance company, satisfactory to such Purchaser;
(d) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received a Phase I environmental report with respect
to each Mortgage Property and each Fee Property which does not disclose any
condition on or in respect of any of such properties that would constitute a
Default hereunder (without giving effect to any requirement for the giving of
notice, the passage of time or both);
(e) All filings and recordings of the Collateral
Documents shall have been made with each office or official in each location
necessary for each such Collateral Document to create and to continue to create
a fully perfected first priority Lien in favor of the Collateral Agent for the
benefit of the Purchasers in all right, title and interest of the Company in
the Collateral described in each such Collateral Document, superior in right to
any Lien, existing or future, which the Company or any creditors thereof or
purchasers therefrom or any other Person may have against such Collateral or
interests therein, except in the case of the Direct Mortgages, for the
Permitted Fee Property Liens, and the Company shall have delivered to the
Collateral Agent, on behalf of the Purchasers, all UCC-1 financing statements
and all other documents necessary to evidence the filing, recording and
perfection of the Liens granted by such Collateral Documents and the payment of
any and all fees payable in connection with any such filing or recordings;
(f) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received true, correct and complete copies of each
Collateral Lease, and for each Fee Property with respect to which a Collateral
Lease exists, a Lessee Estoppel Certificate and for each Mortgage Property, a
Borrower Estoppel Certificate;
(g) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received evidence that each item of Collateral
relating to the Fee Properties is insured in accordance with Section 5.7 (and
with respect to those items of Collateral subject to a Direct Mortgage in
accordance with the terms of such Direct Mortgage), and that each item of
Collateral relating to the Mortgage Properties is insured in accordance with
the provisions of the applicable Assigned Loan Documents, and the Company shall
have furnished the Collateral Agent, on behalf of such Purchaser, evidence that
the Collateral Agent is named as a loss payee or additional insured (as
appropriate) on each such policy;
(h) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received a copy of an Appraisal of each Fee Property
and Mortgage Property constituting a part of the Collateral satisfactory to
such Purchaser;
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<PAGE> 20
(i) On the Closing Date, each Fee Property and each
Mortgage Property constituting a part of the Collateral shall be undamaged by
fire or other casualty and not subject to any condemnation proceeding;
(j) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received (i) an opinion satisfactory in form and
substance to such Purchaser from a law firm approved by such Purchaser (which
approval shall not be unreasonably withheld) and located in each of the states
in which a Fee Property or Mortgage Property is located and (ii) a letter from
the local law firm which represented the borrower with respect to each Assigned
Loan and the lessee with respect to each Collateral Lease, stating that such
Purchaser may rely upon the opinion delivered by such law firm with respect to
such Assigned Loan or such Collateral Lease; provided that such letter need not
be provided if such opinion itself states that any assignee of the Company's
interest in such Assigned Loan or such Collateral Lease may rely thereon;
(k) Such Purchaser, or its special counsel, on behalf of
such Purchaser, shall have received evidence satisfactory to it that the
description of the tax lot or lots covering each Fee Property and Mortgage
Property constituting a part of the Collateral does not include any lands or
buildings other than those described in the applicable Collateral Document; and
(l) A letter shall have been prepared and executed by the
Company and delivered to the Collateral Agent (which the Collateral Agent may
send only after a Default or an Event of Default shall have occurred under the
Note Documents), which directs each lessee under a Collateral Lease, each
borrower under an Assigned Loan, and the guarantor, if any, of such lessee's or
borrower's obligations under such Collateral Lease or Assigned Loan, to make
all payments in respect of such Collateral Lease, such Assigned Loan or such
guaranty to the Collateral Agent upon notice from the Required Holders that a
Default or Event of Default shall have occurred under the Note Documents.
4.7. RATINGS. The Notes shall have a National Association of
Insurance Commissioners's rating of "2" and a Duff & Phelps rating of at least
BBB (it being understood and agreed that a rating of BBB- is lower than a
rating of BBB), and each Purchaser shall have received written evidence of both
thereof.
4.8. PRIVATE PLACEMENT NUMBER APPLICATION. An application for
issuance of a private placement number for the Notes shall have been made to
Standard & Poor's.
4.9. LEGALITY. The Notes shall qualify as a legal investment for
such Purchaser under the laws and regulations of each jurisdiction to which
such Purchaser is subject (without reference to any so-called "basket"
provision (such as Section 1405(a)(8) of the New York Insurance Law) which
permits the making of an investment without restrictions as to the character of
the particular investment being made); and such Purchaser shall have received
such certificates of the Company and information concerning the Company and its
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<PAGE> 21
Subsidiaries and the Collateral and the Notes as such Purchaser shall
reasonably request to establish such facts.
4.10. FUNDING INSTRUCTIONS. Such Purchaser shall have received
written instructions executed by an Executive Officer of the Company directing
transfer of the payment of funds in the manner required by Section 1.2 setting
forth (a) the name of the transferee bank, (b) such transferee bank's ABA
Number and (c) the account name and number into which the Purchase Price for
the Notes is to be deposited.
4.11. NO DEFAULT OR EVENT OF DEFAULT; ACCURACY OF REPRESENTATIONS
AND WARRANTIES. On the Closing Date, no Default or Event of Default shall
exist (either before or after giving effect to the issuance of the Notes and
the consummation of the other transactions contemplated by this Agreement and
the other Note Documents). The representations and warranties contained in
this Agreement (including Section 3.1) and in the other Note Documents shall be
true and correct on and as of the Closing Date.
4.12. OTHER PURCHASERS. Such Purchaser shall have received evidence
that the Notes to be issued to and purchased by each other Purchaser hereunder
shall have been issued by, and the Purchase Price therefor shall have been
received by, the Company.
4.13. OTHER AGREEMENTS. Such Purchaser shall have received a copy
of the Credit Agreement and the 1993 Note Documents and each material document
referred to therein, in each case as in effect on the Closing Date, together
with a certificate of an Executive Officer of the Company certifying that each
such copy is a true, complete and correct copy of each such document and
agreement as then in effect. Such certificate shall also state that each such
document and agreement is in full force and effect and that no default or event
of default exists thereunder or will result from the consummation of the
transactions contemplated by this Agreement.
4.14. OPINION OF COUNSEL TO THE PURCHASERS. Such Purchaser shall
have received from its special counsel an opinion dated the Closing Date in
form and substance satisfactory to such Purchaser covering such matters
relating to the transactions contemplated by this Agreement as such Purchaser
may reasonably request.
4.15. SATISFACTORY PROCEEDINGS. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary for the consummation thereof, shall be satisfactory in form and
substance to such Purchaser and its special counsel, and such Purchaser shall
have received a copy (executed or certified as may be appropriate) of all legal
documents or proceedings taken in connection with the consummation of such
transactions.
4.16. COSTS AND EXPENSES. The Company shall have paid or provided
for the payment of all expenses that the Company is obligated to pay pursuant
to Section 9.4. In addition, such Purchaser shall have received reasonable
assurance in writing that all other
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<PAGE> 22
fees and expenses incurred by any other Person in connection with the
transactions contemplated hereunder shall have been paid on or prior to the
Closing Date.
If on the Closing Date the Company fails to tender to any Purchaser the Notes
to be issued on such date or if the conditions specified in this Section 4 have
not been fulfilled, such Purchaser or any other Purchaser may thereupon elect
to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in this Section 4 have not
been fulfilled, any Purchaser may waive (as between such Purchaser and the
Company) compliance by the Company with any such condition to such extent as
such Purchaser may in its own sole discretion determine; PROVIDED, HOWEVER,
that any such waiver shall not prejudice the rights or obligations of any other
Purchaser. Nothing herein shall operate to relieve the Company of any of its
obligations hereunder, including its obligation to pay expenses pursuant to
Section 9.4, or to waive any of any Purchaser's rights against the Company.
SECTION 5. COMPANY COVENANTS.
Without limiting the obligations of the Company set forth in the
Collateral Documents or any of the other Note Documents, from and after the
Closing Date and continuing so long as any amount remains unpaid on any Note:
5.1. FINANCIAL REPORTS. The Company will furnish to each holder of
outstanding Notes:
(a) As soon as available and in any event within 90 days
after the end of each fiscal year of the Company, a copy of the annual audited
report for such fiscal year for the Company (a copy of which shall also be
furnished to the Securities Valuation Office of the National Association of
Insurance Commissioners, New York, New York), including therein a balance sheet
of the Company as at the end of such fiscal year and statements of income, cash
flow and shareholders' equity of the Company for such fiscal year, prepared in
accordance with GAAP and setting forth in comparative form the corresponding
figures of the preceding fiscal year and in each case certified by either Ernst
& Young, another nationally recognized independent auditing firm, or a firm of
independent certified public accountants reasonably acceptable to the
Purchasers, together with a certificate from such accountants to the effect
that, in making the examination necessary for the signing of such annual report
by such accountants, they have not become aware of any Default or Event of
Default that has occurred and is continuing, or, if they have become aware of
such Default or Event of Default, describing such Default or Event of Default;
(b) As soon as available and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Company, a balance sheet of the Company as at the end of such fiscal
quarter and statements of income, cash flow and shareholders' equity of the
Company for such fiscal quarter and for the period commencing
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at the end of the previous fiscal year and ending at the end of such fiscal
quarter, prepared in accordance with GAAP (subject to normal year-end
adjustments and the absence of footnotes), together with a certificate of the
chief financial Executive Officer of the Company to the effect that such
balance sheet and related financial statements fairly present the financial
condition, results of operations and shareholders' equity as of such date and
for such period;
(c) Promptly upon their becoming available, and
notwithstanding the provisions of Sections 5.1(a) and (b), copies of each
financial statement, report, notice or proxy statement filed by the Company
with the Securities and Exchange Commission under the Exchange Act and sent by
the Company to its security holders generally;
(d) Within the periods provided in Sections 5.1(a) and
(b), a certificate of the chief financial Executive Officer of the Company
stating that such officer has reviewed the provisions of this Agreement and the
other Note Documents and stating whether there existed as of the date of such
financial statements and whether, to the best of such officer's knowledge,
there exists at the time of the certificate or existed at any time during the
period covered by such financial statements, any Default or Event of Default,
together with a detailed calculation which demonstrates the Company's
compliance with Sections 5.8(b), 5.12 through 5.22, and, if any such condition
or event does exist on the date of the certificate, specifying the nature and
period of existence thereof and the action the Company is taking and/or
proposes to take with respect thereto;
(e) As soon as available and in any event within 45 days
after the end of each of the Company's fiscal quarters at any time while the
Secured Obligations are required to be secured, a Borrowing Base Certificate
("BORROWING BASE CERTIFICATE") setting forth in reasonable detail the Company's
Borrowing Base as at the end of that quarter and certified by the chief
financial Executive Officer to be true and complete and certifying that the
Company is in compliance with Section 5.24(a) and (e);
(f) As soon as available and in any event within 45 days
after the end of each of the Company's fiscal quarters, a schedule showing the
aging of delinquent lease and mortgage receivables, if any, for all of the
Company's Health Care Facilities and in each case where a receivable is past
due over 60 days, a report on the status of the receivable;
(g) As soon as available and in any event within 45 days
after the end of each of the Company's fiscal quarters, a schedule showing the
Company's recorded liabilities, unfunded commitments, contingent liabilities
and other material items;
(h) Promptly after the Company's receipt thereof, (i) a
copy of any special audits of the Company's properties, assets or operations
conducted by the Company's auditors and (ii) a copy of any letters to the
Company from the Company's auditors in connection with the preparation and
presentation of the Company's annual audited report;
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(i) In respect of each Plan:
(1) a copy of each annual report (and
related schedules) of such Plan within 10 days after filing
the same with any ERISA regulator;
(2) a copy of each application for a
determination of the qualified status of any such Plan, in
each case within 10 days after the filing thereof; and
(j) Promptly upon any Purchaser's written request, such
other information in writing about the Company's financial condition,
properties and operations as such Purchaser may from time to time reasonably
request.
The balance sheets and financial statements referred to in Sections 5.1(a) and
(b) shall be deemed to refer to both the consolidated balance sheets and
financial statements of the Company and its consolidated Subsidiaries.
5.2. BOOKS AND RECORDS.
(a) The Company will, and will cause each Subsidiary to,
keep proper books of record and account in accordance with GAAP.
(b) (i) Each Purchaser shall have the right, at all
reasonable times, at the expense of the Company, subject to reasonable notice
and as often as may be reasonably requested, to examine the corporate books and
records of the Company and its Subsidiaries and to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the officers,
directors, independent public accountants, actuaries, Plan administrators and
trustees of or for the Company and its Subsidiaries, each of which is
authorized to make such information available to each Purchaser to the same
extent as it would be to the Company or to its Subsidiaries; PROVIDED, HOWEVER,
that any transferee of a Note (other than an Affiliate of an original
Purchaser) in a principal amount of less than $2,000,000 shall be entitled to
exercise the foregoing rights only once every 12 months.
(ii) The Company shall also permit, and cause each
of its Subsidiaries and tenants under any Collateral Lease to permit,
upon receipt of not less than two (2) Business Days' prior written
notice, the Purchasers and the Collateral Agent (and their agents and
representatives) (at the expense of the Company after the occurrence
of a Default), during normal business hours, to examine the Company's,
such Subsidiary's or such tenant's, properties, as the case may be,
with the guidance and supervision of the Company or such Subsidiary,
as the case may be.
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5.3. PAYMENTS.
(a) The Company will duly and punctually pay the
principal of, premium (if any) and interest on the Notes in accordance with
their terms and this Agreement and all other Secured Obligations in accordance
with this Agreement and the other Note Documents, free and clear of, and
without reduction for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholding,
now or hereafter imposed, levied, collected, withheld or assessed by any
governmental authority, excluding, in the case of any Purchaser, net income and
franchise taxes imposed on such Purchaser by the jurisdiction under the laws of
which such Purchaser is organized or any political subdivision or taxing
authority thereof or therein (such non-excluded taxes, "TAXES"). If any Taxes
are required to be withheld from any amounts payable to any Purchaser
hereunder, under any Note or under any other Note Document, the amounts so
payable to such Purchaser shall be increased to the extent necessary to yield
to such Purchaser (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, the applicable Note or such other Note Document. If the Company
fails to pay any Taxes when due to the appropriate taxing authority, the
Company shall indemnify each Purchaser for any incremental taxes, interest or
penalties that may become payable by such Purchaser as a result of any such
failure.
(b) Any amount that is due and payable by the Company
under any Note Document that is not paid when due shall bear interest, for each
day from (and including) the date such amount was due and payable to (but
excluding) the date of payment thereof, at a rate per annum equal to the
Overdue Rate.
5.4. PAYING AGENCY. The Company will maintain an office in the
United States of America where notices, presentations and demands to or upon
the Company in respect of this Agreement, the Notes and the other Note
Documents may be given or made. As of the date of this Agreement, such office
is located at the Company's address set forth in Section 9.6. The Company will
give written notice to the holders of the Notes of any change of location of
such office no later than five Business Days prior to the date of any such
change. Notwithstanding the foregoing, in lieu of, or in addition to,
maintaining an office as herein contemplated, the Company may appoint and
maintain an agent for receiving notices, presentations or demands and/or making
payments on the Notes which shall be a state or national bank or trust company
organized under the laws of the United States of America or any State thereof
or the District of Columbia, having capital, surplus and undivided profits
aggregating at least U.S. $250,000,000, and having an office in the Borough of
Manhattan in the City of New York from which it can perform the functions it is
so appointed to perform (the "PAYING AGENT").
5.5. CORPORATE EXISTENCE. The Company 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 corporate existence and, except as
provided in Section 5.23, to maintain the Company's status as a REIT, and
comply with all applicable laws, statutes, regulations,
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rules, orders, and all applicable restrictions imposed by any governmental or
regulatory body except those being contested in good faith by appropriate
proceedings and where the failure so to comply would not have a Material
Adverse Effect, and maintain all licenses and permits necessary to conduct its
business and own its properties; PROVIDED, HOWEVER that the foregoing shall not
restrict any transaction permitted by Section 5.8.
5.6. TAXES. The Company will, and will cause each of its
Subsidiaries to, pay all applicable taxes except for taxes for which adequate
reserves have been established in accordance with GAAP and the payment of which
is being contested by the Company or such Subsidiary in good faith and by
appropriate proceedings and the non-payment of which would not have a Material
Adverse Effect.
5.7. INSURANCE. The Company will, and will cause each of its
Subsidiaries to, carry and maintain in full force and effect at all times with
fiscally sound and reputable insurers accorded a rating of "A VIII" or better
by A.M. Best Company, Inc. (or a comparable rating by any comparable rating
agency) insurance against such risks as is reasonable and prudent in the
circumstances and in any event as may be required by applicable laws, statutes,
regulations, rules or orders and, with respect to any Fee Property, such
insurance as is required by the applicable Direct Mortgage. Upon written
request from any Purchaser or the Collateral Agent, the Company shall cause an
appropriate officer to furnish to such Purchaser or the Collateral Agent, as
the case may be, such information about the Company's insurance as such
Purchaser or the Collateral Agent may from time to time reasonably request,
which information shall be prepared in form and detail reasonably satisfactory
to such Purchaser and be certified by an Executive Officer of the Company. The
Company shall furnish certificates of insurance to the Purchasers containing a
provision for 30 days notice to each Purchaser prior to any cancellation
thereof, and insurance policies insuring the Fee Properties and the Mortgage
Properties shall be endorsed to require 30 days notice to the Collateral Agent
prior to modification or cancellation and to name the Collateral Agent, on
behalf of the Purchasers, as an additional insured and/or a "mortgagee loss
payee" as its interests may appear.
5.8. LIMITATION ON CONSOLIDATION AND MERGER, SALES OF ASSETS.
(a) The Company will not, directly or indirectly,
consolidate or merge with or into, or sell, convey, transfer or otherwise
dispose of all or substantially all of its assets to, any other Person unless
(i) no Default or Event of Default shall have occurred and be continuing or
would result therefrom, (ii) the Company is the survivor of such transaction,
if such transaction is a merger, or, if the Company is not the survivor, or if
the transaction is not a merger, (x) the surviving, resulting or acquiring
corporation in such transaction is a corporation organized under the laws of
any State of the United States, (y) such corporation expressly assumes in
writing the Company's obligations under this Agreement, the Notes and the other
Note Documents pursuant to an instrument in form and substance reasonably
satisfactory to the Purchasers and (z) after such transaction, such corporation
shall own all or substantially all the assets of the Company, (iii) immediately
after giving effect to such
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transaction (and after giving pro forma effect to such transaction for purposes
of determining compliance with Sections 5.12 through and including 5.22), no
Default or Event of Default would exist, (iv) immediately after giving effect
to such transaction, the surviving, resulting, or acquiring corporation in such
transaction could incur an additional $1 of Indebtedness without causing any
Default or Event of Default, (v) subject to Section 5.23, the surviving,
resulting or acquiring corporation qualifies as a REIT under the Code, (vi)
Duff & Phelps shall have confirmed in a writing (in form and substance
satisfactory to the Purchasers) that, immediately after giving effect to such
transaction, it will continue to assign a credit rating to the Notes that is no
lower than BBB (it being understood and agreed that a rating of BBB- is lower
than a rating of BBB), and (vii) a certificate signed by two Executive Officers
of the surviving, resulting or acquiring corporation to the effect that the
conditions precedent in clauses (i) through (vi) have been satisfied or
complied with. In the case of any such consolidation or merger or sale,
conveyance, transfer or other disposition of assets in which the Company is not
the surviving, resulting or acquiring corporation, the surviving, resulting or
acquiring corporation shall furnish to the Purchasers an unqualified opinion of
independent counsel satisfactory to the Required Holders to the effect that the
instrument of assumption described in clause (y) has been duly authorized,
executed and delivered and constitutes the legal, valid and binding agreement
of the surviving, resulting or acquiring corporation, as the case may be,
enforceable in accordance with its terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and by general
equitable principles. Following a transaction of the kind described above, the
surviving, resulting or acquiring corporation shall use its reasonable best
efforts to cause the Recognized Rating Agencies that immediately prior to the
relevant transaction have rated the unsubordinated, unsecured debt of the
Company, to confirm that such debt continues to have the same such rating.
Notwithstanding the foregoing, the applicable provisions of the Collateral
Documents, and not those of this Section 5.8(a), shall govern with respect to
the sale, conveyance or transfer of Collateral.
(b) Other than Leases of Health Care Facilities in the
ordinary course of the Company's business ("ORDINARY LEASES"), and except as
otherwise permitted pursuant to Section 5.8(a) or Section 5.13, the Company and
its Subsidiaries will not, directly or indirectly, during any four consecutive
fiscal quarters of the Company, sell, lease or otherwise dispose of any assets
or shares of capital stock of a Subsidiary which, individually or when combined
with all other assets (other than Ordinary Leases) sold, leased or otherwise
disposed of by the Company and its Subsidiaries during such four fiscal
quarters, including the assets attributable to a Subsidiary the capital stock
of which was sold during such period, (i) represented 15% or more of the
Company's total assets shown on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP, as of the end of the most recently completed fiscal quarter of the
Company, or (ii) generated 15% or more of the Company's total gross revenues
shown on the income statement of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for the most
recently completed four consecutive fiscal quarters of the Company, UNLESS the
net proceeds from any such sale, lease
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or other disposition are reinvested in the business of the Company within 180
days following the date of each such sale, lease or other disposition and,
prior to such investment, invested in Permitted Investments. The provisions of
this Section 5.8 shall not restrict the sale by the Company or its Subsidiaries
of owned real property and the improvements thereon pursuant to and in
accordance with the terms of Ordinary Leases which grant the lessee thereunder
an option to purchase such owned real property and improvements thereon.
Notwithstanding the foregoing, the applicable provisions of the Collateral
Documents, and not those of this Section 5.8(b), shall govern with respect to
the sale, lease or other disposition of Collateral.
5.9. RATINGS. The Company will use its commercially reasonable
best efforts to enable a Recognized Rating Agency to have in effect a rating
for its unsubordinated, senior, unsecured indebtedness. After the Security
Release Date, the Company shall cause Duff & Phelps to have in effect at all
times a rating for the Notes.
5.10. DIRECT PAYMENTS. Notwithstanding anything to the contrary in
this Agreement or the Notes, if any Purchaser has given written notice to the
Company and the Paying Agent requesting that the provisions of this Section
5.10 shall apply, the Company will cause the Paying Agent promptly and
punctually to pay when due the principal of the Notes and premium, if any, and
interest thereon, without any presentment thereof directly to such Purchaser at
the address of such Purchaser set forth on Schedule 1.1(a) or at such other
address as such Purchaser may from time to time designate in writing to the
Company and the Paying Agent or, if a bank account is designated for such
Purchaser in any written notice to the Company and the Paying Agent from such
Purchaser, the Company will cause the Paying Agent to make such payments in
current and immediately available federal funds which at the time of payment
shall be legal tender in the United States of America for the payment of public
and private debts to such bank account, marked for attention as indicated, or
in such other manner or to such other account of such Purchaser in any bank in
the United States as such Purchaser may from time to time direct in writing.
With respect to Notes to which this Section 5.10 applies, the Company and the
Paying Agent shall be entitled to presume conclusively that any Purchaser as
shall have requested the provisions hereof to apply to its Notes remains the
holder of such Notes until such Notes shall have been presented to the Company
as evidence of the transfer thereof.
5.11. PROPERTIES LEASED TO OTHERS. The Company and its Subsidiaries
will provide in each of its Leases entered into after the Closing Date that the
lessee thereunder will maintain the assets leased thereunder in good working
order and condition, ordinary wear and tear excepted.
5.12. INDEBTEDNESS. The Company will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist or guarantee
or otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness of the Company in respect of the Notes
and other obligations hereunder and under the Note Documents;
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(b) Indebtedness of the Company in respect of loans and
other obligations under (i) the Credit Agreement and (ii) the 1993 Note
Documents;
(c) Indebtedness of the Company as of the Closing Date
which is identified on Schedule 5.12 ("ONGOING INDEBTEDNESS");
(d) Indebtedness of a Subsidiary which is owed to or held
by the Company or a Wholly Owned Subsidiary of the Company; and
(e) Credit Enhancements by the Company permitted pursuant
to Section 5.19;
unless (i) such Indebtedness (other than the Indebtedness described in clause
(d) above) is Indebtedness of the Company and (ii) immediately after giving
effect to the incurrence of such Indebtedness, the total outstanding
Indebtedness of the Company and its Subsidiaries (including the Indebtedness
described in clauses (a) through (e) above) does not exceed 150% of the
Company's Tangible Net Worth as of the end of the most recently completed
fiscal quarter of the Company (any such Indebtedness which satisfies the
conditions set forth in clauses (i) and (ii), and any such Indebtedness
incurred to refinance, extend, renew, refund, repay or replace such
Indebtedness, being referred to herein as "BASKET INDEBTEDNESS").
5.13. LIENS.
(a) Prior to the Security Release Date and thereafter at
any time during which the Secured Obligations are required to be secured
pursuant to Section 5.24(f), the Company will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(i) Liens securing payment of Indebtedness of the
type permitted and described in Section 5.12(a) and (b) or securing
payment of Basket Indebtedness;
(ii) Liens described on Schedule 5.12 granted
prior to the date hereof to secure payment of Ongoing Indebtedness;
(iii) Liens for taxes, assessments or other
governmental charges or levies not at the time delinquent or
thereafter payable without penalty or being diligently contested in
good faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have been set aside on its books;
(iv) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or, if overdue, being diligently contested in
good faith by appropriate proceedings and for
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which adequate reserves in accordance with GAAP shall have been set
aside on its books;
(v) Liens incurred in the ordinary course of
business in connection with workers' compensation, unemployment
insurance or other forms of governmental insurance or benefits, or to
secure performance of tenders, statutory obligations, leases and
contracts (other than for Debt) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds;
(vi) judgment Liens in existence for less than 15
days after the entry thereof or with respect to which execution has
been stayed or the payment of which is covered in full (subject to a
customary deductible) by insurance maintained with responsible
insurance companies;
(vii) the Liens of the lessee created or permitted
by Ordinary Leases; and
(viii) any Lien that is created or assumed by the
Company or any Subsidiary in the ordinary course of its business in
purchasing, constructing or improving any Health Care Facility or to
which any such property is subject when purchased by the Company or
any Subsidiary, PROVIDED, that (A) the Lien is confined to the
aforesaid property and (B) the Indebtedness secured thereby does not
exceed the lesser of (x) one hundred percent (100%) of the total cost
of such purchase, construction or improvement of such Health Care
Facility and (y) the Appraised Value of such Health Care Facility at
the time such Lien is created or assumed.
(b) Subsequent to the Security Release Date and
thereafter at any time during which the Secured Obligations are not required to
be secured pursuant to Section 5.24(f), the Company will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its property, revenues or assets, whether now or hereafter
acquired, except
(i) Liens specified in paragraphs (iii) through
(viii) of Section 5.13(a); and
(ii) (A) Liens securing the payment of Debt
permitted under Section 5.12 (other than Section 5.12(b)(i)),
PROVIDED that (x) no such Debt is incurred pursuant to a
Secured Credit Agreement and (y) such Liens shall be permitted
only if the aggregate amount of all Debt secured by such Liens
(including the Debt described in Section 5.12(b)(ii)) does not
exceed 20% of the Company's Tangible Net Worth as of the end
of the most recently completed fiscal quarter of the Company;
or
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(B) Liens securing the payment of Debt
permitted under Section 5.12, but only if (i) the Indebtedness
in respect of the Notes and the other obligations of the
Company hereunder and under the Note Documents is equally and
ratably secured by such Liens pursuant to such documents as
shall be approved as to form and substance by the Purchasers
and the Purchasers receive an opinion of counsel satisfactory
to them that the Indebtedness in respect of the Notes and the
other Secured Obligations of the Company are equally and
ratably secured by such Liens, and (ii) the provisions of
Section 5.24(f) are complied with.
(c) Notwithstanding the foregoing, the provisions of the
Collateral Documents, and not those of this Section 5.13, shall govern the
rights of the Company to create, incur, assume or suffer to exist Liens on the
Collateral.
5.14. TANGIBLE NET WORTH. The Tangible Net Worth of the Company
will at no time be less than $170,000,000.
5.15. INTEREST COVERAGE RATIO. The Company will not permit the
Interest Coverage Ratio to be less than 2.00:1.00.
5.16. RESTRICTED PAYMENTS.
(a) The Company will not declare, pay or make any
dividend or distribution (in cash, property or obligations) on any shares of
capital stock (now or hereafter outstanding) of the Company, or on any
warrants, options or other rights with respect to any class of capital stock
(now or hereafter outstanding) of the Company, or apply or permit any
Subsidiary to apply, any of its funds, property or assets to the purchase,
redemption, sinking fund, or other retirement of, or agree, or permit any
Subsidiary of the Company to agree, to purchase or redeem (or set aside funds
to purchase or redeem) any shares of any class of capital stock (now or
hereafter outstanding) of the Company, or warrants, options or other rights
with respect to any class of capital stock (now or hereafter outstanding) of
the Company (all or any of the foregoing, "RESTRICTED PAYMENTS"); PROVIDED,
HOWEVER, that so long as the Company remains qualified as a REIT under the
Code, the Company may make Restricted Payments if and to the extent (but only
to the extent) that: (i) no Default or Event of Default shall have occurred and
be continuing at the time of declaration of such Restricted Payment, and (ii)
immediately after giving effect to the making of such Restricted Payment, the
sum of all Restricted Payments made subsequent to December 31, 1995 would not
exceed the sum of (1) $10,000,000, (2) 100% of Cash Flow accumulated subsequent
to December 31, 1995, and (3) the net proceeds to the Company since December
31, 1995 from the issuance of any shares of its capital stock or any warrants,
options or other rights with respect thereto; PROVIDED FURTHER that the Company
may make a Restricted Payment if a Default (but not an Event of Default) shall
have occurred and be continuing if such Restricted Payment was declared but not
yet paid prior to the occurrence of such Default and
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the making of such Restricted Payment would be permitted under clause (ii) of
this Section 5.16(a).
(b) The provisions of Section 5.16(a) to the contrary
notwithstanding, the Company may declare and make a Restricted Payment if a
Default or Event of Default shall have occurred and be continuing at the time
that such Restricted Payment was declared, if (i) the declaration and payment
of such Restricted Payment is required in order for the Company to continue to
qualify as a REIT under the Code, and (ii) the Default or Event of Default
existing at the time of such declaration did not result from (1) a breach of
this Section 5.16, (2) a failure to make any payment or prepayment of principal
or interest on the Notes (including failure to pay the Make-Whole Premium
pursuant to Section 2.1, when due), or (3) the occurrence of any event
specified in Section 6.1(a) or (g).
(c) If the Company shall at any time no longer be
qualified as a REIT under the Code, the Company will not make any Restricted
Payments until such time as the Company and the Purchasers shall have amended
this Section 5.16 to set forth mutually satisfactory limitations on Restricted
Payments reflecting the Company's changed status. The Company and the
Purchasers agree to act reasonably and in good faith in their efforts to agree
upon such amendments.
5.17. CONSTRUCTION FINANCING. Except for Construction Financing
provided prior to the Closing Date and identified on Schedule 5.17, neither the
Company nor any Subsidiary of the Company will provide any Construction
Financing, unless, immediately after giving effect thereto, the aggregate
outstanding amount of all Construction Financing (including Construction
Financing identified on Schedule 5.17), including principal, accrued interest
(estimated in good faith to the extent not known) and fees, will not exceed
17.5% of the Company's assets, as reflected on the balance sheet of the Company
and its consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for the most recently completed fiscal quarter of the
Company. In addition, the Company will not permit the aggregate outstanding
amount of all issued Construction Financing, including principal, accrued
interest (estimated in good faith to the extent not known) and fees, for each
of any three consecutive fiscal quarters of the Company to exceed 17.5% of the
Company's assets, as reflected on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for each of such fiscal quarters.
5.18. INCONSISTENT AGREEMENTS. The Company will not, and will not
permit any of its Subsidiaries to, enter into any agreement containing any
provision which would be violated or breached by the performance by the Company
of its obligations hereunder, under the Notes or under any other Note Document.
5.19. CREDIT ENHANCEMENTS. Except for Credit Enhancements issued
prior to the Closing Date and identified on Schedule 5.19, neither the Company
nor any Subsidiary of the Company will provide any Credit Enhancement, unless,
immediately after giving effect
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thereto, the aggregate outstanding amount, including principal, accrued
interest (estimated in good faith to the extent not known) and fees, of all
issued Credit Enhancements (including Credit Enhancements identified on
Schedule 5.19) will not exceed 20% of the Company's Tangible Net Worth as of
the end of the most recently completed fiscal quarter of the Company. In
addition, the Company will not permit the aggregate outstanding amount of all
Credit Enhancements, including principal, accrued interest (estimated in good
faith to the extent not known) and fees, for each of any three consecutive
fiscal quarters of the Company to exceed 20% of the Company's Tangible Net
Worth as of the end of each of such fiscal quarters.
5.20. OTHER FINANCINGS. Except for Other Financings issued prior to
the Closing Date and identified on Schedule 5.20, neither the Company nor any
Subsidiary of the Company will issue any Other Financing, unless, immediately
after giving effect thereto, the aggregate outstanding amount, including
principal, accrued interest and fees, of all issued Other Financings (including
Other Financings identified on Schedule 5.20) will not exceed 15% of the
Company's assets, as reflected on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for the most recently completed fiscal quarter of the Company. In
addition, the Company will not permit the aggregate outstanding amount,
including principal, accrued interest and fees, of all issued Other Financings
for each of any three consecutive fiscal quarters of the Company to exceed 15%
of the Company's assets, as reflected on the balance sheet of the Company and
its consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for each of such fiscal quarters.
5.21. PSYCHIATRIC HOSPITALS. Except for financings provided to, or
secured by, Psychiatric Hospitals prior to the Closing Date and identified on
Schedule 5.21, neither the Company nor any Subsidiary of the Company will
provide financing of a Psychiatric Hospital, unless, immediately after giving
effect thereto, the aggregate outstanding amount of such financings, including
principal, accrued interest and fees, provided to or in respect of Psychiatric
Hospitals (including the financings identified on Schedule 5.21) will not
exceed 20% of the Company's assets, as reflected on the balance sheet of the
Company and its consolidated Subsidiaries, determined on a consolidated basis
in accordance with GAAP, for the most recently completed fiscal quarter of the
Company. In addition, the Company will not permit the aggregate outstanding
amount of all financings (including principal, accrued interest and fees)
provided to Psychiatric Hospitals for each of any four consecutive fiscal
quarters of the Company to exceed 20% of the Company's assets, as reflected on
the balance sheet of the Company and its consolidated Subsidiaries, determined
on a consolidated basis in accordance with GAAP, for each of such fiscal
quarters.
5.22. DIVERSIFICATION OF ASSETS AND REVENUES. The Company will not
permit there to be any four consecutive fiscal quarters during which more than
20% of the Company's assets, as reflected on the balance sheet of the Company
and its consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for the most recently completed fiscal quarter of the
Company, are operated, or more than 20% of the Company's
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gross revenues, as reflected on the statement of income for the Company and its
consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for the most recently completed fiscal quarter of the Company, are
generated, directly or indirectly, by any single operator, lessee or borrower
(or by any single group of affiliated operators, lessees or borrowers).
5.23. MAINTENANCE OF REIT STATUS. The Company will maintain its
qualification as a REIT under the Code unless the Company's Board of Directors
determines in good faith that, as a result of a change in the Code taking
effect subsequent to the Closing Date, the continued qualification of the
Company as a REIT would have a Material Adverse Effect. At such time that the
Company's Board of Directors shall begin to consider a change in the Company's
qualification as a REIT under the Code, the Company shall, subject to
applicable securities laws and regulations, disclose such fact to each of the
Purchasers and, thereafter, shall, subject to applicable securities laws and
regulations, promptly advise the Purchasers of any material developments
related thereto. If the Company's Board of Directors determines that the
Company's REIT qualification should no longer be maintained, such
determination, and the basis therefor, shall be set forth in a resolution
adopted by such Board of Directors and a copy of such resolution, certified by
an Executive Officer of the Company to be true, complete and correct, shall be
promptly delivered to each Purchaser. As long as the Company is required to
maintain its qualification as a REIT under the Code, the Company shall not
create, acquire or permit to exist any Subsidiary unless such Subsidiary is a
"qualified REIT subsidiary" within the meaning of Section 856(j)(i)(2) of the
Code. The foregoing notwithstanding, the Company may not and will not permit
any of its Subsidiaries to, directly or indirectly, engage in any business
which would substantially change the general nature of the business of the
Company and its Subsidiaries, considered as a whole, from the nature of the
Company's business as it exists on the date of this Agreement.
5.24. COLLATERAL POOL.
(a) At all times while the Secured Obligations are
required to be secured, the Company will maintain a Borrowing Base in an amount
that is at least 133 1/3% of the aggregate principal amount of all Notes
outstanding. No more than 20% of the Borrowing Base may be attributable to
Construction Financing (including Construction Financing related to Psychiatric
Hospitals) and no more than 20% of the Borrowing Base may be attributable to
Psychiatric Hospitals (including Construction Financing related thereto). No
fewer than three income producing properties (as defined in the definition of
"Borrowing Base") shall, at all times, be included within the Collateral.
(b) The Company shall, promptly upon it becoming
available and at the Company's expense, deliver to each Purchaser a copy of any
appraisal of any property included within the Collateral (including any
Mortgage Property) that is of a more recent date than any appraisal theretofore
delivered to the Purchasers. The Required Holders may, at any time, require
the Company to obtain an Appraisal, at the Company's expense, of one or more of
the properties included within the Collateral (including one or more Mortgage
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Properties) if the aggregate of the Appraised Values of such properties, at the
time the Required Holders shall require such Appraisal(s), equals or exceeds
10% of the Borrowing Base; PROVIDED, HOWEVER, that the Required Holders shall
not request an Appraisal of any single property more frequently than once every
three years unless the Required Holders believe in good faith that as a result
of such Appraisal of such property, the value assigned to such property in
determining the Borrowing Base is likely to be reduced.
(c) The Company shall be permitted (i) to add additional
Collateral to the Borrowing Base ("ADDITIONAL COLLATERAL"), (ii) to remove
Collateral then included in the Borrowing Base ("EXISTING COLLATERAL"), or
(iii) to substitute Additional Collateral for Existing Collateral, in each case
upon satisfaction of the conditions set forth below:
(i) the Company shall deliver to the Collateral
Agent and each Purchaser a written notice executed by an Executive
Officer (a "COLLATERAL NOTICE"), which notice shall (1) identify the
Additional Collateral proposed to be included in the Borrowing Base,
if any, and the Existing Collateral to be removed from the Borrowing
Base, if any, (2) specify the date on which the change to the
Collateral is to be effected, which shall be a date which is not less
than 30 or more than 60 days from the date of the Collateral Notice
(the "EFFECTIVE DATE"), (3) state that as of the date of the
Collateral Notice, (a) the representations set forth in Section
3.1(a), (b), (d) (subject to Section 5.23), (j), (m), (n), (o) and (s)
are true and correct, and (b) the representations of the Company set
forth in Section 3.1(c), (e), (f), (g), (q), (r), (s), (t), (u) and
(w) are true and correct with respect to the Additional Collateral and
the Note Documents relating thereto, and (c) the representations of
the Company set forth in Section 3.1(i) with respect to the three
fiscal years prior to the date of the Collateral Notice and the
balance sheet of the last fiscal year, are true and correct, (4)
certify that no Default or Event of Default exists on and as of such
date and (5) state in bold, capitalized print, the following: "THIS
COLLATERAL NOTICE AND THE ENCLOSED MATERIALS ARE BEING DELIVERED
PURSUANT TO SECTION 5.24(c) OF THAT CERTAIN NOTE PURCHASE AGREEMENT
DATED AS OF APRIL 15, 1996, BETWEEN HEALTH CARE REIT, INC. AND THE
PURCHASERS PARTY THERETO. PURSUANT TO THE LAST PARAGRAPH OF SECTION
5.24(d) OF SUCH AGREEMENT, EACH SUCH PURCHASER SHALL HAVE 12 BUSINESS
DAYS FROM THE RECEIPT OF THIS COLLATERAL NOTICE TO REVIEW AND COMMENT
ON THE ENCLOSED MATERIALS AND SHALL BE DEEMED TO HAVE APPROVED ALL
SUCH MATERIALS IF NO OBJECTION IS MADE THERETO WITHIN SUCH TIME
PERIOD.";
(ii) the Collateral Notice shall be accompanied
by:
(1) a Borrowing Base Certificate which
reflects the Borrowing Base as in effect on the date of the
Collateral Notice and the Borrowing Base estimated to be in
effect immediately after giving effect to the
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change to the Borrowing Base referenced in the Collateral
Notice and which sets forth the Value of the Additional
Collateral and/or Existing Collateral (as such Value is
determined in accordance with the definition of the term
"Borrowing Base" in Section 8.1) (and with respect to the
Value to be determined under clause (c) of such definition,
the Collateral Notice shall be accompanied by a copy of such
Appraisal);
(2) in the case of Additional Collateral
which consists of Mortgage Property, a copy of each document
that will be assigned to the Collateral Agent pursuant to any
Assignment of Loan Documents;
(3) in the case of Additional
Collateral: (i) if the Additional Collateral is a Fee
Property, a commitment for a mortgagee title insurance policy
insuring the applicable Direct Mortgage and copies of all
documents shown as exceptions to title in such commitment
(including any Lease); (ii) if the Additional Collateral is an
Assigned Loan, an Assigned Loan Title Policy (or commitment
therefor) with respect thereto, together with copies of all
documents shown as exceptions to title in such commitment and
a draft endorsement in favor of the Collateral Agent; (iii) a
copy of the most recent survey of the Fee Property or Mortgage
Property in question; (iv) a customary Phase I environmental
report, which shall include, without limitation, an evaluation
of off-site liabilities, compliance with material
Environmental Laws, Releases or potential Releases of
Hazardous Substances and a report on whether there exist any
Hazardous Release sites within the immediate vicinity of the
Fee Property or Mortgage Property; (v) an Appraisal of the
proposed Fee Property or Mortgage Property; (vi) drafts of the
Direct Mortgage and Assignment of Lease, or the Assignment of
Loan Documents, to be delivered with respect to the Additional
Collateral, and all UCC-1 financing statements and the like
necessary to satisfy the conditions set forth in clause
5.24(d)(iii)(6) with respect thereto, each providing for, in
addition to the remedies and waivers included in the
applicable exhibit to this Agreement, such other remedies and
waivers, if any, as are customarily granted to mortgagees or
assignees thereof in the state in which such Fee Property or
Mortgage Property is located, and otherwise satisfying the
formal and other requirements imposed by the laws of such
state on such documents or the perfection thereof; (vii)
drafts of opinions of local counsel in respect of the
Additional Collateral (and in the event such Additional
Collateral consists of an Assigned Loan, the opinion of local
counsel obtained by the Company in connection with the making
such Assigned Loans, together with a draft reliance opinion of
such local counsel if the opinion obtained by the Company may
not by its terms be relied upon by an assignee of the Assigned
Loans); (viii) a description of the insurance coverage
proposed to be afforded to the Purchasers and Additional
Collateral; and (ix) evidence of the matters described in
Section 4.6(k); and
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(4) a revised Schedule 3.1(f) which
gives effect to the transactions proposed in the Collateral
Notice.
(d) The changes to the Collateral may be made on the
Effective Date if the following additional conditions are satisfied:
(i) the Company shall have delivered to the
Collateral Agent and each Purchaser a certificate of an Executive
Officer dated as of the Effective Date to the effect that (1) as of
such date, the statements made in the Collateral Notice with respect
to the representations of the Company set forth in Section 3.1 are
true and correct (assuming for the purposes of such representations,
in the case where Additional Collateral is to be added to the
Borrowing Base, that the Additional Collateral is included as a Fee
Property or an Assigned Loan, as the case may be), (2) no Default or
Event of Default exists on and as of such date, (3) since the date of
the Collateral Notice, no event has occurred which adversely affects
or is likely to adversely affect the Value of the Additional
Collateral to be added to the Borrowing Base, including any event
which is likely to reduce the Value of the Additional Collateral to
less than that set forth in the Appraisal accompanying the Collateral
Notice, (4) the Borrowing Base Certificate accompanying the Collateral
Notice is true and correct on and as of the Effective Date, and (5)
each of the other conditions set forth herein have been satisfied;
(ii) immediately after giving effect to such
change, no Default or Event of Default shall exist and the Borrowing
Base shall be at least 133 1/3% of the outstanding principal amount of
the Notes and shall otherwise meet the standards set forth in Section
5.24(a);
(iii) if Additional Collateral is to be added to
the Borrowing Base or substituted for Existing Collateral:
(1) the Company shall have executed and
delivered to the Collateral Agent, on behalf of the
Purchasers, (x) if the Additional Collateral is a Fee
Property, a Direct Mortgage and an Assignment of Lease and (y)
if the Additional Collateral is an Assigned Loan, an
Assignment of Loan Documents and (z) all UCC-1 financing
statements and the like necessary to satisfy the conditions
set forth in Section 5.24(d)(iii)(6) in connection with the
Additional Collateral, in each case (as to (x), (y) and (z))
meeting, to the reasonable satisfaction of the Purchasers, the
conditions set forth in Section 5.24(d)(iii)(6);
(2) the Company shall have provided to
the Collateral Agent all information regarding the Additional
Collateral as shall be reasonably requested by any Purchaser
to (i) verify the Borrowing Base information provided by the
Company in the Collateral Notice or (ii) confirm that all
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representations of the Company set forth in Section 3.1 as
they relate to such Additional Collateral are true and correct;
(3) in the case of Additional Collateral
consisting of an Assigned Loan: (i) such Assigned Loan, as
reflected in the applicable Assigned Loan Documents, shall
conform to the information with respect thereto set forth in
the Collateral Notice and accompanying Borrowing Base
Certificate; (ii) the Collateral Agent shall have received the
original executed note and an original executed mortgage and
any separate assignment of rents and leases delivered in
connection with the Assigned Loan, such note endorsed by the
Company to the Collateral Agent, and transfer documents
substantially identical to those being delivered on the
Closing Date; (iii) the Collateral Agent shall have received
copies of the other Assigned Loan Documents and such Assigned
Loan Documents shall provide for adequate and customary rights
and remedies on the part of the lender thereunder and shall
otherwise be reasonably satisfactory to the Purchasers; and
(iv) the Collateral Agent shall have received a copy of the
applicable Assigned Loan Title Policy (which shall be issued
by a title insurance company or companies reasonably
satisfactory to the Purchasers), insuring the mortgage
securing the Assigned Loan as a first priority lien on the
Mortgage Property in question (subject only to taxes not yet
due and payable and utility easements, encroachments and other
minor title defects which do not, singly or in the aggregate,
have a Material Adverse Effect), deleting the so-called
"survey exception" and accompanied by or including (subject to
availability in the state in question) such endorsements
(including, without limitation, an endorsement insuring the
Assignment of Loan Documents, in form identical in all
material respects to the endorsements being obtained in
connection with the Assignments of Loan Documents being
delivered on the Closing Date) and affirmative coverages as
the Purchasers shall reasonably require (it being agreed that
whether the Purchasers' requirement is reasonable shall be
determined with reference to, among other things, the
materiality of the matters covered by the proposed endorsement
or affirmative coverage, whether Purchaser is receiving
alternative protection (other than representations and
covenants of the Company) with respect to the matters covered
by the proposed affirmative coverage and the cost of the
proposed endorsement or affirmative coverage; provided,
however, that Purchaser's requirement shall be deemed
reasonable in the case of any endorsement or affirmative
coverage for which there is no additional charge by the title
insurance company or which was obtained in connection with the
Collateral delivered on the Closing Date), and generally in
form and substance reasonably satisfactory to the Purchasers;
(4) in the case of Additional Collateral
consisting of a Fee Property, the Collateral Agent shall have
received, from a title insurance company or companies
reasonably satisfactory to the Purchasers, a mortgagee
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title insurance policy insuring the applicable Direct Mortgage
as a first priority lien on such Fee Property, subject only to
taxes not yet due and payable and utility easements,
encroachments and other minor title defects which do not,
singly or in the aggregate, have a Material Adverse Effect,
and otherwise satisfying the conditions set forth in the
immediately preceding paragraph;
(5) the Purchasers shall have received a
copy of the most recent survey obtained by the Company in
respect of the Fee Property or Mortgage Property in question
(which shall in all cases be an as-built survey, except in the
case of Additional Collateral consisting of Construction
Financing), showing no easements, encroachments or other title
defects that, singly or in the aggregate, have a Material
Adverse Effect, and otherwise reasonably satisfactory to the
Purchasers (together with a certificate of an Executive
Officer to the effect that such survey remains accurate in all
material respects, or other evidence to such effect reasonably
satisfactory to the Purchasers);
(6) the condition set forth in Section
4.6(e) shall be satisfied with respect to the Additional
Collateral, except that the fully perfected first priority
Lien referred to in Section 4.6(e) may be subject to title
defects of the nature described in clause (3)(iv) above and
except that, in the case of the Lien of a Direct Mortgage or
an Assignment of Loan Documents, the condition set forth in
Section 4.6(e) shall be deemed satisfied if the Collateral
Agent shall have received title insurance policies and
endorsements satisfying the conditions set forth in clauses
(3) and (4) above (but only to the extent such title insurance
policies and endorsements insure the lien of such Direct
Mortgage or Assignment of Loan Documents as of the Effective
Date, without any so-called "gap" period or other condition to
coverage with respect to the recordation or filing of any
document or instrument);
(7) the condition set forth in Section
4.6(g) shall have been satisfied with respect to the
Additional Collateral;
(8) the Appraisal of the proposed Fee
Property or Mortgage Property shall be consistent with the
information provided in the Collateral Notice and the
accompanying Borrowing Base Certificate and shall otherwise be
reasonably satisfactory in form and substance to the
Purchasers;
(9) final opinions and reliance letters
satisfying the conditions set forth in Section 4.6(j) shall
have been delivered to the Purchasers (it being agreed that
such opinions shall be deemed satisfactory in form and
substance to the Purchasers if they are identical in all
material respects to those being delivered on the Closing
Date, unless, due to any
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different facts or circumstances, the Purchasers reasonably
request any changes thereto);
(10) the conditions set forth in Section
4.6(i) and 4.6(k) shall be satisfied with respect to the
Additional Collateral;
(11) the condition set forth in Section
4.6(d) shall be satisfied with respect to the Phase I
environmental report delivered with respect to the Fee
Property or Mortgage Property in question and the condition
set forth in Section 4.6(f) shall be satisfied;
(12) in the case of Additional Collateral
consisting of a Fee Property, the Lease, if any, covering such
Fee Property shall be consistent with the information set
forth in the Collateral Notice and the accompanying Borrowing
Base Certificate and shall be in form and substance reasonably
satisfactory to the Purchasers;
(13) in the case of Additional
Collateral, a letter shall have been prepared and executed by
the Company and delivered to the Collateral Agent (which the
Collateral Agent may send only after a Default or an Event of
Default shall have occurred under the Note Documents), which
directs each lessee under a Collateral Lease, each borrower
under an Assigned Loan, and the guarantor, if any, of such
lessee's or borrower's obligations under such Collateral Lease
or Assigned Loan, to make all payments in respect of such
Collateral Lease, such Assigned Loan or such guaranty to the
Collateral Agent upon notice from the Purchaser that a Default
or Event of Default shall have occurred under the Note
Documents; and
(14) in the case of Additional
Collateral, the Company shall have obtained from the lessee
under each Collateral Lease which is part of the Additional
Collateral and the borrower under each Assigned Loan which is
part of the Additional Collateral, a Lessee Estoppel
Certificate or a Borrower Estoppel Certificate, as the case
may be.
(iv) if Existing Collateral is to be removed from
the Borrowing Base, the Collateral Agent shall have executed and
delivered all appropriate releases or assignments necessary to
terminate the interest of the Collateral Agent in and to the Existing
Collateral; and
(v) all documents executed or submitted pursuant
to this Section by or on behalf of the Company shall be reasonably
satisfactory in form and substance to the Purchasers, the Collateral
Agent and special counsel to the Purchasers; and the Purchasers, the
Collateral Agent and special counsel to the Purchasers shall have
received all information, approvals, opinions, documents or
instruments as they may
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have reasonably requested; and all costs and expenses (including
reasonable fees and expenses of special counsel to the Purchasers)
relating to such change in the Collateral shall have been paid for by
the Company.
Notwithstanding anything to the contrary contained in the foregoing, if none of
the Purchasers shall have objected to any item delivered pursuant to clause
5.24(c)(ii)(2) or (3), or any modification of any such item, within 12 Business
Days after delivery to the Purchasers and Purchasers' special counsel of such
item or modification, such item or modification shall be deemed to satisfy the
applicable condition hereinabove set forth in Section 5.24(c)(ii)(2) or (3), as
applicable, and the Effective Date shall in no event occur until the latest of
(i) the 12th Business Day after the delivery to the Purchasers of all of such
items and modifications, (ii) the Effective Date set forth in the Collateral
Notice and (iii) the satisfaction of the conditions set forth in this Section
5.24(d) with respect to the change in Collateral. Provided that all of the
conditions of this Section 5.24(d) have been satisfied or waived, the
Purchasers shall promptly notify the Collateral Agent in writing of such fact.
(e) Prior to the Security Release Date, the Company will
maintain separate but substantially similar collateral to secure its
obligations under (i) the Notes, this Agreement and the other Note Documents
(the "NOTE INDEBTEDNESS"), (ii) its obligations under the Credit Agreement, and
the notes issued to the lenders thereunder (the "BANK INDEBTEDNESS"), and any
Basket Indebtedness, and the notes issued to the lenders thereunder, if
secured, and (iii) its obligations under the 1993 Note Documents (the "1993
NOTE INDEBTEDNESS"). The quality of, and the perfection of the security
interests in, the Collateral securing the Note Indebtedness shall be of no
lower quality than the collateral securing any of the Bank Indebtedness, the
Basket Indebtedness, if secured, or the 1993 Note Indebtedness. Prior to the
occurrence of the Security Release Date, the Company shall obtain amendments to
the documentation evidencing the Bank Indebtedness and any secured Indebtedness
(other than Indebtedness that would be permitted to be secured after the
Security Release Date pursuant to Section 5.13(b)), to ensure that the
provisions governing the release of collateral (including the definition of
"Security Release Date" or any analogous definition) are identical to the
provisions set forth in the Note Documents. If such amendments are not
obtained by the Company, the relevant provisions of this Agreement (including
the definition of "Security Release Date") and the other Note Documents shall
be deemed to be amended prior to any release of Collateral pursuant to this
Agreement or any other Note Document so as to afford the Noteholders any
additional protections available to the holders of Indebtedness under the
respective documentation evidencing the Bank Indebtedness and any secured
Indebtedness (other than Indebtedness that would be permitted to be secured
after the Security Release Date pursuant to Section 5.13(b)) with respect to
the release of collateral.
(f) If at any time after the Security Release Date, (i)
Duff & Phelps shall lower the rating of the Notes to a rating of "BBB-" or
lower, or (ii) the Company shall be required to grant Liens on any of its
assets pursuant to the terms of the Bank Indebtedness, or (iii) the Company
shall grant Liens on any of its assets securing Debt in excess of the
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aggregate amount of Debt permitted to be secured by Liens under Section
5.13(b)(ii)(A), then the Company shall promptly thereafter give notice of such
event to the Purchasers and the Collateral Agent and in accordance with Section
5.24(a), (c) and (d) take all actions necessary to grant to the Collateral
Agent for the benefit of the Purchasers legal, valid and enforceable fully
perfected first priority Liens on such assets of the Company as are acceptable
to the Required Holders and which have an aggregate Value (as such term is
defined in the definition of the term "Borrowing Base") such that the Borrowing
Base shall be at least 133 1/3% of the aggregate principal amount of all Notes
then outstanding.
5.25. NOTICE. The Company will give each Purchaser written notice
whenever any of the following events occurs, as soon as possible, and in any
event, within five days, after the Company knows or has reason to know thereof:
(a) (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan; or (ii) the institution of
proceedings or the taking or expected taking of any other action by PBGC or the
Company, any Subsidiary of the Company or any ERISA Affiliate to terminate,
withdraw or partially withdraw from any Plan and with respect to a
Multiemployer Plan, the Reorganization or Insolvency of such Plan;
(b) the Internal Revenue Service or any other federal,
state or local taxing authority shall allege any material default by the
Company or any Subsidiary in the payment of any tax material in amount or make
any assessment in respect thereof;
(c) any litigation or proceeding shall be brought against
the Company or any Subsidiary of the Company before any court or administrative
agency which, if successful, may reasonably be expected to have a Material
Adverse Effect;
(d) there shall be filed any application for a
determination of the qualified status of any Plan;
(e) the Company receives any written claims, complaints,
notices or inquiries relating to the condition of its facilities and properties
(including Mortgage Properties), or compliance with Environmental Laws which,
if adversely determined, individually or in the aggregate may reasonably be
expected to have a Material Adverse Effect;
(f) any officer of the Company reasonably believes that
any Default has occurred or that any representation or warranty made in Section
3.1 shall for any reason have ceased in any material respect to be true and
correct;
(g) the Company or any Subsidiary of the Company shall
receive a notice of optional prepayment with respect to any Assigned Loan
and/or shall receive any optional prepayment, in whole or in part, of the
outstanding principal, interest and other amounts owed with respect to any
Assigned Loan which, after giving effect to the making of such
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optional prepayment, would cause the Borrowing Base to decline below 133 1/3%
of the principal amount of Notes then outstanding;
(h) the Company or any Subsidiary of the Company shall
receive insurance proceeds paid in respect of any material casualty which
occurred in or in respect of any Fee Property or proceeds paid in respect of
any material condemnation of all or any part of any Fee Property; or
(i) a payment default or any other default, which if it
were to become an event of default, would have a Material Adverse Effect, shall
have occurred under any Assigned Loan or Collateral Lease.
5.26. DELIVERY OF CERTAIN CONSTRUCTION FINANCING DOCUMENTS. In the
event that any Collateral consists of Construction Financing, the Company shall
promptly deliver to the Purchasers, as construction progresses and upon
completion of the Health Care Facility in question, such updated surveys and
title insurance endorsements as shall be required in order that the conditions
set forth in Article 4 or Section 5.24, as applicable, shall continue to be
satisfied with respect to the Collateral in question.
5.27. ENVIRONMENTAL LAWS. The Company will, and will cause each of
its Subsidiaries and lessees under Leases to, use and operate all of its
respective facilities and properties in material compliance with all
Environmental Laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all Hazardous Materials
in material compliance with all applicable Environmental Laws. The Company
shall promptly resolve any non-compliance with Environmental Laws and keep its
property free of any Lien imposed by any Environmental Law which individually
or in the aggregate may reasonably be expected to have a Material Adverse
Effect.
5.28. MODIFICATION OF CERTAIN AGREEMENTS. The Company will not
consent to:
(a) any amendment, supplement or other modification to
any of the terms or provisions contained in, or applicable to the Credit
Agreement, the 1993 Note Documents, or other agreement evidencing Indebtedness
of the Company or any of its Subsidiaries that would require the lenders
thereunder to consent to any amendment or modification of the Note Documents;
or
(b) (i) a material change to the financial terms of, or
the material terms relating to arrangements to secure the payment of any
obligations under, any document relating to an Assigned Loan or a Collateral
Lease, or (ii) any provisions of a Collateral Lease or an Assigned Loan
Document which is for the express benefit of, in the case of a Fee Property,
the mortgagee thereof or, in the case of a Mortgage Property, the assignee of
the mortgage covering the same, or (iii) any provision requiring the
subordination of a Collateral Lease to a Direct Mortgage or the attornment by
the lessee under a Collateral
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Lease to the holder of a Direct Mortgage. For the purposes of clause (i), a
change to the terms of any document shall be deemed "material" if such change
would cause the Borrowing Base of the then Existing Collateral to be less than
133 1/3% of the principal amount of the Notes then outstanding or would cause
any of the Collateral Documents or Assigned Loan Documents so amended,
supplemented or modified to no longer satisfy the requirements of Section
5.24(c) with respect to such Collateral Documents or Assigned Loan Documents.
Notwithstanding the foregoing, the Company shall deliver to each Purchaser,
promptly upon their becoming available, all amendments, supplements or
modifications to the Credit Agreement, the 1993 Note Documents, or any document
relating to the security granted to secure payment of the Indebtedness under
the Credit Agreement and the 1993 Note Documents and all amendments,
supplements or modifications to any Collateral Lease or Assigned Loan
Documents.
5.29. TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any of its Subsidiaries to, enter into, or cause, suffer or permit
to exist any arrangement or contract (including any arrangement or contract for
the purchase, sale or exchange of property or rendering of any services) with
any of its Affiliates except in the ordinary course, and pursuant to the
reasonable requirements, of the Company's or such Subsidiary's business and
only if the terms of such arrangements or contract are fair and equitable to
the Company or such Subsidiary and such terms are no less favorable to the
Company or such Subsidiary as would be obtained in an arms-length transaction
with a Person that is not an Affiliate.
5.30. LIMITATION ON INVESTMENTS. Whether or not the Company is
qualified as a REIT, the Company will not, and will not permit any of its
Subsidiaries to, make or permit to remain outstanding any Investments except
Permitted Investments.
5.31. DELIVERY OF DOCUMENTS AFTER THE CLOSING DATE. If the
Purchasers, in their sole discretion, shall have waived the requirement of
delivery of any of the same before the Closing Date, then the Company will use
its commercially reasonable efforts to deliver to each Purchaser a Lessee
Estoppel Certificate with respect to each Collateral Lease and a Borrower
Estoppel Certificate with respect to each Assigned Loan as soon as possible
after the Closing Date.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
6.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "EVENT OF DEFAULT" as the term is used herein or in the other
Note Documents:
(a) (i) the Company shall fail to pay when due any
payment of the principal of any Note or of any premium thereon; or
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(ii) the Company shall fail to pay when due any
payment of interest on any Note or any other amount payable hereunder
or under any other Note Document and such payment default with respect
to interest or such other amount shall continue for more than five
Business Days; or
(b) the Company shall fail to observe or perform any of
its obligations under Section 5.8, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.18,
5.19, 5.20, 5.21, 5.22, 5.23, 5.24(a), 5.25(f), 5.28 or 6.2 of this Agreement,
Section 4 or 17(b) of any Assignment of Loan Documents, or Section 4(j) of any
Assignment of Lease; or there shall occur an Event of Default under Section
6.1(b) of any Direct Mortgage; or
(c) the Company shall fail to observe or perform any
other obligation, covenant, undertaking, condition or provision in respect of
the Notes or contained in this Agreement or the other Note Documents that is
not remedied within 30 days after the earliest of (i) the furnishing of notice
thereof by the Company to the Purchasers, (ii) the Company's willful failure to
provide any notice required under Section 6.2 or (iii) receipt of written
notice thereof from any Purchaser to the Company requiring the same to be
remedied; PROVIDED, that in the event the Company shall fail to observe or
perform any obligation, covenant, undertaking, condition or provision in any
Note Document (other than the Notes or this Agreement), other than any
provision which incorporates or restates a term or provision of the Notes or
this Agreement, such failure shall not constitute an Event of Default if no
other Event of Default has occurred and is continuing, such failure can be
remedied by the Company, and the Company is diligently proceeding to remedy
such failure; or
(d) any representation or warranty made by the Company
herein, or made by the Company in any other Note Document, shall be untrue or
inaccurate in any material respect; or
(e) any of the Note Documents or any provision thereof
shall cease to be a legal, valid and binding agreement enforceable against the
Company (or, in the case of the Collateral Agency Agreement or any other
Collateral Document, the Collateral Agent or the Company) in accordance with
the respective terms thereof or shall in any way be terminated or become or be
declared ineffective or inoperative or shall in any way whatsoever cease to
give or provide the respective Liens, rights, titles, interests, remedies,
priorities, powers or privileges intended to be created thereby; or
(f) a judgment shall be rendered against the Company or
any Subsidiary of the Company for the payment of money in excess of $1,000,000
individually or in the aggregate (as to such foregoing amount, net of the
portion thereof covered by insurance, as confirmed in writing by the insurer)
and such judgment shall not be discharged or dismissed, or execution thereof
stayed pending appeal, within 60 days after entry; or
(g) (i) the Company or any Subsidiary of the Company
shall commence or consent to any case, proceeding or other action (1) under any
existing or future law of any
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jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution, composition or other relief
with respect to it, any substantial part of its assets (including the
Collateral), or its debts, or (2) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial part
of its assets (including the Collateral), or the Company shall make a general
assignment for the benefit of creditors or admit in writing that it is unable
to pay its debts as they become due; or
(ii) there shall be commenced against the Company
or any Subsidiary of the Company any such case, proceeding or other
action referred to in paragraph (i) of this subsection (g) that (1)
results in the entry of an order for relief or any such adjudication
or appointment or (2) is not dismissed or stayed for a period of 30
days from the commencement thereof; or
(iii) there shall be commenced against the Company
or any Subsidiary of the Company, any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets (or
against the Collateral) that results in the entry of any order for any
such relief which shall not have been vacated, discharged or stayed
within 30 days from the entry thereof; or
(iv) the Company shall have been dissolved or
terminated; or
(v) the Company or any Subsidiary of the Company
shall take any action authorizing, or in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth above in this subsection (g); or
(h) a default shall occur in the payment when due
(subject to any applicable grace period), whether by acceleration or otherwise,
of any Indebtedness (other than the Secured Obligations) of the Company with an
aggregate principal amount in excess of $1,000,000 or any Subsidiary with an
aggregate principal amount in excess of $200,000, or a default shall occur in
the performance or observance of any obligation or condition with respect to
any such Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders thereof,
or any trustee or agent for such holders (immediately or after the giving of
notice or passage of time or both), to cause such Indebtedness to become due
and payable prior to its stated maturity, or any such Indebtedness 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;
or
(i) any of the following events shall occur with respect
to any Plan:
(x) the institution of any steps by the Company,
any Subsidiary of the Company, any ERISA Affiliate or any other Person
to terminate a Plan if, as a
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result of such termination, the Company, any Subsidiary of the Company
or any such ERISA Affiliate could be required to make a contribution
to such Plan, or could reasonably expect to incur a liability or
obligation to the PBGC or any other Person under Title IV of ERISA or
to such Plan, in excess of $100,000; or
(y) a contribution failure occurs with respect to
any Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA; or
(j) any person or group of persons (within the meaning of
Section 13 or 14 of the Exchange Act) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Exchange Act) of 20% or more of the outstanding shares of
common stock of the Company; or, during any period of 12 consecutive calendar
months, individuals who were directors of the Company on the first day of such
period shall cease to constitute a majority of the board of directors of the
Company.
6.2. NOTICE TO PURCHASERS. Whenever the Company becomes aware that
any Default or Event of Default has occurred, or if a Purchaser has either
given any notice to the Company or taken any other action of which the Company
is aware with respect to a Default or Event of Default, or the Company receives
written notice from a third party concerning an event which constitutes a
Default or Event of Default, the Company will ensure that notice is given (or
such third party notice is forwarded) to all holders of the Notes then
outstanding and to the Collateral Agent, no later than the fifth day (or second
day in the case of an Event of Default or Default under Section 6.1(a)) after
it becomes aware that such Event of Default or Default has occurred, or that
such notice has been given or such other action has been taken with respect to
such Default or Event of Default, such notice to be in writing and sent in the
manner provided in Section 9.6.
6.3. ACCELERATION OF MATURITIES; OTHER REMEDIES.
(a) Upon the occurrence of an Event of Default under
Section 6.1(a), the holder of any Note may, by written notice to the Company,
declare such Note to be due and payable (without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Company) at
the Redemption Price. Upon the occurrence of an Event of Default under Section
6.1(g) in respect of the Company (but not of a Subsidiary), all Notes shall
immediately become due and payable (without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company) at the
Redemption Price. Upon the occurrence of any Event of Default, other than in
respect of the Company under Section 6.1(g) and other than under Section 6.1(a)
(which are governed by the preceding two sentences), the Required Holders may,
by written notice to the Company, declare all Notes to be due and payable
(without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company) at the Redemption Price. No course of
dealing on the part of any holder of any Note nor any delay or failure on the
part of any holder of any Note to exercise any right shall operate as a waiver
of such
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right or otherwise prejudice such holder's rights, powers and remedies. The
Company further agrees to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Note upon any default
hereunder or thereon, including the fees, disbursements and other charges of
such holder's or holders' attorneys for all services rendered in connection
therewith.
(b) The rights and remedies expressly provided for in
this Agreement and the other Note Documents are cumulative and not exclusive of
any rights or remedies which the Purchaser or any holder of a Note would
otherwise have, including, without limitation, the rights and remedies provided
for in the applicable Collateral Documents.
6.4. RESCISSION OF ACCELERATION. The provisions of Section 6.3 are
subject to the condition that if any outstanding Notes have been declared or
have become immediately due and payable by reason of the occurrence of any
Event of Default described in paragraphs (a) through (f), inclusive, of Section
6.1 or an Event of Default described in Section 6.1(g) involving a Subsidiary
but not the Company, or an Event of Default described in paragraphs (h) through
(j), inclusive, of Section 6.1, then the Required Holders may by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof; PROVIDED that at the time such declaration is annulled
and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and payable
solely by reason of such declaration under Section 6.3) shall have been duly
paid; and
(c) each and every other Default and Event of Default
shall have been cured or waived pursuant to Section 7.1 and the Company shall
have paid all of Purchaser's costs and expenses as provided for in Section 9.4;
and PROVIDED further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS
7.1. CONSENT REQUIRED. (a) Any term, covenant, agreement or
condition of this Agreement or the Notes or the other Note Documents may, with
the consent of the Company (and in the case of the Collateral Agency Agreement
or any other Collateral Document, the Collateral Agent), be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the Company shall have
obtained the consent in writing of the Required Holders, provided that no such
waiver,
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modification, alteration or amendment shall (a) change the time of payment of
the principal of or the interest on any Note or reduce the principal amount
thereof or change the rate of interest thereon, (b) change any of the
provisions with respect to Section 2 including, without limitation, the
calculation of the Redemption Price, or (c) change the percentage of holders of
the Notes, or the number of holders of Notes, required to take any action under
this Section 7 or any other provision of this Agreement, without the consent of
each holder of the Notes affected thereby. Executed or true and correct copies
of any waiver, modification, alteration or amendment to this Agreement shall be
delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and delivered by
the holder or holders of the requisite percentage of outstanding Notes.
Whenever in this Agreement it is provided that an action may be taken or a
condition may exist with the consent of all or any percentage of the Purchasers
or the outstanding Notes, such consent must be the consent of all or such
percentage of the Purchasers or such outstanding Notes without regard to any
Notes held or agreed to be purchased by the Company, any Subsidiary of the
Company or any Affiliate of the Company or any such Subsidiary.
(b) If the Company shall furnish evidence (satisfactory
in form and substance to the Purchasers) that the Credit Agreement shall have
been amended so that a Change in Control Event (defined below) shall not
constitute an "Event of Default" thereunder and shall not require a prepayment
of Indebtedness thereunder (or a reduction in the amount of Indebtedness that
may be borrowed thereunder), then the Purchasers agree that, upon the written
request of the Company, this Agreement shall be amended so as to delete Section
6.1(j). For purposes of this Section 7.1(b), a "Change in Control Event" shall
mean any event of the type described in Section 6.01(f) of the credit agreement
specified in clause (i) of the definition of "Credit Agreement" (as in
existence on the date hereof), without giving effect to any minimum percentage
of voting stock of the Company or to any minimum number of directors of the
Company specified therein.
7.2. SOLICITATION OF PURCHASERS. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes or the other Note Documents unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder as
consideration for or as an inducement to entering into by any holder of any
waiver or amendment of any of the terms and provisions of the Agreements or the
Notes or the other Note Documents unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all Notes then outstanding,
whether or not such holders agreed to such waiver or amendment.
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7.3. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or waiver
shall apply equally to all of the holders of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Company, whether or
not such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1. DEFINITIONS. (a) Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined. Capitalized terms used
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the other Note Documents.
"ACT" means the Securities Act of 1933, as amended.
"AFFILIATE" means any Person (a) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, the Company, (b) which beneficially owns or holds with power to
vote 5% or more of any class of the voting stock of the Company, (c) 5% or more
of the voting stock of which is beneficially owned or held by the Company, or
(d) which is an officer or director of the Company. The term "CONTROL" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall mean this Note Purchase Agreement, as amended,
modified or supplemented from time to time.
"APPRAISAL" means an appraisal of property, conducted and certified by
an independent M.A.I. appraiser, having experience appraising properties
similar to the applicable property.
"APPRAISED VALUE" means the value of any property determined in an
Appraisal.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 ET SEQ., as amended.
"BORROWER ESTOPPEL CERTIFICATE" means a current estoppel certificate
executed by a borrower under an Assigned Loan, which certificate shall be in
form and substance reasonably satisfactory to the Purchasers; PROVIDED that if
the applicable Assigned Loan Documents require the borrower thereunder to
deliver an estoppel letter to the Company and
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prescribe the form thereof, the form of estoppel letter prescribed under such
Assigned Loan Documents shall be satisfactory to the Purchasers.
"BORROWING BASE" means the aggregate Value of the Company's income
producing nursing homes, retirement centers and other Health Care Facilities
which from time to time are included within the Collateral, plus all cash and
cash equivalents standing to the credit of the Company from time to time in the
Cash Collateral Account created and maintained pursuant to the Collateral
Agency and Cash Collateral Agreement (subject, however, to Section 6.5(d) of
that Agreement). An income producing property shall be deemed to be a property
leased by the Company under a Lease, a property for which the Company provides
mortgage financing, or a property for which Construction Financing is being
provided by the Company so long as such Construction Financing will either, (x)
pursuant to binding terms contained in the Construction Financing to effect a
sale and lease back of the underlying property, convert to a Lease by the
Company or (y) pursuant to binding terms in the Construction Financing, convert
to long-term mortgage financing by the Company, in each case within nine months
from the period such Construction Financing is included within the Collateral.
The "VALUE" of each asset included within the Collateral shall, for purposes of
the Borrowing Base, be the lowest of the following values: (a) with respect to
a Fee Property, the lessee's contract purchase price from time to time for such
Fee Property, (b) with respect to Fee Properties and Assigned Loans, the value
at which such asset is carried on the Company's balance sheet in accordance
with GAAP, (c) with respect to a Fee Property or an Assigned Loan, the
Appraised Value of such Fee Property or the Mortgage Property securing such
Assigned Loan, (d) with respect to any Fee Property or Assigned Loan, such
portion of the lowest value assigned under (a), (b) or (c) which does not
exceed $17,500,000, (e) 50% of the value assigned under (a), (b) or (c) if a
lessee of any Fee Property or a borrower under an Assigned Loan is in default
in any material respect under a Collateral Lease, loan, financing, mortgage or
related security document and such default has not been remedied within a
period of three months from the date on which such default first occurred or,
on account of such default, the Company has commenced foreclosure, eviction or
other action against such lessee or borrower, (f) zero if a default referred to
in (e) remains unremedied for a period in excess of four months (including the
three months referred to above) or results from the bankruptcy or insolvency of
such lessee or borrower (whether or not the Company has commenced foreclosure,
eviction or other action against such lessee or borrower), (g) zero for any Fee
Property or Assigned Loan, if at any time a condition exists on or in respect
of such Fee Property or the Mortgage Property securing such Assigned Loan which
would constitute a breach of the representation made in Section 3.1(r) assuming
the Company were required to restate such representation at the time such
condition occurred and such condition remains unremedied 90 days after the
occurrence thereof, (h) zero if the lessee of a Fee Property or the borrower
under an Assigned Loan has instituted, or has threatened to institute, an
action in any court or other tribunal contesting such lessee's or borrower's
payment obligations under its Collateral Lease or Assigned Loan and (i) zero
for any Fee Property affected by condemnation or casualty, if so provided in
the Direct Mortgage related to such Fee Property and (j) in the event of a
Mortgage Property affected by a casualty or condemnation, such amount as is
provided for in the applicable Assignment
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of Loan Documents. The Value of cash shall be the amount of such cash and the
Value of cash equivalents shall be the lower of cost or market value thereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which banks in New York are required by law to close or are customarily
closed.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
amount of such Note that is to be paid or prepaid pursuant to any paragraph of
Section 2 or is declared to be immediately due and payable pursuant to Section
6.3, as the context requires.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"CASH FLOW" means, for any period, the Company's consolidated net
income (loss) for such period, excluding extraordinary items net of tax effect,
plus depreciation, plus amortization of loan expenses, plus (minus) any change
in provision for losses, plus (minus) each of the following: (i) non-refundable
loan and commitment fees received in cash in excess of (less than) amounts
earned; (ii) non-refundable lease income received in cash in excess of (less
than) amounts earned; and (iii) non-refundable interest income received in cash
in excess of (less than) amounts earned.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENCY AND CASH COLLATERAL AGREEMENT" shall mean that
certain Collateral Agency and Cash Collateral Agreement to be entered into on
the Closing Date by and among the Company, the Purchasers and the Collateral
Agent, as amended, modified or supplemented from time to time.
"COLLATERAL AGENT" means the Collateral Agent identified in the
Collateral Agency and Cash Collateral Agreement, including any successor or
additional Collateral Agent appointed pursuant thereto.
"COLLATERAL DOCUMENT" means each Direct Mortgage, Assignment of Lease
and Assignment of Loan Documents, the Collateral Agency and Cash Collateral
Agreement and each financing statement granting or perfecting the interest of
the Collateral Agent in and to the Collateral or assigning to the Collateral
Agent the interest of the Company therein.
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"COLLATERAL LEASE" means each Lease to which the Company is a party,
as lessor, which is included in the Collateral.
"COMPANY" means Health Care REIT, Inc., a Delaware corporation,
together with its successors.
"CONSTRUCTION FINANCING" means a loan or loans, or other extension of
credit, made by the Company or any Subsidiary of the Company for the purpose of
funding all or a portion of the cost of construction of a Health Care Facility
and secured by a first priority fee mortgage on the facility under
construction, including a loan or other extension of credit for such purpose to
a lessee under a Collateral Lease.
"CREDIT AGREEMENT" means (i) the Company's $150,000,000 credit
agreement, as amended and in effect on the Closing Date, dated September 8,
1994, between the Company and the banks named therein and National City Bank,
as agent, and as hereafter amended from time to time (provided that no such
amendment results in a breach of Section 5.24(e) or Section 5.28(a)), and (ii)
any credit agreement entered into by the Company to refinance, extend, renew,
refund, repay or replace, in whole or in part, the credit agreement specified
in clause (i).
"CREDIT ENHANCEMENT" means any obligation, contingent or otherwise, of
the Company or any of its Subsidiaries directly or indirectly guaranteeing any
Indebtedness or other obligation of any Person and any obligation, direct or
indirect, contingent or otherwise, of the Company or any of its Subsidiaries
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such Person (whether arising by
virtue of partnership arrangements, or by agreement to keep well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part). The term "Credit Enhanced" used as a
verb has a corresponding meaning.
"DEBT" means at any date, without duplication, (i) all obligations of
the Company or any of its Subsidiaries for borrowed money, (ii) all obligations
of the Company or any of its Subsidiaries evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of the Company or any of
its Subsidiaries to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business, (iv)
all obligations of the Company or any of its Subsidiaries as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all obligations of the Company or any of its Subsidiaries to purchase
securities (or other property) which arise out of or in connection with the
sale of the same or substantially similar securities or property, (vi) all
obligations of the Company or any of its Subsidiaries to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, (vii) all obligations of the Company or any of its Subsidiaries to
mandatorily redeem any capital
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stock of the Company or any of its Subsidiaries or any other Person, (viii) all
Debt of others secured by a Lien on any asset of the Company or any of its
Subsidiaries, whether or not such Debt is assumed by the Company or any of its
Subsidiaries, and (ix) all Debt of others Credit Enhanced by the Company or any
of its Subsidiaries.
"DEFAULT" means any event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event of
Default as defined in Section 6.1.
"DISCOUNTED PREPAYMENT VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the sum of the Reinvestment
Yield plus 50 basis points.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any corporation, trade or business that is
treated as a single employer with the Company or any Subsidiary of the Company
under Section 414(b), (c), (m) or (o) of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means the Chairman of the Board, President, a Vice
President, chief financial officer or Treasurer of the Company.
"HAZARDOUS MATERIALS" means (a) any "hazardous substance" as defined
by CERCLA; (b) any "hazardous waste" or "petroleum," as defined by the Resource
Conservation and Recovery Act, as amended; (c) any petroleum product; (d) any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material or
substance within the meaning of any other Environmental Law, as amended or
hereafter amended; or (e) any radioactive material, including any source,
special nuclear or by-product material as defined at 42 U.S.C. Section 2011 ET
SEQ., as amended or hereafter amended.
"HEALTH CARE FACILITY" means a facility that provides health care,
medical or personal care services, including, but not limited to, nursing
homes, retirement centers, assisted living facilities, psychiatric hospitals,
rehabilitation facilities, mentally ill/mentally retarded
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facilities, substance abuse centers, medical/surgical hospitals, clinics,
physician group practice facilities, medical office buildings or facilities
related thereto.
"INCLUDING" means including without limitation.
"INDEBTEDNESS" means, at any date, all obligations of the Company or
any Subsidiary of the Company that, in accordance with generally accepted
accounting principles, would be classified on the balance sheet, at such date,
as liabilities, including all (a) obligations for borrowed money, (b)
obligations secured by any Lien or other charge upon any property or asset
owned by the Company or its Subsidiaries, and (c) capitalized rentals under any
Capitalized Lease Obligation, and the aggregate amount of all guaranties or
other contingent obligations in respect of Indebtedness of others; PROVIDED,
HOWEVER, that any Credit Enhancement of the Company that (x) was issued and
outstanding as of the Closing Date and identified on Schedule 5.19 and (y)
relates to a property which, at such date, maintains a Qualifying Debt Service
Coverage Ratio shall not be included as a guarantee in respect of Indebtedness
of others pursuant to this clause (c).
"INSOLVENCY" means with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used
in section 4245 of ERISA.
"INSOLVENT" shall pertain to a condition of Insolvency.
"INTEREST COVERAGE RATIO" means, for any period of four consecutive
fiscal quarters, the ratio of
(a) the sum of (i) Cash Flow for such period plus (ii)
Interest Expense for such period, to
(b) Interest Expense for such period,
determined by reference to the statements of income and cash flow of the
Company and its consolidated Subsidiaries, determined on a consolidated basis
in accordance with GAAP, for the most recently completed fiscal quarter of the
Company.
"INTEREST EXPENSE" means for any fiscal period all interest charges,
including amortization of debt discount and imputed interest on Capitalized
Lease Obligations, on all Indebtedness of the Company and its consolidated
Subsidiaries, as determined in accordance with GAAP.
"INVESTMENT" means, for any Person: (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person (including, without limitation, any "short sale" or any
sale of any securities at a time when such securities are
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not owned by the Person entering into such short sale); or (b) the making of
any advance, loan or other extension of credit to any other Person.
"LEASE" means any Operating Lease or a Lease that creates a
Capitalized Lease Obligation, in either case in which the Company or a
Subsidiary of the Company is the lessor.
"LESSEE ESTOPPEL CERTIFICATE" means a current estoppel certificate
executed by a lessee under a Collateral Lease which states that there do not
exist any defaults under, or defenses or offsets against, such Collateral Lease
and shall otherwise be in form and substance reasonably satisfactory to the
Purchasers; PROVIDED, that if a Collateral Lease requires the lessee thereunder
to deliver an estoppel letter to the Company and prescribes the form thereof,
the form of estoppel letter prescribed in such Collateral Lease shall be
satisfactory to the Purchasers.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
encroachment, charge or claim against or interest in property, to secure
payment of a debt or performance of an obligation or other priority or
preferential arrangement of any kind or nature whatsoever.
"MAKE-WHOLE PREMIUM" means, with respect to any Note, a premium equal
to the excess, if any, of the Discounted Prepayment Value of the Called
Principal of such Note over such Called Principal. The Make-Whole Premium
shall in no event be less than zero.
"MATERIAL ADVERSE EFFECT" means:
(a) a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries, taken as
a whole, or on the condition, value or use of any of the Collateral or on the
ability of the Company to perform its obligations under this Agreement, the
Notes or any other Note Document; or
(b) a material adverse effect on the legality, validity
or enforceability of the Company's obligations under this Agreement or the
Notes or the other Note Documents or a material impairment of any of the Liens
granted by or under the Collateral Documents.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET WORTH" means, at any date, the aggregate amount of capital stock
(less any treasury stock), surplus and retained earnings of the Company, all
determined as of such date in accordance with GAAP.
"1993 NOTE DOCUMENTS" means, collectively, the Note Purchase Agreement
between the Company and the Purchasers party thereto, dated as of April 8,
1993, for $52,000,000 of
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Senior Notes, the notes issued pursuant thereto and all other documents and
instruments executed or delivered by the Company in connection therewith or
pursuant thereto.
"NOTES" means the Notes described in Section 1.1, and any Notes issued
in exchange or replacement therefor, in each case as the same may be amended,
modified or supplemented from time to time.
"NOTE DOCUMENTS" means this Agreement, the Notes, each Collateral
Document and any other agreements, documents and writings now or hereafter
executed by, on behalf of or for the benefit of the Company, the Purchasers or
the Collateral Agent pursuant to or in connection with this Agreement or the
transactions contemplated hereby and thereby, together with all amendments,
modifications (including through the waiver of any provision hereof or
thereof), supplements and/or restatements hereto or thereto.
"OPERATING LEASE" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property having a lease term
(as defined in Financial Accounting Standards Board Statement No. 13, as in
effect on the Closing Date) of more than one year.
"OTHER FINANCING" means any financing provided or committed to be
provided by the Company or any Subsidiary of the Company, other than Permitted
Operating Leases, Capitalized Lease Obligations, secured first priority
mortgage loans, Construction Financings, Credit Enhancements and any financing
in respect of real property owned by the Company as a result of a foreclosure
or restructuring of any of the foregoing. Notwithstanding the foregoing,
secured second priority mortgage loans provided by the Company prior to the
Closing Date and set forth on Schedule 8.1(a) shall not constitute Other
Financings.
"OVERDUE RATE" means, for each day, a rate per annum equal to the
higher of (a) 9.29% and (b) the sum of (i) 2% PLUS (ii) the Prime Rate for such
day. Nothing contained in this definition shall require the Company to pay
interest at a rate exceeding the maximum rate permitted by applicable law.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED INVESTMENTS" means any Investments which a REIT is
permitted to make and maintain pursuant to and in accordance with Section 856
of the Code and the rules and regulations promulgated thereunder.
"PERMITTED OPERATING LEASE" shall mean any Operating Lease having an
initial lease term (as defined in Financial Accounting Standards Board
Statement No. 13, as in effect on the Closing Date) of seven years or longer,
and which may not be terminated by the lessee at any time prior to the end of
such initial term.
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"PERSON" means a corporation, an association, a partnership, a limited
liability company or partnership, an organization, a business, a trust or any
other entity, an individual, a government or political subdivision thereof or a
governmental agency or instrumentality.
"PLAN" means at any particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company, any Subsidiary of the
Company or an ERISA Affiliate is (or, if such plan was terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
section 3(5) of ERISA.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PRIVATE PLACEMENT MEMORANDUM" shall mean the Confidential Private
Placement Memorandum dated November 1995 furnished to the original Purchasers.
"PSYCHIATRIC HOSPITAL" means facilities that offer principally
psychiatric and psychological treatment programs.
"PURCHASER'S ENVIRONMENTAL LIABILITY" means any and all losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
costs, judgments, suits, proceedings, damages (including consequential
damages), disbursements or expenses of any kind or nature whatsoever (including
reasonable attorneys' fees at trial and appellate levels and experts' fees and
disbursements and expenses incurred in investigating, defending against or
prosecuting any litigation, claim or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against any Purchaser or the
Collateral Agent or any of their respective affiliates, shareholders,
directors, officers, employees or agents in connection with or arising from:
(a) any investigation, litigation or proceeding related
to any environmental cleanup, audit, compliance or other matter relating to the
protection of the environment to which the Company or any of its Subsidiaries
may be subject;
(b) the Release by the Company or any of its Subsidiaries
of any Hazardous Material on, in, under or affecting all or any portion of any
property of the Company or any such Subsidiary, the groundwater, or any of the
surrounding areas;
(c) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Company or any of its Subsidiaries of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law);
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(d) any misrepresentation, inaccuracy or breach of any
warranty, contained or referred to in Section 3.1(r); or
(e) the imposition of any lien for damages caused by or
the recovery of any costs for the cleanup, release or threatened release of
Hazardous Material by the Company or any of its Subsidiaries, or in connection
with any property owned or formerly owned by the Company or any of its
Subsidiaries.
"QUALIFYING DEBT SERVICE COVERAGE RATIO" means, with respect to a
property at any date, a ratio of earnings before interest, taxes, depreciation
and amortization allocable to such property for the immediately preceding four
consecutive fiscal quarters to debt service (including principal, premium and
interest) allocable to such property for the immediately preceding four
consecutive fiscal quarters, that equals or exceeds 2.50:1.00.
"RECOGNIZED RATING AGENCY" shall mean a nationally recognized rating
agency or organization, including Moody's, Standard & Poor's and Duff & Phelps,
and any other rating agency or organization approved by the Required Holders.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the third Business Day preceding the
Settlement Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other display as may
replace Page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the weighted average remaining life of
the Called Principal being paid or prepaid as of such Settlement Date, or (ii)
if such yields shall not be reported as of such time or the yields reported as
of such time shall not be ascertainable, the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields shall have been so
reported as of the third Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release
H.15(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the weighted average
remaining life of the Called Principal being paid or prepaid as of such
Settlement Date. Such implied yield shall be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between reported yields.
"RELEASE" means a "release," as such term is defined in CERCLA.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon (other than interest accrued to the Settlement Date) that would be due
on or after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its expressed maturity
date.
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"REORGANIZATION" means with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term
as used in Section 4241 of ERISA.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the 30-day notice period
is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section
2615, and the event described in Section 4062(e) of ERISA.
"REQUIRED HOLDERS" means, at any time, the holders of at least 67% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Subsidiaries or any Affiliates).
"SECURED CREDIT AGREEMENT" means any credit agreement, note purchase
agreement or other documentation evidencing Debt borrowed from institutional
investors or banks which is secured by Liens on assets or properties of the
Company or any Subsidiary of the Company; PROVIDED that (i) if the only
security for such Debt is a mortgage creating a Lien on a single real estate
property of the Company or any Subsidiary of the Company, then such credit
agreement, note purchase agreement or other documentation shall not be deemed
to be a Secured Credit Agreement and (ii) the 1993 Note Documents shall not be
deemed to be a Secured Credit Agreement.
"SECURED OBLIGATIONS" means the payment and performance of all present
and future obligations and liabilities of the Company (whether actual or
contingent or whether owed jointly or severally or in any other capacity
whatsoever) to the Purchasers or the Collateral Agent (or any of them) under
the Note Documents (or any of them), together with all costs, charges and
expenses incurred by the Purchasers or the Collateral Agent (or any of them) in
connection with the protection, preservation or enforcement of their respective
rights under the Note Documents, including, without limitation
(i) all principal of, premium (including the
Make-Whole Premium), if any, and interest on, any Note and all other
amounts payable by the Company under any Note Document (including,
without limitation, amounts owed in respect of interest that accrues
on all or any portion of the Secured Obligations after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Company), and all
renewals or extensions of any of the foregoing; and
(ii) all sums advanced to protect the Lien of any
Collateral Document, including, without limitation, for payment of
taxes on any Collateral, for payment of insurance premiums relating to
any insurance policies covering any Collateral, for payment of
principal, interest and other amounts with respect to prior Liens on
any Collateral, for payment of expenses and attorneys' fees provided
for under any Note Document, and for all other sums advanced for any
other purpose
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under or pursuant to any Note Document, and all damages which may
arise out of or be payable in connection with the nonperformance or
noncompliance with any term, covenant or condition contained in any
Note Document or otherwise allowable at law or in equity; together
with interest on such amounts, from the date advanced or otherwise
paid by one or more of the Purchasers or the Collateral Agent to the
date such amount is repaid in full.
"SECURITY RELEASE DATE" means the first date on which all of the
following conditions shall have been satisfied: (i) the Liens securing the
Indebtedness under the Credit Agreement and any other Secured Credit Agreement
shall have been released by the lenders and agents thereunder and such
Indebtedness shall be unsecured, (ii) the total Debt of the Company secured by
Liens (excluding Indebtedness in respect of which Liens are to be released on
the Security Release Date, but including the 1993 Note Indebtedness) shall be
not greater than 20% of the Company's Tangible Net Worth as of the end of the
most recently completed fiscal quarter of the Company, (iii) Duff & Phelps
shall have confirmed in a writing (in form and substance satisfactory to the
Purchasers) that, on the Business Day immediately following the Security
Release Date, it will continue to assign a credit rating to the Notes that is
no lower than BBB (it being understood and agreed that a rating of BBB- is
lower than a rating of BBB), and (iv) no Default or Event of Default shall have
occurred.
"SERIES" when referring to the Notes shall mean either the Series A
Notes or the Series B Notes issued hereunder.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be paid or prepaid
pursuant to any paragraph of Section 2 or is declared to be immediately due and
payable pursuant to Section 6.3, as the context requires.
"SUBSIDIARY" of any Person shall mean and include (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 (assuming exercise or conversion solely of the securities held by
such Person) is at the time beneficially owned by such Person directly or
indirectly through Subsidiaries, and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time or the power to
elect a majority of the Board of Directors or similar governing body.
"TANGIBLE NET WORTH" means, at any date, the aggregate amount of Net
Worth of the Company, after subtracting all intangible assets arising or
existing on or after January 1, 1996, all determined as of such date in
accordance with GAAP.
"UCC" means the Uniform Commercial Code now or hereafter in effect in
each State.
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"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association, joint venture or other entity of which
all of the equity securities or ownership interests (other than, in the case of
a corporation, directors' qualifying shares) are owned or controlled by such
Person or one or more Wholly Owned Subsidiaries of such Person.
(b) In addition, each of the following terms is defined
in the Section set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Additional Collateral 5.24(c)
Assigned Loan Documents 3.1(q)
Assigned Loans 1.1(b)
Assigned Loan Title Policies 3.1(q)
Assignment of Lease 1.1(b)
Assignment of Loan Documents 1.1(c)
Audited Financials 3.1(i)
Bank Indebtedness 5.24(e)
Basket Indebtedness 5.12(e)
Borrowing Base Certificate 5.1(e)
Closing Date 1.2(b)
Collateral 1.1(c)
Collateral Notice 5.24(c)
Direct Mortgage 1.1(b)
Effective Date 5.24(c)
Environmental Reports 3.1(r)
Event of Default 6.1
Existing Collateral 5.24(c)
Fee Property 1.1(b)
GAAP 3.1(i)
Indemnified Liabilities 9.4(b)
Indemnified Parties 9.4(b)
Initial Borrowing Base Certificate 4.3
Mortgage Property 1.1(c)
1993 Note Indebtedness 5.24(e)
1995 10-K 3.1(h)
Note Indebtedness 5.24(e)
Note Register 9.1(a)
Notes 1.1(a)
Ongoing Indebtedness 5.12(b)
Ordinary Leases 5.8(b)
Paying Agent 5.4
Permitted Fee Property Liens 3.1(q)
</TABLE>
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<TABLE>
<S> <C>
Permitted Mortgage Property Liens 1.2(a)
Purchase Price Preamble
Purchaser 2.1
Redemption Price 3.1(d)
REIT 5.16(a)
Restricted Payments 1.1(a)
Series A Notes 1.1(a)
Series B Notes 5.3
Taxes
</TABLE>
8.2. ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with GAAP.
SECTION 9. MISCELLANEOUS
9.1. REGISTERED NOTES. (a) Company shall cause to be kept a
register for the registration and transfer of the Notes (the "NOTE REGISTER")
at the office of the Company or the Paying Agent, and the Company will cause to
be registered or transferred on the Note Register as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
(b) At any time and from time to time the registered
holder of any Note which has been duly registered as hereinabove provided may,
subject to compliance with applicable securities laws and the provisions of
Section 3.2, transfer such Note upon surrender thereof at the Company or the
principal office of the Paying Agent (if one shall have been appointed) duly
endorsed or accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or its attorney duly authorized in writing;
provided that the Company or the Paying Agent may decline to exchange or
register the transfer of any Note during the period of five Business Days
preceding the due date for any payment of principal or interest on the Notes.
(c) The Person in whose name any registered Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes of this Agreement. Payment of or on account of the principal,
premium, if any, and interest on any registered Note shall be made to or upon
the written order of such registered holder.
9.2. EXCHANGE OF NOTES. At any time and from time to time, upon
not less than three Business Days' notice to that effect given by the holder of
any Note initially delivered or of any Note substituted therefor pursuant to
Section 9.1, this Section 9.2, or Section 9.3 (except in the case of a lost,
stolen, or mutilated certificate sought to be exchanged pursuant
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to Section 9.3, as soon as practicable), and, upon surrender of such Note at
the office of the Paying Agent, the Company will cause the Paying Agent to
deliver in exchange therefor, without expense to the holder, except as set
forth below, Notes for the same aggregate principal amount as the then unpaid
principal amount of the Note so surrendered, in the denomination of U.S.
$100,000 or any amount in excess thereof as such holder shall specify, dated as
of the date to which interest has been paid on the Note so surrendered, or, if
such surrender is prior to the payment of any interest thereon, then dated as
of the date of issue, payable to such Person or Persons, or registered assigns,
as may be designated by such holder and otherwise permitted hereunder, and
otherwise of the same form and tenor as the Notes so surrendered for exchange.
The Company may require the payment of a sum sufficient to cover any stamp tax
or governmental charges imposed upon such exchange or transfer.
9.3. LOSS, THEFT OR MUTILATION OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Notes, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will cause the Paying Agent to
deliver without expense to the holder thereof, a new Note, of like tenor, in
lieu of such lost, stolen, destroyed or mutilated Note. If any Purchaser is
the owner of any such lost, stolen or destroyed Note, then the affidavit of an
authorized officer, of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
9.4. EXPENSES, STAMP TAX, INDEMNITY.
(a) Whether or not the transactions herein contemplated
shall be consummated, the Company agrees to pay directly all of its, the
Purchasers' and the Collateral Agent's out-of-pocket expenses in connection
with the preparation, execution and delivery of this Agreement, the Collateral
Agency Agreement and each of the other Note Documents and the transactions
contemplated or permitted hereby and thereby, including the reasonable fees,
disbursements and other charges of Purchasers' special counsel, the Collateral
Agent and its counsel, and all duplicating and printing costs and charges for
shipping the Notes, adequately insured to each Purchaser at such Purchaser's
home office or at such other place as such Purchaser may designate. The
Company agrees to pay all of its out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated or permitted hereby, including the fees and expenses of its
counsel and of Everen Securities, Inc. The Company also agrees to pay all
expenses relating to the performance of any transactions contemplated or
permitted hereby (including the addition or substitution of Collateral pursuant
to Section 5.24), any title insurance premiums, survey charges, any filing or
recording fees or taxes, all expenses of the Purchasers and the Collateral
Agent in connection with any Default or Event of Default
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or any alleged Default or Event of Default hereunder or in connection with any
action for the enforcement or collection of the Notes or this Agreement or any
other Note Document and all expenses associated with any amendment, waivers or
consents pursuant to the provisions hereof or thereof (whether or not the same
are actually executed and delivered), including any amendments, waivers or
consents resulting from any work-out, restructuring or similar proceedings
relating to the performance by the Company of the Secured Obligations. The
Company also agrees that it will pay any fees and related expenses incurred or
to be incurred in connection with its cooperation with a Recognized Rating
Agency as provided in Section 5.9 and all initial and ongoing fees and all
out-of-pocket expenses of the Paying Agent, if any, and the Collateral Agent
and will pay and save the Purchasers harmless against any and all liability
with respect to stamp and other similar taxes, if any, which may be payable or
which may be determined to be payable in connection with the execution,
delivery or enforcement of this Agreement or the Notes or any other Note
Documents, whether or not any Notes are then outstanding. Without limiting the
foregoing, the Company agrees to pay the cost of obtaining a private placement
number for the Notes and authorizes the submission of such information as may
be required by Standard & Poor's for the purpose of obtaining such number.
(b) In consideration of the execution and delivery of
this Agreement by each Purchaser, the Company hereby indemnifies, exonerates
and holds each Purchaser and the Collateral Agent and each of their respective
affiliates, shareholders, officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") free and harmless from and against
any and all actions, causes of action, suits, losses, costs, claims,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "INDEMNIFIED LIABILITIES"), incurred
by the Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(i) any and all brokerage fees and commissions
payable or claimed to be payable by the Company to any Person in
connection with the transactions contemplated by this Agreement or any
of the other Note Documents;
(ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds from
the sale of the Notes;
(iii) the entering into and performance of this
Agreement and any other Note Document by any of the Indemnified
Parties; or
(iv) any Purchaser's Environmental Liability;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of such Indemnified Party's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. This indemnity shall survive
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repayment or transfer of the Notes, the release of any Collateral, or a
transfer of the Company's property by foreclosure or by a deed in lieu of
foreclosure, regardless of whether caused by, or within the control of, the
Company or any Subsidiary of the Company. The Company, its successors and
assigns, hereby waive, release and agree not to make any claim or bring any
cost recovery action against any Indemnified Party under CERCLA or any state
equivalent, or any other similar law now existing or hereafter enacted. It is
expressly understood and agreed that the Company's obligation to any
Indemnified Party under this indemnity shall be without regard to fault on the
part of the Company with respect to the violation or condition which results in
liability of any Indemnified Party. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
9.5. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No delay
or failure on the part of the holder of any Note in the exercise of any power
or right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the holder
of any Note are cumulative to and are not exclusive of any rights or remedies
any such holder would otherwise have, and no waiver or consent, given or
extended pursuant to Section 7, shall extend to or affect any obligation or
right not expressly waived or consented to.
9.6. NOTICES. All communications provided for hereunder shall be
in writing and delivered or mailed by registered or certified mail, return
receipt requested, or by overnight courier, or by facsimile communication
transmitted on a Business Day (confirmed in writing by registered or certified
mail, return receipt requested, or by overnight courier), and shall be deemed
given if mailed, five Business Days after deposited in the mail, if sent by
overnight courier, one Business Day after delivered to the courier or, if sent
by facsimile transmission when appropriate record of transmission is obtained,
in each case prepaid and addressed, if to the Company, to Health Care REIT,
Inc., One Sea Gate, Suite 1500, Toledo, Ohio 43604, Attention: Chairman,
Telecopier No. 419-247-2826 or to such other address as the Company or the
Paying Agent, if any, may in writing designate to the Purchasers or to a
subsequent holder of the Note initially issued to Purchaser, and, if to an
original Purchaser, addressed to such Purchaser at the address set forth on
Schedule 1.1(a) hereto, and if to any transferee of such Purchaser, to the
address set forth on the Note Register, or to such other address as such
original Purchaser or transferee of such Purchaser shall designate in writing
to the Company and the Paying Agent, if any.
9.7. SUCCESSORS AND ASSIGNS. This Agreement and the Notes shall be
binding upon the Company and its respective successors and permitted assigns
and shall be binding upon and inure to each Purchaser's benefit and to the
benefit of each Purchaser's successors and assigns, including each successive
holder or holders of any Notes, except that the Company may not assign or
otherwise transfer any of its rights or obligations under this Agreement and
the Notes without the prior written consent of all the Purchasers. Each such
successive
-62-
<PAGE> 67
holder or holders of any Notes, including each Purchaser, shall have all rights
and privileges of a "Purchaser" hereunder. Each successive holder or holders
of a Note shall, at the Company's request, restate in writing for the Company's
benefit as to such holder, the representations set forth in Section 3.2.
9.8. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All covenants,
representations and warranties made by the Company herein and in any other Note
Documents and in any certificates delivered pursuant hereto or thereto, whether
or not in connection with the Closing Date, shall survive the closing and the
delivery of this Agreement and the Notes. The obligations of the Company under
Section 5.3 and Section 9.4 shall in each case survive any termination of this
Agreement, the payment in full of all Secured Obligations, or the invalidity or
unenforceability of any term or provision of this Agreement.
9.9. SEVERABILITY. If any provision of this Agreement or any of
the other Note Documents for any reason is declared unenforceable by a court of
competent jurisdiction (sustained on appeal, if any), such unenforceability
shall not affect the enforceability of any other provision hereof or thereof,
all of which shall remain in force and effect; PROVIDED that, if any provision
of this Agreement or any of the other Note Documents shall be unenforceable by
reason of a final judgment of a court of competent jurisdiction based upon a
court's ruling (sustained on appeal, if any) that such provision is
unenforceable because of the excessive degree or magnitude of the obligation
imposed thereby on any Person, that unenforceable obligation shall be reduced
in magnitude or degree by the minimum degree or magnitude necessary in order to
permit the provision to be enforceable by the Purchasers. In the event the
provisions of the immediately preceding sentence applies, the parties shall
make appropriate adjustment to the provisions of this Agreement and the other
Note Documents to give effect to the benefits intended to be conferred upon the
parties hereby.
9.10. GOVERNING LAW. THIS AGREEMENT AND THE NOTES ISSUED AND SOLD
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
9.11. SUBMISSION TO JURISDICTION. THE COMPANY HEREBY CONSENTS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT ALL ACTIONS
OR PROCEEDINGS (EXCEPT ACTIONS AND PROCEEDINGS FOR THE ENFORCEMENT OF ANY
COLLATERAL DOCUMENT AGAINST PROPERTY LOCATED IN ANY STATE OTHER THAN NEW YORK)
RELATING TO THIS AGREEMENT, THE NOTES AND OTHER NOTE DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS, AND THE COMPANY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE
-63-
<PAGE> 68
CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE
BY REGISTERED OR CERTIFIED MAIL (RETURN RECEIPT REQUESTED) OR MESSENGER
DIRECTED TO IT AT ITS ADDRESS SET FORTH IN SECTION 9.6 OR TO ITS AGENT REFERRED
TO BELOW AT SUCH AGENT'S ADDRESS SET FORTH BELOW AND THAT SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED IN ACCORDANCE WITH SECTION 9.6. THE COMPANY HEREBY
IRREVOCABLY APPOINTS THE PRENTICE HALL CORPORATION SYSTEM, INC., WITH AN OFFICE
ON THE DATE HEREOF AT 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023, AS ITS
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF ANY PROCESS WITHIN THE STATE OF
NEW YORK. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY
HOLDER OF NOTES TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY JURISDICTION AGAINST THE
COMPANY OR TO ENFORCE A JUDGMENT OBTAINED IN THE COURTS OF ANY OTHER
JURISDICTION.
9.12. WAIVER OF JURY TRIAL. THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, THE NOTES, ANY COLLATERAL DOCUMENT OR ANY
OTHER NOTE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PURCHASERS, THE COLLATERAL AGENT OR
THE COMPANY IN CONNECTION HEREWITH OR THEREWITH. THE COMPANY ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH NOTE DOCUMENT TO WHICH IT IS A
PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH PURCHASER
ENTERING INTO THIS AGREEMENT.
9.13. CAPTIONS. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
9.14. COUNTERPARTS; INTEGRATION. This Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
hereof but all together constituting only one agreement. This Agreement, the
Notes and the other Note Documents constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof and thereof.
-64-
<PAGE> 69
9.15. INTEREST RATE LIMITATION. Nothing contained in the definition
of Overdue Rate or in any Note Document shall require the Company to pay
interest at a rate exceeding the maximum rate permitted by applicable law.
-65-
<PAGE> 70
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
HEALTH CARE REIT, INC.
By:__________________________
Name:
Title:
PURCHASERS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, AS TRUSTEE OF A
COMMINGLED PENSION TRUST
By:__________________________
Name:
Title:
ALLSTATE LIFE INSURANCE COMPANY
By:__________________________
Name:
Title: Authorized Signatory
By:__________________________
Name:
Title: Authorized Signatory
-66-
<PAGE> 71
Exhibit A
Form of
Health Care REIT, Inc.
6.96% Series A Senior Note
Due 2001
[Private Placement No.]
No. ___ April __, 1996
U.S. $_________________
HEALTH CARE REIT, INC., a Delaware corporation (the
"Company"), for value received, hereby unconditionally promises to pay to the
order of ___________________ (the "Purchaser") or its registered assigns, on
April 15, 2001 the principal amount of __________________ DOLLARS (U.S.
$___________) and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the principal amount from time to time remaining
unpaid hereon at the rate of 6.96% per annum from (and including) April __,
1996 to (but excluding) the date of repayment of such principal amount, payable
on the 15th day of each April and October in each year (commencing October 15,
1996), and at maturity. The Company agrees to pay interest on overdue
principal (whether by acceleration or otherwise, and including any overdue
optional prepayment of principal) and premium, if any, and on any overdue
installment of interest, at the Overdue Rate until paid.
Unless otherwise set forth herein, capitalized terms used
herein but not defined herein have the respective meanings assigned to them in
the Note Purchase Agreement (as such term is hereafter defined).
1. Except as may be otherwise provided pursuant to
Section 5.4 or 5.10 of the Note Purchase Agreement, both the principal hereof,
premium, if any, and interest hereon are payable at the principal office of the
Company, in immediately available funds, in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. Such payments shall be applied first to
accrued interest, then to premium, if any, and then to principal. If any
amount of principal, premium, if any, or interest on or in respect of this Note
becomes due and payable on any date which is not a Business Day, such amount
shall be payable on the immediately preceding Business Day. Payment of any
amount on or in respect of this Note shall be made not later than 12:00 Noon
New York Time on the date on which such payment shall become due (each such
payment made after such time on such date to be deemed to have been made on the
next succeeding Business Day).
<PAGE> 72
2. This Note is one of the Series A Senior Notes due
2001 issued pursuant to the terms and provisions of that certain Note Purchase
Agreement, dated as of April 15, 1996 (the "Note Purchase Agreement"), entered
into by the Company and each of the Purchasers party thereto, and this Note and
the holder hereof are entitled equally and ratably with the holders of all
other Notes (as defined in the Note Purchase Agreement) outstanding under the
Note Purchase Agreement to all the benefits and security provided for in the
Note Documents or referred to therein, and may be accelerated prior to maturity
thereof as provided in the Note Purchase Agreement, to which Note Purchase
Agreement reference is hereby made for the statement thereof. A copy of the
Note Purchase Agreement may be obtained from the Company.
3. The Notes are not subject to prepayment, purchase or
redemption at the option of the Company prior to their expressed maturity dates
except on the terms and conditions and in the amounts and with the Make-Whole
Premium, if any, all as set forth in Section 2 of the Note Purchase Agreement.
4. This Note is registered on the books of the Company
and is transferable only by surrender hereof at the offices of the Company (or
of such Paying Agent as may be appointed by the Company pursuant to Section 5.4
of the Note Purchase Agreement from time to time), duly endorsed or accompanied
by a written instrument of transfer duly executed by the registered holder of
this Note or its attorney duly authorized in writing. Payment of or on account
of principal, premium, if any, and interest on this Note shall be made only to
or upon the order in writing of the registered holder.
5. The Company and each surety, endorser, guarantor and
other party ever liable for payment of any sums of money payable upon this Note
jointly and severally waive presentment, demand, protest, notice of protest and
nonpayment or other notice of default, notice of acceleration and intention to
accelerate or other notice of any kind, and agree that their liability under
this Note shall not be affected by any renewal or extension in the time of
payment hereof, or in any indulgences, or by any release or change in any
security for the payment of this Note, and hereby consent to any and all
renewals, extensions, indulgences, releases or changes hereto or any other Note
Document, regardless of the number of such renewals, extensions, indulgences,
releases or changes.
6. No waiver by Purchaser of any of its rights or
remedies hereunder or under any other Note Document or otherwise, shall be
considered a waiver of any other subsequent right or remedy of Purchaser; no
delay or omission in the exercise or enforcement by Purchaser of any rights or
remedies shall ever be construed as a waiver of any right or remedy of
Purchaser; and no exercise or enforcement of any such rights or remedies shall
ever be held to exhaust any right or remedy of Purchaser.
-2-
<PAGE> 73
7. This Note and the Note Purchase Agreement shall be
governed by and shall be construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely within such
State.
HEALTH CARE REIT, INC.
By:_____________________
Name:
Title:
-3-
<PAGE> 74
Exhibit B
Form of
Health Care REIT, Inc.
7.29% Series B Senior Note
Due 2003
[Private Placement No.]
No. ___ April __, 1996
U.S. $_________________
HEALTH CARE REIT, INC., a Delaware corporation (the
"Company"), for value received, hereby unconditionally promises to pay to the
order of ___________________ (the "Purchaser") or its registered assigns, on
April 15, 2003 the principal amount of __________________ DOLLARS (U.S.
$___________) and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) on the principal amount from time to time remaining
unpaid hereon at the rate of 7.29% per annum from (and including) April __,
1996 to (but excluding) the date of repayment of such principal amount, payable
on the 15th day of each April and October in each year (commencing October 15,
1996), and at maturity. The Company agrees to pay interest on overdue
principal (whether by acceleration or otherwise, and including any overdue
optional prepayment of principal) and premium, if any, and on any overdue
installment of interest, at the Overdue Rate until paid.
Unless otherwise set forth herein, capitalized terms used
herein but not defined herein have the respective meanings assigned to them in
the Note Purchase Agreement (as such term is hereafter defined).
1. Except as may be otherwise provided pursuant to
Section 5.4 or 5.10 of the Note Purchase Agreement, both the principal hereof,
premium, if any, and interest hereon are payable at the principal office of the
Company, in immediately available funds, in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. Such payments shall be applied first to
accrued interest, then to premium, if any, and then to principal. If any
amount of principal, premium, if any, or interest on or in respect of this Note
becomes due and payable on any date which is not a Business Day, such amount
shall be payable on the immediately preceding Business Day. Payment of any
amount on or in respect of this Note shall be made not later than 12:00 Noon
New York Time on the date on which such payment shall become due (each such
payment made after such time on such date to be deemed to have been made on the
next succeeding Business Day).
<PAGE> 75
2. This Note is one of the Series B Senior Notes due
2003 issued pursuant to the terms and provisions of that certain Note Purchase
Agreement, dated as of April 15, 1996 (the "Note Purchase Agreement"), entered
into by the Company and each of the Purchasers party thereto, and this Note and
the holder hereof are entitled equally and ratably with the holders of all
other Notes (as defined in the Note Purchase Agreement) outstanding under the
Note Purchase Agreement to all the benefits and security provided for in the
Note Documents or referred to therein, and may be accelerated prior to maturity
thereof as provided in the Note Purchase Agreement, to which Note Purchase
Agreement reference is hereby made for the statement thereof. A copy of the
Note Purchase Agreement may be obtained from the Company.
3. The Notes are not subject to prepayment, purchase or
redemption at the option of the Company prior to their expressed maturity dates
except on the terms and conditions and in the amounts and with the Make-Whole
Premium, if any, all as set forth in Section 2 of the Note Purchase Agreement.
4. This Note is registered on the books of the Company
and is transferable only by surrender hereof at the offices of the Company (or
of such Paying Agent as may be appointed by the Company pursuant to Section 5.4
of the Note Purchase Agreement from time to time), duly endorsed or accompanied
by a written instrument of transfer duly executed by the registered holder of
this Note or its attorney duly authorized in writing. Payment of or on account
of principal, premium, if any, and interest on this Note shall be made only to
or upon the order in writing of the registered holder.
5. The Company and each surety, endorser, guarantor and
other party ever liable for payment of any sums of money payable upon this Note
jointly and severally waive presentment, demand, protest, notice of protest and
nonpayment or other notice of default, notice of acceleration and intention to
accelerate or other notice of any kind, and agree that their liability under
this Note shall not be affected by any renewal or extension in the time of
payment hereof, or in any indulgences, or by any release or change in any
security for the payment of this Note, and hereby consent to any and all
renewals, extensions, indulgences, releases or changes hereto or any other Note
Document, regardless of the number of such renewals, extensions, indulgences,
releases or changes.
6. No waiver by Purchaser of any of its rights or
remedies hereunder or under any other Note Document or otherwise, shall be
considered a waiver of any other subsequent right or remedy of Purchaser; no
delay or omission in the exercise or enforcement by Purchaser of any rights or
remedies shall ever be construed as a waiver of any right or remedy of
Purchaser; and no exercise or enforcement of any such rights or remedies shall
ever be held to exhaust any right or remedy of Purchaser.
-2-
<PAGE> 76
7. This Note and the Note Purchase Agreement shall be
governed by and shall be construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely within such
State.
HEALTH CARE REIT, INC.
By:_____________________
Name:
Title:
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1996.
</LEGEND>
<CIK> 0000766704
<NAME> HEALTH CARE REIT INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 997,785
<SECURITIES> 1,569,836
<RECEIVABLES> 329,153,407
<ALLOWANCES> 10,100,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 79,065,396
<DEPRECIATION> 4,846,802
<TOTAL-ASSETS> 397,412,701<F1>
<CURRENT-LIABILITIES> 10,109,361
<BONDS> 198,610,439
<COMMON> 12,082,519
0
0
<OTHER-SE> 176,610,439
<TOTAL-LIABILITY-AND-EQUITY> 397,412,701
<SALES> 0
<TOTAL-REVENUES> 10,890,381
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,365,019
<LOSS-PROVISION> 150,000
<INTEREST-EXPENSE> 3,698,254
<INCOME-PRETAX> 5,677,108
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,677,108
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<FN>
<F1>TOTAL ASSETS INCLUDE $1,573,079, WHICH REPRESENTS DEFERRED LOAN EXPENSES THAT
HAVE NOT BEEN LISTED SEPARATELY.
</FN>
</TABLE>
<PAGE> 1
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
January 16, 1996
For more information contact:
Erin Ibele (419) 247-2800
Robert Pruger (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES DIVIDEND
Toledo, Ohio, January 16, 1996. . . . The Directors of Health Care
REIT, Inc. (NYSE/HCN) voted to pay a quarterly cash dividend of $.52 per share.
The dividend will be payable February 20, 1996 to shareholders of record on
February 2, 1996. This will be the REIT's 99th consecutive dividend
distribution.
Health Care REIT, Inc. is a real estate investment trust which
invests in health care facilities, primarily nursing homes, assisted living and
retirement facilities. The Company also invests in specialty care hospitals
and primary care facilities.
adb\press\66.doc
<PAGE> 1
1995 Year-End Results
February 19, 1996
Page 1
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
February 19, 1996
For more information contact:
Erin Ibele (419) 247-2800
Robert Pruger (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES 1995 RESULTS
Toledo, Ohio, February 19, 1996 (NYSE/HCN)....For the quarter ended December
31, 1995, net income before a non-recurring charge for settlement of management
contract was $5.8 million (or $.49 per share) compared to $5.8 million (or $.51
per share) in the fourth quarter of 1994. The 1995 fourth quarter and year-end
income statements were also affected by a large provision for losses which
reduced net income by $800,000 and $4,800,000, respectively, versus comparative
1994 provision for losses of $500,000 and $1,000,000, respectively. The
non-recurring charge and provision for losses (which are almost exclusively
non-cash) reduced 1995 over 1994 net income by $.81 per share.
Cash flows from operating activities available for distribution ("CAD") for the
year ended December 31, 1995 were $27.9 million ($2.39 per share) compared with
$31.7 million ($2.75 per share) for 1994. CAD for the three months ended
December 31, 1995 was $8.8 million ($.75 per share) compared with $7.3 million
($.63 per share) for the three months ended December 31, 1994. The 1995 versus
1994 fourth quarter and year-end results were unfavorably affected by a net
reduction in gain on exercise of options and prepayment fees of $.02 and $.26
per share, respectively. The fourth quarter 1995 versus 1994 results were
favorably affected by the receipt of a net $1.3 million additional cash over
recorded income for leases and interest, which increased CAD by $.11 per share.
adb\press\95yr-end.doc
<PAGE> 2
1995 Year-End Results
February 19, 1996
Page 2
Total assets of $358.1 million at December 31, 1995 were up 10.5% from a year
ago, while shareholders' equity decreased slightly to $187.6 million.
The following tables highlight the information presented above.
SUMMARY FINANCIAL DATA
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
December 31 Year Ended
(Unaudited) December 31
----------- -----------
GROSS INCOME 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest and other income $ 9,306 $ 7,073 $ 35,049 $ 26,225
Direct financing leases 382 659 1,529 4,353
Operating-lease rents 1,646 1,543 6,352 5,480
Loan and commitment fees 644 229 1,666 1,184
Gain on exercise of options 1,538 5,490
----- -----
$ 11,978 $ 11,042 $ 44,596 $ 42,732
========== ========== ========= =========
Three Months Ended
December 31 Year Ended
(Unaudited) December 31
----------- -----------
OTHER FINANCIAL INFORMATION 1995 1994 1995 1994
---- ---- ---- ----
Net income before non-recurring charge
and provision for losses (a) $ 6,616 $ 6,343 $ 24,228 $ 25,953
CAD 8,850 7,301 27,938 31,697
Net income per share before non-
recurring charge and provision
for losses (a) .56 .55 2.07 2.25
CAD per share .75 .63 2.39 2.75
Distributions per share .52 .51 2.075 2.01
Average number of shares outstanding 11,835 11,573 11,710 11,519
December 31
-----------
1995 1994
---- ----
Assets:
Real Estate Related Investments:
Loans receivable $ 291,999 $ 254,924
Operating-lease properties 58,629 57,231
</TABLE>
<PAGE> 3
1995 Year-End Results
February 19, 1996
Page 3
<TABLE>
<S> <C> <C>
Direct financing leases 11,246 11,428
------ ------
361,874 323,583
Less allowance for losses 9,950 5,150
----- -----
351,924 318,433
Other assets 6,168 5,669
----- -----
Total assets $ 358,092 $ 324,102
=========== ==========
Total liabilities $ 170,494 $134,922
Shareholders' Equity 187,598 189,180
------- -------
$ 358,092 $ 324,102
=========== ==========
</TABLE>
Health Care REIT, Inc. is a real estate investment trust which
invests in health care facilities, primarily nursing homes, assisted living and
retirement facilities. The Company also invests in specialty care hospitals
and primary care facilities.
(a) Reportable net income was $.06 and $.51 for the fourth quarter of 1995 and
1994, respectively, and $1.16 and $2.17 for the year 1995 and 1994,
respectively.
<PAGE> 1
F O R I M M E D I A T E R E L E A S E
PRESS RELEASE
March 13, 1996
For more information contact:
Erin Ibele (419) 247-2800
George Chapman (419) 247-2800
HEALTH CARE REIT, INC. ANNOUNCES
APPOINTMENT OF VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND TREASURER
Toledo, Ohio, March 13, 1996....Health Care REIT, Inc. (NYSE/HCN)
announced the appointment of Edward F. Lange, Jr. to the position of Vice
President, Chief Financial Officer and Treasurer of the Company. Mr. Lange was
formerly Senior Vice President-Finance with The CarePlex Group, Inc. of
Needham, Massachusetts. Prior to his affiliation with The CarePlex Group, Mr.
Lange was Vice President - Finance with MediTrust of Needham, Massachusetts.
He received his MBA from the University of Connecticut after undergraduate
studies at the University of Massachusetts. Mr. Lange has over 10 years'
experience in finance, with a specialization in the health care industry. He
assumed his new responsibilities on March 11, 1996.
George L. Chapman, President of the Company, stated, "With the addition of
Ed Lange as CFO, we have assembled a management team committed to driving
Health Care REIT, Inc. into the ranks of top-tier REITs. Ed's skills,
experience and work ethic will be important factors in achieving our goals."
Health Care REIT, Inc. is a real estate investment trust which invests in
health care facilities, primarily nursing homes, assisted living and retirement
facilities. The Company also invests in specialty care hospitals and primary
care facilities.
adb\press\cfo-tres.doc
