UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1993
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______ to _____
Commission File Number 1-9317
HEALTH AND REHABILITATION PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 04-6558834
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive offices) (Zip Code)
617-332-3990
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Shares of Beneficial Interest New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock of the registrant
held by non-affiliates was $656,557,656 based on the $15-3/8
closing price per share for such stock on the New York Stock
Exchange on March 2, 1994. For purposes of this calculation,
1,996,250 shares held by HRPT Advisors, Inc. (the "Advisor"),
including a total of 1,000,000 shares held by the Advisor solely
in its capacity as voting trustee under certain voting trust
agreements, and an aggregate of 23,313 shares held by the
trustees and executive officers of the registrant, have been
included in the number of shares held by affiliates.
Number of the registrant's Common Shares of Beneficial Interest,
$.01 par value ("Shares"), outstanding as of March 2, 1994:
44,722,500.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K is incorporated
herein by reference from the Company's definitive Proxy Statement
for the annual meeting of shareholders currently scheduled to be
held on May 17, 1994.
THE DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED OCTOBER
9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY
AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE TRUST
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY,
FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE TRUST. ALL PERSONS
DEALING WITH THE TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS
OF THE TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
<PAGE>
HEALTH AND REHABILITATION PROPERTIES TRUST
1993 FORM 10-K ANNUAL REPORT
Table of Contents
PART I
Page
Item 1.Business . . . . . . . . . . . . . . . . . . . 1
Item 2.Properties . . . . . . . . . . . . . . . . . . 26
Item 3.Legal Proceedings. . . . . . . . . . . . . . . 28
Item 4.Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . 29
PART II
Item 5.Market for the Registrant's Common
Stock and Related Stockholder Matters. . . . 29
Item 6.Selected Financial Data. . . . . . . . . . . . 32
Item 7.Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . 33
Item 8.Financial Statements and Supplementary Data. . 38
Item 9.Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 38
PART III
To be incorporated by reference from the Company's
definitive Proxy Statement for the annual meeting of shareholders
currently scheduled to be held on May 17, 1994, which will be
filed not later than 120 days after the end of the Company's
fiscal year.
PART IV
Item 14.Exhibits, Financial Statement Schedules
and Reports on Form 8-K. . . . . . . . . . . 39
FINANCIAL STATEMENTS AND SCHEDULES. . . . . . . . . . F-1
<PAGE>
PART I
Item 1. Business.
The Company. Health and Rehabilitation Properties Trust
(the "Company") was organized on October 9, 1986 as a Maryland
real estate investment trust. The Company invests in nursing
homes and other income producing health care related real estate.
The Company's investments, to date, have been principally in
nursing homes and other long-term care facilities, assisted
living facilities, retirement complexes and facilities that
provide subacute and other specialty rehabilitation services.
The Company has no current plans to invest in non-health care
related real estate. The facilities in which the Company has
made investments by mortgage, purchase lease or merger
transactions shall hereinafter be referred to individually as a
"Property" and collectively as "Properties".
As of December 31, 1993, the Company owned 68 Properties
acquired for an aggregate of $384.8 million and had mortgage
investments in 76 Properties aggregating $157.3 million, for
total real estate investments of approximately $542 million in
144 Properties located in 27 states. The Properties are
described in "Business -- Developments Since January 1, 1993" and
"Properties".
<TABLE>
<CAPTION>
Number of Total Investment
State Properties at December 31, 1993
(in thousands)
<S> <C> <C>
Alabama............. 2 $3,601
Arizona............. 3 6,219
California.......... 15 41,662
Colorado............ 10 32,990
Connecticut......... 9 83,802
Florida............. 1 965
Georgia............. 4 6,883
Illinois............ 1 2,711
Indiana............. 10 27,318
Iowa................ 10 14,175
Kansas.............. 4 8,521
Kentucky............ 2 19,735
Louisiana........... 5 32,403
Massachusetts....... 7 103,824
Michigan............ 1 7,051
Missouri............ 2 3,178
Nebraska............ 12 16,925
North Carolina...... 10 23,025
Ohio................ 9 27,259
Pennsylvania........ 2 18,490
South Carolina...... 1 886
South Dakota........ 3 7,589
Tennessee........... 1 1,077
Texas............... 7 6,959
Washington.......... 1 5,125
Wisconsin........... 9 33,260
Wyoming............. 3 6,459
Total.......... 144 $542,092
</TABLE>
The Company's principal executive offices are located at 400
Centre Street, Newton, Massachusetts 02158, and its telephone
number is (617) 332-3990.
Investment Policy and Method of Operation. The Company's
investment goals are current income for distribution to
shareholders, capital growth resulting from appreciation in the
residual value of owned Properties, and preservation and
protection of shareholders' capital. The Company's income is
derived primarily from minimum rent and minimum interest payments
under its leases and mortgages and from additional rent and
additional interest payments based upon revenue increases at the
leased and mortgaged Properties.
The Company's day-to-day operations are conducted by HRPT
Advisors, Inc., the Company's investment advisor (the "Advisor").
The Advisor originates and presents investment opportunities to
the Company's Board of Trustees (the "Trustees"). In evaluating
potential investments, the Company considers such factors as: the
adequacy of current and anticipated cash flow from the property
to meet operational needs and financing obligations and to
provide a competitive market return on investment to the Company;
the growth, tax and regulatory environments of the community in
which the property is located; the quality, experience, and
credit worthiness of the property's operator; an appraisal of the
property, if available; occupancy and demand for similar health
care facilities in the same or nearby communities; the mix of
private and government sponsored patients; the mix of cost-based
and charge-based revenues; the construction quality, condition
and design of the property; and the geographic area and type of
property.
In the case of each purchase lease transaction and mortgage
investment originated by the Company to date, the Trustees
considered, among other things, the various factors set forth
above. In connection with the SAFECO transaction and several
loan pool acquisitions from the Resolution Trust Corporation
("RTC") and others described in "Developments since January 1,
1993", the Company considered the seller's information package,
made site visits to a significant number of the facilities and
reviewed other available documentation.
The Trustees have established a policy that the Company will
not purchase or mortgage finance a facility for an amount which
exceeds the appraised value of such facility. Prior to investing
in properties, the Company obtains title commitments or policies
of title insurance insuring that the Company holds title to or
has mortgage interests in such properties, free of material liens
and encumbrances.
The Company's investments may be structured using leases
with minimum and additional rent and escalator provisions, loans
with fixed or floating rates, joint ventures and partnerships
with affiliated or unaffiliated parties, commitments or options
to purchase interests in real estate, mergers or any combination
of the foregoing that will best suit the particular investment.
After an investment has been made in a Property, the Company
makes periodic site visits and conducts Property reviews. The
Property reviews include, among other things: reviews of
licensure and certification materials, regulatory reports,
pending or contemplated building improvements and applications
for certificates or determinations of need, pending litigation
and liens; analysis of staffing patterns, accounts receivable and
cash flow; observation of the overall condition of the Property;
a tour of the Property, usually conducted by a facility
administrator or program director; and discussions with the
facility administrator and other personnel. Financial statements
and patient census information are requested and reviewed
quarterly or as otherwise provided in the mortgage documents.
In connection with the Company's new $110 million revolving
credit facility the Company has agreed to obtain bank syndicate
approval before exceeding certain investment concentrations.
Among these are that no more than 40% of its properties be
operated by any single tenant or mortgagor, and that investment
in rehabilitation treatment, acute care, and psychiatric care
assets, as defined, not exceed 50%, 10% and 10%, respectively, of
total investments. In addition to these restrictions, the
Trustees may establish limitations as they deem appropriate from
time to time. No limits have been set on the number of
properties in which the Company will seek to invest, or on the
concentration of investments involving any one facility or
geographical area; however, the Trustees consider concentration
of investments in determining whether to make new or increase
existing investments. The Company's Declaration of Trust (the
"Declaration") and operating policies provide that any investment
in facilities owned or operated by the Advisor, persons expressly
permitted under the Declaration to own more than 8.5% of the
Company's shares, or any company affiliated with any of the
foregoing must, however, be approved by a majority of the
Trustees not affiliated with any of the foregoing (the
"Independent Trustees").
The Company has in the past and may in the future consider,
from time to time, the acquisition of or merger with other
companies engaged in the same business as the Company; however,
the Company has no present agreements or understandings
concerning any such acquisition or merger. The Company has no
intention of investing in the securities of others for the
purpose of exercising control.
Borrowing Policy. In addition to the use of equity, the
Company utilizes short-term and long-term borrowings to finance
investments. At present, the Company has term and revolving
credit facilities available to it totalling $143 million. As of
March 7, 1994, $73 million of this amount was outstanding, $61.6
million was available to be drawn and $8.4 million will be
available to be drawn upon receipt by the Company's lenders of
certain material relating to the borrowing base. Of the $73
million of indebtedness outstanding, $40 million is outstanding
under a revolving line of credit and $33 million is outstanding
under a term loan facility. All outstanding borrowings are at
variable interest rates determined by formulae based upon the
London Interbank Offered Rate, prime or some other generally
recognized interest rate standard. Fluctuations in interest
rates on all of the outstanding term indebtedness have been
limited by hedging arrangements so that the maximum rates payable
on the first $100 million of indebtedness is 5.5% per annum.
At present, the Company's borrowing guidelines established
by its Trustees and covenants in various bank agreements prohibit
the Company from maintaining a debt to equity ratio of greater
than 1.50 to 1. As of March 7, 1994 the Company's debt to
equity ratio was .16 to 1. The Declaration prohibits the Company
from incurring secured and unsecured indebtedness which in the
aggregate exceeds 300% of the net assets of the Company, unless
approved by a majority of the Independent Trustees. The present
debt to equity limitation in the Company's borrowing policies and
in various bank agreements may in the future be changed. There
can be no assurance that debt capital will in the future be
available at reasonable rates to fund the Company's operations or
growth.
Developments Since January 1, 1993.
January Share Offering. During the first quarter of 1993,
the Company sold 10,350,000 Shares in a public offering and
received net proceeds of approximately $123 million. The
proceeds were used, in part, to prepay $88.5 million in
outstanding indebtedness (which resulted in a write off of $3.4
million in deferred finance charges) and, in part, to fund
transactions described below.
Resolution Trust Corporation Mortgage Portfolios. During
1993, the Company acquired two pools of performing loans secured
by mortgages on 33 nursing homes or retirement facilities
operated by 12 separate companies. Each of these pools was
previously held by a bank taken over by the RTC. The total
outstanding balances of these loans at the time of purchase was
approximately $98 million, and the purchase price of the loans
totalled approximately $88.4 million, of which $65.9 million was
borrowed from DLJ Mortgage Capital, Inc. ("DLJMC"), an affiliate
of Donaldson, Lufkin & Jenrette Securities Corporation. Since
they were acquired, four of these loans have been paid in full
and the DLJMC loan has been repaid in full. Certain information
relating to these transactions is set forth below:
<TABLE>
HRP Acquisitions of RTC Mortgages
(dollars in thousands)
<CAPTION>
No. of
Facilities Outstanding Carrying Annualized
Date of Originating at Acquisition Balance at Purchase Amount at Interest at
Acquisition Bank (beds) Acquisition Price Dec. 31, 1993 Dec. 31, 1993(1)
<S> <C> <C> <C> <C> <C> <C>
May 1993 TransOhio
Federal 27 $79,883 $72,411 $64,850 $6,705
Savings Bank (3,552)
September San Diego 6 18,200 16,000 13,528 1,623
1993 Home Federal (914)
Savings Bank
- ---------------
(1) Includes amortization of purchase price discounts.
</TABLE>
SAFECO Portfolio. In June 1993, the Company acquired three
nursing homes (428 beds) and related improvement loans for $5.8
million from SAFECO Corporation, an insurance and financial
services holding company. The three nursing homes are leased to
three separate companies pursuant to leases which have initial
terms expiring between 1995 and 2001 and include various
additional rent provisions and renewal options. Total minimum
annual rent and interest from these facilities is approximately
$804,000.
Sun Healthcare. In November 1993, the Company acquired a 143
bed nursing home in Seattle, Washington, for $5.1 million from
Greenery Rehabilitation Group, Inc. ("Greenery"). This facility
was immediately leased to Sun Healthcare Group, Inc. ("Sun").
Simultaneously, the Company's existing lease arrangements with
Sun for three nursing homes in Connecticut, which had been
scheduled to expire in 1997, were combined into one lease which
also covers the Seattle facility and the lease term for all four
facilities was extended through 2005 with renewal options. The
three Connecticut facilities contain 458 beds and were acquired
by the Company in 1987 for approximately $15.5 million. The
total minimum annual rent payable to the Company for these four
facilities is approximately $2.5 million.
Goldome Mortgage Portfolio. In November 1993, the Company
was selected as the winning bidder for a portfolio of performing
mortgage loans originated by Goldome Credit Corporation. These
loans had a combined principal balance of approximately $29.2
million, maturities between 1994 and 1999, and are secured by
mortgages on 18 nursing homes and retirement complexes (1,876
beds) located in eight states and operated by 12 separate
companies. In December 1993, the Company acquired all but one of
these mortgage loans, with a combined principal balance of $27.9
million, for $26.6 million. In February 1994, the Company
acquired the remaining mortgage loan (which related to a property
which was damaged by fire prior to the original closing).
Funding for this investment was provided by borrowing under the
Company's revolving credit facility and from DLJMC. The
annualized interest, including amortization of purchase price
discount, is approximately $3.2 million.
Community Care of America. In December 1993, the Company
purchased for $33.4 million and immediately leased to Community
Care of America, Inc. ("Community Care") 12 nursing homes and
five retirement complexes and provided $26.6 million in financing
for the acquisition of an additional 14 nursing homes and one
retirement complex by Community Care or its affiliates, secured
by mortgages on eleven of the nursing homes or a first lien on
the assets of the operator of the nursing homes or its parent.
The 26 nursing homes contain 2,183 beds and the six retirement
complexes contain 119 units. The purchased facilities have been
leased to Community Care for an initial term of ten years, with
renewal options totalling an additional 26 years. The loans will
mature in 23 years, but may be accelerated by the Company after
ten years in certain circumstances. Total minimum rent and
interest payments are approximately $6.7 million, plus additional
rent commencing in 1996 based upon increases in net patient
revenues at the facilities. Community Care's obligations are
also secured by a $3.8 million security deposit. Subject to
regulatory approvals, the Company may elect, at any time during
the term of the loans, to purchase and lease to the borrower any
or all of the financed nursing homes.
December Share Offering. In December 1993, the Company sold
9,000,000 shares in a public offering and received net proceeds
of approximately $122 million. The proceeds were used to repay
amounts borrowed from DLJMC and to fund the Community Care
transaction. In January 1994, the underwriters exercised their
overallotment option for 601,500 additional shares, resulting in
the Company's receipt of additional net proceeds of approximately
$8.3 million.
Horizon/Greenery Merger. In February 1994, the previously
announced merger transaction (the "Horizon/Greenery Merger")
between Horizon Healthcare Corporation ("Horizon") and Greenery
was consummated.
In connection with this merger:
- Horizon became the lessee of seven facilities
previously leased by the Company to Greenery. The rent
for these facilities is substantially the same as that
previously paid by Greenery. The initial lease term
was extended through June 30, 2005, and Horizon has
renewal options totalling an additional 20 years.
- The Company granted Horizon options to purchase any or
all of the seven leased facilities. The options may be
exercised at a rate of not more than one facility in
any 12 month period and expire December 31, 2003. The
option purchase prices are approximately equal to the
Company's investment in these facilities.
- Horizon purchased from the Company three facilities
previously leased by Greenery. The purchase price of
$28.4 million was paid $23.3 million in cash and the
balance of $5.1 million in a note secured by a first
mortgage on one of the facilities. The mortgage loan
bears interest at 11.5% per annum and matures on
December 31, 2000. The Company realized a gain from
these sales of approximately $3.9 million.
- The Company lent Horizon $4.3 million secured by a
first mortgage on one facility which Horizon acquired
from Greenery in the Horizon/Greenery Merger. The
mortgage loan bears interest at 11.5% per annum and
matures on December 31, 2000.
- Horizon assumed management responsibility for three of
the Company's facilities in Connecticut previously
leased to Greenery. The Company purchased leasehold
improvements made at these facilities by Greenery for
their net book value of approximately $541,000. The
existing leases with Greenery were terminated and the
facilities were leased to Connecticut Subacute
Corporation II ("CSCII"), a newly organized corporation
which is owned by Gerard M. Martin and Barry M.
Portnoy, who are Trustees of the Company. The lease
with CSCII and the management contract with Horizon
will continue for up to five years until the Company
locates a substitute operator. Under the terms of the
management contract between Horizon and CSCII, Horizon
will guarantee the lease payments to the Company, which
are approximately equal to the previous lease
obligations of Greenery for these facilities.
- All obligations of Horizon to the Company under the new
leases, mortgages and management agreements affecting
the former Greenery properties are fully guaranteed by
Horizon and are subject to cross collateralization and
cross default provisions.
As a result of the Horizon/Greenery Merger and the related
transactions, Horizon has become the tenant or mortgagor of 27%
of the Company's total investments and is the largest single
operator of the Company's facilities (before taking into account
the Marriott Transaction described below).
New Revolving Credit Facility. In February 1994, the
Company closed a new $110 million revolving credit facility from
a syndicate of banks (the "New Credit Facility"). The New Credit
Facility replaced the Company's existing $40 million revolving
credit facility, which was scheduled to mature in January 1995.
The New Credit Facility will mature in 1997, unless extended by
the parties. Borrowings on the New Credit Facility will bear
interest, at the Company's option, at a spread over prime or
LIBOR.
Marriott Transaction. On March 17, 1994, the Company agreed
to acquire 14 retirement complexes from affiliates of Host
Marriott Corporation ("HMT") for $320 million, subject to
adjustment (the "Marriott Transaction"). The retirement
complexes are presently leased to and operated by a subsidiary of
Marriott International, Inc. ("Marriott"), and will be acquired
by the Company subject to the existing leases. The complexes are
located in the following seven states: Florida - five complexes;
Virginia - three complexes; Arizona - two complexes; California -
one complex; Illinois - one complex; Maryland - one complex; and
Texas - one complex. The retirement complexes offer a continuum
of services, which may include independent living residences,
assisted living and on-site skilled nursing facilities, and
contain a total of 3,932 residences or beds. The 14 retirement
complexes are triple net leased to a subsidiary of Marriott for
initial terms expiring on December 31, 2013, with renewal options
extending for an additional 20 years. The leases provide for
fixed rent aggregating approximately $28 million per year and
additional rentals equal to 4.5% of annual revenues from
operations in excess of base amounts determined on a facility by
facility basis. All of the leases are subject to cross default
provisions and the obligations under the leases to pay rents due
to the Company are fully guaranteed by Marriott. In addition to
the 14 retirement complexes to be acquired by the Company, the
Company and HMT have agreed to negotiate for the possible
assumption by the Company of HMT obligations to invest in
additional retirement and skilled nursing facility projects to be
operated by Marriott; however, there are presently no agreements
or understandings concerning assumption of the obligations
relating to any specific projects. Upon completion of the
Marriott Transaction, Marriott will become the Company's largest
single tenant comprising 38% of the Company's total investment
portfolio of health care related real estate. Consummation of
the Marriott Transaction is subject to certain conditions
including regulatory approvals. Although no assurance can be
given that the Marriott Transaction will be consummated, the
Company presently anticipates that the transaction will close in
June 1994.
The Advisor. The Advisor is wholly owned by Gerard M.
Martin and Barry M. Portnoy. Messrs. Martin, Portnoy and Mark J.
Finkelstein are the directors of the Advisor, Mr. Finkelstein is
the President and Chief Executive Officer, David J. Hegarty is
the Executive Vice President, Chief Financial Officer and
Secretary and John G. Murray is the Treasurer. These officers of
the Advisor are also officers of the Company. The Advisor
provides management services and investment advice to the
Company. The Advisor's principal executive offices are located
at 400 Centre Street, Newton, Massachusetts 02158, and its
telephone number is (617) 332-3990.
The Advisory Agreement. The following description of the
Advisory Agreement is not complete but contains a summary of the
material provisions. Reference is made to the Advisory
Agreement, as amended, incorporated by reference as an exhibit to
this Form 10-K, for a complete statement of its provisions, and
the following summary is qualified in its entirety by such
reference.
Under the Advisory Agreement, the Advisor is obligated to
use its best efforts to present to the Company a continuing and
suitable investment program consistent with the investment
policies and objectives of the Company. Subject to its duty of
overall management and supervision, the Board of Trustees has
delegated to the Advisor the power and duty to, among other
things, serve as the Company's investment advisor, investigate
and evaluate investment opportunities and recommend them to the
Trustees, manage the Company's short-term investments and
administer the day-to-day operations of the Company. In
performing its services under the Advisory Agreement, the Advisor
may utilize facilities, personnel and support services of various
of its affiliates.
Under the Advisory Agreement, the Advisor assumes no
responsibility other than to render the services described
therein in good faith and is not responsible for any action of
the Trustees in following or declining to follow any advice or
recommendation of the Advisor. In addition, the Company has
agreed to indemnify the Advisor, its shareholders, directors,
officers, employees and affiliates against liabilities relating
to certain acts or omissions of the Advisor.
The Advisory Agreement has been renewed annually since
December 1987 for successive one year terms with the current term
expiring on December 31, 1994. The Advisory Agreement is
renewable annually by the Company if a majority of the
Independent Trustees determine that the Advisor's performance has
been satisfactory. During any renewal term, the Advisory
Agreement may be terminated without penalty by either party
thereto for any reason upon 60 days' written notice.
The Advisory Agreement does not restrict the Advisor from
engaging in other activities or businesses or from acting as
advisor to any other person or entity, including other real
estate investment trusts ("REITs"), even though such person or
entity has investment policies and objectives similar to those of
the Company or competes with the Company. The Advisory Agreement
does require the Advisor, upon request by any Trustee, to
disclose information concerning certain investments by the
Advisor or certain of its affiliates. Although it is not
prohibited from doing so, the Advisor has informed the Trustees
that it does not presently intend to provide advisory services to
any other real estate investment trust and has agreed to inform
the Trustees of any change in such intention.
Compensation to the Advisor. The Declaration provides that
the Board of Trustees, including a majority of the Independent
Trustees, are to determine the amount of compensation which the
Company contracts to pay the Advisor, based upon such factors as
it deems appropriate and to review the compensation the Company
has agreed to pay the Advisor on an annual basis.
The Advisory Agreement provides for an annual advisory fee
equal to 0.70% of the Company's Average Invested Capital, as
defined in the Advisory Agreement, up to $250 million, and 0.50%
of Average Invested Capital equal to or exceeding $250 million;
and an annual incentive fee based upon a formula relating to the
Company's cash flow available for distribution. The Advisor's
fee will be waived to the extent necessary to limit the Company's
total annual operating expenses to the greater of (i) 2% of
Average Invested Capital or (ii) 25% of the Company's Net Income
determined as set forth in the Advisory Agreement. Beginning
with 1994, the Advisor's incentive fee will be paid in restricted
shares of the Company's stock. The aggregate advisory fees paid
to the Advisor for the year ended December 31, 1993, were $2.6
million, of which approximately $1.1 million was attributable to
investments in Greenery, and approximately $200,000 was
attributable to investments in Connecticut Subacute Corporation
("CSC").
The Advisor is required to pay certain fees and expenses of
directors, officers and employees of the Advisor (except fees and
expenses of such persons who are Trustees or officers of the
Company incurred in their capacities as Trustees and officers of
the Company) and miscellaneous administrative expenses relating
to performance of its functions under the Advisory Agreement.
The Advisor is also obligated to pay its own rent, utilities and
other office and overhead expenses, except to the extent such
expenses relate solely to an office maintained by the Company
separate from the office of the Advisor. The Company is required
to pay all other expenses, including the costs and expenses of
acquiring, owning and disposing of the Company's real estate
interests, such as appraisal, reporting, audit and legal fees,
and its costs of borrowing money, and the costs of securities
listing, transfer, registration and compliance with reporting
requirements.
Employees. As of March 16, 1994, the Company had no
employees. The Advisor, which administers the day-to-day
operations of the Company, has thirteen full-time employees and
one part-time employee.
Regulation and Reimbursement; Competition. Compliance with
federal, state and local statutes and regulations governing
health care facilities is a prerequisite to continuation of
health care operations at the Properties. In addition, the
health care industry depends significantly upon federal and
federal/state programs for revenues and, as a result, is
vulnerable to the budgetary policies of both the federal and
state governments.
Certificate of Need and Licensure. Most states in which the
Company has or may invest require certificates of need ("CONs")
prior to expansion of beds or services, certain capital
expenditures, and in some states, a change in ownership. CON
requirements are not uniform throughout the United States.
Changes in CON requirements may affect competition, profitability
of the Properties and the Company's opportunities for investment
in health care facilities.
State licensure requirements, including regulations
providing that commonly controlled facilities are subject to
delicensure if one such facility is delicensed, also affect
facilities in which the Company invests. The Company believes
that each facility in which it has invested is appropriately
licensed. Although each of the facilities has from time to time
received notices of non-compliance with certain standards, and
certain facilities in Connecticut, Massachusetts and North
Carolina are subject to provisional or probationary licenses, the
Company believes that such actions have not, in fiscal year 1993
and through the date hereof, had any material adverse effect on
the operations of the Company. By agreement on February 11,
1994, Horizon's licenses to operate the Massachusetts facilities
leased to it will be probationary subject to certain conditions.
The probationary license agreement resolves an initial denial of
Horizon's application for a determination of suitability for
licensure.
An increasing number of legislative proposals have been
introduced in Congress that would effect major reforms of the
health care system. In 1993, the Clinton administration and
members of Congress introduced far-reaching health-care reform
legislation, including the proposed Health Security Act. The
proposals include universal health coverage, employer mandated
insurance, group health insurance for small businesses, a single
government health insurance plan and cost-containment. The
Company cannot predict whether any such legislative proposals
will be adopted and, if adopted, what effect, if any, such
proposals would have on the business of the lessees, the
mortgagors or the Company. Moreover, Congress has investigated
the head injury rehabilitation industry, and regulatory and other
inquiries about, and legislative proposals for greater regulation
of, the head injury rehabilitation industry are in progress. The
Company cannot predict the effect of congressional or other
investigations or the adverse publicity resulting therefrom on
providers of head injury rehabilitation, whether other reviews
will be initiated or, if initiated, their outcome. An adverse
determination concerning licensure or eligibility for government
reimbursement of any operator could materially adversely affect
that operator, its affiliates and the Company. In addition,
federal and state civil and criminal anti-fraud and anti-kickback
laws and regulations govern financial activities of health care
providers and enforcement proceedings have increased. If any
operator of the Company's Properties were to fail to comply with
such laws or regulations, it, and therefore the Company, could be
materially adversely affected unless and until the Company were
able to re-lease or sell the affected Property or Properties on
favorable terms.
Reimbursement. Reimbursement for health care services
derives principally from the following sources: Medicare, a
federal health insurance program for the aged and certain
chronically disabled individuals; Medicaid, a medical assistance
program for indigent persons operated by individual states with
the financial participation of the federal government; health and
other insurance plans, including health maintenance
organizations; and private funds. These reimbursement sources
are generally contingent upon compliance with state CON and
licensure regulations and with extensive federal requirements for
Medicare and Medicaid participation.
Medicaid programs provide significant current revenues of
nursing facilities. Medicare is not presently a major source of
revenue for the Company's lessees and mortgagors. The Medicaid
program is subject to change and affected by funding restrictions
and budget shortfalls which may materially decrease rates of
payment or delay payment. There is no assurance that Medicaid or
Medicare payments will remain constant or be sufficient to cover
costs allocable to Medicare and Medicaid patients. The operators
of the Properties appeal reimbursement rates from time to time.
The Company cannot predict whether such appeals, if decided
adversely, would have any material effect upon the respective
financial positions of the operators.
Other. Federal law limits Medicare and Medicaid
reimbursement for capital costs related to increases in the
valuation of capital assets solely as a result of a change of
ownership of nursing facilities, and numerous states use more
restrictive standards to limit Medicaid reimbursement of capital
costs. Effective October 1, 1993, Medicare eliminated
reimbursement of return on equity capital for Medicare skilled
nursing homes. Some state Medicaid programs also do not provide
for return on equity capital. In addition, a seller is liable to
the Medicare program, and in certain states may also be liable to
the Medicaid program, for recaptured depreciation. Such
limitations may adversely affect the resale value of some
Properties owned or financed by the Company.
Effective October 23, 1992, DHHS issued final regulations
which limit the amount of Medicare reimbursement available to a
facility for rental or lease expenses paid after a purchase lease
transaction to that amount which would have been reimbursed as
capital costs had the provider retained legal title to the
facility. Limitations on rental expenses contained in the
regulations may adversely affect the financial feasibility of
future purchase lease transactions by denying Medicare and
Medicaid reimbursement for additional rental expenses.
It is not possible to predict the content, scope or impact
of future legislation, regulations or changes in reimbursement or
insurance coverage policies which might affect the health care
industry.
Competition. The Company is one of several REITs currently
investing primarily in health care related real estate. The
REITs compete with one another in that each is continually
seeking attractive investment opportunities in health care
facilities. The Company also competes with banks, non-bank
finance companies, leasing companies and insurance companies.
In addition, the Company competes with the operators of its
Properties in connection with the expansion of their businesses.
Although each of the operators may offer investment opportunities
to the Company, each of the operators or its affiliates will, in
fact, compete with the Company (as well as with others) for
investment opportunities. The operators may own facilities that
are not mortgaged or leased to the Company. An operator, or an
affiliate thereof, could preferentially place patients or operate
special service programs in facilities other than those included
among the Properties. Such preferential treatment and/or new
programs could adversely affect the revenues derived by the
Company under its mortgages and leases.
Federal Income Tax Considerations
The Company intends to be and remain qualified as a real
estate investment trust ("REIT") under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the "Code").
The following is a general summary of the Code provisions
governing the federal income tax treatment of REITs. These
provisions are highly technical and complex and this summary is
qualified in its entirety by the applicable Code provisions,
rules and regulations promulgated thereunder, and administrative
and judicial interpretations thereof. Each shareholder therefore
is urged to consult his own tax advisor with respect to the
federal income tax and other tax consequences of the purchase,
holding and sale of shares of beneficial interest of the Company.
The Company has obtained legal opinions that the Company has
been organized in conformity with the requirements for
qualification as a REIT, has qualified as a REIT for its 1987,
1988, 1989, 1990, 1991 and 1992 taxable years, and that its
current and anticipated investments and its plan of operation
will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code. Actual
qualification of the Company as a REIT, however, will depend upon
the Company's continued ability to meet, and its meeting, through
actual annual operating results, the various qualification tests
imposed under the Code and discussed below. No assurance can be
given that the actual results of the Company's operation for any
one taxable year will satisfy such requirements.
Taxation of the Company. If the Company qualifies for taxation
as a REIT and distributes to its shareholders at least 95% of its
"real estate investment trust taxable income", it generally will
not be subject to federal corporate income taxes on the amount
distributed. However, a REIT is subject to special taxes on the
net income derived from "prohibited transactions." In addition,
property acquired by the Company as the result of a default or
imminent default on a lease or mortgage is classified as
"foreclosure property". Certain net income from foreclosure
property held by the Company for sale is taxable to it at the
highest corporate marginal tax rate then prevailing.
Section 856(a) of the Code defines a REIT as a corporation,
trust or association: (1) which is managed by one or more
trustees or directors; (2) the beneficial ownership of which is
evidenced by transferable shares or by transferable certificates
of beneficial interest; (3) which would be taxable, but for
Sections 856 through 859 of the Code, as a domestic corporation;
(4) which is neither a financial institution nor an insurance
company subject to certain provisions of the Code; (5) the
beneficial ownership of which is held by 100 or more persons; (6)
which is not closely held as determined under the personal
holding company stock ownership test (as applied with one
modification); and (7) which meets certain other tests, described
below. Section 856(b) of the Code provides that conditions (1)
to (4), inclusive, must be met during the entire taxable year and
that condition (5) must be met during at least 335 days of a
taxable year of 12 months, or during a proportionate part of a
taxable year of less than 12 months. By reason of condition (6)
above, the Company will fail to qualify as a REIT for a taxable
year if at any time during the last half of such year more than
50% in value of its outstanding Shares are owned directly or
indirectly by five or fewer individuals. To help maintain
conformity with condition (6), the Company's Declaration of Trust
(the "Declaration") contains certain provisions restricting share
transfers and giving the Board of Trustees power to redeem shares
involuntarily.
It is the expectation of the Company that it will have at
least 100 shareholders during the requisite period for each of
its taxable years. There can, however, be no assurance in this
connection and, if the Company has fewer than 100 shareholders
during the requisite period, condition (5) described above will
not be satisfied, and the Company would not qualify as a REIT
during such taxable year.
For taxable years beginning after 1993, the rule that an
entity will fail to qualify as a REIT for a taxable year if at
any time during the last half of such year more than 50% in value
of its outstanding shares is owned directly or indirectly by five
or fewer individuals has been liberalized in the case of a
qualified pension trust owning shares in a REIT. Under the new
rule, the requirement is applied by treating shares in a REIT
held by such a pension trust as held directly by its
beneficiaries in proportion to their actuarial interests in the
pension trust. Consequently, five or fewer pension trusts could
own more than 50% of the interests in an entity without
jeopardizing its qualification as a REIT. However, if a REIT is
a "pension-held REIT" as defined in the new law, each pension
trust holding more than 10% of its shares (by value) generally
will be taxable on a portion of the dividends it receives from
the REIT, based on the ratio of the REIT's gross income for the
year which would be unrelated trade or business income if the
REIT were a qualified pension trust to the total gross income of
the REIT for the year. A "pension-held REIT" is one in which at
least one qualified pension trust holds more than 25% (by value)
of the interests by value, or a combination of qualified pension
trusts each of which owns more than 10% by value of the REIT
together holds more than 50% of the REIT interests by value.
To qualify as a REIT for a taxable year under the Code, the
Company must elect to be so treated and must meet other
requirements, certain of which are summarized below, including
percentage tests relating to the sources of its gross income, the
nature of the Company's assets, and the distribution of its
income to shareholders. The Company has made such election for
1987 (its first full year of operations) and such election,
assuming continuing compliance with the qualification tests
discussed herein, continues in effect for subsequent years.
There are three gross income requirements. First, at least
75% of the Company's gross income (excluding gross income from
certain sales of property held primarily for sale) must be
derived directly or indirectly from investments relating to real
property (including "rents from real property") or mortgages on
real property. When the Company receives new capital in exchange
for its shares (other than dividend reinvestment amounts) or in a
public offering of five-year or longer debt instruments, income
attributable to the temporary investment of such new capital in
stock or a debt instrument, if received or accrued within one
year of the Company's receipt of the new capital, is qualifying
income under the 75% test. Second, at least 95% of the Company's
gross income (excluding gross income from certain sales of
property held primarily for sale) must be derived from such real
property investments, dividends, interest, certain payments under
interest rate swap or cap agreements, and gain from the sale or
disposition of stock, securities, or real property or from any
combination of the foregoing. Third, short-term gain from the
sale or other disposition of stock or securities, including,
without limitation, stock in other REITs, dispositions of
interest rate swap or cap agreements, and gain from certain
prohibited transactions or other dispositions of real property
held for less than four years (apart from involuntary conversions
and sales of foreclosure property) must represent less than 30%
of the Company's gross income. (This rule does not apply for a
year in which the REIT is completely liquidated, as to
dispositions occurring after the adoption of a plan of complete
liquidation.) For purposes of these rules, income derived from a
"shared appreciation provision" is treated as gain recognized on
the sale of the property to which it relates. Even though the
Company's present mortgages do not contain shared appreciation
provisions, the Company may make mortgage loans which include
such provisions.
The Company temporarily invests working capital in
short-term investments, including shares in other REITs.
Although the Company will use its best efforts to ensure that its
income generated by these investments will be of a type which
satisfies the 75% and 95% gross income tests, there can be no
assurance in this regard (see discussion above of the "new
capital" rule under the 75% test). Moreover, the Company may
realize short-term capital gain upon sale or exchange of such
investments, and such short-term capital gain would be subject to
the limitations imposed by the 30% gross income test.
In order to qualify as "rents from real property," the
amount of rent received generally must not be determined from the
income or profits of any person, but may be based on receipts or
sales. The Code also provides that rents will not qualify as
"rents from real property," in satisfying the gross income tests,
if the REIT owns 10% or more of the tenant, whether directly or
under certain attribution rules. The Company intends not to
lease property to any party if rents from such property would not
so qualify. Application of the 10% ownership rule is, however,
dependent upon complex attribution rules provided in the Code and
circumstances beyond the control of the Company. Ownership,
directly or by attribution, by an unaffiliated third party of
more than 10% of the Company's shares and more than 10% of the
stock of a lessee would result in lessee rents not qualifying as
"rents from real property". The Declaration provides that
transfers or purported acquisitions, directly or by attribution,
of shares that could result in disqualification of the Company as
a REIT are null and void and permits the Trustees to repurchase
shares to the extent necessary to maintain the Company's status
as a REIT. Nevertheless, there can be no assurance such
provisions in the Declaration will be effective to prevent the
Company's REIT status from being jeopardized under the 10% rule.
Furthermore, there can be no assurance that the Company will be
able to monitor and enforce such restrictions, nor will
shareholders necessarily be aware of shareholdings attributed to
them under the attribution rules. Although the Advisor owns
shares of the Company (and Greenery and Continuing Healthcare
Corporation ("CHCC") formerly owned shares of the Company), the
Company has received a legal opinion that, while the matter is
not entirely free from doubt, under the Code, the relevant
regulations, and the existing facts concerning share ownership
and other matters as they have been represented to legal counsel,
the Company for all periods will not have been treated as owning
more than 10% of the Advisor, Greenery or CHCC. Greenery, CHCC,
the Advisor, Barry M. Portnoy and Gerard M. Martin, have each
represented to the Company that he or it is aware of the 10% rule
and the accompanying attribution rules, and will take no action
which would jeopardize favorable tax treatment of the Company's
rental income on account of the 10% rule.
An issue could have arisen concerning whether rents received
from Greenery in 1987 were "rents from real property" in light of
certain options held by the Advisor during a portion of 1987.
Considering the factual aspects of the matter, certain
representations made by the Independent Trustees, and applicable
legal authority, the Company has received a legal opinion that,
while the matter is not entirely free from doubt, the options
formerly held by the Advisor would at no time have been regarded
as outstanding for stock attribution purposes, and therefore
would not have jeopardized the qualification of the rents
received from Greenery in 1987 as "rents from real property."
In addition, the Company must not manage the property or
furnish or render services to the tenants of such property,
except through an independent contractor from whom the company
derives no income. There is an exception to this rule permitting
a REIT to perform certain customary tenant services of the sort
which a tax-exempt organization could perform without being
considered in receipt of "unrelated business taxable income".
If rent attributable to personal property leased in
connection with a lease of real property is greater than 15% of
the total rent received under the lease, then the portion of rent
attributable to such personal property will not qualify as "rents
from real property." The portion of rental income treated as
attributable to personal property is determined according to the
ratio of the tax basis of the personal property to the total tax
basis of the property which is rented. If rent payments do not
qualify, for the reasons discussed above, as rents from real
property for the purposes of Section 856 of the Code, it will be
more difficult for the Company to meet the 95% or 75% gross
income tests and qualify as a REIT. Finally, in order to qualify
as mortgage interest on real property for purposes of the 75%
test, interest must derive from a mortgage loan secured by real
property with a fair market value at least equal to the amount of
the loan. If the amount of the loan exceeds the fair market
value of the real property, the interest will be treated as
interest on a mortgage loan in a ratio equal to the ratio of the
fair market value of the real property to the total amount of the
mortgage loan.
If the Company fails to satisfy one or both of the 75% or
95% gross income tests for any taxable year, it may nevertheless
qualify as a REIT for such year if its failure to meet such test
was due to reasonable cause and not due to willful neglect, it
attaches a schedule of the sources of its income to its return,
and any incorrect information on the schedule was not due to
fraud with intent to evade tax. It is not possible, however, to
state whether in all circumstances the Company would be entitled
to the benefit of these relief provisions. If these relief
provisions apply, a special tax generally equal to 100% is
imposed upon the greater of the amount by which the Company
failed the 75% test or the 95% test, less an amount which
generally reflects the expenses attributable to earning the
nonqualified income.
At the close of each quarter of the Company's taxable year,
it must also satisfy three tests relating to the nature of its
assets. First, at least 75% of the value of the Company's total
assets must consist of real estate assets (including its
allocable share of real estate assets held by joint ventures or
partnerships in which the Company participates), cash, cash items
and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities (other
than those includable in the 75% asset class). Finally, of the
investments included in the 25% asset class, the value of any one
issuer's securities owned by the Company may not exceed 5% of the
value of the Company's total assets, and the Company may not own
more than 10% of any one issuer's outstanding voting securities.
Where a failure to satisfy the 25% asset test results from
an acquisition of securities or other property during a quarter,
the failure can be cured by disposition of sufficient
nonqualifying assets within 30 days after the close of such
quarter. The Company intends to maintain adequate records of the
value of its assets to maintain compliance with the 25% asset
test, and to take such action as may be required to cure any
failure to satisfy the test within 30 days after the close of any
quarter.
The Company, in order to qualify as a REIT, is required to
distribute dividends (other than capital gain dividends) to its
shareholders in an amount equal to or greater than the excess of
(A) the sum of (i) 95% of the Company's "real estate investment
trust taxable income" (computed without regard to the dividends
paid deduction and the Company's net capital gain) and (ii) 95%
of the net income, if any, (after tax) from foreclosure property,
over (B) the sum of certain non-cash income (from certain imputed
rental income and income from transactions inadvertently failing
to qualify as like-kind exchanges). These requirements may be
waived by the IRS if the REIT establishes that it failed to meet
them by reason of distributions previously made to meet the
requirements of the 4% excise tax discussed below. To the extent
that the Company does not distribute all of its net long-term
capital gain and all of its "real estate investment trust taxable
income", it will be subject to tax thereon. In addition, the
Company will be subject to a 4% excise tax to the extent it fails
within a calendar year to make "required distributions" to its
shareholders of 85% of its ordinary income and 95% of its capital
gain net income plus the excess, if any, of the "grossed up
required distribution" for the preceding calendar year over the
amount treated as distributed for such preceding calendar year.
For this purpose, the term "grossed up required distribution" for
any calendar year is the sum of the taxable income of the Company
for the calendar year (without regard to the deduction for
dividends paid) and all amounts from earlier years that are not
treated as having been distributed under the provision.
Dividends declared in October, November, or December and paid
during the following January will be treated as having been paid
and received on December 31.
It is possible that the Company, from time to time, may not
have sufficient cash or other liquid assets to meet the 95%
distribution requirements, due to timing differences between the
actual receipt of income and actual payment of deductible
expenses or dividends on the one hand and the inclusion of such
income and deduction of such expenses or dividends in arriving at
"real estate investment trust taxable income" of the Company on
the other hand. The problem of inadequate cash to make required
distributions could also occur as a result of the repayment in
cash of principal amounts due on the Company's outstanding debt,
particularly in the case of "balloon" repayments or as a result
of capital losses on short-term investments of working capital.
Therefore, the Company might find it necessary to arrange for
short-term, or possibly long-term, borrowing, or new equity
financing. If the Company were unable to arrange such borrowing
or financing as might be necessary to provide funds for required
distributions, its REIT status could be jeopardized.
Under certain circumstances, the Company may be able to
rectify a failure to meet the distribution requirement for a year
by paying "deficiency dividends" to shareholders in a later year,
which may be included in the Company's deduction for dividends
paid for the earlier year. The Company may be able to avoid
being taxed on amounts distributed as deficiency dividends;
however, the Company may in certain circumstances remain liable
for the 4% excise tax discussed above.
The Company is also required to request annually from record
holders of certain significant percentages of its shares certain
information regarding the ownership of such shares. Under the
Declaration, shareholders are required to respond to such
requests for information.
Federal Income Tax Treatment of Leases. The availability to
the Company of, among other things, depreciation deductions with
respect to the facilities owned and leased by the Company will
depend upon the treatment of the Company as the owner of the
facilities and the classification of the leases of the facilities
as true leases, rather than as sales or financing arrangements,
for Federal income tax purposes. As to the approximately 5% of
the leased facilities which constitutes personal property, it is
less clear that the Company will be treated as the owner of such
personal property and that the leases will be treated as true
leases with respect to such property. The Company plans to
insure its compliance with the 95% distribution requirement (and
the "required distribution" requirement) by making distributions
on the assumption that it is not entitled to depreciation
deductions for the 5% of the leased facilities which constitute
personal property, but to report the amount of income taxable to
its shareholders by taking into account such depreciation.
Other Issues. In the case of certain sale-leaseback
arrangements, the IRS could assert that the Company realized
prepaid rental income in the year of purchase to the extent that
the value of a leased property exceeds the purchase price paid by
the Company for that property. In litigated cases involving
sale-leasebacks which have considered this issue, courts have
concluded that buyers have realized prepaid rent where both
parties acknowledged that the purported purchase price for the
property was substantially less than fair market value and the
purported rents were substantially less than the fair market
rentals. Because of the lack of clear precedent, complete
assurance cannot be given that the IRS could not successfully
assert the existence of prepaid rental income.
Additionally, it should be noted that Code Section 467
(concerning leases with increasing rents) would apply to the
leases because many of the leases provide for rents that increase
from one period to the next. Section 467 provides that in the
case of a so-called "disqualified leaseback agreement," rental
income must be accrued at a constant rate. If such constant rent
accrual were required, the Company would recognize rental income
in excess of cash rents and, as a result, may fail to meet the
95% dividend distribution requirement. "Disqualified leaseback
agreements" include leaseback transactions where a principal
purpose for providing increasing rent under the agreement is the
avoidance of Federal income tax. Because Section 467 directs the
Treasury to issue regulations providing that rents will not be
treated as increasing for tax avoidance purposes where the
increases are based upon a fixed percentage of lessee receipts,
the additional rent provisions of the leases should not cause the
leases to be "disqualified leaseback agreements". In addition,
the legislative history of Section 467 indicates that the
Treasury should issue regulations under which leases providing
for fluctuations in rents by no more than a reasonable percentage
from the average rent payable over the term of the lease will be
deemed not motivated by tax avoidance; this legislative history
indicated that a standard allowing a 10% fluctuation in rents may
be too restrictive for real estate leases.
Depreciation of Properties. For tax purposes, the Company's
real property generally is depreciated over 40 years and personal
property owned by the Company generally is depreciated over 12
years.
Failure to Qualify. If the Company fails to qualify for
taxation as a REIT in any taxable year, and the relief provisions
do not apply, the Company will be subject to tax on its taxable
income at regular corporate rates (plus any applicable minimum
tax). Distributions to shareholders in any year in which the
Company fails to qualify will not be deductible by the Company
nor will they be required to be made. In such event, to the
extent of current and accumulated earnings and profits, all
distributions to shareholders will be taxable as ordinary income
and, subject to certain limitations in the Code, eligible for the
70% dividends received deduction for corporations. Unless
entitled to relief under specific statutory provisions, the
Company will also be disqualified from taxation as a REIT for the
following four taxable years. It is not possible to state
whether in all circumstances the Company would be entitled to
statutory relief from such disqualification. Failure to qualify
for even one year could result in the Company's incurring
substantial indebtedness (to the extent borrowings are feasible)
or liquidating substantial investments in order to pay the
resulting taxes.
Taxation of United States Shareholders--Generally. As long
as the Company qualifies as a REIT, distributions (including
reinvestments pursuant to the Company's dividend reinvestment
plan) made to the Company's shareholders out of current or
accumulated earnings and profits will be taken into account by
them as ordinary income (which will not be eligible for the 70%
dividends received deduction for corporations). Distributions
that are designated as capital gain dividends will be taxed as
long-term capital gains to the extent they do not exceed the
Company's actual net capital gain for the taxable year although
corporate shareholders may be required to treat up to 20% of any
such capital gain dividend as ordinary income pursuant to Section
291 of the Code. For purposes of computing the Company's
earnings and profits, depreciation on real estate is computed on
a straight-line basis (over 40 years for property acquired after
1986). Distributions in excess of current or accumulated
earnings and profits will not be taxable to a shareholder to the
extent that they do not exceed the adjusted basis of the
shareholder's shares, but will reduce the basis of the
shareholder's shares. To the extent that such distributions
exceed the adjusted basis of a shareholder's shares they will be
included in income as long-term capital gain (or short-term
capital gain if the shares have been held for not more than one
year) assuming the shares are a capital asset in the hands of the
shareholder. Shareholders may not include in their individual
income tax returns any net operating losses or capital losses of
the Company.
Dividends declared by the Company in October, November or
December of a taxable year to shareholders of record on a date in
such month, will be deemed to have been received by such
shareholders on December 31, provided the Company actually pays
such dividends during the following January. The Company has,
however, generally declared dividends for the quarter ended
December 31 in January of the following year and paid these
dividends in the following February. As a result, for tax
purposes, the dividend for any calendar year will generally
include the dividends for the first three quarters of that year
plus the dividend for the fourth quarter of the prior year. For
tax purposes, dividends paid in 1987, 1988, 1989, 1990, 1991,
1992 and 1993 aggregated $1.085, $.840, $1.13, $1.16, $1.22,
$1.25 and $1.29, respectively, of which $.289, $.065, $.332,
$.267, $.104, $.218 and $.335, respectively, represented a return
of capital.
A sale of a share will result in recognition of gain or loss
to the holder in an amount equal to the difference between the
amount realized and its adjusted basis. Such a gain or loss will
be capital gain or loss, provided the share is a capital asset in
the hands of the seller. In general, any loss upon a sale or
exchange of shares by a shareholder who has held such shares for
not more than one year (after applying certain rules), will be
treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such
shareholders as long-term capital gain.
Investors (other than certain corporations) who borrow funds
to finance their acquisition of Shares in the Company could be
limited in the amount of deductions allowed for the interest paid
on the indebtedness incurred in such an arrangement. Under Code
Section 163(d), interest paid or accrued on indebtedness incurred
or continued to purchase or carry property held for investment is
generally deductible only to the extent of the taxpayer's net
investment income. An investor's net investment income will
include the dividend and capital gain dividend distributions he
receives from the Company; however, distributions treated as a
nontaxable return of the shareholder's basis will not enter into
the computation of net investment income.
In Revenue Ruling 66-106, the IRS ruled that amounts
distributed by a real estate investment trust to a tax-exempt
employee's pension trust did not constitute "unrelated business
taxable income". Revenue rulings are interpretive in nature and
subject to revocation or modification by the IRS. However, based
upon Revenue Ruling 66-106 and the analysis therein, the Company
has received an opinion of counsel that distributions by the
Company to qualified pension plans (including individual
retirement accounts) and other tax-exempt entities should not
constitute "unrelated business taxable income," except as
explained above in the case of a pension trust which holds more
than 10% by value of a "pension-held REIT". This Revenue Ruling
may not apply if a shareholder has borrowed money to acquire
shares.
Under Section 469 of the Code, taxpayers (other than certain
corporations) generally will not be entitled to deduct losses
from so-called passive activities except to the extent of their
income from passive activities. For purposes of these rules,
distributions received by a shareholder from the Company will not
be treated as income from a passive activity and thus will not be
available to offset a shareholder's passive activity losses.
Tax preference and other items which are treated differently
for regular and alternative minimum tax purposes are to be
allocated between a REIT and its shareholders under regulations
which are to be prescribed. It is likely that these regulations
would require tax preference items to be allocated to the
Company's shareholders with respect to any accelerated
depreciation claimed by the Company, but the Company has not
claimed accelerated depreciation with respect to its existing
Properties.
Foreign Shareholders. The preceding discussion does not
address the Federal income tax consequences to foreign
shareholders of an investment in the Company. Foreign
shareholders in the Company should consult their own tax advisors
concerning the application to them of the Foreign Investment in
Real Property Tax Act of 1980 ("FIRPTA"), which altered the
Federal income tax treatment of shares in REITs held by foreign
shareholders. The Company will qualify as a
"domestically-controlled REIT" so long as less than 50% in value
of its shares are held directly or indirectly (under Code
attribution rules) by foreign persons at all times during the
period under review. If the Company qualifies as a
"domestically-controlled REIT", gain from the sale of shares by a
nonresident alien individual or foreign corporation should not be
subject to U.S. taxation, unless (i) such person is an individual
who is present in the United States for 183 days or more during
the taxable year of disposition and either such individual has a
"tax home" in the United States or the gain is attributable to an
office or other fixed place of business maintained by such
individual in the United States or (ii) such gain is effectively
connected with the conduct by such person of a trade or business
in the United States. Distributions of cash to foreign persons
generated by the Company's real estate operations, which are not
attributable to gain from sales or exchanges by the Company of
U.S. real property interests, generally will be subject to U.S.
withholding tax at a rate of 30%, or any applicable treaty rates.
Foreign shareholders receiving distributions which have been
subject to such withholding taxes will be able to claim refunds
to the extent the withholding has been imposed on a portion of
such distributions representing amounts in excess of current or
accumulated earnings and profits. Distributions of proceeds
attributable to gain from the Company's sale or exchange of such
properties are subject to income and withholding taxes pursuant
to FIRPTA. Federal income taxation of foreign shareholders is a
highly complex matter that may be affected by many other
considerations, including treaty provisions.
Withholding on Dividends. A form of "backup withholding" is
imposed for payments of interest, dividends and payments of gross
proceeds by brokers. This withholding applies only if a
shareholder, among other things, (i) fails to furnish the Company
with his taxpayer identification number certified under penalties
of perjury, (ii) furnishes the Company an incorrect taxpayer
identification number, (iii) fails properly to report interest or
dividends from any source or (iv) under certain circumstances
fails to provide the Company or his securities broker with a
certified statement, under penalty of perjury, that he is not
subject to backup withholding. The withholding rate is 20% of
"reportable payments", which include dividends. Shareholders
should consult their tax advisors as to their qualification for
exemption from withholding and the procedure for obtaining such
an exemption. Finally, U.S. persons are required to certify
their U.S. status in order to receive dividends without the
withholding imposed by FIRPTA.
The Company reports to its shareholders and the IRS the
amount of dividends paid during each calendar year, and the
amount of tax withheld, if any.
Other Tax Consequences. The Company and its shareholders
may be subject to state or local taxation in various state or
local jurisdictions, including those in which it or they transact
business or reside.
There may be other Federal, state, local or foreign income,
or estate and gift, tax considerations applicable to the
circumstances of a particular investor. Shareholders should
consult their own tax advisors with respect to such matters.
ERISA Plans, Keogh Plans and Individual Retirement Accounts
General Fiduciary Obligations. Fiduciaries of a pension,
profit-sharing or other employee benefit plan subject to Title I
of the Employee Retirement Income Security Act of 1974 ("ERISA")
("ERISA Plan") must consider whether their investment in the
Company's shares satisfies the diversification requirements of
ERISA, whether the investment is prudent in light of possible
limitations on the marketability of the shares, whether such
fiduciaries have authority to acquire such shares under the
appropriate governing instrument and Title I of ERISA, and
whether such investment is otherwise consistent with their
fiduciary responsibilities. Any ERISA Plan fiduciary should also
consider ERISA's prohibition on improper delegation of control
over or responsibility for "plan assets." Trustees and other
fiduciaries of an ERISA plan may incur personal liability for any
loss suffered by the plan on account of a violation of their
fiduciary responsibilities. In addition, such fiduciaries may be
subject to a civil penalty of up to 20% of any amount recovered
by the plan on account of such a violation (the "Fiduciary
Penalty"). Also, fiduciaries of any Individual Retirement
Account ("IRA"), Keogh Plan or other qualified retirement plan
not subject to Title I of ERISA because it does not cover common
law employees ("Non-ERISA Plan") should consider that such an IRA
or non-ERISA Plan may only make investments that are authorized
by the appropriate governing instrument. Fiduciary shareholders
should consult their own legal advisers if they have any concern
as to whether the investment is inconsistent with any of the
foregoing criteria.
Prohibited Transactions. Fiduciaries of ERISA Plans and
persons making the investment decision for an IRA or other
Non-ERISA Plan should also consider the application of the
prohibited transaction provisions of ERISA and the Code in making
their investment decision. Sales and certain other transactions
between an ERISA Plan, IRA, or other Non-ERISA Plan and certain
persons related to it are prohibited transactions. The
particular facts concerning the sponsorship, operations and other
investments of an ERISA Plan, IRA, or other Non-ERISA Plan may
cause a wide range of other persons to be treated as disqualified
persons or parties in interest with respect to it. A prohibited
transaction, in addition to imposing potential personal liability
upon fiduciaries of ERISA Plans, may also result in the
imposition of an excise tax under the Code or a penalty under
ERISA upon the disqualified person or party in interest with
respect to the ERISA or Non-ERISA Plan or IRA. If the
disqualified person who engages in the transaction is the
individual on behalf of whom an IRA is maintained (or his
beneficiary), the IRA may lose its tax-exempt status and its
assets may be deemed to have been distributed to such individual
in a taxable distribution (and no excise tax will be imposed) on
account of the prohibited transaction. Fiduciary shareholders
should consult their own legal advisers if they have any concern
as to whether the investment is a prohibited transaction.
Special Fiduciary and Prohibited Transactions
Considerations. On November 13, 1986 the Department of Labor
("DOL"), which has certain administrative responsibility over
ERISA Plans as well as over IRAs and other Non-ERISA Plans,
issued a final regulation defining "plan assets." The regulation
generally provides that when an ERISA or non-ERISA Plan or IRA
acquires a security that is an equity interest in an entity and
that security is neither a "publicly offered security" nor a
security issued by an investment company registered under the
Investment Company Act of 1940, the ERISA or Non-ERISA Plan's or
IRA's assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity, unless
it is established either that the entity is an operating company
or that equity participation in the entity by benefit plan
investors is not significant.
The regulation defines a publicly offered security as a
security that is "widely held," "freely transferable" and either
part of a class of securities registered under the Securities
Exchange Act of 1934, or sold pursuant to an effective
registration statement under the Securities Act of 1933 (provided
the securities are registered under the Securities Exchange Act
of 1934 within 120 days after the end of the fiscal year of the
issuer during which the offering occurred.) The Company's shares
have been registered under the Securities Exchange Act of 1934.
The regulation provides that a security is "widely held"
only if it is part of a class of securities that is owned by 100
or more investors independent of the issuer and of one another.
However, a security will not fail to be "widely held" because the
number of independent investors falls below 100 subsequent to the
initial public offering as a result of events beyond the issuer's
control.
The regulation provides that whether a security is "freely
transferable" is a factual question to be determined on the basis
of all relevant facts and circumstances. The regulation further
provides that, where a security is part of an offering in which
the minimum investment is $10,000 or less, certain restrictions
ordinarily will not, alone or in combination, affect a finding
that such securities are freely transferable. The restrictions
on transfer enumerated in the regulation as not affecting that
finding include: any restriction on or prohibition against any
transfer or assignment which would result in a termination or
reclassification of the Company for Federal or state tax
purposes, or would otherwise violate any state or Federal law or
court order; any requirement that advance notice of a transfer or
assignment be given to the Company and any requirement that
either the transferor or transferee, or both, execute
documentation setting forth representations as to compliance with
any restrictions on transfer which are among those enumerated in
the regulation as not affecting free transferability, including
those described in the preceding clause of this sentence; any
administrative procedure which establishes an effective date, or
an event prior to which a transfer or assignment will not be
effective; and any limitation or restriction on transfer or
assignment which is not imposed by the issuer or a person acting
on behalf of the issuer. The Company believes that the
restrictions imposed under the Declaration on the transfer of
shares do not result in the failure of the shares to be "freely
transferable." Furthermore, the Company believes that at present
there exist no other facts or circumstances limiting the
transferability of the shares which are not included among those
enumerated as not affecting their free transferability under the
regulation, and the Company does not expect or intend to impose
in the future (or to permit any person to impose on its behalf)
any limitations or restrictions on transfer which would not be
among the enumerated permissible limitations or restrictions.
However, the final regulation only establishes a presumption in
favor of a finding of free transferability, and no guarantee can
be given that the DOL or the Treasury Department will not reach a
contrary conclusion.
Assuming that the shares will be "widely held" and that no
other facts and circumstances exist which restrict
transferability of the shares, the Company has received an
opinion of counsel that the shares should not fail to be "freely
transferable" for purposes of the regulation due to the
restrictions on transfer of the shares under the Declaration and
that under the regulation the shares are publicly offered
securities and the assets of the Company will not be deemed to be
"plan assets" of any ERISA Plan, IRA or other Non-ERISA Plan that
invests in the shares.
If the assets of the Company are deemed to be plan assets
under ERISA, (i) the prudence standards and other provisions of
Part 4 of Title I of ERISA would be applicable to investments
made by the Company; (ii) the person or persons having investment
discretion over the assets of ERISA Plans which invest in the
Company would be liable under the aforementioned Part 4 of Title
I of ERISA for investments made by the Company which do not
conform to such ERISA standards unless the Advisor registers as
an investment adviser under the Investment Advisers Act of 1940
and certain other conditions are satisfied; and (iii) certain
transactions that the Company might enter into in the ordinary
course of its business and operation might constitute "prohibited
transactions" under ERISA and the Code.
Item 2. Properties.
General. Approximately 64% of the Company's total
investments are in nursing homes providing long-term care or
retirement complexes, 31% of the Company's total investments are
in nursing homes providing subacute and other specialty
rehabilitation services and 5% are in psychiatric facilities.
The Company believes that the physical plant of each of the
facilities in which it has invested is suitable and adequate for
its present and any currently proposed uses.
The following table summarizes certain information about the
Properties as of December 31, 1993. All dollar figures are in
thousands.
<TABLE>
REAL ESTATE OWNED:
<CAPTION>
Purchase Price/
No. of No. of Mortgage Minimum
Location Facilities Beds Investment Rent/Interest
<S> <C> <C> <C> <C>
Rehabilitation
Facilities
Connecticut 4 660 $42,450 $5,709
Louisiana 1 118 24,376 3,065
Massachusetts 5 762 82,064 10,044
Michigan 1 189 7,051 827
Pennsylvania 1 120 15,599 1,951
Long-Term Care and
Retirement Facilities
Arizona 3 320 6,219 911
California 9 1,140 26,549 3,888
Colorado 5 707 19,390 2,546
Connecticut 5 867 40,137 4,804
Illinois 1 230 2,711 397
Iowa 10 676 14,119 1,691
Kansas 1 83 2,209 252
Massachusetts 2 334 21,760 2,752
Missouri 2 215 3,178 498
Ohio 2 400 9,840 1,168
South Dakota 3 381 7,589 1,111
Washington 1 143 5,125 611
Wisconsin 7 1,026 22,977 3,365
Wyoming 3 243 6,459 758
Psychiatric
Facilities
Kentucky 1 94 18,373
North Carolina 1 64 6,636 3,377
Total Real Estate: 68 8,772 $384,811 $49,705
MORTGAGE INVESTMENTS:
Long-Term Care and
Retirement Facilities
Alabama 2 171 $ 3,601 $ 324
California 6 1,011 15,112 1,936
Colorado 5 389 13,600 1,564
Connecticut * 1,215 85
Florida 1 58 965 114
Georgia 4 533 6,883 826
Indiana 10 1,229 27,317 2,828
Iowa * 59 3
Kansas 3 346 6,311 760
Kentucky 1 90 1,362 162
Louisiana 4 387 8,027 1,275
Nebraska 12 834 16,925 1,747
North Carolina 9 879 16,389 1,563
Ohio 7* 903 17,419 2,916
Pennsylvania 1 120 2,891 297
South Carolina 1 102 886 106
Tennessee 1 78 1,077 110
Texas 7 668 6,959 1,171
Wisconsin 2 366 10,283 1,506
Total Mortgages: 76 8,164 $157,281 $19,293
________________
* Amounts represent or include notes receivable related to improvements to owned Property,
above.
</TABLE>
The Lessees and the Mortgagors.
The Company's financial condition depends upon both the
financial condition of the Properties and the financial condition
of the operators of the Properties. The Company believes that its
lessees and mortgagors are able to meet their obligations under
their respective leases and mortgages. The following operators
individually account for 5% or more of the Company's investments.
Horizon. After completion of the Horizon/Greenery Merger,
the Company has invested $140.7 million or 27% of total
investments in 12 Properties (1,738 beds) operated by Horizon.
The occupancy of these facilities was approximately 87% and the
total minimum annual rent and interest due the Company in 1994
for these facilities is $24.6 million. Horizon was formed in
July 1986 by former senior officers of The Hillhaven Corporation.
As of March 1, 1993, Horizon operated 104 facilities located in
18 states. Horizon's common stock is listed on the New York
Stock Exchange ("NYSE").
GranCare. The Company has invested $87 million or 16% of
total investments in 27 Properties (3,908 beds) operated by
GranCare, Inc. ("GranCare"). The occupancy of these facilities
was approximately 89% and the total minimum annual rent and
interest due the Company for these facilities is $12.7 million.
GranCare operates 84 health care facilities and various ancillary
businesses. GranCare Properties in which the Company has
invested are operated by AMS Properties, Inc. ("AMSP") and GCI
Healthcare Centers, Inc. ("GCI"), each an indirect wholly owned
subsidiary of GranCare. The only business of AMSP and GCI is
operation of its respective GranCare Properties. The obligations
of AMSP and GCI to the Company are secured by a pledge of one
million Shares and by guarantees from GranCare and certain of its
affiliates. GranCare's common stock is listed on the NYSE.
Community Care of America. Community Care is a new
corporation organized by certain present and former senior
officers of Integrated Health Services, Inc. and venture capital
investors. The Company invested approximately $60 million, or
11% of total investments, in 26 nursing homes (2,183 beds) and
six retirement housing projects (119 units) operated by Community
Care. The occupancy of these facilities was approximately 88%;
and the total minimum annual rent and interest due to the Company
for these facilities is approximately $6.7 million.
Connecticut Subacute. The Company has invested $32.4
million, or 6% of total investments, in three Properties (480
beds) operated by Connecticut Subacute Corporation ("CSC") and
$34.7 million, or 7% of total investments, in three Properties
(585 beds) operated by CSCII. CSC and CSCII are owned by Barry
M. Portnoy and Gerard M. Martin, trustees of the Company. CSC
and CSCII have agreed to lease these properties from the Company
until the Company locates other suitable operators. The
occupancy was approximately 94% (93% for CSC; 95% for CSCII); and
the total annual rent to the Company for these facilities is $8.6
million ($4.5 million for CSC; $4.1 million for CSCII). Horizon
guarantees CSCII's obligations to the Company for up to five
years.
Item 3. Legal Proceedings.
The Company may be subject to routine litigation in the
ordinary course of business. It is not presently subject to any
legal proceedings which would result in material losses to the
Company. The Company knows of no proceedings contemplated by
governmental authorities relating to the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of shareholders during
the fourth quarter of the year covered by this Form 10-K.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Company's Shares are traded on the New York Stock
Exchange (symbol: HRP). The following table sets forth for the
periods indicated the high and low sale prices for the Shares as
reported in the New York Stock Exchange Composite Transactions
reports.
High Low
1992
First Quarter........... 14 3/4 10 7/8
Second Quarter.......... 12 1/8 8 7/8
Third Quarter........... 12 1/2 11
Fourth Quarter.......... 12 1/2 11 1/4
1993
First Quarter........... 15 11 3/8
Second Quarter.......... 14 12
Third Quarter........... 15 1/8 12 1/2
Fourth Quarter.......... 16 3/4 14
The closing price of the Shares on the New York Stock
Exchange on March 2, 1994 was $15-3/8.
As of March 2, 1993, there were 3,266 holders of record of
the Shares and the Company estimates that as of such date there
were in excess of 30,000 beneficial owners of the Shares.
Dividends declared with respect to each period for the two most
recent fiscal years and the amount of such dividends and the
respective annualized rates are set forth in the following table.
Annualized
Dividend Dividend
Per Share Rate
1992
First Quarter...... $.31 $1.24
Second Quarter..... .31 1.24
Third Quarter...... .32 1.28
Fourth Quarter..... .32 1.28
1993
First Quarter...... .32 1.28
Second Quarter..... .32 1.28
Third Quarter...... .33 1.32
Fourth Quarter..... .33 1.32
All dividends declared have been paid. The Company intends
to continue to declare and pay future dividends on a quarterly
basis.
In order to qualify for the beneficial tax treatment
accorded to REITs by Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company is
required to make distributions to shareholders which annually
will be at least 95% of the Company's "real estate investment
trust taxable income" (as defined in the Code). All
distributions will be made by the Company at the discretion of
the Board of Trustees and will depend on the earnings of the
Company, the cash flow available for distribution, the financial
condition of the Company and such other factors as the Board of
Trustees deems relevant. The Company has in the past
distributed, and intends to continue to distribute, substantially
all of its "real estate investment trust taxable income" to its
shareholders.
Dividends declared and paid by the Company in the past have
exceeded earnings and profits and are expected to do so in the
future. For tax purposes, in these circumstances, each dividend
distribution paid with respect to a year is apportioned between a
taxable dividend and a tax-free return of capital. This
apportionment of each year's dividend is the same ratio as the
current and accumulated tax earnings and profits of the Company
bears to the Company's total dividend distributions with respect
to such year. The portion of a distribution treated as tax-free
return of capital reduces a shareholder's basis in his Shares.
The Company reported that 26% of dividends paid with respect to
1993 is considered a return of capital. For income tax purposes,
the dividend paid on February 25, 1994, with respect to cash
available for distribution for the final quarter of fiscal year
1993, is considered a 1994 dividend, and the dividend paid on
February 23, 1993, with respect to cash available for
distribution for the final quarter of 1992, is considered a 1993
dividend.
Maryland law permits a REIT to provide, and the Declaration
provides, that no Trustee, officer, shareholder, employee or
agent of the Company shall be held to any personal liability,
jointly or severally, for any obligation of or claim against the
Company, and that, as far as practicable, each written agreement
of the Company is to contain a provision to that effect. Despite
these facts counsel has advised the Company that in some
jurisdictions the possibility exists that shareholders of a
non-corporate entity such as the Company may be held liable for
acts or obligations of the Company. Counsel has advised the
Company that the State of Texas may not give effect to the
limitation of shareholder liability afforded by Maryland law, but
that Texas law would likely recognize contractual limitations of
liability such as those discussed above. The Company intends to
conduct its business in a manner designed to minimize potential
shareholder liability by, among other things, inserting
appropriate provisions in written agreements of the Company;
however, no assurance can be given that shareholders can avoid
liability in all instances in all jurisdictions.
The Declaration provides that, upon payment by a shareholder
of any such liability, the shareholder will be entitled to
indemnification by the Company. There can be no assurance that,
at the time any such liability arises, there will be assets of
the Company sufficient to satisfy the Company's indemnification
obligation. The Trustees intend to conduct the operations of the
Company, with the advice of counsel, in such a way as to minimize
or avoid, as far as practicable, the ultimate liability of the
shareholders of the Company. The Trustees do not intend to
provide insurance covering such risks to the shareholders.
<PAGE>
Item 6. Selected Financial Data.
Set forth below are selected financial data for the Company
for the periods and dates indicated. This data should be read in
conjunction with, and is qualified in its entirety by reference
to, the financial statements and accompanying notes included
elsewhere in this Form 10-K. Amounts are in thousands, except
per Share information.
<TABLE>
<CAPTION>
Year Ended December 31,
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Operating Statement
Data:
Total revenues........ $23,233 $32,872 $43,835 $48,735 $56,485
Net income............ 7,900 14,280 22,079 27,243 33,417
Cash flow available for
distribution(1)..... 12,561 19,467 30,059 36,853 47,578
Dividends declared.... 13,137 18,927 27,179 33,079 44,869
Per Share:
Net income.......... $ .76 $ .89 $ 1.01 $ 1.02 $ .97
Cash flow available for
distribution(1)... 1.20 1.21 1.38 1.38 1.38
Dividends declared.. 1.14 1.17 1.23 1.26 1.30
Average Shares
Outstanding......... 10,425 16,088 21,834 26,760 34,407
(1) Cash flow available for distribution is net income plus depreciation
and amortization of deferred interest and finance costs. Distributions
in excess of net income generally constitute a return of capital.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Year Ended December 31, 1993 compared to Year Ended
December 31, 1992
Total revenues for the year ended December 31, 1993 were
$56.5 million, an increase of $7.8 million or 16% over the year
ended December 31, 1992. Rental income increased to $46.1
million from $43.0 million and interest income increased to
$10.4 million from $5.7 million. Rental income increased as a
result of new purchase lease investments, increases in additional
rent, and improvement financings during 1993. The growth in
interest income is primarily the result of the acquisition since
December 1, 1992, of four pools of performing mortgage loans for
$133.7 million with a principal balance at the time of
acquisition of approximately $148.2 million.
Net income for 1993 increased to $33.4 million, or $.97 per
share, from $27.2 million, or $1.02 per share in the comparable
1992 period. The increase in net income of $6.2 million or 23%
during the 1993 period was primarily the result of new
investments discussed above and a decrease in total expenses of
$2.7 million. On a per share basis, net income decreased
slightly during 1993 primarily as a result of non-recurring
charges related to the early extinguishment of debt. Debt was
retired with the proceeds from the issuance of 10,350,000 and
9,000,000 new shares of the Company's stock during the first and
fourth quarters, respectively, of 1993. Total expenses for 1993
were $18.7 million, a decrease of 13% from $21.5 million for the
comparable 1992 period. Interest expense decreased $3.2 million
as a result of lower average bank borrowings and lower interest
rates during the comparable periods. Advisory fees increased by
$.4 million as a result of new investments while depreciation and
amortization expense remained flat reflecting the fact that the
new mortgage investments occurred throughout the year and the
significant purchase lease investments occurred near year end.
The Company's business plan is to maximize cash flow
available for distribution to shareholders rather than to
maximize net income. Net income is reduced by extraordinary
items, if any, depreciation and amortization and other non-cash
items which have no impact on the cash flow available for
distribution. These items are added back to net income to
determine cash flow available for distribution. Dividends are
principally determined based on the Company's cash flow available
for distribution. The Company's cash flow available for
distribution for the years ended December 31, 1993, and 1992 was
$47.6 million ($1.38 per share) and $36.9 million ($1.38 per
share), respectively. Total cash flow available for distribution
for 1993 increased $10.7 million or 29% over the prior year.
However, on a per share basis, cash flow available for
distribution remained unchanged for the 1993 period compared to
the 1992 period, primarily as a result of the 19.4 million new
shares of the Company's stock issued in 1993. Dividends declared
for the years ended December 31, 1993 and 1992 were $1.30 per
share and $1.26 per share, respectively. Dividends in excess of
net income constitute a return of capital. For 1993, the return
of capital portion was 26% of the dividends.
Cash flow provided by (used for) operations, investing and
financing activities were $46.7 million, ($175.4 million) and
$128.6 million, respectively, for the year ended December 31,
1993, and $41.8 million, ($71.9 million) and $2.0 million,
respectively, for the year ended December 31, 1992.
Year Ended December 31, 1992 compared to Year Ended
December 31, 1991
Total revenues for the year ended December 31, 1992 were
$48.7 million, an increase of $4.9 million or 11% over the year
ended December 31, 1991. Rental income increased to $43.0
million from $36.8 million and interest income decreased to $5.7
million from $7.0 million. Rental income increased primarily as
a result of $54.9 million in purchase lease transactions and
improvement financing during 1992 and the conversion of a $55.0
million mortgage investment to a $72.3 million purchase lease
transaction on March 1, 1991. The change in interest income is
primarily the result of the repayment of the $55.0 million
mortgage investment on March 1, 1991.
Net income for 1992 increased to $27.2 million, or $1.02 per
share, from $22.1 million, or $1.01 per share in the comparable
1991 period. The increase in net income of $5.2 million or 23%
during the 1992 period was primarily the result of new
investments discussed above and a decrease in total expenses of
$.3 million. On a per share basis, net income increased slightly
during 1992 primarily as a net result of new investments made
during the year and the issuance of 6,435,500 new shares of the
Company's stock in September 1991. Total expenses for 1992 were
$21.5 million, a decrease of 1.2% from $21.8 million of the
comparable 1991 period. Interest expense decreased $2.3 million
as a result of lower bank borrowing and lower interest rates
during the comparable periods. Advisory fees increased by $.2
million as a result of new investments since December 31, 1991
and depreciation and amortization expense increased as a result
of the purchase lease and improvement financing investments
during 1992.
The Company's cash flow available for distribution for the
years ended December 31, 1992, and 1991 was $36.9 million ($1.38
per share) and $30.1 million ($1.38 per share), respectively.
Total cash flow available for distribution for 1992 increased
$6.8 million or 23% over the prior year. However, on a per share
basis, cash flow available from operations remained unchanged for
the 1992 period compared to the 1991 period primarily as a net
result of new investments and the issuance of 6,435,500 new
shares of the Company's stock in September 1991. Dividends
declared for the years ended December 31, 1992 and 1991 were
$1.26 per share and $1.23 per share, respectively. Dividends in
excess of net income constitute a return of capital. For 1992,
the return of capital portion was 17% of the dividends.
Cash flow provided by (used for) operations, investing and
financing activities were $41.8 million, ($71.9 million) and $2.6
million, respectively, for the year ended December 31, 1992, and
$19.6 million, ($15.1 million) and $27.8 million, respectively,
for the year ended December 31, 1991.
Liquidity and Capital Resources
Assets increased to $527.7 million as of December 31, 1993
from $374.5 million as of December 31, 1992. The increase of
$153.2 million or 41% is primarily attributable to new real
estate investments of $190.2 million as well as increases in
receivables and other assets of $6.2 million, net of $33.6
million of mortgage principal repayments and $9.8 million of
depreciation and amortization charges for the year ended December
31, 1993.
Real estate mortgages, net, increased as a result of a $72.4
million acquisition of performing mortgage loans with a face
value of $79.9 million from the Resolution Trust Corporation on
May 20, 1993, a $16.0 million acquisition of performing mortgage
loans with a face value of $18.2 million from a group of
institutional investors on September 27, 1993 and a $26.6 million
acquisition of performing mortgage loans with a face value of
$27.9 million originated by Goldome Credit Corporation on
December 10, 1993. These acquisitions were funded using
approximately $22.5 million in cash, $23.0 million borrowed under
the Company's revolving line of credit and $69.5 million borrowed
under a repurchase facility from DLJ Mortgage Capital, Inc.
(DLJMC). The repurchase facility was repaid on December 27,
1993.
On June 4, 1993, the Company acquired three long term care
facilities and related improvement loans pursuant to an Option
Agreement with subsidiaries of SAFECO Corporation, for $5.8
million. The three facilities, which include a total of 428 beds
in Ohio, Iowa and Missouri, are subject to existing leases with
terms expiring between 1995 and 2001 and have several renewal
options. This purchase was funded from the Company's available
cash.
On November 1, 1993, the Company purchased a 143 bed long-
term care facility in Seattle, Washington for $5.1 million from
Greenery Rehabilitation Group, Inc. (Greenery) and simultaneously
leased it to Sun Healthcare Group, Inc. (Sun). In addition, the
Company and Sun agreed to extend the lease arrangements on three
nursing facilities, which had been scheduled to expire in May
1997, through December 2005. The new lease arrangement between
the Company and Sun includes all four facilities and provides for
annual base rent of approximately $2.5 million plus additional
rent beginning in 1995. Sun has renewal options totalling an
additional 20 years. Prior to this transaction, the three
existing leases were between the Company and Horizon Healthcare
Corporation (Horizon) with Sun as sub-lessee to Horizon. This
purchase was funded from the Company's available cash.
On December 30, 1993, the Company completed the financing
for Community Care of America, Inc. (Community Care), a privately
owned corporation, of 26 nursing homes with 2,183 beds and six
retirement apartment complexes with 119 units. The Company
provided financing totalling $26.6 million, secured by mortgages
on certain Nebraska and Colorado facilities and the stock of a
wholly owned subsidiary of Community Care. The Company acquired
the remaining facilities for $33.4 million. In addition, the
Company has agreed to finance up to $7.3 million for capital
improvements to the facilities. The acquired facilities are
leased on a triple net basis. The combined minimum annual rent
and interest revenue expected from this transaction is $6.7
million.
On February 11, 1994, the previously announced merger
transaction between Horizon and Greenery was consummated. In
connection with this merger:
- Horizon has purchased three facilities for $28.4
million from the Company. This has resulted in a gain
to the Company of $3.9 million.
- The Company has provided Horizon with $9.4 million in
first mortgage financing for two facilities in
Michigan. These notes bear interest at 11.5% and have
balloon maturities in December, 2000.
- Horizon has leased seven facilities formerly leased to
Greenery at minimum rents substantially the same as
rent previously paid by Greenery. These leases have 12
year terms and provide renewal options for an
additional 20 years.
- The Company granted Horizon a ten year option to buy,
at a rate of up to one facility per year, any or all of
the seven facilities now leased to Horizon.
- Three facilities in Connecticut have been leased to
Connecticut Subacute Corporation II (CSC II), a newly
formed entity, with lease payments guaranteed by
Horizon for up to five years until a replacement
operator acceptable to the Company is identified.
As a result of the merger, Horizon is now the Company's
largest tenant accounting for approximately 28% of the Company's
total revenues.
At December 31, 1993, the Company had $13.9 million of cash
and cash equivalents. The Company's existing revolving credit
facility had a balance of $40.0 million at December 31, 1993, the
maximum available under this agreement. On February 25, 1994,
the Company closed a new $110 million revolving credit facility
from a syndicate of banks. This facility replaces the existing
line of credit and has a three year maturity with interest at a
spread over LIBOR.
On December 27, 1993, the Company completed an offering of
9,000,000 common shares of beneficial interest to the public.
The net proceeds of the offering of approximately $121.6 million
were used to repay borrowings under the Company's repurchase
facility and to fund the Community Care transaction described
above. On January 19, 1994, the underwriters exercised their
over-allotment option for 601,500 additional shares, resulting in
the Company's receipt of additional net proceeds of approximately
$8.3 million. Earlier in the year, the Company raised
approximately $123.0 million by the issuance of 10,350,000 shares
of the Company's stock. The proceeds were used, in part, to
repay borrowings outstanding under two term loans of $70.0
million and $18.5 million outstanding under the Company's
revolving line of credit.
As of December 31, 1993, the Company had extended
commitments to provide financing totalling approximately $43.2
million. On March 17, 1994, the Company entered into an
agreement with affiliates of Host Marriott Corporation to acquire
14 retirement complexes for $320 million, subject to adjustment.
The 14 complexes are leased to a wholly owned subsidiary of
Marriott International, Inc. ("Marriott") for initial terms
expiring on December 31, 2013 plus renewal options extending for
an additional 20 years. The complexes will be acquired subject
to the existing leases and the obligations to pay rent to the
Company under the leases are and will continue to be fully
guaranteed by Marriott. At the conclusion of the transaction,
Marriott will become the Company's largest single tenant,
constituting approximately 38% of the Company's total investment
portfolio. The Company intends to fund these commitments with a
combination of cash on hand, amounts available under its existing
credit facilities, amounts advanced under new interim credit
facilities and/or proceeds of other financings. Although no
assurance can be given that the Marriott transaction will be
consummated, the Company presently anticipates the transaction
will close in June 1994.
The Company continues to seek new investments to expand and
diversify its portfolio of leased and mortgaged health care
related real estate. The Company believes that the transactions
described above will substantially improve the diversity of
lessees and mortgagors in its existing portfolio and also improve
the credit worthiness of its operators as a group. The Company
intends to balance the use of debt and equity in such a manner
that the long term cost of funds borrowed to acquire or mortgage
finance facilities is appropriately matched, to the extent
practicable, with the terms of the investments made with such
borrowed funds. As of December 31, 1993, the Company's debt as a
percentage of total capitalization was approximately 14%.
Impact of Inflation
Management believes that the Company is not adversely
affected by inflation. In the real estate market, inflation
would tend to increase the value of the Company's underlying real
estate which would be realized at the end of the lessees' fixed
terms. In the health care industry, inflation would increase the
lessees' and mortgagors' revenues, thereby increasing the
Company's additional rent or interest. At December 31, 1993, all
of the Company's outstanding debt was protected to a degree if
interest rates rise by the use of interest hedging agreements.
The Company has interest rate collar agreements which provide for
maximum interest rates of approximately 5.5%.
Item 8. Financial Statements and Supplementary Data
The financial statements and related notes and reports of
independent auditors for the Company are included following Part
IV, beginning at page F-1, and identified in the index appearing
at Item 14(a). The financial statements and financial statement
schedules for Greenery are incorporated by reference to
Greenery's Annual Report on Form 10-K for the year ended
September 30, 1993, Commission File No. 1-10577. The financial
statements and financial statement schedules for GranCare are
incorporated by reference to GranCare's Annual Report on Form 10-
K for the year ended December 31, 1993, Commission File No. 0-
19571.
Item 9. Changes in and Disagreements on Accounting and
Financial Disclosure
Not applicable.
PART III
The information in Part III (Items, 10, 11, 12 and 13) is
incorporated by reference to the Company's definitive Proxy
Statement, which will be filed not later than 120 days after the
end of the Company's fiscal year.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) Index to Financial Statements and Financial Statement
Schedules
<TABLE> Page
<CAPTION> ----
HEALTH AND REHABILITATION PROPERTIES TRUST
<S> <C>
Report of Ernst & Young, Independent Auditors......... F-1
Balance Sheets as of December 31, 1992 and 1993...... F-2
Statements of Income for the years ended
December 31, 1991, 1992 and 1993...................... F-3
Statements of Shareholders' Equity for the
years ended December 31, 1991, 1992 and 1993........... F-4
Statements of Cash Flows for the years ended
December 31, 1991, 1992 and 1993...................... F-5
Notes to Financial Statements ........................ F-6
The following financial schedules are included:
XI -- Real Estate and Accumulated Depreciation...... F-16
XII -- Mortgage Loans on Real Estate.................. F-18
</TABLE>
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
GREENERY REHABILITATION GROUP, INC. AND SUBSIDIARIES
The following financial statements for Greenery are
incorporated by reference from Greenery's Annual Report on Form
10-K for the year ended September 30, 1993, Commission File No.
1-10577.
Report of Independent Auditors
Consolidated Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Changes in
Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
GRANCARE, INC. AND SUBSIDIARIES
The following financial statements for GranCare are
incorporated by reference from GranCare's Annual Report on Form
10-K for the year ended December 31, 1993, Commission File No.
0-19571.
Report of Independent Auditors
Consolidated Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Shareholders'
Equity (Capital Deficiency)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Exhibits:
3.1 - Declaration of Trust, as amended.(2)
3.2 - July, 1992 Amendment to Declaration of Trust.(6)
3.3 - July 1993 Amendment to Declaration of Trust.(7)
3.4 - By-Laws.(1)
10.1 - Advisory Agreement, as amended.(2)(+)
10.2 - Second Amendment to Advisory Agreement.(*)(+)
10.3 - Incentive Share Award Plan.(6)(+)
10.4 - $33 Million Senior Term Loan Agreement.(3)
10.5 - Promissory Note related to the Senior
Term Loan.(3)
10.6 - Open-End Deed Mortgage and Security Agreement
related to the Senior Term Loan.(3)
10.7 - Assignment of Leases and Tents related to the
Senior Term Loan.(3)
10.8 - Subordination Agreement related to the Senior Term
Loan.(3)
10.9 - Master Lease Document.(4)
10.10 - Mortgage and Security Agreement with respect to
River Hills East Healthcare Center.(4)
10.11 - Mortgage and Security Agreement with respect to
River Hills West Healthcare Center.(4)
10.12 - Mortgage and Security Agreement with respect to
Northwest Healthcare Center.(4)
10.13 - Promissory Note.(4)
10.14 - HRPT Shares Pledge Agreement.(4)
10.15 - Voting Trust Agreement.(4)
10.16 - AMS Properties Security Agreement.(4)
10.17 - AMS Subordination Agreement.(4)
10.18 - AMS Guaranty.(4)
10.19 - AMS Pledge Agreement (pledging shares
of AMSP).(4)
10.20 - AMS Holding Co. Pledge Agreement (pledging shares
of AMS).(5)
10.21 - Amended and Restated Renovation Funding
Agreement.(5)
10.22 - Amendment to AMS Transaction Documents.(5)
10.23 - Indemnification Agreement.(6)
10.24 - Mortgage and Security Agreement --
Wauchula, FL.(6)
10.25 - Deed of Trust -- CRS/Texas.(6)
10.26 - GCI Master Lease Document.(6)
10.27 - Amended and Restated Voting Trust Agreement.(6)
10.28 - Amended and Restated HRP Shares Pledge
Agreement.(6)
10.29 - Guaranty, Cross-Default and Cross-
Collateralization Agreement.(6)
10.30 - CSC $8,000,000 Working Capital Promissory Note.(6)
10.31 - February 1994 Revolving Credit Facility.(*)
10.32 - Marriott Senior Living Services Purchase and Sale
Agreement.(*)
25 - Powers of Attorney (*)
- --------------------
(*) Filed herewith.
(+) Management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the Company's Registration
Statement No. 33-9412 on Form S-11 dated October 10, 1986 and
amendments thereto.
(2) Incorporated by reference to the Company's Registration
Statement No. 33-16799 on Form S-11 dated August 27, 1987 and
amendments thereto.
(3) Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990 and
amendments thereto.
(4) Incorporated by reference to the Company's Current
Report on Form 8-K dated December 28, 1990 and amendments
thereto.
(5) Incorporated by reference to the Company's Annual
Report on Form 10-K for its fiscal year ended December 31, 1991.
(6) Incorporated by reference to the Company's Registration
Statement No. 33-55684 on Form S-11 dated December 23, 1992 and
amendments thereto.
(7) Incorporated by reference to the Company's Registration
Statement No. 33-71422 on Form S-3 dated November 1, 1993 and
amendments thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of
the period covered by this report.
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Shareholders
Health and Rehabilitation Properties Trust
We have audited the accompanying balance sheets of Health
and Rehabilitation Properties Trust as of December 31, 1993 and
1992, and the related statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended
December 31, 1993. Our audits also included the financial
statement schedules listed in the Index at Item 14(a). These
financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Health and Rehabilitation Properties Trust at December 31,
1993 and 1992, and the results of its operations and its cash
flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
ERNST & YOUNG
Boston, Massachusetts
February 11, 1994
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
BALANCE SHEETS
(dollars in thousands, except share amounts)
<CAPTION>
December 31,
1992 1993
ASSETS
<S> <C> <C>
Real estate properties, at cost
(including properties leased to
affiliates with a cost of
$217,443 and $217,947, respectively):
Land $ 31,016 $ 33,450
Buildings and improvements 289,578 330,988
Equipment 16,482 20,373
337,076 384,811
Less accumulated depreciation 26,194 34,969
310,882 349,842
Real estate mortgages and notes, net
(including amounts due from
affiliates of $17,600 and $1,215,
respectively) 47,173 157,281
Cash and cash equivalents 14,104 13,887
Interest and rent receivable 1,088 3,039
Deferred interest and finance costs,
net, and other assets 1,221 3,613
$374,468 $527,662
LIABILITIES AND SHAREHOLDERS' EQUITY
Borrowings $138,500 $ 73,000
Security deposits 4,500 8,300
Due to affiliate 203 709
Accounts payable and accrued expenses 2,964 4,518
Shareholders' equity:
Preferred shares of beneficial interest,
$.01 par value, 50,000,000 shares
authorized, none issued
Common shares of beneficial interest,
$.01 par value, 100,000,000 shares
authorized, 26,763,500 shares and
44,121,000 shares issued and
outstanding, respectively 268 441
Additional paid-in capital 246,459 470,572
Cumulative net income 85,472 118,889
Distributions of cash flow available
from operations ( 103,898 ) ( 148,767 )
Total shareholders' equity 228,301 441,135
$374,468 $527,662
</TABLE>
See accompanying notes
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
<CAPTION>
Year Ended December 31,
1991 1992 1993
<S> <C> <C> <C>
Revenues:
Rental income $36,806 $43,029 $46,069
Interest income 7,029 5,706 10,416
Total revenues 43,835 48,735 56,485
Expenses:
Interest 11,741 9,466 6,217
Advisory fees 2,030 2,231 2,591
Depreciation and amortization 7,286 9,076 9,087
General and administrative 699 719 852
Total expenses 21,756 21,492 18,747
Income before extraordinary item 22,079 27,243 37,738
Extraordinary item - early
extinguishment of debt and
termination costs of interest
rate hedging arrangements - - (4,321)
Net income $22,079 $27,243 $33,417
Weighted average shares
outstanding 21,834 26,760 34,407
Per share amounts:
Income before extaordinary item $ 1.01 $ 1.02 $ 1.10
Net income $ 1.01 $ 1.02 $ .97
</TABLE>
See accompanying notes
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<CAPTION>
Distributions
Additional Cumulative of Cash Flow
Number of Common Paid-in Net Available From
Shares Shares Capital Income Operations Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1991 18,997,500 $ 190 $ 161,653 $ 36,150 $ (50,233) $ 147,760
Issuance of common
shares of beneficial
interest for
acquisition of
real estate 1,320,000 13 10,547 - - 10,560
Issuance of common
shares of beneficial
interest, net 6,435,500 65 74,162 - - 74,227
Exercise of
stock options 2,000 - 16 - - 16
Net income - - - 22,079 - 22,079
Dividends - - - - ( 20,215) ( 20,215)
Balance at December 31,
1991 26,755,000 268 246,378 58,229 (70,448) 234,427
Expenses related to the
issuance of common shares
of beneficial interest - - (15) - - (15)
Exercise of stock
options 1,000 - 8 - - 8
Stock grants 7,500 - 88 - - 88
Net income - - - 27,243 - 27,243
Dividends - - - - ( 33,450) ( 33,450)
Balance at December 31,
1992 26,763,500 268 246,459 85,472 (103,898) 228,301
Redemption of common
shares of beneficial
interest (2,000,000) (20) ( 20,580) - - (20,600)
Issuance of common
shares of
beneficial interest,
net 19,350,000 193 244,599 - - 244,792
Stock grants 7,500 - 94 - - 94
Net income - - - 33,417 - 33,417
Dividends - - - - (44,869) (44,869)
Balance at December 31,
1993 44,121,000 $441 $470,572 $118,889 $(148,767) $441,135
</TABLE>
See accompanying notes
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
STATEMENTS OF CASH FLOWS
(dollars in thousands)
<CAPTION>
Year Ended December 31,
1991 1992 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 22,079 $ 27,243 $ 33,417
Adjustments to reconcile net income to cash
provided by operating activities:
Loss on early extinguishment of debt - - 4,321
Depreciation and amortization 7,286 9,076 9,087
Amortization of deferred interest costs 694 534 700
(Decrease) increase in security deposits (7,280) 4,500 3,800
Deferred finance costs (502) (126) (583)
Change in assets and liabilities:
(Increase) decrease in interest and rent
receivable and other assets (106) 735 (6,156)
Increase (decrease) in accounts payable
and accrued expenses (2,683) 1,219 1,554
Increase (decrease) in deferred income
and due to affiliate 94 (1,343) 506
Cash provided by operating activities 19,582 41,838 46,646
Cash flows from investing activities:
Investments in mortgage loans (500) (19,573) (142,475)
Repayment of mortgage loans 840 - 15,982
Real estate acquisitions (15,406) (52,287) (47,735)
Loans to affiliates - (2,476) (1,460)
Repayment of loans to affiliates - 2,476 245
Cash used for investing activities (15,066) (71,860) (175,443)
Cash flows from financing activities:
Proceeds from (cost of) issuance of
common shares 74,243 (7) 244,792
Proceeds from borrowings 14,000 35,500 98,700
Payments on borrowings (36,500) - (164,200)
Termination costs of debt and interest
rate hedging arrangements - - (2,843)
Payment related to stock surrender - - (3,000)
Dividends paid (23,894) (33,450) (44,869)
Cash provided by financing activities 27,849 2,043 128,580
Increase (decrease) in cash
and cash equivalents 32,365 (27,979) (217)
Cash and cash equivalents at
beginning of period 9,718 42,083 14,104
Cash and cash equivalents at
end of period $ 42,083 $ 14,104 $ 13,887
Supplemental cash flow information:
Interest paid $ 11,522 $ 7,330 $ 6,522
Supplement non-cash investing and financing activities:
Repayment of mortgage loans $ 54,961 $ 4,160 $ 17,600
Issuance (redemption) of common shares 10,500 - (20,600)
Real estate acquisitions (72,321) (68,378) -
Real estate exchanged - 34,000 -
Cash paid $ (6,860) $(30,218) $ (3,000)
</TABLE>
See accompanying notes
Note 1. Organization
Health and Rehabilitation Properties Trust, a Maryland real
estate investment trust (the Company), was organized on October
9, 1986. The Company invests in income-producing health care
related real estate.
Note 2. Summary of Significant Accounting Policies
Real estate properties and mortgages. Real estate
properties and mortgages are recorded at original cost.
Depreciation is provided for on a straight-line basis over the
following estimated useful lives:
Buildings and improvements 40 years
Equipment 12 years
Cash and cash equivalents. Cash, over-night repurchase
agreements and short-term investments with maturities of three
months or less at date of purchase are carried at cost plus
accrued interest, which approximate market value.
Deferred interest and finance costs. Costs incurred to
secure certain borrowings and related interest rate hedge
agreements are capitalized and amortized over the terms of their
respective loans. At December 31, 1993, the Company's interest
rate hedge arrangements are carried at cost of $2,989 and have an
estimated fair market value of approximately $3,208, based on
quoted market prices.
Revenue recognition. Rental income from operating leases is
recognized as earned over the life of the lease agreements.
Interest income is recognized as earned over the terms of the
real estate mortgages. Additional rent and interest revenues are
recognized as earned. Additional rent and interest for the years
ended December 31, 1991, 1992 and 1993 were $1,786, $1,809, and
$2,312, respectively.
Net income per share. Net income per share is computed
using the weighted average number of shares outstanding during
the period. Supplemental earnings per share for the years ended
December 31, 1991 and 1993 were $.99 and $.91, respectively,
based on the assumption that the issuance of shares in the
Company's public offerings in September 1991, January 1993 and
December 1993, and the related repayment of outstanding bank
borrowings took place at the beginning of each year.
Tax status. The Company is a real estate investment trust
under the Internal Revenue Code of 1986, as amended.
Accordingly, the Company expects not to be subject to federal
income taxes on amounts distributed to shareholders provided it
distributes at least 95% of its real estate investment trust
taxable income and meets certain other requirements for
qualifying as a real estate investment trust.
Note 3. Leases
The Company's real estate properties are leased pursuant to
noncancellable, fixed term operating leases expiring from 1994 to
2013. The leases generally provide for renewal terms at existing
rates followed by several market rate renewal terms. Each lease
is a triple net lease and generally requires the lessee to pay
minimum rent, additional rent based upon increases in net patient
revenues and all operating costs associated with the leased
property.
On June 4, 1993, the Company acquired for cash, three long-
term care facilities and related improvement loans for $5,778.
The facilities are subject to existing leases with terms expiring
between 1995 and 2001.
On November 1, 1993, the Company purchased a 143 bed long-term
care facility in Seattle, Washington for $5.1 million from
Greenery Rehabilitation Group, Inc. (Greenery) and simultaneously
leased it to Sun Healthcare Group, Inc. (Sun). In addition, the
Company and Sun agreed to extend the lease arrangements on three
nursing facilities that had been scheduled to expire in May,
1997, through December, 2005.
On December 30, 1993, the Company acquired 12 nursing homes
and five retirement apartment complexes for $33,400 from
subsidiaries of Community Care of America, Inc. (together with
its subsidiaries, CCA). In addition, the Company has agreed to
provide improvement financing of $7,300 to CCA. The acquired
facilities have been leased on a triple net basis. The minimum
annual rent from this transaction will be approximately $3,814.
On February 11, 1994, in connection with the merger of
Greenery into Horizon Healthcare Corporation (Horizon) the
Company sold to Horizon for $28,400, three facilities that had
been leased to Greenery. The Company realized a capital gain of
approximately $3,906 on the sale of these properties. In
addition, Horizon has leased seven facilities previously leased
to Greenery, on substantially similar terms with the leases
extended through 2005. The Company has also granted Horizon a
ten year option to buy, at the rate of no more than one facility
per year, the seven leased facilities.
Also, in connection with the Horizon-Greenery merger, the
Company leased the three remaining Greenery facilities to a newly
formed corporation, Connecticut Subacute Corporation II (CSCII),
an affiliate of HRPT Advisors, Inc. (Advisor). These facilities
are being managed by and the lease payments are guaranteed by
Horizon for a term of up to five years. The terms of these lease
arrangements are substantially similar to the original lease
arrangements.
Future minimum lease payments to be received by the Company
during the current terms of the leases are as follows:
Twelve months ended December 31,
1994 $ 46,813
1995 40,084
1996 37,065
1997 32,248
1998 20,127
Thereafter 71,388
$247,725
Note 4. Real Estate Mortgages and Notes Receivable
<TABLE>
<CAPTION>
December 31,
1992 1993
<S> <C> <C>
Mortgage notes receivable from an
affiliate, repaid in 1993 $ 17,600 $ -
Mortgage notes receivable, net of
discounts of $3,437 and $11,951,
respectively, due March 1994
through March 2001 18,726 118,367
Mortgage notes receivable due
December 2016 - 19,600
Mortgage notes receivable due
December 2000 10,847 10,283
Secured note receivable due 2016 - 7,000
Note receivable from an affiliate
due June, 1995 - 1,215
Other secured notes receivable - 816
$ 47,173 $157,281
</TABLE>
The average minimum interest rates on the mortgages range
from 8.8% to 13.75%.
On January 2, 1993, $17,600 of mortgage notes were prepaid
to the Company by the surrender of two million shares of the
Company's stock owned by the mortgagee and its affiliates.
Concurrently, the Company waived all prepayment penalties under
the mortgage investments and paid $3,000 in cash.
On May 20, 1993, the Company acquired a portfolio of
mortgage loans from the Resolution Trust Corporation (RTC) for
$72,411. The loans, which are secured by first mortgages on 27
nursing homes, had a face value of approximately $79,883 and have
maturities ranging from 1996 to 2001. The acquisition was funded
using approximately $18,411 of cash with the balance from a
$54,000 borrowing under a repurchase facility. The repurchase
facility accrued interest at a floating rate based on LIBOR plus
a premium and was repaid in full on December 27, 1993.
On September 27, 1993, the Company acquired a portfolio of
mortgage loans from a group of institutional investors for
$16,000. The loans, which are secured by first mortgages on six
nursing homes, had a face value of approximately $18,200 and have
maturities ranging from 1994 to 1997. The acquisition was funded
using approximately $4,100 of cash with the balance borrowed
under the repurchase facility referred to above.
On December, 10, 1993, the Company acquired for $26,600, a
portfolio of mortgage loans secured by first mortgages on 17
nursing homes. These loans have a combined principal balance of
approximately $27,900 and mature between 1994 and 1999. The
acquisition was primarily funded by borrowing $23,000 on the
Company's revolving credit facility and the balance from the
repurchase facility referred to above.
In connection with the CCA purchase-lease transaction
described in Note 3, the Company provided first mortgage
financing on 14 nursing homes and one retirement apartment
complex for $19,600 and a $7,000 note secured by a first lien on
substantially all of the assets of the borrower at a weighted
average interest rate of 10.9%. The notes mature in December
2016. Minimum annual interest from this transaction will be
$2,909.
On February 11, 1994, in connection with the Horizon-
Greenery merger discussed in Note 3, the Company provided Horizon
with $9,400 first mortgage financing for two facilities. One of
the facilities previously was owned by the Company and leased to
Greenery. The mortgage notes bear interest at 11.5% per annum
and will mature on December 31, 2000.
At December 31, 1993, the estimated aggregate fair market
value of the Company's mortgages and notes receivable was
$170,063 based on estimates using discounted cash flow analyses
and rates currently prevailing for comparable mortgages and
notes.
Note 5. Common Shares of Beneficial Interest
On January 20, 1993, the Company received approximately
$107,315 net proceeds from the public offering of 9,000,000
shares of the Company's stock. The proceeds were used, in part,
to repay outstanding borrowings of $70,000 under the Company's
term loans and $18,500 under the Company's revolving line of
credit. On February 17, 1993, the Company received additional
net proceeds of approximately $15,822 and issued 1,350,000 shares
of the Company's stock in connection with the exercise of the
underwriters' over-allotment option.
On December 27, 1993 the Company received approximately
$121,665 net proceeds from the public offering of 9,000,000
shares of the Company's stock. The proceeds were used to repay
$63,871 of borrowings outstanding under the repurchase facility
and to fund the CCA purchase-lease and mortgage transactions
described in Notes 3 and 4. On January 19, 1994, the Company
received additional net proceeds of approximately $8,301 and
issued 601,500 shares of the Company's stock in connection with
the exercise of the underwriters' over-allotment option.
In connection with the prepayment of the loans in January
and December 1993, the Company terminated certain interest rate
hedge arrangements, wrote off certain deferred costs related to
the prepayment and recorded extraordinary charges of
approximately $4,321.
Note 6. Financing Commitments
At December 31, 1993, the Company had total financing
commitments aggregating $43,236 of which $33,836 is committed for
improvements to certain properties owned and leased or mortgage
financed by the Company. During the twelve months ended December
31, 1993, the Company provided improvement financing at existing
properties aggregating $3,682.
At December 31, 1993, the Company's financing commitments
approximate fair market values. On February 11, 1994, in
connection with the Horizon-Greenery merger, $13,000 of financing
commitments were terminated.
Note 7. Pro Forma Information (Unaudited)
The following summarized Pro Forma Statements of Income
assume that all of the Company's real estate financing
transactions during 1992 and 1993, both 1993 stock offerings, the
January 19, 1994 over-allotment option exercise described in Note
5 and the Horizon-Greenery merger described in Notes 3 and 4 had
occurred on January 1, 1992 and give effect to the Company's
borrowing rates throughout the periods indicated.
The summarized Pro Forma Balance Sheet is intended to present
the financial position of the Company as if the January 19, 1994
over-allotment option exercise described in Note 5 and the
Horizon-Greenery merger described in Notes 3 and 4, had occurred
on December 31, 1993.
These pro forma statements are not necessarily indicative of
the expected results of operations or the Company's financial
position for any future period. Differences could result from,
but are not limited to, additional property investments, changes
in interest rates and changes in the debt and/or equity structure
of the Company.
<TABLE>
<CAPTION>
Year Ended December 31,
Pro Forma Statements of Income 1992 1993
(Unaudited)
<S> <C> <C>
Total revenues $66,669 $67,980
Total expenses 19,399 16,656
Net income $47,270 $51,324
Weighted average shares
outstanding (in thousands) 44,723 44,723
Net income per share $ 1.06 $ 1.15
</TABLE>
<TABLE>
<CAPTION>
December 31,
Pro Forma Balance Sheet 1993
(Unaudited)
<S> <C>
Real estate properties, net $325,348
Real estate mortgages and notes, net 166,681
Other assets 28,737
Total assets $520,766
Borrowings $ 58,500
Other liabilities 9,027
Shareholders' equity 453,239
Total liabilities and
shareholders' equity $520,766
</TABLE>
Note 8. Transactions With Affiliates
The Company has an advisory agreement with the Advisor
whereby the Advisor provides investment, management and
administrative services to the Company. The Advisor is owned by
Gerard M. Martin and Barry M. Portnoy. Messrs Martin and Portnoy
are shareholders of CSCII and Connecticut Subacute Corporation
(CSC), lessees of the Company, directors of Horizon and serve as
Trustees of the Company. Mr. Portnoy is a partner in a law firm
which provides legal services to the Company and was a minority
shareholder of the owner of Continuing Healthcare Corporation
(Continuing Health). The Advisor is compensated monthly at an
annual rate equal to .7% of the Company's real estate investments
up to $250 million and .5% of such investments thereafter and,
beginning in 1994, will be entitled to an annual incentive fee
comprised of shares of the Company's stock based upon a formula.
Advisory fees for the years ended December 31, 1991, 1992 and
1993 were $2,030, $2,231 and $2,591, respectively. Certain
officers of the Company are also officers of the Advisor.
At December 31, 1993, the Advisor owned 996,250 shares which
represented a 2.3% interest in the Company.
Amounts resulting from transactions with affiliates included
in the accompanying statements of income, shareholders' equity
and cash flows are as follows:
<TABLE>
Year Ended December 31,
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
Dividends paid to the Advisor $ 1,215 $ 1,245 $ 1,325
Dividends paid to Continuing
Health and affiliates 2,044 2,500 -
Rent from Greenery 9,050 17,531
22,527
Rent and interest income
from CSC - 929 4,483
Rent and interest income from
Continuing Health and affiliates 17,341 10,218 -
Interest expense paid to Greenery - 31 270
</TABLE>
Note 9. Additional Security
The obligations of GranCare, Inc. (together with its
subsidiaries, GranCare) under various leases and mortgages are
secured by 1,000,000 shares of the Company's stock and
substantially all the assets of the special operating
subsidiaries. All obligations of GranCare are cross defaulted,
cross guaranteed and cross secured.
The obligations of the CCA leases, mortgages and note due to
the Company are secured by a $3,800 cash security deposit and
substantially all the assets of certain of the special operating
CCA subsidiaries and by CCA's parent. Substantially all of the
obligations are cross defaulted, cross guaranteed and cross
secured.
The Company has also obtained a $3,000 letter of credit, from
another tenant, to secure its annual lease obligations of
approximately $3,377.
On February 11, 1994, in connection with to the Horizon-
Greenery merger, the $4,500 cash security deposit held to secure
Greenery's lease obligations was returned.
At December 31, 1993, the Company's carrying value of the
security deposits approximate fair value.
<TABLE>
<CAPTION>
Note 10. Borrowings December 31,
1992 1993
<S> <C> <C>
Term loan payable, repaid in January 1993 $ 45,000 $ -
Term loan payable, repaid in January 1993 25,000
Term loan payable, due June 1995,
interest only at LIBOR plus a premium 33,000 33,000
$40,000 revolving line of credit, repaid
in February 1994 35,500 40,000
$138,500 $73,000
The term loan outstanding at December 31, 1993 is secured by
first mortgage liens on three properties having an aggregate net
book value of $40,568. Substantially all of the Company's assets
are pledged to secure the revolving line of credit.
At year end, the Company had commitments totalling $110 million
from a syndicate of banks to provide a new revolving credit
facility. The new facility will replace the existing revolver
and will mature in 1997, unless extended. This new revolver will
bear interest at a spread over LIBOR.
At December 31, 1993, the Company had interest rate hedge
agreements which cap interest rates on up to $100,000 of
borrowings. The maximum rates payable on such borrowings under
these arrangements is 5.5% per annum over the terms of the loans.
The maturities of the hedge agreements range from 1995 through
1998.
The required principal payments on the borrowings during the
five years subsequent to December 31, 1993 are $73,000, due in
1995.
At December 31, 1993, the estimated fair market value of the
Company's borrowings was $72,185 based on estimates using
discounted cash flow analyses and current rates offered to the
Company for comparable debt.
Note 11. Concentration of Credit Risk
Substantially all of the Company's assets are invested in
income producing health care related real estate. At December
31, 1993, 49% of the Company's real estate mortgages and net real
estate properties were subject to leases and mortgages with
Greenery and GranCare as indicated in the following table.
</TABLE>
<TABLE>
<CAPTION>
Notes,
Mortgages and
Real Estate Rent and Mortgage
Properties, Net Interest Revenue
%of %of
Amount Total Amount Total
<S> <C> <C> <C> <C>
Greenery $169,121 33% $ 22,527 40%
GranCare 82,111 16 13,657 25
Other 255,891 51 19,458 35
$507,123 100% $ 55,642 100%
</TABLE>
In connection with the merger discussed in Notes 3 and 4, on
February 11, 1994, the Company's investments with Greenery were
terminated and the Company's net investments with Horizon
increased to $129,850.
Note 12. Long-term Incentive Plans
On May 12, 1992, the Company adopted the 1992 Incentive Share
Award Plan (the Plan). A total of 1,000,000 shares of the
Company's stock are reserved for issuance under the Plan. The
Plan provides for the grant, by the Board of Trustees, of the
Company's shares to selected officers and Trustees of the
Company, the Company's investment advisor and others rendering
valuable services to the Company. The Plan also provides for
annual grants of 500 shares to each Independent Trustee, as part
of their annual fee. On each of July 10, 1992 and June 29, 1993,
7,500 shares were issued under this plan of which 6,000 shares
were granted to officers of the Company and certain employees of
the Advisor and 1,500 shares were granted to the Independent
Trustees. The shares granted to officers of the Company and
employees of the Advisor vest over a three year period, with one-
third of the shares vesting immediately. At December 31, 1993,
985,000 shares of the Company remain reserved for issuance under
the Plan.
Note 13. Selected Quarterly Financial Data (Unaudited)
The following is a summary of the unaudited quarterly results
of operations of the Company for 1992 and 1993.
<TABLE>
<CAPTION>
1992
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Total revenues $11,539 $11,858 $12,414 $12,924
Net income 6,495 6,562 6,812 7,374
Net income per share .24 .25 .25 .28
</TABLE>
<TABLE>
<CAPTION>
1993
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Total revenues $12,650 $13,763 $14,727 $15,345
Income before extraordinary
item 8,409 9,536 9,739 10,054
Extraordinary item (3,392) - - (929)
Net income 5,017 9,536 9,739 9,125
Per share data:
Income before extraordinary
item .27 .27 .28 .28
Net income .16 .27 .28 .26
</TABLE>
Note 14. Events Occurring Subsequent to Independent Auditors'
Report (Unaudited)
On March 17, 1994, the Company entered into an agreement
with Host Marriott Corporation to acquire 14 retirement complexes
containing 3,932 residences or beds for $320,000, subject to
adjustment. The complexes are triple net leased through December
31, 2013 to a wholly owned subsidiary of Marriott International,
Inc. (Marriott). Minimum annual rent is approximately $28,000
with additional rent equal to 4.5% of revenues in excess of a
base amount. The leases are cross-defaulted and guaranteed by
Marriott. The acquisition is expected to close in June 1994.
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1993
(Dollars in thousands)
<CAPTION>
COSTS GROSS AMOUNT AT
REAL ESTATE PROPERTIES INITIAL COST TO COMPANY CAPITALIZED WHICH CARRIED AT (2) ORIGINAL
ENCUM- -------------------------- SUBSEQUENT TO --- CLOSE OF PERIOD --- (1) ACCUM. DATE CONST.
LOCATION STATE BRANCE LAND BUILDING EQUIPMENT ACQUISITION LAND BUILDING EQUIPMENT TOTAL DEPRN. ACQUIRED DATE
- ---------- ----- ------ ---- --------- --------- ----------- ------ -------- --------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BEVERLY MA $864 $10,530 $305 $233 $864 $10,763 $305 $11,932 $1,803 11/01/87 1973
BROOKFIELD WI 834 3,615 234 1,276 834 4,891 234 5,959 347 12/28/90 1954
CHESHIRE CT 520 7,110 270 111 520 7,221 270 8,011 1,249 11/01/87 1963
CLINTONVILLE WI 14 1,610 85 37 14 1,640 92 1,746 145 12/28/90 1960
CLINTONVILLE WI 49 1,542 83 105 49 1,639 91 1,779 144 12/28/90 1965
DANVERS MA 838 8,460 282 255 838 8,715 282 9,835 1,471 11/01/87 1972
FAIRLAWN OH 330 4,970 400 727 330 5,697 400 6,427 1,126 05/15/87 1971
FRESNO CA 738 2,411 166 188 738 2,554 211 3,503 238 12/28/90 1968
HURON SD 144 2,945 163 4 144 2,949 163 3,256 131 06/30/92 1968
HURON SD 45 917 51 1 45 918 51 1,014 41 06/30/92 1968
KILLINGLY CT 240 4,910 450 460 240 5,370 449 6,059 1,112 05/15/87 1972
LAKEWOOD CO 232 3,566 200 724 232 4,285 205 4,722 349 12/28/90 1972
LANCASTER CA 601 1,736 123 804 601 2,462 201 3,264 186 12/28/90 1963
LITTLETON CO 185 4,782 261 348 185 5,050 341 5,576 450 12/28/90 1965
MADISON WI 144 1,544 89 109 144 1,651 91 1,886 145 12/28/90 1920
MILWAUKEE WI 116 3,260 178 123 116 3,379 182 3,677 298 12/28/90 1960
MILWAUKEE WI 277 3,594 289 0 277 3,594 289 4,160 199 03/27/92 1969
NASHVILLE IL 75 2,424 132 80 75 2,458 178 2,711 225 12/28/90 1964
NEWPORT BEACH CA 1,176 1,584 145 1,173 1,176 2,734 167 4,077 172 12/28/90 1962
NEW HAVEN CT 1,681 14,201 752 0 1,681 14,201 752 16,634 678 05/11/92 1971
PALM SPRINGS CA 103 1,196 68 702 103 1,866 99 2,068 123 12/28/90 1969
PHOENIX AZ 655 2,366 159 4 655 2,370 159 3,184 108 06/30/92 1963
SAN DIEGO CA 1,114 964 109 480 1,114 1,402 151 2,667 129 12/28/90 1969
SOUIX FALLS SD 253 2,896 166 4 253 2,900 166 3,319 129 06/30/92 1960
STOCKTON CA 382 2,593 157 4 382 2,597 157 3,136 117 06/30/92 1968
TARZANA CA 1,277 864 113 804 1,277 1,647 134 3,058 141 12/28/90 1969
THOUSAND OAKS CA 622 2,365 157 310 622 2,647 185 3,454 231 12/28/90 1965
VAN NUYS CA 716 322 56 225 716 505 98 1,319 51 12/28/90 1969
WATERFORD CT 86 4,214 500 453 86 4,667 499 5,252 1,023 05/15/87 1965
WAUKESHA WI 68 3,276 176 251 68 3,524 179 3,771 301 12/28/90 1958
WILLIMANTIC CT 134 3,316 250 479 166 3,763 250 4,179 732 05/15/87 1965
YUMA AZ 223 1,984 116 4 223 1,988 116 2,327 89 06/30/92 1984
YUMA AZ 103 569 35 1 103 570 35 708 26 06/30/92 1984
CLARINDA IA 77 1,300 153 0 77 1,300 153 1,530 2 12/30/93 1968
GRAND JUNCTION CO 136 2,311 272 0 136 2,311 272 2,719 3 12/30/93 1978
LARAMIE WY 191 3,250 382 0 191 3,250 382 3,823 5 12/30/93 1964
MEDIAPOLIS IA 94 1,589 187 0 94 1,589 187 1,870 2 12/30/93 1973
MUSCATINE IA 246 4,190 493 0 246 4,190 492 4,928 6 12/30/93 1964
PAONIA CO 115 1,950 229 0 115 1,950 229 2,294 3 12/30/93 1981
SMITH CENTER KS 111 1,878 221 0 111 1,878 221 2,210 3 12/30/93 1971
TARKIO MO 102 1,734 204 0 102 1,734 204 2,040 3 12/30/93 1970
TOLEDO IA 153 2,601 306 0 153 2,601 306 3,060 4 12/30/93 1975
WINTERSET IA 111 1,878 221 0 111 1,878 221 2,210 3 12/30/93 1973
WORLAND WY 132 2,239 264 0 132 2,239 264 2,635 3 12/30/93 1970
</TABLE>
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
SCHEDULE XI - Continued
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1993
(Dollars in thousands)
<CAPTION>
COSTS GROSS AMOUNT AT
REAL ESTATE PROPERTIES INITIAL COST TO COMPANY CAPITALIZED WHICH CARRIED AT (2) ORIGINAL
ENCUM- -------------------------- SUBSEQUENT TO --- CLOSE OF PERIOD --- (1) ACCUM. DATE CONST.
LOCATION STATE BRANCE LAND BUILDING EQUIPMENT ACQUISITION LAND BUILDING EQUIPMENT TOTAL DEPRN. ACQUIRED DATE
- ---------- ----- ------ ---- --------- --------- ----------- ------ -------- --------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GRAND JUNCTION CO 204 3,467 408 0 204 3,467 408 4,079 5 12/30/93 1975
COUNCIL BLUFFS IA 50 467 0 0 50 467 0 517 6 06/04/93 1970
GROVE CITY OH 332 3,081 0 0 332 3,081 0 3,413 41 06/04/93 1965
SEATTLE WA 256 4,356 513 0 256 4,356 513 5,125 19 11/01/93
ST JOSEPH MO 111 1,027 0 0 111 1,027 0 1,138 14 06/04/93 1976
------ ------- ------ ------- --------- ------- --------- -------- ------
LONG TERM CARE FACILITIES 17,260 149,954 10,573 10,479 17,292 159,935 11,035 188,262 13,831
------ ------- ------ ------ ------ ------- ------ ------- ------
BOSTON MA (3) 2,164 19,836 1,000 1,978 2,164 21,816 1,000 24,980 2,811 05/01/89 1968
BRISTOL CT 465 8,905 330 283 465 9,188 330 9,983 1,763 12/23/86 1972
HOWELL MI 80 4,110 260 2,601 103 6,090 858 7,051 1,051 06/05/87 1966
HYANNIS MA 829 7,048 415 0 829 7,048 415 8,292 342 05/11/92 1972
MIDDLEBOROUGH MA 1,771 14,961 791 0 1,771 14,961 791 17,523 714 05/11/92 1975
N. ANDOVER MA 1,448 10,435 614 0 1,448 10,435 614 12,497 507 05/11/92 1985
N. STRABANE PA 1,499 12,743 750 606 1,518 13,320 760 15,598 1,112 03/01/91 1985
SLIDELL LA 2,323 19,745 1,161 1,147 2,353 20,848 1,176 24,377 1,733 03/01/91 1984
WALLINGFORD CT (3) 557 10,649 394 73 557 10,722 394 11,673 2,101 12/23/86 1974
WATERBURY CT (3) 514 9,822 364 68 514 9,890 364 10,768 1,939 12/23/86 1971
WATERBURY CT 1,003 8,522 501 0 1,003 8,522 501 10,026 414 05/11/92 1974
WORCESTER MA 1,829 14,186 885 1,870 1,829 16,058 885 18,772 2,517 05/01/88 1970
------ ------- ----- ------ ------ ------- ------ -------- -------
REHABILITATION FACILITIES 14,482 140,962 7,465 8,626 14,554 148,898 8,088 171,540 17,004
------ ------- ------ ------ ------ ------- ------ ------- ------
HICKORY NC 454 5,703 324 155 454 5,858 324 6,636 1,086 10/02/87 1938
LOUISVILLE KY 1,150 16,297 926 0 1,150 16,297 926 18,373 3,048 10/02/87 1835
------ ------- ------ ------ --------- ------- --------- -------- -------
PSYCHIATRIC FACILITIES 1,604 22,000 1,250 155 1,604 22,155 1,250 25,009 4,134
------ ------- ------ ------ --------- ------- --------- -------- -------
TOTAL REAL ESTATE $33,346 $312,915 $19,288 $19,260 $33,450 $330,988 $20,373 $384,811 $34,969
========= ========= ========= ========= ========= ======== ======== ======== =======
- ------------------
(1) Aggregate cost for federal income tax purposes is approximately $348,155.
(2) Depreciation is provided for on buildings and improvements over 40 years, equipment over 12 years.
(3) Encumbered by a $33,000 five year term loan due in 1995.
Reconciliation of the carrying amount of real estate at the beginning of the period:
</TABLE>
<TABLE>
<CAPTION>
Real Estate and Equipment Accumulated Depreciation
<S> <C> <C>
Balance at January 1, 1991 $200,839 $12,847
Additions 80,927 6,722
Balance at December 31, 1991 281,766 19,209
Additions 56,447 8,122
Adjustments to Exchange Contract (1,137) (1,137)
Balance at December 31, 1992 337,076 26,194
Additions 47,735 8,775
Balance at December 31, 1993 $384,811 $34,969
</TABLE>
<TABLE>
HEALTH AND REHABILITATION PROPERTIES TRUST
SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE
<CAPTION>
December 31, 1993 Principal
(Dollars in thousands) Amount of
Loans Subject
Final Face Carrying to Delinquent
Interest Maturity Value of Value of Principal or
Location Rate Date Periodic Payment Terms Mortgage Mortgage(1) Interest
- ------------ -------- --------- ---------------------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
CONNORSVILLE, 6.25% 07/01/98 Principal and interest $ 5,795 $ 4,974 -
IN payable monthly in
arrears. $5.3 million
due at maturity.
ELKHART, IN 9.875% 05/01/97 Principal and interest 8,057 7,963 -
payable monthly in
arrears. $7.5 million
due at maturity.
MEDINA, OH 6.75% 02/01/98 Principal and interest 6,151 5,373 -
payable monthly in
arrears. $6.5 million
due at maturity.
TORRANCE, CA 10.46% 01/01/97 Principal and interest 5,114 4,911 -
payable monthly in
arrears. $4.9 million
due at maturity.
CARROLLTON, 9.50% 08/10/95 Principal and interest 5,311 5,116 -
GA payable monthly in
arrears. $5.2 million
due at maturity.
MILWAUKEE, WI 13.75% 12/28/00 Principal and interest 9,400 9,400 -
PEWAUKEE, WI payable monthly in
advance. $5.7 million
due at maturity.
CANON CITY, CO 11.5% 12/31/16 Principal and interest 13,600 13,600
SPRING VILLAGE, payable monthly in
CO arrears.
DELTA, CO
AINSWORTH, NE 9.00% 12/31/16 Principal and interest 6,000 6,000 -
ASHLAND, NE payable monthly in
BLUE HILL, NE arrears.
CENTRAL CITY,
NE
GRETNA, NE
SUTHERLAND, NE
WAVERLY, NE
56 MORTGAGES 0% 03/94 N/A 100,173 90,313 -
-12.50% -08/08
-------- -------- -------
TOTAL $160,201 $148,250 $0
======== ======== =======
- -----------------
(1) Also represents cost for federal income tax purposes.
</TABLE>
<TABLE>
Reconciliation of the carrying amount of mortgage loans at the beginning of the period:
<CAPTION>
<S> <C>
Balance at January 1, 1991 $ 87,061
New Mortgage Loans 500
Collections of Principal (55,801)
Balance at December 31, 1991 31,760
New Mortgage Loans 19,573
Collections of Principal (4,160)
Balance at December 31, 1992 47,173
New Mortgage Loans 133,939
Amortization of discount 965
Collections of principal (33,827)
Balance at December 31, 1993 $148,250
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HEALTH AND REHABILITATION PROPERTIES
TRUST
By:/S/ Mark J. Finkelstein
Mark J. Finkelstein
President and Chief
Executive Officer
Dated: March 22, 1994
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons, or by their attorney-in-fact, in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Mark J. Finkelstein President and Chief March 22, 1994
Mark J. Finkelstein Executive Officer
/s/ David J. Hegarty Executive Vice March 22, 1994
David J. Hegarty President and Chief
Financial Officer
/s/ John L. Harrington Trustee March 18, 1994
John L. Harrington
/s/ Arthur G. Koumantzelis Trustee March 22, 1994
Arthur G. Koumantzelis
/s/ Justinian Manning, C.P. Trustee March 22, 1994
Rev. Justinian Manning,
C.P.
/s/ Gerard M. Martin Trustee March 22, 1994
Gerard M. Martin
/s/ Barry M. Portnoy Trustee March 22, 1994
Barry M. Portnoy
</TABLE>
SECOND AMENDMENT TO ADVISORY AGREEMENT
THIS SECOND AMENDMENT is entered into as of December 6,
1993, by and between Health and Rehabilitation Properties Trust,
a Maryland real estate investment trust (the "Company"), and HRPT
Advisors, Inc., a Delaware corporation (the "Advisor").
WHEREAS, the Company and the Advisor entered into an
advisory agreement dated as of November 20, 1986 and an amendment
thereto dated August 26, 1987 (collectively, the "Advisory
Agreement"); and
WHEREAS, the Company and the Advisor wish to modify the
provisions of the Advisory Agreement providing for an incentive
fee payable to the Advisor.
NOW, THEREFORE, in consideration of these premises, the
Company and the Advisor agree as follows:
1. The second sentence of Section 9 of the Advisory
Agreement is hereby deleted and the following is substituted:
"In addition, the Advisor shall be paid an
annual incentive fee (the 'Incentive Fee'),
consisting of a number of the Company's
Common Shares of Beneficial Interest with a
value (determined as provided below) equal to
15% of the amount by which 'Cash Available
for Distribution to Shareholders' (as defined
below) for such fiscal year exceeds the
'Threshold Amount' (as defined below), but in
no event shall the Incentive Fee payable in
respect of any year exceed $.01 multiplied by
the weighted average number of the Company's
Shares of Beneficial Interest outstanding
during such year."
2. Section 9 of the Advisory Agreement is further amended
by inserting the following paragraphs at the end of said Section
9:
"For purposes of this Agreement: The
'Threshold Amount' in respect of any year
shall mean the product of (a) the weighted
average number of the Company's Shares of
Beneficial Interest outstanding during such
year, times (b) the 'Per Share Threshold
Amount'. The 'Per Share Threshold Amount'
shall mean, for calendar year 1994, an amount
equal to $1.37, and, for any calendar year
subsequent to 1994, the Per Share Threshold
Amount for the prior calendar year, plus
$.05.
Payment of the Incentive Fee shall be made by
issuance of Common Shares of Beneficial
Interest under the Company's 1992 Incentive
Share Award Plan. The number of shares to be
issued in payment of the Incentive Fee shall
be the whole number of shares (disregarding
any fraction) equal to the value of the
Incentive Fee, as provided above, divided by
the average closing price of the Company's
Common Shares of Beneficial Interest on the
New York Stock Exchange during the month of
December in the year for which the
computation is made."
3. Except as amended hereby, the Advisory Agreement
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Second Amendment to be executed by their duly authorized
officers, under seal, as of the day and year first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST
By: /s/ David J. Hegarty
HRPT ADVISORS, INC.
By: /s/ John G. Murray
F:\MAM\HRPT10\ADVAGREE.AMD:12/03/93
U.S. $110,000,000
REVOLVING LOAN AGREEMENT
among
HEALTH AND REHABILITATION PROPERTIES TRUST,
as Borrower,
THE LENDERS NAMED HEREIN,
and
KLEINWORT BENSON LIMITED,
as Agent,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
Dated as of February 24, 1994
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional Provisions . . . . . . . . . . . . . 30
SECTION 2. AMOUNT AND TERMS OF REVOLVING LOANS . . . . . . . . . . . 31
2.1. Revolving Loans. . . . . . . . . . . . . . . . . . . . 31
2.2. Notes; Maturity Date. . . . . . . . . . . . . . . . . . 32
2.3. Procedure for Borrowing. . . . . . . . . . . . . . . . 33
2.4. Interest. . . . . . . . . . . . . . . . . . . . . . . . 36
2.5. Duration of Interest Period; Notice of
Continuation/Conversion. . . . . . . . . . . . . . . . . 37
2.6. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.7. Termination or Reduction of Commitment. . . . . . . . . 40
2.8. Optional Prepayments; Mandatory Prepayments. . . . . . 40
2.9. Computation of Interest and Fees. . . . . . . . . . . . 42
2.10. Payments. . . . . . . . . . . . . . . . . . . . . . . . 42
2.11. Use of Proceeds. . . . . . . . . . . . . . . . . . . . 44
2.12. Increased Costs. . . . . . . . . . . . . . . . . . . . 44
2.13. Change in Law Rendering Eurodollar Loans or Alternate
Rate Loans Unlawful . . . . . . . . . . . . . . . . . . 47
2.14. Eurodollar Availability. . . . . . . . . . . . . . . . 49
2.15. Indemnities. . . . . . . . . . . . . . . . . . . . . . 50
2.16 Eligible Mortgages and Eligible Properties. . . . . . . 51
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 58
3.1. Financial Condition. . . . . . . . . . . . . . . . . . 58
3.2. No Material Adverse Effect. . . . . . . . . . . . . . . 59
3.3. Existence; Borrower's Compliance with Law. . . . . . . 59
3.4. Operator, Advisor, Credit Support Obligors; Compliance
with Law. . . . . . . . . . . . . . . . . . . . . . . . 60
3.5. Power; Authorization; Enforceable Obligations. . . . . 60
3.6. No Legal Bar. . . . . . . . . . . . . . . . . . . . . . 61
3.7. No Material Litigation. . . . . . . . . . . . . . . . . 61
3.8. No Default. . . . . . . . . . . . . . . . . . . . . . . 61
3.9. Ownership of Mortgage Interests and Property; Liens. . 61
3.10. No Burdensome Restrictions. . . . . . . . . . . . . . . 65
3.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 65
3.12. Federal Regulations. . . . . . . . . . . . . . . . . . 65
3.13. Employees. . . . . . . . . . . . . . . . . . . . . . . 65
3.14. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 66
3.15. Status as REIT. . . . . . . . . . . . . . . . . . . . . 66
3.16. Restrictions on Incurring Indebtedness. . . . . . . . . 66
3.17. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 66
3.18. Compliance with Environmental Laws. . . . . . . . . . . 66
3.19. Pollution; Hazardous Materials. . . . . . . . . . . . . 66
3.20. Securities Laws. . . . . . . . . . . . . . . . . . . . 67
3.21. Declaration of Trust, By-Laws, Advisory Contract, etc. 67
3.22. Disclosures. . . . . . . . . . . . . . . . . . . . . . 67
3.23. Medicare and Medicaid Certification . . . . . . . . . . 67
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SECTION PAGE
3.24. Offering, Etc., of Securities . . . . . . . . . . . . . 68
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 68
4.1. Conditions to Loans . . . . . . . . . . . . . . . . . . 68
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 76
5.1. Financial Statements. . . . . . . . . . . . . . . . . . 76
5.2. Certificates; Other Information. . . . . . . . . . . . 77
5.3. Payment of Obligations. . . . . . . . . . . . . . . . . 78
5.4. Conduct of Business and Maintenance of Existence. . . . 79
5.5. Leases and Mortgage Interests; Credit Support
Agreements. . . . . . . . . . . . . . . . . . . . . . . 79
5.6. Maintenance of Property, Insurance. . . . . . . . . . 79
5.7. Inspection of Property; Books and Records; Discussions. 80
5.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . 80
5.9. Appraisals. . . . . . . . . . . . . . . . . . . . . . . 82
5.10. Meetings. . . . . . . . . . . . . . . . . . . . . . . . 82
5.11. REIT Requirements. . . . . . . . . . . . . . . . . . . 82
5.12. Indemnification. . . . . . . . . . . . . . . . . . . . 83
5.13. Changes in GAAP. . . . . . . . . . . . . . . . . . . . 84
5.14. Treatment Under Disclosure Documents . . . . . . . . . 84
5.15. Creation of Liens; Perfection of Security Upon Default
or Event of Default; Release of Liens . . . . . . . . . 84
5.16. Further Assurances. . . . . . . . . . . . . . . . . . . 87
5.17. California Title Endorsements. . . . . . . . . . . . . 87
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 87
6.1. Financial Covenants. . . . . . . . . . . . . . . . . . 88
6.2. Restricted Payments. . . . . . . . . . . . . . . . . . 88
6.3. Merger; Sale of Assets; Termination and Other Actions. 88
6.4. Transactions with Affiliates. . . . . . . . . . . . . . 89
6.5. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 89
6.6. Accounting Changes. . . . . . . . . . . . . . . . . . . 89
6.7. Change in Nature of Business. . . . . . . . . . . . . . 89
6.8. No Liens . . . . . . . . . . . . . . . . . . . . . . . 89
6.9. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . 90
6.10. Chief Executive Office. . . . . . . . . . . . . . . . . 90
6.11. Amendment of Certain Agreements . . . . . . . . . . . . 90
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 90
7.1. Events of Default. . . . . . . . . . . . . . . . . . . 90
7.2. Annulment of Acceleration. . . . . . . . . . . . . . . 93
7.3. Cooperation by Borrower. . . . . . . . . . . . . . . . 94
SECTION 8. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . 94
8.1. Appointment of Agent and Administrative Agent. . . . . 94
SECTION 9. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . 99
9.1. CHOICE OF LAW. . . . . . . . . . . . . . . . . . . . . 99
9.2. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; ETC. 99
9.3. Notices; Certain Payments. . . . . . . . . . . . . . . 100
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<PAGE>
SECTION PAGE
9.4. No Waivers; Cumulative Remedies; Entire Agreement;
Headings; Successors and Assigns; Counterparts;
Severability. . . . . . . . . . . . . . . . . . . . . . 101
9.5. Survival. . . . . . . . . . . . . . . . . . . . . . . . 103
9.6. Amendments and Waivers. . . . . . . . . . . . . . . . . 103
9.7. Payment of Expenses and Taxes. . . . . . . . . . . . . 104
9.8. Adjustments; Setoff. . . . . . . . . . . . . . . . . . 105
9.9. NONLIABILITY OF TRUSTEES. . . . . . . . . . . . . . . . 107
EXHIBITS
EXHIBIT A - FORM OF PROMISSORY NOTE
EXHIBIT B - FORM OF ASSIGNMENT OF LEASE
EXHIBIT C - INTENTIONALLY OMITTED
EXHIBIT D - FORM OF COLLATERAL ASSIGNMENT
EXHIBIT E-1 - FORM OF MORTGAGE
EXHIBIT E-2 - FORM OF DEED OF TRUST
EXHIBIT F - FORM OF NON-DISTURBANCE AGREEMENT
EXHIBIT G - FORM OF SUBORDINATION AGREEMENT
EXHIBIT H - FORM OF NOTICE OF ANTICIPATED BORROWING
EXHIBIT I - FORM OF NOTICE OF BORROWING
EXHIBIT J - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT K - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT L - FORM OF LOCAL COUNSEL OPINION
EXHIBIT M - FORM OF PLEDGE ESCROW AGREEMENT
EXHIBIT N - FORM OF SECURITY DOCUMENTS ESCROW AGREEMENT
SCHEDULES
Schedule 1 - LENDERS' COMMITMENTS
Schedule 2 - LEASES
Schedule 3 - TITLE REPORTS
Schedule 4 - ENVIRONMENTAL REPORTS
Schedule 5 - PERMITTED EXCEPTIONS
Schedule 6 - EXCLUDED GCI OR AMS CREDIT SUPPORT AGREEMENTS
iii
<PAGE>
HEALTH AND REHABILITATION PROPERTIES TRUST
REVOLVING LOAN AGREEMENT
DATED AS OF FEBRUARY 24, 1994
This REVOLVING LOAN AGREEMENT is dated as of February 24,
1994, among HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate
investment trust formed under the laws of the State of Maryland
("Borrower"), the several lenders parties to this Agreement (each,
together with any additional lender or lenders pursuant to Section
2.1(b), a "Lender" and, collectively, the "Lenders"), KLEINWORT BENSON
LIMITED, a bank organized under the laws of England, as agent for itself
and the other Lenders (in such capacity, together with any successor in
such capacity in accordance with the terms hereof, "Agent"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States of America, as administrative agent (in such capacity,
together with any successor in such capacity in accordance with the
terms hereof, "Administrative Agent").
WHEREAS, Borrower desires that Lenders extend revolving loans
to Borrower for the acquisition of certain real property, for the
funding or acquisition of certain mortgage loans, for the repayment of
certain outstanding indebtedness of Borrower and for general corporate
purposes of Borrower; and
WHEREAS, Lenders desire to extend such revolving loans to
Borrower.
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement:
"Acute Care Asset" means, in respect of an Eligible Property
or Eligible Mortgage, that more than 50% of the licensed beds of the
Eligible Property or, in the case of an Eligible Mortgage, of the
Mortgaged Property covered thereby, are designated for acute care.
"Advisor" means HRPT Advisors or such other Person as shall
act as an advisor to Borrower, whether pursuant to the Advisory
Agreement, or an agreement analogous to the Advisory Agreement, with the
prior written consent of Agent.
"Advisory Agreement" means the Advisory Agreement, dated
December 23, 1986, between Borrower and HRPT Advisors, as amended by an
Amendment Agreement, dated August 26, 1987, between Borrower and HRPT
Advisors and as amended by a Second Amendment Agreement, dated December
6, 1993, between Borrower and HRPT Advisors, and as amended,
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<PAGE>
supplemented or modified from time to time in a manner not inconsistent
with the terms hereof or of the Subordination Agreement.
"Affiliate" means, with respect to a particular Person,
(a) any Person which, directly or indirectly, is in Control of, is
Controlled by, or is under common Control with such particular Person,
or (b) any Person who is a director or officer or trustee (i) of such
particular Person, (ii) of any Subsidiary of such particular Person or
(iii) of any Person described in clause (a) above.
"Agreement" means this Revolving Loan Agreement, as amended,
supplemented or modified from time to time in accordance herewith.
"Allowed Value" means, as of any date of determination,
(i) with respect to each Eligible Property, the lesser of (a) the
acquisition cost of Borrower in respect of such Eligible Property, (b)
the Appraised Value of such Eligible Property as set forth in the then
most recent Appraisal with respect to such Property less the value
attributable to any capital improvements made by the Operator of such
Eligible Property financed by such Operator, (c) the minimum purchase
price (howsoever denominated) that would be payable to Borrower by the
Operator of such Eligible Property or any other Person if it purchased
such Eligible Property on the date of determination pursuant to the
exercise of any right it may have (whether then or in the future
exercisable) to purchase such Eligible Property (assuming in the case of
any such right only exercisable in the future that such right is
exercisable on the date of determination), and (d) after a Document
Release Event, the value placed on such Eligible Property pursuant to
the FIRREA Appraisal obtained for such Eligible Property pursuant to
Section 5.9(b), and (ii) with respect to each Eligible Mortgage, the
lesser of (a) the outstanding principal amount due to Borrower from the
relevant Mortgagor in respect of such Eligible Mortgage, (b) the
Appraised Value of the Mortgaged Property which is covered by the
relevant Eligible Mortgage as set forth in the most recent Appraisal
with respect to such Mortgaged Property and (c) after a Document Release
Event, the value placed on such Mortgaged Property pursuant to the
FIRREA Appraisal obtained for such Mortgaged Property pursuant to
Section 5.9(b); provided that for purposes of determining the Borrowing
Base the Allowed Value of a Property which is not an Eligible Property
or of a Mortgage Interest which is not an Eligible Mortgage shall be
zero.
"Alternate Rate", in respect of any Loan, means the rate or
rates of interest agreed pursuant to Section 2.13 or 2.14, as the case
may be, between Borrower and Lenders to be applicable to such Loan;
provided that the Alternate Rate shall be equal to the Base Rate in the
absence of such agreement under the circumstances specified in Section
2.13 or 2.14, as the case may be.
"Alternate Rate Loans" means the portion of the Loans the
interest on which is computed by reference to the Alternate Rate.
"AMS" means AMS Properties, Inc., a Delaware corporation and a
wholly owned subsidiary of Grancare.
2
<PAGE>
"Applicable Margin" means, in the case of a Eurodollar Loan or
an Alternate Rate Loan, a margin of one and one-half percentage points
(1-1/2%) per annum and, in the case of a Base Rate Loan, a margin of
one-half of one percentage point (1/2%) per annum.
"Appraisal" means an appraisal using methodologies acceptable
to Agent and Administrative Agent at the time such appraisal is or was
made and performed by a Recognized Appraiser.
"Appraised Value" of any Facility shall mean (a) in the case
of any Fee Interest, the lesser of (i) the value placed upon such
Facility pursuant to the most recent Appraisal thereof based on a
valuation of the Fee Interest subject to the Lease(s) in respect of such
Fee Interest and (ii) the value placed upon such Facility pursuant to
the most recent Appraisal thereof based on a valuation of the Fee
Interest free and clear of all Leases and determined by discounting to
present value the Facility's future projected net cash flow, provided
that in the case where the most recent Appraisal only values the Fee
Interest under either subclause (i) or subclause (ii) of this clause (a)
but not both, the Appraised Value shall mean the value so placed on the
Fee Interest under either subclause (i) or subclause (ii) of this clause
(a), whichever is applicable; (b) in the case of a Leasehold Interest,
the lesser of (i) the value placed upon such Facility pursuant to the
most recent Appraisal thereof based on a valuation of the Leasehold
Interest subject to the Lease(s) in respect of such Leasehold Interest
and (ii) the value placed upon such Facility pursuant to the most recent
Appraisal thereof based on a valuation of the Leasehold Interest free
and clear of all Leases and determined by discounting to present value
the Facility's future projected net cash flow, provided that in the case
where the most recent Appraisal only values the Leasehold Interest under
either subclause (i) or subclause (ii) of this clause (b) but not both,
the Appraised Value shall mean the value so placed on the Leasehold
Interest under either subclause (i) or subclause (ii) of this clause
(b), whichever is applicable; and (c) in the case of a Mortgage
Interest, the value placed upon the Mortgaged Property covered by such
Mortgage Interest pursuant to the most recent Appraisal thereof based on
a valuation of such Mortgaged Property free and clear of such Mortgage
Interest and determined by discounting to present value the future
projected net cash flow of such Mortgaged Property.
"Assignments of Leases" means each of the Collateral
Assignments of Leases and Rents and Credit Support Agreements relating
thereto from time to time between Administrative Agent and Borrower,
each substantially in the form attached as Exhibit B, or in such other
form or forms as Agent may in its sole discretion reasonably request or
approve, as such Collateral Assignments of Leases and Rents and Credit
Support Agreements relating thereto may be amended, supplemented or
modified from time to time.
"Assignments of Mortgages" means each of the Collateral
Assignments of Mortgages from time to time between Administrative Agent
and Borrower, each substantially in the form attached as Exhibit B to
the Collateral Assignment, or in such other form or forms as Agent may
in its sole discretion reasonably request or approve, as such Collateral
3
<PAGE>
Assignments of Mortgages may be amended, supplemented or modified from
time to time.
"Barclays Mortgage" has the meaning set forth in Section
3.9(a).
"Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall at all
times be equal to the greater of:
(i) the prime rate of interest announced by Administrative
Agent from time to time, changing when and as said
prime rate changes; and
(ii) the sum of one-half of one percent (0.5%) and the
Federal Funds Rate in effect from time to time,
changing when and as such Federal Funds Rate changes.
"Base Rate Loans" means the portion of the Loans the interest
on which is computed by reference to the Base Rate.
"Borrower" has the meaning set forth in the first paragraph of
this Agreement.
"Borrowing Base" means, as of any date of determination, the
aggregate of (i) the Allowed Value of each Eligible Mortgage and
(ii) the Allowed Value of each Eligible Property.
"Borrowing Base Certificate" means a certificate substantially
in the form of Exhibit K.
"Borrowing Date" means the First Borrowing Date or a
Subsequent Borrowing Date, as the context requires.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City or London, England
are authorized or required by law to remain closed or on which banks are
not open for dealings in U.S. Dollar deposits in the London interbank
market.
"Capitalized Lease Obligation" means, as to any Person, any
obligation of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real or personal
property which obligation is required to be classified or accounted for
as a capital lease obligation on a balance sheet of such Person prepared
in accordance with GAAP and, for purposes of this Agreement, the amount
of such obligation at any date shall be the outstanding amount thereof
at such date, determined in accordance with GAAP.
"Cash Equivalent" means (i) commercial paper rated P-1 or
better by Moody's Investors Service, Inc. or A-1 or better by Standard &
Poor's Corporation or similarly rated by any successor to either of such
rating services, (ii) obligations of the United States government or any
agency thereof which are backed by the full faith and credit of the
4
<PAGE>
United States, or (iii) deposits, including certificates of deposit, in
any commercial bank or trust company (x) which is registered to do
business in any state of the United States, (y) which has capital and
surplus in excess of $100,000,000 and (z) whose short-term debt is rated
A-1 or better by Standard & Poor's Corporation or P-1 or better by
Moody's Investor's Service, Inc. or is similarly rated by any successor
thereof, provided that each such item of commercial paper, each such
obligation, and each such time deposit has a maturity date not later
than one year after the date of purchase thereof.
"Cash Flow" means, for any period and any Person in respect of
one or more Properties and/or Mortgaged Properties as to which such
Person is the Operator or Mortgagor thereof, the sum (without
duplication of counting) of (i) Income Before Extraordinary Items,
(ii) Interest Charges payable to Borrower, in the case of a Mortgaged
Property, (iii) depreciation expenses, (iv) amortization expenses,
(v) other non-cash items reducing Income before Extraordinary Items,
(vi) all payments required to be made to Borrower under a Lease,
including without limitation fixed rent, participation rent and
additional rent in respect of (a) operating expenses, (b) taxes based on
the ownership of real property, (c) insurance premiums and/or (d) any
other costs or expenses of the relevant lessor or sublessor and (vii) to
the extent otherwise included in the calculation of Income Before
Extraordinary Items, any Restricted Payment, less non-cash items
increasing Income Before Extraordinary Items, in each case of such
Person for such period attributable to such Properties and/or Mortgaged
Properties.
"Cash Flow Event" means in respect of a Property or
Mortgaged Property, that the Cash Flow of the Operator or Mortgagor
thereof (as applicable) over its past four financial quarters,
attributable to that Property or Mortgaged Property is less than its
Fixed Charges over the same period for such Property or Mortgaged
Property; provided that a Cash Flow Event shall not be deemed to occur
in respect of a Property or a Mortgaged Property that is part of a group
of Cross Guarantied Assets if the Cash Flow of the Operators and
Mortgagors determined on an aggregate basis over their respective past
four financial quarters, attributable to the relevant group of Cross
Guarantied Assets, is greater than or equal to their Fixed Charges
determined on an aggregate basis over the same period in respect of such
group of Cross Guarantied Assets.
"Closing Date" means the date when the conditions precedent
set forth in Section 4 are first satisfied, or are waived pursuant to
Section 9.6.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means any real or personal property or interest
or right subject to the mortgage or the lien and security interest of
any of the Security Documents, in each case whether or not any such
mortgage, lien or other security interest is perfected pursuant to
applicable law.
5
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"Collateral Assignment" means the Collateral Assignment of
Mortgage Loan Documents, Pledge and Security Agreement between Borrower
and Administrative Agent, substantially in the form attached as
Exhibit D, or in such other form as Agent may in its sole discretion
reasonably request or approve, as such Collateral Assignment of Mortgage
Documents, Pledge and Security Agreement may be amended, supplemented or
modified from time to time.
"Commission" means the United States Securities and Exchange
Commission or any successor to the responsibilities of such commission.
"Commitment" has the meaning set forth in Section 2.1(b).
"Commitment Period" means the period from and including the
date hereof to and including the Final Borrowing Date or such earlier
date as the Commitments shall terminate as provided herein.
"Common Shares" means Borrower's common shares of beneficial
interest, $0.01 par value.
"Contingent Obligation" means, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (a) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the payment of, or
the ability of the primary obligor to make payment of, such primary
obligation or (d) otherwise to assure or hold harmless the owner of such
primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Contractual Obligation" means, as to any Person, the
Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any provision of any security
issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is
bound.
"Control" (including with correlative meanings the terms
"Controlling", "Controlled by" and "under common Control with"), as
6
<PAGE>
applied to any Person, means the possession of the power, direct or
indirect, (i) to vote 5% or more of the securities having ordinary
voting power for the election of directors or trustees of such Person,
or (ii) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Credit Support Agreements" means each of the Lease
Guarantees, Mortgage Guarantees, Pledges and Sublease Agreements, and
any other agreements or instruments providing assurances in any form, in
each case in respect of any Person's obligations under a Lease or
Mortgage Interest Agreement, excluding the Credit Support Agreements set
forth in Schedule 6.
"Credit Support Obligors" means the obligors in respect of the
Credit Support Agreements, and each of them.
"Cross Guarantied Assets" means a group of Properties and/or
Mortgage Interests as to which the various Operators and/or Mortgagors
have guarantied each other's obligations to Borrower and have agreed to
cross-default such obligations and/or cross-collateralize those
obligations to the extent of any security or credit support that has
been provided for such obligations or a group of Properties and/or
Mortgage Interests operated by a single Operator or Mortgagor as to
which such Operator or Mortgagor has agreed to cross-default all of its
obligations to Borrower and to cross-collateralize those obligations to
the extent of any security or credit support that has been provided for
such obligations.
"CSC" means Connecticut Subacute Corporation, a Delaware
corporation.
"Declaration of Trust" means the Declaration of Trust
establishing Borrower, dated October 7, 1986, as amended and restated on
December 23, 1986, as further amended on September 27, 1987 pursuant to
an Amendment of Declaration of Trust dated August 26, 1987, as further
amended on July 23, 1992 by an Amendment to Declaration of Trust dated
July 1, 1993 and as further amended on August 4, 1993 by an Amendment to
Deed of Trust dated July 30, 1993, as such Declaration of Trust may be
further amended, supplemented or modified from time to time.
"Default" means any of the events specified in Section 7.1,
whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Document Release Event" means the earlier to occur of (i) any
event as a result of which the ratio of (a) the aggregate of all Secured
Debt outstanding, or which could be incurred (with or without any
requirement for the satisfaction of one or more conditions precedent)
under agreements in effect as at any date of determination, to (b)
Tangible Net Worth of Borrower, would exceed 1:3; (ii) any event as a
result of which the aggregate of all Secured Debt outstanding, or which
could be incurred (with or without any requirement for the satisfaction
of one or more conditions precedent) under agreements in effect as at
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any date of determination, exceeds $100,000,000; or (iii) a Perfection
Event.
"DLJ" means DLJ Mortgage Capital, Inc.
"EBI" means, with respect to Borrower, for any period of time,
without duplication of counting, the sum of (i) the net income from
operations of Borrower and its Subsidiaries, if any, on a consolidated
basis (determined in accordance with GAAP for such period), plus
(ii) any losses for such period from the sale of assets (on a tax
effected basis) outside the ordinary course of business, minus (iii) any
gains for such period from the sale of assets (on a tax effected basis)
outside the ordinary course of business, minus (iv) any extraordinary
gains from such period, plus (v) to the extent deducted from gross
income to calculate net income from operations, Interest Charges of
Borrower and its Subsidiaries, if any, on a consolidated basis for such
period.
"ECA" means ECA Holdings, Inc., a Delaware corporation and a
wholly owned subsidiary of Community Care of America, Inc., a Delaware
corporation.
"ECA Nebraska" means Community Care of Nebraska, Inc., a
Delaware corporation and a wholly owned subsidiary of ECA Holdings,
Inc., a Delaware corporation.
"ECA Properties" means ECA Properties, Inc., a Delaware
corporation and a wholly owned subsidiary of Community Care of America,
Inc., a Delaware corporation.
"Eligible Mortgage" has the meaning set forth in Section 2.16.
"Eligible Property" has the meaning set forth in Section 2.16.
"Environmental Laws" means all statutes, ordinances, orders,
rules and regulations relating to environmental matters, including,
without limitation, those relating to fines, orders, injunctions,
penalties, damages, contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release of Hazardous
Materials and to the generation, use, storage, transportation, or
disposal of Hazardous Materials, in any manner applicable to Borrower,
any Mortgagor or any of their respective Subsidiaries or any of their
respective properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C.
Sec. 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C.
Sec. 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Sec. 6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C. Sec. 1251 et seq.), the Clean Air Act (42 U.S.C. Sec. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. Sec. 2601 et seq.),
the Occupational Safety and Health Act (29 U.S.C. Sec. 651 et seq.) and
the Emergency Planning and Community Right-to-Know Act (42 U.S.C.
Sec. 11001 et seq.), each as amended or supplemented, and any analogous
future or present local, municipal, state and federal statutes and
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regulations promulgated pursuant thereto, each as in effect as of the
date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means (i) any corporation which is an entity
under common control with Borrower within the meaning of Section 4001 of
ERISA or a member of a controlled group of corporations within the
meaning of Section 414(b) of the Code of which Borrower is a member;
(ii) any trade or business (whether or not incorporated) which is a
member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Code of which Borrower is a member;
and (iii) any member of an affiliated service group within the meaning
of Section 414(m) or (o) of the Code of which Borrower, any corporation
described in clause (i) above or any trade or business described in
clause (ii) above is a member.
"Eurodollar Loans" means the portion of the Loans the interest
on which is computed by reference to the LIBO Rate.
"Event of Default" means any of the events specified in
Section 7.1, provided that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been satisfied.
"Excluded Taxes" means taxes upon any Lender's overall net
income imposed by the United States of America or any political
subdivision or taxing authority thereof or therein or by any
jurisdiction in which the Lending Office of any Lender is located or in
which any Lender is organized or has its principal or registered office
except taxes, duties or charges imposed pursuant to Section 1, 2 and/or
39 of the Massachusetts General Laws, Chapter 63, as currently in effect
or as amended hereafter or any analogous provisions (or provisions
having an analogous effect) of the laws, rules or regulations (or
interpretations thereof) of Massachusetts or any other Governmental
Authority.
"Facility" means each operating facility, offering health care
or related services or rehabilitation services, or other income
producing facility (including, without limitation, the Fee Interests
and/or Leasehold Interests associated with such Facility) in which
Borrower has acquired or will acquire an interest as owner, lessee or
mortgagee, including without limitation each Property and Mortgaged
Property.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a day for
which such rate is published, for the next preceding day for which it is
published) by the Federal Reserve Bank of New York.
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"Fee Interests" means any land and any buildings, structures,
improvements and fixtures owned beneficially in fee simple by Borrower
and equipment located thereon or used in connection therewith and all
personalty (including, without limitation, franchises) related thereto
and all other real estate interests, owned beneficially by Borrower.
"First Borrowing Date" means the Business Day specified in a
notice pursuant to Section 2.3 as the date on which Borrower requests
the Lenders to make the first Loans hereunder.
"Final Borrowing Date" means the earlier of (i) the second
anniversary of the date of this Agreement and (ii) such date as the
Commitments shall terminate as provided herein.
"Financing Statements" means UCC-1 financing statements or
comparable instruments, as required in any jurisdiction, for filing at
the local and/or State level with respect to any personal property that
is a part of any Property, and in respect of each Mortgage Interest,
Lease, Credit Support Agreement and all other relevant items of
Collateral, each duly executed by Borrower and, if required in any
jurisdiction, Administrative Agent.
"FIRREA" means the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"FIRREA Appraisal" means an Appraisal complying with the
requirements of FIRREA.
"Fixed Charges" means, for any period and any Person in
respect of one or more Properties and/or Mortgaged Properties as to
which such Person is the Operator or Mortgagor thereof, the sum (without
duplication of counting) of (i) Interest Charges, (ii) all payments
required to be made as lessee or sublessee under the terms of any Lease
or other lease agreement, including without limitation fixed rent,
participation rent and additional rent in respect of (a) operating
expenses, (b) taxes based on the ownership of real property, (c)
insurance premiums and/or (d) any other costs or expenses of the
relevant lessor or sublessor, and (iii) scheduled payments of principal
of Indebtedness or payments of amounts equivalent to principal, in each
case of such Person, for such period and attributable to such Properties
and/or Mortgaged Properties.
"GAAP" means, subject to the provisions of Section 1.2,
generally accepted accounting principles set forth in the Opinions of
the Accounting Principles Board of the American Institute of Certified
Public Accountants and statements by the Financial Accounting Standards
Board or in such other statement by such other entity as may be approved
by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date in question; and the
requirement that such principles be applied on a consistent basis shall
mean that the accounting principles observed in a current period are
comparable in all material respects to those applied in a preceding
period.
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"GCI" means GCI Healthcare Centers, Inc., a Delaware
corporation and a wholly owned subsidiary of Grancare.
"General Corporate Loans" means Loans, the proceeds of which
are to be applied toward general corporate purposes of Borrower, as
designated by Borrower pursuant to a Notice of Borrowing or Notice of
Anticipated Borrowing.
"GranCare" means GranCare, Inc., a California corporation.
"Greenery" means Greenery Rehabilitation Group, Inc., a
Delaware corporation.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity
owned or Controlled (through stock or capital ownership or otherwise) by
any of the foregoing.
"Hazardous Material" means (i) any chemical, material,
substance or waste defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," or "toxic
substances" or any other formulations intended to define, list or
classify substances by reason of deleterious properties under any
applicable Environmental Laws, (ii) biomedical waste, (iii) any oil,
petroleum or petroleum derived substance, any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, any flammable substances or explosives, any
radioactive materials, any toxic wastes or substances or any other
materials or pollutants which (a) pose a hazard to any property of
Borrower, any Mortgagor or any of their respective Subsidiaries or to
Persons on or about such property or (b) cause such property to be in
violation of any Environmental Laws, (iv) asbestos in any form which is
or could become friable, urea formaldehyde foam insulation, electrical
equipment which contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of fifty parts per million, and
(v) any other chemical, material, substance or waste, exposure to which
is prohibited, limited or regulated by any Governmental Authority or may
or could pose a hazard to the health and safety of the owners, occupants
or any Persons surrounding the Facilities.
"Horizon" means Horizon Healthcare Corporation, a Delaware
corporation.
"HRPT Advisors" means HRPT Advisors, Inc., a Delaware
corporation.
"Income Before Extraordinary Items" means, for any period and
any Person in respect of one or more Properties and/or Mortgaged
Properties as to which such Person is the Operator or Mortgagor thereof,
the net income (or loss) of such Person for such period attributable to
such Properties and/or Mortgaged Properties, excluding any extraordinary
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<PAGE>
items (net of taxes) and including amounts paid or provided for income
taxes or deferred income taxes by or on behalf of such Person
attributable to such Properties and/or Mortgaged Properties, all as
determined in conformity with GAAP.
"Indebtedness" means, with respect to any Person, and without
duplication, (i) all indebtedness, obligations and other liabilities
(contingent or otherwise) of such Person for borrowed money or other
extensions of credit or evidenced by bonds, debentures, notes or similar
instruments (whether or not the recourse of the lender is to the whole
of the assets of such Person or to only a portion thereof), (ii) all
reimbursement obligations and other liabilities (contingent or
otherwise) of such Person with respect to letters of credit or bankers'
acceptances issued for the account of such Person or with respect to
interest rate protection agreements or securities repurchase agreements
or currency exchange agreements or similar or analogous agreements,
(iii) all obligations and other liabilities (contingent or otherwise) of
such Person with respect to any conditional sale, installment sale or
other title retention agreement, purchase money mortgage or security
interest, or otherwise to pay the deferred purchase price of property or
services (except trade accounts payable and accrued expenses arising in
the ordinary course of business) or in respect of any sale and leaseback
arrangement, (iv) all Capitalized Lease Obligations of such Person,
(v) all Contingent Obligations of such Person, (vi) all surety and other
bonds and deposits, and all obligations and other liabilities secured by
a Lien or other encumbrance on any asset of such Person (even though
such Person has not assumed or otherwise become liable for the payment
thereof), and (vii) all obligations to purchase, redeem or acquire any
capital stock of such Person or its Subsidiaries that, by its terms or
by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of any event or the passage of
time would be, required to be redeemed or repurchased by such Person or
its Subsidiaries, including at the option of the holder, in whole or in
part, or has, or upon the happening of an event or passage of time would
have, a redemption or similar payment due, on or prior to the fifth
anniversary of the date hereof or, if later, the date which is two years
after the due date for the final repayment of the Loans as specified in
any amendment of this Agreement.
"Independent Trustees" has the meaning set forth in the
Declaration of Trust.
"Ineligibility Event" means, with respect to any Person, that
(a) such Person shall have defaulted (i) in any payment of principal of
or interest on any Indebtedness in respect of money borrowed or
Capitalized Lease Obligations or incurred for the deferred purchase
price of property or services or evidenced by a note, debenture or other
similar written obligation to pay money, or in the payment of any
Contingent Obligation, or (ii) in the observance or performance of any
other agreement or condition relating to any such Indebtedness or
Contingent Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or (b) any other event shall
have occurred with respect to such Person, the effect of which default
or other event described in clause (a) or (b) above is to cause, or to
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<PAGE>
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Contingent Obligation to
become payable and such Indebtedness or Contingent Obligation shall
involve a principal amount of $1,000,000 or more; provided that any
default or event of the type described in clause (a) or (b) above by or
with respect to a Credit Support Obligor which relates only to
Indebtedness of that Credit Support Obligor which is Specified
Subordinated Indebtedness shall not constitute an Ineligibility Event.
"Insolvency Event", with respect to any Person, means that
(i) such Person shall have suspended or discontinued its business or
commenced any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, 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 a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its
assets, or such Person shall have made a general assignment for the
benefit of its creditors; or (ii) there shall have been commenced
against such Person any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall have been commenced against such Person 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, which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or
(iv) such Person shall have taken any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii) or (iii) above; or (v) such Person
shall generally not be paying, or shall have been unable to pay, or
shall have admitted in writing its inability to pay, its debts as they
become due.
"Interest Charges" of a Person for any period means the sum of
(i) the aggregate interest accrued and payable in cash, securities or
otherwise on all Indebtedness of such Person and its Subsidiaries, if
any, on a consolidated basis for such period, plus (ii) the aggregate
amount of debt discount or other amounts analogous to interest accruing
during or attributable to such period, whether or not payable during
such period, including without limitation all commissions, discounts and
other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under (a)(i) interest rate
swap agreements, interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person and/or its
Subsidiaries against fluctuations in interest rates; and(b) foreign
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exchange contracts and other agreements or arrangements designed to
protect such Person and/or its Subsidiaries against fluctuations in
currency values, all amounts calculated above to be determined in
conformity with GAAP.
"Interest Payment Date" means, subject to Section 2.10 hereof,
(i) in the case of a Eurodollar Loan, the last day of each Interest
Period (or if any such day is not a Business Day, the next succeeding
Business Day), provided that in the case of each Interest Period of more
than three months duration, "Interest Payment Date" shall also include
each date that is three months, or an integral multiple thereof, after
commencement of such Interest Period; and (ii) in the case of an
Alternate Rate Loan or Base Rate Loan, the last Business Day of each
calendar month and the date such Loan (or any portion thereof) is
converted in accordance with the terms hereof into a Base Rate Loan or
Eurodollar Loan, in the case of an Alternate Rate Loan, or an Alternate
Rate Loan or Eurodollar Loan, in the case of a Base Rate Loan.
"Interest Period" means with respect to each Eurodollar Loan,
and subject to Section 2.10 hereof, a one, two, three or six month
period (or such longer period as shall be agreed by all the Lenders) as
selected at the option of Borrower pursuant to a Notice of Borrowing or
Notice of Continuation; provided, however, that:
(i) no Interest Period may be selected which expires later
than the Termination Date;
(ii) any Interest Period which begins on the last Business Day
of a calendar month (or on a day with respect to which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall, subject to the foregoing proviso, end
on the last Business Day of a calendar month;
(iii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Loan continued as such pursuant to a
Notice of Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period
expires;
(iv) there shall be no more than eight Interest Periods
outstanding at any one time; and
(v) in the event Borrower fails to specify an Interest Period
for any Loan in the applicable Notice of Borrowing or Notice of
Continuation, Borrower shall be deemed to have selected an Interest
Period of one month.
"Interest Rate Determination Date" means each date for
calculating the LIBO Rate for purposes of determining the interest rate
in respect of an Interest Period. The Interest Rate Determination Date
shall be the second Business Day prior to the first day of the related
Interest Period for a Eurodollar Loan.
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"Kleinwort Benson" means Kleinwort Benson Limited, a bank
organized and existing under the laws of England.
"Lease Guarantees" means each guarantee, letter of credit or
other similar undertaking issued by any Person in respect of any of the
obligations of an Operator under a Lease.
"Lease Guarantors" means the obligors in respect of the Lease
Guarantees, and each of them.
"Leasehold Interests" means any leasehold estate in any land
and/or any buildings, structures, improvements and fixtures owned
beneficially by Borrower and all equipment located thereon or used in
connection therewith and all personalty (including, without limitation,
franchises) related thereto, owned beneficially by Borrower.
"Leases" means the leases and subleases described in
Schedule 2, as amended, and any additional leases or subleases relating
to the Properties in respect of which Borrower is the lessor, as may be
executed from time to time.
"Lender" has the meaning set forth in the first paragraph of
this Agreement.
"Lender's Title Policy" means, in respect of each Mortgage, an
ALTA Standard Lender's Policy or Policies of title insurance
satisfactory to counsel for Agent, together with evidence that all
premiums thereon have been paid in full, (x) insuring each Mortgage to
be a first Lien on the Property covered by such Mortgage, subject only
to Permitted Exceptions and such other exceptions and conditions to
title as Agent shall have approved in writing, and (y) containing such
endorsements and affirmative coverage as Agent may reasonably require.
"Lending Office" means the branch or Affiliate office of each
Lender designated as the Lending Office of such Lender appearing beneath
such Lender's signature on the signature pages hereof and each other
branch or Affiliate office as such Lender may designate as its Lending
Office from time to time by notice to Agent and Borrower.
"LIBO Rate" means the average, rounded up to the nearest one-
sixteenth of one percent (1/16%), of the offered rates, if any, quoted
by the Reference Banks to Administrative Agent in the London interbank
market for U.S. Dollar deposits of amounts comparable to the principal
amount of the Loans for which the LIBO Rate is being determined with
maturities comparable to the Interest Period for which such LIBO Rate
will apply as of approximately 11:00 A.M. (London time) on the Interest
Rate Determination Date for such Interest Period.
"Lien" means, as to any Person, any mortgage, lien (statutory
or otherwise), pledge, adverse claim, charge, security interest,
assignment, deposit agreement or other encumbrance in or on, or any
interest or title of any vendor, lessor, lender or other secured party
to or of such Person under any conditional sale or other title retention
agreement or Capitalized Lease Obligation with respect to any property
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or asset of such Person, or the signing or filing of a financing
statement which names such Person as debtor, or the signing of any
security agreement authorizing any other party as the secured party
thereunder to file any financing statement.
"Loan Agents" has the meaning set forth in Section 8.1(a).
"Loan Documents" means, collectively, this Agreement, the
Notes, the Security Documents and any other agreements, documents or
instruments delivered pursuant to or in connection with any of the
foregoing, as such agreements, documents or instruments may be amended,
modified or supplemented from time to time.
"Loans" means the revolving loans made or to be made to
Borrower by the Lenders hereunder.
"MAC" means, with respect to any Property or Mortgage
Interest, any material adverse effect on or change in (a) the business,
operations, assets, prospects or financial condition or other condition
of (i) such Property or (ii) such Mortgage Interest or (iii) any
Operator of such Property or (iv) any Mortgagor of such Mortgage
Interest or (v) any Credit Support Obligor of such Property or Mortgage
Interest, (b) Agent's, Administrative Agent's or any Lender's rights and
remedies under the Loan Documents, or (c) the ability of (i) any
Operator of such Property or (ii) any Mortgagor of such Mortgage
Interest or (iii) any Credit Support Obligor of such Property or
Mortgage Interest to perform its obligations under the Loan Documents or
under the Leases, the Mortgage Interest Agreements or the Credit Support
Agreements in respect of such Property or Mortgage Interest.
"Majority Lenders" means at any particular time, Lenders
having more than 66-2/3% of the Commitments, or if the Commitments have
been terminated at such time, Lenders having more than 66-2/3% of the
aggregate principal amount of the Loans then outstanding.
"Material Adverse Effect" means a material adverse effect on
or change in (a) the business, operations, assets, prospects or
financial condition or other condition of (i) Borrower or (ii) the
Advisor or (iii) the Properties and Mortgage Interests taken as a whole,
(b) Agent's, Administrative Agent's or any Lender's rights and remedies
under the Loan Documents, (c) the ability of (i) Borrower or (ii) the
Advisor to perform its obligations under the Loan Documents, the
Advisory Agreement, the Leases, the Mortgage Interest Agreements or the
Credit Support Agreements, or (d) the ability of the Operators,
Mortgagors and Credit Support Obligors (taken as a whole) to perform
their obligations under the Loan Documents, the Leases, the Mortgage
Interest Agreements and the Credit Support Agreements insofar as they
relate to Eligible Properties and Eligible Mortgages.
"Maximum Aggregate Availability" means as of any date of
determination the lesser of (i) the Commitments in effect on such date
and (ii) 40% of the Borrowing Base on such date.
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"Mortgages" means each of the Mortgage and Security Agreements
or Deed of Trust and Security Agreements or other similar documents as
applicable in the particular jurisdiction where the Property covered by
such instrument is located, from time to time made by Borrower in favor
of or for the benefit of Administrative Agent, substantially in the form
of Exhibits E-1 and E-2, respectively, or in such other form as Agent
may in its sole discretion approve, as such agreements may be amended,
modified or supplemented from time to time.
"Mortgage Guarantees" means each guarantee, letter of credit
or other similar undertaking issued by any Person in respect of any of
the obligations of a Mortgagor under a Mortgage Interest Agreement.
"Mortgage Guarantors" means the obligors in respect of the
Mortgage Guarantees, and each of them.
"Mortgage Interest" means any interest of Borrower as lender
and as mortgagee or beneficiary, as applicable, in respect of a loan
secured in whole or in part by a Lien on any land or any buildings,
structures, improvements and fixtures (including any leasehold estate
with respect thereto) except for those interests which are subject to a
Lien (other than a Lien under the Security Documents) permitted pursuant
to clause (ii) or (iii) of Section 6.8.
"Mortgage Interest Agreement" means any agreement, note,
mortgage, deed of trust and/or other document creating, evidencing or
securing a Mortgage Interest.
"Mortgaged Property" means any land and any building,
structure, improvements and fixtures (including any leasehold estate
with respect thereto) with respect to which Borrower has a Mortgage
Interest.
"Mortgagor" means, in the case of a Mortgage Interest, the
obligor or obligors in respect of such Mortgage Interest, and in the
case of a Facility which is subject to a Lien of one or more financial
institutions pursuant to clause (ii) or (iii) of Section 6.8, the
mortgagor of such Facility in favor of Borrower as lender and as
mortgagee or beneficiary, as applicable.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate
is making or accruing an obligation to make contributions, or has within
any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" means an employee benefit plan, other
than a Multiemployer Plan, subject to Title IV of ERISA to which
Borrower or any ERISA Affiliate, and at least one employer other than
Borrower or an ERISA Affiliate, is making or accruing an obligation to
make contributions or, in the event that any such plan has been
terminated, to which Borrower or any ERISA Affiliate made or accrued an
obligation to make contributions during any of the five plan years
preceding the date of termination of such plan.
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"Net Mortgage Proceeds" means (a) any amounts paid, other than
scheduled repayments, by a Mortgagor to Borrower under an agreement,
evidencing or securing any interest of Borrower as lender and as
mortgagee or beneficiary, as applicable, in respect of a loan secured in
whole or in part by a Lien on a Facility, in respect of principal
thereunder, plus (b) the gross proceeds received by or for the account
of Borrower of any sale or other disposition of any such agreement minus
(c) the reasonable out-of-pocket fees and expenses incurred by Borrower
in connection with such sale or other disposition.
"Net Property Proceeds" means (a) the gross proceeds received
by or for the account of Borrower of any sale, lease or other
disposition of any Fee Interest or Leasehold Interest or termination or
substitution of any lease or sublease with respect to any Fee Interest
or Leasehold Interest of Borrower, minus the reasonable out-of-pocket
fees and expenses incurred by Borrower in connection with such sale or
other disposition, (b) all insurance proceeds paid and received by or
for the account of Borrower on account of the loss of or damage of any
such Fee Interest or Leasehold Interest, to the extent such proceeds are
not applied to the replacement or restoration of such assets and (c) all
proceeds received by or for the account of Borrower, arising from the
taking by condemnation or eminent domain of any such Fee Interest or
Leasehold Interest, to the extent such proceeds are not applied to the
replacement or restoration of such assets.
"Net Securities Proceeds" with respect to any private or
public offering of securities or any borrowing from one or more
financial institutions means the gross proceeds thereof received by or
for the account of Borrower net of (a) underwriting discounts and
commissions and (b) reasonable out-of-pocket fees and expenses incurred
in connection with such offering or borrowing; provided that such
proceeds shall not include proceeds from borrowings from financial
institutions which are applied substantially contemporaneously with the
borrowing thereof to the acquisition of one or more Facilities but no
later than two Business Days after such borrowing.
"Non-Disturbance Agreements" means each of the Subordination,
Non-Disturbance and Attornment Agreements from time to time between
Administrative Agent and the Operators of the Properties, each
substantially in the form of Exhibit F, or in such other form or forms
as Agent and Administrative Agent may in their sole discretion
reasonably request or approve, as such Subordination, Non-Disturbance
and Attornment Agreements may be amended, modified or supplemented from
time to time.
"Notes" has the meaning set forth in Section 2.2.
"Notice of Anticipated Borrowing" has the meaning set forth in
Section 2.3(a).
"Notice of Borrowing" means a notice substantially in the form
of Exhibit I hereto delivered by Borrower to Administrative Agent (with
a copy to Agent to follow) pursuant to Section 2.3 with respect to a
proposed borrowing.
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"Notice of Continuation/Conversion" means a notice
substantially in the form of Exhibit J hereto delivered by Borrower to
Administrative Agent (with a copy to Agent to follow) pursuant to
Section 2.5 with respect to a continuation or conversion of one or more
Loans.
"Notice of Deficiency" means any notice, report, or
correspondence from any Governmental Authority relating to (a) the
compliance of any Property or Mortgaged Property and the operation
thereof with (i) Requirements of Law relating to the licensure of the
Property or Mortgaged Property as a nursing home or other health care
facility or (ii) conditions of participation in the Medicare program or
the Medicaid program under Title XVIII and Title XIX, respectively, of
the Social Security Act of 1965, and the regulations promulgated
thereunder, which notice, report or correspondence had, or is reasonably
likely to result in, a MAC or Material Adverse Effect or (b) any suspen-
sion, revocation, non-renewal or any other action, or the initiation of
proceedings therefor, which in any case has a MAC or Material Adverse
Effect and is adverse to any certificate, determination, license, permit
or other approval or authorization necessary to operate any Property or
Mortgaged Property as it is currently operated or as it is operated at
the time such Notice of Deficiency is given.
"Operators" in respect of a Facility, means the lessee or
sublessee (other than Borrower) thereof.
"Outstanding" means, when used with reference to the Notes as
of a particular time, all Notes theretofore issued as provided in this
Agreement, except (i) Notes theretofore reported as lost, stolen,
damaged or destroyed, or surrendered for transfer, exchange or
replacement, in respect of which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes theretofore duly
canceled by Borrower; and except that, for the purpose of determining
whether holders of the requisite principal amount of Notes have made or
concurred in any waiver, consent, approval, notice or other
communication or matter under this Agreement, Notes held or owned by
Borrower or any Affiliate of Borrower, shall not be deemed to be
outstanding.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, or any
successor to the responsibilities of such corporation.
"Perfection Event" has the meaning set forth in Section
5.15(b).
"Permitted Exceptions" means those exceptions to title set
forth on Schedule 5.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever
nature.
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"Plan" means an employee benefit plan, other than a
Multiemployer Plan, maintained for or covering any employees of Borrower
or any ERISA Affiliate and subject to Title IV of ERISA.
"Pledge Escrow Agent" means Sullivan & Worcester, a
Massachusetts general partnership, as Escrow Agent under the Pledge
Escrow Agreement, and any successor Pledge Escrow Agent thereunder.
"Pledge Escrow Agreement" means the Pledge Escrow Agreement
among Borrower, Administrative Agent and Pledge Escrow Agent
substantially in the form attached as Exhibit M, as amended,
supplemented or modified from time to time.
"Pledges" means any pledge or grant of a Lien to secure any of
the obligations of a Mortgagor under a Mortgage Interest Agreement, an
Operator under a Lease, a Mortgage Guarantor under a Mortgage Guarantee,
a Lease Guarantor under a Lease Guarantee or a Sublessee under a
Sublease Agreement, each as amended, supplemented or modified from time
to time.
"Pledgors" means the obligors in respect of the Pledges, and
each of them.
"Powers of Attorney" means the powers of attorney, each in
proper form for recording and to be effective for the purposes
contemplated thereby in each jurisdiction where any Property or
Mortgaged Property is located, and otherwise in form satisfactory to
Agent constituting and appointing Administrative Agent as the true and
lawful attorney in fact, irrevocably and coupled with an interest, of
Borrower granting Administrative Agent, inter alia, the right and power
to cause the Security Documents to be recorded and/or filed in the
appropriate places in each such jurisdiction and to make any
modifications to such Security Documents that Agent deems necessary or
proper in order to effect such recording and/or filing.
"Preferred Shares" means Borrower's preferred shares of
beneficial interest authorized under the Declaration of Trust.
"Prior Loan Agreement" means the Loan Agreement, dated as of
August 31, 1989, among Borrower, Barclays Bank PLC, New York Branch, as
agent, and the lenders party thereto, as such agreement may be amended,
supplemented or modified from time to time.
"Prior Term Loan Agreement" means the Senior Secured Term Loan
Agreement, dated as of June 19, 1990, among Borrower, National
Westminster Bank USA, as agent, and the lenders party thereto, as such
agreement may have been amended, supplemented or modified from time to
time prior to the date hereof.
"Process Agent" has the meaning set forth in Section 9.2.
"Property" or "Properties" means each of the Facilities in
which Borrower has a Fee Interest or Leasehold Interest except for those
Facilities in which Borrower has a Fee Interest or Leasehold Interest
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which is subject to a Lien (other than a Lien under the Security
Documents) permitted pursuant to clause (ii) or (iii) of Section 6.8.
"Pro Rata Share" means, with respect to each Lender as of the
date of determination, the percentage obtained by dividing (i) the
Commitment of that Lender as of such date by (ii) the Commitment of all
Lenders as of such date; provided that if the Commitments have been
terminated at such time, such Pro Rata Share shall be the percentage
obtained by dividing (i) the aggregate amount of the Loans outstanding
from that Lender as of such date by (ii) the aggregate amount of the
Loans outstanding from all Lenders as of such date.
"Psychiatric Care Asset" means, in respect of an Eligible
Property or Eligible Mortgage, that more than 50% of the licensed beds
of the Eligible Property or, in the case of an Eligible Mortgage, of the
Mortgaged Property covered thereby, are designated for psychiatric
treatment.
"Real Property" has the meaning set forth in Section 5.12.
"Real Property Permit" has the meaning set forth in Section
2.16(c)(v)(E).
"Recognized Appraiser" means a qualified and recognized
professional appraiser as may be selected or approved by Agent and
Administrative Agent with the consent of Borrower, which will not be
unreasonably withheld, having at least five years' prior experience in
performing real estate appraisals in the geographic area where the
property being appraised is located, having a recognized expertise in
appraising properties operated as health care facilities.
"Reference Banks" means Kleinwort Benson Limited and Wells
Fargo Bank, National Association.
"Rehabilitation Treatment Asset" means, in respect of an
Eligible Property or Eligible Mortgage, that more than 50% of the
licensed beds of the Eligible Property or, in the case of an Eligible
Mortgage, of the Mortgaged Property covered thereby, are designated for
rehabilitation treatment.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, leaching or migration of any Hazardous Materials into the
indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Materials), or into or out of any
Facility, including the movement of any Hazardous Material through the
air, soil, surface water, groundwater or property.
"Relevant Credit Support Agreement" means each Credit Support
Agreement in respect of obligations of a Relevant Operator or Relevant
Mortgagor under an Eligible Property or Eligible Mortgage.
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"Relevant Credit Support Obligor" means each Credit Support
Obligor in respect of obligations of a Relevant Operator or Relevant
Mortgagor under an Eligible Property or Eligible Mortgage.
"Relevant Mortgagor" means each Mortgagor in respect of an
Eligible Mortgage.
"Relevant Operator" means each Operator in respect of an
Eligible Property.
"Relevant Operator and Mortgagor" means each Relevant Operator
and each Relevant Mortgagor.
"Reportable Event" means a "reportable event" within the
meaning of Section 4043 of ERISA (other than a "reportable event" for
which the 30-day notice to PBGC requirement has been waived by
regulation of PBGC).
"Requirement of Law" means, as to any Person, any law, treaty,
rule or regulation, or judgment, order, directive or other determination
of any arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its properties
or to which such Person or any of its property is subject.
"Responsible Officer" means, with respect to any matter
(including financial matters), the president, chief executive officer,
chief financial officer, executive vice president, or, with respect to
financial matters only, treasurer of Borrower.
"Restricted Payment" means (a) every dividend or other
distribution of assets, properties, cash, rights, obligations or
securities paid, made, declared or authorized by Borrower or in respect
of any of its Common Shares, Preferred Shares or other equity
securities, or any class of its equity securities, or for the benefit of
holders of any thereof in their capacity as such and (b) every payment
by or for the account of Borrower or any of its Subsidiaries in
connection with the redemption, purchase, retirement, defeasance or
other acquisition of any Common Shares, Preferred Shares or other equity
securities of Borrower or options, warrants or other rights to acquire
any of Borrower's equity securities and (c) every payment (i) of
principal, interest, fees or other amounts in respect of any
Indebtedness of Borrower to any Affiliate of Borrower, (ii) in respect
of the redemption, purchase, retirement, defeasance, or other
acquisition from an Affiliate of Borrower of any Indebtedness of
Borrower, or (iii) of fees in respect of advisory services rendered to
Borrower by the Advisor and (d) every direct or indirect investment by
Borrower (by means of capital contribution, advance, loan or otherwise)
in an Affiliate or any Person which becomes an Affiliate after or as a
result of such investment, and (e) every payment by or for the account
of Borrower or any of its Subsidiaries in connection with the
redemption, purchase, retirement, defeasance or other acquisition for
value, directly or indirectly, prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of Indebtedness
which is subordinate in right of payment to the Loans or the Notes.
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"Secured Debt" means any Indebtedness of Borrower and any of
its Subsidiaries secured by one or more Liens on any interest of
Borrower or any of its Subsidiaries in any property or asset.
"Security Documents" means, collectively, the Mortgages, the
Assignments of Leases, the Assignments of Mortgages, the Collateral
Assignment, the Financing Statements, the Powers of Attorney, the Non-
Disturbance Agreements, and the Subordination Agreement, and any other
agreements, instruments or documents securing or purporting to secure
any obligations of Borrower hereunder from time to time, and any
agreements and any instruments or documents delivered pursuant to or in
connection with any of the foregoing, as such agreements, instruments or
documents may be amended, supplemented or modified from time to time.
"Security Documents Escrow Agent" means O'Melveny & Myers, a
California general partnership, as Escrow Agent under the Security
Documents Escrow Agreement, and any successor Security Documents Escrow
Agent thereunder.
"Security Documents Escrow Agreement" means the Security
Documents Escrow Agreement among Borrower, Administrative Agent and
Security Documents Escrow Agent substantially in the form attached as
Exhibit N, as amended, supplemented or modified from time to time.
"Solvent" means, with respect to any Person on a particular
date, that on such date (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person (whether or
not required to be reflected on a balance sheet prepared in accordance
with GAAP), (ii) the present fair salable value of the assets of such
Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute
and matured, (iii) such Person is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such
Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature, and (v) such Person is not engaged in business
or a transaction for which such Person's property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"Specified Subordinated Indebtedness" means Indebtedness of
any Person, the terms of which prohibit the holder or any representative
of the holder from exercising any legal remedies or other creditor's
rights (including without limitation the filing of a petition in respect
of such Person under the U.S. Bankruptcy Code, 11 U.S.C. 101 et seq.)
thereunder until all obligations (contingent or otherwise) of such
Person to Borrower under all Leases, Mortgage Interest Agreements and
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Credit Support Agreements to which that Person is a party have been
indefeasibly satisfied in full.
"Sublease Agreement" means any agreement pursuant to which a
Person subleases all, or a material portion, of a Property from an
Operator, as such agreement is amended, supplemented or modified from
time to time.
"Sublessees" means the sublessees in respect of the Sublease
Agreements, and each of them.
"Subordination Agreement" means the subordination agreement
among Administrative Agent, the Advisor and Borrower substantially in
the form of Exhibit G, as such agreement may be amended, supplemented or
modified from time to time.
"Subsequent Borrowing Date" means the Business Day specified
in a Notice of Borrowing after the First Borrowing Date as the date on
which Borrower requests the Lenders to make Loans hereunder.
"Subsidiary" means, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the happening of
a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by such
Person.
"Sun" means Sunrise Healthcare Corporation, a New Mexico
corporation.
"Survey" means, in respect of any Property or Mortgaged
Property, an as-built survey or other survey for such Property or
Mortgaged Property prepared by a licensed surveyor, in form and
substance satisfactory to Agent, which shall, in each case (other than a
survey of a Property or Mortgaged Property delivered on the First
Borrowing Date that is dated as of a date more recent than November 1,
1988 or a survey of a Property leased by ECA, ECA Nebraska or ECA
Holdings and acquired by Borrower prior to March 31, 1994), be certified
(with a certification in form and substance approved by Agent) to Agent
and Administrative Agent and be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping, and, without limiting the generality
of the foregoing, there shall be surveyed and shown on such survey the
following: (A) through the use of course bearings and distances, the
full legal descriptions of such Property or Mortgaged Property; (B) the
locations on such Property or Mortgaged Property of all the buildings,
structures and other improvements and all dimensions thereof, and the
established building setback lines; (C) the lines of streets abutting
the sites and width thereof; (D) all access and other easements and
appurtenant to such Property or Mortgaged Property or necessary or
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desirable to use such Property or Mortgaged Property; (E) all roadways,
paths, driveways, rights of way, deviations between survey lines and
title lines, easements, encroachments and overhanging projections and
similar encumbrances affecting such Property or Mortgaged Property,
whether recorded, apparent from a physical inspection of such Property
or Mortgaged Property or otherwise known to the surveyor; (F) any
encroachments on any adjoining property by the building structures and
improvements on such Property or Mortgaged Property; and (G) if such
Property or Mortgaged Property is described as being on a filed map, a
legend relating the survey to said map.
"Tangible Net Worth" of a Person means the excess of total
assets over total liabilities of such Person on a consolidated basis,
such total assets and total liabilities each to be determined in
accordance with GAAP, consistent with those applied in the preparation
of the financial statements of such Person referred to in Section 3.1;
excluding, however, from the determination of total assets (i) goodwill,
organizational expenses, capitalized software, research and development
expenses, trademarks, trade names, copyrights, patents, patent
applications, licenses and rights in any thereof, and other similar
intangibles, (ii) all prepaid expenses, deferred charges or unamortized
debt discount and expense, (iii) all reserves carried and not deducted
from assets, (iv) treasury stock and shares of beneficial interest and
capital stock, obligations or other securities of, or capital
contributions to, or investments in, any Subsidiary, (v) securities
which are not readily marketable, (vi) cash held in a sinking or other
analogous fund established for the purpose of redemption, purchase,
retirement, defeasance, acquisition or prepayment of Common Shares,
Preferred Shares or other equity securities, capital stock or
Indebtedness, (vii) any write-up in the book value of any asset
resulting from a revaluation thereof subsequent to December 31, 1987,
(viii) leasehold improvements not recoverable at the expiration of a
Lease (to the extent that the useful life of such improvements is
greater than the term of such Lease), and (ix) any items not included in
clauses (i) through (viii) above which are treated as intangibles in
conformity with GAAP.
"Termination Date" means January 2, 1997.
"Termination Event" means (i) a Reportable Event or an event
described in Section 4062(e) of ERISA, or (ii) the withdrawal of
Borrower or any ERISA Affiliate from a Multiple Employer Plan during a
plan year in which it was a "substantial employer", as such term is
defined in Section 4001(a)(2) of ERISA, or the incurrence of liability
by Borrower or any ERISA Affiliate under Section 4064 of ERISA upon the
termination of a Multiple Employer Plan, (iii) the filing of a notice of
intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA,
(v) the withdrawal of Borrower or any ERISA Affiliate from any
Multiemployer Plan, or (vi) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan.
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"Title Report" means (a) on the First Borrowing Date, in
respect of each Property or Mortgaged Property, either (x) a valid
owner's policy of title insurance dated no earlier than November 1, 1992
(in the case of a Property), or (in the case of a Mortgaged Property) a
valid lender's policy of title insurance dated no earlier than November
1, 1992, in either case, in form and substance satisfactory to Agent and
Administrative Agent naming Borrower as the insured thereunder, together
with evidence that all premiums thereon have been paid in full, or (y) a
title report and/or recorded document certificate from a title insurance
company or abstract company reasonably satisfactory to Agent and
Administrative Agent (each of the Title Reports for all Eligible
Properties and all Eligible Mortgages as of the First Borrowing Date is
included in Schedule 3), and (b) after the First Borrowing Date, in
respect of each Property acquired after the First Borrowing Date, an
ALTA Standard Owner's policy of title insurance dated as of such
Subsequent Borrowing Date, and, in respect of each Mortgaged Property
acquired after the First Borrowing Date, an ALTA Standard Lender's
policy of title insurance dated as of such Subsequent Borrowing Date, in
either case, in form and substance satisfactory to Agent and
Administrative Agent naming Borrower as the insured thereunder, together
with evidence that all premiums thereon have been paid in full; in the
case of either (a) or (b), all of which policies and/or reports shall
insure or report that Borrower has fee (or, in the case of a Leasehold
Interest, leasehold) title to the Property or a valid first mortgage on
the Mortgaged Property, described in such policy or report, subject only
to Permitted Exceptions and such other exceptions and conditions to
title as Agent and Administrative Agent shall have approved in writing
together with copies of all documents, recorded or unrecorded, referred
to, or listed as exceptions to title in, such policy or report, and/or
copies, certified by such parties as Agent and Administrative Agent may
deem appropriate, of all other documents affecting title to such
Property. If, on the First Borrowing Date, the Title Report in respect
of any Property consists of several title policies, title reports and/or
recorded document certificates, then the exceptions and conditions to
title shown in the Title Report in respect of such Property shall be
deemed to exclude any exception or condition to title shown in any such
title policy, title report or recorded document certificate that has
been omitted from any subsequently issued title policy, title report or
recorded document certificate (or deleted by endorsement thereto),
except that, in the case of a recorded document certificate only, if
such recorded document certificate specifically states that it only sets
forth exceptions or conditions to title arising after a certain date,
the omission of matters arising prior to such date shall not be deemed
to be an omission of such earlier arising matters for the purposes of
this sentence. In addition, in respect of any recorded document
certificate on or before the First Borrowing Date, only matters shown in
such recorded document certificate that arose in respect of or attached
to the Property in question after the date of the most recent previously
issued title policy or title report in respect of such Property shall be
deemed to be included in the Title Report in respect of such Property.
"Total Liabilities" of any Person means and includes, as of
any date as of which the amount thereof is to be determined, without
duplication (i) all items which in accordance with GAAP would be
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required to be included on the liabilities side of a consolidated
balance sheet of such Person at such date and (ii) to the extent not
otherwise included in (i) above, all Indebtedness of such Person as of
such date, determined on a consolidated basis.
"UCC Search" means, in respect of each Property or Mortgaged
Property, a search no more than one month old as at the date of
determination by a Person satisfactory to Agent, of the Uniform
Commercial Code filings which may have been filed in each location where
any Property or Mortgaged Property is located or where Borrower does
business or is domiciled.
"U.S. Dollars" or "$" shall mean lawful currency of the United
States of America.
1.2. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
meanings assigned to them herein when used in the Notes or any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein.
(b) As used herein and in the Notes and other Loan Documents,
and any certificate or other document made or delivered pursuant hereto
or thereto, accounting terms not defined in Section 1.1, and accounting
terms partly defined in Section 1.1 to the extent not defined, shall
have the respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
section, schedule and exhibit references are to this Agreement unless
otherwise specified and, where appropriate, the singular shall include
the plural.
SECTION 2. AMOUNT AND TERMS OF REVOLVING LOANS
2.1. Revolving Loans.
(a) Each Lender severally (and not jointly) agrees, subject
to the terms and conditions hereof, to make Loans to Borrower from time
to time during the period from the Closing Date to and including the
Final Borrowing Date, and to maintain its Loans outstanding to Borrower
on the Final Borrowing Date from such date until the Termination Date,
up to an aggregate amount at any one time not exceeding its Pro Rata
Share of the aggregate Commitments (as defined below) to be used for the
purposes identified in Section 2.11. Each Loan hereunder shall be made
by Lenders pro rata in accordance with their respective Commitments.
(b) Each Lender's commitment to make and maintain Loans to
Borrower pursuant to this Section 2.1 is herein called its "Commitment"
and such commitments of all Lenders in the aggregate are herein called
the "Commitments". The original amount of each Lender's Commitment is
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set forth opposite its name on Schedule 1 annexed hereto and the
aggregate original amount of the Commitments is $110,000,000; provided
that the amount of the Commitments shall be reduced from time to time by
the amount of any reductions thereto made pursuant to Section 2.7;
provided further that Lenders shall have no obligation to make or
maintain Loans hereunder to the extent any such Loan would (i) cause the
aggregate amount of the Loans then outstanding to exceed the Maximum
Aggregate Availability or (ii) cause the aggregate amount of the General
Corporate Loans then outstanding to exceed the lesser of $20,000,000 or
16% of the Maximum Aggregate Availability. The foregoing
notwithstanding, if prior to June 30, 1994 an additional lender
satisfactory to Borrower and Agent shall execute and deliver to Borrower
and Agent on behalf of the parties hereto counterparts substantially in
the form of this Agreement, with the amount of such additional lender's
Commitment hereunder typed immediately below its signature on such
counterpart, upon notification of such execution and delivery by Agent
to the other parties hereto, such additional lender shall become a
Lender and its Commitment shall be added to the aggregate Commitments
for all purposes hereunder; provided that no such additional lender
shall become a Lender without the consent of Borrower and all Lenders if
such additional lender's Commitment would make the aggregate Commitments
exceed $150,000,000. The other terms of this Agreement notwithstanding,
such additional lender shall, on the first day thereafter which is the
last day of an Interest Period, pay to Administrative Agent (i) its Pro
Rata Share of the Loans then outstanding (if any) for distribution to
the other Lenders that have funded such Loans, in accordance with their
respective Commitments, and each Lender's share of the outstanding Loans
shall be adjusted accordingly; and (ii) any other amounts due from it on
such date as a Lender hereunder.
(c) Each Lender's Commitment shall expire on the Termination
Date and all Loans and all other amounts owed hereunder with respect to
the Loans and the Commitments shall be paid in full no later than that
date.
(d) Subject to the other terms and conditions hereof,
Borrower may borrow under this Section 2.1, repay Loans in accordance
with Section 2.10 or prepay Loans in accordance with Section 2.8 and
reborrow under this Section 2.1.
2.2. Notes; Maturity Date. The Loans of each Lender pursuant
hereto shall be evidenced by, and be repayable with interest in
accordance with the terms of, a promissory note of Borrower
substantially in the form of Exhibit A, with appropriate insertions,
payable to the order of such Lender in the principal amount of the
Commitment of such Lender (together with any replacement, modification,
renewal or substitution thereof, individually a "Note" and collectively,
the "Notes"), which shall be dated the Closing Date and be duly
completed, executed and delivered by Borrower. The Loans of each Lender
pursuant hereto shall be made and maintained by such Lender's Lending
Office as designated by such Lender from time to time. All outstanding
Loans and each of the Notes shall mature and Borrower shall repay the
outstanding principal amount of such Loans and the Notes in full
together with all unpaid interest accrued thereon on the Termination
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Date (or earlier as hereinafter provided) (or if such day is not a
Business Day, the next preceding Business Day), and shall be subject to
payment and prepayment as provided in Section 2.8 hereof. Each Lender
is authorized to endorse at any time the date and amount of each Loan or
conversion or continuation thereof, the date and amount of each payment
of principal with respect to its Loans and whether its Loans are Base
Rate Loans, Eurodollar Loans or Alternate Rate Loans, on the schedule
annexed to and constituting a part of such Lender's Note, which
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed.
2.3. Procedure for Borrowing.
(a) Whenever Borrower desires to borrow under Section 2.1, it
shall deliver to Administrative Agent and Agent a notice substantially
in the form of Exhibit H (a "Notice of Anticipated Borrowing") with
respect to such proposed borrowing, specifying each of the following in
terms not inconsistent with those required for a Notice of Borrowing:
(i) the anticipated Borrowing Date;
(ii) the anticipated aggregate amount of the Loans to be
requested for such Borrowing Date; and
(iii) whether such Loans (or any portion thereof) are to be
General Corporate Loans and/or are to be used to repay the Prior
Loan Agreement and/or the DLJ Agreement as contemplated by Section
2.11 and the amount of each such portion;
(iv) with respect to the amount of such Loans which will not
be General Corporate Loans, the following:
(x) the name of the proposed Operators and/or Mortgagors
(as applicable) of the Facility or Facilities to which such
borrowing relates and any Credit Support Obligors in relation
thereto;
(y) the name and location of such Facility or
Facilities, the Appraised Value(s) thereof, and a description
of the interests of Borrower therein to be acquired with the
proceeds of such borrowing; and
(z) if the proceeds of such Loan will be used to acquire
an interest in any Facility which interest is required to be
an Eligible Property or Eligible Mortgage included in the
Borrowing Base in order to satisfy Section 4.1(x) after giving
effect to such Loan, any information (in sufficient copies for
each of Agent and Administrative Agent) with respect to such
Operator(s) and/or Mortgagor(s) and/or Credit Support Obligors
and such Facility or Facilities as Borrower may deem relevant
concerning such Operator(s) and/or Mortgagor(s) and such
Facility or Facilities, including, without limitation, the
financial statements of such Operator(s) or Mortgagor(s) as
described in Section 5.1 hereof and such other additional
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documents or information as are necessary or appropriate in
order for Agent to determine that the conditions set forth in
Sections 4.1 and 4.2, to the extent applicable to such
proposed borrowing, have been satisfied.
Each such Notice of Anticipated Borrowing shall be given to
Administrative Agent and Agent at least ten Business Days in advance of
the anticipated Borrowing Date and may be given verbally provided that
any verbal notice shall be promptly followed by written notice
substantially in the form of Exhibit H. Upon receipt of such written
notice from Borrower, Administrative Agent shall promptly notify each
Lender thereof.
(b) Agent shall review each Notice of Anticipated Borrowing
and any other documents which may have been enclosed therewith, and
Agent shall notify Borrower of any additional documents or information
it requires in order to determine that the conditions set forth in
Sections 4.1 and 4.2, to the extent applicable to such proposed
borrowing, have been satisfied. Upon receipt of all such documents and
information requested, Agent shall by written notice delivered within
ten Business Days, notify Borrower and Administrative Agent whether the
conditions set forth in Sections 4.1 and 4.2, to the extent applicable
to such proposed borrowing, have been satisfied.
(c) If a proposed borrowing has not been disapproved by
Agent, Borrower shall deliver a Notice of Borrowing not inconsistent
with the relevant Notice of Anticipated Borrowing to Administrative
Agent (with a copy to Agent) no later than 11:00 A.M. (New York time) at
least three Business Days in advance of the proposed Borrowing Date.
The Notice of Borrowing shall specify (i) the proposed Borrowing Date
(which shall be a Business Day), (ii) the amount of the Loans requested
(which amount shall be in a minimum aggregate amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount), (iii) whether
such Loans will be Base Rate Loans or Eurodollar Loans and, if
Eurodollar Loans are specified, the initial Interest Period requested
for such Eurodollar Loans, (iv) Borrower's account at Wells Fargo Bank,
National Association to which the net proceeds of the requested Loans
are to be credited, (v) whether the requested Loans (or any portion
thereof) are to be General Corporate Loans and, if only a portion
thereof are so designated, the amount of such portion, (vi) that the
representations and warranties contained in the Loan Documents are true,
correct and accurate in all material respects to the same extent as
though made on and as of the date of such Notice of Borrowing unless
stated in the relevant Loan Document to relate to a specific earlier
date, in which case such representations and warranties shall be true,
correct and complete in all material respects as of such earlier date,
(vii) that no event has occurred and is continuing or would result from
the proposed borrowing that would constitute a Default or Event of
Default, (viii) that the amount of the proposed borrowing will not cause
(A) the aggregate outstanding principal amount of the Loans to exceed
the Maximum Aggregate Availability currently in effect, or (B) the
aggregate amount of the General Corporate Loans then outstanding to
exceed the lesser of $20,000,000 or 16% of the Maximum Aggregate
Availability, and (ix) that the proceeds of the proposed borrowing
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(other than any proceeds in respect of General Corporate Loans) shall be
used to make payment on the proposed Borrowing Date for the purchase
price and costs of acquiring interests in one or more Facilities due and
payable on such Borrowing Date. In lieu of delivering the above-
described Notice of Borrowing, Borrower may give Administrative Agent
telephonic notice (which telephonic notice shall be followed immediately
with a notice by facsimile telecopy) by the time specified for a Notice
of Borrowing above; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent and Agent on or before the applicable Borrowing
Date; provided further that in the event of a discrepancy between a
Notice of Borrowing and such telephonic notice, the telephonic notice
shall govern. Except as otherwise provided in Sections 2.13 and 2.14, a
Notice of Borrowing (or telephonic notice in lieu thereof as provided
above) shall be irrevocable, and Borrower shall be bound to make the
borrowing specified in such Notice of Borrowing (or telephonic notice in
lieu thereof as provided above) in accordance therewith.
None of Agent, Administrative Agent or any Lender shall incur
any liability to any Person (including Borrower) in acting upon any
telephonic notice referred to above that Administrative Agent or Agent
believes in good faith to have been given by a duly authorized officer
or other Person authorized to borrow on behalf of Borrower or otherwise
acting in good faith under this Section 2.3, and upon funding of Loans
by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Borrower shall have effected the borrowing of such
Loans hereunder.
(d) All Loans under this Agreement shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata Shares
of the Commitments, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make Loans requested hereunder nor shall the Commitment of
any Lender to make Loans requested hereunder be increased or decreased
as a result of a default by any other Lender in that other Lender's
obligation to make Loans requested hereunder. Promptly after receipt by
Administrative Agent of a Notice of Borrowing pursuant to Section 2.3(c)
(or telephonic notice in lieu thereof followed immediately with a notice
by facsimile telecopy) and in any event not later than 2:00 p.m. (New
York time) at least three Business Days in advance of the proposed
Borrowing Date, Administrative Agent shall notify each Lender of the
relevant details of the proposed borrowing. Each Lender shall make the
amount of its Loan available to Administrative Agent, in immediately
available funds, at the account specified by Administrative Agent to the
Lenders, not later than 11:00 A.M. (New York time) on the Borrowing Date
specified in the applicable Notice of Borrowing. Upon satisfaction or
waiver of the applicable conditions precedent specified in Sections 4.1
and 4.2, Administrative Agent shall make the proceeds of such Loans
available to Borrower on such Borrowing Date by causing an amount of
immediately available funds equal to the proceeds of all such Loans
received by Administrative Agent from Lenders to be credited to the
account at Wells Fargo Bank, National Association specified by Borrower
in the Notice of Borrowing.
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Unless Administrative Agent shall have been notified by any
Lender prior to the Borrowing Date for any Loans that such Lender does
not intend to make available to Administrative Agent the amount of such
Lender's Loan requested on such Borrowing Date (and any such notice
shall be without prejudice to any rights of Borrower against such Lender
hereunder), Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Borrowing Date and
Administrative Agent may, in its sole discretion, but shall not be
obligated to, make available to Borrower a corresponding amount on such
Borrowing Date. If such corresponding amount is not in fact made
available to Administrative Agent by such Lender, Administrative Agent
shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from such
Borrowing Date until the date such amount is paid to Administrative
Agent, at the Base Rate. If such Lender does not pay such corresponding
amount forthwith upon Administrative Agent's demand therefor,
Administrative Agent shall promptly notify Borrower and Borrower shall
immediately pay such corresponding amount to Administrative Agent
together with interest thereon, for each day from such Borrowing Date
until the date such amount is paid to Administrative Agent, at the Base
Rate. Nothing in this Section 2.3 shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrower may have against any Lender as a result of any
default by such Lender hereunder.
2.4. Interest.
(a) Generally. Each Loan shall be a Eurodollar Loan or a
Base Rate Loan as selected by Borrower initially at the time a Notice of
Borrowing is given pursuant to Section 2.3(c) or as selected pursuant to
Section 2.5, except for any portion of a Eurodollar Loan which is
converted to an Alternate Rate Loan pursuant to Section 2.13 or 2.14.
Loans shall bear interest on the unpaid principal amount thereof from
the date made to maturity (whether by accelerations or otherwise), at
the interest rates specified as follows:
(i) in the case of a Eurodollar Loan, at an interest
rate per annum for and during each Interest Period equal to
the LIBO Rate for such Interest Period plus the Applicable
Margin;
(ii) in the case of the Base Rate Loan, at an interest
rate per annum equal to the Base Rate in effect from time to
time plus the Applicable Margin; and
(iii) in the case of an Alternate Rate Loan, at an
interest rate per annum equal to the Alternate Rate in effect
from time to time plus the Applicable Margin.
Borrower shall pay interest on the unpaid principal amount of the Loans
outstanding from time to time, in arrears, (i) on each Interest Payment
Date, (ii) on the Termination Date and (iii) in accordance with Section
2.4(b) (where applicable).
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(b) Default Interest. If Borrower shall default in the
payment of the principal of or interest on any portion of a Loan or any
other amount becoming due hereunder or under any of the Loan Documents,
Borrower shall on demand from time to time pay interest (to the extent
permitted by law in the case of interest on overdue interest) on such
defaulted amount accruing from and including the date of such default
(without reference to any period of grace) up to and including the date
of actual payment (after as well as before judgment) at a rate per annum
which is the sum of (i) two percent (2%) plus (ii) the greatest of the
LIBO Rate, the Alternate Rate or the Base Rate plus (iii) the Applicable
Margin. Interest under this Section 2.4(b) shall be payable upon
demand.
(c) Interest Determination. Upon determining the LIBO Rate
for each Interest Period, the Alternate Rate for any period or the Base
Rate in effect from time to time, Administrative Agent shall promptly
notify Borrower and Lenders thereof by telephone (confirmed promptly in
writing) or in writing. Such determination shall, in the absence of
manifest error, be conclusive and binding upon Borrower and the Lenders.
2.5. Duration of Interest Period; Notice of
Continuation/Conversion.
(a) Borrower may, pursuant to the applicable Notice of
Borrowing or Notice of Continuation/Conversion, as the case may be,
select an Interest Period to be applicable to each Eurodollar Loan.
(b) Subject to the provisions of Sections 2.13 and 2.14,
Borrower shall have the option (i) to convert at any time all or any
part of outstanding Base Rate Loans to Eurodollar Loans or (ii) upon the
expiration of any Interest Period applicable to Eurodollar Loans, to
continue all or any portion of such Loans as Eurodollar Loans or convert
all or any portion of such Loans to Base Rate Loans, as the case may be,
and the succeeding Interest Period(s) of such continued Loans shall
commence on the most recent Interest Payment Date therefor; provided,
however, that Loans may be continued as, or converted into, Eurodollar
Loans with a particular Interest Period only in an aggregate amount
equal to $1,000,000 and integral multiples of $500,000 in excess of that
amount; provided further that Eurodollar Loans or any portion thereof
may only be converted into Base Rate Loans on the expiration date of the
Interest Period(s) applicable thereto; and provided further that (i) no
event has occurred and is continuing or would result from such Loan
continuation/conversion that would constitute a Default or Event of
Default, and (ii) the representations and warranties contained in
Section 3 shall be true, correct and complete in all material respects
on and as of the proposed continuation/ conversion date to the same
extent as though made on and as of that date unless stated in such
section to relate to a specific earlier date, in which case such
representations and warranties shall be true, correct and complete in
all material respects as of such earlier date. All conversions and
continuations of Loans shall be made simultaneously and on a pro rata
basis by the Lenders in accordance with their respective Pro Rata
Shares.
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Borrower shall deliver a Notice of Continuation/ Conversion to
Administrative Agent (with a copy to Agent to follow) no later than
11:00 A.M. (New York City time) at least three Business Days in advance
of the proposed continuation/ conversion date (in the case of a
conversion to, or a continuation of, Eurodollar Loans) or at least three
Business Days in advance of the proposed continuation/conversion date
(in the case of a conversion to Base Rate Loans). A Notice of
Continuation/Conversion shall specify (i) the proposed
continuation/conversion date (which shall be a Business Day), (ii) the
amount of the Eurodollar Loans to be continued/ converted, (iii) the
nature of the proposed continuation/ conversion, (iv) in the case of a
continuation of, or conversion to, Eurodollar Loans, the requested
Interest Period, (v) that the representations and warranties contained
in the Loan Documents are true, correct and accurate in all material
respects to the same extent as though made on and as of the date of such
Notice of Continuation/Conversion unless stated in such Loan Documents
to relate to a specific earlier date, in which case such representations
and warranties shall be true, correct and complete in all material
respects as of such earlier date, and (vi) that no event has occurred
and is continuing or would result from the proposed continuation/
conversion that would constitute a Default or Event of Default. In lieu
of delivering the above-described Notice of Continuation/Conversion,
Borrower may give Administrative Agent telephonic notice by the time
specified for delivery of a Notice of Continuation/Conversion above
(which telephonic notice shall be followed immediately with a notice by
facsimile telecopy); provided that in the event of a discrepancy between
a Notice of Continuation/Conversion and such telephonic notice, such
telephonic notice shall govern.
Promptly after receipt by Administrative Agent of a Notice of
Continuation/Conversion pursuant to this Section 2.5 (or telephonic
notice followed immediately with a notice by facsimile telecopy), and in
any event not later than 2:00 p.m. (New York time) at least three
Business Days in advance of the proposed continuation/conversion date,
Administrative Agent shall notify each Lender of the relevant details of
the proposed continuation/conversion.
None of Agent, Administrative Agent or any Lender shall incur
any liability to any Person (including Borrower) in acting upon any
telephonic notice referred to above that Administrative Agent or Agent
believes in good faith to have been given by a duly authorized officer
or other person authorized to act on behalf of Borrower or for otherwise
acting in good faith under this Section 2.5, and upon the continuation
and/or conversion (as applicable) of any Loan in accordance with this
Agreement pursuant to any such telephonic notice, Borrower shall have
effected a continuation and/or conversion (as applicable) hereunder of
such Loan.
Except as otherwise provided in Sections 2.13 and 2.14, a
Notice of Continuation/Conversion (or telephonic notice in lieu thereof)
shall be irrevocable from and after the giving thereof, and Borrower
shall be bound to effect a continuation and/or conversion (as
applicable) in accordance therewith.
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2.6. Fees.
(a) Borrower shall pay to Administrative Agent for the
account of each Lender, in accordance with its Pro Rata Share of the
Commitments, a Commitment fee in an amount equal to three eighths of one
percent (.375%) per annum of the average of the daily excess of (i) such
Lender's Commitment over (ii) the aggregate amount of the Loans of such
Lender outstanding from time to time during the period from the date
hereof to but excluding the Final Borrowing Date, payable in arrears on
(x) the last Business Day of March, June, September and December of each
year until the Final Borrowing Date and (y) the Final Borrowing Date,
such Commitment Fee to accrue from the date this Agreement is delivered
by the parties hereto to and excluding the Final Borrowing Date.
(b) Borrower shall on the date this Agreement is delivered by
the parties hereto pay to Administrative Agent for the account of each
Lender a Lender's fee in an amount specified in the September 24, 1993
letter from Agent to prospective Lenders.
(c) Borrower shall pay to Administrative Agent for its
account an annual administration fee and an annual collateral agency fee
payable in such amounts and according to such terms as are set forth in
a separate letter agreement between Administrative Agent and Borrower,
the first such payment to be due on the date this Agreement is delivered
by the parties hereto.
(d) Borrower agrees to pay to Agent for its account a
syndication fee payable in such amount on the date this Agreement is
delivered by the parties hereto and according to such terms as are set
forth in a separate letter agreement between Agent and Borrower.
2.7. Termination or Reduction of Commitment. Borrower shall
have the right, upon not less than five Business Days' notice to
Administrative Agent, to terminate the Commitments or, from time to
time, to reduce pro rata the amount of the Commitments, to the extent,
in either case, that the Commitments are undrawn. Any such reduction
shall be in an amount of $1,000,000 or any integral multiple thereof and
shall reduce permanently the aggregate amount of the Commitments then in
effect.
2.8. Optional Prepayments; Mandatory Prepayments.
(a) Subject to Section 2.8(f), Borrower may, at its option,
prepay any Loans on the last day of an Interest Period, in whole or in
part, without premium or penalty, upon at least five Business Days'
prior written notice to Administrative Agent, specifying the amount of
prepayment. Each notice of prepayment pursuant to this clause (a) shall
be irrevocable and the payment amount specified in such notice shall be
due and payable on the date specified, together with accrued interest to
such date on the Loans and all amounts (if any) payable pursuant to
Section 2.15. Partial prepayments of the Loans pursuant to this clause
(a) shall be in an aggregate principal amount of $1,000,000 or an
integral multiple thereof.
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(b) In the event of any sale or other disposition of any
interest in any Facility, any Lease termination, or any other event
giving rise to Net Property Proceeds or Net Mortgage Proceeds, all of
such Net Property Proceeds and Net Mortgage Proceeds (other than any
amount thereof required and used to satisfy Indebtedness secured by a
Lien, not inconsistent with the terms of this Agreement, on the relevant
Properties or Mortgage Interests) shall be deposited in an interest-
bearing escrow account with a bank designated by Administrative Agent
and, within thirty days after the closing of any such sale or other
disposition, Lease termination or other event giving rise to Net
Property Proceeds or Net Mortgage Proceeds, Borrower shall apply all of
such Net Property Proceeds and Net Mortgage Proceeds (other than any
amount thereof required and used to satisfy Indebtedness secured by a
Lien, not inconsistent with the terms of this Agreement, on the relevant
Properties or Mortgage Interests) to the prepayment of the Loans.
(c) In the event of any (i) public or private offering by or
on behalf of Borrower of debt or equity securities issued by Borrower or
(ii) incurrence by Borrower of Indebtedness to one or more financial
institutions, on the date of receipt by Borrower of the Net Securities
Proceeds therefrom, all (but not more than is required to prepay the
Loans as contemplated below) of such Net Securities Proceeds (other than
those to be applied in accordance with the following proviso) shall be
deposited in an interest-bearing account with a bank designated by
Administrative Agent and, within thirty days after such offering or
incurrence, Borrower shall apply such Net Securities Proceeds to the
prepayment of the Loans provided, however, that such Net Securities
Proceeds may, at Borrower's option, first be applied toward any
obligation of Borrower to repay any installment of principal on any
Indebtedness of Borrower at its stated maturity then or at any time in
the next thirty days due and owing.
(d) The Loans shall be subject to certain mandatory
prepayments pursuant to and upon the occurrence of the events described
in the provisions of Sections 2.13 and 2.14.
(e) If at any time the principal balance of the Loans exceeds
the Maximum Aggregate Availability, Borrower shall immediately (and in
any event no later than two Business Days after becoming aware thereof)
repay Loans to the extent necessary to reduce the aggregate outstanding
principal amount thereof to an amount that is equal to or less than the
Maximum Aggregate Availability. If at any time the principal balance of
the General Corporate Loans then outstanding exceeds the lesser of
$20,000,000 or 16% of the Maximum Aggregate Availability, Borrower shall
immediately (and in any event no later than two Business Days after
becoming aware thereof) repay General Corporate Loans to the extent
necessary to reduce the aggregate outstanding principal amount thereof
to an amount that is equal to or less than the lesser of $20,000,000 or
16% of the Maximum Aggregate Availability.
(f) Subject to the application of the payments provisions of
Section 2.10, any prepayments of the Loans pursuant to this Section,
Sections 2.13 or 2.14, or any other provision of any Loan Document shall
be applied first to any amounts payable with respect thereto pursuant to
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Section 2.15, second to the payment of accrued and unpaid interest on
the principal amount of outstanding General Corporate Loans up to and
including the date of prepayment, third, to the extent no General
Corporate Loans remain outstanding, to the payment of accrued and unpaid
interest on the principal amount of all other outstanding Loans up to
and including the date of prepayment, fourth to the principal amount of
such General Corporate Loans, and fifth to the principal amount of all
other outstanding Loans. Subject to the requirements of the preceding
sentence, Borrower may designate the application of any prepayments, to
be applied to principal on the Loans, to the Eurodollar Loans, Base Rate
Loans and/or Alternate Rate Loans, as it may select, provided that if
Borrower does not designate such application, such prepayments shall be
applied (x) first to outstanding Base Rate Loans, (y) second to
outstanding Alternate Rate Loans and (z) third to outstanding Eurodollar
Loans.
2.9. Computation of Interest and Fees. Interest and fees and
other amounts calculated on the basis of a rate per annum shall be
computed on the basis of a 360-day year for the actual days elapsed;
provided that interest on the Base Rate Loans (other than any such
interest the calculation of which is based on the Federal Funds Rate)
shall be computed on the basis of a 365-day year for the actual days
elapsed.
2.10. Payments. Except as contemplated by this Agreement,
the borrowing by Borrower from the Lenders, each payment (including each
prepayment) by Borrower on account of principal, interest and fees
required under Sections 2.6(a) and (b), and any reduction of the amount
of the Commitments of the Lenders hereunder, shall be made for the
account of each Lender according to its Pro Rata Share; provided, that
payments to the Lenders of interest based upon the Alternate Rate shall
be allocated appropriately to give effect to differences among the
Lenders' respective costs of funds. All payments (including
prepayments) by Borrower on account of principal, interest, fees, costs,
indemnities or other amounts payable hereunder or under any of the Loan
Documents shall be made to Administrative Agent for the account of the
applicable Lenders (except for fees required under Sections 2.6(c) and
(d) which shall be only for the account of Administrative Agent and
Agent, respectively) at the account of Administrative Agent specified in
Section 9.3(b) and in United States Dollars in immediately available
funds. Each payment or prepayment hereunder and under the Notes and the
other Loan Documents shall be made without set-off or counterclaim and
free and clear of, and without deduction for, any present or future
withholding or other taxes, duties or charges of any nature imposed on
or attributable to such payments or prepayments by or on behalf of any
Governmental Authority, except for any Excluded Taxes. If any such
taxes (other than any Excluded Taxes), duties or charges (including,
without limitation, any tax, duty or charge imposed by Sections 1, 2
and/or 39 of the Massachusetts General Laws, Chapter 63, as currently in
effect or as amended hereafter or any analogous provisions (or
provisions having an analogous effect) of the laws, rules or regulations
(or interpretations thereof) of Massachusetts or any other Governmental
Authority) are so levied or imposed on or are attributable to any such
payment or prepayment, Borrower will make additional payments in such
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amounts as may be necessary so that the net amount received by a Lender,
after withholding or deduction for or on account of all such taxes,
duties or charges, will be equal to the amount provided for herein or in
such Lender's Note or in any of the other Loan Documents. Whenever any
taxes, duties or charges are payable by Borrower with respect to or
attributable to any payments or prepayments hereunder or under any of
the Notes or any other Loan Document, Borrower agrees to furnish
promptly to Administrative Agent for the account of the applicable
Lender official receipts or copies thereof, if reasonably available,
evidencing payment of any such taxes, duties or charges so withheld or
deducted. If Borrower fails to pay any such taxes, duties or charges
when due to the appropriate taxing authority after receipt of notice
that any such taxes, duties or charges are due, or fails to remit to
Administrative Agent for the account of the applicable Lender the
customary evidence of payment of any such taxes, duties or charges so
withheld or deducted, Borrower shall indemnify the affected Lender for
any incremental taxes, duties, charges, interest or penalties that may
become payable by such Lender as a result of any such failure. During
the continuance of any Default, Administrative Agent may, but shall be
under no obligation to, apply all payments received by Administrative
Agent from Borrower pursuant to any of the Loan Documents in the
following order of payment regardless of the application designated by
Borrower: first to any interest owing under Section 2.4(b) or under any
of the Loan Documents other than interest owing on the Loans and the
Notes referred to below, second to any fees then payable to Agent,
Administrative Agent or the Lenders, third to any amounts owing pursuant
to Section 9.7, fourth to any amounts owing pursuant to Sections 2.13,
2.14 or 2.15, fifth to any other sums (other than principal on the Loans
and the Notes and interest thereon referred to below) owing under any of
the Loan Documents, sixth to any interest owing on the Loans and Notes
and seventh to the repayment of the principal of the Loans and the Notes
as designated by Administrative Agent; provided, that if such
application is other than in accordance with any express designation by
Borrower, Administrative Agent shall promptly notify Borrower of such
application. Administrative Agent will distribute each payment to the
applicable Lenders promptly upon receipt thereof (and in any event on
the same Business Day as the date when received, if such payment is
received at or prior to 12:00 noon (New York time)). Each payment by
Administrative Agent to a Lender shall be made for the account of such
Lender's Lending Office as designated by such Lender to Administrative
Agent in writing from time to time. Whenever any payment to be made
hereunder or under any Loan Document, including, without limitation, any
principal of or interest on any Loan, shall become due and payable, or
whenever the last day of any Interest Period would otherwise occur, on a
day which is not a Business Day, such payment shall be made and the last
day of such Interest Period shall occur on the next succeeding Business
Day and such extension of time shall in such case be included in
computing interest on such payment; provided, however, if such extension
would cause any such payment to be made in the next succeeding calendar
month, or the last day of such Interest Period to occur in the next
succeeding calendar month, such payment shall be made, and the last day
of such Interest Period shall occur, on the next preceding Business Day.
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2.11. Use of Proceeds. The proceeds of the Loans hereunder
shall be used by Borrower for (a) the acquisition of Properties; and (b)
the acquisition or funding of Mortgage Interests; provided that the
General Corporate Loans may be used by Borrower for its general
corporate purposes; provided further that a portion of the proceeds of
the Loans hereunder made on the First Borrowing Date shall be used to
repay all principal outstanding under the Prior Loan Agreement; provided
yet further that up to $35,000,000 of such proceeds on the First
Borrowing Date may be used to repay all principal outstanding under any
facility from DLJ (or, pursuant to an agreement with DLJ, from an
affiliate of DLJ) the proceeds of which were used after the date hereof
to purchase Mortgage Interests from Goldome Credit Corporation.
2.12. Increased Costs.
(a) If any Requirement of Law or other event or condition, or
any amendment, modification or interpretation thereof (including,
without limitation, any request, recommendation, guideline or policy,
whether or not having the force of law, of or from any central bank or
other Governmental Authority), in any such case, adopted, effective,
made or issued after the date hereof (but in any event including,
without limitation, Regulation D and Section 1, 2 and/or 39 of the
Massachusetts General Laws, Chapter 63 as currently in effect or as
amended hereafter or any analogous provisions (or provisions having an
analogous effect) of the laws, rules or regulations (or interpretations
thereof) of Massachusetts or any other Governmental Authority) by any
authority charged with the administration or interpretation thereof:
(i) subjects Agent, Administrative Agent or any Lender
or any branch or Affiliate of Agent, Administrative Agent or such
Lender to any tax (except Excluded Taxes), fee, deduction, duty,
withholding, levy, impost or other charge or reduction of any
nature, on or with respect to, or which Agent, Administrative Agent
or such Lender in its sole discretion deems applicable or
attributable to this Agreement, any Note, any of the other Loan
Documents, its Commitment or its pro rata share of the Loans, or
interest, fees or other amounts attributable thereto or to any of
the foregoing; or
(ii) changes the basis of taxation of payments to any
Lender or any branch or Affiliate of such Lender of principal of
and/or interest on such share of the Loans and/or other fees and
amounts payable hereunder or under any of the Loan Documents or
with respect hereto or thereto (including in any event imposition
of or change in any withholding taxes, but excluding any Excluded
Taxes); or
(iii) imposes upon, modifies, requires, makes or deems
applicable to any Lender, or any of its branches or Affiliates, any
regular, special, supplementary or other reserve or deposit
requirement, insurance assessment or similar requirement against or
affecting any assets held by, or liabilities of, or deposits with
or for the account of, such Lender or such branch or Affiliate,
with respect to or which Agent or such Lender in its sole
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discretion deems applicable or attributable to this Agreement, any
Note, any of the other Loan Documents, its Commitment or its pro
rata share of the Loans, or interest, fees or other amounts
attributable thereto or to any of the foregoing; or
(iv) imposes, modifies or deems applicable any condition
or requirement upon or causes in any manner the addition of any
supplement to, or increase of any kind to, the capital or cost base
of Agent, Administrative Agent or any Lender or such branch or
Affiliate, for extending or maintaining its Commitment or its pro
rata share of the Loans which results in an increase in the capital
requirement supporting such Commitment or its pro rata share of the
Loans, or imposes upon, modifies, requires, makes or deems
applicable to Agent, Administrative Agent or such Lender or any
such branch or Affiliate any capital requirement, increased capital
requirement or similar requirement, with respect to or which Agent,
Administrative Agent or such Lender in its sole discretion deems
applicable or attributable to this Agreement, any Note, any of the
other Loan Documents, its Commitment or its pro rata share of the
Loans, or interest, fees or other amounts attributable thereto or
to any of the foregoing; or
(v) imposes upon Agent, Administrative Agent or any
Lender or any branch or Affiliate of Agent, Administrative Agent or
such Lender any other conditions with respect to, or allocable or
attributable in good faith by Agent, Administrative Agent or the
Lender to, this Agreement, any Note, any of the other Loan
Documents or such share of the Loans or its Commitment hereunder or
such interest, fees or other amounts;
and the result of any of the foregoing, based solely upon the good faith
determination and allocation by Agent, Administrative Agent or any
Lender, as the case may be, of costs, decreased benefits and/or reduced
amount of payments, is to increase the cost or decrease the benefit, in
any way, to Agent, Administrative Agent or such Lender, as the case may
be, or any branch or Affiliate of Agent, Administrative Agent or such
Lender, as the case may be, of funding or maintaining its Commitment or
its share of the Loans hereunder or of holding any Collateral, or to
reduce the amount of any payment (whether of principal, interest, or
otherwise) received or receivable by Agent, Administrative Agent or such
Lender, as the case may be, or any branch or Affiliate of Agent,
Administrative Agent or such Lender, as the case may be, or to require
Agent, Administrative Agent or such Lender, as the case may be, or any
branch or Affiliate of Agent, Administrative Agent or such Lender, as
the case may be, to make any payment, then and in any such case:
(1) Agent, Administrative Agent or such Lender, as the case
may be, shall promptly notify Borrower and the other Lenders in
writing of the happening of such event;
(2) Agent, Administrative Agent or such Lender, as the case
may be, shall promptly deliver to Borrower and the other Lenders a
certificate stating the change or event which has occurred or the
reserve or capital requirements or other conditions which have been
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imposed on Agent, Administrative Agent or such Lender, as the case
may be, or branch or Affiliate of Agent, Administrative Agent or
such Lender, as the case may be, or the request, recommendation,
guideline or policy with which it has complied, together with the
date thereof, the amount of such increased cost, decreased benefit
or reduction payment; and
(3) Borrower shall pay Agent, Administrative Agent or such
Lender, as the case may be, promptly on demand such an amount or
amounts as:
(A) in the case of events referred to in clauses (i),
(ii), (iii) and (v) and, if applicable, clause (iv) above,
shall be sufficient to compensate it or such branch or
Affiliate for all such increased costs and/or payments and/or
decreased benefits, and/or reduced amount of payment; and/or
(B) in the case of events referred to in clause
(iv) above, shall be an amount equal to the reduction, as
reasonably determined by Agent, Administrative Agent or such
Lender, as the case may be, in the after-tax rate of return on
Agent's, Administrative Agent's or such Lender's capital
resulting from any such capital or increased capital or
similar requirement, all as certified by Agent, Administrative
Agent or such Lender or Lenders, as the case may be, in said
written notice to Borrower. Such certification shall be
conclusive and binding on Borrower absent manifest error.
The certificate of Agent, Administrative Agent or such Lender
as to the additional amounts payable pursuant to this Section 2.12
delivered to Borrower shall constitute prima facie evidence of the
amount thereof. Agent, Administrative Agent and each Lender agree to
use reasonable efforts, as determined by Agent, Administrative Agent or
such Lender, as the case may be, to avoid or minimize the payment by
Borrower of any additional amounts under this Section 2.12. The
protection provided by this Section 2.12 shall be available to Agent,
Administrative Agent and each Lender regardless of any possible
contention of invalidity or inapplicability of the Requirement of Law,
interpretation, recommendation, guideline, policy or event or condition
which has been imposed or has occurred. In the event that after
Borrower shall have paid any additional amount under this Section 2.12
with respect to the Loans Agent, Administrative Agent or such Lender
shall have successfully contested such Requirement of Law,
interpretation, recommendation, guideline, policy or event or condition
then, to the extent that Agent, Administrative Agent or such Lender will
be placed in the same position it was in prior to the incurrence of the
increased cost or reduction in amount received or receivable (on an
after-tax basis), but without giving effect to interest which may have
been earned on the additional amount paid by Borrower (but with interest
to the extent actually earned by Agent, Administrative Agent or such
Lender, as the case may be, on such amount as determined by Agent,
Administrative Agent or such Lender, as the case may be), Agent,
Administrative Agent or such Lender, as the case may be, shall refund to
Borrower such additional amount (with such interest, if any).
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2.13. Change in Law Rendering Eurodollar Loans or Alternate
Rate Loans Unlawful; Failure to Give Notice of Continuation.
(a) Notwithstanding anything to the contrary herein
contained, in the event that any Requirement of Law or any change in any
existing Requirement of Law or in the interpretation thereof by any
Governmental Authority charged with the administration thereof, in any
case adopted, issued or effective after the date hereof, (i) shall make
it unlawful for any Lender to fund any portion of the Eurodollar Loans
or to give effect to its obligations as contemplated hereby with respect
to its making or maintaining its pro rata share of the Eurodollar Loans,
or (ii) shall make it unlawful for any Lender to fund any portion of the
Alternate Rate Loans or to give effect to its obligations as
contemplated hereby with respect to its Commitment or making or
maintaining its pro rata share of the Alternate Rate Loans, such Lender
shall, upon the happening of such event, notify Agent, Administrative
Agent, the other Lenders and Borrower thereof in writing stating the
reason therefor and the effective date of such event, and (x) upon the
effectiveness of any such event referred to in clause (i) above, the
obligation of such Lender to make or maintain its pro rata share of the
Eurodollar Loans to Borrower shall forthwith be suspended for the
duration of such illegality and during such illegality such Lender
shall, upon payment of any amounts owing under Section 2.15 with respect
to such conversion, convert its share of the Eurodollar Loans to
Alternate Rate Loans or (upon effectiveness of any such event referred
to in clause (ii) and during the continuance of such event) Base Rate
Loans, and (y) upon the effectiveness of any such event referred to in
clause (ii), the obligation of such Lender to make or maintain its pro
rata share of the Alternate Rate Loans to Borrower shall forthwith be
suspended for the duration of such illegality and during such illegality
such Lender shall, upon payment of any amounts owing under Section 2.15
with respect to such conversion, convert its share of the Alternate Rate
Loans to Base Rate Loans. If and when such illegality with respect
thereto ceases to exist, such suspension shall cease and such affected
Lender shall similarly notify Agent, Administrative Agent, the other
Lenders and Borrower and the Alternate Rate Loan or Base Rate Loan into
which such share of the Eurodollar Loans or Alternate Rate Loans (as
applicable) was converted pursuant to this Section 2.13 was converted to
a Eurodollar Loan or Alternate Rate Loan, respectively, on the first day
of the next succeeding Interest Period.
(b) If Borrower fails to give a valid Notice of
Continuation/Conversion in respect of any portion of a Eurodollar Loan
which is not repaid in accordance with the terms hereof at the end of
the relevant Interest Period in respect thereto, such portion shall be
converted automatically into Base Rate Loans; provided that if Borrower
subsequently gives a valid Notice of Continuation/Conversion in respect
of such Base Rate Loans, such Base Rate Loans shall be converted into
Eurodollar Loans in accordance with the requirements for a
continuation/conversion under Section 2.5.
(c) If any Loan is converted to an Alternate Rate Loan
pursuant to this Section 2.13, Borrower and Lenders, acting through
Administrative Agent, shall enter into negotiations in good faith with a
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view to agreeing upon a substitute basis for determining the rate or
rates of interest from time to time applicable to such Loan, which shall
be acceptable to each Lender, and the rate or rates so determined shall
constitute the Alternate Rate for that Loan from the date of such
conversion. If, however, Borrower and Majority Lenders fail to agree to
such substitute basis within thirty (30) days after such conversion,
such Loan shall be deemed to have been converted to a Base Rate Loan,
effective from the date of such conversion.
2.14. Eurodollar Availability. (a) In the event, and on
each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for the Eurodollar Loans,
Administrative Agent shall have determined (which determination shall,
in the absence of manifest error, be conclusive and binding upon
Borrower) that U.S. Dollar deposits in the amount of the principal
amount of the Eurodollar Loans which is to have such Interest Period are
not generally available in the London interbank market, or that the rate
at which such U.S. Dollar deposits are being offered will not accurately
reflect the cost to any of the Lenders of making or funding such
principal amount of such Eurodollar Loans during such Interest Period,
or that reasonable means do not exist for ascertaining the LIBO Rate,
Administrative Agent shall, as soon as practicable thereafter, give
written or telephonic notice (which telephonic notice shall be followed
immediately with a notice by facsimile telecopy) of such determination
to Agent, the Lenders and Borrower and (i) such principal amount of such
Eurodollar Loans shall automatically be converted, as of the last day of
the Interest Period during which such determination is made, to
Alternate Rate Loans subject to the last sentence of this paragraph and
(ii) any request by Borrower for such Eurodollar Loans pursuant to
Section 2.3 hereof shall thereupon, and until the circumstances giving
rise to such notice no longer exist (as notified by Administrative Agent
to Borrower and the Lenders), be deemed a request for the making of
Alternate Rate Loans. If at any time Administrative Agent shall have
determined (which determination shall, in the absence of manifest error,
be conclusive and binding upon Borrower) that any contingency has
occurred which adversely affects the London interbank market or that any
Requirement of Law or any change in any existing Requirement of Law or
in the interpretation thereof or other circumstance affecting the
Lenders or the London interbank market makes the funding of the
Eurodollar Loans impracticable, Administrative Agent shall, as soon as
practicable thereafter, give written or telephonic notice (which
telephonic notice shall be followed immediately with a notice by
facsimile telecopy) of such determination to Agent, the Lenders and
Borrower and (i) the Eurodollar Loans shall automatically be converted,
as of the last day of each Interest Period during which such
determination is made and in each case in respect of the principal
amount of the Eurodollar Loans having an Interest Period ending on such
date, to Alternate Rate Loans, subject to the last sentence of this
paragraph, and (ii) any request by Borrower for the Eurodollar Loans
pursuant to Section 2.3 hereof shall thereupon, and until the
circumstances giving rise to such notice no longer exist (as notified by
Administrative Agent to Borrower, Agent and the Lenders), be deemed a
request for the making of Alternate Rate Loans. If, in the
circumstances specified in this paragraph or in Section 2.13,
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Administrative Agent determines that no reasonable alternate source of
funding for the Eurodollar Loans, or no reasonable basis for determining
the Alternate Rate, is available or practicable, Administrative Agent
shall promptly so notify the other Lenders, Agent and Borrower thereof
and any notice of borrowing under Section 2.3 shall be deemed rescinded
and each principal amount of the Eurodollar Loans, if outstanding,
having an Interest Period then current, together with all interest
thereon, shall be due and payable by Borrower on the last day of the
Interest Period then applicable to it.
(c) If any Loan is converted to an Alternate Rate Loan
pursuant to this Section 2.14, Borrower and Lenders, acting through
Administrative Agent, shall enter into negotiations in good faith with a
view to agreeing upon a substitute basis for determining the rate or
rates of interest from time to time applicable to such Loan, which shall
be acceptable to each Lender, and the rate or rates so determined shall
constitute the Alternate Rate for that Loan from the date of such
conversion. If, however, Borrower and Majority Lenders fail to agree to
such substitute basis within thirty (30) days after such conversion,
such Loan shall be deemed to have been converted to a Base Rate Loan,
effective from the date of such conversion.
2.15. Indemnities. Borrower shall indemnify each Lender on
demand for, from and against any actual loss or expense (including but
not limited to any loss or expense sustained or incurred in liquidating
or employing or redeploying deposits from third parties acquired to
effect or maintain any Loan or any portion thereof) which such Lender or
its branch or Affiliate may sustain or incur as a consequence of (i) any
default in payment or prepayment of the principal amount of any Loan or
any portion thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by irrevocable notice of payment or
prepayment, or otherwise), (ii) the effect of the occurrence of any
Event of Default upon any Loan, (iii) the payment or prepayment of any
principal amount of any Loan or the conversion of any portion of any
Eurodollar Loan to Alternate Rate Loans or Base Rate Loans on any day
other than the last day of an Interest Period or the payment of any
interest on such Loan, or portion thereof, on a day other than an
Interest Payment Date for the Loan or (iv) any failure of Borrower to
accept or make a borrowing of the Loans or continue or convert a Loan
after delivery of a notice requesting a Loan under Section 2.3 or, as
the case may be, a notice requesting a continuation or conversion under
Section 2.5 or any failure by Borrower to satisfy any of the conditions
precedent to the making of Loans hereunder after it has requested the
borrowing thereof (other than any such conditions that are waived in
accordance with the provisions hereof). The determination of each
Lender of any amount payable under this Section 2.15 shall, in the
absence of manifest error, be conclusive and binding upon Borrower.
2.16 Eligible Mortgages and Eligible Properties.
(a) "Eligible Mortgage" means each Mortgage Interest where
(i) the requirements of Section 2.16(c) in respect of such Mortgage
Interest are met, (ii) the Mortgagor in respect of such Mortgage
Interest is not in default under any payment obligation or in any
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material respect under any other Contractual Obligation between such
Mortgagor and Borrower, including without limitation any Mortgage
Interest Agreement, any note payable by such Mortgagor to Borrower or
any Lease, (iii) there has been no Ineligibility Event or Insolvency
Event with respect to such Mortgagor or any Credit Support Obligor for
such Mortgage Interest, (iv) there has been no Cash Flow Event with
respect to such Mortgaged Property, (v) there shall have been no Notice
of Deficiency regarding such Mortgaged Property which has not been cured
or withdrawn, and (vi) no Credit Support Obligor in respect of such
Mortgage Interest is in default under any payment obligation or in any
material respect under any other Contractual Obligation of such Credit
Support Obligor to Borrower, including without limitation any Lease,
Mortgage Interest Agreement or Credit Support Agreement.
(b) "Eligible Property" means each Property which is leased to
an Operator pursuant to a Lease approved in all respects by Agent,
provided (i) the requirements of Section 2.16(c) in respect of such
Property are met, (ii) it is not a Property the Operator of which has
failed to exercise any renewal option under the Lease thereof prior to
the expiration of that option (and no replacement Lease with that or
another Operator has been signed), (iii) the Operator thereof has
executed and delivered a Non-Disturbance Agreement for that Property,
(iv) there shall have been no Notice of Deficiency regarding such
Property which has not been cured or withdrawn, (v) such Operator is not
in default under any payment obligation or in any material respect under
any other Contractual Obligation between such Operator and Borrower,
including without limitation such Lease, any other Lease or any Mortgage
Interest Agreement, (vi) there has been no Ineligibility Event or
Insolvency Event with respect to such Operator or any Credit Support
Obligor for the Lease of such Property, (vii) there has been no Cash
Flow Event with respect to such Property, and (viii) no Credit Support
Obligor for the Lease of such Property is in default under any payment
obligation or in any material respect under any other Contractual
Obligation of such Credit Support Obligor to Borrower, including without
limitation any Lease, Mortgage Interest Agreement or Credit Support
Agreement. Notwithstanding the foregoing, in the case of any Property
that would qualify as an Eligible Property as of the First Borrowing
Date but for the failure of the Operator to have executed and delivered
a Non-Disturbance Agreement, such failure shall not preclude such
Property from being an Eligible Property; provided that if the Operator
thereof has not delivered a Non-Disturbance Agreement within ninety (90)
days of the First Borrowing Date such Property shall thereafter cease to
be an Eligible Property until all of the requirements for qualifying as
an Eligible Property have been met, including clause (iii) of the
definition of Eligible Property.
(c) (x) No Mortgage Interest shall be an Eligible Mortgage
unless the following are true, correct and accurate in all material
respects on any relevant date (to the extent applicable) in relation to
that Mortgage Interest, the Mortgaged Property covered thereby and the
Mortgagor, any Credit Support Obligor, any Mortgage Interest Agreement
and any Credit Support Agreement for that Mortgage Interest, and (y) no
Property shall be an Eligible Property unless the following are true,
correct and accurate in all material respects on any relevant date (to
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the extent applicable) in relation to that Property, any Operator or
Lease for that Property and any Credit Support Obligor or Credit Support
Agreement relating to any such Lease:
(i) No MAC. There has been no MAC in respect of such (A)
Property (or any Operator or Credit Support Obligor for the Lease
thereof), or (B) Mortgaged Property (or any Mortgagor or Credit
Support Obligor for the Mortgage Interest Agreements in respect
thereof), in each case since December 31, 1992 or, if later, the
date on which Borrower acquired an interest in such Property or
Mortgaged Property other than, in each case, a MAC which has ceased
to be in effect.
(ii) Operator and Credit Support Obligors; Compliance with
Law.
(A) To the knowledge of Borrower, the Operator (in the
case of a Property) and the Mortgagor (in the case of a
Mortgage Interest) (i) has full power and authority and the
legal right to own, lease (or sublease) and operate (as
applicable) the properties it operates and to conduct the
business in which it is currently engaged with respect to any
Properties and Mortgaged Properties, as applicable, (ii) is
duly qualified or licensed and is in good standing under the
laws of each jurisdiction where its ownership, lease (or
sublease) or operation of any Properties and Mortgaged
Properties requires such qualification, and (iii) is in
compliance with all Requirements of Law applicable to the
Properties and Mortgaged Properties operated by it, or
applicable to the operation thereof except to the extent that
the failure to comply therewith is not reasonably likely to
cause, in the aggregate, a MAC.
(B) To the knowledge of Borrower, each Credit Support
Obligor in respect of such Property or Mortgage Interest (A)
has full power and authority and legal right to conduct the
business in which it is presently engaged and to perform its
obligations under the Credit Support Agreements to which it is
a party, and (B) is in compliance with all requirements of law
except to the extent that the failure to comply therewith is
not reasonably likely to cause a MAC.
(iii) No Material Litigation. To the knowledge and belief of
Borrower, no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge and belief of Borrower, threatened by or against any of
the Operators or Mortgagors of such Property or Mortgage Interest
or against any of their respective properties (a) with respect to
this Agreement or the other Loan Documents, the Leases or the
Mortgage Interest Agreements with respect to such Property or
Mortgage Interest, or any of the transactions contemplated hereby
or thereby, or (b) relating to such Property, such Mortgage
Interest or the ownership or the operation thereof or the conduct
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of business thereon as presently conducted, which, in the case of
either (a) or (b), is reasonably likely to cause a MAC.
(iv) [Intentionally Omitted]
(v) Ownership of Mortgage Interests and Property; Liens.
(A) In the case of a Mortgage Interest, Borrower has
good record, marketable and indefeasible title to such
Mortgage Interest. In the case of a Property which is a Fee
Interest, Borrower has good record, marketable and
indefeasible fee simple absolute title to such Fee Interest.
In the case of a Property which is a Leasehold Interest,
Borrower has good record and marketable title to such
Leasehold Interest. In the case of a Mortgage Interest in
respect of which all or any part of the Mortgaged Property is
a fee interest in land and/or buildings, structures,
improvements and fixtures, the Mortgagor with respect to such
Mortgaged Property has good record, marketable and
indefeasible fee simple absolute title to such Mortgaged
Property. In the case of a Mortgage Interest in respect of
which all or any part of the Mortgaged Property is a leasehold
estate, the Mortgagor with respect to such Mortgaged Property
has good record and marketable title to such leasehold estate.
In each of the foregoing cases, such title shall be free and
clear of all Liens and other matters affecting title except
for (i) certain mortgages and security interests granted to
Barclays Bank, PLC, as agent, pursuant to the Amended and
Restated Mortgage, Deed of Trust, Open-End Mortgage, Security
Agreement, Fixture Filing and Financing Statement, dated as of
August 31, 1989 (the "Barclays Mortgage") described in the
Title Reports listed in Schedule 3, which mortgages and
security interests shall have been terminated as provided in
Section 4.1(z), and (ii) such other matters affecting title as
are set forth in the Title Report for each such Property or in
the Title Report for each such Mortgage Interest and Mortgaged
Property.
(B) The buildings, structures, and other improvements
located on such Property or Mortgaged Property are in good
operating condition and repair (ordinary wear and tear which
are not such as to materially and adversely affect the
operations of the business conducted thereon, excepted), free
of any material structural or engineering defects known to
Borrower on the date hereof (except for defects which are in
the process of being repaired or removed and which would not
be reasonably likely to cause a MAC with respect to such
Property or Mortgaged Property) and are suitable for their
present uses.
(C) All water, sewer, gas, electricity, telephone and
other utilities serving such Property or Mortgaged Property
are supplied directly to such Property or Mortgaged Property
by public utilities and enter such Property or Mortgaged
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Property through adjoining public streets or, if they pass
through adjoining private land, do so in accordance with valid
public easements which inure to Borrower's benefit (in the
case of a Property) or Mortgagor's benefit (in the case of a
Mortgaged Property). All of such utilities are presently
installed and operating and are in good and safe condition.
All material assessments for public improvements that have
been made against such Property or Mortgaged Property have
been paid or provided for, except that in the case of any
assessments that are payable in installments, all installments
due as of the date hereof have been paid or provided for.
(D) Borrower and, to the knowledge and belief of
Borrower, the Operator (in the case of a Property) or
Mortgagor (in the case of a Mortgaged Property), have not
received notice of any pending, threatened or contemplated
condemnation proceeding or similar taking affecting such
Property, Mortgaged Property, or any portion thereof or any
sale or other disposition of such Property, Mortgaged Property
or any portion thereof in lieu of condemnation or similar
taking.
(E) All certificates of occupancy, permits, licenses,
franchises, approvals and authorizations (collectively, the
"Real Property Permits") from all Governmental Authorities
having jurisdiction over such Property or Mortgaged Property
or any portion thereof, the absence of which could materially
impair the use of such Property or Mortgaged Property for the
purposes for which it is currently used, and from all
insurance companies and fire rating and similar boards and
organizations required to have been issued to Borrower or the
Operator (in the case of a Property) or Mortgagor (in the case
of a Mortgaged Property) to enable such Property or Mortgaged
Property or any portion thereof to be lawfully occupied and
used as currently so occupied or used have been issued and are
in full force and effect. Borrower has not received or been
informed by a third party, including any Operator or
Mortgagor, of the receipt by it of any notice from any
Governmental Authority having jurisdiction over such Property
or Mortgaged Property or any portion thereof or from any
insurance company or fire rating or similar board or
organization threatening a suspension, revocation,
modification or cancellation of any Real Property Permit,
except as disclosed to Agent in writing prior to the date
hereof.
(F) Each of the Leases, Mortgage Interest Agreements and
Credit Support Agreements with respect to such Property or
Mortgaged Property is in full force and effect and is a
legally valid and binding obligation of Borrower and the other
parties thereto. None of such Leases, Mortgage Interest
Agreements or Credit Support Agreements has been renewed,
amended, modified or terminated, nor has there been any
material change in or waiver of any obligation of any
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Operator, Mortgagor or Credit Support Obligor contained in any
such Lease, Mortgage Interest Agreement or Credit Support
Agreement nor any set-off or counterclaim asserted by any
Operator, Mortgagor or Credit Support Obligor, that in any
such case could result in a MAC. Borrower has not mortgaged,
pledged or otherwise encumbered any of such Leases or Mortgage
Interest Agreements or its right to obtain rental, interest or
other payments thereunder except for the Barclays Mortgage
which will be discharged on the First Borrowing Date, and
except for Liens permitted by Section 6.8. Borrower has not
collected any rents becoming due under any of the Leases in
respect of such Property or Mortgaged Property more than 30
days in advance (except an amount equal to one month's
installment of rent under any such Lease). No notice of
termination under any such Lease is outstanding. No notice of
acceleration under any such Mortgage Interest Agreement or
Credit Support Agreement is outstanding. As to such Leases,
Borrower has performed all of its repair and maintenance
obligations (if any) and, to the knowledge and belief of
Borrower, each Operator and Mortgagor under each such Lease
and Mortgage Interest Agreement to which it is a party has
performed all of its repair and maintenance obligations.
(G) In the case of a Property, there have not been any
alterations to such Property, nor have there been any
encumbrances, encroachments or other survey matters affecting
such Property, in each case, after the date of the most recent
Survey of such Property furnished to Agent that would result
in a change to such Survey. In the case of a Mortgage
Interest, to the knowledge of Borrower, there have not been
any alterations to the Mortgaged Property covered thereby, nor
any encumbrances, encroachments or other survey matters
affecting such Mortgaged Property, in each case, after the
date of the most recent Survey of such Mortgaged Property
furnished to Agent that would result in a change to such
Survey.
(vi) No Burdensome Restrictions. To Borrower's knowledge and
belief, no Contractual Obligation of the Operator (in the case of a
Property) or the Mortgagor (in the case of a Mortgage Interest) and
no Requirement of Law currently has a MAC, or insofar as Borrower
may reasonably foresee may have a MAC.
(vii) Compliance with Environmental Laws. Except as
specifically set forth in the environmental reports for such
Property or Mortgaged Property delivered to Agent and listed on
Schedule 4, to the knowledge of Borrower, the Operator (in the case
of a Property) and the Mortgagor (in the case of a Mortgage
Interest) is in compliance with all applicable statutes, laws,
rules, regulations and orders of all Governmental Authorities
relating to environmental protection, pollution control and
Hazardous Materials and with respect to the conduct of its business
and the ownership of its properties, except for such noncompliance
which would not result in imposition of Liens, fines, penalties,
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injunctive relief or other civil or criminal liabilities or which,
in the aggregate, could not have a MAC; and there is no
contamination at, under or about such Property or Mortgaged
Property which could interfere in a manner that would be reasonably
likely to have a MAC with the continued operation of such Property
or Mortgaged Property.
(viii) Pollution; Hazardous Materials. In connection with the
acquisition and ownership of its interests in such Property or
Mortgage Interest, Borrower has made and will continue to make such
inquiries, and has and will continue to cause such testing,
surveying, inspection or other action, with respect to such
Property or, in the case of a Mortgage Interest, the Mortgaged
Property covered thereby as is necessary or desirable in connection
with Hazardous Materials which might be present in the air, soil,
surface water or groundwater at such Facility. Except (a)
Hazardous Materials maintained in accordance with all Requirements
of Law and necessary for the business operations of any such
Property or Mortgaged Property as a health care facility,
including, without limitation, petroleum used for heating oil and
certain medications and (b) Hazardous Materials that are not
reasonably likely to result in an MAC in respect of such Property
or Mortgage Interest or to have a material adverse effect on the
value of such Property or Mortgage Interest as security for the
Loans, there are not, and, to the knowledge of Borrower based upon
the inquiries described in the immediately preceding sentence, were
not previously, any Hazardous Materials present in the air, soil,
surface water or groundwater at such Property or Mortgaged Property
and no Hazardous Materials are used in the operation of such
Property or Mortgaged Property. Borrower is not aware of any claim
or notice of violation, alleged violation, noncompliance, liability
or potential liability relating to any Property or Mortgaged
Property nor any judicial proceedings or governmental or
administrative actions pending or, to the knowledge of Borrower,
threatened, to which Borrower would be named a party in connection
with any Property or Mortgaged Property which, if adversely
determined, would be reasonably likely to result in a MAC.
(ix) Medicare and Medicaid Certification. Subject to such
exceptions which, in the aggregate, are not reasonably likely to
have a MAC, to the best knowledge of Borrower after reasonable
investigation, (x) in the case of a Mortgage Interest, the
Mortgagor with respect to the covered Mortgaged Property, and (y)
in the case of a Property, the Operator for that Property, (a) is
validly licensed under applicable law to operate such Property or
Mortgaged Property and to conduct the business in which it is
currently engaged, (b) has received any applicable Certificate of
Need, Determination of Need or similar approval, and any amendments
or supplements, and such approvals are in full force and effect,
(c) (except where participation in Medicare or Medicaid is deemed
undesirable in the reasonable business judgment of the Operator or
Mortgagor) is validly certified or approved for participation in
Medicare and Medicaid by the applicable federal and state
authorities and is a party to provider agreements with respect to
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its participation in Medicare and Medicaid, which provider
agreements are in full force and effect, in each case only to the
extent that such Property or Mortgaged Property is of a character
eligible for participation in Medicare or Medicaid, and (d) no
proceedings have been initiated or notices issued to suspend or
revoke any such license, approval, certification or provider
agreement, except for notices of deficiency which are issued and
corrected in the ordinary course of business.
(x) Environmental Assessment Reports. In the case of a
Property or a Mortgage Interest, Agent shall have received from
Borrower copies of environmental reports on such Property or
Mortgage Property, each such report being dated (i) not earlier
than November 1, 1988, in the case of Facilities acquired before
the date of this Agreement, or (ii) within 6 months prior to its
becoming subject to a Mortgage (in the case of a Property) or prior
to its becoming an Eligible Mortgage hereunder, in the case of all
Mortgaged Properties covered by an Eligible Mortgage. In the case
of all such reports identified in clause (ii) above, such reports
shall consist of phase I environmental audits and, if so
recommended in such audits, phase II and other additional audits.
In each case, Agent shall have received evidence satisfactory to it
that all recommendations contained in any such report or audit
shall have been implemented, except where a failure to implement
any such recommendations in the aggregate is not reasonably likely
to cause a MAC.
(xi) Materials Provided to Agent. Borrower has satisfied the
requirements of paragraphs (d)(ii), (d)(iii), (e), (g), (i), (j),
(k), (l), (m), (n), (o), (w) and (bb) of Section 4.1 in respect of
such Property, or such Mortgage Interest and the Mortgaged Property
covered thereby, as the case may be, without, in any case, giving
effect to Section 4.2(b).
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement
and to make the Loans herein provided for, Borrower hereby covenants,
represents and warrants to Agent, Administrative Agent and each Lender
that:
3.1. Financial Condition. The balance sheet of Borrower as
at December 31, 1991 and December 31, 1992 and the related statements of
income, stockholders' equity and cash flows for the fiscal years ended
on such dates, certified by Ernst & Young, copies of which have
heretofore been furnished to Agent, are complete and correct and present
fairly the financial condition of Borrower as at such dates, and
stockholders' equity and cash flows for the fiscal years then ended.
The unaudited balance sheet of Borrower as at March 31, 1993, June 30,
1993 and September 30, 1993 and the related unaudited statements of
income, stockholders' equity and cash flows for the three month period
ended on March 31, 1993, on June 30, 1993 and on September 30, 1993
certified by a Responsible Officer, copies of which have heretofore been
furnished to Agent, are complete and correct and present fairly the
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financial condition of Borrower as at such date, and the stockholders'
equity and cash flows for the three month period then ended (subject to
normal year-end audit adjustment). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer,
as the case may be, and as disclosed therein). Borrower has no material
Contingent Obligation, contingent liabilities or liability for taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in the foregoing statements or in the notes thereto. Borrower
has previously delivered to Agent copies of (i) Greenery's annual report
on Form 10-K for the fiscal year ended September 30, 1992 filed with the
Commission and a copy of Greenery's quarterly reports on Form 10-Q for
the fiscal quarters ended December 31, 1992, March 31, 1993 and June 30,
1993 filed with the Commission, and (ii) Horizon's annual report on Form
10-K for the fiscal year ended May 31, 1993 filed with the Commission
and a copy of Horizon's quarterly report on Form 10-Q for the fiscal
quarter ended August 31, 1993 filed with the Commission.
3.2. No Material Adverse Effect. Since December 31, 1992 (a)
there has been no Material Adverse Effect, and no event has occurred and
no condition exists which could reasonably be expected to have a
Material Adverse Effect and (b) no dividends or other distributions have
been declared the payment of which could result in a Default or Event of
Default nor have any Common Shares, Preferred Shares or other equity
securities of Borrower been redeemed, retired, purchased or otherwise
acquired for value by Borrower.
3.3. Existence; Borrower's Compliance with Law. Borrower (a)
is a real estate investment trust duly organized, validly existing and
in good standing under the laws of the State of Maryland, (b) has full
power and authority and the legal right to own its property, to lease
(as lessee) the property that it leases as lessee, to lease (as lessor)
or sublease the property it owns and/or leases (as lessee) and to
conduct the business in which it is currently engaged, (c) is duly
qualified or licensed and is in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of
its business require such qualification, and (d) is in compliance with
all Requirements of Law except to the extent that the failure to comply
therewith is not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
3.4. Operator, Advisor, Credit Support Obligors; Compliance
with Law.
(a) To the best knowledge of Borrower, each Operator and
Mortgagor (i) has full power and authority and the legal right to own,
lease (or sublease) and operate (as applicable) the properties it
operates and to conduct the business in which it is currently engaged
with respect to any Facility, (ii) is duly qualified or licensed and is
in good standing under the laws of each jurisdiction where its
ownership, lease (or sublease) or operation of any Facility requires
such qualification, and (iii) is in compliance with all Requirements of
Law applicable to the Facilities operated by it, or applicable to the
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operation thereof except to the extent that the failure to comply
therewith is not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
(b) To the best knowledge of Borrower, the Advisor (i) has
full power and authority and legal right to conduct the business in
which it is presently engaged and to perform its obligations under the
Advisory Agreement, (ii) is duly qualified or licensed and is in good
standing under the laws of each jurisdiction where the conduct of its
business requires such qualification, and (iii) is in compliance with
all Requirements of Law except to the extent that the failure to comply
therewith is not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
(c) To the best knowledge of Borrower, the Credit Support
Obligors (i) have full power and authority and legal right to conduct
the business in which they are presently engaged and to perform their
obligations under the Credit Support Agreements to which they are
parties, and (ii) are in compliance with all Requirements of Law,
except, in the case of clauses (i) and (ii), to the extent that the
failure to comply therewith is not reasonably likely to have, in the
aggregate, a Material Adverse Effect.
3.5. Power; Authorization; Enforceable Obligations. Borrower
has the power and authority and the legal right to make, deliver and
perform each of the Loan Documents and to borrow hereunder and has taken
all necessary action to authorize the borrowings hereunder, and the
grant of the Liens securing such borrowings, on the terms and conditions
of the Loan Documents and to authorize the execution, delivery and
performance of each of the Loan Documents other than such filings with
the Attorney General of the Commonwealth of Massachusetts as have been
made. No consent or authorization of, filing with, or other act by or
in respect of any Governmental Authority is required in connection with
the borrowings hereunder or with the execution, delivery, performance,
validity or enforceability of the Loan Documents. This Agreement has
been, and each other Loan Document will be (subject to the terms of the
Pledge Escrow Agreement and the Security Documents Escrow Agreement),
duly executed and delivered on behalf of Borrower and this Agreement
constitutes, and each other Loan Document when executed and delivered
will constitute, a legal, valid and binding obligation of Borrower
enforceable against Borrower in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
3.6. No Legal Bar. The execution, delivery and performance
of this Agreement and the other Loan Documents, the borrowings hereunder
and the use of the proceeds thereof, will not violate any Requirement of
Law or any Contractual Obligation of Borrower, and will not result in,
or require, the creation or imposition of any Lien on any of its
properties or revenues pursuant to any Requirement of Law or Contractual
Obligation other than the Liens for the benefit of Lenders expressly
contemplated by this Agreement and the Security Documents.
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3.7. No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or, to the best knowledge and belief of Borrower, threatened by
or against Borrower or against any of its properties or revenues or, to
the best knowledge and belief of Borrower, by or against any of the
Operators and Mortgagors or against any of their respective properties
(a) with respect to this Agreement or the other Loan Documents, the
Leases, the Mortgage Interest Agreements, or any of the transactions
contemplated hereby or thereby, or (b) relating to the Properties, the
Mortgaged Properties or the ownership or the operation thereof or the
conduct of business thereon as presently conducted, which, in the case
of (a) or (b), is reasonably likely to have, in the aggregate, a
Material Adverse Effect.
3.8. No Default. Borrower is not in default under or with
respect to any Contractual Obligation in any respect which could have a
Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
3.9. Ownership of Mortgage Interests and Property; Liens.
(a) In the case of a Mortgage Interest, Borrower has good
record, marketable and indefeasible title to such Mortgage Interest. In
the case of a Property which is a Fee Interest, Borrower has good
record, marketable and indefeasible fee simple absolute title to such
Fee Interest. In the case of a Property which is a Leasehold Interest,
Borrower has good record and marketable title to such Leasehold
Interest. In the case of a Mortgage Interest in respect of which all or
any part of the Mortgaged Property is a fee interest in land and/or
buildings, structures, improvements and fixtures, the Mortgagor with
respect to such Mortgaged Property has good record, marketable and
indefeasible fee simple absolute title to such Mortgaged Property. In
the case of a Mortgage Interest in respect of which all or any part of
the Mortgaged Property is a leasehold estate, the Mortgagor with respect
to such Mortgaged Property has good record and marketable title to such
leasehold estate. In each of the foregoing cases, such title shall be
free and clear of all Liens and other matters affecting title except for
(i) the mortgages and security interests granted to Barclays Bank, PLC,
as agent, pursuant to the Amended and Restated Mortgage, Deed of Trust,
Open-End Mortgage, Security Agreement, Fixture Filing and Financing
Statement, dated as of August 31, 1989 (the "Barclays Mortgage") in the
Properties described in Schedule 3, which mortgages and security
interests shall have been terminated as provided in Section 4.1(z),
(ii) such other matters affecting title as are set forth in the Title
Report for each such Eligible Property or in the Title Report for each
Eligible Mortgage and Mortgaged Property covered by an Eligible
Mortgage, and (iii) such other matters not reasonably likely to have, in
the aggregate, a Material Adverse Effect.
(b) The buildings, structures, and other improvements located
on each Facility are in good operating condition and repair (ordinary
wear and tear which are not such as to materially and adversely affect
the operations of the business conducted thereon, excepted), free of any
material structural or engineering defects known to Borrower on the date
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hereof and are suitable for their present uses, subject to such
exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect.
(c) All water, sewer, gas, electricity, telephone and other
utilities serving each Facility are supplied directly to such Facility
by public utilities and enter such Facility through adjoining public
streets or, if they pass through adjoining private land, do so in
accordance with valid public easements which inure to Borrower's benefit
(in the case of a Facility in which Borrower has a Fee Interest) or a
mortgagor's or beneficiary's benefit (in the case of a Facility in which
Borrower is a mortgagor or beneficiary, as applicable, of a loan secured
in whole or in part by a Lien on a Facility), subject to such exceptions
which are not reasonably likely to have, in the aggregate, a Material
Adverse Effect. All of such utilities are presently installed and
operating and are in good and safe condition, subject to such exceptions
which are not reasonably likely to have, in the aggregate, a Material
Adverse Effect. All material assessments for public improvements that
have been made against the Facilities have been paid or provided for,
except that in the case of any assessments that are payable in
installments, all installments due as of the date hereof have been paid
or provided for, subject to such exceptions which are not reasonably
likely to have, in the aggregate, a Material Adverse Effect.
(d) Borrower and, to the best knowledge and belief of
Borrower, the Operators and Mortgagors, have not received notice of any
pending, threatened or contemplated condemnation proceeding or similar
taking affecting the Facilities, or any portion thereof, or any sale or
other disposition of the Facilities or any portion thereof in lieu of
condemnation or similar taking, in each case, subject to such exceptions
which are not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
(e) All Real Property Permits from all Governmental
Authorities having jurisdiction over the Facilities or any portion
thereof, the absence of which could materially impair the use of any
Facility for the purposes for which it is currently used, and from all
insurance companies and fire rating and similar boards and organizations
required to have been issued to Borrower or any Operators and Mortgagors
of such Facility, as the case may be, to enable such Facility or any
portion thereof to be lawfully occupied and used as currently so
occupied or used have been issued and are in full force and effect,
subject to such exceptions which are not reasonably likely to have, in
the aggregate, a Material Adverse Effect. Borrower has not received or
been informed by a third party, including the Operators and Mortgagors
of the Facilities, of the receipt by it of any notice from any
Governmental Authority having jurisdiction over the Facilities or any
portion thereof or from any insurance company or fire rating or similar
board or organization threatening a suspension, revocation, modification
or cancellation of any Real Property Permit, subject to such exceptions
which are not reasonably likely to have, in the aggregate, a Material
Adverse Effect.
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(f) Borrower has heretofore made available to Agent true,
correct and complete copies of each Lease, Mortgage Interest Agreement
and Credit Support Agreement relating to all Eligible Properties and all
Eligible Mortgages (other than the Credit Support Agreements with
respect to the Property known as Monterey Nursing Home in Grove City,
Ohio) each of which as of the First Borrowing Date is included in
Schedule 2. Each of the Leases, Mortgage Interest Agreements and Credit
Support Agreements relating to Properties and Mortgage Interests
(including Properties which are not Eligible Properties and Mortgage
Interests which are not Eligible Mortgages) is in full force and effect
and is a legally valid and binding obligation of Borrower and the other
parties thereto, subject to such exceptions which are not reasonably
likely to have, in the aggregate, a Material Adverse Effect. Borrower
has not mortgaged, pledged or otherwise encumbered any of the Leases or
Mortgage Interest Agreements or its right to obtain rental, interest or
other payments thereunder except for the Barclays Mortgage which will be
discharged on the First Borrowing Date, and except for Liens permitted
by Section 6.8. Borrower has not collected any rents becoming due under
any Lease more than 30 days in advance (except an amount equal to one
month's installment of rent under a Lease). All rent and other sums and
charges payable by any Operator under each Lease to which it is a party
are current, no notice of default or termination under any such Lease is
outstanding, no termination event or condition or uncured default on the
part of an Operator exists under any Lease, and no event of default has
occurred which, with the giving of notice or the lapse of time or both,
would constitute such a default or termination event or condition or
uncured default on the part of Borrower or the Operators (as the case
may be), subject to such exceptions which are not reasonably likely to
have, in the aggregate, a Material Adverse Effect. All payments
required from any Mortgagor under any Mortgage Interest Agreement to
which it is a party are current, no notice of default or acceleration
under any such Mortgage Interest Agreement is outstanding, no default or
condition or uncured default on the part of the Mortgagor exists under
any Mortgage Interest Agreement, and no event of default has occurred
which, with the giving of notice or the lapse of time or both, would
constitute such a default or termination event or condition or uncured
default on the part of the Mortgagor, subject to such exceptions which
are not reasonably likely to have, in the aggregate, a Material Adverse
Effect. All payments required from any Credit Support Obligor in
respect of any Credit Support Agreement for the Lease of an Property or
for a Mortgage Interest are current, no notice of default or
acceleration under any such Credit Support Agreement is outstanding, and
no default or condition or uncured default on the part of such Credit
Support Obligor exists under any such Credit Support Agreement, subject
to such exceptions which are not reasonably likely to have, in the
aggregate, a Material Adverse Effect. As to all of the Leases, Borrower
has performed all of its repair and maintenance obligations (if any)
and, to the best knowledge and belief of Borrower, each Operator and
Mortgagor under each Lease and Mortgage to which it is a party has
performed all of its repair and maintenance obligations, subject to such
exceptions which are not reasonably likely to have, in the aggregate, a
Material Adverse Effect.
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(g) Borrower has good record and marketable title in fee
simple to or valid mortgage interests in all its real property, other
than the Properties and Mortgaged Properties, as to which Borrower has
made the representation set forth in subsection (a) of this Section 3.9,
and good title to all its other property other than the Properties, and
none of such property is subject to any Lien for borrowed money as of
the date hereof, except for (i) the Barclays Mortgage which mortgage and
any security interest granted thereunder shall have been terminated as
provided in Section 4.1(z), any mortgage or similar instrument given to
secure the obligations of Borrower under the Prior Term Loan Agreement
and Liens permitted by Section 6.8, (ii) Liens permitted pursuant to
clause (ii) or (iii) of Section 6.8, and (iii) exceptions which are not
reasonably likely to have, in the aggregate, a Material Adverse Effect.
3.10. No Burdensome Restrictions. No Contractual Obligation
of Borrower or, to Borrower's best knowledge and belief, of any of the
Operators and Mortgagors and no Requirement of Law currently has a
Material Adverse Effect, or insofar as Borrower may reasonably foresee
may have a Material Adverse Effect.
3.11. Taxes. Borrower has filed or caused to be filed all
tax returns which to the best knowledge and belief of Borrower are
required to be filed, and has paid or caused to be paid all taxes shown
to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority
(other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books
of Borrower); and no tax Liens have been filed and, to the knowledge of
Borrower, no claims are being asserted with respect to any such taxes,
fees or other charges.
3.12. Federal Regulations. Borrower is not engaged and will
not engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of
the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.
No part of the proceeds of the Loans hereunder will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any
purpose which violates, or which would be inconsistent with, the
provisions of the Regulations of such Board of Governors. If requested
by Agent, Borrower will furnish to Agent and each Lender a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to
in said Regulation U to the foregoing effect.
3.13. Employees. Borrower has no employees and has never
engaged any employees.
3.14. ERISA. No ERISA Affiliate has been, since July 1,
1974, an "employer", as defined in Section 3(5) of ERISA, in respect of
any Plan or making contributions to any Multiemployer Plan.
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3.15. Status as REIT. Borrower is organized in conformity
with the requirements for qualification as a real estate investment
trust under the Code. Borrower's failure to elect to be treated as a
real estate investment trust under the Code for its fiscal year ended
December 31, 1986 has not and will not have any Material Adverse Effect.
Borrower has met all of the requirements for qualification as a real
estate investment trust under the Code for its fiscal years ended
December 31, 1991 and 1992. Borrower is in a position to qualify for
its current fiscal year as a real estate investment trust under the Code
and its proposed methods of operation will enable it to so qualify.
3.16. Restrictions on Incurring Indebtedness. Borrower is
not (a) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended, or (b) a "holding company" as defined in, or
otherwise subject to, regulation under the Public Utility Holding
Company Act of 1935. Borrower is not subject to regulation under any
federal or state statute or regulation which limits its ability to incur
the indebtedness described in this Agreement.
3.17. Subsidiaries. Borrower has no Subsidiaries at the date
hereof.
3.18. Compliance with Environmental Laws. Except as
specifically set forth in the environmental reports delivered to Agent
and listed on Schedule 4 or otherwise set forth on Schedule 4, Borrower
and, to the best knowledge of Borrower, each Operator and each Mortgagor
of the Facilities is in compliance with all applicable statutes, laws,
rules, regulations and orders of all Governmental Authorities relating
to environmental protection, pollution control and Hazardous Materials
and with respect to the conduct of its business and the ownership of its
properties, except for such noncompliance which would not result in
imposition of Liens, fines, penalties, injunctive relief or other civil
or criminal liabilities and which, in the aggregate, could not have a
Material Adverse Effect. Borrower shall comply (in respect of each
Property) with all of the provisions of Article 33 of the form of
Mortgage attached hereto as Exhibit E-1 to be complied with by the
"Mortgagor" (whether or not such Property is covered by a Mortgage which
has been released from escrow pursuant to the Security Documents Escrow
Agreement).
3.19. Pollution; Hazardous Materials. In connection with the
acquisition and ownership of its interests in the Properties and
Mortgage Interests, Borrower has made and will continue to make such
inquiries, and has and will continue to cause such testing, surveying,
inspection or other action, with respect to each Facility as is
necessary or desirable in connection with Hazardous Materials which
might be present in the air, soil, surface water or groundwater at such
Facility. Except as specifically set forth in the environmental reports
delivered to Agent and listed on Schedule 4 or otherwise set forth on
Schedule 4 and except for such exceptions which are not reasonably
likely to have, in the aggregate, a Material Adverse Effect, there are
not, and, to the knowledge of Borrower after diligent inquiry, were not
previously, any Hazardous Materials present in the air, soil, surface
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water or groundwater at any Facility and no Hazardous Materials (except
Hazardous Materials maintained in accordance with all Requirements of
Law and necessary for the business operations of any such Facility as a
health care facility, including, without limitation, petroleum used for
heating oil and certain medications) are used in the operation of any
Facility. Borrower is not aware of any claim or notice of violation,
alleged violation, noncompliance, liability or potential liability
relating to any Facility nor any judicial proceedings or governmental or
administrative actions pending or, to the knowledge of Borrower,
threatened, to which Borrower would be named a party in connection with
any Facility which, if adversely determined, would be reasonably likely
to result in a Material Adverse Effect.
3.20. Securities Laws. None of the Common Shares, Preferred
Shares or other equity securities of Borrower has been issued in
violation of the Securities Act of 1933, as amended, or the securities
or "blue sky" or other applicable laws or regulations of any applicable
jurisdiction.
3.21. Declaration of Trust, By-Laws, Advisory Contract, etc.
The copies of the Declaration of Trust and By-Laws of Borrower and the
Advisory Contract which have been furnished to Agent are true, correct
and complete copies thereof as in effect on the date of this Agreement.
3.22. Disclosures. The financial statements referred to in
Section 3.1 do not, nor does this Agreement, the other Loan Documents,
or any other written statement furnished by or on behalf of Borrower to
any Lender in connection with the transactions contemplated hereby or
thereby, contain any untrue statement of a material fact or omit a
material fact necessary to make the statement contained therein or
herein not misleading.
3.23. Medicare and Medicaid Certification. Subject to such
exceptions which, in the aggregate, are not reasonably likely to have a
Material Adverse Effect, to the best knowledge of Borrower after
reasonable investigation, each Operator with respect to each of the
Properties that it operates, and each Mortgagor with respect to each of
the Mortgaged Properties that it owns, (a) is validly licensed under
applicable law to operate such Property or Mortgaged Property and to
conduct the business in which it is currently engaged, (b) has received
any applicable Certificate of Need, Determination of Need or similar
approval, and any amendments or supplements, and such approvals are in
full force and effect, (c) (except where participation in Medicare or
Medicaid is deemed undesirable in the reasonable business judgment of
the Operator or Mortgagor) is validly certified or approved for
participation in Medicare and Medicaid by the applicable federal and
state authorities and is a party to provider agreements with respect to
its participation in Medicare and Medicaid, which provider agreements
are in full force and effect, in each case only to the extent that such
Property or Mortgaged Property is of a character eligible for
participation in Medicare or Medicaid, and (d) no proceedings have been
initiated or notices issued to suspend or revoke any such license,
approval, certification or provider agreement, except for notices of
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deficiency which are issued and corrected in the ordinary course of
business.
3.24. Offering, Etc., of Securities. Neither Borrower nor
any agent with the authority of Borrower has offered any securities
similar to the Notes, nor solicited any offer to buy any such
securities, in a manner which would render the offering, sale or
issuance of the Notes subject to the registration requirements of the
Securities Act of 1933, as amended.
SECTION 4. CONDITIONS PRECEDENT
4.1. Conditions to Loans. The obligation of each Lender to
make a Loan hereunder on the First Borrowing Date and, subject to
Section 4.2, on each Subsequent Borrowing Date, is subject to the
satisfaction of the following conditions precedent on each such date:
(a) Note. Agent shall have received for the account of each
Lender a Note conforming to the requirements hereof and executed by a
duly authorized officer of Borrower.
(b) Representations and Warranties. The representations and
warranties made by Borrower herein or made by any Person in the other
Loan Documents or which are contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with any of the Loan Documents, shall be true, correct and
accurate in all material respects on and as of the Borrowing Date for
the Loan as if made on and as of such date unless stated to relate to a
specific earlier date, in which case such representations and warranties
shall be true, correct and complete in all material respects as of such
earlier dates.
(c) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date either before
or after giving effect to the Loan to be made on the Borrowing Date.
(d) Legal Opinion. Agent shall have received, with a
counterpart for each Lender, a favorable opinion of (i) Messrs. Sullivan
& Worcester, counsel to Borrower, (ii) local counsel admitted to
practice law in each of the States where any of the Properties are
located (including Properties which are not Eligible Properties) stating
that the taking of an unrecorded mortgage on property within such State
will not invalidate or render unenforceable the indebtedness secured by
such unrecorded mortgage, (iii) local counsel admitted to practice law
in each of the States where any of the Eligible Properties and Mortgaged
Properties covered by Eligible Mortgages are located, substantially in
the form attached as Exhibit L, together with such assumptions,
qualifications and variations as are reasonably customary in the
relevant jurisdiction and are reasonably acceptable to Agent, and
(iv) counsel to the Advisor, in each case, addressed to Agent and the
Lenders and dated the Borrowing Date, and in form and substance
satisfactory to Agent; provided that Agent in its sole discretion may
accept written assurances satisfactory to it in lieu of the opinion
described in clause (ii) of this Section 4.1(d).
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(e) Appraisals. Agent shall have received copies of
Appraisals for each of the Eligible Properties and Mortgaged Properties
covered by Eligible Mortgages.
(f) Organizational Documents. Agent shall have received
certified copies of the Declaration of Trust, Bylaws and all resolutions
of the Board of Trustees of Borrower approving this Agreement and the
other Loan Documents and the transactions contemplated hereby and
thereby, and of all documents evidencing other necessary corporate
action and approvals, if any, of Governmental Authorities with respect
to this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby.
(g) Good Standing and Existence. Agent shall have received
certificates of the appropriate governmental officials of the State of
Maryland and of any other State where Borrower conducts business, and in
each jurisdiction in which a Relevant Operator or Mortgagor operates an
Eligible Property or a Mortgaged Property covered by an Eligible
Mortgage, dated not more than 30 days prior to the date of the
borrowing, to the effect that Borrower and the applicable Relevant
Operator or Mortgagor (in the case of jurisdictions in which such
Relevant Operator or Mortgagor operates an Eligible Property or
Mortgaged Property covered by an Eligible Mortgage) is validly existing
and is in good standing with respect to payment of franchise and similar
taxes and is duly qualified to transact business therein; provided that
Agent may in its sole discretion waive any of the requirements of this
clause (g).
(h) Advisory Agreement. Agent shall have received copies of
the Advisory Agreement certified by a Responsible Officer.
(i) Leases; Mortgages; Credit Support Agreements. Agent
shall have completed a review of the Leases, the Credit Support
Agreements and the Mortgage Interest Agreements in respect of Eligible
Properties and Eligible Mortgages, all of which shall be satisfactory in
form and substance to Agent and its counsel.
(j) Properties. Agent shall have received such information
and access to the Eligible Properties and Mortgaged Properties covered
by Eligible Mortgages as it shall have requested and shall be satisfied
with such information and access.
(k) Evidence of Compliance. Agent shall have received such
evidence, in form and substance satisfactory to Agent and its counsel,
that each of Borrower, each Relevant Operator, each Relevant Mortgagor,
the Advisor and each of the Eligible Properties and Mortgaged Properties
covered by Eligible Mortgages are and have been at all relevant times in
all respects in compliance with all applicable zoning, building,
environmental and Hazardous Material, and other Requirement of Law, in
each case subject to such exceptions as are not reasonably likely to
have a MAC with respect to any Eligible Property or Eligible Mortgage,
such evidence to consist of a certificate of a Responsible Officer of
Borrower confirming such compliance.
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(l) Health Care Licenses, etc. Agent shall have received for
each Eligible Property and each Mortgaged Property covered by an
Eligible Mortgage (i) to the extent available, a copy of a current OSCAR
Report (full facility profile) issued by the applicable state health
regulatory agency in each state where such Eligible Property or
Mortgaged Property covered by an Eligible Mortgage is located and
(ii) copies of current licenses in Borrower's possession for the
operation of such Eligible Property or Mortgaged Property as a health
care facility. Borrower shall use all reasonable efforts to obtain
copies of any such licenses not in Borrower's possession promptly after
the relevant Borrowing Date and deliver such copies to Agent, but in any
event shall deliver such copies no later than 60 days after the relevant
Borrowing Date.
(m) Insurance. With respect to each Eligible Property and
each Eligible Mortgage, Agent shall have received binders or
certificates (to the extent available to Borrower) with respect to all
insurance required to be maintained by the Operators pursuant to the
Leases, the Mortgages or any of the other Loan Documents or by the
Mortgagors pursuant to any Mortgage Interest Agreement, the Mortgages or
any of the other Loan Documents. Borrower shall use all reasonable
efforts to obtain copies of any such binders or certificates not
available to Borrower promptly after the relevant Borrowing Date and
deliver such binders or certificates to Agent, but in any event shall
deliver such copies no later than 60 days after the relevant Borrowing
Date.
(n) Security Documents and Instruments.
(i) Agent shall have received (A) an original copy of
the Subordination Agreement duly executed by the Advisor, an original
copy of the Security Documents Escrow Agreement duly executed by
Borrower and Security Documents Escrow Agent, and an original copy of
the Pledge Escrow Agreement duly executed by Borrower and Pledge Escrow
Agent; (B) all necessary consents relating to the execution of the
Security Documents from third parties (including, without limitation,
the consent of and estoppel certificate from the lessor in respect of
any Leasehold Interest to the mortgaging by Borrower of such interest)
so that the same shall be valid and not result in any violation of any
Contractual Obligation running in favor of such third party; and (C) all
satisfactions of mortgages, termination statements under the Uniform
Commercial Code and other instruments releasing Liens or security
interests in favor of third parties and other encumbrances as may be
required to be released or discharged pursuant to the terms of this
Agreement or Title Reports or other evidence satisfactory to Agent
evidencing the satisfaction or discharge of such Liens, security
interests and other encumbrances.
(ii) Agent shall have received evidence satisfactory to
it that Borrower shall have delivered to Pledge Escrow Agent, to hold in
accordance with the Pledge Escrow Agreement, (A) originals of each of
the Subject Notes (as such term is defined in the Collateral Assignment)
(but, in the case of Mortgage Interests which are not Eligible
Mortgages, only to the extent available) and any stock certificates or
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other "instruments" (as such term is defined in the Uniform Commercial
Code in effect in the State of New York) that are pledged to Borrower
pursuant to the Credit Support Agreements assigned to Administrative
Agent pursuant to the Collateral Assignment, (B) originals of the
Subject Mortgages (as such term is defined in the Collateral Assignment)
(but, in the case of Mortgage Interests which are not Eligible
Mortgages, only to the extent available), (C) copies of any of the other
Mortgage Interest Agreements or other Credit Support Agreements assigned
to Administrative Agent pursuant to the Collateral Assignment, all of
which shall be listed on Schedule I, II or III of the Collateral
Assignment and (D) originals (but only to the extent available) of any
Credit Support Agreements in respect of any of the leases to the extent
that the same constitute "instruments" under the provisions of the
Uniform Commercial Code in effect in the State of New York.
(iii) Agent shall have received evidence satisfactory to
it that Borrower shall have delivered to Security Documents Escrow
Agent, to hold in accordance with the Security Documents Escrow
Agreement, the following agreements and documents: an original copy of
a Mortgage covering each Property (other than that certain Leasehold
Interest commonly known as Palm Springs Health Care, 227 South Sunrise
Way, Palm Springs, California 92262) duly executed and acknowledged by
Borrower and in proper form for recording, an original copy of an
Assignment of Mortgage in respect of each Mortgage Interest duly
executed and acknowledged by Borrower and in proper form for recording,
an original copy of an Assignment of Lease in respect of each Property
(other than that certain Leasehold Interest commonly known as Palm
Springs Health Care, 227 South Sunrise Way, Palm Springs, California
92262) duly executed and acknowledged by Borrower and in proper form for
recording, an original copy of the Collateral Assignment duly executed
by Borrower and Administrative Agent, the Financing Statements duly
executed by Borrower and, if required, by Administrative Agent, in
proper form for filing, an original copy of each Power of Attorney duly
executed and acknowledged by Borrower and in proper form for recording,
and all other documentation (without duplication of documents described
in clauses (i) or (ii) of this Section 4.1(n)) which Agent deems
appropriate to obtain and maintain a first priority unperfected Lien for
Administrative Agent and the Lenders and giving Administrative Agent and
the Lenders the ability to perfect such Lien without further action or
consent being required from Borrower, in favor of Administrative Agent
and the Lenders on each Property (other than that certain Leasehold
Interest commonly known as Palm Springs Health Care, 227 South Sunrise
Way, Palm Springs, California 92262), Mortgage Interest, Lease, Credit
Support Agreement and all other relevant items of Collateral, each duly
executed by Borrower, and the same shall be in full force and effect and
shall grant or create the rights, powers, priorities, remedies and
benefits contemplated herein or therein, as the case may be.
(o) Title Reports, Surveys and UCC Search. Agent shall have
received and approved (i) the Title Report and the Survey in respect of
each Eligible Property and Mortgaged Property covered by an Eligible
Mortgage, and (ii) in the case of the initial Loans only, a UCC Search
but only in the jurisdiction where Borrower has its principal place of
business.
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(p) No Material Adverse Effect. No Material Adverse Effect
specified in clause (a)(i), (b), (c)(i) or (d) of the definition thereof
shall have occurred since December 31, 1992.
(q) Solvency of Borrower. Both after and immediately before
the making of the Loan on the Borrowing Date, Borrower shall be Solvent.
(r) Compensation. All obligations of Borrower to pay fees
and provide compensation and reimbursement of costs and expenses to
Agent, Administrative Agent and the Lenders or their designees as of the
Borrowing Date hereunder or otherwise in connection with the financing
contemplated hereby shall have been satisfied.
(s) Legality of Loans. The making of the Loans hereunder by
the Lenders and the acquisition of the Notes shall be permitted as of
the Borrowing Date by all applicable Requirements of Law and shall not
subject any Lender to any penalty or other onerous condition in or
pursuant to any such Requirement of Law or result in a Material Adverse
Effect.
(t) Borrowing Certificate. Administrative Agent shall have
received, with a counterpart for each Lender, a Notice of Borrowing,
dated the Borrowing Date, substantially in the form of Exhibit H, with
appropriate insertions and attachments satisfactory in form and
substance to Agent and its counsel, executed by a Responsible Officer.
(u) Real Property List. Agent shall have received from a
Responsible Officer a list of all Facilities owned by Borrower or in
which Borrower has an interest, identifying the nature of such interest
and the Appraised Value, if available, relating thereto and specifying
in respect of each Facility each of the following:
(i) whether as of the date hereof such Facility is (A) an
Eligible Property or a Mortgaged Property covered by an Eligible
Mortgage, (B) a Property which is neither an Eligible Property nor
a Mortgaged Property covered by a Mortgage Interest Agreement which
is an Eligible Mortgage, or (C) a Facility which is subject to a
Lien of one or more financial institutions permitted pursuant to
clause (ii) or (iii) of Section 6.8 (in which case Borrower shall
specify the nature of such Lien and the amount secured thereby);
(ii) in respect of each Eligible Property, the acquisition
cost of Borrower in respect of such Eligible Property; and
(iii) in respect of each Eligible Mortgage, the then
outstanding principal amount due to Borrower from the Relevant
Mortgagor in respect of such Eligible Mortgage.
(v) Environmental Assessment Reports. Agent shall have
received from Borrower copies of environmental reports on all the
Properties (including Properties which are not Eligible Properties) and
Mortgaged Properties but only those covered by Eligible Mortgages, each
such report being dated (i) not earlier than November 1, 1988, in the
case of Facilities acquired before the date of this Agreement, or
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(ii) within 6 months prior to its becoming subject to a Mortgage (in the
case of a Property) or prior to its becoming an Eligible Mortgage
hereunder, in the case of all Mortgaged Properties covered by an
Eligible Mortgage. In the case of all such reports identified in clause
(ii) above, such reports shall consist of phase I environmental audits
and, if so recommended in such audits, phase II and other additional
audits. In each case, Agent shall have received evidence satisfactory
to it that all recommendations contained in any such report or audit
shall have been implemented except (x) in the case of a report or audit
in respect of an Eligible Property or a Mortgaged Property covered by an
Eligible Mortgage, where a failure to implement any such recommendations
in the aggregate is not reasonably likely to cause a MAC, and (y) in the
case of any other report or audit, where a failure to implement any such
recommendations in the aggregate is not reasonably likely to cause a
Material Adverse Effect.
(w) Non-Disturbance Agreements. Each Relevant Operator shall
have delivered to Administrative Agent and Administrative Agent shall
have delivered to each Relevant Operator executed copies of the Non-
Disturbance Agreements with respect to the Leases; provided that for any
Lease in respect of any Eligible Property as of the First Borrowing
Date, executed copies of the Non-Disturbance Agreement with respect to
such Lease may be delivered at any time up until the ninetieth (90th)
day following the First Borrowing Date.
(x) Borrowing Base. After the making of the Loans on any
Borrowing Date, the aggregate principal amount of all Loans outstanding
shall not exceed the Maximum Aggregate Availability, the aggregate
principal amount of all General Corporate Loans outstanding shall not
exceed the lesser of $20,000,000 or 16% of the Maximum Aggregate
Availability and Agent and Administrative Agent shall have received a
Borrowing Base Certificate dated as of a date not more than five (5)
Business Days prior to the relevant Borrowing Date to such effect.
(y) Intentionally Omitted
(z) Barclays Bank PLC. Borrower shall have irrevocably
directed Administrative Agent to pay to Barclays Bank PLC (as Agent
under the Prior Loan Agreement) an amount equal to the principal,
accrued interest and all other amounts outstanding under the Prior Loan
Agreement (which agreement shall not have been amended after the date
hereof) out of the proceeds of the initial Loans hereunder, in payment
of all principal outstanding under the Prior Loan Agreement, and
Barclays Bank PLC shall have delivered all documents necessary to
release the Liens securing the Prior Loan Agreement.
(aa) Merger of Greenery into Horizon. Greenery shall have
merged into Horizon, and Horizon shall be the surviving entity of such
merger.
(bb) Additional Matters. Agent shall have received such
other approvals, opinions or documents as it may reasonably request and
all documents and legal matters in connection with the transactions
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contemplated by this Agreement and the other Loan Documents shall be
satisfactory in form and substance to Agent and its counsel.
Notwithstanding the foregoing, with respect to any Property
leased by ECA, ECA Nebraska or ECA Holdings as of the First Borrowing
Date or any Mortgage Interest covering a Mortgaged Property that is
owned by ECA, ECA Nebraska or ECA Holdings as of the First Borrowing
Date, none of the foregoing conditions precedent shall be required to be
satisfied with respect to such Property or such Mortgage Interest as of
the First Borrowing Date; provided that such Property or Mortgage
Interest is not required to be an Eligible Property or Eligible Mortgage
included in the Borrowing Base in order to satisfy Section 4.1(x) on the
First Borrowing Date (after giving effect to the initial Loans made on
the First Borrowing Date); and provided further that all such conditions
precedent, to the extent they would otherwise be applicable to such
Property or Mortgage Interest but for this paragraph, shall be satisfied
no later than the earlier of (x) thirty (30) days after the First
Borrowing Date or (y) the first Subsequent Borrowing Date when such
Property or Mortgage Interest is required to be an Eligible Property or
Eligible Mortgage included in the Borrowing Base in order to satisfy
Section 4.1(x) on such Subsequent Borrowing Date (after giving effect to
the Loans made on such Subsequent Borrowing Date).
4.2. Subsequent Borrowings. Notwithstanding Section 4.1,
(a) the provision by or on behalf of Borrower to Agent on
each Subsequent Borrowing Date of evidence in form and substance
satisfactory to the Agent that no material change has occurred to the
relevant date in respect of the facts, circumstances or laws relevant to
the conditions precedent set forth in paragraphs (d)-(h), (k), (v)-(w)
and (z)-(bb) of Section 4.1 shall constitute satisfaction of such
conditions on such Borrowing Date; provided that if the conditions which
would be required to be satisfied by Section 4.1 but for the preceding
provisions of this Section 4.2(a) relate to a Facility, Operator,
Mortgagor, Credit Support Obligor or any other Person or matter in
respect of which such conditions have not previously been satisfied in
accordance with Section 4.1, then the preceding provisions of this
Section 4.2(a) shall not apply to the extent of the information
described in those conditions; and
(b) where Borrower requests a Loan hereunder (other than a
General Corporate Loan or a Loan to be made on the First Borrowing Date)
to acquire an interest in a Facility, which interest is not required to
be an Eligible Property or Eligible Mortgage included in the Borrowing
Base in order to satisfy Section 4.1(x) on the date such Loan is made
(after giving effect to such Loan), paragraphs (d)(iii), (e), (g), (i),
(j), (k), (l), (m), (n), (o), (v), (w) and (bb) of Section 4.1 shall not
apply in respect of such Property or Mortgage Interest to the making of
such Loan.
SECTION 5. AFFIRMATIVE COVENANTS
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Borrower hereby agrees that, so long as the Commitments remain
in effect, any Note remains Outstanding and unpaid or any other amount
is owing to the Lenders hereunder, Borrower shall:
5.1. Financial Statements. Furnish to Administrative Agent,
with sufficient copies for each Lender:
(a) as soon as available, but in any event within ninety days
after the end of each fiscal year of Borrower and within one hundred
thirty-five days after the end of each fiscal year of each Relevant
Operator and Mortgagor and Relevant Credit Support Obligor, a copy of
each of the following (except for any thereof to the extent none of the
Leases, Mortgage Interest Agreements or Credit Support Agreements
requires the provision of any of the following to Borrower within such
period, in respect of which Borrower's obligation to furnish copies to
each Lender shall be satisfied by furnishing copies as soon as
practicable after Borrower receives one or more copies thereof): the
audited balance sheet prepared on a consolidated basis for Borrower and
for each Relevant Operator and Mortgagor and Relevant Credit Support
Obligor, each as at the end of such year and the related statements or
income, stockholders' equity and cash flows for such year, setting forth
in each case in comparative form the figures for the previous year,
certified without a "going concern" or like qualification or exception,
or qualification arising out of the scope of the audit, by independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than
forty-five days after the end of each of the first three quarterly
periods of each fiscal year of Borrower and not later than seventy-five
days after the end of each of the first three quarterly periods of each
fiscal year of each Relevant Operator, Relevant Mortgagor, Relevant
Credit Support Obligor and each Operator that is a public company,
copies of each of the following (except for any thereof to the extent
none of the Leases, Mortgage Interest Agreements or Credit Support
Agreements requires the provision of any of the following to Borrower
within such period, in respect of which Borrower's obligation to furnish
copies to each Lender shall be satisfied by furnishing copies as soon as
practicable after Borrower receives one or more copies thereof): the
unaudited balance sheet prepared on a consolidated basis for Borrower
and for each Relevant Operator, Relevant Mortgagor, Relevant Credit
Support Obligor and each Operator that is a public company, each as at
the end of each such quarter and the related unaudited statements of
income, stockholders' equity and cash flows for such quarterly period
and the portion of the fiscal year through such date, setting forth in
each case in comparative form the figures for the previous year,
certified by a Responsible Officer of such entity as being fairly stated
and complete and correct in all material respects (subject to normal
year-end audit adjustments); all such financial statements referred to
in clauses (a) and (b) above to be complete and correct in all material
respects and be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein
(except as approved by such accountants or officer, as the case may be,
and disclosed therein).
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5.2. Certificates; Other Information. Furnish to
Administrative Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial
statements of Borrower referred to in Section 5.1(a) above, a
certificate of Borrower's independent certified public accountants
certifying such financial statements of Borrower stating that in making
the examination necessary therefor, no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of Borrower's financial
statements referred to in Section 5.1(a) and (b) above, a certificate of
a Responsible Officer (i) stating that, to the best of such officer's
knowledge, Borrower during such period has observed or performed all of
its covenants and other agreements, and satisfied every condition,
contained in the Loan Documents to be observed, performed or satisfied
by it, and that such officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate, and
(ii) showing in detail the calculations supporting such statement in
respect of Sections 6.1(a), 6.1(b) and 6.1(c);
(c) within ten days of the end of each month after the First
Borrowing Date, a Borrowing Base Certificate as at the end of such month
signed by a Responsible Officer;
(d) within five days of receipt thereof, copies of any
financial statements or other information furnished to Borrower pursuant
to the Leases, Mortgage Interest Agreements and/or Credit Support
Agreements in respect of Eligible Properties and Eligible Mortgages;
(e) within forty-five days after the end of each calendar
quarter following the First Borrowing Date, a written report signed by a
Responsible Officer describing in reasonable detail any acquisitions or
dispositions of any Fee Interests or Mortgage Interests by Borrower or
any other material property of Borrower which shall include, without
limitation (i) in the case of acquisitions of property, a description of
(A) the geographic area and type of property, (B) the current and
anticipated cash flow from the property, (C) the operators of such
property and (D) financing of the acquisition, (ii) with respect to
dispositions of property, a description of (A) the amount and use of
proceeds from such disposition and (B) the reasons for the disposition,
and (iii) a copy of any appraisals of the property acquired or disposed
of;
(f) within 30 days prior to the first day of each fiscal year
of Borrower, a copy of the projections by Borrower of the operating
budget and cash flow of Borrower for such fiscal year, such projections
to be accompanied by a certificate of a Responsible Officer to the
effect that such projections have been prepared on the basis of sound
financial planning practice and that such officer has no reason to
believe they are incorrect or misleading in any material respect;
(g) promptly after the same are sent, copies of all financial
statements and reports which Borrower sends to its holders of Common
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Shares, Preferred Shares or other equity securities, and promptly after
the same are filed by Borrower and within ten days after the same are
filed by any Relevant Operator, Relevant Mortgagor or Relevant Credit
Support Obligor copies of all financial statements and reports which
Borrower or any Relevant Operator, Relevant Mortgagor or Relevant Credit
Support Obligor may make to, or file with, the Commission or any
successor or analogous Governmental Authority; and
(h) promptly, such additional financial and other information
respecting the financial or other condition of the Relevant Operators,
the Relevant Mortgagors, the Relevant Credit Support Obligors, the
Advisor or Borrower or the status or condition of the Facilities or the
operation thereof which Borrower is entitled to or can otherwise
reasonably obtain as Agent may from time to time reasonably request.
5.3. Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the
case may be, all its Indebtedness and other obligations of whatever
nature, except, in the case of Indebtedness other than that described in
Section 7.1(e), when the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, and reserves in
conformity with GAAP with respect thereto have been provided on the
books of Borrower.
5.4. Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted
by it, and preserve, renew and keep in full force and effect its
existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct
of its business; and comply with all Contractual Obligations and
Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, have a Material Adverse Effect.
5.5. Leases and Mortgage Interests; Credit Support
Agreements. (a) Maintain the Leases, Mortgage Interests and Credit
Support Agreements in full force and effect and enforce the obligations
of the Operators under the Leases, the Mortgagors under the Mortgage
Interests and the Credit Support Obligors under the Credit Support
Agreements in a timely manner and obtain the consent of Agent in
connection with any materially adverse change in or waiver of any
obligation of any Operator, Mortgagor or Credit Support Obligor
contained in, or any right or remedy of Borrower under, any Lease,
Mortgage Interest Agreement or Credit Support Agreement, including,
without limitation, any renewal, amendment, modification or termination
thereof, except to the extent that the failure to comply with this
Section 5.5 with respect to Facilities which are not Eligible Properties
or Eligible Mortgages could not, in the aggregate, have a Material
Adverse Effect; and (b) give notice to Agent of each waiver, renewal,
amendment, modification or termination of the Leases, Mortgage Interests
and Credit Support Agreements in respect of any Eligible Property or
Eligible Mortgage, together with a copy of such waiver, renewal,
amendment, modification or termination. Notwithstanding anything to the
contrary contained herein, Borrower shall in its sole discretion have
the right to amend that certain Acquisition Agreement, Agreement to
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Lease and Mortgage Loan Agreement dated as of December 28, 1990 among
Borrower, Hostmasters, Inc., AMS Holding Co., American Medical Services,
Inc. ("AMS") and AMS Properties, Inc. in order to remove or amend any
restrictions or covenants relating to, or to release the obligations of,
GranCare, Inc. or any of the AMS Companies (as defined in such
Acquisition Agreement) under such Acquisition Agreement other than AMS
Properties, Inc. and GCI Health Care Centers, Inc.
5.6. Maintenance of Property, Insurance. Keep all property
useful and necessary in its business in good working order and
condition; maintain or cause the Operators of its Properties to maintain
with financially sound and reputable insurance companies insurance on
all such property as specified as being maintained by the "Mortgagor" in
Sections 3.1 through 3.9 of the form of Mortgage attached hereto as
Exhibit E-1 in respect of each Property (whether or not such Property is
covered by a Mortgage that has been released from escrow pursuant to the
Security Documents Escrow Agreement), except that those requirements
contained in clause (h) of Section 5.15(b) of this Agreement shall only
be applicable after a Perfection Event, and to cause the Mortgagors of
each of its Mortgaged Properties to maintain comparable insurance.
Borrower shall furnish to each Lender, upon written request, full
information as to the insurance carried.
5.7. Inspection of Property; Books and Records; Discussions.
Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives of Agent and/or Administrative
Agent and, after the occurrence of a Default, any Lender, to visit and
inspect any of its properties and examine and make abstracts from any of
its books and records at any reasonable time and as often as may
reasonably be desired, and to discuss the business, operations,
properties, prospects and financial and other condition of Borrower with
officers and employees of Borrower and the Advisor and with its
independent certified public accountants.
5.8. Notices. Promptly, and in any event within ten Business
Days after an officer of Borrower obtains knowledge thereof, give notice
to Agent, Administrative Agent and each Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of (i) any default or event of default or termination
under any Lease, Credit Support Agreement, Mortgage Interest Agreement
or any other Contractual Obligation of or in favor of Borrower which
could have a Material Adverse Effect and (ii) any litigation,
investigation or proceeding which may exist at any time between Borrower
or any Operator, Mortgagor or Credit Support Obligor and any
Governmental Authority or other Person, which if adversely determined
could have a Material Adverse Effect;
(c) of any litigation or proceeding affecting Borrower, any
Relevant Operator, any Relevant Mortgagor, or any Relevant Credit
Support Obligor in which the amount involved is $100,000 or more and is
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not fully covered by insurance or in which injunctive or similar relief
is sought;
(d) of the following events, as soon as possible and in any
event within 30 days after Borrower knows or has reason to know thereof
(provided, however, that with respect to any Multiemployer Plan in which
neither Borrower nor any ERISA Affiliate is a substantial employer
Borrower shall only be deemed to have knowledge of facts concerning
which it has actual knowledge): (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 Borrower or any ERISA Affiliate to terminate or
withdraw from any Plan, and in addition to such notice, deliver to each
Lender whichever of the following may be applicable: (A) a certificate
of the chief financial officer or treasurer of Borrower setting forth
details as to such Reportable Event and the action that Borrower or
ERISA Affiliate proposes to take with respect thereto, together with a
copy of any notice of such Reportable Event that may be required to be
filed with PBGC, or (B) any notice delivered by PBGC evidencing its
intent to institute such proceedings or any notice to PBGC that such
Plan is to be terminated, as the case may be;
(e) of the adoption by Borrower or any ERISA Affiliate of any
Plan or of any Plans maintained by any Person that becomes an ERISA
Affiliate after the date hereof;
(f) of any Notice of Deficiency with respect to any
Eligible Property or any Mortgaged Property covered by an Eligible
Mortgage;
(g) of any proposed transaction or event which may give rise
to Net Property Proceeds, Net Mortgage Proceeds or Net Securities
Proceeds;
(h) of the occurrence or existence of any event or condition
which could reasonably be expected to have, or which has had, a Material
Adverse Effect;
(i) of the occurrence or existence of a Document Release
Event; and
(j) of the occurrence or existence of any event or condition
which would cause any of the representations and warranties set forth in
Section 3.9 to be untrue if repeated after the occurrence, or during the
existence, of such event or condition.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Borrower proposes to take
with respect thereto. For all purposes of clause (d) of this Section,
Borrower shall be deemed to have all knowledge or knowledge of all facts
attributable to the administrator of such Plan.
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5.9. Appraisals. (a) From time to time during the term of
this Agreement, Agent may, in its sole discretion, order an Appraisal of
one or more of the Eligible Properties and/or Mortgaged Properties
covered by Eligible Mortgages (in addition to the Appraisals delivered
pursuant to Section 4.1). Any such Appraisal shall be at Borrower's
cost if (i) Agent shall have obtained a letter from an expert appraiser
or evaluator of real property or health care facilities to the effect
that, or Agent shall otherwise in good faith have determined that, facts
or circumstances exist, or changes in market conditions have occurred,
as a result of which there exists a reasonable possibility that
Appraisals of the Eligible Properties and Mortgaged Properties covered
by Eligible Mortgages, might result in an aggregate valuation thereof
reflecting a material loss of value as compared to the value thereof
indicated in the original Appraisals for such Eligible Properties and
Mortgaged Properties delivered to Agent pursuant to Section 4.1, or
(ii) an Event of Default has occurred.
(b) At least 65 days prior to incurring Secured Debt or
entering into an agreement pursuant to which Secured Debt could be
incurred (with or without any requirement for the satisfaction of one or
more conditions precedent), which in either case, would be likely to
result in the occurrence of a Document Release Event, Borrower shall
provide Agent and Administrative Agent with prior notice of its
intention to incur such Secured Debt or enter into such an agreement.
At any time after (a) Administrative Agent receives any such notice or
(b) Administrative Agent obtains knowledge of a Document Release Event,
Administrative Agent shall obtain, at Borrower's expense, FIRREA
Appraisals on all Eligible Properties and Eligible Mortgages then being
included in the Borrowing Base.
5.10. Meetings. Within one hundred and fifty days after the
end of each fiscal year of Borrower, one or more Responsible Officers of
Borrower shall attend an annual informational meeting with the Lenders,
for the purpose of answering reasonable questions of any Lender, Agent
and/or Administrative Agent relating to the Facilities and/or the Loan
Documents, to be held at Borrower's cost and at such time and place to
be determined by Agent as is reasonably requested by Agent; provided
that each Lender shall bear the costs of transportation and
accommodation for any of its representatives attending such meeting.
5.11. REIT Requirements. Operate its business at all times
so as to satisfy or be deemed to have satisfied all requirements
necessary to qualify as a real estate investment trust under Section 856
through 860 of the Code. Borrower will maintain adequate records so as
to comply with all record-keeping requirements relating to the
qualification of Borrower as a real estate investment trust as required
by the Code and applicable regulations of the Department of the Treasury
promulgated thereunder and will properly prepare and timely file with
the Internal Revenue Service all returns and reports required thereby.
Borrower will request from its shareholders all shareholder information
required by the Code and applicable regulations of the Department of
Treasury promulgated thereunder.
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5.12. Indemnification. Borrower agrees to indemnify, defend
(with counsel selected by Agent) and hold Agent, Administrative Agent,
Lenders and the directors, officers, shareholders, employees and agents
of each of them harmless for, from and against any claims (including
without limitation third party claims for personal injury or real or
personal property damage), actions, administrative proceedings,
judgments, damages, punitive damages, penalties, fines, costs, expenses,
disbursements, liabilities (including sums paid in settlements of
claims), obligations, interest or losses, including attorneys' fees,
consultant fees and expert fees, that arise at any time (including,
without limitation, at any time after the payment of the Notes) directly
or indirectly from or in connection with the presence, suspected
presence, release or suspected release of any Hazardous Material in the
air, soil, surface water or groundwater at or from the real property or
any portion thereof with respect to a Facility, or any other real
property in which Borrower has any interest (all of the foregoing real
property shall be referred to collectively as the "Real Property").
Without limiting the generality of the foregoing, the indemnification
provided by this Section shall specifically cover (i) costs, including
capital, operating and maintenance costs, incurred in connection with
any investigation or monitoring of site conditions or any clean-up,
remedial, removal or restoration work required or performed by any
federal, state or local governmental agency or political subdivision or
performed by any non-governmental Person, including any Operator or
Mortgagor of a Facility, because of the presence, suspected presence,
release or suspected release of Hazardous Material in the air, soil,
surface water or groundwater at or from the Real Property; and
(ii) costs incurred in connection with (A) Hazardous Material present or
suspected to be present in the air, soil, surface water or groundwater
at the Real Property before the date of this Agreement, or (B) Hazardous
Material that migrates, flows, percolates, diffuses or in any way moves
onto or under or from the Real Property after the date of this
Agreement, or (C) Hazardous Material present at the Real Property as a
result of any release, discharge, disposal, dumping, spilling or leaking
(accidental or otherwise) onto or from the Property before or after the
date of this Agreement by any Person.
5.13. Changes in GAAP. Borrower and the Lenders hereby agree
that in the event of a change in GAAP which would cause the financial
covenants set forth herein to provide less protection to the Lenders
than presently provided for hereunder, such financial covenants shall be
reset, in good faith, by the Majority Lenders to maintain the protection
to the Lenders equivalent to that in place prior to such change and
Borrower agrees to execute one or more amendments to this Agreement to
effect such reset.
5.14. Treatment Under Disclosure Documents. Borrower shall,
to the extent appropriate in all documents filed with the Commission or
other public filings, not fail to disclose the existence of the Security
Documents Escrow Agreement and Pledge Escrow Agreement.
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5.15. Creation of Liens; Perfection of Security Upon Default
or Event of Default; Release of Liens.
(a) Promptly after acquiring any Property or Mortgage
Interest that is not required to be included in the Borrowing Base in
order to satisfy Section 4.1(x), Borrower shall: (i) deliver to
Security Documents Escrow Agent, to hold in accordance with the Security
Documents Escrow Agreement, or, following a Document Release Event, to
the Administrative Agent, the following agreements and documents: an
original copy of a Mortgage covering any such Property duly executed and
acknowledged by Borrower and in proper form for recording, an original
copy of an Assignment of Mortgage in respect of any such Mortgage
Interest duly executed and acknowledged by Borrower and in proper form
for recording, an original copy of an Assignment of Lease in respect of
any such Property duly executed and acknowledged by Borrower and in
proper form for recording, the Financing Statements duly executed by
Borrower and, if required, by Administrative Agent, in proper form for
filing, an original copy of a Power of Attorney for the Mortgage
covering any such Property duly executed and acknowledged by Borrower
and in proper form for recording, and all other documentation (without
duplication of documents described in clauses (i) or (ii) of Section
4.1(n)) which Agent deems appropriate to obtain and maintain subject, in
the case of any delivery prior to a Document Release Event, to the
provisions of the Security Documents Escrow Agreement, a first priority
unperfected Lien for Administrative Agent and the Lenders and giving
Administrative Agent and the Lenders the ability to perfect such Lien,
without further action or consent being required from Borrower, in favor
of Administrative Agent and the Lenders on each such Property or
Mortgage Interest and each Lease, Credit Support Agreement and all other
relevant items of Collateral relating thereto, each duly executed by
Borrower, and the same shall subject, in the case of documents to be
delivered prior to a Document Release Event, to the provisions of the
Security Documents Escrow Agreement, be in full force and effect and
grant or create the rights, powers, priorities, remedies and benefits
contemplated herein or therein, as the case may be; (ii) deliver to
Agent (A) all necessary consents relating thereto from third parties
(including, without limitation, the consent of and estoppel certificate
from the lessor in respect of any Leasehold Interest to the mortgaging
by Borrower of such interest) so that the same shall be valid and not
result in any violation of any Contractual Obligation running in favor
of such third party, and (B) all satisfactions of mortgages, termination
statements under the Uniform Commercial Code and other instruments
releasing Liens, security interests and other encumbrances as may be
necessary or desirable in connection with the foregoing or Title Reports
or other evidence satisfactory to Agent evidencing the satisfaction or
discharge of such Liens, security interests and other encumbrances; and
(iii) deliver to Pledge Escrow Agent, to hold in accordance with the
Pledge Escrow Agreement, (A) originals of each of the Subject Notes (as
such term is defined in the Collateral Assignment) in respect of such
Mortgage Interest (but only to the extent available) and any stock
certificates or other "instruments" (as such term is defined in the
Uniform Commercial Code in effect in the State of New York) that are
pledged to Borrower pursuant to the Credit Support Agreements in respect
of such Mortgage Interest assigned to Administrative Agent pursuant to
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the Collateral Assignment, (B) originals of the Subject Mortgages (as
such term is defined in the Collateral Assignment) in respect of such
Mortgage Interest (but only to the extent available), (C) copies of any
of the other Mortgage Interest Agreements or other Credit Support
Agreements assigned in respect of such Mortgage Interest to
Administrative Agent pursuant to the Collateral Assignment, all of which
shall be listed on Schedule I, II or III of the Collateral Assignment
and (D) originals (but only to the extent available) of any Credit
Support Agreements in respect of any of the leases to the extent that
the same constitute "instruments" under the provisions of the Uniform
Commercial Code in effect in the State of New York.
(b) Agent (i) at any time at the request of Majority Banks
shall, and (ii) upon the occurrence of a Default or Event of Default
may, direct the Administrative Agent to take such reasonable steps as
are available to it to perfect the Liens under the Loan Documents (the
giving of such direction, a "Perfection Event"). In addition, at the
written request of Agent, which Agent (x) at any time at the request of
Majority Banks shall, and (y) upon the occurrence of a Default or Event
of Default may, give to Borrower, Borrower shall, at its expense,
execute, deliver and file or record all documents and take all steps
reasonably requested by Agent to perfect all Liens under the Loan
Documents to the extent then unperfected and thereafter shall at its
expense take all further steps reasonably necessary or appropriate to
maintain the perfection and priority of such Liens, including the
payment of all fees, charges and taxes (including any mortgage recording
taxes) payable in connection therewith. In connection with such
perfection, and without limitation, Borrower at its expense shall to the
extent requested by Agent (a) cause the Operator under each Lease in
respect of a Property to execute, deliver and record a Non-Disturbance
Agreement; (b) deliver to Administrative Agent a Lender's Title Policy
for each Mortgage dated as of the date of perfection of the Lien under
such Mortgage and in the amount of the Appraised Value placed upon the
Property covered by such Mortgage in the Appraisal for such Property
delivered pursuant to clause (e) below; (c) deliver to Administrative
Agent an endorsement to each policy of title insurance in favor of
Borrower in respect of any Mortgaged Property, recognizing
Administrative Agent as the collateral assignee of the interest of
Borrower in such title policy and in the Mortgage Interest insured
thereby as of the date of perfection of the Lien on such Mortgage
Interest; (d) deliver to Administrative Agent a Survey no more than one
month old of each Property, certified to Administrative Agent and the
title company issuing the Lender's Title Policy; (e) deliver to
Administrative Agent a current Appraisal in respect of each Property and
Mortgaged Property; (f) deliver to Administrative Agent current
environmental reports on all the Facilities, consisting of phase I
environmental audits and, if so recommended in such audits, phase II and
other additional audits together with evidence satisfactory to Agent
that all material recommendations contained in any such report or audit
shall have been implemented; (g) deliver to Administrative Agent a
current UCC Search; and (h) deliver to Administrative Agent binders or
certificates of insurance indicating that (i) Administrative Agent is an
additional insured on each policy of liability insurance required to be
maintained hereunder or under the Security Documents,
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(ii) Administrative Agent is the loss payee on each policy of property
insurance required to be maintained hereunder or under the Security
Documents, and (iii) every insurance policy required to be maintained
hereunder or under the Security Documents provides Administrative Agent
with at least thirty (30) days' prior notice of cancellation,
non-renewal or modification. In lieu of requesting Borrower to deliver
the items set forth in clauses (a) through (h) of the immediately
preceding sentence, Administrative Agent may obtain such items directly
and require Borrower to reimburse Administrative Agent for all costs and
expenses incurred in connection therewith.
(c) Provided no Event of Default has occurred and is
continuing and no default under any provision of the Loan Documents will
result therefrom, Administrative Agent shall release or permit the
release of any Liens and/or Security Documents to the extent necessary
(x) to permit Borrower to make a conveyance, sale, lease or other
disposal permitted under Section 6.3(b), (y) in conjunction with the
granting of a first priority or other Lien by Borrower permitted under
clause (iii) of Section 6.8 or (z) as otherwise required under the Loan
Documents.
5.16. Further Assurances. Borrower agrees that at any
time, at the expense of Borrower, it will promptly execute and deliver
all further instruments and documents, and take all further action, that
may be reasonably necessary, or that Agent may reasonably request, in
order to perfect and protect any security interest granted or purported
to be granted by any of the Loan Documents or to enable Administrative
Agent to exercise and enforce its rights and remedies on behalf of
itself, Agent and/or the Lenders with respect to any interests of
Borrower subject to such security interest. If, under the laws of the
jurisdiction in which the property covered by any Security Document is
located, such Security Document shall expire or become unrecordable or
unenforceable unless such Security Document is filed, recorded,
continued or re-recorded within a certain period of time after its
execution, then, not less than thirty (30) days prior to the date on
which such Security Document would otherwise expire or become
unrecordable or unenforceable, Borrower shall deliver to Security
Documents Escrow Agent (if a Document Release Event shall not
theretofore have occurred) or to Administrative Agent (after the
occurrence of a Document Release Event) original copies of such Security
Document executed, acknowledged and dated as of the date of delivery
thereof and/or such continuation statements, continuation affidavits or
similar instruments as Administrative Agent may reasonably require.
5.17. California Title Endorsements. Within ten (10)
Business Days after the occurrence of a Document Release Event, Borrower
shall deliver evidence reasonably satisfactory to Agent and
Administrative Agent that each Property located in the State of
California that is covered by a Mortgage and each Mortgaged Property
located in the State of California that is covered by a Mortgage
Interest Agreement is a valid and legal lot for purposes of the
California Subdivision Map Act. Borrower may satisfy this requirement
by obtaining a California Subdivision Map Act Compliance Endorsement
(CLTA Form 116.7) to the owner's policy of title insurance held by
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Borrower covering any such Property or to the lender's policy of title
insurance held by Borrower covering any such Mortgaged Property.
SECTION 6. NEGATIVE COVENANTS
Borrower hereby agrees that, so long as the Commitments remain
in effect or any Note remains Outstanding and unpaid or any other amount
is owing to any Lender, Agent or Administrative Agent hereunder or under
any other Loan Document, Borrower shall not directly or indirectly:
6.1. Financial Covenants.
(a) Net Worth of Borrower. Suffer or permit its Tangible Net
Worth at any time to be less than the aggregate of (i) $275,000,000,
plus (ii) 80% of the Net Securities Proceeds of all issues of any Common
Shares, Preferred Shares or other equity securities by Borrower in one
or more transactions received after the date hereof.
(b) Interest Coverage. Suffer or permit the ratio of EBI for
any fiscal quarter to the Interest Charges of Borrower for such quarter
to be less than 3 to 1.
(c) Debt to Net Worth. Suffer or permit, as of the last day
of each fiscal quarter after the date hereof, the ratio of Borrower's
Total Liabilities to Borrower's Tangible Net Worth to be greater than 1
to 1.
6.2. Restricted Payments.
(a) Declare, make or pay any Restricted Payment except where
(i) no Default or Event of Default is continuing either before or after
giving effect to such Restricted Payment, (ii) Borrower has sufficient
funds or availability under its credit facilities (including this
Agreement) to pay the next installment of interest payable in respect of
the Loans and (iii) immediately upon declaring, making or paying any
such Restricted Payment a Responsible Officer shall certify to
Administrative Agent in writing that Borrower is in compliance with each
condition hereof with respect to the declaration, making or payment, as
the case may be, of such Restricted Payment; or
(b) directly or indirectly make any payment of Indebtedness
of Borrower in contravention of the terms of any agreement or instrument
subordinating or purporting to subordinate any rights to receive
payments in respect of any Indebtedness of Borrower to any rights to
receive payments under this Agreement.
6.3. Merger; Sale of Assets; Termination and Other Actions.
(a) Cause to be organized or assist in organizing any Person
under the laws of any jurisdiction to acquire all or substantially all
of the assets of Borrower, terminate, wind up, liquidate or dissolve its
affairs or enter into any reorganization, merger or consolidation or
take any other action whatsoever under or pursuant to Articles 6.15,
8.1, 8.2 and 8.5 of the Declaration of Trust or agree to do any of the
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foregoing at any future time, or (b) convey, sell, lease or otherwise
dispose of (i) any of the Properties, the Mortgage Interests or its
other interests in Facilities or (ii) any substantial part of its
property or assets (other than the Properties) unless, in the case of
this clause (b), either (A) the consideration therefor shall be equal to
the fair market value thereof and no default under any other provision
hereof or under the Security Documents results therefrom or (B) such
conveyance, sale, lease or other disposition is pursuant to the exercise
of an option contained in a Lease.
6.4. Transactions with Affiliates. Enter into or be a party
to any transaction directly or indirectly with or for the benefit of any
Affiliate of Borrower, other than (i) in the ordinary course of business
and (ii) for fair consideration and on terms no less favorable to
Borrower than are available in an arm's-length transaction from
unaffiliated third parties and (iii) if the Independent Trustees
determine in their reasonable good faith judgment that such transaction
is in the best interests of Borrower based on full disclosure of all
relevant facts and circumstances.
6.5. Subsidiaries. Create, or permit to exist, any
Subsidiary without the prior written consent of Agent.
6.6. Accounting Changes. Make any significant change in
accounting treatment and reporting practices, except as required by GAAP
or with which Borrower's independent certified public accountants have
agreed. Borrower will advise Agent sufficiently in advance of any
proposed change to permit representatives of Agent to discuss the
proposed change with the officers of Borrower.
6.7. Change in Nature of Business. Make any material change
in the nature of its business as presently conducted.
6.8. No Liens. Suffer or permit after the date hereof any
Lien on any Facility, Lease, Mortgage Interest, or Credit Support
Agreement, whether superior or inferior to the Liens created by the
Security Documents, except (i) the Liens set forth in the Title Reports,
(ii) purchase money Liens upon or in property or mortgage loans acquired
or held by Borrower in the ordinary course of business to secure the
purchase price of such property or mortgage loans or to secure
indebtedness incurred solely for the purpose of financing the
acquisition of such property or mortgage loans, (iii) Liens granted on
any Property or Mortgage Interest to secure borrowings from one or more
financial institutions, where the Net Securities Proceeds thereof are
applied in prepayment of the Loans pursuant to the terms hereof and such
Net Securities Proceeds are not less than 40% of the Allowed Value of
such Property or Mortgage Interest (or the amount which would be the
Allowed Value if each such Property were an Eligible Property and each
such Mortgage Interest were an Eligible Mortgage) as at the date of
incurrence of such Lien, (iv) Permitted Exceptions and (v) with respect
to either (A) Properties that are not Eligible Properties or (B)
Mortgaged Properties that are subject to Mortgage Interest Agreements
which are not Eligible Mortgages only, Liens that are not created or
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granted by Borrower, which Liens, in the aggregate, would not be
reasonably likely to cause or create a Material Adverse Effect.
6.9. Fiscal Year. Change the fiscal year end of Borrower
from December 31 to any other date without the prior written consent of
Agent.
6.10. Chief Executive Office. Change the name of Borrower or
the chief executive office of Borrower or the address where Borrower's
books and records with respect to the Collateral are maintained unless
Borrower has (a) given Administrative Agent at least 15 Business Days'
prior written notice of any such change and (b) made all such filings
and recordings necessary to maintain the priority and, if perfected in
accordance with the terms hereof, perfection of the Liens in favor of
the Lenders under the Loan Documents.
6.11. Amendment of Certain Agreements. Amend, supplement or
otherwise modify (a) the Advisory Agreement, or (b) the Declaration of
Trust in a manner which would be reasonably likely to cause a Material
Adverse Effect, in either case without the prior written consent of
Agent.
SECTION 7. EVENTS OF DEFAULT
7.1. Events of Default. Upon the occurrence of any of the
following events (each an "Event of Default"):
(a) Payments. Borrower shall fail to pay any principal of or
interest on any Note, or any other amount payable hereunder, when due in
accordance with the terms thereof or hereof; or
(b) Representations and Warranties. Any representation or
warranty made or deemed made by Borrower herein or by any Person in any
other Loan Document or which is contained in any certificate, document
or financial or other statement furnished at any time under or in
connection with this Agreement or any other Loan Document shall prove to
have been incorrect in any material respect on or as of the date made or
deemed made; or
(c) Certain Covenant Defaults. Borrower shall default in the
observance or performance of any agreement contained in Section 6 of
this Agreement, or the Advisor shall default in the observance or
performance of any material provision of the Subordination Agreement; or
(d) Certain Other Covenant Defaults. Borrower or any other
party to any of the Loan Documents (other than Agent, Administrative
Agent and the Lenders hereunder) shall default in the observance or
performance of any other provision of this Agreement or any of the other
Loan Documents, and such default shall continue unremedied for a period
of 20 days; or
(e) Cross-Default. Borrower shall (i) default in any payment
of principal of or interest on any Indebtedness (other than the Notes)
in respect of money borrowed or Capitalized Lease Obligations or
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incurred for the deferred purchase price of property or services or
evidenced by a note, debenture or other similar written obligation to
pay money, or in the payment of any Contingent Obligation, beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Contingent
Obligation was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Contingent Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur, the effect of which default or other event is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or such Contingent Obligation to
become payable; or
(f) Qualification as REIT. Either Agent or the Majority
Lenders shall have determined in good faith, and shall have so given
notice to Borrower, that Borrower has at any time ceased to be in a
position to qualify, or has not qualified, as a real estate investment
trust for any of the purposes of the provisions of the Code applicable
to real estate investment trusts; provided, however, that no Event of
Default under this Section (f) shall be deemed to have occurred and be
continuing if, within 10 days after notice of any such determination is
given to Borrower, Borrower shall have furnished each Lender with an
opinion of Borrower's tax counsel (who shall be satisfactory to the
Majority Lenders provided that the Majority Lenders may not unreasonably
withhold their approval) to the effect that Borrower is then in a
position to so qualify, or has so qualified, as the case may be, which
opinion shall not contain any material qualification unsatisfactory to
the Majority Lenders; or
(g) Insolvency, Etc. There shall be an Insolvency Event with
respect to Borrower or the Advisor; or
(h) ERISA. (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Termination Event shall occur or
(iv) any other event or condition shall occur or exist with respect to a
Plan or a Multiemployer Plan; and in each case in clauses (i) through
(iv) above, such event or condition, together with all other such events
or conditions, if any, could subject Borrower to any tax, penalty or
other liabilities in the aggregate material in relation to the business,
operations, property or financial or other condition of Borrower; or
(i) Certain Judgments. One or more judgments or decrees
shall be entered against Borrower involving in the aggregate a liability
(not paid or fully covered by insurance) of $100,000 or more and all
such judgments or decrees shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or
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(j) Certain Ownership of Borrower. Barry M. Portnoy and/or
Gerard M. Martin and/or any Person in respect of which either or both of
them own more than 50% of the securities having ordinary voting power
for the election of directors shall cease at any time to hold
beneficially and of record, in the aggregate, at least 750,000 shares of
the issued and outstanding Common Shares and each other class of equity
securities of Borrower (adjusted for any division, reclassification or
stock dividend in respect of Common Shares) or such lesser amount as
shall be approved by Agent; or
(k) Change of Control of Advisor. Barry M. Portnoy and/or
Mr. Gerard M. Martin shall cease at any time to have the power to direct
the management and policies of HRPT Advisors; or
(l) Operator and Mortgagors. More than 40% of the aggregate
Allowed Value of the Properties and Mortgage Interests shall be
attributable to Properties and Mortgage Interests having the same Person
(or any of that Person's Affiliates) as Mortgagor or Operator thereof.
(m) Rehabilitation Treatment Assets. More than 50% of the
aggregate Allowed Value of the Properties and Mortgage Interests shall
be attributable to Properties and Mortgages consisting of Rehabilitation
Treatment Assets.
(n) Acute Care Assets. More than 10% of the aggregate
Allowed Value of the Properties and Mortgage Interests shall be
attributable to Properties and Mortgages consisting of Acute Care
Assets.
(o) Psychiatric Care Assets. More than 10% of the aggregate
Allowed Value of the Properties and Mortgage Interests shall be
attributable to Properties and Mortgages consisting of Psychiatric Care
Assets.
(p) Advisor. HRPT Advisors shall cease to be the sole
Advisor to Borrower pursuant to and in accordance with the Advisory
Agreement, without Agent's prior written consent or the Advisory
Agreement shall be materially amended, supplemented or modified without
Agent's prior written consent; or
(q) Loan Documents. From and after the First Borrowing Date,
any Loan Document in full force and effect shall be terminated or
otherwise shall cease to be in full force and effect or shall cease to
give the Lenders the Liens, rights, powers and privileges purported to
be created thereby or any party thereto other than Agent and the Lenders
shall cease to be, or shall assert that it is not, bound thereby in
accordance with its terms; or
(r) Medicare and Medicaid. Any event shall occur or
circumstance shall exist as a result of which the representation set
forth in Section 3.23 shall, at such time, cease to be true and accurate
as if such representation or warranty were made on and as of such date.
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then, and in any such event, (a) if such event is an Event of Default
specified in paragraph (g) above, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement, the Notes and
any other Loan Document shall immediately become due and payable, and
(b) if such event is any other Event of Default, either or both of the
following actions may be taken: (i) Agent may, or upon the request of
the Majority Lenders, Agent shall, by notice to Borrower, declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) Agent may, or upon the request of the
Majority Lenders, Agent shall, by notice of default to Borrower, declare
the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement, the Notes and any other Loan
Document to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Except as expressly provided above
in this Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived.
7.2. Annulment of Acceleration. If payment on the Loans and
the Notes is accelerated in accordance with Section 7.1 of this
Agreement, then and in every such case, the Majority Lenders may, by an
instrument delivered to Borrower (and to Agent and/or Administrative
Agent, as applicable, to the extent it is or they are not participating
in the giving of notice) annul such acceleration and the consequences
thereof, provided, that at the time such acceleration is annulled:
(a) all arrears or interest on the Loans and the Notes and
all other sums payable in respect of the Loans and pursuant to this
Agreement, the Notes and each other Loan Document (except any principal
of or interest or premium on the Loans and the Notes and other sums
which have become due and payable only by reason of such acceleration)
shall have been duly paid; and
(b) every other Default or Event of Default shall have been
duly waived or otherwise cured;
provided, further, that no such annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent
thereon.
7.3. Cooperation by Borrower. To the extent that it lawfully
may, Borrower agrees that it will not at any time insist upon or plead,
or in any manner whatever claim or take any benefit or advantage of any
applicable present or future stay, extension or moratorium law, which
may affect observance or performance of the provisions of this Agreement
or of any Note or any other Loan Document.
SECTION 8. THE AGENTS
8.1. Appointment of Agent and Administrative Agent.
(a) Each Lender hereby irrevocably designates and appoints
Kleinwort Benson as Agent of such Lender and Wells Fargo Bank, National
Association, as Administrative Agent of such Lender (the Agent and
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Administrative Agent collectively being the "Loan Agents") under this
Agreement and the Loan Documents and the other documents or instruments
delivered pursuant to or in connection herewith or therewith and each
such Lender hereby irrevocably authorizes each Loan Agent, for such
Lender, to take such action on behalf of each Lender under the
provisions of the Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Loan Agent by the terms
of the Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to such Loan Agent by the terms of the
Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
elsewhere in the Loan Documents, no Loan Agent shall have any duties or
responsibilities other than those expressly set forth in the Loan
Documents, nor any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist
against either Loan Agent.
(b) Each Loan Agent may execute any of its duties under the
Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. No Loan Agent shall be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
(c) None of the Loan Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken
by it under or in connection with the Loan Documents (except for its
gross negligence or willful misconduct), or (ii) responsible in any
manner to any Lender for any recitals, statements, representations or
warranties made by Borrower or any other Person contained in the Loan
Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by either Loan Agent under
or in connection with, the Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of the Loan
Documents or the Collateral or the validity, enforceability, perfection
or priority of any Lien or security interest granted or purported to be
granted under any of the Loan Documents or otherwise or for any failure
of Borrower or any other Person to perform its obligations under the
Loan Documents. The Loan Agents shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, the
Loan Documents, or to inspect the properties, books or records of
Borrower or any other Person or to insure, protect or preserve any of
the Collateral.
(d) Each Loan Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation reasonably believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
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counsel to Borrower), independent accountants and other experts selected
by such or the other Loan Agent. Each Loan Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof shall have been
filed with such Loan Agent.
(e) Each Loan Agent shall be fully justified in failing or
refusing to take any action under the Loan Documents unless it shall
first receive such advice or concurrence of the Majority Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such
action. Each Loan Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in
accordance with a request of the Majority Lenders, and such request and
any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Notes.
(f) No Loan Agent shall be deemed to have knowledge or notice
of the occurrence of any Event of Default or event, act or condition
which with notice or lapse of time, or both, would constitute an Event
of Default hereunder unless such Loan Agent shall have received notice
from the other Loan Agent, a Lender or Borrower referring to this
Agreement, describing such event, act or condition or Event of Default
and stating that such notice is a "notice of default". In the event
that a Loan Agent receives such a notice, such Loan Agent shall give
prompt notice thereof to the Lenders and (provided such notice is not
received from the other Loan Agent) to the other Loan Agent. Each Loan
Agent shall take such action with respect to the rights and remedies
given to such Loan Agent pursuant to the terms of the Loan Documents as
shall be reasonably directed by the Majority Lenders; provided that,
unless and until such Loan Agent shall have received such directions,
such Loan Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, as it shall deem advisable in the best
interests of the Lenders.
(g) Each Lender expressly acknowledges that none of the Loan
Agents nor any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by either Loan Agent hereinafter taken,
including any review of the affairs of Borrower or any of its
Subsidiaries, shall be deemed to constitute any representation or
warranty by that Loan Agent to any Lender. Each Lender represents to
the Loan Agents that it has, independently and without reliance upon
either Loan Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and
other condition and creditworthiness of Borrower, each Operator, each
Mortgagor and each Credit Support Obligor, and made its own decision to
make its loans hereunder and enter into this Agreement, and that it has
satisfied itself independently, without reliance on either of the Loan
Agents or any of their respective officers, directors, employees,
agents, attorneys-in-fact or affiliates, as to the compliance of the
transactions contemplated hereby with all legal and regulatory
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requirements applicable to such Lender. Each Lender also represents
that it will, independently and without reliance upon either Loan Agent
or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and
other condition and creditworthiness of Borrower, any Operator, any
Mortgagor or any Credit Support Obligor. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by
that Loan Agent hereunder, neither Loan Agent shall have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and
other condition or credit-worthiness of Borrower which may come into its
possession or the possession of any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
(h) Each Lender agrees to indemnify, defend (with counsel
selected by each Loan Agent or, as the case may be, the Security
Documents Escrow Agent) and hold each Loan Agent and the Security
Documents Escrow Agent in its capacity as such (to the extent not
reimbursed by Borrower and without limiting the obligation of Borrower
to do so), and such Loan Agent's and such Security Documents Escrow
Agent's respective officers, directors, shareholders, employees and
agents, ratably according to the aggregate loan percentages set forth
opposite its name on Schedule 1 hereto, harmless for, from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any
time following the payment of the Notes) be imposed on, incurred by or
asserted against such Loan Agent or, as the case may be, the Security
Documents Escrow Agent, in any way relating to or arising out of the
Loan Documents or the transactions contemplated thereby or any action
taken or omitted by such Loan Agent or, as the case may be, the Security
Documents Escrow Agent, under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgements, suits, costs, expenses or disbursements
resulting primarily from such Loan Agent's or, as the case may be, the
Security Documents Escrow Agent's, willful misconduct or gross
negligence. The agreements in this Section shall survive the payment of
the Notes.
(i) Each Loan Agent and its affiliates may make loans to and
generally engage in any kind of business with Borrower as though such
Loan Agent were not a Loan Agent hereunder. With respect to its pro
rata share of the Loan made or extended by it and any Note issued to it,
each Loan Agent shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though it were not
a Loan Agent. The terms "Lender" and "Lenders" shall include each Loan
Agent in its individual capacity.
(j) A Loan Agent may resign as Loan Agent upon 30 days'
written notice to the Lenders. In the event that a Loan Agent shall
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enter receivership, then the Lenders (other than the Lender which is
acting as such Loan Agent, if applicable) may, by unanimous consent,
remove such Loan Agent as Loan Agent under this Agreement. If a Loan
Agent shall resign as such Loan Agent under this Agreement or a Loan
Agent shall be removed, then the Majority Lenders shall within 30 days
of such resignation or removal or, in the absence of such appointment,
the resigning or removed Loan Agent shall, appoint a successor agent for
the Lenders, whereupon such successor agent shall succeed to the rights,
powers and duties of such Loan Agent, and the term "Agent" or
"Administrative Agent", as applicable, shall mean such successor agent
effective upon its appointment, and the former Loan Agent's rights,
powers and duties as Loan Agent shall be terminated, without any other
or further act or deed on the part of such former Loan Agent or any of
the parties to this Agreement or any holders of the Notes. After any
retiring Loan Agent's resignation hereunder as Loan Agent or any Loan
Agent's removal, the provisions of this Section 8.1 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it
was a Loan Agent under this Agreement.
(k) Each Lender agrees to use its best efforts promptly, upon
an officer responsible for the administration of this Agreement becoming
aware of any development or other information which may have a Material
Adverse Effect or MAC, to notify the other Lenders of the same. Each
Loan Agent agrees that it shall promptly deliver to each Lender copies
of all notices, demands, statements and communications which such Loan
Agent gives to Borrower, except for routine notices of payment due under
the Loan Documents and other miscellaneous notices, demands, statements
and communications, the failure of delivery of which to each Lender
shall not have a material adverse effect on any Lender. The foregoing
notwithstanding, no Loan Agent shall have any liability to any Lender,
nor shall a cause of action arise against any Loan Agent, as a result of
the failure of such Loan Agent to deliver to any Lender any notice,
demand, statement or communication required to be delivered by it under
this Section 8.1(k), except to the extent such failure is due to the
gross negligence or wilful misconduct of such Loan Agent.
(l) Each Loan Agent shall endeavor to exercise the same care
in administering the Loan Documents as it exercises with respect to
similar transactions in which it is involved and where no other co-
lenders or participants are involved; provided that the liability of
such Loan Agent for failing to do so shall be limited as provided in the
preceding paragraphs of this Section 8.1.
(m) Each Lender agrees that, as between it and any Loan
Agent, any Loan Document, Appraisal, Survey or environmental report sent
to it for review shall be deemed consented to by it for purposes of any
approval thereof by any Loan Agent if such Lender does not give to such
Loan Agent written notice of its objection thereto within five Business
Days of its receipt thereof. The foregoing shall be for the benefit of
such Loan Agent only and shall not be deemed a consent under any other
provision of this Agreement or to confer any rights on Borrower under
this Agreement in any manner whatsoever.
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SECTION 9. GENERAL
9.1. CHOICE OF LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONTRACTS UNDER AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9.2. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; ETC.
NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT, BORROWER HEREBY IRREVOCABLY (a) SUBMITS TO THE NON-
EXCLUSIVE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE
STATE OF NEW YORK IN ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING RELATING
TO THIS AGREEMENT OR THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS; (b)
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR OTHER
LEGAL PROCEEDING MAY BE HEARD AND DETERMINED IN, AND ENFORCED IN AND BY,
ANY SUCH COURT; (c) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO VENUE IN ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM; (d) AGREES TO SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY TELEX, OR IN ANY
OTHER MANNER PERMITTED BY LAW, TO ANY THEN ACTIVE AGENT FOR SERVICE OF
PROCESS ("PROCESS AGENT") AT ANY SPECIFIED ADDRESS OR TO BORROWER AT ITS
ADDRESS SET FORTH HEREIN OR TO SUCH OTHER ADDRESS OF WHICH
ADMINISTRATIVE AGENT (WITH A COPY TO AGENT TO FOLLOW) SHALL HAVE BEEN
NOTIFIED IN WRITING (SUCH SERVICE TO BE EFFECTIVE ON THE EARLIER OF
RECEIPT THEREOF OR, IN THE CASE OF SERVICE BY MAIL, THE 5TH DAY AFTER
DEPOSIT OF SUCH SERVICE IN THE MAILS AS AFORESAID), AND HEREBY WAIVES
ANY CLAIM OF ERROR ARISING OUT OF SERVICE OF PROCESS BY ANY METHOD
PROVIDED FOR HEREIN OR ANY CLAIM THAT SUCH SERVICE WAS NOT EFFECTIVELY
MADE; (e) AGREES THAT THE FAILURE OF ITS PROCESS AGENT TO GIVE ANY
NOTICE OF ANY SUCH SERVICE OF PROCESS TO IT SHALL NOT IMPAIR OR AFFECT
THE VALIDITY OF SUCH SERVICE OR ANY JUDGMENT BASED THEREON; (f) TO THE
EXTENT THAT BORROWER HAS ACQUIRED, OR HEREAFTER MAY ACQUIRE, ANY
IMMUNITY FROM JURISDICTION OF ANY SUCH COURT OR FROM LEGAL PROCESS
THEREIN, WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, SUCH
IMMUNITY; (g) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN CONNECTION WITH, OR WITH RESPECT TO, ANY SUIT, ACTION OR OTHER LEGAL
PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OF THE OTHER
LOAN DOCUMENTS, (i) ANY CLAIM THAT IT IS IMMUNE FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO
IT OR ANY OF ITS PROPERTY, (ii) ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, AND (iii) ANY RIGHT TO A
JURY TRIAL; AND (h) AGREES THAT AGENT AND EACH LENDER SHALL HAVE THE
RIGHT TO BRING ANY LEGAL PROCEEDINGS (INCLUDING A PROCEEDING FOR
ENFORCEMENT OF A JUDGMENT ENTERED BY ANY OF THE AFOREMENTIONED COURTS)
AGAINST BORROWER IN ANY OTHER COURT OR JURISDICTION IN ACCORDANCE WITH
APPLICABLE LAW. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF AGENT AND EACH LENDER TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OF THE OTHER
LOAN DOCUMENTS IN THE COURTS OF ANY OTHER JURISDICTION OR THE RIGHT, IN
CONNECTION WITH ANY LEGAL ACTION OR PROCEEDING WHATSOEVER, TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BORROWER HEREBY
IRREVOCABLY DESIGNATES THE FIRM OF SULLIVAN & WORCESTER, WITH OFFICES
AT 767 THIRD AVENUE, NEW YORK, NEW YORK 10017, ATTENTION: CHARLES M.
DUBROFF, AS ITS PROCESS AGENT TO RECEIVE SERVICE OF ANY AND ALL PROCESS
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AND DOCUMENTS ON ITS BEHALF IN ANY LEGAL PROCEEDING IN THE STATE OF NEW
YORK AND SUCH PROCESS AGENT, BY ITS ACKNOWLEDGEMENT BELOW, IRREVOCABLY
AGREES TO SO ACT AS PROCESS AGENT FOR SERVICE OF PROCESS. IF SUCH
PROCESS AGENT SHALL FOR ANY REASON FAIL TO ACT, OR BE PREVENTED FROM
ACTING, AS PROCESS AGENT, NOTICE THEREOF SHALL IMMEDIATELY BE GIVEN TO
AGENT BY REGISTERED OR CERTIFIED MAIL AND BORROWER AGREES PROMPTLY TO
DESIGNATE ANOTHER PROCESS AGENT IN THE CITY OF NEW YORK, SATISFACTORY TO
AGENT UNDER THIS AGREEMENT, TO SERVE IN PLACE OF SUCH PROCESS AGENT AND
DELIVER TO AGENT WRITTEN EVIDENCE OF SUCH SUBSTITUTE PROCESS AGENT'S
ACCEPTANCE OF SUCH DESIGNATION. SUCH ACTING PROCESS AGENT SHALL
NEVERTHELESS CONTINUE TO SERVE AS PROCESS AGENT UNTIL ITS SUCCESSOR IS
DULY APPOINTED.
9.3. Notices; Certain Payments. (a) All notices, consents
and other communications to Borrower, Agent, Administrative Agent or any
Lender relating hereto to be effective shall be in writing and shall be
deemed made (i) if by certified mail, return receipt requested, or
facsimile, when received, (ii) if by telex, when sent answerback
received, and (iii) if by courier, when receipted for, in each case
addressed to them as follows or at such other address as either of them
may designate by written notice to the other: (w) Borrower: Health and
Rehabilitation Properties Trust, 400 Centre Street, Newton,
Massachusetts 02158, Attention: President (telecopier no. (617) 332-
2261) with a copy to Sullivan & Worcester, One Post Office Square,
Boston, Massachusetts 02109, Attention: Lena G. Goldberg, Esq.
(telecopier no. (617) 338-2880); (x) Agent: Kleinwort Benson Limited,
P.O. Box 560, 20 Fenchurch Street, London, EC3P 3DB, England),
Attention: Robin Tilbury, Loans Administration (telecopier no. 011-44-
71-956-6105) with a copy to Kleinwort Benson (North America),
Incorporated, 200 Park Avenue, 25th Floor, New York, New York 10166,
Attention: David Watanabe and Peter Kettle (telecopier no. 1-212-983-
5981); (y) Administrative Agent: Wells Fargo Bank, National Association,
Corporate Banking, 420 Montgomery Street (a), San Francisco, California
94163, Attention: (in the case of a Notice of Anticipated Borrowing or
Notice of Borrowing) Lupe Barajas (telecopier no. 1-415-989-4319) or (in
all other cases) Kathleen J. Harrison (telecopier no. 1-415-421-1352);
and (z) the Lenders: to the addresses specified opposite such Lenders'
respective names on the signature page hereof, with a copy to O'Melveny
& Myers, 153 East 53rd Street, New York, New York 10022, Attention:
Christopher D. Hall, Esq. (telecopier no. (212) 326-2061).
(b) All payments on account of the Loans and the related
Notes pursuant hereto or pursuant to the other Loan Documents shall be
made to the Borrower's account with Administrative Agent at:
Wells Fargo Bank, N.A.
San Francisco, California
ABA No. 121000248
Account Name: Health and Rehabilitation Properties Trust
Account No. 4518073184
together with irrevocable instructions to Administrative Agent to apply
such payments under this Agreement. Administrative Agent may by written
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notice to Borrower specify or change its account and address for payment
instructions hereunder.
9.4. No Waivers; Cumulative Remedies; Entire Agreement;
Headings; Successors and Assigns; Counterparts; Severability. No
action, failure, delay or omission by Agent, Administrative Agent or any
Lender in exercising any rights, powers, privileges and remedies under
this Agreement, the Notes or any other Loan Document, or otherwise,
shall constitute a waiver of, or impair, any of the rights, powers,
privileges or remedies of Agent, Administrative Agent or any Lender
hereunder or thereunder. No single or partial exercise of any such
right, power, privilege or remedy shall preclude any other or further
exercise thereof or the exercise of any other right, power, privilege or
remedy. Such rights, powers, privileges and remedies are cumulative and
not exclusive of any rights, powers, privileges and remedies provided by
law or otherwise available, including, but not limited to, rights to
specific performance (to the extent permitted by law) or any covenant or
agreement contained in this Agreement or any of the Loan Documents. No
waiver of any such right, power, privilege or remedy shall be effective
unless given in writing by the Majority Lenders or as otherwise provided
in Section 9.6. No waiver of any such right, power, privilege or remedy
shall be deemed a waiver of any other right, power, privilege or remedy
hereunder or thereunder. Every right, power, privilege and remedy given
by this Agreement or by applicable law to Agent, Administrative Agent or
any Lender may be exercised from time to time and as often as may be
deemed expedient by Agent, Administrative Agent or any Lender. This
Agreement, the Notes and the other Loan Documents constitute the entire
agreement of the parties relating to the subject matter hereof and
thereof and there are no verbal agreements relating hereto or thereto.
Section headings herein shall have no legal effect. This Agreement, the
Notes and the other Loan Documents (including all covenants,
representations, warranties, rights, powers, privileges and remedies
made or granted herein or therein) shall inure to the benefit of, and be
enforceable by, Agent, Administrative Agent and each Lender and their
respective successors and assigns, except as otherwise expressly
provided in this Agreement. Borrower may not directly or indirectly
assign or transfer (whether by agreement, by operation of law or
otherwise) any of its rights or obligations and liabilities hereunder
without the prior written consent of each Lender. Each of the Lenders
may make, carry or transfer its pro rata share of the Loans at, to or
for the account of, any of its branch offices or the office of one or
more of its Affiliates. Further, each Lender may sell participations in
all or any part of its pro rata share of the Loans or its Commitments or
any other interest herein or in its Notes to another bank or Person, or
with the prior written consent of Agent and Borrower (not to be
unreasonably withheld) each Lender may assign its rights and delegate
its obligations under this Agreement and any of the other Loan Documents
and with the prior written consent of Agent and Borrower (not to be
unreasonably withheld) may assign all or any part of its pro rata share
of the Loans or its Commitment or any other interest herein or in its
Notes to another bank or other Person in amounts not less than
$5,000,000 to any one assignee, in which event (i) in the case of an
assignment, upon notice thereof by such Lender to Borrower, Agent and
Administrative Agent, the assignee shall have, to the extent of such
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assignment (unless otherwise provided therein), the same rights and
benefits as it would have if it were such Lender hereunder and the
holder of a Note and to such extent shall be deemed a "Lender" for all
purposes of this Agreement and the other Loan Documents, and (ii) in the
case of a participation, the participant shall not have any rights under
this Agreement or any Note or any other Loan Document (the participant's
rights against such Lender in respect of such participation to be those
set forth in the agreement executed by such Lender in favor of the
participant relating thereto). In the case of such a participation, the
terms of the agreement or agreements pursuant to which any such
participation is created shall not confer upon the participant any right
to vote its interest as a participant in respect of any matter relating
to the Loans other than (v) the extension of the maturity of any Note or
the time of payment of interest thereon, (w) the reduction of the rate
of interest payable hereunder, (x) the reduction of any other amount
payable hereunder, (y) the release or surrender of all or any material
portion of the Collateral subject to a Lien or security interest in
favor of Administrative Agent granted pursuant to any Loan Documents,
except as specifically permitted by any Loan Documents, or (z) the
increase of such participant's share of the relevant Lender's Commitment
hereunder. Each Lender may furnish any information concerning Borrower
and its Subsidiaries, the Advisor, any Operator, any Mortgagor and any
Credit Support Obligor in the possession of such Lender from time to
time to assignees and participants (including prospective assignees and
participants). In the event that any Lender shall assign or sell any of
its Notes, such Lender shall at the time of such assignment or sale give
written notice to Agent, Administrative Agent and Borrower of the name
and address of the assignee (including the name of the account officer
if applicable). Each Lender agrees that such Lender shall not assign or
offer to assign interests in its Notes in such a manner which would
require that the Notes be registered under applicable securities laws.
Each Lender represents that it is acquiring its respective Note for
investment and not with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act of 1933,
as amended, provided, that the disposition of the Notes in accordance
with the other provisions of this Section 9.4 shall at all times remain
within the Lenders' control. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed an
original and all of which taken together shall be deemed to constitute
one and the same instrument. In the event any one or more of the
provisions contained in this Agreement or any Notes or any other Loan
Documents should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected
or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal, or unenforceable provisions.
9.5. Survival. The obligations of Borrower under Sections
2.6, 2.10, 2.12, 2.13, 2.14, 2.15, 5.12 and 9.7 (and all other
indemnification and expense reimbursement obligations of Borrower under
this Agreement) shall survive the repayment of the Loans and the
cancellation of the Notes and the termination of the other obligations
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of Borrower hereunder and under the other Loan Documents. All
representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and
the Notes and the funding of the Loans.
9.6. Amendments and Waivers. With the written consent of the
Majority Lenders, Agent and Borrower may, from time to time, enter into
written amendments, supplements or modifications hereto or to any of the
other Loan Documents and with the written consent of the Majority
Lenders, Agent on behalf of the Lenders may execute and deliver to
Borrower a written instrument waiving, on such terms and conditions as
Agent may specify in such instrument, any of the requirements of this
Agreement or the Notes or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (a) extend the maturity of
any Note, or reduce the rate or extend the time of payment of interest
thereon, or reduce or postpone the due date for the principal amount
thereof or any other amount payable in connection herewith, or, except
as specifically permitted by any Loan Documents, substitute, discharge,
release or surrender all or any material portion of the Collateral
subject to a Lien or security interest in favor of Administrative Agent
granted pursuant to any Loan Document, or change the amount or terms of
any Lender's Commitment or amend, modify or waive any provision of this
Section or reduce the percentage specified in the definition of Majority
Lenders, or consent to the assignment or transfer by Borrower of any of
its rights and obligations under this Agreement, in each case without
the written consent of all the Lenders, (b) amend, modify or waive any
provision of Section 8 or otherwise change any of the rights or
obligations of either or both of the Loan Agents under any of the Loan
Documents without the written consent of the affected Loan Agent or Loan
Agents (as applicable) at the time or (c) amend, modify or waive any
provision of Section 5.15 or this Section 9.6 without the written
consent of all Lenders. In the case of any waiver, Borrower, Agent,
Administrative Agent and the Lenders shall be restored to their former
position and rights hereunder and under the Outstanding Notes, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
9.7. Payment of Expenses and Taxes. Borrower agrees (a) to
pay or reimburse each of Agent and Administrative Agent on demand for
all its out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement
or modification to, this Agreement, the Notes and any other Loan
Documents or other documents prepared in connection herewith, and the
consummation of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of
counsel to Agent and Administrative Agent, (b) to pay or reimburse each
Lender, Agent and Administrative Agent on demand for all its costs and
expenses incurred in connection with the enforcement or preservation of
any rights under this Agreement, the Notes, the other Loan Documents and
any such other documents, or the satisfaction or review of conditions
precedent to any borrowing other than that occurring on the First
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Borrowing Date, including, without limitation, reasonable fees and
disbursements of counsel to Agent and Administrative Agent and, in the
case of enforcement or preservation of any rights under this Agreement,
counsel to the several Lenders, and (c) to pay, indemnify, and to hold
each Lender, Agent and Administrative Agent and their respective
officers, directors, employees and agents harmless for, from and
against, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, the Notes, the
other Loan Documents and any such other documents, and (d) to pay,
indemnify, and hold each Lender, Agent and Administrative Agent and
their respective officers, directors, employees and agents harmless for,
from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of, or
in any other way arising out of or relating to, this Agreement, the
Notes, the other Loan Documents and any such other documents, including,
without limitation, any claim resulting or arising out of the presence
of Hazardous Materials in any of the Properties (all the foregoing,
collectively, the "indemnified liabilities"), provided, that Borrower
shall have no obligation hereunder with respect to indemnified
liabilities arising from (i) the willful misconduct of any such Lender
or (ii) legal proceedings commenced against any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as
such.
9.8. Adjustments; Setoff.
(a) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of its Loan, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the
nature referred to in clause (g) of Section 7.1, or otherwise) in a
greater proportion than any such payment to or collateral received by
any other lender, if any, in respect of such other Lenders' Loan, or
interest thereon, such benefitted Lender shall purchase for cash from
the other Lenders such portion of each such other Lender's Loan, or
shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest. Borrower expressly
consents to the foregoing arrangements and agrees that each Lender so
purchasing a portion of another Lender's Loan may exercise all rights of
payment (including, without limitation, rights of set-off) with respect
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to such portion as fully as if such Lender were the direct holder of
such portion.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice
to Borrower, any such notice being expressly waived by Borrower to the
extent permitted by applicable law, upon
(i) the filing of a petition under any of the provisions of
the federal bankruptcy act or amendments thereto, by or against;
(ii) the making of an assignment for the benefit of creditors
by;
(iii) the application for the appointment, or the appointment,
of any receiver of, or of any of the property of;
(iv) the issuance of any execution against any of the property
of;
(v) the issuance of a subpoena or order, in supplementary
proceedings, against or with respect to any of the property of;
and/or
(vi) or the issuance of a warrant of attachment against any of
the property of;
Borrower to set off and apply against any indebtedness, whether matured
or unmatured, of Borrower to such Lender, any amount owing from such
Lender to Borrower, at or at any time after, the happening of any of the
above-mentioned events, and the aforesaid right of set off may be
exercised by such Lender against Borrower or against any trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of Borrower, or
against anyone else claiming through or against Borrower or such trustee
in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set off shall not have been
exercised by such Lender prior to the making, filing or issuance, or
service upon such Lender of, or of notice of, any such petition;
assignment for the benefit of creditors; appointment or application for
the appointment of a receiver; or issuance of execution, subpoena or
order of warrant. Each Lender agrees promptly to notify Borrower, Agent
and Administrative Agent after any such set off and application made by
such Lender, provided that the failure to give such notice shall not
affect the validity of such set off and application. The proceeds of
any set off or application pursuant to this subsection (b) of Section
9.8 shall be distributed in accordance with the preceding subsection
(a).
9.9. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST
ESTABLISHING BORROWER, DATED OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
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PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF BORROWER SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, BORROWER. ALL PERSONS DEALING WITH BORROWER, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF BORROWER FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by
their proper and duly authorized officers as of the day and year first
above written.
HEALTH AND REHABILITATION PROPERTIES TRUST
By:
Name:
Title:
KLEINWORT BENSON LIMITED,
as Agent and as Lender
By:
Name:
Title:
Lending Office:
20 Fenchurch Street
London, EC3P3DB
England
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as Lender
By:
Name:
Title:
Lending Office:
Corporate Banking
420 Montgomery Street
San Francisco, California 94163
[Signatures continued on next page]
S-1
<PAGE>
FLEET BANK OF MASSACHUSETTS
By:
Name:
Title:
BARCLAYS BANK PLC,
New York Branch
By:
Name:
Title:
DAIWA BANK, LTD.
By:
Name:
Title:
By:
Name:
Title:
[Signatures continued on next page]
S-2
<PAGE>
NATIONAL WESTMINSTER BANK, USA
By:
Name:
Title:
By:_____________________________________
Name:
Title:
CORESTATES BANK, N.A.
By:
Name:
Title:
S-3
<PAGE>
Acknowledgement by Process Agent
We hereby acknowledge and accept the designation of our firm
at our address of 767 Third Avenue, New York, New York 10017 (or such
other address as the Process Agent may notify the Agent and
Administrative Agent under the foregoing Agreement) as Process Agent for
Health and Rehabilitation Properties Trust pursuant to Section 9.2 of
the foregoing Agreement.
SULLIVAN & WORCESTER
By:
<PAGE>
EXHIBIT A
FORM OF
PROMISSORY NOTE
$ New York, New York
, 19
FOR VALUE RECEIVED, the undersigned, HEALTH AND REHABILITATION
PROPERTIES TRUST, a real estate investment trust organized under the
laws of the State of Maryland (the "Borrower"), hereby unconditionally
promises to pay to the order of (the "Lender") in
lawful money of the United States of America and in immediately
available funds, the lesser of (a) $ or (b)
the unpaid outstanding principal amount from time to time of the Loans
from the Lender to the Borrower pursuant to the Revolving Loan Agreement
hereinafter referred to, on January 2, 1997.
The undersigned further agrees to pay interest in like money
on the unpaid principal amount of such Loans on the dates and at the
rate or rates provided for in the Revolving Loan Agreement until paid in
full (both before and after judgment). The holder of this Note is
authorized to endorse from time to time the date and amount of the
Loans, any conversions or continuations thereof, each payment of
principal with respect thereto and whether such Loans are Base Rate
Loans, Eurodollar Loans or Alternate Rate Loans on the schedule annexed
hereto and made a part hereof, or on a continuation thereof which shall
be attached hereto and made a part hereof, which endorsements shall
constitute prima facie evidence of the accuracy of the information
endorsed. Any failure to make any such endorsement, however, shall not
limit or otherwise affect the obligations of Borrower under this Note.
All payments of principal and interest hereunder shall be made
to the account of the Administrative Agent referred to below designated
in or pursuant to the Revolving Loan Agreement for payments thereunder
for the benefit of the Lender named herein.
This Note is one of the Notes referred to in the Revolving
Loan Agreement dated as of February ____, 1994 among the Borrower, the
Lenders named therein, Kleinwort Benson Limited, as Agent, and Wells
Fargo Bank, National Association, as Administrative Agent (as the same
may be amended, supplemented or modified from time to time, the
"Revolving Loan Agreement"). The holder of this Note is entitled to the
benefits of the Revolving Loan Agreement and the Security Documents.
Terms defined in the Revolving Loan Agreement and not otherwise defined
herein are used herein with the same meanings. Reference is made to the
Revolving Loan Agreement for provisions for the prepayment hereof and
the acceleration of the maturity hereof.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection or enforcement of
A-1
<PAGE>
this Note. The Borrower hereby waives diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any
demand hereunder.
The Declaration of Trust of the Borrower provides that the
name "Health and Rehabilitation Properties Trust" refers to the Trustees
under the Declaration of Trust (the "Trustees") collectively as
Trustees, but not individually or personally, and that no Trustee,
officer, shareholder, employee or agent of the Borrower shall be held to
any personal liability, jointly or severally, for any obligation of, as
claims against, the Borrower.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
HEALTH AND REHABILITATION PROPERTY TRUST
By:
Name:
Title:
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<PAGE>
PROMISSORY NOTE (Cont'd)
Amount of Eurodollar,
Date of Loan, Loan, Base Rate or Amount of
Conversion or Conversion or Alternate Principal Notation
Continuation Continuation Rate Loan Repaid Made By
A-3
<PAGE>
EXHIBIT B
FORM OF
ASSIGNMENT OF LEASE
Prepared by and after
recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attn: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
ASSIGNMENT OF LEASES AND RENTS AND
CREDIT SUPPORT AGREEMENTS
THIS ASSIGNMENT OF LEASES AND RENTS AND CREDIT SUPPORT AGREEMENTS
(this ``Assignment'') is granted as of February , 1994 by HEALTH AND
REHABILITATION PROPERTIES TRUST, a Maryland real estate investment trust
(``Assignor''), with an address at 400 Centre Street, Newton,
Massachusetts 02158, to WELLS FARGO BANK, NATIONAL ASSOCIATION, a
banking institution organized under the laws of the United States, with
an address at 333 South Grand Avenue, Los Angeles, California 90071, as
administrative agent (in such capacity, ``Assignee''), for itself, Agent
(as defined in the Loan Agreement defined below) and the other lenders
(collectively, the ``Lenders'') party to such Loan Agreement.
WHEREAS, Assignor is the owner in fee simple of the lands described
in Exhibit A-I attached hereto and by this reference incorporated herein
(the ``Fee Land'') and the buildings, structures and other improvements
located thereon (the ``Fee Improvements''; the Fee Improvements together
with the Fee Land are referred to herein collectively as the ``Fee
Premises'');
WHEREAS, Assignor is the owner and holder of all right, title and
interest in and to each leasehold estate (individually, a ``Leasehold
Estate'' and collectively, the ``Leasehold Estates'') created pursuant
to the lease or leases more particularly described in Exhibit B attached
hereto and by this reference incorporated herein, or otherwise, and
affecting (a) all or the portions indicated in Exhibit B of those
certain parcels of land more particularly described in Exhibit A-II
attached hereto and by this reference incorporated herein (the ``Leased
Land''; the Fee Land and the Leased Land are referred to herein
collectively as the ``Land'') and (b) the buildings, structures and
B-1
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other improvements located thereon 1 (the ``Leasehold Improvements,''
together with the Leased Land referred to herein collectively as the
``Leasehold Premises''; the Leasehold Premises together with the Fee
Premises are referred to herein collectively as the ``Premises'');
WHEREAS, pursuant to that certain Revolving Loan Agreement, dated
as of February ____, 1994, among Assignor, Assignee, Kleinwort Benson
Limited, as agent for itself and the other Lenders (in such capacity,
the ``Agent''), and the Lenders (as the same may be amended from time to
time, the "Loan Agreement"), the Lenders have agreed to make loans to
Assignor, which loans shall, in the aggregate, not exceed ONE HUNDRED
FIFTY MILLION DOLLARS ($150,000,000) (collectively, the ``Loans''), as
evidenced by Assignor's promissory notes of even date herewith (together
with any promissory note or notes made and delivered by Assignor to each
or any of the Lenders in substitution therefor or extension or
replacement thereof, in whole or in part, the ``Notes''), secured, inter
alia, by a deed of trust or mortgage and security agreement of even date
from Assignor to Assignee (as amended from time to time, the
``Mortgage''), encumbering the Premises and certain other security
instruments with respect thereto (capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed to such
terms in the Loan Agreement); and
WHEREAS, as further security for the payment and performance by
Assignor of its obligations under the Notes, the Mortgage, the Loan
Agreement and the other Loan Documents (collectively the
``Obligations''), Assignor has agreed to execute and deliver to Assignee
this Assignment.
NOW, THEREFORE, in consideration of the Loan and for other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged and intending to be legally bound hereby, Assignor hereby
agrees with Assignee as follows:
1. Assignment of Leases, Rents and Credit Support Agreements
Subject to the terms and conditions hereinafter set forth, Assignor
does hereby transfer, assign and deliver unto Assignee as security for
the payment and performance of the Obligations, all of its right, title
and interest in and to:
(a) All leases, subleases and tenancies, whether written or oral,
now or hereafter existing with respect to any portion or portions of the
Premises, including, without limitation, that certain lease described on
Schedule I attached hereto and incorporated herein by reference (the
``Facility Lease'') between the Assignor, as lessor, and the lessee
described on such Schedule I (the ``Operator''), together with any
1 In the event Assignor holds a leasehold interest in the
land but a fee simple interest in the improvements, this Recital
should be revised to accurately reflect Assignor's ownership
interests.
B-2
<PAGE>
renewals or extensions thereof and all leases, subleases and tenancies
in substitution therefor (the Facility Lease together with any such
renewals, extensions and tenancies in substitution therefor are referred
to herein collectively as the ``Assigned Leases'');
(b) All rents, security deposits and other payments of every kind
due or payable and to become due or payable to Assignor by virtue of the
Assigned Leases, or otherwise due or payable and to become due or
payable to Assignor as the result of any use, possession or occupancy of
any portion or portions of the Premises (collectively, the ``Rents'');
and
(c) All assignments, pledge agreements, guarantees and other
agreements, including, but not limited to those set forth on Schedule II
attached hereto and by this reference incorporated herein (as the same
may be amended or otherwise modified or supplemented from time to time,
collectively the ``Credit Support Agreements''), providing assurances in
any form in respect of the Operator's obligations under the Facility
Lease.
2. Present Assignment
This Assignment shall constitute a present and absolute assignment
to Assignee as of the date hereof of all of Assignor's right, title and
interest in the Rents and in the Assigned Leases and Credit Support
Agreements and is not merely the passing of a security interest therein
for the payment of any indebtedness or the performance of any
obligations of Assignor under the Loan Agreement or the other Loan
Documents.
3. Assignor's License.
So long as no Event of Default by Assignor hereunder or under
any of the Loan Documents shall have occurred and be continuing, and
except as otherwise expressly provided herein or in the Loan Documents,
Assignor shall have a license from Assignee, which license shall be
revocable as provided in Section 4 hereof, to exercise all rights
extended to the landlord under the Assigned Leases and the Credit
Support Agreements, including the right to perform, discharge and
observe all obligations agreed to be performed by, or imposed upon, the
landlord thereunder, the right to demand and receive performance under
the Assigned Leases and the Credit Support Agreements, the right to
enforce all rights and exercise all remedies under the Assigned Leases
and the Credit Support Agreements, the right to receive and collect (but
not prior to accrual) all Rents and other amounts due and owing under
the Assigned Leases and the Credit Support Agreements, and the right to
enter into new leases and new Credit Support Agreements with respect to
the Premises or renewals, extensions, amendments or modifications of the
Assigned Leases and the Credit Support Agreements.
B-3
<PAGE>
4. Revocation of Assignor's License.
Upon the occurrence of an Event of Default (as defined in the
Loan Agreement) and at any time thereafter during the continuance
thereof, Assignee shall have the right, whether or not legal proceedings
have commenced under the Mortgage, without regard to waste, adequacy of
security under any Loan Document, or solvency of Assignor, to revoke the
license hereby granted to Assignor upon notice to Assignor of such
revocation (unless the giving of such notice shall be prevented by
applicable bankruptcy or other similar law, in which event Assignee may
revoke such license without notice to or demand upon Assignor). Upon
any such revocation, Assignor shall promptly deliver to Assignee all
Rents then held by Assignor. Assignee shall thereafter be entitled to
enforce the Assigned Leases and the Credit Support Agreements, to
collect and receive, without deduction or offset, all Rents and other
amounts payable under the Assigned Leases and the Credit Support
Agreements, including all Rents that were accrued and unpaid as of the
date of such revocation, and to exercise all rights and authority as set
forth in Section 5 hereof.
5. Assignee's Authority.
(a) Exculpation of Assignee. It is expressly agreed by
Assignor that, anything herein to the contrary notwithstanding, Assignor
shall remain liable under each Assigned Lease and each Credit Support
Agreement to observe and perform all the obligations to be observed and
performed by the landlord thereunder, all in accordance with and
pursuant to the provisions of each Assigned Lease and each Credit
Support Agreement. Assignee shall have no obligation or liability under
any Assigned Lease or any Credit Support Agreement by reason of or
arising out of this Assignment, nor shall Assignee be required or
obligated in any manner to perform or fulfill any of the obligations of
the landlord under any Assigned Lease, or to make any payment or to make
any inquiry as to the nature or sufficiency of any payment received by
it or the sufficiency of any performance by any party under any Assigned
Lease or any Credit Support Agreement, or to present or file any claim,
or to take any action to collect or enforce any performance or the
payment of any amounts that may have been assigned to it or to which it
may be entitled at any time or times. Nothing contained herein shall be
construed to obligate Assignee to perform any obligation arising out of
any covenant of quiet enjoyment contained in any Assigned Lease in the
event the tenant under any such Assigned Lease shall have been joined as
a party defendant in any action of foreclosure and the estate of such
tenant shall have been thereby terminated. Prior to actual entry into
and taking possession of the Premises by Assignee and assumption by
Assignee of management of the Premises pursuant to Section 5(c) hereof,
this Assignment shall not operate to place upon Assignee any
responsibility for the development, construction, management, operation,
maintenance, repair or restoration of the Premises, or any portion
thereof, except to the extent of the gross negligence or willful
misconduct of Assignee, and the execution of this Assignment by Assignor
shall constitute conclusive evidence that all responsibility for the
development, construction, management, operation, maintenance, repair
B-4
<PAGE>
and restoration of the Premises is and shall be that of Assignor prior
to such actual entry and taking of possession.
(b) Entry Upon the Premises. Upon the occurrence of an Event
of Default, and at all times thereafter during the continuance thereof,
Assignee may, at its option, either in person or by an agent or
attorney, with or without bringing any action or proceeding, or by a
receiver to be appointed by a court, enter upon the Premises or any part
thereof and, either with or without taking possession of the Premises,
in the name of Assignor or in its own name, (i) notify all tenants and
demand that all Rents thereafter be paid to Assignee and sue for or
otherwise collect and receive the Rents, including those past due and
unpaid, and (ii) notify all Credit Support Obligors that all duties and
obligations of such Credit Support Obligors arising under the Credit
Support Agreements shall thereafter be performed for and run to the
benefit of Assignee, and (iii) observe, perform and discharge all
obligations agreed to be performed by, or imposed upon, the landlord
under the Assigned Leases and/or perform all acts that Assignee deems
necessary or advisable in its sole discretion to protect the benefits
and security thereof. Assignor agrees to facilitate, in all reasonable
ways, Assignee's collection of the Rents and will, upon request by
Assignee, execute a written notice to each tenant under the Assigned
Leases directing the tenant to pay the Rent payable under its respective
Assigned Lease to Assignee. Assignor further agrees to take all steps
necessary to cause the Credit Support Obligors to fully observe, perform
and discharge all their obligations under the Credit Support Agreements
and will, upon request by Assignee, execute a written notice to each
Credit Support Obligor instructing such Credit Support Obligor to direct
performance under its respective Credit Support Agreements to Assignee.
It is not the intention of Assignor and Assignee that an entry by
Assignee upon the Premises under the terms of this Assignment shall make
Assignee a mortgagee in possession, except insofar as Assignee elects by
giving written notice thereof to Assignor.
(c) Assumption of Management. Assignee, upon the entry
referred to in Section 5(b) hereof, at Assignee's option shall have the
right, subject to the rights of the Operator under the Assigned Leases,
to take over and assume the management, operation and maintenance of the
Premises to the extent permitted by applicable law, to perform all acts
and to expend such sums out of the Rents that Assignee, in its sole
discretion, deems necessary or proper in connection with the
construction, operation, management, maintenance, repair or restoration
of the Premises, in the same manner and to the same extent as Assignor
theretofore might do, including the right to enforce all Assigned Leases
and Credit Support Agreements and to enter into new leases, to cancel,
terminate, accept the surrender of, supplement, alter or amend the terms
of and/or renew or extend, the Assigned Leases and/or to make
concessions to the tenants thereunder. Assignor hereby releases and
discharges all claims of any kind or nature against Assignee arising out
of such management, operation and maintenance, excepting the liability
of Assignee to account for Rents actually collected and received as
hereinafter set forth and except to the extent caused by the willful
misconduct and bad faith of Assignee.
B-5
<PAGE>
(d) No Leasing After Revocation. Upon the revocation of the
license granted under Section 3, Assignor shall have no right to lease
any portion of the Premises.
(e) Specific Enforcement. Assignee shall have the right to
specifically enforce the provisions of this Assignment and, if Assignee
shall so elect, to obtain the appointment of a receiver pursuant to and
in accordance with the applicable provisions of the Mortgage.
(f) Appointment of Assignee as Attorney-In-Fact. In
furtherance of the provisions contained in this Section 5, Assignor
hereby irrevocably appoints Assignee as its true and lawful attorney-in-
fact with full power of substitution and with full power for Assignee,
in its own name and capacity or in the name and capacity of Assignor,
from and after the occurrence and during the continuance of any Event of
Default, to demand, collect, receive and give complete acquittance for
any and all Rents accruing from the Premises and other amounts due under
the Credit Support Agreements, in its sole discretion, to file any claim
or take any other action or proceeding or to make any settlement of any
claims that Assignee may deem necessary or desirable in order to collect
and enforce the payment of the Rents and the other amounts due under the
Credit Support Agreements and to carry out all other rights of Assignee
described in this Section 5.
[**Note: The following Section 5(g) is to be inserted in all Wisconsin
Assignments**]
(g) Perfection of Assignment. From and after delivery of the
written notice of revocation described in Section 4 hereof, constructive
possession of the Premises shall be vested in Assignee and Assignee
shall have the right to receive the Rents. In addition, Assignee shall
have the right to receive the Rents upon Assignee's exercising, upon the
occurrence of an Event of Default or at any time thereafter during the
continuance thereof, any of the following remedies pursuant to this
Assignment or the Mortgage:
(i) taking possession of the Premises;
(ii) moving or applying for the appointment of a
receiver;
(iii) filing or commencing an action to
foreclose the Mortgage; or
(iv) collecting the Rents directly from the
tenant(s).
6. Protection of Tenants and Credit Support Obligors.
All tenants of the Premises are hereby expressly authorized
and directed, upon demand by Assignee and without the necessity of any
further consent by Assignor, to attorn to Assignee as the owner of the
B-6
<PAGE>
Assigned Leases and to pay any and all Rents due Assignor pursuant to
the Assigned Leases directly to Assignee, or such nominee as Assignee
may designate in writing to such tenants, and to observe and perform the
tenants' obligations under the Assigned Leases to or for Assignee and to
accept performance of the landlord's obligations under the Assigned
Leases from Assignee. All such tenants are hereby expressly relieved of
any and all duty, liability or obligation to Assignor in respect of all
payments so made. The payment of Rent to Assignee pursuant to
Assignee's demand and the performance of obligations under any Assigned
Lease to or for the benefit of Assignee shall not cause Assignee to
assume or be bound by the provisions of such Assigned Lease. All Credit
Support Obligors are hereby expressly authorized and directed, upon
demand by Assignee and without the necessity of any further consent by
Assignor, to tender performance to Assignee as the owner, holder and
beneficiary under the Credit Support Agreements and to pay any and all
amounts due Assignor pursuant to the Credit Support Agreements directly
to Assignee, or such nominee as Assignee may designate in writing to
such Credit Support Obligors and to observe and perform the Credit
Support Obligors' obligations under the Credit Support Agreements to or
for Assignee. All such Credit Support Obligors are hereby expressly
relieved of any and all duty, liability or obligation to Assignor in
respect of all payments so made and performance so tendered. The
payment of any amounts due under the Credit Support Agreements to
Assignee pursuant to Assignee's demand and the performance of
obligations under any such Credit Support Agreement to or for the
benefit of Assignee shall not cause Assignee to assume or be bound by
the provisions of such Credit Support Agreement.
7. COVENANTS AND AGREEMENTS
Assignor covenants and agrees that:
(a) Except as otherwise permitted by the Loan Agreement, it will
not assign, pledge or otherwise encumber any of the Assigned Leases, the
Credit Support Agreements or the Rents;
(b) It will, upon request by Assignee, while this Assignment
remains in force and effect, serve such written notices upon any lessee,
sublessee, tenant or other occupant of any portion of the Premises or
include among the written provisions of any instrument hereafter
creating any such lease, sublease, tenancy or right of occupancy
specific reference to this Assignment, and make, execute and deliver all
such powers of attorney or instruments of pledge or assignment, and such
other instruments or documents as Assignee may reasonably request at any
time for the purpose of securing its rights hereunder; and
(c) It will, upon request by Assignee, while this Assignment
remains in force and effect, serve such written notices upon any Credit
Support Obligor or include among the written provisions of any
instrument hereafter creating, amending or modifying any Credit Support
Agreement a specific reference to this Assignment, and make, execute and
deliver all such powers of attorney or instruments of pledge or
assignment, and such other instruments or documents as Assignee may
B-7
<PAGE>
reasonably request at any time for the purpose of securing its rights
hereunder.
8. GENERAL PROVISIONS
(a) Assignor hereby agrees to indemnify and hold Assignee and
Agent harmless (a) [ 2 for, from and against] against and from any and
all liability, loss, damage and expense, including reasonable attorneys'
fees, which either may or shall incur under or in connection with any of
the Assigned Leases or Credit Support Agreements, or by reason of any
action taken or expenses paid or incurred by Assignee or Agent under
this Assignment (unless caused by such Assignee's or such Agent's gross
negligence or willful misconduct) and (b) against and from any and all
claims and demands whatsoever which may be asserted against Assignee or
Agent by reason of any alleged obligations or undertaking on the part of
either of them to perform or discharge any of the terms, covenants and
conditions contained in (or in connection with) any of the Assigned
Leases or Credit Support Agreements, including claims for leasing
commissions. Should Assignee or Agent pay or incur any such liability,
loss, damage or expense, the amount thereof shall be payable by Assignor
to the party that has made such payment or incurred such liability upon
such party's written demand therefor. At the direction of Agent,
Assignee may reimburse itself or Agent therefor out of any Rents or
other amounts which Assignee has collected under the Assigned Leases or
the Credit Support Agreements.
(b) Failure of Assignee to avail itself of any of the terms,
covenants and conditions of this Assignment shall not be construed or
deemed to be a waiver of any of its rights hereunder. The rights and
remedies of Assignee under this Assignment are cumulative and are not in
lieu of but are in addition to any other rights and remedies which
Assignee shall have under or by virtue of any of the other Loan
Documents.
(c) Upon the payment in full and performance of all of the
Obligations and the termination of the Commitments (as defined in the
Loan Agreement), this Assignment shall become null and void, and
thereafter, upon request of Assignor, Assignee shall execute and deliver
to Assignor any further instruments necessary to terminate this
Assignment.
(d) If both the landlord's and the tenant's interest under
any Assigned Lease of any part of the Premises shall at any time become
vested in any one person, this Assignment shall not be destroyed or
terminated by the application of the doctrine of merger and, in such
event, Assignee shall continue to have and enjoy all of the rights and
privileges of Assignee hereunder as to each separate estate.
(e) The terms, covenants, agreements and conditions contained
herein shall extend to, include, and inure to the benefit of and be
2 Arizona variation as per local counsel instruction.
B-8
<PAGE>
binding upon Assignor, Assignee, Agent and each Lender and their
respective heirs, executors, administrators, successors and assigns, as
the case may be, and may not be terminated, modified, changed or amended
orally.
(f) Whenever any notice, demand or request may properly be given
hereunder, the same shall always be sufficient if given in the manner
and to the address or addresses then required pursuant to the Loan
Agreement.
(g) In the event that any one or more of the provisions contained
in this Assignment shall for any reason be held to be invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby
and the Agreement shall thereupon be reformed and construed and enforced
to the maximum extent permitted by law.
(h) This Assignment and any other instruments executed and
delivered to evidence, complete, or perfect the transactions
contemplated hereby will be interpreted, construed, applied and
enforced in accordance with the laws of the jurisdiction in which the
applicable Premises is located.
(i) THE DECLARATION OF TRUST ESTABLISHING ASSIGNOR DATED OCTOBER 9,
1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND
REHABILITATION PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT
OF ASSIGNOR SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, ASSIGNOR. ALL
PERSONS DEALING WITH ASSIGNOR, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS
OF ASSIGNOR FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
(j) This Assignment shall inure to the benefit of, and be
enforceable by, Assignee and its successors and assigns. This
Assignment may be executed in any number of separate counterparts, each
of which shall be deemed an original and all of which taken together
shall be deemed to constitute one and the same instrument. In the event
any one or more of the provisions contained in this Assignment should be
held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal, or
unenforceable provisions.
(k) This Assignment shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.
B-9
<PAGE>
Notwithstanding such provisions, however, matters respecting the
creation, perfection, priority and enforcement of liens on, and security
interests in, the Assigned Leases and the Rents shall be governed by,
and construed and enforced in accordance with, the internal laws of the
state or commonwealth in which the Premises are situated without giving
effect to the conflicts-of-law rules and principles of such state or
commonwealth.
B-10
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
By:
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
Print Name:
By:
John G. Murray
Treasurer
[Seal]
S-1
<PAGE>
[SIGNATURE PAGE FOR LA]
THUS DONE AND PASSED on the date set forth above in New York,
New York, in the presence of the undersigned competent witnesses, who
hereunto sign their names with Assignor and me, Notary Public, after due
reading of the whole.
WITNESSES: HEALTH AND REHABILITATION PROPERTY
TRUST, a Maryland real estate
investment trust
By:
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
By:
Print Name: John G. Murray
Treasurer
NOTARY PUBLIC
New York County, New York
My commission expires:
S-1
<PAGE>
[SIGNATURE PAGE FOR WA]
IN WITNESS WHEREOF, Assignor has caused this instrument to be
duly executed under seal as of the date first above written.
PLEASE BE ADVISED THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, OR FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
By:
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
Print Name:
By:
John G. Murray
Treasurer
[Seal]
S-1
[WA]
<PAGE>
[SIGNATURE PAGE FOR KY]
IN WITNESS WHEREOF, Assignor has on the date set forth in the
acknowledgements hereto, effective as of the date first above written,
caused this instrument to be duly EXECUTED, SEALED AND DELIVERED.
ASSIGNOR:
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate investment
trust
WITNESSES AS TO BOTH:
_____________________ By: ________________________
Print Name: David J. Hegarty
Chief Financial Officer and Executive
Vice President
_____________________
Print Name:
By: ________________________
John G. Murray
Treasurer
[Seal]
ASSIGNEE:
WELLS FARGO BANK, NATIONAL ASSOCIATION, a
bank organized under the laws of the
United States
WITNESSES:
_____________________ By: ________________________
Print Name: Print Name:
Title:
_____________________
Print Name:
S-1
[KY]
<PAGE>
[SIGNATURE PAGE FOR NC]
IN WITNESS WHEREOF, Grantor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES:
By:
Print Name: John G. Murray
Treasurer
Print Name:
ATTEST:
By:
David J. Hegarty
Its: Secretary
[Seal]
S-1
[NC]
<PAGE>
[SIGNATURE PAGE FOR MI]
IN WITNESS WHEREOF, Assignor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES:
By:
Print Name David J. Hegarty
Chief Financial Officer and
Executive Vice President
Print Name
By:
Print Name John G. Murray
Treasurer
Print Name
[Seal]
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
S-1
<PAGE>
[WA]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I certify that I know or have satisfactory evidence that David
J. Hegarty and John G. Murray are the persons who appeared before me,
and said persons acknowledged that they signed this instrument, on oath
stated that they were authorized to execute the instrument and
acknowledged it as the Chief Financial Officer and Executive Vice
President and as the Treasurer respectively, of HEALTH AND
REHABILITATION PROPERTIES TRUST, a Maryland real estate investment
trust, to be the free and voluntary act of such trust for the uses and
purposes mentioned in the instrument.
Dated this ____ day of February, 1994,
_________________________________
(Signature of Notary)
___________________________________
(Legibly Print or Stamp Name of Notary)
Notary Public in and for the state of New York,
residing at _____________________
My appointment expires:
N-1
[WA]
<PAGE>
[MA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, to me known and
known by me to be the party executing the foregoing instrument for and
on behalf of the Trustees of said entity and he acknowledged said
instrument by him executed, to be his free act and deed in his capacity
as aforesaid, and the free act and deed of Health and Rehabilitation
Properties Trust.
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me personally
appeared John G. Murray, Treasurer of Health and Rehabilitation
Properties Trust, to me known and known by me to be the party executing
the foregoing instrument for and on behalf of the Trustees of said
entity and he acknowledged said instrument by him executed, to be his
free act and deed in his capacity as aforesaid, and the free act and
deed of Health and Rehabilitation Properties Trust.
Notary Public
My commission expires:
N-1
[MA]
<PAGE>
[WI]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Personally came before me, this ____ day of February, 1994,
John G. Murray, Treasurer and David J. Hegarty, Chief Financial Officer
and Executive Vice President, of Health and Rehabilitation Properties
Trust, a real estate investment trust formed under the laws of the State
of Maryland, to me known to be the persons who executed the foregoing
instrument, and to me known to be such officers of such trust, and
acknowledged that they executed the foregoing instrument as such
officers as the act of such trust, by its authority.
Name:
Notary Public
County,
My commission expires:
N-1
[WI]
<PAGE>
[CT]
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
On this the ___ day of February, 1994 before me, personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, signer and
sealer of the foregoing instrument, and he, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as Chief Financial
Officer and Executive Vice President and acknowledged the same to be the
free act and deed of said corporation and his free act and deed as such
officer thereto.
Notary Public
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
On this the ___ day of February, 1994 before me, personally
appeared John G. Murray, Treasurer of Health and Rehabilitation
Properties Trust, signer and sealer of the foregoing instrument, and he,
being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by
himself as Treasurer and acknowledged the same to be the free act and
deed of said corporation and his free act and deed as such officer
thereof.
Notary Public
N-1
[CT]
<PAGE>
[IL]
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
I , __________________, a Notary Public in and for the said
County, in the State aforesaid, DO HEREBY CERTIFY that John G. Murray
and David J. Hegarty personally known to me to be, respectively, the
Treasurer and the Chief Financial Officer and Executive Vice President
of HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, and personally known to me to be the same persons
whose names are subscribed to the foregoing instrument, appeared before
me this day in person and acknowledged that as such Treasurer and as
such Chief Financial Officer and Executive Vice President they signed
and delivered the said instrument as, respectively, Treasurer and Chief
Financial Officer and Executive Vice President of said trust, pursuant
to authority given by the Board of Directors of said trust, as their
free and voluntary act, and as the free and voluntary act and deed of
said trust, for the uses and purposes therein set forth.
Given under my hand and seal this _____ day of February, 1994.
Notary Public
My commission expires __________, 19__.
[SEAL]
N-1
[IL]
<PAGE>
[OH]
State of New York )
) ss.:
County of New York )
The foregoing instrument was acknowledged before me this _____
day of February, 1994 by John G. Murray, Treasurer and by David J.
Hegarty, the Chief Financial Officer and Executive Vice President, of
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, on behalf of the Trust.
Notary Public
[Print name: ]
[Notary Seal]
My commission expires:
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
N-1
[OH]
<PAGE>
[SD]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of February, 1994, before me,
__________, the undersigned officer, personally appeared David J.
Hegarty of the State of __________, County of __________, known to me or
satisfactorily proven to be the person described in the foregoing
instrument, and acknowledged that he executed the same in the capacity
therein stated and for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public,
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of February, 1994, before me,
__________, the undersigned officer, personally appeared John G. Murray
of the State of __________, County of __________, known to me or
satisfactorily proven to be the person described in the foregoing
instrument, and acknowledged that he executed the same in the capacity
therein stated and for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public,
My commission expires:
N-1
[SD]
<PAGE>
[IA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of February, 1994, before me, the
undersigned, a Notary Public in and for the State of New York,
personally appeared John G. Murray and David J. Hegarty, to me
personally known, who being by me duly sworn did say that they are the
authorized officers of Health and Rehabilitation Properties Trust, a
Maryland real estate investment trust executing the foregoing
instrument; (that no seal has been procured by the trust) that said
instrument was signed on behalf of the trust and that John G. Murray and
David J. Hegarty, respectively, as Treasurer and as Chief Financial
Officer and Executive Vice President, acknowledged the execution of said
instrument to be their voluntary act and deed by it, by them and as
fiduciaries voluntarily executed.
NOTARY PUBLIC IN AND FOR THE STATE OF
NEW YORK AND COUNTY OF NEW YORK
N-1
[IA]
<PAGE>
[KA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February, 1994, by David J. Hegarty, Chief Financial Officer and
Executive Vice President of Health and Rehabilitation Properties Trust,
a real estate investment trust formed under the laws of the State of
Maryland.
Notary Public
Name:
(typed, printed or stamped)
[SEAL]
My appointment expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February, 1994, by John G. Murray, Treasurer of Health and
Rehabilitation Properties Trust, a real estate investment trust formed
under the laws of the State of Maryland.
Notary Public
Name:
(typed, printed or stamped)
[SEAL]
My appointment expires:
N-1
[KA]
<PAGE>
[PA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the _____ day of February, 1994, before me, the
undersigned officer, personally appeared David J. Hegarty, who
acknowledged himself to be the Chief Financial Officer and Executive
Vice President of Health and Rehabilitation Properties Trust, a Maryland
real estate investment trust, and that he as such President, being
authorized to do so, executed the foregoing instrument for the purpose
therein contained by signing the name of the Trust by himself as
President.
In witness whereof, I hereunto set my hand and official seal.
Title of Officer
My commission expires:
[Notary Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the _____ day of February, 1994, before me, the
undersigned officer, personally appeared John G. Murray who acknowledged
himself to be the Treasurer of Health and Rehabilitation Properties
Trust, a Maryland real estate investment trust, and that he as such
Treasurer being authorized to do so, executed the foregoing instrument
for the purpose therein contained by signing the name of the Trust by
himself as Treasurer.
In witness whereof, I hereunto set my hand and official seal.
Title of Officer
My commission expires:
[Notary Seal]
N-1
[PA]
<PAGE>
[WY]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing was acknowledged before me by David J. Hegarty,
Chief Financial Officer and Executive Vice President of the Health and
Rehabilitation Properties Trust, a Maryland real estate investment
trust, this _____ day of February, 1994.
Witness my hand and official seal.
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing was acknowledged before me by John G. Murray,
Treasurer of the Health and Rehabilitation Properties Trust, a Maryland
real estate investment trust, this _____ day of February, 1994.
Witness my hand and official seal.
Notary Public
My commission expires:
N-1
[WY]
<PAGE>
[CO]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 1994, before me personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, to me known and
known by me to be the party executing the foregoing instrument for and
on behalf of the Trustees of said entity and he acknowledged said
instrument by him executed, to be his free act and deed in his capacity
as aforesaid, and the free act and deed of Health and Rehabilitation
Properties Trust.
_____________________________
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of 1994, before me personally appeared John
G. Murray, Treasurer of Health and Rehabilitation Properties Trust, to
me known and known by me to be the party executing the foregoing
instrument for and on behalf of the Trustees of said entity and he
acknowledged said instrument by him executed, to be his free act and
deed in his capacity as aforesaid, and the free act and deed of Health
and Rehabilitation Properties Trust.
_________________________
Notary Public
My commission expires:
N-2
[CO]
<PAGE>
[MO]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me, the
undersigned, a Notary Public in and for said state, personally appeared
John G. Murray, to me personally known, who, being by me duly sworn, did
say that he is the Treasurer of Health and Rehabilitation Properties
Trust, a Maryland real estate investment trust, and that the foregoing
instrument was signed in behalf of said real estate investment trust by
authority of its Trustees, and said John G. Murray acknowledged said
instrument to be the free act and deed of said real estate investment
trust for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Printed Name:
Notary Public in and for said State
Commissioned in __________ County
[SEAL]
My commission expires:
N-3
[MO]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me, the
undersigned, a Notary Public in and for said state, personally appeared
David J. Hegarty, to me personally known, who, being by me duly sworn,
did say that he is the Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, a Maryland real
estate investment trust, and that the foregoing instrument was signed in
behalf of said real estate investment trust by authority of its
Trustees, and said David J. Hegarty acknowledged said instrument to be
the free act and deed of said real estate investment trust for the
purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Printed Name:
Notary Public in and for said State
Commissioned in __________ County
[SEAL]
My commission expires:
N-4
[MO]
<PAGE>
[CA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On February ___, 1994, before me ____________________,
personally appeared John G. Murray and David J. Hegarty, personally
known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized
capacities, and that by their signatures on the instrument the entity on
behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
N-5
[CA]
<PAGE>
[AZ]
State of New York )
) ss.:
County of New York )
The foregoing instrument was acknowledged before me this _____
day of February, 1994 by John G. Murray, Treasurer and by David J.
Hegarty, the Chief Financial Officer and Executive Vice President, of
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, on behalf of the Trust.
Notary Public
[Print name: ]
My commission expires:
N-1
[AZ]
<PAGE>
[KY]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this
___ day of February, 1994 by David J. Hegarty and John G. Murray, as the
Chief Financial Officer and Executive Vice President and as the
Treasurer, respectively, of HEALTH AND REHABILITATION PROPERTIES TRUST,
a Maryland real estate investment trust, for and on behalf of said
trust.
My commission expires _____________________.
_________________________
Notary Public
(Notary Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this
___ day of February, 1994 by , as the
of WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank organized
under the laws of the United States for and on behalf of said bank.
My commission expires _____________________.
_________________________
Notary Public
(Notary Seal)
<PAGE>
[NC]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I, ____________________, Notary Public certify that David
J. Hegarty personally came before me this day and acknowledged that he
is the Assistant Secretary of HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate investment trust, and that by authority
duly given and as the act of the corporation, the foregoing instrument
was signed in its name by John G. Murray, its Treasurer, sealed with its
corporate seal, and attested to by himself as its Assistant Secretary.
My commission expires __________________.
Witness my hand and official seal this the _____ day of
February, 1994.
________________________
Notary Public
Seal
N-1
[NC]
<PAGE>
Exhibit A-I
Legal Descriptions
Fee Land
A-I-1
<PAGE>
Exhibit A-II
Legal Descriptions
Leased Land
A-II-1
<PAGE>
Exhibit B
Assignor's Leasehold Estate
The land covered by Assignor's Leasehold Estate is described on Exhibit
A-II of this instrument.
B-1
<PAGE>
Schedule I
Facility Lease
SCH-I-1
<PAGE>
Schedule II
Credit Support Agreements
SCH-II-1
<PAGE>
EXHIBIT C
[INTENTIONALLY OMITTED]
C-1
<PAGE>
EXHIBIT D
FORM OF
COLLATERAL ASSIGNMENT
COLLATERAL ASSIGNMENT OF MORTGAGE LOAN DOCUMENTS, PLEDGE AND SECURITY
AGREEMENT
THIS COLLATERAL ASSIGNMENT OF MORTGAGE LOAN DOCUMENTS,
PLEDGE AND SECURITY AGREEMENT (this ``Assignment'') is made as of
February __, 1994, between HEALTH AND REHABILITATION PROPERTIES TRUST, a
real estate investment trust formed under the laws of the State of
Maryland (``Assignor''), with an address at 400 Centre Street, Newton,
Massachusetts 02158 and WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank
organized under the laws of the United States, with an address at 333
South Grand Avenue, Los Angeles, California 90071, as Administrative
Agent (in such capacity, ``Assignee''), for itself, Agent (as defined in
the Loan Agreement defined below) and the other lenders (collectively,
the ``Lenders'') party to such Loan Agreement.
RECITALS
WHEREAS, Assignor is the owner and obligee in respect of
certain loans (the ``Subject Loans''), which Subject Loans are secured,
inter alia, by those certain mortgages or deeds of trust more fully
described on Schedule I attached hereto and by this reference
incorporated herein (collectively the ``Subject Mortgages''), which
Subject Mortgages encumber the right, title and interest of the grantor
thereof in and to each of the parcels of real property described on
Exhibit A, attached hereto and by this reference incorporated herein
(the ``Properties''); and
WHEREAS, the Subject Loans are each evidenced by the
promissory notes set forth on Schedule II attached hereto and by this
reference incorporated herein (the ``Subject Notes''); and
WHEREAS, in furtherance of and as additional security for
the Subject Loans, the parties thereto entered into certain other
assignments, agreements and guarantees each as set forth on Schedule III
attached hereto and by this reference incorporated herein (the ``Credit
Support Agreements''); and
WHEREAS, pursuant to that certain Revolving Loan
Agreement of even date herewith, among Assignor, Kleinwort Benson
Limited, as agent for itself and the other Lenders (in such capacity,
the ``Agent''), the Lenders and Assignee (as the same may be amended
from time to time, the ``Loan Agreement''), the Lenders have agreed to
make loans to Assignor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
``Loans''), as evidenced by Assignor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
COLLATERAL ASSIGNMENT D-1
<PAGE>
by Assignor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the ``Promissory
Notes'') payable to each of the Lenders or to order in the aggregate
principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, in connection with the Loan Agreement and the
Loans, Assignor has entered into certain other documents and instruments
described in the Loan Agreement as the Loan Documents (all capitalized
terms used herein without definition shall have the respective meanings
given to such terms in the Loan Agreement); and
WHEREAS, as a condition to the making of the Loans,
Lenders have required that Assignor execute and deliver this Assignment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing
recitals (which are incorporated herein by this reference) and other
good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties hereto agree as follows:
(i) Assignment and Grant of Security Interest. In order
to secure the full and punctual payment and performance of all of the
obligations of Assignor under the Loan Agreement and the other Loan
Documents, Assignor hereby sells, assigns, transfers, pledges, sets over
and delivers to Assignee all of Assignor's right, title and interest in
and to the following (the ``Collateral''):
(1) the Subject Loans;
(2) the Subject Mortgages;
(3) the Subject Notes;
(4) the Credit Support Agreements;
(5) all books and records (including, without limitation,
credit files, computer programs, printouts and other
computer materials and records) pertaining to any of the
foregoing items of Collateral;
(6) all contract rights, accounts receivable, accounts,
documents, instruments, general intangibles or other
personal property in any way relating to the foregoing;
and
(7) any and all other agreements, contracts, documents and
instruments whatsoever pertaining to the Subject Loans,
and any amendments, modifications, extensions, renewals
or substitutions of any of the foregoing.
COLLATERAL ASSIGNMENT D-2
<PAGE>
The foregoing assignment also encompasses the right of
Assignor to terminate any of the Collateral, to perform its obligations
thereunder and to compel performance and otherwise exercise all remedies
thereunder, together with the immediate and continuing right to collect
and receive all sums which may become due to Assignor or which Assignor
may now or shall hereafter become entitled to demand or claim, arising
from or out of the Collateral, including claims of Assignor for damages
arising out of, or for breach of, or default under, any of the
agreements comprising any part of the Collateral and all rights of
Assignor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to any of the Collateral.
(ii) Delivery of Collateral. On the date of this
Agreement, Assignor shall deliver to the Escrow Agent (the ``Escrow
Agent'') from time to time under the Pledge Escrow Agreement dated as of
February __, 1994 (as amended, supplemented or otherwise modified from
time to time, the ``Escrow Agreement'') among Sullivan & Worcester, as
Escrow Agent, Assignor and Assignee, the following (or, with respect to
hereafter acquired Collateral only, upon each acquisition thereof
Assignor shall deliver to Escrow Agent (if no Administrative Agent
Delivery Event, as defined in the Escrow Agreement, has occurred) or
Assignee (if an Administrative Agent Delivery Event shall have
occurred), the following in respect thereof: (i) the Subject Notes;
(ii) the Subject Mortgages; (iii) the Credit Support Agreements; (iv) a
Collateral Assignment of Mortgage in respect of each Subject Mortgage in
proper form for recording in each jurisdiction where any such Subject
Mortgage is recorded substantially in the form of Exhibit B attached
hereto; and (v) any other instruments or documents required to be
delivered to Assignee to grant, perfect and maintain the priority of the
security interest granted herein or otherwise reasonably requested by
Assignee (the ``Escrowed Collateral''). Immediately after additional
instruments or documents, if any, shall become part of the Collateral,
Assignor shall deliver such other instruments or documents to Escrow
Agent or Assignee, as applicable, together with appropriate amendments
to Schedules I, II and III hereto, in form and substance satisfactory to
Assignee and Agent, adding such new instruments or documents thereto.
Until delivery to Assignee or Escrow Agent, as specified above, Assignor
shall hold such Collateral separate and in trust for Assignee. If any
Collateral is disposed of in accordance with the terms and provisions of
the Loan Agreement, Assignor shall deliver appropriate amendments to
Schedules I, II and III hereto, in form and substance satisfactory to
Assignee and Agent, deleting the released instruments or documents
therefrom.
(iii) Further Assurances. Assignor shall execute, at
its cost, upon Assignee's request, any documents necessary to cause the
specific assignment of any particular Collateral and any financing
statements and other documents necessary to evidence the security
interest in the Collateral granted hereby, which are necessary, proper
or desirable in Assignee's or Agent's judgment to carry out the purposes
of this Assignment.
COLLATERAL ASSIGNMENT D-3
<PAGE>
(iv) Assignor Remains Liable. Anything herein to the
contrary notwithstanding and except as otherwise required by law, (a)
Assignor shall remain liable under the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to
the same extent and in the same manner as if this Assignment had not
been executed, (b) the exercise by Assignee of any of its rights
hereunder shall not release Assignor from any of its duties or
obligations under the Collateral, and (c) Assignee shall not have any
obligation or liability under the Collateral by reason of this
Assignment, nor shall Assignee be obligated to Assignor to perform any
of the obligations or duties of Assignor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
(v) Non-responsibility. The acceptance by Assignee of
this Assignment with all the rights, powers, privileges and authority so
granted shall not obligate Assignee to assume any obligations under the
Collateral or to take any action thereunder or to expend any money or
incur any expense or perform or discharge any obligation, duty or
liability under the Collateral or to assume any obligation or
responsibility for the nonperformance of the provisions thereof by
Assignor. Assignor hereby acknowledges that Assignee shall not be
responsible for any actions taken or omitted by Escrow Agent in respect
of the Escrowed Collateral, other than actions taken or omitted pursuant
to express written instructions of Assignee, and agrees to indemnify and
hold Assignee harmless from any claims, losses, actions, damages,
liabilities, costs and expenses (including reasonable fees and costs of
counsel) arising out of any such actions.
(vi) Location of Documents. Assignee shall hold in its
possession in a segregated location on its premises any of the Subject
Notes, Subject Mortgages and Credit Support Agreements and any other
instruments or documents which have been delivered to Assignee hereunder
or pursuant to the Escrow Agreement and shall continue to hold each such
document until it releases such document in accordance with the terms of
this Agreement.
(vii) Release of Documents Prior to Release of
Collateral. Upon the occurrence of an Administrative Agent Delivery
Event and thereafter so long as no Event of Default shall have occurred
and is continuing under the Loan Agreement, from time to time as may be
required for (i) recordation or re-recordation or for use in connection
with foreclosure proceedings or other actions, suits or proceedings
relating thereto, or for the purpose of enforcing or realizing upon any
right represented thereby, (ii) the release of any Collateral is
required under the Credit Agreement (as defined in the Escrow Agreement)
in connection with the grant of Liens permitted by clauses (ii) and
(iii) of Section 6.8 of such Credit Agreement, or (iii) the release of
certain Collateral is required in connection with the conveyance, sale,
lease or other disposal of the Property covered thereby, upon delivery
to Agent and Assignee at least five Business Days prior to the requested
date of release of (x) a certificate signed by an officer of Assignor
stating the purposes for which the documents are necessary and that the
specified original documents held by Assignee are necessary for such
COLLATERAL ASSIGNMENT D-4
<PAGE>
purposes and the reasons therefor and (y) a schedule listing the
Collateral Documents to be released, Assignee, pursuant to the terms of
this Agreement shall deliver physical custody of any Collateral
Documents in Assignee's possession listed on such schedule to an
attorney, auditor or other agent (other than Assignor or any of their
Affiliates or any of their respective employees) retained on behalf of
Assignor, against such recipient's signed agreement to and delivery of a
bailee letter substantially in the form of Exhibit C hereto.
(viii) Filings by Assignee. Assignee is authorized by
Assignor to file of record in any public office the Collateral
Assignment of Mortgage and any financing statements with respect hereto
without the signature of Assignor where permitted by applicable law and
notices of assignment or any other public notice required to effect the
purposes of this Assignment. Assignor shall pay the costs of, or
incidental to, any recording or filing of any notice of this Assignment
or any financing or continuation statements concerning the Collateral.
(ix) Remedies Upon Default. Upon the occurrence of an
Event of Default under the Loan Agreement, and so long as such event
shall be continuing, Assignee may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code (the ``UCC'')
(whether or not the UCC applies to the affected Collateral) and Assignee
shall be entitled, without limitation, to:
(1) require Assignor to, and Assignor hereby agrees that it
will at its own expense and upon request of Assignee
forthwith, assemble all or part of the Collateral in its
possession as directed by Assignee and make it available
to Assignee at any reasonable place designated by
Assignee;
(2) to the full extent permitted by law, without notice or
demand or legal process, enter upon any premises of
Assignor and take possession of the Collateral;
(3) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at
public or private sale, at any of Assignee's offices or
elsewhere, at such time or times, for cash, on credit or
for future delivery, and at such price or prices and upon
such other terms as Assignee may deem commercially
reasonable, irrespective of the impact of such sales on
the market price of the Collateral. Assignee may be the
purchaser of any or all of the Collateral at any such
sale. Assignor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to
Assignor of the time and place of any public sale or the
time after which any private sale is to be made shall
constitute reasonable notification. Assignee shall not
be obligated to make any sale of Collateral regardless of
COLLATERAL ASSIGNMENT D-5
<PAGE>
notice of sale having been given. Assignee may adjourn
any public or private sale from time to time by
announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the
time and place to which it was so adjourned;
(4) receive all amounts payable in respect of the Collateral;
(5) transfer all or any part of Collateral into the
Assignee's name; and
(6) accelerate any Subject Loan which may be accelerated in
accordance with its terms, and take any other action to
collect upon any Subject Loan.
Assignor hereby agrees that the exercise of any or all of the foregoing
rights are commercially reasonable.
(x) Application of Proceeds. All proceeds received by
Assignee in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied in
accordance with the Loan Agreement.
(xi) Security Interest Absolute. All rights of Assignee
and security interests hereunder, and all obligations of Assignor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the
Loan Agreement or any other Loan Document; or any other
agreement or instrument relating to any of the foregoing;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the obligations of
Assignor under the Loan Agreement, or any other amendment or
waiver of or any consent to any departure from any of the Loan
Agreement or any other Loan Document;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or
consent to any departure from any guaranty, for all or any of
the obligations of Assignor under the Loan Agreement; or
(d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, Assignor
or a third party grantor.
(xii) No Waiver. No failure on the part of Assignee to
exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by Assignee of
any right, power or remedy hereunder preclude any other or further
COLLATERAL ASSIGNMENT D-6
<PAGE>
exercise thereof or the exercise of any other right, power or remedy.
The remedies herein provided are to the fullest extent permitted by law
cumulative, and are not exclusive, of any remedies provided by law.
(xiii) Attorney-in-Fact. Assignor does hereby
constitute and appoint Assignee its true and lawful attorney-in-fact,
which appointment is coupled with an interest, to (i) exercise any and
all rights under the Collateral and (ii) demand, sue for, collect,
attach, levy, recover and receive any and all sums which may become due
to Assignor to which Assignor now or shall hereafter become entitled or
may demand or claim, arising or issuing from or out of the Collateral
and to give proper notices, receipts, releases and acquittances therefor
and after deducting expenses of collection, to apply the net proceeds as
a credit upon any portion of the Loans then outstanding, as selected by
Assignee and Agent, notwithstanding that the amount owing thereunder may
not then be due and payable or that the Promissory Notes are adequately
secured. Assignor does hereby authorize and direct the delivery and
payment of such sums to Assignee and authorizes Assignee to sign and
deliver written instructions to this effect in Assignor's name and
stead, and hereby ratifies and confirms all whatsoever that its said
attorney shall do or cause to be done by virtue of the powers granted
hereby. The power of attorney hereunder is irrevocable, coupled with an
interest and continuing and such rights, powers and privileges shall be
exclusive in Assignee, its successors and assigns so long as any part of
the Loans then outstanding remains unpaid; provided, however, Assignee
shall not exercise any of its rights or authority as attorney-in-fact
prior to the occurrence of an Event of Default.
(xiv) Indemnity. Assignor shall pay any and all
costs and expenses incurred by Assignee in enforcing any rights or
remedies under this Assignment, including reasonable attorneys' fees.
Assignor shall indemnify, defend, protect and hold Assignee harmless
from and against any and all claims, losses, liabilities, costs and
expenses (including reasonable attorneys' fees) arising out of or
resulting from this Assignment, including the exercise or enforcement of
any of the rights of Assignee hereunder, and Assignor shall reimburse
Assignee on demand for any and all such expenses.
(xv) Counterparts. This Assignment may be executed in
any number of counterparts, each of which counterparts shall be deemed
to be an original and all of which together shall constitute but one and
the same Assignment.
(xvi) Successors and Assigns. The covenants and
agreements herein contained shall bind and inure to the benefit of the
parties hereto and their successors and assigns.
(xvii) Governing Law. THIS ASSIGNMENT SHALL BE AN
ASSIGNMENT UNDER AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(xviii) NONLIABILITY OF TRUSTEES. THE DECLARATION OF
TRUST ESTABLISHING ASSIGNOR, DATED OCTOBER 9, 1986, A COPY OF WHICH,
COLLATERAL ASSIGNMENT D-7
<PAGE>
TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED
WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE,
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF ASSIGNOR SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR
CLAIM AGAINST, ASSIGNOR. ALL PERSONS DEALING WITH ASSIGNOR, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF ASSIGNOR FOR THE PAYMENT OF ANY SUM OR
THE PERFORMANCE OF ANY OBLIGATION.
IN WITNESS WHEREOF, Assignor has caused its duly
authorized representative to execute and deliver this Assignment as of
the day and year first above written.
HEALTH AND REHABILITATION PROPERTIES TRUST, a
Maryland real estate investment trust
By:
David J. Hegarty
Chief Financial Officer and Executive Vice
President
By:
John G. Murray
Treasurer
COLLATERAL ASSIGNMENT D-8
<PAGE>
Schedule I
Subject Mortgages
SCH-I-1
<PAGE>
Schedule II
Subject Notes
SCH-II-1
<PAGE>
Schedule III
Credit Support Agreements
SCH-III-1
<PAGE>
Exhibit A
Legal Descriptions of the Properties
Exhibit A, Page A-1
<PAGE>
Exhibit B
Form of Collateral Assignment of Mortgage
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
COLLATERAL ASSIGNMENT OF MORTGAGE
THIS COLLATERAL ASSIGNMENT OF MORTGAGE (this ``Assignment'')
is made as of February __, 1994, between HEALTH AND REHABILITATION
PROPERTIES TRUST, a real estate investment trust formed under the laws
of the State of Maryland (``Assignor''), with an address at 400 Centre
Street, Newton, Massachusetts 02158 and WELLS FARGO BANK, NATIONAL
ASSOCIATION, a bank organized under the laws of the United States, with
an address at 333 South Grand Avenue, Los Angeles, California 90071, as
Administrative Agent (in such capacity, ``Assignee''), for itself, Agent
(as defined in the Loan Agreement defined below) and the other lenders
(collectively, the ``Lenders'') party to such Loan Agreement.
RECITALS
WHEREAS, Assignor is the owner and obligee in respect of
certain loans (the ``Subject Loans''), which Subject Loans are secured,
inter alia, by that certain mortgage or deed of trust more fully
described on Schedule I attached hereto and by this reference
incorporated herein (collectively the ``Subject Mortgage''), which
Subject Mortgage encumbers the right, title and interest of the grantor
thereof in and to the real property described on Exhibit A, attached
hereto and by this reference incorporated herein (the ``Property''); and
WHEREAS, the Subject Loans are evidenced by the promissory
notes set forth on Schedule II attached hereto and by this reference
incorporated herein (the ``Subject Notes''); and
WHEREAS, in furtherance of and as additional security for the
Subject Loans, the parties thereto entered into certain other
assignments, agreements and guarantees each as set forth on Schedule III
attached hereto and by this reference incorporated herein (the ``Credit
Support Agreements''); and
WHEREAS, pursuant to that certain Revolving Loan Agreement of
even date herewith, among Assignor, Kleinwort Benson Limited, as agent
Exhibit B, Page B-1
<PAGE>
for itself and the other Lenders (in such capacity, the ``Agent''), the
Lenders and Assignee (as the same may be amended from time to time, the
``Loan Agreement''), the Lenders have agreed to make loans to Assignor,
which loans shall, in the aggregate, not exceed ONE HUNDRED FIFTY
MILLION DOLLARS ($150,000,000) (collectively, the ``Loans''), as
evidenced by Assignor's promissory notes of even date herewith (together
with any promissory note or notes made and delivered by Assignor to each
or any of the Lenders in substitution therefor or extension or
replacement thereof, in whole or in part, the ``Promissory Notes'')
payable to each of the Lenders or to order in the aggregate principal
amount of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000), together
with interest thereon (the rate of which interest may vary from time to
time as specified in the Promissory Notes); and
WHEREAS, in connection with the Loan Agreement and the Loans,
Assignor has entered into certain other documents and instruments
described in the Loan Agreement as the Loan Documents (all capitalized
terms used herein without definition shall have the respective meanings
given to such terms in the Loan Agreement); and
WHEREAS, as a condition to the making of the Loans, Lenders
have required that Assignor execute and deliver this Assignment.
NOW, THEREFORE, in consideration of the foregoing recitals
(which are incorporated herein by this reference) and other good and
valuable consideration, the receipt and sufficiency of which is
acknowledged, and intending to be bound thereby, the parties hereto
agree as follows:
1. Assignment and Grant of Security Interest. In order to
secure the full and punctual payment and performance of all of the
obligations of Assignor under the Loan Agreement and the other Loan
Documents, Assignor hereby sells, assigns, transfers, pledges, sets over
and delivers to Administrative Agent all of Assignor's right, title and
interest in and to the following (the ``Collateral''):
a. the Subject Loans;
b. the Subject Mortgages;
c. the Subject Notes;
d. the Credit Support Agreements;
e. all books and records (including, without limitation, credit
files, computer programs, printouts and other computer
materials and records) pertaining to any of the foregoing
items of Collateral;
f. all contract rights, accounts receivable, accounts, documents,
instruments, general intangibles or other personal property in
any way relating to the foregoing; and
Exhibit B, Page B-2
<PAGE>
g. any and all other agreements, contracts, documents and
instruments whatsoever pertaining to the Subject Loans, and
any amendments, modifications, extensions, renewals or
substitutions of any of the foregoing.
The foregoing assignment also encompasses the right of
Assignor to terminate any of the Collateral, to perform its obligations
thereunder and to compel performance and otherwise exercise all remedies
thereunder, together with the immediate and continuing right to collect
and receive all sums which may become due to Assignor or which Assignor
may now or shall hereafter become entitled to demand or claim, arising
from or out of the Collateral, including claims of Assignor for damages
arising out of, or for breach of, or default under, any of the
agreements comprising any part of the Collateral and all rights of
Assignor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to any of the Collateral.
2. Attorney-in-Fact. Assignor does hereby constitute and
appoint Assignee its true and lawful attorney-in-fact, which appointment
is coupled with an interest, to (i) exercise any and all rights under
the Collateral and (ii) demand, sue for, collect, attach, levy, recover
and receive any and all sums which may become due to Assignor to which
Assignor now or shall hereafter become entitled or may demand or claim,
arising or issuing from or out of the Collateral and to give proper
notices, receipts, releases and acquittances therefor and after
deducting expenses of collection, to apply the net proceeds as a credit
upon any portion of the Loans then outstanding, as selected by Assignee
and Agent, notwithstanding that the amount owing thereunder may not then
be due and payable or that the Promissory Notes are adequately secured.
Assignor does hereby authorize and direct the delivery and payment of
such sums to Assignee and authorizes Assignee to sign and deliver
written instructions to this effect in Assignor's name and stead, and
hereby ratifies and confirms all whatsoever that its said attorney shall
do or cause to be done by virtue of the powers granted hereby. The
power of attorney hereunder is irrevocable, coupled with an interest and
continuing and such rights, powers and privileges shall be exclusive in
Assignee, its successors and assigns so long as any part of the Loans
then outstanding remains unpaid; provided, however, Assignee shall not
exercise any of its rights or authority as attorney-in-fact prior to the
occurrence of an Event of Default.
3. Indemnity. Assignor shall pay any and all costs and
expenses incurred by Assignee in enforcing any rights or remedies under
this Assignment, including reasonable attorneys' fees. Assignor shall
indemnify, defend, protect and hold Assignee harmless from and against
any and all claims, losses, liabilities, costs and expenses (including
reasonable attorneys' fees) arising out of or resulting from this
Assignment, including the exercise or enforcement of any of the rights
of Assignee hereunder, and Assignor shall reimburse Assignee on demand
for any and all such expenses.
4. Counterparts. This Assignment may be executed in any
number of counterparts, each of which counterparts shall be deemed to be
Exhibit B, Page B-3
<PAGE>
an original and all of which together shall constitute but one and the
same Assignment.
5. Successors and Assigns. The covenants and agreements
herein contained shall bind and inure to the benefit of the parties
hereto and their successors and assigns.
6. NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST
ESTABLISHING ASSIGNOR, DATED OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF ASSIGNOR SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, ASSIGNOR. ALL PERSONS DEALING WITH ASSIGNOR, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF ASSIGNOR FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
Exhibit B, Page B-4
<PAGE>
IN WITNESS WHEREOF, Assignor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate investment
trust
WITNESSES AS TO BOTH:
By:
Print Name: David J. Hegarty
Chief Financial Officer and Executive
Vice President
Print Name:
By:
John G. Murray
Treasurer
[Seal]
S-1
<PAGE>
[SIGNATURE PAGE FOR LA]
THUS DONE AND PASSED on the date set forth above in New York,
New York, in the presence of the undersigned competent witnesses, who
hereunto sign their names with Assignor and me, Notary Public, after due
reading of the whole.
WITNESSES: HEALTH AND REHABILITATION PROPERTY
TRUST, a Maryland real estate investment
trust
By:
Print Name: David J. Hegarty
Chief Financial Officer and Executive
Vice President
By:
Print Name: John G. Murray
Treasurer
NOTARY PUBLIC
New York County, New York
My commission expires:
S-1
<PAGE>
[SIGNATURE PAGE FOR WA]
IN WITNESS WHEREOF, Assignor has caused this instrument to be
duly executed under seal as of the date first above written.
PLEASE BE ADVISED THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, OR FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate investment
trust
WITNESSES AS TO BOTH:
By:
Print Name: David J. Hegarty
Chief Financial Officer and Executive
Vice President
Print Name:
By:
John G. Murray
Treasurer
[Seal]
S-1
[WA]
<PAGE>
[SIGNATURE PAGE FOR MI]
IN WITNESS WHEREOF, Assignor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate investment
trust
WITNESSES:
By:
Print Name David J. Hegarty
Chief Financial Officer and Executive
Vice President
Print Name
By:
Print Name John G. Murray
Treasurer
Print Name
[Seal]
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
S-1
<PAGE>
[WA]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I certify that I know or have satisfactory evidence that David
J. Hegarty and John G. Murray are the persons who appeared before me,
and said persons acknowledged that they signed this instrument, on oath
stated that they were authorized to execute the instrument and
acknowledged it as the Chief Financial Officer and Executive Vice
President and as the Treasurer respectively, of HEALTH AND
REHABILITATION PROPERTIES TRUST, a Maryland real estate investment
trust, to be the free and voluntary act of such trust for the uses and
purposes mentioned in the instrument.
Dated this ____ day of February, 1994,
_________________________________
(Signature of Notary)
___________________________________
(Legibly Print or Stamp Name of Notary)
Notary Public in and for the state of New York,
residing at _____________________
My appointment expires:
N-1
[WA]
<PAGE>
[MA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, to me known and
known by me to be the party executing the foregoing instrument for and
on behalf of the Trustees of said entity and he acknowledged said
instrument by him executed, to be his free act and deed in his capacity
as aforesaid, and the free act and deed of Health and Rehabilitation
Properties Trust.
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me personally
appeared John G. Murray, Treasurer of Health and Rehabilitation
Properties Trust, to me known and known by me to be the party executing
the foregoing instrument for and on behalf of the Trustees of said
entity and he acknowledged said instrument by him executed, to be his
free act and deed in his capacity as aforesaid, and the free act and
deed of Health and Rehabilitation Properties Trust.
Notary Public
My commission expires:
N-1
[MA]
<PAGE>
[WI]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Personally came before me, this ____ day of February, 1994,
John G. Murray, Treasurer and David J. Hegarty, Chief Financial Officer
and Executive Vice President, of Health and Rehabilitation Properties
Trust, a real estate investment trust formed under the laws of the State
of Maryland, to me known to be the persons who executed the foregoing
instrument, and to me known to be such officers of such trust, and
acknowledged that they executed the foregoing instrument as such
officers as the act of such trust, by its authority.
Name:
Notary Public
County,
My commission expires:
N-1
[WI]
<PAGE>
[CT]
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
On this the ___ day of February, 1994 before me, personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, signer and
sealer of the foregoing instrument, and he, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as Chief Financial
Officer and Executive Vice President and acknowledged the same to be the
free act and deed of said corporation and his free act and deed as such
officer thereto.
Notary Public
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
On this the ___ day of February, 1994 before me, personally
appeared John G. Murray, Treasurer of Health and Rehabilitation
Properties Trust, signer and sealer of the foregoing instrument, and he,
being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by
himself as Treasurer and acknowledged the same to be the free act and
deed of said corporation and his free act and deed as such officer
thereof.
Notary Public
N-1
[CT]
<PAGE>
[IL]
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
I , __________________, a Notary Public in and for the said
County, in the State aforesaid, DO HEREBY CERTIFY that John G. Murray
and David J. Hegarty personally known to me to be, respectively, the
Treasurer and the Chief Financial Officer and Executive Vice President
of HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, and personally known to me to be the same persons
whose names are subscribed to the foregoing instrument, appeared before
me this day in person and acknowledged that as such Treasurer and as
such Chief Financial Officer and Executive Vice President they signed
and delivered the said instrument as, respectively, Treasurer and Chief
Financial Officer and Executive Vice President of said trust, pursuant
to authority given by the Board of Directors of said trust, as their
free and voluntary act, and as the free and voluntary act and deed of
said trust, for the uses and purposes therein set forth.
Given under my hand and seal this _____ day of February, 1994.
Notary Public
My commission expires __________, 19__.
[SEAL]
N-1
[IL]
<PAGE>
[OH]
State of New York )
) ss.:
County of New York )
The foregoing instrument was acknowledged before me this _____
day of February, 1994 by John G. Murray, Treasurer and by David J.
Hegarty, the Chief Financial Officer and Executive Vice President, of
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, on behalf of the Trust.
Notary Public
[Print name: ]
[Notary Seal]
My commission expires:
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
N-1
[OH]
<PAGE>
[SD]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of February, 1994, before me,
__________, the undersigned officer, personally appeared David J.
Hegarty of the State of __________, County of __________, known to me or
satisfactorily proven to be the person described in the foregoing
instrument, and acknowledged that he executed the same in the capacity
therein stated and for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public,
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of February, 1994, before me,
__________, the undersigned officer, personally appeared John G. Murray
of the State of __________, County of __________, known to me or
satisfactorily proven to be the person described in the foregoing
instrument, and acknowledged that he executed the same in the capacity
therein stated and for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public,
My commission expires:
N-1
[SD]
<PAGE>
[IA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of February, 1994, before me, the
undersigned, a Notary Public in and for the State of New York,
personally appeared John G. Murray and David J. Hegarty, to me
personally known, who being by me duly sworn did say that they are the
authorized officers of Health and Rehabilitation Properties Trust, a
Maryland real estate investment trust executing the foregoing
instrument; (that no seal has been procured by the trust) that said
instrument was signed on behalf of the trust and that John G. Murray and
David J. Hegarty, respectively, as Treasurer and as Chief Financial
Officer and Executive Vice President, acknowledged the execution of said
instrument to be their voluntary act and deed by it, by them and as
fiduciaries voluntarily executed.
NOTARY PUBLIC IN AND FOR THE STATE OF NEW YORK
AND COUNTY OF NEW YORK
N-1
[IA]
<PAGE>
[KA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February, 1994, by David J. Hegarty, Chief Financial Officer and
Executive Vice President of Health and Rehabilitation Properties Trust,
a real estate investment trust formed under the laws of the State of
Maryland.
Notary Public
Name:
(typed, printed or stamped)
[SEAL]
My appointment expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February, 1994, by John G. Murray, Treasurer of Health and
Rehabilitation Properties Trust, a real estate investment trust formed
under the laws of the State of Maryland.
Notary Public
Name:
(typed, printed or stamped)
[SEAL]
My appointment expires:
N-1
[KA]
<PAGE>
[PA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the _____ day of February, 1994, before me, the
undersigned officer, personally appeared David J. Hegarty, who
acknowledged himself to be the Chief Financial Officer and Executive
Vice President of Health and Rehabilitation Properties Trust, a Maryland
real estate investment trust, and that he as such President, being
authorized to do so, executed the foregoing instrument for the purpose
therein contained by signing the name of the Trust by himself as
President.
In witness whereof, I hereunto set my hand and official seal.
Title of Officer
My commission expires:
[Notary Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the _____ day of February, 1994, before me, the
undersigned officer, personally appeared John G. Murray who acknowledged
himself to be the Treasurer of Health and Rehabilitation Properties
Trust, a Maryland real estate investment trust, and that he as such
Treasurer being authorized to do so, executed the foregoing instrument
for the purpose therein contained by signing the name of the Trust by
himself as Treasurer.
In witness whereof, I hereunto set my hand and official seal.
Title of Officer
My commission expires:
[Notary Seal]
N-1
[PA]
<PAGE>
[WY]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing was acknowledged before me by David J. Hegarty,
Chief Financial Officer and Executive Vice President of the Health and
Rehabilitation Properties Trust, a Maryland real estate investment
trust, this _____ day of February, 1994.
Witness my hand and official seal.
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing was acknowledged before me by John G. Murray,
Treasurer of the Health and Rehabilitation Properties Trust, a Maryland
real estate investment trust, this _____ day of February, 1994.
Witness my hand and official seal.
Notary Public
My commission expires:
N-1
[WY]
<PAGE>
[CO]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 1994, before me personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, to me known and
known by me to be the party executing the foregoing instrument for and
on behalf of the Trustees of said entity and he acknowledged said
instrument by him executed, to be his free act and deed in his capacity
as aforesaid, and the free act and deed of Health and Rehabilitation
Properties Trust.
_____________________________
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of 1994, before me personally appeared John
G. Murray, Treasurer of Health and Rehabilitation Properties Trust, to
me known and known by me to be the party executing the foregoing
instrument for and on behalf of the Trustees of said entity and he
acknowledged said instrument by him executed, to be his free act and
deed in his capacity as aforesaid, and the free act and deed of Health
and Rehabilitation Properties Trust.
_________________________
Notary Public
My commission expires:
N-2
[CO]
<PAGE>
[MO]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me, the
undersigned, a Notary Public in and for said state, personally appeared
John G. Murray, to me personally known, who, being by me duly sworn, did
say that he is the Treasurer of Health and Rehabilitation Properties
Trust, a Maryland real estate investment trust, and that the foregoing
instrument was signed in behalf of said real estate investment trust by
authority of its Trustees, and said John G. Murray acknowledged said
instrument to be the free act and deed of said real estate investment
trust for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Printed Name:
Notary Public in and for said State
Commissioned in __________ County
[SEAL]
My commission expires:
N-3
[MO]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me, the
undersigned, a Notary Public in and for said state, personally appeared
David J. Hegarty, to me personally known, who, being by me duly sworn,
did say that he is the Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, a Maryland real
estate investment trust, and that the foregoing instrument was signed in
behalf of said real estate investment trust by authority of its
Trustees, and said David J. Hegarty acknowledged said instrument to be
the free act and deed of said real estate investment trust for the
purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Printed Name:
Notary Public in and for said State
Commissioned in __________ County
[SEAL]
My commission expires:
N-4
[MO]
<PAGE>
[CA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On February ___, 1994, before me ____________________,
personally appeared John G. Murray and David J. Hegarty, personally
known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized
capacities, and that by their signatures on the instrument the entity on
behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
N-5
[CA]
<PAGE>
[AZ]
State of New York )
) ss.:
County of New York )
The foregoing instrument was acknowledged before me this _____
day of February, 1994 by John G. Murray, Treasurer and by David J.
Hegarty, the Chief Financial Officer and Executive Vice President, of
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, on behalf of the Trust.
Notary Public
[Print name: ]
My commission expires:
N-1
[AZ]
<PAGE>
[MI]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February by David J. Hegarty, the Chief Financial Officer and
Executive Vice President, of HEALTH AND REHABILITATION PROPERTIES TRUST,
a Maryland real estate investment trust, on behalf of the trust.
[Print name: ]
Notary Public
[Notary Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February by John G. Murray, the Treasurer of HEALTH AND
REHABILITATION PROPERTIES TRUST, a Maryland real estate investment
trust, on behalf of the trust.
[Print name: ]
Notary Public
[Notary Seal]
N-1
[MI]
<PAGE>
Schedule I
Subject Mortgage
Exhibit B, Page SCH-I-1
<PAGE>
Schedule II
Subject Notes
Exhibit B, Page SCH-II-1
<PAGE>
Schedule III
Credit Support Agreements
Exhibit B, Page SCH-III-1
<PAGE>
Exhibit A
Legal Description of the Property
Exhibit B, Page A-1
<PAGE>
Exhibit C
Form of Bailee Letter
[Letterhead of Assignee]
Dated , 19
To: _______________________________
_______________________________
_______________________________
The documents delivered herewith (the ``Collateral
Documents'') as more particularly described on the attached schedule
relate to collateral that has been assigned and pledged to us under that
certain Collateral Assignment of Mortgage Loan Documents, Pledge and
Security Agreement, dated as of November ___, 1994 (as the same may be
amended from time to time, the ``Assignment''), between Health and
Rehabilitation Properties Trust (``Assignor'') and Wells Fargo Bank,
N.A., (``Assignee'').
The Collateral Documents are being delivered to you in
accordance with Section 7 of the Assignment. You are hereby deemed to
be holding the Collateral Documents in trust as our bailee in accordance
with the applicable provisions of the Uniform Commercial Code, subject
to the security interest granted to us under the Assignment. In the
event that you receive conflicting instructions regarding the Collateral
Documents from Assignor and any affiliate of Assignor and us, you agree
to act in accordance with our instructions, and Assignor, by its
counter-execution hereof in the space provided below, so confirms and
acknowledges. You agree promptly to return the Collateral Documents to
us within 120 days of the date hereof or if otherwise requested by us.
[This paragraph will contain appropriate instruction to the
Bailee to accomplish the purpose for which the release of the Collateral
Documents has been requested.]
Exhibit C, Page C-1
<PAGE>
If the foregoing accurately reflects your understanding of
your role with respect to the Collateral Documents, and in particular
your status as bailee, please execute and return to us a copy of this
letter.
Very truly yours,
WELLS FARGO BANK, N.A.,
as Assignee
By: ________________________________
Name:
Title:
Confirmed and Acknowledged:
HEALTH AND REHABILITATION PROPERTIES TRUST
By: ________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO
this ____ day of ________, 19__.
___________________________________
Signature of Recipient
Print Name of Recipient:
Exhibit C, Page C-2
<PAGE>
EXHIBIT E-1
FORM OF
MORTGAGE
Prepared by, recording requested by
and when recorded return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
[CT MORTGAGED PROPERTY]
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE DEED, SECURITY AGREEMENT
AND FIXTURE FILING
This Open-End Mortgage Deed, Security Agreement and Fixture
Filing (this "Mortgage") is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
This is an "OPEN-END MORTGAGE" and the holder(s) hereof shall
have all of the rights, powers and protection to which the holder of an
OPEN-END MORTGAGE is entitled under Connecticut law. Upon request the
Lenders may, in their discretion, make future advances to Mortgagor
pursuant to the Loan Agreement (as hereinafter defined). Any future
advance and the interest payable thereon shall be secured by this
Mortgage, shall be evidenced by the Promissory Notes (as hereinafter
defined), copies of which are annexed hereto as Exhibit C, and shall be
recorded on the books and records of the Lenders. At no time shall the
principal amount of the debt secured by this Mortgage exceed the
original loan authorized, nor shall the maturity of any future advance
secured hereby extend beyond the maturity of the original mortgage debt
as set forth in the Promissory Notes (as hereinafter defined).
WHEREAS, pursuant to that certain Revolving Loan Agreement
dated as of February ____, 1994, among Mortgagor, Mortgagee, Kleinwort
Benson Limited, as agent for itself and the other Lenders (in such
capacity, the "Agent"), and the Lenders (as the same may be amended from
MORTGAGE E-1-1
<PAGE>
time to time, the "Loan Agreement"), the Lenders have agreed to make
loans to Mortgagor, which loans shall, in the aggregate, not exceed ONE
HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes);
WHEREAS, the final maturity date of the Loans evidenced by the
Promissory Notes is January 2, 1997; and
WHEREAS, pursuant to the Loan Agreement, the proceeds of the
Loans secured hereby are to be used by Mortgagor for the acquisition of
certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
NOW THEREFORE, KNOW ALL MEN, that in consideration of said
debt and for other good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Mortgagor
hereby grants, mortgages, warrants, affects, specially hypothecates,
bargains, sells, conveys, releases, transfers, assigns and pledges and
grants a security interest to Mortgagee, its heirs, successors and
assigns, forever, with POWER OF SALE and with MORTGAGE COVENANTS, the
following described real and personal property, none of which real or
personal property is used principally or at all for agricultural or
farming purposes (herein collectively, the "Mortgaged Property"):
A. LAND:
The land described in Exhibit A-I attached hereto and by this
reference incorporated herein (the "Fee Land") and all right title and
interest of Mortgagor in and to each leasehold estate (individually, a
"Leasehold Estate" and collectively, the "Leasehold Estates") created
pursuant to the lease or leases more particularly described in Exhibit B
attached hereto and by this reference incorporated herein (such lease or
leases, together with any amendments, modifications, extensions,
renewals or substitutions therefor are referred to herein individually,
as a "Lease (Mortgagor Lessee)" and collectively as the "Leases
(Mortgagor Lessee)"), or otherwise, and affecting all or the portions
indicated in Exhibit B of those certain parcels of land more
particularly described in Exhibit A-II attached hereto and by this
reference incorporated herein (the "Leased Land") (the Fee Land and the
Leased Land being sometimes hereinafter collectively referred to as the
"Land") (Exhibit A-I and Exhibit A-II are collectively referred to as
"Exhibit A").
MORTGAGE E-1-2
<PAGE>
B. IMPROVEMENTS:
All buildings, structures, facilities and other improvements
now located on or to be constructed on any of the Land or added thereto,
together with all fixtures now or hereafter owned by Mortgagor, or in
which Mortgagor has an interest, and placed in or upon any of the Land
or the buildings or other improvements thereon (collectively, the
"Improvements").
C. EASEMENTS:
All easements, servitudes, bridges, rights of way, licenses,
privileges, tenements, hereditaments, royalties, air rights, water and
water rights, mineral rights and appurtenances belonging to or inuring
to the benefit of the Land; and all right, title and interest of
Mortgagor in and to the land lying within any street or roadway
adjoining the Land; and all right, title and interest of Mortgagor in
and to any vacated or hereafter vacated streets or roads adjoining any
of the Land (collectively, the "Easements").
D. PERSONAL PROPERTY:
All fixtures, machinery, equipment and other personal property
of every kind, description and nature whatsoever, now or hereafter
located in or upon or affixed to the Land or Improvements, or any part
thereof, or now or hereafter used or to be used in connection with any
present or future operation thereof or construction thereon, and now
owned or hereafter acquired by Mortgagor, including, without in any way
limiting the generality of the foregoing, any and all: (i) heating,
lighting, incinerating, refrigerating, ventilating, air conditioning,
air cooling, lifting, fire extinguishing, plumbing, cleaning,
communications and power equipment and apparatus; (ii) gas, water and
electrical equipment and apparatus; (iii) elevators, escalators,
switchboards, engines, motors, tanks, pumps, partitions, conduits, ducts
and compressors, together with any renewals, replacements or additions
thereto or substitutions therefor and (iv) all Goods, Fixtures and
Equipment, as such terms are defined within the meaning of the Uniform
Commercial Code (as from time to time in effect in the State or
Commonwealth in which the Personal Property as hereinafter defined is
located, the "Code"); it being understood and agreed that all such
fixtures, machinery, apparatus, equipment and other personal property
are a part of and are declared to be a portion of the security for the
indebtedness hereby secured, whether physically attached to the
Improvements or not (collectively, the "Personal Property").
E. LEASES AND RENTS:
All of the landlord's right, title and interest, owned by
Mortgagor in and to all leases (which term, as used herein, shall
include all occupancy agreements excluding however, agreements with
MORTGAGE E-1-3
<PAGE>
respect to the provision of care for patients of the Operator (as
defined below), licenses, concession agreements and all other agreements
or tenancies, however denominated, affecting the occupancy of the
Mortgaged Property, or any portion thereof) now or hereafter affecting
or pertaining to the Mortgaged Property and the business operations
conducted thereon, including without limitation, that certain lease
described on Schedule I attached hereto and incorporated herein by
reference, between Mortgagor, as lessor and the operator lessee (the
"Operator"), described in said Schedule I (such lease, as in effect on
the date hereof, without giving effect to any amendments, modifications
or supplements from time to time entered into unless the same shall be
approved in writing by both Mortgagee and Agent, the "Lease (Mortgagor
Lessor)"), together with all of Mortgagor's right, title and interest in
and to all rents, issues, profits, royalties, revenues, income and other
benefits derived from the Mortgaged Property or the Land or from any
other leases, subleases or licenses of, or any concessions, franchises
or similar agreements with respect to, the Mortgaged Property whether
now or hereafter existing (collectively, the "Rents").
F. RECORDS:
A security interest in and to all of the records and books of
account now or hereafter maintained by Mortgagor in connection with the
operation of the Mortgaged Property.
G. PROCEEDS, AWARDS AND OTHER MONEYS:
A security interest in all proceeds, including insurance
proceeds, paid for any damage or loss to the Mortgaged Property or any
part thereof, all awards, including interest and insurance proceeds, in
connection with any condemnation or other taking of the Mortgaged
Property, or any part thereof, or for conveyance in lieu thereof, and
any and all other moneys which may from time to time become subject to
the lien hereof (including, without limitation, all sums held by
Mortgagee), whether by conversion, voluntary or involuntary, of any of
the foregoing into cash or liquidated claims or otherwise (collectively,
the "Proceeds").
H. REPLACEMENTS AND SUBSTITUTIONS:
All of Mortgagor's right, title and interest in and to all
replacements, substitutions, betterments and additions of or to any or
all of the foregoing.
SUBJECT, HOWEVER, to the Permitted Exceptions as defined in
the Loan Agreement.
This mortgage and conveyance is made to secure (herein, the
"indebtedness"):
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<PAGE>
(1) Payment of the indebtedness of Mortgagor to the
Lenders evidenced by the Promissory Notes, together with interest on
said indebtedness at the rate specified therein;
(2) Payment by Mortgagor of all sums expended or advanced
by Mortgagee, the Agent or the Lenders from time to time pursuant to any
term or provision of the Notes, the Loan Agreement or this Mortgage;
(3) Payment, performance and observance by Mortgagor of
each and every covenant, condition and obligation contained in the
Notes, this Mortgage, the Loan Agreement and/or any other document now
or hereafter given by Mortgagor either as additional security for the
payment of the indebtedness hereby secured, or otherwise executed and
delivered in connection therewith (all of such instruments being
hereinafter sometimes collectively referred to as the "Security
Instruments"); and
(4) Payment and performance of all obligations of
Mortgagor to Mortgagee, Agent and the Lenders for fees, costs and
expenses (including attorney's fees) under the Security Instruments.
3 [***This Mortgage is given to secure not only existing
indebtedness, but also such future advances made after the date hereof,
whether such advances are obligatory or are to be made at the option of
the Lenders, or otherwise, as are made within twenty (20) years from the
date hereof, to the same extent as if such future advances were made on
the date of the execution of this Mortgage. Such advances are and will
be evidenced by the Notes and the Security Instruments. The maturity
date of the unpaid balances of the indebtedness shall be January 2, 1997
(or earlier as provided in the Loan Agreement). The total amount of
indebtedness that may be so secured may decrease or increase from time
to time, but the total unpaid principal balance so secured at one time
shall not exceed $150,000,000 plus interest thereon and any
disbursements made by Mortgagee or any of the Lenders to or on behalf of
Mortgagor pursuant to the terms of this Mortgage, the Loan Agreement or
the Security Instruments, including, but not limited to, disbursements
made for the payment of taxes, levies or insurance on the Mortgaged
Property, in each case with interest thereon from date of expenditure at
the rate of default interest specified in Section 2.4(b) of the Loan
Agreement.***]
[**Note: The following paragraph should be omitted from the
Louisiana form of Mortgage.**]
The Notes are hereby incorporated herein by reference, with
the same force and effect as if each such Note, and all of the terms,
conditions and provisions thereof, were set forth herein in its
entirety, and copies of all such Notes shall be maintained, and made
available to parties having an interest therein, at the principal
3 Replace this paragraph with the alternative provision
suggested by Ohio local counsel for all Ohio mortgages.
MORTGAGE E-1-5
<PAGE>
offices of Kleinwort Benson Limited, or any successor agent under the
Loan Agreement, at New York, New York.
CERTAIN OF PERSONAL PROPERTY COVERED BY THIS MORTGAGE ARE OR
ARE TO BECOME FIXTURES RELATED TO THE LAND. THIS MORTGAGE IS ALSO
INTENDED TO BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE
FILING WITH RESPECT TO THE SECURITY INTEREST GRANTED HEREIN IN SUCH
PERSONAL PROPERTY. THE MORTGAGOR IS THE DEBTOR AND THE MORTGAGEE IS THE
SECURED PARTY FOR SUCH PURPOSES AND THE MAILING ADDRESS OF THE MORTGAGOR
AND MORTGAGEE ARE AS SET FORTH ON THE FIRST PAGE OF THIS MORTGAGE.
Mortgagor hereby further covenants and agrees with Mortgagee
to pay, perform or observe, as the case may be, all of the following
additional covenants and agreements:
ARTICLE 1
Performance
1.1 Mortgagor shall pay all indebtedness hereby secured at
the time or times and in the manner provided herein or in the Notes, and
shall pay or cause to be paid, as and when the same respectively become
due and payable, all premiums for insurance maintained on the Mortgaged
Property and all expenses of repair to the Mortgaged Property.
1.2 Mortgagor shall promptly and fully keep, perform and
comply with all the terms, provisions, covenants and conditions imposed
upon Mortgagor hereunder, under the Notes, the Loan Agreement and under
the other Security Instruments.
ARTICLE 2
Assignment of Leases and Rents
Mortgagor hereby assigns, sets over, and transfers to
Mortgagee, all leases, licenses, concession agreements, occupancy
agreements and all other tenancy agreements, including, without
limitation, the Lease (Mortgagor Lessor), and all of the Rents, subject,
however, to the terms and conditions of any separate assignment of
leases and rents from time to time delivered by Mortgagor to Mortgagee
with respect to the Mortgaged Property.
ARTICLE 3
Insurance
3.1 Mortgagor shall keep, or shall cause the Operator to
keep, the Improvements constantly and satisfactorily insured against the
following risks:
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<PAGE>
(i) Loss or damage by fire, vandalism and malicious mischief,
extended coverage perils, and all physical loss perils insurance,
if available and economically feasible, including but not limited
to sprinkler leakage, in an amount not less than one hundred
percent (100%) of the then full replacement cost thereof (as
defined below in Section 3.2) and in an amount which is sufficient
to prevent Mortgagor from becoming a co-insurer;
(ii) Business interruption or loss of rental under a rental
value insurance policy covering risk of loss during the lesser of
the first twelve (12) months of reconstruction or the actual
reconstruction period necessitated by the occurrence of any of the
hazards described in Section 3.1(i), if available and economically
feasible, in such amounts as may be customary for comparable
properties in the area and in an amount sufficient to prevent
Mortgagor from becoming a coinsurer;
(iii) Claims for personal injury or property damage under a
policy of comprehensive general public liability insurance, if
available and economically feasible, with amounts not less than
Five Million Dollars ($5,000,000.00) per occurrence in respect of
bodily injury and death and One Million Dollars ($1,000,000.00) for
property damage;
(iv) Claims arising out of malpractice in an amount not less
than Five Million Dollars ($5,000,000.00) for each person and for
each occurrence; provided, however, that if such malpractice
insurance, with such limit, at any time is not available at rates
which are economically feasible in relation to the risks covered,
Mortgagor may permit the Operator to self-insure as to such
malpractice claims in accordance with the provisions of Section 3.5
below; and
(v) Flood (when the Improvements are located in whole or in
part within a designated flood plain area) and such other hazards
and in such amounts as may be customary for comparable properties
in the area and are available from insurance companies, insurance
pools, or other appropriate companies authorized to do business in
the State or Commonwealth in which the Mortgaged Property is
located, at rates which are economically practicable in relation to
the risks covered.
3.2 The term "full replacement cost" as used herein, shall
mean the actual replacement cost of the Mortgaged Property requiring
replacement from time to time including an increased cost of
construction endorsement, if available and economically feasible, less
exclusions provided in the standard form of fire insurance policy.
3.3 In addition to the insurance described above, Mortgagor
shall require the Operator to maintain such additional insurance as may
be reasonably required from time to time by either Mortgagee or Agent.
Mortgagor shall at all times cause the Operator to maintain adequate
worker's compensation insurance coverage for all persons employed by the
MORTGAGE E-1-7
<PAGE>
Operator on the Mortgaged Property. Such worker's compensation
insurance shall be in accordance with the requirements of applicable
local, state and federal law.
3.4 Notwithstanding anything to the contrary contained in
this Article 3, Mortgagor's obligations to carry or cause to be carried
the insurance provided for herein may be brought within the coverage of
a so-called blanket policy or policies of insurance carried and
maintained by Mortgagor or the Operator, as the case may be; provided,
however, that the coverage afforded will not be reduced or diminished or
otherwise be different from that which would exist under a separate
policy meeting all other requirements of this Mortgage by reason of the
use of such blanket policy of insurance, and provided further that the
requirements of this Article 3 are otherwise satisfied.
3.5 With respect to the risks specified in Section 3.1(iv)
only, Mortgagor may permit the Operator to self-insure (pursuant to a
prudent program of self-insurance no less stringent than any program of
self-insurance maintained by the Operator with respect to its other
properties, with reserves therefor in such amounts as would conform to
the requirements of generally accepted accounting principles) against
the risks, and in the amounts hereinabove described and shall not be
required to maintain insurance hereunder, except that, until such time
as the Operator is rated in one of the highest three ratings by either
Moody's or Standard & Poor's, the Operator shall only self-insure an
amount equal to the greater of $250,000 or 3.0% of its Consolidated
Tangible Net Worth as hereafter defined. "Consolidated Tangible Net
Worth" shall mean the aggregate of the par or stated value of all
outstanding capital stock, capital surplus, and retained earnings set
forth on a consolidated balance sheet prepared in accordance with
generally accepted accounting principles, less the sum of (A) all
intangibles included on the asset side of said consolidated balance
sheet, including, without limitation, goodwill (including any assets
designated on such balance sheet representing the excess of the purchase
price paid for assets or stock acquired over the value assigned hereto
on the books of the Operator and its subsidiaries), patents, trademarks,
trade names, copyrights, and similar intangibles, and (B) deferred
charges.
3.6 All such insurance shall (i) be evidenced by valid and
enforceable policies written by insurance companies qualified to do
business in the State or Commonwealth in which the Mortgaged Property is
located, (ii) to the extent provided by Section 5.15 of the Loan
Agreement, be made payable to Mortgagee by means of a standard
non-contributory mortgagee clause in favor of Mortgagee as
administrative agent on behalf of Lenders, (iii) to the extent provided
by Section 5.15 of the Loan Agreement, contain an endorsement requiring
thirty (30) days written notice to Mortgagee prior to cancellation or
modification in the coverage, scope or amount of any such policy or
policies, (iv) to the extent provided by Section 5.15 of the Loan
Agreement, provide that any loss shall be payable to Mortgagee
notwithstanding any act or negligence of Mortgagor or Mortgagee which
might otherwise result in a forfeiture of said insurance, and (v) to the
MORTGAGE E-1-8
<PAGE>
extent provided by Section 5.15 of the Loan Agreement, in the case of
liability coverage, name Mortgagee, as administrative agent for itself
and the other Lenders, as additional insured. Mortgagee agrees that a
$25,000 deductible in such policies is acceptable. A certificate from
the insurer setting forth the limits of the insurance coverage shall be
delivered to Mortgagee concurrently with the execution and delivery of
this Mortgage, and thereafter all renewal or replacement certificates
shall be delivered to Mortgagee not less than thirty (30) days prior to
the expiration date of the policy to be renewed or replaced,
accompanied, if requested by Mortgagee, by evidence satisfactory to
Mortgagee and Agent that all premiums payable with respect to such
policies have been paid in full.
3.7 All property insurance policies carried by either the
Operator or Mortgagor covering the Mortgaged Property, including without
limitation, contents, fire and casualty insurance, shall expressly waive
any right of subrogation on the part of the insurer against any other
party. The parties hereto agree that their policies will include such
waiver clause or endorsement so long as the same are obtainable without
extra cost, and in the event of such an extra charge the other party, at
its election, may pay the same, but shall not be obligated to do so.
3.8 Mortgagee shall have the right and is hereby constituted
and appointed the true and lawful attorney-in-fact, irrevocable and
coupled with an interest, of Mortgagor (with full power of substitution,
delegation and revocation), in the name and stead of Mortgagor, but in
the discretion of said attorney, (i) to demand, adjust, sue for,
compromise and collect any amounts due under such insurance policies in
the event of loss, and (ii) to give releases for any and all amounts
received in settlement of losses under such policies; provided, however,
that unless and until an Event of Default shall have occurred and be
continuing, Mortgagor reserves to itself the right to take any such
action, without the consent or participation of Mortgagee therein.
3.9 Mortgagor shall not on Mortgagor's own initiative or
pursuant to the request or requirement of any third party, take out
separate insurance concurrent in form or contributing in the event of
loss with that required in this Article, to be furnished by, or which
may reasonably be required to be furnished by, Mortgagor, or increase
the amount of the existing insurance by securing an additional policy or
additional policies, unless all parties having an insurable interest in
the subject matter of the insurance, including in all cases Mortgagee,
are included therein as additional insureds, and the loss is payable
under said insurance in the same manner as losses are payable under this
Mortgage. Mortgagor shall immediately notify Mortgagee of the receipt
of any notice from the Operator of the taking out of any such separate
insurance.
3.10 In the event of the occurrence of a casualty or other
loss with respect to a Mortgaged Property, Mortgagee, at its election
(except as provided in subsection 3.10.1 below), may apply all amounts
received by reason of such casualty or other loss, after first deducting
the costs of collection, to the payment of the indebtedness secured
MORTGAGE E-1-9
<PAGE>
hereby, whether or not then due, or to reimbursement of any taxes,
assessments, charges, insurance premiums or other obligations paid by
Mortgagee pursuant hereto, or, notwithstanding the claims of any
subsequent lienor, amounts so received with respect to casualty loss may
be used or paid over to Mortgagor for use in repairing or replacing
damaged buildings and improvements on such Mortgaged Property.
3.10.1 Notwithstanding the foregoing, however, provided that
no Event of Default hereunder shall have occurred and be continuing, in
the event the Operator (i) is entitled or has elected to restore such
Mortgaged Property in accordance with the applicable provisions of the
Lease (Mortgagor Lessor) pertaining to such Mortgaged Property or (ii)
elects to substitute a new property for such Mortgaged Property in
accordance with the provisions of such Lease (Mortgagor Lessor) and in
the manner provided in such Lease (Mortgagor Lessor), then all amounts
received by reason of such casualty or other loss shall (A) in the event
of repair or restoration, be made available for such repair and
restoration in the manner provided in the following paragraph or (B) in
the event the Operator has offered to substitute a property for such
Mortgaged Property, which offer has been accepted by Mortgagor with the
consent of both Mortgagee and Agent, and which substitute property shall
be subject to a first mortgage and security interest and a collateral
assignment of leases and rents in favor of Mortgagee, and such other
certificates, documents and instruments as may be reasonably required by
Mortgagee and/or Agent, be paid to the Operator in accordance with such
Lease (Mortgagor Lessor) upon completion of said substitution.
3.10.2 Provided that no Event of Default hereunder shall have
occurred and be continuing, if Mortgagee elects to permit the use of
casualty insurance proceeds for repair and restoration of damaged
buildings and improvements or if the Operator elects to restore such
Mortgaged Property in accordance with the applicable provisions of such
Lease (Mortgagor Lessor), then the amounts payable to Mortgagee pursuant
to this Article, or so much thereof as may be required for such purpose,
shall be paid out from time to time as the work of repair or replacement
progresses, upon such architects' certificates or other certificates,
including certificates from title insurance companies, as Mortgagee and
Agent may from time to time require, with respect to the cost of such
repair or replacement and the status of title to such Mortgaged
Property; provided, however, Mortgagee shall not be required to release
or pay any portion of such proceeds unless (i) Mortgagor shall first
furnish additional funds from sources other than the net amount of such
proceeds which, together with said proceeds, shall be sufficient to
cover the cost of repair or replacement as established by the
certificate of an architect or engineer employed by Mortgagee at
Mortgagor's expense, which certificate shall provide that such Mortgaged
Property can reasonably be restored to substantially the same condition
as existed immediately prior to such damage or destruction; (ii) the
proceeds of the business interruption insurance required to be carried
pursuant to Section 3.1(ii) hereof are available for the payment of rent
due under such Lease (Mortgagor Lessor); and (iii) such repair or
replacement shall be effected promptly and in accordance with plans and
specifications submitted to and approved by Mortgagee and Agent and
MORTGAGE E-1-10
<PAGE>
diligently pursued to completion. Mortgagee shall at no time whatever,
whether in possession of such Mortgaged Property or not, have any
obligation to advance or make funds other than said proceeds available
for the repair or replacement of such Mortgaged Property. Provided that
no Event of Default shall have occurred and be continuing, any excess
proceeds remaining after restoration shall be paid to Mortgagor.
3.11 If Mortgagee shall in any manner acquire title to the
Mortgaged Property, it shall thereupon become the sole and absolute
owner of all insurance policies pertaining to such Mortgaged Property
and held by or required hereunder to be delivered to Mortgagee, with the
sole right to collect and retain all unearned premiums and dividends
thereon, and Mortgagor shall only be entitled to a credit, in reduction
of the then outstanding indebtedness secured hereby, in the amount of
the short rate cancellation refund.
3.12 Mortgagor shall comply, or shall cause the Operator to
comply, with all requirements of the issuer of any policy of insurance
required to be carried pursuant to Section 3.1 hereof.
ARTICLE 4
Payment of Taxes
4.1 Mortgagor shall, or shall cause the Operator to, promptly
pay, when due, all taxes, assessments, water and sewer charges and all
other charges of whatever nature which may at any time be assessed
against, levied upon or constitute a lien on, the whole or any portion
of the Mortgaged Property and any tax assessed against Mortgagee with
respect to this Mortgage or the indebtedness hereby secured, whether
under statutes now in force or that may hereafter be enacted; and
Mortgagor shall promptly pay or cause to be paid, when due, all other
taxes (including corporate taxes and personal property taxes),
assessments or charges that might become a lien prior to this Mortgage
or that might have priority in distribution of the proceeds of a
judicial sale. Mortgagor shall not suffer or permit any such taxes, as-
sessments or charges on the Mortgaged Property to become or remain
delinquent or permit any part thereof or any interest therein to be sold
for any such taxes, assessments or charges; and further shall furnish to
Mortgagee, in each instance prior to the date when they would become
delinquent, certificates or receipts of the proper officer showing full
payment of all taxes, assessments and charges.
4.2 Notwithstanding the foregoing provisions of this Article,
Mortgagor shall not be required to pay and discharge or cause to be paid
and discharged any such tax, assessment or charge so long as the
validity thereof shall be contested in good faith by appropriate
proceedings in accordance with the applicable provisions of the Lease
(Mortgagor Lessor) pertaining to permitted contests and Article 6
hereof; provided, however, that payment in full with respect to any such
tax, assessment or charge shall be made not less than five (5) days
MORTGAGE E-1-11
<PAGE>
before the first day upon which the Mortgaged Property, or any portion
thereof, may be seized and sold in satisfaction thereof.
4.3 Mortgagor hereby assigns to Mortgagee all rights of
Mortgagor now or hereafter arising in and to any refunds or abatements
of any such tax, assessment or charge, which refunds and abatements
shall be applied by Mortgagee in reduction of the principal indebtedness
under the Notes; provided, however, that until an Event of Default shall
have occurred and be continuing, Mortgagor shall be entitled to any such
refunds or abatements.
ARTICLE 5
Payment of Liens
5.1 Mortgagor shall pay or cause to be paid, when the same
shall become due and payable, all lawful claims and demands of
mechanics, materialmen, laborers and others which, if unpaid, might
result in or permit the creation of a lien on the Mortgaged Property or
any part thereof, other than Permitted Exceptions.
5.2 Nothing contained in the Notes, this Mortgage or any
other Security Instrument and no action or inaction by Mortgagee shall
be construed as (i) constituting the request of Mortgagee, express or
implied, to any contractor, sub-contractor, laborer, materialman or
vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to the Mortgaged
Property or any part thereof, or (ii) giving Mortgagor any right, power
or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Mortgagee in
respect thereof or to make any agreement that may create, or in any way
be the basis for any right, title, interest, lien, claim or other
encumbrance upon the estate of Mortgagee in the Mortgaged Property, or
any portion thereof.
5.3 Notwithstanding the foregoing provisions of this Article,
Mortgagor shall not be required to pay and discharge or cause to be paid
and discharged any such claim so long as the validity thereof shall be
contested diligently and in good faith by appropriate proceedings in
accordance with the applicable provisions of the Lease (Mortgagor
Lessor) and Article 6 hereof; provided, however, that if at any time
payment of any obligation imposed upon the Mortgagor by this Article
shall become necessary to prevent the sale or forfeiture of the
Mortgaged Property, because of nonpayment, to prevent the cancellation
of the insurance required to be carried pursuant to Article 3 of this
Mortgage or to protect the lien of this Mortgage, then Mortgagor shall
forthwith pay the same and forthwith take all other actions necessary or
appropriate to prevent the sale or forfeiture of the Mortgaged Property,
the cancellation of said insurance or to protect the lien of this
Mortgage, as the case may be.
MORTGAGE E-1-12
<PAGE>
ARTICLE 6
Permitted Contests
Pursuant to the provisions of the Lease (Mortgagor Lessor)
relating to permitted contests, the Operator shall have the right to
contest the amount or validity of any tax or imposition or any Legal
Requirement or Insurance Requirement (as such terms are defined in the
Lease (Mortgagor Lessor)) or any lien, attachment, levy, encumbrance,
charge or claim ("Claims"), by appropriate legal proceedings in good
faith and with due diligence on the condition, however, that such legal
proceedings shall not cause the sale or forfeiture of the Mortgaged
Property, or any part thereof, to satisfy the same or cause Mortgagee or
Mortgagor to be in default under any mortgage or deed of trust
encumbering the Mortgaged Property or any interest therein. Upon the
reasonable request of Mortgagee or Agent, Mortgagor shall cause the
Operator either (i) to provide a bond or other assurance reasonably
satisfactory to Mortgagee and Agent that all Claims which may be
assessed against the Mortgaged Property together with interest and
penalties, if any, thereon will be paid, or (ii) deposit within the time
otherwise required for payment with a bank or trust company as trustee,
as security for the payment of such Claims, money in an amount
sufficient to pay the same, together with interest and penalties in
connection therewith and all Claims which may be assessed against or
become a Claim on the Mortgaged Property, or any part thereof, in said
legal proceedings. Mortgagor shall cause the Operator to furnish
Mortgagee with reasonable evidence of such deposit within five (5) days
of making the same. Mortgagor hereby assigns to Mortgagee all right,
title and interest of Mortgagor in and to any and all bonds, deposits,
or other assurances provided by the Operator in accordance with said
provisions of the Lease (Mortgagor Lessor).
ARTICLE 7
Mortgagee's Right to Pay Insurance Charges, Taxes and Liens
If Mortgagor fails to insure or cause the insurance of the
Mortgaged Property, or to pay and furnish receipts for all taxes,
assessments and other charges, or to pay for all labor and materials,
all as provided herein, Mortgagee may, at its option, upon ten (10) days
notice to Mortgagor (or upon lesser notice or without notice if
Mortgagee reasonably deems the same is required to protect Mortgagee's
interest in the Mortgaged Property): procure such insurance; pay such
taxes, assessments and charges and any penalty, and interest thereon,
redeem the Mortgaged Property or any part thereof from any tax sale or
procure such receipts; and pay for such labor and materials; and
Mortgagor shall immediately pay to Mortgagee all sums which Mortgagee
shall have so paid, together with interest thereon from date of
expenditure at the rate of default interest specified in Section 2.4(b)
of the Loan Agreement, and for payment thereof, this Mortgage shall
stand as security in like manner and effect as for the payment of the
MORTGAGE E-1-13
<PAGE>
indebtedness evidenced by the Notes. The failure of Mortgagee to
procure such insurance, to pay such taxes, assessments and charges or to
redeem the Mortgaged Property or any part thereof from any tax sale, or
to pay for labor and materials, shall in no way render Mortgagee liable
to Mortgagor. If Mortgagee shall elect to advance insurance premiums,
taxes, assessments or charges, or redeem from tax sale, or pay for labor
or materials, the receipt of the insurance company, the proper tax
official or supplier shall be conclusive evidence of the amount,
validity and the fact of payment thereof.
ARTICLE 8
Insurance and Tax Deposits
Mortgagee may, at its election, such election to be made only
after the occurrence and during the continuance of an Event of Default,
while such Event of Default is continuing and remains uncured, require
Mortgagor to pay to Mortgagee, on the first day of each calendar month,
a sum (hereinafter referred to as the "Deposited Funds") equal to (i)
one-twelfth (1/12) of the aforesaid annual taxes, assessments, water and
sewer charges and all other charges upon the Mortgaged Property and/or
upon Mortgagee with respect to the Mortgaged Property (for the purposes
of this paragraph, collectively referred to as the "taxes") and (ii)
one-twelfth (1/12) of the annual premiums for the insurance required
hereunder to be maintained on the Mortgaged Property, the respective
amounts of such taxes and premiums to be reasonably estimated from time
to time by Mortgagee. Mortgagee shall apply the Deposited Funds to the
payment of such taxes and premiums and shall render an annual accounting
to Mortgagor of all disbursements of the Deposited Funds. Although each
such monthly payment of the Deposited Funds is to be in a lump sum, each
component thereof shall be deemed to be held separately by Mortgagee
for, and shall be applied only to, the particular item for which it was
paid over by Mortgagor. If the amount of the Deposited Funds shall
exceed the amount necessary to pay such taxes and premiums for the then
current year, such excess shall be credited against future monthly
deposits required hereunder; provided, however, upon the curing of such
Event of Default, and so long as no other Event of Default is
continuing, all Deposited Funds shall promptly be refunded to Mortgagor.
No interest shall be paid on the Deposited Funds, and the Deposited
Funds may be commingled with Mortgagee's general funds. Upon payment in
full of all sums secured by this Mortgage, any excess Deposited Funds
shall be refunded to Mortgagor. Upon the occurrence of an Event of
Default hereunder (until such time as the same may be cured as described
above), Mortgagee may apply against the indebtedness secured hereby, in
such manner as Mortgagee may determine, any of the Deposited Funds then
held by Mortgagee.
MORTGAGE E-1-14
<PAGE>
ARTICLE 9
Maintenance and Repair
9.1 Mortgagor shall at all times keep and maintain, or cause
the Operator to keep and maintain, the Mortgaged Property, including all
Improvements and Personal Property now or hereafter installed or located
thereon or used in connection therewith, in good order, and repair and
operating condition, reasonable wear and tear excepted.
9.2 Mortgagor shall not: permit any strip or waste of the
Mortgaged Property; permit the violation of any law, ordinance or
governmental regulation affecting the same or the use thereof; permit
any conditions to exist which would wholly or partially invalidate any
insurance on the Mortgaged Property; or permit anything to be done to
the Mortgaged Property that might materially diminish the value thereof.
9.3 Mortgagor shall permit Mortgagee and/or Agent, and their
respective officers, agents and servants, to enter upon the Mortgaged
Property at all reasonable times upon forty-eight (48) hours prior
notice to view and inspect the same; in addition, after the occurrence
and during the continuance of an Event of Default, Mortgagor shall
permit Lenders and their respective officers, agents and servants to
enter upon the Mortgaged Property upon forty-eight (48) hours prior
notice to view and inspect the same.
9.4 Mortgagor shall, promptly after demand by Mortgagee (or
immediately upon demand in case of emergency), make, or cause to be
made, such repairs, replacements, renewals, or additions, or perform
such items of maintenance to the Mortgaged Property as Mortgagee may
reasonably require in order to maintain the Mortgaged Property at the
standards required by this Article; provided, however, that if such
required action cannot reasonably be completed within the time herein
provided, then if Mortgagor shall so notify Mortgagee and immediately
commence and carry out such action in a prompt and diligent manner, the
time for completion thereof shall be extended to the period of time
necessary to complete the same in a prompt and diligent manner.
9.5 Mortgagor shall replace, or cause the Operator to
replace, all worn out or obsolete fixtures or other personal property
which form a part of the Improvements or the Personal Property with
fixtures or personal property comparable thereto unless replacement of
such fixtures or personal property is not necessary to the operation of
the Improvements in compliance with all licensure and certification
requirements and with all other applicable legal and insurance
requirements and otherwise in accordance with customary practice for
comparable properties. Mortgagor shall not and shall not permit the
Operator to, without the prior written consent of Mortgagee, remove from
the Improvements any fixtures or personal property covered by this
Mortgage (except to repair the same) unless the same is no longer
necessary to the operation or maintenance of the Improvements in
compliance with all licensure and certification requirements and with
all other applicable legal and insurance requirements and otherwise in
MORTGAGE E-1-15
<PAGE>
accordance with customary practice for comparable properties, or unless
the same is replaced by Mortgagor with an article of comparable
suitability owned by Mortgagor or the Operator free and clear of all
liens and encumbrances except Permitted Exceptions.
ARTICLE 10
Alterations
Except as otherwise permitted by the Lease (Mortgagor Lessor)
without the consent of Mortgagor or by the Loan Agreement, Mortgagor,
shall not and shall not permit the Operator to:
10.1 remove or demolish any of the Improvements;
10.2 make changes or alterations to the Improvements which
would change their general character or size;
10.3 alter the design or structural character of the
Improvements;
10.4 make any other material alteration or addition thereto;
or
10.5 do or permit anything to be done to the Improvements
that might diminish the value thereof,
without in each instance having first obtained the prior written
consent of Mortgagee and Agent.
ARTICLE 11
Compliance With Leases, Etc.
11.1 Mortgagor shall promptly and fully keep, perform and
comply with all the terms, provisions, covenants, conditions and
agreements imposed upon or assumed by Mortgagor as landlord, licensor or
guarantor under any lease, license, concession, occupancy or other
tenancy agreement, now or hereafter in effect (including, without
limitation, the Lease (Mortgagor Lessor)), including, in each case, any
amendments or supplements thereto, covering any part of the Mortgaged
Property or any other property owned or controlled by Mortgagor that is
affected by the terms, provisions, covenants, conditions and agreements
imposed upon or assumed by Mortgagor in such lease, and Mortgagor shall
not do or permit to be done, or omit and refrain from doing, any act or
thing the doing or omission of which will give any tenant, licensee,
concessionaire or other occupant a right to terminate any such lease,
license, concession, occupancy or other tenancy agreement or to abate
the rental due thereunder.
MORTGAGE E-1-16
<PAGE>
11.2 If Mortgagor shall, in any manner, fail to comply with
Section 11.1 above, Mortgagee may (but shall not be obliged to) take,
upon ten (10) days prior written notice to Mortgagor, any action
Mortgagee deems necessary or desirable to prevent or cure any default by
Mortgagor in the performance of or compliance with any of Mortgagor's
covenants or obligations as landlord, licensor or guarantor under any
such lease, license, concession, occupancy or other tenancy agreement.
Mortgagee may rely on any notice of default received from any tenant,
licensee, concessionaire or other occupant and may act thereon as herein
provided even though the existence of such default or the nature thereof
may be questioned or denied by Mortgagor or any party acting on behalf
of Mortgagor, and such notice of default shall be conclusive evidence
that a default exists for the purposes of this Article. Mortgagor shall
promptly deliver to Mortgagee a copy of any notice of default received
from any tenant that is a party to any such lease, license, concession,
occupancy or other tenancy agreement. Mortgagee shall have the right to
enter upon the Mortgaged Property, and any other property owned or
controlled by Mortgagor which is affected by any of the terms,
conditions, provisions, covenants, and agreements of any such lease,
license, concession, occupancy or other tenancy agreement, as often as
Mortgagee reasonably deems necessary or desirable in order to prevent or
cure any such default by Mortgagor. Mortgagee may expend such sums of
money as are reasonable and necessary for any such purpose, and
Mortgagor hereby agrees to pay to Mortgagee, immediately upon demand,
all sums so expended by Mortgagee, together with interest thereon from
date of expenditure at the rate of default interest specified in Section
2.4(b) of the Loan Agreement. All sums so expended by Mortgagee, and
the interest thereon shall be added to and secured by the lien of this
Mortgage.
ARTICLE 12
Operation
12.1 To the best of Mortgagor's knowledge, the Improvements
and the present and contemplated use and/or occupancy thereof comply
with all applicable laws, ordinances, rules, regulations, and directions
of governmental authorities having jurisdiction over the Mortgaged
Property and Mortgagor shall cause the Improvements to be continuously
operated in an efficient and first class manner and in compliance with
all applicable laws, ordinances, rules, regulations and directions of
governmental authorities having jurisdiction over the Mortgaged
Property, and also in compliance with the requirements of all policies
of insurance on the Mortgaged Property and of the national or local
Boards of Fire Underwriters, and Mortgagor shall also cause the Operator
to procure, maintain and comply with all permits, licenses and other
authorizations needed for the operation of such Mortgaged Property;
subject, however, in each such instance, to the right of the Operator to
postpone compliance with governmental requirements to the extent and in
the manner provided in the provisions of the Lease (Mortgagor Lessor)
relating to permitted contests and Article 6 hereof.
MORTGAGE E-1-17
<PAGE>
ARTICLE 13
Financial Reports
13.1 Mortgagor shall furnish to Mortgagee such financial
statements and other information bearing on the financial condition of
Mortgagor and the status and progress of the operation of the Mortgaged
Property as may from time to time be required by Mortgagee pursuant to
Sections 5.1 and 5.2 of the Loan Agreement.
ARTICLE 14
Condemnation
14.1 Forthwith upon the receipt by Mortgagor of notice of the
institution of any proceeding or negotiations for the taking of the
Mortgaged Property, or any part thereof, in condemnation or by the
exercise of the power of eminent domain, Mortgagor shall give notice
thereof to Mortgagee. Mortgagee may appear in any such proceedings
together with Mortgagor and participate in any such negotiations and may
be represented by counsel. Mortgagor, notwithstanding that Mortgagee
may not be a party to any such proceeding, shall promptly give to
Mortgagee copies of all notices, pleadings, judgments, determinations
and other papers received by Mortgagor therein. Mortgagor shall not
enter into any agreement for the taking of a Mortgaged Property, or any
part thereof, with anyone authorized to acquire the same in condemnation
or by eminent domain unless Mortgagee and Agent shall first have
consented thereto in writing.
14.2 Any award, whether paid as a result of a negotiated
settlement or judgment, shall be paid to Mortgagee and applied as
provided in Section 14.3 and 14.4 below (Mortgagor hereby assigning such
award to Mortgagee), and Mortgagee is hereby constituted and appointed
the true and lawful attorney-in-fact, irrevocable and coupled with an
interest, of Mortgagor for such purpose and as such Mortgagee is duly
authorized and empowered to collect and receive the total amount of such
award, including interest, and to give proper receipts and acquittances
therefor.
14.3 If all or substantially all of the Mortgaged Property
shall be taken by condemnation or otherwise as a result of the exercise
of such power so as to result in termination of the Lease (Mortgagor
Lessor) and the Operator fails to offer substitute property (pursuant to
and in accordance with the applicable provisions of the Lease (Mortgagor
Lessor)) which is accepted by Mortgagor with the consent of Mortgagee
and Agent, then, all awards paid or payable to Mortgagor on account of
such taking shall be paid to Mortgagee and applied to the payment and
discharge of the indebtedness secured hereby, such application to be in
the following order of priority: (i) repayment of all amounts expended
or advanced by Mortgagee in the discharge of Mortgagor's obligations
hereunder or under the Security Instruments; (ii) payment of accrued
interest under the Notes; and (iii) payment of unpaid principal under
MORTGAGE E-1-18
<PAGE>
the Notes. To the extent that such award or awards exceed the amount
required to pay in full the principal and interest under the Notes and
all other sums and charges then secured hereby, Mortgagee shall pay over
to the person or persons legally entitled thereto the amount of such
excess; provided, however, that until the actual vesting of title in the
condemning authority in such proceeding or pursuant to any agreement in
lieu or in settlement thereof, the obligations of Mortgagor to perform
the terms, covenants and conditions of the Notes and this Mortgage shall
continue unimpaired. In no event shall Mortgagee be required to satisfy
or discharge this Mortgage until the principal, interest and all other
sums and charges secured hereby are paid in full. In the event
Mortgagor shall accept Operator's offer to substitute a new property for
such Mortgaged Property, which acceptance shall be given only with the
prior consent of Mortgagee and Agent, and which substitute property
shall be subject to a first mortgage and security interest and a
collateral assignment of leases and rents in favor of Mortgagee, and
such other certificates, documents and instruments as may be reasonably
required by Mortgagee, upon completion of said substitution all awards
shall be payable to the Operator.
14.4 In the event of a taking of less than all or
substantially all of a Mortgaged Property, in condemnation or by eminent
domain, or by agreement or conveyance in lieu thereof, provided no Event
of Default has occurred and is continuing hereunder, all awards payable
to Mortgagor as a result of such taking shall forthwith be paid to and
applied by Mortgagee to restoration of such Mortgaged Property in the
manner provided in the Lease (Mortgagor Lessor). To the extent that the
net proceeds of such awards exceed the cost of restoration, such excess
shall be paid to and applied by Mortgagee in accordance with Section
14.3 hereof.
14.5 Anything to the contrary herein contained
notwithstanding, if at the time of such taking or conveyance, an Event
of Default shall have occurred and be then continuing, or in the event
that Mortgagor, or the Operator, as the case may be, does not promptly
commence and diligently pursue such repair or restoration to completion
in accordance herewith, the total amount of such award shall be applied
in accordance with Section 14.3 hereof.
14.6 As used in this Article, taking of "all or substantially
all" of the Mortgaged Property shall mean a taking of so much of the
Mortgaged property so as, in the reasonable judgment of Mortgagor, such
Mortgaged Property cannot be operated on a commercially practicable
basis for its Primary Intended Use (as defined in the Lease (Mortgagor
Lessor)), taking into account, among other relevant factors the number
of usable beds, the amount of square footage, and the amount of revenues
affected by such taking.
MORTGAGE E-1-19
<PAGE>
ARTICLE 15
Senior or Junior Indebtedness
Mortgagor shall pay all indebtedness secured by any mortgage
creating a senior and prior lien (if any) or junior and subordinate lien
(if any) on the whole or any part of the Mortgaged Property and perform
all covenants, terms and conditions contained in any such mortgage on
the part of Mortgagor to be performed and observed, all within the
periods provided for payment, performance and observance in any such
mortgage, thereby preventing an event of default from occurring
thereunder. Nothing contained herein shall be deemed to give Mortgagee
any rights to encumber the Mortgaged Property except as set forth in
Section 6.8 of the Loan Agreement.
ARTICLE 16
Government Regulations
Mortgagor shall promptly comply with all present and future
laws, ordinances, rules, regulations, directives and other requirements
of all governmental authorities whatsoever having jurisdiction over the
Mortgaged Property or the use or occupation thereof; provided, however,
that Mortgagor, acting alone or through the Operator, shall have the
right to contest the validity or legality of any such governmental
requirement in the manner provided in the provisions of the Lease
(Mortgagor Lessor) pertaining to permitted contests and Article 6
hereof.
ARTICLE 17
Interest in Mortgaged Property
Except as otherwise expressly permitted by the provisions of
this Mortgage relating to permitted contests, and except as the Loan
Agreement may otherwise expressly provide, Mortgagor shall not, directly
or indirectly, sell, convey, mortgage, pledge, hypothecate, encumber,
lease, assign or otherwise transfer the Mortgaged Property or any
portion thereof or any interest therein, except to the Operator pursuant
to and in accordance with a specific provision in the Lease (Mortgagor
Lessor) granting such Operator an option to purchase the Mortgaged
Property in which event the purchase price paid therefor shall be paid
to Mortgagee to reduce the indebtedness secured hereby, without in each
instance obtaining the prior written consent of Mortgagee and Agent. In
the event Mortgagor breaches its obligations pursuant to this Article
17, then the entire indebtedness secured hereby shall become immediately
due and payable at the option of Mortgagee.
MORTGAGE E-1-20
<PAGE>
ARTICLE 18
Impairment of Mortgage
Mortgagor shall not do or suffer any act or thing to be done,
or omit to do any act or thing, if such act or thing, or such
forbearance or omission, would impair the security of the payment of the
indebtedness secured hereby or the lien of this Mortgage.
ARTICLE 19
Recording Fees, Stamp and Other Taxes
Mortgagor shall pay any and all taxes (including any stamp tax
or mortgage recording tax), charges, filing, registration and recording
fees, excises and levies imposed by any governmental authority by reason
of or in connection with (i) the execution, recordation, assignment or
discharge of this Mortgage, or the Notes, the Loan Agreement or any
other Security Instrument, or any other instrument executed and
delivered or assigned to Mortgagee in connection with this Mortgage or
any mortgage supplemental hereto, any security instrument with respect
to any Personal Property or any instrument of further assurance, (ii)
the exercise by Mortgagee of any of its remedies hereunder, or (iii) the
indebtedness secured hereby.
ARTICLE 20
Changes in Tax Laws Relating to Mortgages
In the event of the passage, after the date of this Mortgage,
of any law imposing upon Mortgagee the obligation to pay, in whole or in
part, the taxes, assessments, charges or liens herein required to be
paid by Mortgagor, or changing in any way the laws for the taxation of
mortgages or debts secured by mortgages for state or local purposes or
the manner of the collection of any such taxes, so as to affect this
Mortgage, then the indebtedness hereby secured without deduction shall,
at the option of Mortgagee, upon thirty (30) days' written notice to
Mortgagor, become immediately due and payable, notwithstanding anything
contained in this Mortgage or any law heretofore or hereafter enacted;
provided, however, that if in the opinion of Mortgagee's counsel it be
lawful in all respects for Mortgagor to pay such taxes, assessments,
charges or liens imposed under any such future law or reimburse
Mortgagee therefor (and the same will not amount to an exaction of
interest in excess of the highest rate permitted by law), and Mortgagor
lawfully makes payment thereof or reimburses Mortgagee therefor, then
the unpaid balance of the indebtedness hereby secured shall not be so
accelerated on account of the matters hereinabove set forth.
MORTGAGE E-1-21
<PAGE>
ARTICLE 21
Amendments
No change, amendment, modification, cancellation or discharge
of this Mortgage, or any part hereof, shall be valid unless in writing
and signed by the party to be charged therewith or its respective
successors and assigns.
ARTICLE 22
Collection Costs
In the event that the indebtedness secured by this Mortgage,
or any part thereof, is collected by suit or action, or this Mortgage be
foreclosed, or in the event said indebtedness or Mortgage is put into
the hands of an attorney for collection, suit, action or foreclosure, or
in the event of the foreclosure of any mortgage prior to or subsequent
to this Mortgage, in which proceeding Mortgagee and/or Agent is made a
party, or in the event of the bankruptcy of Mortgagor, or an assignment
by Mortgagor for the benefit of creditors, Mortgagor, its successors or
assigns, shall be chargeable with all costs of collection, including an
amount as reasonable attorneys' fees not to exceed such maximum amount
as may be permitted by law, including reasonable attorneys' fees for all
appellate proceedings involved therein, which shall be due and payable
at once; the payment of which charges and fees, together with all costs
and expenses, shall be secured hereby, and may be recovered in any suit
or action hereupon or hereunder.
ARTICLE 23
Events of Default
The happening and continuance for the period, if any,
hereinafter indicated, of any of the following events shall constitute
an "Event of Default" hereunder:
23.1 The failure of Mortgagor to pay any amount payable
under this Mortgage or any supplement, modification or extension hereof,
unless such failure is cured within the applicable grace period (or in
the absence of any such grace period, within five (5) days of the due
date therefor);
23.2 The occurrence of any breach or default under Article
17, except that, in the event of an involuntary encumbrance, the same
shall not constitute an Event of Default if removed or cured within
thirty (30) days of the occurrence of such breach or default;
23.3 The failure of Mortgagor to perform any of its other
obligations, covenants, or agreements contained in, or the occurrence of
a default under, this Mortgage and the continuance of such failure or
MORTGAGE E-1-22
<PAGE>
default for thirty (30) days (or such longer or shorter period of time
as may herein expressly be provided) after written notice thereof from
Mortgagee to Mortgagor; provided, however, that if such default is
susceptible of cure but such cure cannot be accomplished with reasonable
diligence within said period of time, and if Mortgagor commences to cure
such default promptly after receipt of notice thereof from Mortgagee,
and thereafter prosecutes the curing of such default with reasonable
diligence, such period of time, shall be extended to such period of time
(not to exceed an additional sixty (60) days) as may be necessary to
cure such default with reasonable diligence;
23.4 If, at any time, Mortgagor abandons the Mortgaged
Property or any portion thereof;
23.5 A breach or default under any condition or obligation
contained in the Lease (Mortgagor Lessee) which is not cured within any
applicable cure period provided therein to Mortgagor;
23.6 The occurrence of any event or condition which gives the
lessor under the Lease (Mortgagor Lessee) a right to terminate or
cancel, as against the Mortgagor, the applicable Lease (Mortgagor
Lessee); or
23.7 The occurrence of any Event of Default, as defined
therein, under the Loan Agreement.
ARTICLE 24
No Waiver or Forbearance
No waiver, forbearance, extension of time or other indulgence
shown by Mortgagee to Mortgagor or to any person now or hereafter
interested herein or in any of the Mortgaged Property or in the Notes or
Security Instruments or any other instrument evidencing indebtedness of
Mortgagor to Mortgagee with respect to any or any combination of
conditions, covenants or agreements on the part of the Mortgagor to be
performed or observed as set forth or referred to herein or in the
Notes, the Security Instruments, or said other instruments, shall affect
the right of Mortgagee thereafter to require performance or observance
of the same or any other condition, covenant or agreement.
ARTICLE 25
Mortgagee Appointed Attorney
Mortgagee shall be and hereby is authorized and empowered, for
and in the name or names and on behalf of Mortgagor and/or Mortgagee,
and for the purposes hereinafter set forth, Mortgagee shall be and is
hereby made, constituted and appointed the true and lawful attorney-in-
fact, irrevocable and coupled with an interest, of Mortgagor (with full
power of substitution, delegation and revocation):
MORTGAGE E-1-23
<PAGE>
25.1 In the event of foreclosure of this Mortgage or any
transfer of title to the Mortgaged Property to a third-party purchaser
pursuant to the powers hereinafter granted Mortgagee, to surrender up
the policies of insurance covering such Mortgaged Property and to
collect any amounts due thereunder or, at its option, to transfer its
right, title and interest in and to said policies and the proceeds
thereof to any purchaser of such Mortgaged Property without obligation
to account therefor to any person claiming title to such Mortgaged
Property; provided,
however, that any amounts received by Mortgagee under said policies by
way of refunds, dividends or otherwise, as aforesaid, shall be applied
to the payment of the indebtedness secured hereby, and any surplus shall
be paid over as a surplus on foreclosure;
25.2 In the event of the sale of the Mortgaged Property
pursuant to the powers hereinafter granted, to sell all parcels which
comprise the Mortgaged Property, notwithstanding the fact that the
proceeds of such sale may exceed the amounts then secured hereby;
25.3 To cause the assignment to Mortgagee of any lease,
license, concession, occupancy or other tenancy agreement with respect
to the Mortgaged Property which has not been so assigned by Mortgagor
after request therefor from Mortgagee;
25.4 If at any time any portion of the Improvements or
Personal Property shall be unprotected, unguarded, vacant or deserted,
to employ, at its option, watchmen for the Improvements and Personal
Property and to expend any monies deemed by it necessary to protect the
same from waste, depredation or injury; and the amount of monies
expended for such purposes, with interest from the time of payment at
the highest rate then prevailing under the terms of the Notes for
overdue payments of principal, shall be due from and payable by
Mortgagor to Mortgagee on demand and shall be added to the indebtedness
of Mortgagor to Mortgagee, bear interest at the highest rate then
prevailing under the terms of the Notes for overdue payments of
principal, and together with such interest, be secured by this Mortgage;
25.5 In any action or other proceeding with respect to the
Mortgaged Property in which Mortgagee shall become a party or which may
affect any rights of Mortgagee hereunder with respect to such Mortgaged
Property or the lien of this Mortgage thereon, to appear, prosecute,
defend, intervene and retain counsel in such action or proceeding and to
take such other and further action in connection therewith as Mortgagee
and its successors or assigns, shall deem advisable; and the costs
thereof (including reasonable attorneys' fees and all applicable
statutory costs, allowances and disbursements) shall be paid by
Mortgagor to Mortgagee on demand and, until paid, shall be a lien on
such Mortgaged Property, prior to any right or title to, interest in or
claim upon such Mortgaged Property attaching or accruing subsequent to
the lien of this Mortgage, and shall be deemed to be secured by this
Mortgage; and
MORTGAGE E-1-24
<PAGE>
25.6 Upon the occurrence of any Event of Default hereunder,
to seek the immediate appointment by any court of competent jurisdiction
of a receiver for the Mortgaged Property (which receiver, to the extent
permitted by law, may be Mortgagee), and the business of Mortgagor in
connection therewith and of the rents and profits arising therefrom,
which receiver shall be entitled to immediate possession of such
Mortgaged Property, whether or not occupied by Mortgagor, subject,
however, to the rights of the Operator as set forth in any
subordination, non-disturbance and attornment agreement now or hereafter
entered into between Mortgagee and the Operator or any other lessee,
sublessee or occupant of such Mortgaged Property. Mortgagee shall be
entitled to the appointment of such a receiver as a matter of right
without consideration of the value of the Mortgaged Property or other
security for the amounts due Mortgagee or the solvency of any person or
corporation liable for the payment of such amounts. If Mortgagor is
then in possession of such Mortgaged Property or any portion thereof,
Mortgagor shall immediately, upon the appointment of such receiver,
vacate such Mortgaged Property or such portion thereof, as the case may
be, or pay a reasonable rental for the use thereof, during such
receivership, to be agreed upon between said receiver and Mortgagor or
to be fixed by the court in which said receiver shall have been
appointed; and the relationship between said receiver and Mortgagor
shall be that of landlord and tenant.
ARTICLE 26
Mortgagee's Rights Upon Default
Upon the occurrence of any Event of Default hereunder
Mortgagee shall have the right, forthwith, at its election, to exercise
any and all rights and remedies granted to Mortgagee under this Mortgage
or otherwise available to Mortgagee at law or in equity, all of which
rights and remedies shall be cumulative and not exclusive, and which
shall include, without limitation, the rights set forth in Section 32.3
hereof and the following:
26.1 Mortgagee shall have the right, forthwith, at its
election, to declare the entire indebtedness secured hereby immediately
due and payable.
26.2 Subject to the rights of the Operator or any other
tenant of the Mortgaged Property pursuant to a subordination, non-
disturbance and attornment agreement between Mortgagee and such Operator
or tenant:
26.2.1 Mortgagee shall have the right forthwith, at its
election, and without further notice or demand and without the
commencement of any action to foreclose this Mortgage, to enter
immediately upon and take possession of the Mortgaged Property without
further consent or assignment by Mortgagor, with the right to lease the
Mortgaged Property, or any part thereof, and to collect and receive,
with or without the appointment of a receiver, at its sole option, all
MORTGAGE E-1-25
<PAGE>
of the rents, issues and profits, and all other amounts past due, due or
to become due to Mortgagor by reason of its ownership of the Mortgaged
Property, and to apply the same, after the payment of all necessary
charges and expenses in connection with the operation of the Mortgaged
Property (including any managing agent's commission, at the option of
Mortgagee), on account of interest and principal amortization under the
Notes, taxes, water and sewer charges, assessments and insurance
premiums with respect to the Mortgaged Property, and any advance made by
Mortgagee for improvements, alterations or repairs to the Mortgaged
Property or on account of any other indebtedness hereby secured.
Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact
(which appointment is coupled with an interest), to institute summary
proceedings against any tenant, licensee, concessionaire or other
occupant of any portion of the Mortgaged Property who shall fail to
comply with the provisions of any covenant, agreement or condition
applicable to the possession or occupancy of the Mortgaged Property by
such tenant, licensee, concessionaire or other occupant. If Mortgagor
or any other person claiming by, through or under it, is occupying all
or any part of the Mortgaged Property, it is hereby agreed that
Mortgagor and each such other person shall, at the option of Mortgagee,
either immediately surrender possession of the Mortgaged Property to
Mortgagee and vacate the premises so occupied or pay a reasonable rental
for the use thereof, monthly in advance, to Mortgagee; and
26.2.2 Mortgagee shall have the right forthwith to commence
foreclosure proceedings against the Mortgaged Property and/or, at its
election, to advertise, sell and dispose of, together or in parcels, all
and singular the Mortgaged Property, or any part or parts thereof, or
any part remaining subject to this Mortgage in case of partial release
hereof, and the benefit and equity of redemption of Mortgagor therein,
at public auction on or near any of the Land, or if more than one parcel
then constitutes any of the Land on or near one of said parcels, or at a
place otherwise provided for by law and to bid for and become the
purchaser of the Mortgaged Property at any such sale, first giving
notice of the time and place of sale as required or permitted by
applicable law, such sale or sales to be upon the premises sold or
elsewhere, as specified in such notice, with power to adjourn such sale
from time to time as permitted by law; and in Mortgagee's own name or as
the attorney of Mortgagor (Mortgagee being for that purpose by this
instrument duly and irrevocably authorized and appointed as Mortgagor's
agent and attorney-in-fact, coupled with an interest and with full power
of substitution, delegation and revocation) to make, execute,
acknowledge and deliver to the purchaser or purchasers thereof a good
and sufficient deed or deeds of the Mortgaged Property in fee simple and
to receive the proceeds of such sale or sales, and from such proceeds to
retain all sums hereby secured, whether then due or to fall due
thereafter, or the part thereof then remaining unpaid, and also
including the interest then due on the same, and without limitation, all
reasonable costs and expenses, including attorneys' fees, incident to
such sale or sales or incurred in the exercise or defense of the rights
and powers of Mortgagee hereunder, all expenses incurred in repairing or
preserving the Mortgaged Property, all taxes, water and sewer rates,
assessments and premiums for insurance, either theretofore paid by
MORTGAGE E-1-26
<PAGE>
Mortgagee or then remaining unpaid, and any installments of principal
and/or interest paid by Mortgagee under any senior and prior mortgage on
the Mortgaged Property, rendering and paying the surplus of said
proceeds of sale, if any, over and above the amounts so to be retained
as aforesaid, together with a true and particular account of such sale
or sales, expenses and charges, to Mortgagor, which sale or sales shall
forever be a perpetual bar, both at law and in equity, against Mortgagor
and all persons claiming or purporting to claim the Mortgaged Property
so sold by, through or under Mortgagor. Mortgagor shall, upon
Mortgagee's request, execute such deed or deeds confirmatory of such
sale or sales as Mortgagee may deem necessary or advisable.
26.2.3 Mortgagee shall have the right forthwith, at its
election to sue under the Notes, the Loan Agreement and/or the other
Security Documents in accordance with applicable law and to reduce any
claim to judgment;
26.2.4 Mortgagee shall have the right forthwith, at its
election, to exercise any and all other remedies available at law or in
equity, including, but not limited to, the additional rights, if any,
set forth on Schedule II hereto and incorporated herein by reference.
26.3 Subject to Mortgagor's right to cure as provided in
Article 8, Mortgagee may apply against the indebtedness secured hereby,
in such manner as Mortgagee may determine, any of the Deposited Funds
then held by Mortgagee.
ARTICLE 27
Mortgagee's Rights to Release and Negotiate
27.1 Without affecting the liability of Mortgagor, or any
other person (except any person expressly released in writing), for
payment of the indebtedness hereby secured or for the performance of any
obligations set forth or referred to in this Mortgage, the Notes or the
Security Instruments, and without affecting any lien or other security
not expressly released in writing, Mortgagee at any time, and from time
to time, either before or after maturity of the Notes, and without
notice or consent, may:
27.1.1 release any person liable for payment of said
indebtedness, or for the performance of any of said obligations;
27.1.2 make any agreement extending the time, or otherwise
altering the terms of payment of said indebtedness, or modifying or
waiving any of said obligations, or subordinating, modifying or
otherwise dealing with the lien securing payment of the Notes;
27.1.3 exercise or refrain from exercising or waive any right
Mortgagee may have;
27.1.4 accept additional security of any kind; and/or
MORTGAGE E-1-27
<PAGE>
27.1.5 release or otherwise deal with any property, real or
personal, securing said indebtedness, including all or any part of the
Mortgaged Property.
27.2 In the event that Mortgagor conveys its interest in the
Mortgaged Property to a third party or parties, Mortgagee may, without
notice to Mortgagor, deal with such successor or successors in interest
with reference to this Mortgage and the Notes secured hereby, either by
way of forbearance on the part of Mortgagee or extension of the time of
payment of the indebtedness or any sum hereby secured, without in any
way modifying or affecting the conveyance under this Mortgage or the
original liability of Mortgagor for the indebtedness secured hereby,
either in whole or in part. Nothing in this paragraph, however, shall
be deemed to render unnecessary the consent of Mortgagee to the
conveyance by Mortgagor of any interest in the Mortgaged Property, as
previously required hereunder.
27.3 Except as otherwise specifically provided herein, all
payments on the indebtedness and advancements, if any, hereby secured,
and all proceeds from foreclosure sales, shall be applied first to the
satisfaction of all unpaid and accrued liabilities arising from or
relating to the ownership or operation of the Mortgaged Property, second
to advancements made to or on behalf of Mortgagor, if any, in the order
of their maturity, and third in the order of priority established in
Section 2.10 of the Loan Agreement.
ARTICLE 28
Reaffirmation of Security
28.1 Mortgagor, within fifteen (15) days after request by
Mortgagee, shall furnish to Mortgagee a written statement, duly
acknowledged, of the amount of the unpaid balance of the Notes, of the
existence of any offsets or defenses against the Notes, and such other
information as Mortgagee may reasonably request.
28.2 At any time and from time to time until payment of the
indebtedness secured hereby and upon request of Mortgagee, Mortgagor
shall promptly execute, notarize and deliver to Mortgagee such
additional instruments as Mortgagee may reasonably require to further
evidence the lien of this Mortgage, correct any defects contained herein
and further to protect the security position of Mortgagee with respect
to the property subject to this Mortgage, including, without limitation,
additional chattel mortgages, security agreements, financing statements,
continuation statements and the like, covering items of personal
property, replacements thereof and additions thereto.
28.3 If the lien, security interest, validity or propriety of
this Mortgage, or if title or any of the rights of Mortgagor or
Mortgagee in or to the Mortgaged Property, shall be endangered or
legally challenged, or shall be attacked directly or indirectly, or if
any action or proceeding is instituted against Mortgagor or Mortgagee
MORTGAGE E-1-28
<PAGE>
with respect thereto, Mortgagor shall promptly notify Mortgagee thereof
to the extent Mortgagor has notice thereof and shall diligently endeavor
to cure any defect on which such challenge, action or proceeding is
based except to the extent caused by the act or omission of Mortgagee,
and shall take all necessary and proper steps for the defense of such
action or proceeding, including the employment of counsel, the
prosecution or defense of litigation and, subject to Mortgagee's and
Agent's approval, such approval not to be unreasonably withheld, the
compromise, release or discharge of any and all adverse claims. If
Mortgagor shall have failed to comply with its obligations under this
Section 28.3, Mortgagee (whether or not named as a party to such actions
or proceedings) is hereby authorized and empowered (but shall not be
obligated) to take such steps as Mortgagee may reasonably deem necessary
or proper for the defense of any such action or proceeding or the
protection of the lien, security interest, validity or priority of this
Mortgage or of such title or rights, including the employment of
counsel, the prosecution or defense of litigation, the compromise,
release or discharge of such adverse claims, the purchase of any tax
title and the removal of such prior liens and security interests.
Mortgagor shall immediately reimburse Mortgagee for all reasonable
expenses (including attorney's fees and disbursements) incurred by
Mortgagee in connection with the foregoing matters. All such costs and
expenses of Mortgagee, until reimbursed by Mortgagor, shall become part
of the indebtedness secured hereby and shall be deemed to be secured by
this Mortgage.
ARTICLE 29
Surrender Possession
In the event of any sale of the Mortgaged Property under the
provisions hereof, Mortgagor shall forthwith surrender possession
thereof to the purchaser, subject however, to the right of the Operator
under the Lease (Mortgagor Lessor) and in accordance with the terms of
any subordination, non-disturbance and attornment agreement entered into
between the Operator and Mortgagee. Upon failure to do so, Mortgagor
shall thereupon be a tenant at sufferance of such purchaser, and upon
its failure to surrender possession of the Mortgaged Property upon
demand, such purchaser, his heirs or assigns, shall be entitled to
institute and maintain an appropriate action for possession of the
Mortgaged Property.
ARTICLE 30
Improvements and Personal Property Subject Hereto
As between the parties hereto and all others except holders of
prior liens, it is agreed that all additions to the Improvements,
including all machinery, equipment and fixtures useful in the operation
and management of the Mortgaged Property regardless of the manner in
which they are attached to the Improvements, which are owned by
MORTGAGE E-1-29
<PAGE>
Mortgagor and are a part of any of the Land (or shall become a part
thereof if hereafter placed thereon), are, or shall be upon affixation,
subject to the lien hereof. This provision shall be cumulative and not
exclusive. This provision shall not apply to items installed by the
Operator or any other tenant which remain the property of the tenant
pursuant to the terms of the tenant's lease.
ARTICLE 31
Preservation of Easements and Licenses
Mortgagor shall maintain, preserve and renew all rights of
way, easements, grants, privileges, licenses and franchises necessary
for the use of the Mortgaged Property from time to time and shall not,
without the prior consent of Mortgagee and Agent, except as otherwise
may be required under the Lease (Mortgagor Lessor), (i) initiate, join
in or consent to any private restrictive covenant or other public or
private restriction as to the use of the Mortgaged Property, (ii)
initiate or support by taking action any zoning reclassification of the
Mortgaged Property which reclassification would prohibit the use of the
Mortgaged Property as currently operated, (iii) modify, amend or
supplement any of the Permitted Exceptions except to eliminate any such
encumbrance or reduce its effect on the Mortgaged Property, (iv) impose
any restrictive covenants or encumbrances upon any of the Land or the
Improvements (other than easements of access and operation to public
utility companies granted in connection with the delivery of utility
service by such company to any of the Land and the Improvements),
execute or file any subdivision plat affecting the Land or the
Improvements, transfer any air rights or development rights or consent
to the annexation of the Mortgaged Property to any municipality, or (v)
permit or suffer the Mortgaged Property to be used by the public or any
person in such manner as might make possible a claim of adverse usage or
possession of or any implied dedication or easement. Mortgagor shall,
however, comply with all restrictive covenants which may at any time
affect the Mortgaged Property, and all zoning ordinances and other
public or private restrictions as to the use of the Mortgaged Property.
ARTICLE 32
Security Agreement
32.1 It is the intent of the parties hereto that this
instrument shall constitute a security agreement within the meaning of
the Code with respect to the Personal Property above referred to and
with respect to any other portion of the Mortgaged Property that
constitutes personal property under the Code, and all replacements
thereof, substitutions therefor, additions thereto and proceeds thereof
(said property being sometimes hereinafter referred to as the
"Collateral"), and Mortgagor hereby grants a security interest therein
and said security interest shall attach thereto for the benefit of
Mortgagee to secure the indebtedness evidenced by the Notes and all
MORTGAGE E-1-30
<PAGE>
other indebtedness secured by this Mortgage, and all other sums and
charges which may become due hereunder or thereunder.
32.2 Mortgagor warrants and covenants that:
32.2.1 no financing statement covering any of the Collateral
or any proceeds thereof is on file in any public office; and except for
the security interest granted hereby, Mortgagor is, or upon acquiring
rights in any of the Collateral will be, the owner of the Collateral
free from any other lien, security interest or encumbrance other than
Permitted Exceptions; and Mortgagor shall defend the security interest
of Mortgagee in the Collateral against claims and demands of all persons
at any time claiming the same or any interest therein; and
32.2.2 at the request of Mortgagee from time to time,
Mortgagor shall join with Mortgagee in executing one or more financing
and/or continuation statements pursuant to the Code in form satisfactory
to Mortgagee and shall pay the costs of filing or recording the same in
all public offices wherever filing or recording is deemed by Mortgagee
to be necessary or desirable, and to the extent permitted by law,
Mortgagor hereby further authorizes Mortgagee to file such financing and
continuation statements and amendments thereto without the signature of
Mortgagor or to sign such financing and continuation statements and
amendments on behalf of Mortgagor (Mortgagee being for such purposes by
this instrument duly and irrevocably appointed as Mortgagor's agent and
attorney-in-fact, coupled with an interest and with full power of
substitution, delegation and revocation).
32.3 Upon the occurrence of an Event of Default under this
Mortgage, Mortgagee, pursuant to the Code and subject to any rights of
the Operator under the Lease (Mortgagor Lessor) in accordance with the
terms and provisions of any subordination, non-disturbance and
attornment agreement entered into between the Operator and Mortgagee,
shall have the right, at its option:
32.3.1 to proceed as to both the real and personal property
covered by this Mortgage in accordance with its rights and remedies in
respect of said real property, in which event (i) the default provisions
of the Code shall not apply, and (ii) the sale of the Collateral in
conjunction with and as one parcel with said real estate (or any portion
thereof) shall be deemed to be a commercially reasonable manner of sale;
or
32.3.2 to proceed as to the Collateral separately from the
Land and Improvements, in which event the requirement of reasonable
notice shall be met by mailing notice of the sale, postage prepaid, to
Mortgagor or any other person entitled thereto at least ten (10) days
before the time of the sale or other disposition of any of the
Collateral.
32.4 The Collateral shall be kept at the Land, and until
installed will be suitably and safely stored thereon.
MORTGAGE E-1-31
<PAGE>
32.5 Mortgagor shall not remove or permit to be removed from
the Land any of the Collateral without the prior written consent of
Mortgagee and Agent.
32.6 The foregoing shall not prohibit Mortgagor or the
Operator under the Lease (Mortgagor Lessor) or any other tenant from (a)
making replacements of fixtures and equipment from time to time in the
usual course of business or (b) leasing or purchasing fixtures and
equipment on conditional bill of sale, security agreement or other title
retention agreement, and the lien of Mortgagee thereon shall be subject
and subordinate to the rights or lien of the lessor, conditional vendor
or other lienor thereof; provided, however, that Mortgagor shall duly
and punctually pay, perform, observe and comply with, each and every
obligation of Mortgagor under any such lease, conditional bill of sale,
security agreement or other title retention agreement to the end that no
default shall occur thereunder which would allow any tenant, conditional
vendor or other lienor to reclaim possession of the property in
question.
32.7 Mortgagor shall, from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory of the Collateral in
reasonable detail, including an itemization of all items leased to
Mortgagor or subject to a conditional bill of sale, security agreement
or other title retention agreement.
32.8 To the extent permitted by law, a carbon, photographic
or other reproduction of this Mortgage or a financing statement shall be
sufficient as a financing statement.
ARTICLE 33
Certain Environmental Matters
33.1 Mortgagor covenants that except in compliance with all
statutes, laws, ordinances, rules and regulations, Mortgagor (i) has not
stored and shall not store and has not disposed and shall not dispose of
any hazardous wastes, contaminants, oils, radioactive or other
materials, (including, without limitation, any material or substance
which is (a) any chemical, material or substance defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," or "toxic substances" or any other formulations
intended to define, list or classify substances by reason of deleterious
properties under any applicable Federal, state or local statutes, laws,
ordinances, rules or regulations, (b) any biomedical wastes, (c) any
oil, petroleum or petroleum derived substance, any drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, any flammable substances or
explosives, any radioactive materials, any toxic wastes or substances or
any other materials or pollutants which (y) pose a hazard to the
Mortgaged Property or to persons on or about such Mortgaged Property or
(z) cause such Mortgaged Property to be in violation of any applicable
MORTGAGE E-1-32
<PAGE>
Federal, state or local statutes, laws, ordinances, rules or
regulations, (d) asbestos in any form which is or could become friable,
urea formaldehyde foam insulation, electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million, and (e) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any Federal, state or local statutes, laws,
ordinances, rules or regulations or that may or could pose a hazard to
the health and safety of the owners, occupants or any persons
surrounding the Mortgaged Property (collectively, "hazardous
substances")) on the Mortgaged Property; (ii) has not transported or
arranged for the transportation of and shall not transport or arrange
for the transportation of any hazardous substances, (iii) has not
suffered or permitted, and shall not permit or suffer, any owner,
tenant, occupant or Operator of the Mortgaged Property to do any of the
foregoing; and (iv) has not been identified in any litigation,
administrative proceeding or investigation as a responsible party for
any liability under any Federal, state or local statutes, laws,
ordinances, rules or regulations relating to hazardous substances.
33.2 Mortgagor covenants and agrees to maintain the Mortgaged
Property at all times free of any hazardous substance (except in
compliance with all statutes, laws, ordinances, rules and regulations).
Mortgagor agrees promptly: (i) to notify Mortgagee in writing of any
change in the nature or extent of hazardous substances maintained on or
with respect to the Mortgaged Property; (ii) to transmit to Mortgagee
copies of any citations, orders, notices or other material
communications received with respect thereto; (iii) to observe and
comply with any and all statutes, laws, ordinances, rules and
regulations, licensing requirements or conditions relating to the use,
maintenance and disposal of hazardous substances and all orders or
directives from any official, court or agency of competent jurisdiction
relating to the use or maintenance or requiring the removal, treatment,
containment or other disposition thereof; (iv) to pay or otherwise
dispose of any fine, charge or imposition related thereto which, if
unpaid, would constitute a lien on the Mortgaged Property, unless (a)
contested in accordance with and in the manner provided in the Lease
(Mortgagor Lessor) and Article 6 hereof and (b) the right to the use of
and the value of the Mortgaged Property is not materially and adversely
affected thereby.
ARTICLE 34
Invalidity of Provisions
34.1 All agreements between Mortgagor and Mortgagee contained
herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Notes,
or otherwise, shall the amount paid or agreed to be paid to Mortgagee
for the use, forbearance or detention of the principal amount evidenced
by the Notes and secured by this Mortgage exceed the maximum permissible
under applicable law the benefit of which may be asserted by the
MORTGAGE E-1-33
<PAGE>
Mortgagor as a defense, and if, from any circumstance whatsoever,
fulfillment of any provision of the Notes and this Mortgage, at the time
performance of such provision shall be due, shall involve transcending
the limit of validity prescribed by law, or if from any circumstances
Mortgagee should ever receive as interest under the Notes or this
Mortgage such an excessive amount, then, ipso facto, the amount which
would be excessive interest shall be applied to the reduction of the
principal balance as evidenced by the Notes and secured by this Mortgage
and not to the payment of interest. This provision shall control every
other provision of all agreements between Mortgagor and Mortgagee.
34.2 In case any one or more of the provisions contained in
the Notes or in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other provision
hereof or thereof, but each shall be construed as if such invalid,
illegal or unenforceable provision had never been included.
ARTICLE 35
Notices
All notices, requests, demands, consents or other
communications given hereunder or in connection herewith shall be deemed
given when given at the addresses and in the manner provided in Section
5.8 of the Loan Agreement.
ARTICLE 36
General Provisions
36.1 Mortgagee and the Operator intend to enter into a
subordination, non-disturbance and attornment agreement pursuant to
which the Lease (Mortgagor Lessor) will be subordinated to this Mortgage
on the terms and conditions set forth therein. Notwithstanding the
foregoing, at the option of Mortgagee this Mortgage shall become subject
and subordinate, in whole or in part, (but not with respect to priority
of entitlement to insurance proceeds or any award in condemnation) to
any and all leases of all or any part of the Mortgaged Property upon the
execution by Mortgagee and recording thereof, at any time hereafter,
with the appropriate land records in and for the county wherein such
Mortgaged Property is situated, of a unilateral declaration to that
effect.
36.2 The captions in this Mortgage are for convenience and
reference only and do not define, limit or describe the scope of the
provisions hereof.
36.3 This Mortgage shall inure to the benefit of and bind (i)
the successors and assigns of Mortgagee and (ii) the heirs,
administrators, executors, successors and assigns of Mortgagor, as if
MORTGAGE E-1-34
<PAGE>
all the aforesaid were herein mentioned whenever the parties hereto are
referred to. This instrument shall be so construed that whenever
applicable with reference to any of the parties hereto, the use of the
singular number shall include the plural number, the use of the neuter
gender with respect to Mortgagor shall include the masculine and
feminine gender, and shall likewise be so construed as applicable to and
including a corporation or corporations or any other entity that may be
a party or parties hereto.
36.4 Neither this Mortgage nor any provision hereof may be
waived, changed, amended, discharged or terminated orally.
36.5 This Mortgage shall be and the Loan Agreement and the
other Security Instruments provide that they are to be governed by, and
construed and enforced in accordance with, the laws of the State of New
York. Notwithstanding such provisions, however, (i) matters respecting
title to the Mortgaged Property and the creation, perfection, priority
and foreclosure of liens on, and security interests in, the Mortgaged
Property shall be governed by, and construed and enforced in accordance
with, the internal law of the state or commonwealth in which the
Mortgaged Property is situated without giving effect to the
conflicts-of-law rules and principles of such state or commonwealth;
(ii) Mortgagor agrees that whether or not deficiency judgments are
available under the laws of the state or commonwealth in which the
Mortgaged Property is situated after a foreclosure (judicial or
nonjudicial) of the Mortgaged Property, or any portion thereof, or any
other realization thereon by Mortgagee or any of the Lenders, Mortgagee
and the Lenders shall have the right to seek such a deficiency judgment
against Mortgagor in other states or foreign jurisdictions; (iii)
Mortgagor agrees that, to the extent Mortgagee or any of the Lenders
obtain a deficiency judgment in any other state or foreign jurisdiction
then such party shall have the right to enforce such judgment in the
state or commonwealth in which the Mortgaged Property is situated, as
well as in other states or foreign jurisdictions.
36.6 Mortgagee shall not be deemed to be a partner or joint
venturer with Mortgagor for any reason, including, without limitation,
on account of its becoming a mortgagee in possession or exercising any
rights pursuant to this Mortgage or any other Security Instrument or
otherwise.
36.7 The condition of this Mortgage is such that if the
Notes shall be well and truly paid according to their respective tenor,
and if all of the obligations therein and herein imposed upon Mortgagor
shall be fully performed, then this Mortgage shall be null and void,
otherwise to remain in full force and effect.
36.8 NOTWITHSTANDING ANY OTHER PROVISION IN THIS MORTGAGE,
THE NOTES OR ANY OTHER SECURITY INSTRUMENT, MORTGAGOR HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN CONNECTION
WITH, OR WITH RESPECT TO, ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING
RELATING TO THIS MORTGAGE OR THE NOTES OR ANY OF THE OTHER SECURITY
INSTRUMENTS, ANY RIGHT TO A JURY TRIAL.
MORTGAGE E-1-35
<PAGE>
36.9 If both the lessor's and lessee's estate under any
lease, including, without limitation, any Lease (Mortgagor Lessee), or
any portion thereof which constitutes a part of the Mortgaged Property
shall at any time become vested in one owner, this Mortgage and the lien
created hereby shall not be destroyed or terminated by application of
the doctrine of merger unless Mortgagee so elects as evidenced by
recording a written declaration so stating and, unless and until
Mortgagee so elects, Mortgagee shall continue to have and enjoy all of
the rights and privileges of Mortgagee as to the separate estates. In
addition, upon the foreclosure of the lien created by this Mortgage on
the Mortgaged Property pursuant to the provisions hereof, any leases or
subleases then existing and affecting all or any portion of the
Mortgaged Property shall not be destroyed or terminated by application
of the law of merger or as a matter of law or as a result of such
foreclosure unless Mortgagee or any purchaser at such foreclosure shall
so elect. No act by or on behalf of Mortgagee or any such purchaser
shall constitute a termination of any lease or sublease unless Mortgagee
or such purchaser shall give written notice thereof to such tenant or
subtenant.
[***Include the following Section 36.10 in Mortgages for each state
where the term "Mortgage Covenants" does not incorporate a statutory
warranty of title comparable in form and substance to this Section
36.10. Unless otherwise informed by local counsel this section will be
included in all states except Connecticut and Massachusetts.***]
[*** 36.10 Mortgagor represents and warrants that (i) it holds
good and marketable fee simple title to the Mortgaged Property (other
than the Leasehold Estates) and, pursuant to the Lease (Mortgagor
Lessee) and filed or recorded memoranda thereof, it holds a good and
valid leasehold estate in and record title to each Leasehold Estate;
(ii) it has authority to grant this Mortgage on the same; (iii) the
Mortgaged Property is free and clear of all liens and encumbrances
whatsoever, except the Permitted Exceptions; and (iv) it will forever
warrant and defend title to the Mortgaged Property against the lawful
claims of all persons until all the indebtedness has been satisfied or
performed in full.***]
[***The following paragraph is to be inserted in Connecticut
Mortgages***]
[*** 36.11 Mortgagor acknowledges that the loans made in
connection with the Loan Agreement are commercial transactions and
hereby waives its rights to notice and hearing under Chapter 903a of the
Connecticut General Statutes, or as otherwise allowed by any state or
federal law with respect to any prejudgment remedy which Mortgagee may
desire to use.***]
MORTGAGE E-1-36
<PAGE>
ARTICLE 37
Leasehold Protections
37.1 If a leasehold estate or any other right, title or
interest of Mortgagor under a Lease (Mortgagor Lessee) constitutes a
portion of the Mortgaged Property, Mortgagor shall, within ten days
after written request therefor by Mortgagee, deliver to Mortgagee a
true, correct and complete copy of the applicable lease and all
amendments thereto and memoranda thereof and Mortgagor agrees not to
amend, change, terminate or modify, in a material or adverse manner, any
Lease (Mortgagor Lessee) or any interest therein without the prior
written consent of both Mortgagee and Agent. Consent to one amendment,
change, agreement or modification shall not be deemed to be a waiver of
the right to require consent to other, future or successive amendments,
changes, agreements or modifications. Mortgagor agrees to perform all
obligations and agreements under the Lease (Mortgagor Lessee) and shall
not take any action or omit to take any action which would effect or
permit the termination of the Lease (Mortgagor Lessee). Mortgagor
agrees to promptly notify Mortgagee in writing with respect to any
default or alleged default by any party thereto and to deliver to
Mortgagee copies of all notices, demands, complaints or other
communications received or given by Mortgagor with respect to any such
default or alleged default. Mortgagee after receipt of Agent's prior
written consent, shall have the option to cure any such default of
Mortgagor and to perform any or all of Mortgagor's obligations
thereunder. All sums expended by Mortgagee in curing any such default
shall be secured hereby and shall be immediately due and payable without
demand or notice and shall bear interest from date of expenditure at the
rate of default interest specified in Section 2.4(b) of the Loan
Agreement.
ARTICLE 38
Nonliability of Trustees
38.1 THE DECLARATION OF TRUST ESTABLISHING MORTGAGOR, DATED
OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH
AND REHABILITATION PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT
OF MORTGAGOR SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, MORTGAGOR. ALL
PERSONS DEALING WITH MORTGAGOR, IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF MORTGAGOR FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
MORTGAGE E-1-37
<PAGE>
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
By:
Print Name David J. Hegarty
Chief Financial Officer and
Executive Vice President
Print Name
By:
John G. Murray
Treasurer
[Seal]
S-1
<PAGE>
CERTIFICATE OF RESIDENCY
[PA]
I, the undersigned, ____________________(title), of WELLS
FARGO BANK, NATIONAL ASSOCIATION, as administrative agent and Mortgagee
hereunder, hereby certify that the precise address of Mortgagee is 333
South Grand Avenue, Los Angeles, California 90071.
WELLS FARGO BANK, NATIONAL ASSOCIATION, a
bank organized under the laws of the
United States
By:
Print Name:
Title:
Cert-1
[PA]
<PAGE>
[SIGNATURE PAGE FOR LA]
THUS DONE AND PASSED on the date set forth above in New York,
New York in the presence of the undersigned competent witnesses, who
hereunto sign their names with Mortgagor and me, Notary, after due
reading of the whole.
WITNESSES: HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
By:
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
By:
Print Name: John G. Murray
Treasurer
NOTARY PUBLIC
New York County, New York
My commission expires:
S-1
<PAGE>
[SIGNATURE PAGE FOR LA]
38.2 AND NOW, before the undersigned Notary Public, duly
commissioned and qualified in and for the State of New York, County of
New York, personally came and appeared Mortgagee, appearing herein
through _________________, its __________________, who, after being duly
sworn, declared that Mortgagee hereby accepts this Mortgage on behalf of
itself, its successors and assigns.
THUS DONE AND PASSED on the date set forth above in New York,
New York, in the presence of the undersigned competent witnesses, who
hereunto sign their names with Mortgagee and me, Notary, after due
reading of the whole.
WITNESSES: WELLS FARGO BANK, NATIONAL
ASSOCIATION, a bank organized
under the laws of the United
States
By:
Print Name: Name:
Title:
Print Name:
NOTARY PUBLIC
New York County, New York
My Commission expires:
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
S-2
<PAGE>
[SIGNATURE PAGE FOR KY]
IN WITNESS WHEREOF, Mortgagor has on the date set forth in the
acknowledgements hereto, effective as of the date first above written,
caused this instrument to be duly EXECUTED, SEALED AND DELIVERED.
MORTGAGOR:
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
_____________________ By: ________________________
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
_____________________
Print Name:
By: ________________________
John G. Murray
Treasurer
[Seal]
MORTGAGEE:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, a bank organized under
the laws of the United States
WITNESSES:
_____________________ By: ________________________
Print Name: Print Name:
Title:
_____________________
Print Name:
S-1
<PAGE>
[SIGNATURE PAGE FOR MI]
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES:
By:
Print Name David J. Hegarty
Chief Financial Officer and
Executive Vice President
Print Name
By:
Print Name John G. Murray
Treasurer
Print Name
[Seal]
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
S-1
<PAGE>
[MA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, to me known and
known by me to be the party executing the foregoing instrument for and
on behalf of the Trustees of said entity and he acknowledged said
instrument by him executed, to be his free act and deed in his capacity
as aforesaid, and the free act and deed of Health and Rehabilitation
Properties Trust.
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me personally
appeared John G. Murray, Treasurer of Health and Rehabilitation
Properties Trust, to me known and known by me to be the party executing
the foregoing instrument for and on behalf of the Trustees of said
entity and he acknowledged said instrument by him executed, to be his
free act and deed in his capacity as aforesaid, and the free act and
deed of Health and Rehabilitation Properties Trust.
Notary Public
My commission expires:
N-1
[MA]
<PAGE>
[WI]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Personally came before me, this ____ day of February, 1994,
John G. Murray, Treasurer and David J. Hegarty, Chief Financial Officer
and Executive Vice President, of Health and Rehabilitation Properties
Trust, a real estate investment trust formed under the laws of the State
of Maryland, to me known to be the persons who executed the foregoing
instrument, and to me known to be such officers of such trust, and
acknowledged that they executed the foregoing instrument as such
officers as the act of such trust, by its authority.
Name:
Notary Public
County,
My commission expires:
N-1
[WI]
<PAGE>
[CT]
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
On this the ___ day of February, 1994 before me, personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, signer and
sealer of the foregoing instrument, and he, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as Chief Financial
Officer and Executive Vice President and acknowledged the same to be the
free act and deed of said corporation and his free act and deed as such
officer thereto.
Notary Public
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
On this the ___ day of February, 1994 before me, personally
appeared John G. Murray, Treasurer of Health and Rehabilitation
Properties Trust, signer and sealer of the foregoing instrument, and he,
being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by
himself as Treasurer and acknowledged the same to be the free act and
deed of said corporation and his free act and deed as such officer
thereof.
Notary Public
N-1
[CT]
<PAGE>
STATE OF NEW YORK )
) ss.: February __, 1994
COUNTY OF NEW YORK )
I , __________________, a Notary Public in and for the said
County, in the State aforesaid, DO HEREBY CERTIFY that John G. Murray
and David J. Hegarty personally known to me to be, respectively, the
Treasurer and the Chief Financial Officer and Executive Vice President
of HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, and personally known to me to be the same persons
whose names are subscribed to the foregoing instrument, appeared before
me this day in person and acknowledged that as such Treasurer and as
such Chief Financial Officer and Executive Vice President they signed
and delivered the said instrument as, respectively, Treasurer and Chief
Financial Officer and Executive Vice President of said trust, pursuant
to authority given by the Board of Directors of said trust, as their
free and voluntary act, and as the free and voluntary act and deed of
said trust, for the uses and purposes therein set forth.
Given under my hand and seal this _____ day of February, 1994.
Notary Public
My commission expires __________, 19__.
[SEAL]
N-1
[IL]
<PAGE>
[OH]
State of New York )
) ss.:
County of New York )
The foregoing instrument was acknowledged before me this _____
day of February, 1994 by John G. Murray, Treasurer and by David J.
Hegarty, the Chief Financial Officer and Executive Vice President, of
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, on behalf of the Trust.
Notary Public
[Print name: ]
[Notary Seal]
My commission expires:
Prepared by and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
N-1
[OH]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of February, 1994, before me,
__________, the undersigned officer, personally appeared David J.
Hegarty of the State of __________, County of __________, known to me or
satisfactorily proven to be the person described in the foregoing
instrument, and acknowledged that he executed the same in the capacity
therein stated and for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public,
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the ____ day of February, 1994, before me,
__________, the undersigned officer, personally appeared John G. Murray
of the State of __________, County of __________, known to me or
satisfactorily proven to be the person described in the foregoing
instrument, and acknowledged that he executed the same in the capacity
therein stated and for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public,
My commission expires:
N-1
[SD]
<PAGE>
[IA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of February, 1994, before me, the undersigned, a
Notary Public in and for the State of New York, personally appeared John
G. Murray and David J. Hegarty, to me personally known, who being by me
duly sworn did say that they are the authorized officers of Health and
Rehabilitation Properties Trust, a Maryland real estate investment trust
executing the foregoing instrument; (that no seal has been procured by
the trust) that said instrument was signed on behalf of the trust and
that John G. Murray and David J. Hegarty, respectively, as Treasurer and
as Chief Financial Officer and Executive Vice President, acknowledged
the execution of said instrument to be their voluntary act and deed by
it, by them and as fiduciaries voluntarily executed.
NOTARY PUBLIC IN AND FOR THE STATE OF
NEW YORK AND COUNTY OF NEW YORK
N-1
[IA]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February, 1994, by David J. Hegarty, Chief Financial Officer and
Executive Vice President of Health and Rehabilitation Properties Trust,
a real estate investment trust formed under the laws of the State of
Maryland.
Notary Public
Name:
(typed, printed or stamped)
[SEAL]
My appointment expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this _____
day of February, 1994, by John G. Murray, Treasurer of Health and
Rehabilitation Properties Trust, a real estate investment trust formed
under the laws of the State of Maryland.
Notary Public
Name:
(typed, printed or stamped)
[SEAL]
My appointment expires:
N-1
[KA]
<PAGE>
[PA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the _____ day of February, 1994, before me, the
undersigned officer, personally appeared David J. Hegarty, who
acknowledged himself to be the Chief Financial Officer and Executive
Vice President of Health and Rehabilitation Properties Trust, a Maryland
real estate investment trust, and that he as such President, being
authorized to do so, executed the foregoing instrument for the purpose
therein contained by signing the name of the Trust by himself as
President.
In witness whereof, I hereunto set my hand and official seal.
Title of Officer
My commission expires:
[Notary Seal]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this, the _____ day of February, 1994, before me, the
undersigned officer, personally appeared John G. Murray who acknowledged
himself to be the Treasurer of Health and Rehabilitation Properties
Trust, a Maryland real estate investment trust, and that he as such
Treasurer being authorized to do so, executed the foregoing instrument
for the purpose therein contained by signing the name of the Trust by
himself as Treasurer.
In witness whereof, I hereunto set my hand and official seal.
Title of Officer
My commission expires:
[Notary Seal]
N-1
[PA]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing was acknowledged before me by David J. Hegarty,
Chief Financial Officer and Executive Vice President of the Health and
Rehabilitation Properties Trust, a Maryland real estate investment
trust, this _____ day of February, 1994.
Witness my hand and official seal.
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The foregoing was acknowledged before me by John G. Murray,
Treasurer of the Health and Rehabilitation Properties Trust, a Maryland
real estate investment trust, this _____ day of February, 1994.
Witness my hand and official seal.
Notary Public
My commission expires:
N-1
[WY]
<PAGE>
[KY]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this
___ day of February, 1994 by David J. Hegarty and John G. Murray, as the
Chief Financial Officer and Executive Vice President and as the
Treasurer, respectively, of HEALTH AND REHABILITATION PROPERTIES TRUST,
a Maryland real estate investment trust, for and on behalf of said
trust.
My commission expires _____________________.
_________________________
Notary Public
(Notary Seal)
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this
___ day of February, 1994 by , as the
of WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank organized
under the laws of the United States for and on behalf of said bank.
My commission expires _____________________.
_________________________
Notary Public
(Notary Seal)
<PAGE>
Exhibit A-I
Legal Description
Fee Land
A-I-1
<PAGE>
Exhibit A-II
Legal Description
Leased Land
A-II-1
<PAGE>
Exhibit B
Leases (Mortgagor Lessee)
The land covered by such Lease (Mortgagor Lessee) is described on
Exhibit A-II of this Mortgage.
B-1
<PAGE>
Exhibit C
Promissory Notes
C-1
[CT]
<PAGE>
Schedule I
Lease (Mortgagor Lessor)
SCH-I-1
<PAGE>
Schedule II
Certain Remedies
[LA]
Mortgagor does by these presents confess judgment in
favor of the Mortgagee, or any future holder or holders of the Notes, up
to the full amount of the indebtedness including principal, interest and
attorney's fees and for any sums that the Mortgagee may advance during
the life of this Mortgage for the payment of premiums of insurance,
taxes and assessments or for the protection and preservation of its
Mortgage as authorized elsewhere in this act, and does by these
presents, consent, agree and stipulate that, if an Event of Default
occurs, Mortgagee may, without making a demand and without further
notice or putting in default, the same being hereby expressly waived,
cause all and singular the property herein encumbered to be seized and
sold by executory process issued by any competent court or to proceed
with enforcement of this Mortgage in any other manner provided by law.
In the event any proceedings are taken under this
Mortgage by way of executory process or otherwise, any and all
declarations of facts made by authentic act before a Notary Public and
in the presence of two witnesses, by a person declaring that such facts
lie within his knowledge, shall constitute authentic evidence of such
facts for the purpose of executory process, and also for the purposes of
LA R.S. 9:3509.1 and LA R.S. 9:3504(D)(6) where applicable.
Mortgagor herein agrees, in the event that foreclosure
proceedings are filed, to waive and does hereby specially waive: (A) the
benefit of appraisement provided for in Articles 2332, 2336, 2723, 2724,
Louisiana Code of Civil Procedure and all other laws conferring such
benefits; (B) the demand and three days delay accorded by Articles 2639
and 2721, Louisiana Code of Civil Procedure; (C) the notice of seizure
required by Article 2293 but not that required by Article 2721,
Louisiana Code of Civil Procedure; (D) the three days delay provided by
Articles 2331 and 2722, Louisiana Code of Civil Procedure; and (E) the
benefit of the other provisions of Articles 2331, 2722 and 2723,
Louisiana Code of Civil Procedure and any other Articles not
specifically mentioned above which would prevent the immediate seizure
and sale of such Mortgaged Property.
Mortgagor and Mortgagee do hereby irrevocably appoint and
designate Mortgagee, or any agent or nominee of Mortgagee, as keeper of
the Mortgaged Property, and in addition hereby further expressly
authorize and permit Mortgagee to name a keeper for the Mortgaged
Property or any part thereof, in the event the Mortgaged Property, or
any part thereof is seized or sought to be seized by, Mortgagee (or any
holder of the Notes secured hereby), via executory process,
sequestration, writ of fieri facias or any other legal proceedings in
the courts of the State of Louisiana or of the United States of America,
SCH-II-1
[LA]
<PAGE>
or through any action for the recognition or enforcement of this
Mortgage, but nothing herein shall require Mortgagee to petition for nor
to provoke the appointment of any such keeper. This designation and the
permission herein granted are made pursuant to Louisiana Revised
Statutes 9:5136, et seq., the provisions of which shall likewise govern
the powers, duties and compensation of any such keeper.
SCH-II-2
[LA]
<PAGE>
SCHEDULE II
Certain Remedies
[OH]
Upon the occurrence of any Event of Default hereunder,
and the acceleration of the indebtedness as provided in Section 26.1,
this Mortgage shall become absolute and Mortgagee shall then have
available to it all rights and remedies provided for herein and under
applicable law, including without limitation the right to foreclose its
lien upon the Mortgaged Property by judicial process; and the rights of
a secured creditor under the Code.
SCH-II-1
[OH]
<PAGE>
SCHEDULE II
Certain Remedies
[WI]
Upon the occurrence of any Event of Default hereunder,
Mortgagee shall then have available to it all rights and remedies
provided for herein and under applicable law, including without
limitation the right to foreclose its lien upon the Mortgaged Property
by judicial process; and the rights of a secured creditor under the
Code.
Mortgagor hereby agrees to the provisions of Sections
846.101 and 846.103, Wisconsin Statutes, as the same may be amended or
renumbered from time to time, providing for a reduced period of
redemption between foreclosure judgment and sale upon Mortgagee's
waiving the right to any judgment for deficiency, and consenting to
Mortgagor's remaining in possession of the Mortgaged Property and
collecting all rents, issues and profits therefrom, up to the court's
confirmation of the foreclosure sale.
SCH-II-1
[WI]
<PAGE>
SCHEDULE II
Certain Remedies
[PA]
Institute an action of mortgage foreclosure, or take such
other action as the law may allow, at law or in equity, for the
enforcement thereof and realization of the mortgage security or any
other security which is herein or elsewhere provided for, and proceed
thereon to final judgment and execution thereon for the entire unpaid
balance of the principal indebtedness, with interest, at the rates and
pursuant to the methods of calculation specified in the Notes and this
Mortgage to the date of default and thereafter at the post-maturity
rates provided in the Notes together with all other sums secured by this
Mortgage, all costs of suit, with interest at the post-maturity rates
provided in the Notes and this Mortgage, on any judgment obtained by
Mortgagee from and after the date of any sheriff's sale of the Mortgaged
Property (which may be sold in one parcel or in such parcels, manner or
order as Mortgagee shall elect) until actual payment is made by the
Sheriff of the full amount due Mortgagee, and an attorney's reasonable
fee, which fee shall not be less than fifteen percent (15%) of the
indebtedness, without further stay, any law, usage or custom to the
contrary notwithstanding;
Mortgagee personally, or by its agents or attorneys, may
enter into and upon all or any part of the Mortgaged Property, and each
and every part thereof, and may exclude the Mortgagor, its agents and
servants wholly therefrom without liability for trespass, damages or
otherwise and Mortgagor agrees to surrender possession to Mortgagee on
demand after the happening of any Event of Default; and having and
holding the same, may use, operate, manage and control the Mortgaged
Property and conduct the business thereof, either personally or by its
superintendents, managers, agents, servants, attorneys or receivers; and
upon every such entry, Mortgagee, at the expense of the Mortgagor, from
time to time, either by purpose, repairs or construction, may maintain
and restore the Mortgaged Property, whereof it shall become possessed as
aforesaid, may complete the construction of the buildings, structures
and improvements and in the course of such completion may make such
changes in the contemplated or completed buildings, structures and
improvements as it may deem desirable and may insure the same; and
likewise, from time to time, at the expense of the Mortgagor, Mortgagee
may make all necessary or proper repairs, renewals and replacements and
such useful alterations, additions, betterments and improvements thereto
and thereon as to it may deem advisable; and in every such case
Mortgagee shall have the right to manage and operate the Mortgaged
Property and to carry on the business thereof and exercise all rights
and powers of Mortgagor with respect thereto either in the name of
Mortgagor or otherwise as it shall deem best; and the Mortgagee shall be
entitled to collect and receive all earnings, revenues, rents, issues,
profits and income of the Mortgaged Property and every part thereof, and
after deducting the expenses of conducting the business thereof and of
SCH-II-1
[PA]
<PAGE>
all maintenance, repairs, renewals, replacements, alterations,
additions, betterments and Improvements and amounts necessary to pay for
taxes, assessments, insurance and prior or other proper charges upon the
Mortgaged Property or any part thereof, as well as just and reasonable
compensation for the services of Mortgagee and for all attorneys,
counsel, agents, clerks, servants and other employees by it properly
engaged and employed, Mortgagee shall apply the moneys arising as
aforesaid to, the indebtedness as Mortgagee sees fit. For such purposes
Mortgagor hereby authorizes and employees any attorney of any court of
record in the Commonwealth of Pennsylvania or elsewhere, as attorney for
Mortgagor and its successors and assigns, to appear for Mortgagor to
sign an agreement for entering an amicable action of ejectment for
possession of the Mortgaged Property, and to confess judgment therein
against Mortgagor in favor of Mortgagee, whereupon a writ may forthwith
issue for the immediate possession of the Mortgaged Property, without
any prior writ or proceeding whatsoever; and for so doing this Mortgage
or a copy hereof verified by affidavit shall be a sufficient warrant.
Have a receiver appointed to enter into possession of the
Mortgaged Property, collect the earnings, revenues, rents, issues,
profits and income therefrom and apply the same as the court may direct.
Mortgagee shall be entitled to the appointment of a receiver without the
necessity of proving either the inadequacy of the security or the
insolvency of Mortgagor or any other person who may be legally or
equitably liable to pay moneys secured hereby and Mortgagor and each
such person shall be deemed to have waived such proof and to have
consented to the appointment of such receiver. Should Mortgagee or any
receiver collect earnings, revenues, rents, issues, profits or income
from the Mortgaged Property, the moneys so collected shall not be
substituted for payment of the indebtedness nor can they be used to cure
the Event of Default, without the prior written consent of Mortgagee.
Mortgagee shall be liable to account only for earnings, revenues, rents,
issued, profits and income actually received by Mortgagee.
Mortgagee shall have such rights and remedies in respect
of so much of the Mortgaged Property as may, under applicable law, tie
personal property, or any part thereof, as are provided by the Code and
such other rights and remedies in respect thereof which in equity or
under this Mortgage, including it may have at law or
without limitation the right to take possession of the Mortgaged
Property wherever located and to sell all or any portion thereof at
public or private sale, without prior notice to Mortgagor, except as
otherwise required by law (and if notice is required by law, after 10
days' prior written notice), at such place or places and at such time or
times and in such manner and upon such terms, whether for cash or on
credit, as Mortgagee in its sole discretion may determine. Mortgagee
shall apply the proceeds of any such sale first to the payment of the
reasonable costs and expenses incurred by Mortgagee in connection with
such sale or collection, including reasonable attorney's fees and legal
expenses, second to the payment of the indebtedness, whether on account
of principal or interest or otherwise as Mortgagee in its sole
discretion may elect, and then to pay the balance, if any, as required
SCH-II-2
[PA]
<PAGE>
by law. Upon the occurrence of any Event of Default, Mortgagor, upon
demand by Mortgagee, shall promptly assembly any equipment and Fixtures
included in the Mortgaged Property and make then available to Mortgagee
at a place to be designated by Mortgagee which shall be reasonably
convenient to Mortgagee and Mortgagor.
FOR THE PURPOSE OF OBTAINING POSSESSION AND EXERCISING
THE OTHER REMEDIES GRANTED IN THIS SCHEDULE II AND ARTICLE 26 OF THE
ATTACHED OPEN-END MORTGAGE AND SECURITY AGREEMENT, MORTGAGOR HEREBY
AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD IN THE
COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AS ATTORNEY FOR MORTGAGOR AND
ITS SUCCESSORS AND ASSIGNS, TO SIGN AN AGREEMENT FOR ENTERING IN ANY
COMPETENT COURT AN AMICABLE ACTION IN EJECTMENT FOR POSSESSION OF SUCH
MORTGAGED PROPERTY AND TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
MORTGAGOR AND ITS SUCCESSORS AND ASSIGNS, IN FAVOR OF MORTGAGEE, FOR
RECOVERY BY THE MORTGAGEE OF POSSESSION THEREOF, FOR WHICH THIS
MORTGAGE, OR A COPY THEREOF VERIFIED BY AFFIDAVIT, SHALL BE A SUFFICIENT
WARRANT; AND THEREUPON A WRIT OF POSSESSION MAY IMMEDIATELY ISSUE FOR
POSSESSION OF SUCH MORTGAGED PROPERTY, WITHOUT ANY PRIOR WRIT OR
PROCEEDING WHATSOEVER AND WITHOUT ANY STAY OF EXECUTION. IF FOR ANY
REASON AFTER SUCH AMICABLE ACTION OF EJECTMENT HAS BEEN COMMENCED IT
SHALL BE DISCONTINUED, OR POSSESSION OF THE MORTGAGED PROPERTY SHALL
REMAIN IN OR BE RESTORED TO MORTGAGOR, MORTGAGEE SHALL HAVE THE RIGHT
FOR THE SAME DEFAULT OR ANY SUBSEQUENT DEFAULT TO BRING ONE OR MORE
FURTHER AMICABLE ACTIONS AS ABOVE PROVIDED TO RECOVER POSSESSION OF SUCH
MORTGAGED PROPERTY. AN AMICABLE ACTION IN EJECTMENT MAY BE BROUGHT AND
JUDGMENT MAY BE CONFESSED THEREIN BEFORE OR AFTER THE INSTITUTION OF
PROCEEDINGS TO FORECLOSE OR TO ENFORCE THIS MORTGAGE, OR AFTER ENTRY OF
JUDGMENT HEREON OR ON THE NOTES, OR AFTER A SHERIFF'S SALE OF THE
MORTGAGED PROPERTY IN WHICH MORTGAGEE IS THE SUCCESSFUL BIDDER.
MORTGAGOR HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE
UNITED STATES OR ELSEWHERE TO APPEAR FOR MORTGAGOR AT ANY TIME FOLLOWING
AN EVENT OF DEFAULT TO CONFESS JUDGMENT AS OFTEN AS NECESSARY AGAINST
MORTGAGOR IN FAVOR OF MORTGAGEE OR ITS ASSIGNEE IN ANY SUCH COURT, AS OF
ANY TERM, FOR THE AMOUNT DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND
AN ATTORNEY'S COMMISSION OF 10% FOR COLLECTION, WITH RELEASE OF ALL
ERRORS. MORTGAGOR HEREBY WAIVES ANY RIGHT TO A HEARING PRIOR TO ENTRY
OF ANY SUCH JUDGMENT, OR TO STAY OF EXECUTION AND EXTENSION UPON ANY
LEVY ON REAL ESTATE PURSUANT TO ANY JUDGMENT SO ENTERED AND ALSO HEREBY
EXPRESSLY WAIVES THE EXEMPTION OF ALL PROPERTY FROM LEVY AND SALE ON ANY
EXECUTION THEREON AND ALSO ANY EXEMPTION LAWS NOW IN FORCE OR WHICH MAY
HEREAFTER BE ENACTED BY ANY STATE OR NATION INSOFAR AS SUCH EXEMPTION
LAWS CAN BE WAIVED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT A
RATE EQUIVALENT TO THE DEFAULT RATE OF INTEREST SET FORTH IN THE LOAN
AGREEMENT.
SCH-II-3
[PA]
<PAGE>
[MA RECITALS]
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
This Open-End Mortgage, Security Agreement and Fixture
Filing (this "Mortgage"), is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
This Mortgage is granted upon the STATUTORY CONDITION and
upon the further condition that all covenants and agreements of the
Mortgagor contained herein or in the Notes (as hereinafter defined), the
Loan Agreement or the Security Instruments (as hereinafter defined)
shall be kept and performed and for any breach of which Mortgagee shall
have the STATUTORY POWER OF SALE.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
1
[MA Recitals]
<PAGE>
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
2
[MA Recitals]
<PAGE>
[IA RECITALS]
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
This Open-End Mortgage, Security Agreement and Fixture
Filing (this "Mortgage"), is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
1
[IA Recitals]
<PAGE>
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
NOTICE: THIS MORTGAGE SECURES CREDIT IN THE AMOUNT OF UP TO
$150,000,000. LOANS AND ADVANCES UP TO THIS AMOUNT, TOGETHER
WITH INTEREST, ARE SENIOR TO INDEBTEDNESS TO OTHER CREDITORS
UNDER SUBSEQUENTLY RECORDED OR FILED MORTGAGES AND LIENS.
[***Add the following paragraphs as new Sections 36.11 and 36.12 to all
Iowa mortgages.***]
36.11 It is agreed that if this Mortgage covers less
than ten (10) acres of land, and in the event of the foreclosure of this
Mortgage and sale of the property by sheriff's sale and such foreclosure
proceedings, the time of one year for redemption from said sale provided
by the statutes of the State of Iowa shall be reduced to six (6) months
provided the Mortgagee in such action, files an election to waive any
deficiency judgment against the Mortgagor which may arise out of the
foreclosure proceeding; all to be consistent with the provisions of
Chapter 628 of the Iowa code. It is further agreed that the period of
redemption after a foreclosure of this Mortgagor shall be reduced to
sixty (60) days if all of the three following contingencies develop:
(1) the real estate is less than ten (10) acres in size; (2) the court
finds affirmatively that the said real estate has been abandoned by the
owners and those persons personally liable under this Mortgage at the
time of such foreclosure; and (3) Mortgagee in such action files an
election to waive any deficiency judgment against the Mortgagor or its
successor in interest in such action. This paragraph shall not be
construed to limit or otherwise affect any other redemption provisions
contained in Chapter 628 or in any other Chapter of the Iowa Code,
whether now in effect or hereafter adopted.
36.12 Mortgagor hereby represents and warrants that
neither the Mortgaged Property, nor any part thereof, constitutes
"agricultural land" as such term is defined in Iowa Code Sec.9H.1(2).
2
[IA Recitals]
<PAGE>
[OH RECITALS]
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
This Open-End Mortgage, Security Agreement and Fixture
Filing (this "Mortgage"), is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
1
[OH Recitals]
<PAGE>
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
[**The following alternative provision should be used in
all Ohio Mortgages in lieu of the paragraph immediately following the
four paragraphs defining "indebtedness" after the granting clause.**]
[** The parties hereto intend that, in addition to any other
debt or obligation secured hereby, this Mortgage shall secure unpaid
balances of loan advances made with respect to the Mortgaged Property
after this Mortgage is delivered to the recorder for record, whether
made pursuant to an obligation of Mortgagee or otherwise. Such loan
advances are and will be evidenced by the Notes and the Security
Instruments. The maximum amount of unpaid indebtedness (which shall
consist of unpaid balances of loan advances made either before or after,
or both before and after, this Mortgage is delivered to the recorder for
record), exclusive of interest thereon, which may be outstanding at any
time is One Hundred Twenty-Five Million Dollars ($150,000,000).**]
2
[OH Recitals]
<PAGE>
[SD RECITALS]
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
MORTGAGE -- COLLATERAL REAL ESTATE MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
- ONE HUNDRED EIGHTY DAY REDEMPTION
This MORTGAGE -- COLLATERAL REAL ESTATE MORTGAGE,
SECURITY AGREEMENT AND FIXTURE FILING - ONE HUNDRED EIGHTY DAY
REDEMPTION (this "Mortgage"), is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($150,000,000) (collectively,
the "Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED TWENTY-FIVE MILLION
DOLLARS ($150,000,000), together with interest thereon (the rate of
which interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
1
[SD Recitals]
<PAGE>
of certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
[***Add the following paragraph as a new Section 1.3 to all South Dakota
Mortgages***]
1.3 THE PARTIES AGREE THAT THE PROVISIONS OF THE ONE
HUNDRED EIGHTY DAY REDEMPTION MORTGAGE ACT GOVERN THIS MORTGAGE. THIS
SHALL CONSTITUTE AND AUTHORIZE A POWER OF SALE UNDER THE PROVISIONS OF
SUCH ACT. THE PARTIES FURTHER AGREE THAT THIS MORTGAGE CONSTITUTES A
COLLATERAL REAL ESTATE MORTGAGE PURSUANT TO SDCL 44-8-26.
[***Add the following paragraph as a new Section 26.4 to all South
Dakota Mortgages***]
26.4 In the event Mortgagee shall foreclose this
Mortgage by judicial action, and upon abandonment of the Mortgaged
Property by Mortgagor, the holder of the certificate of sale issued as a
result of such foreclosure may apply to the court for reduction of the
redemption period to a period not less than sixty (60) days from the
date of recording of the certificate of sale.
2
[SD Recitals]
<PAGE>
[WI, IL RECITALS]
This instrument was drafted by and after
recording should be returned to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
This Mortgage, Security Agreement and Fixture Filing
(this "Mortgage"), is dated as of February __, 1994, between HEALTH AND
REHABILITATION PROPERTIES TRUST, a real estate investment trust formed
under the laws of the State of Maryland, with an address at 400 Centre
Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a bank organized under the laws of the United
States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
1
[WI, IL Recitals]
<PAGE>
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
[***The following clause should be inserted in all Illinois Mortgages at
the end of the paragraph immediately following paragraph (3) of the
definition of indebtedness.***]
; provided, however, in no event shall the total amount secured by this
Mortgage exceed two hundred percent (200%) of the face amount of the
Notes.
[***The following waiver of Mortgagor's right of redemption should be
inserted in all Illinois Mortgages as a new Section 36.11.**]
[*** 36.11 Mortgagor hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure
of this Mortgage, on its own behalf and on behalf of each and every
person acquiring any interest in or title to the Premises subsequent to
the date hereof, it being the intent hereof that any and all such rights
of redemption of Mortgagor and of all other persons, are and shall be
deemed to be hereby waived to the full extent permitted by the
provisions of 735 ILCS 5/12-901 and 902, and any statute enacted in
replacement or substitution thereof.***]
2
[WI, IL Recitals]
<PAGE>
[PA RECITALS]
Prepared by, recording requested by
And after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
This Open-End Mortgage, Security Agreement and Fixture
Filing (this "Mortgage"), is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
This Mortgage is an Open-End Mortgage as defined in
Sec.8143(f) of Title 42 of the Pennsylvania Consolidated Statutes, and
as such, is entitled to the benefits of Senate Bill 693, 1989 Session of
the General Assembly of Pennsylvania (the "Act") as codified at 42 PA.
C.S.A. Sec.8143 et seq., as amended. The parties to this Mortgage
intend that, in addition to any other debt or obligations secured
hereby, this Mortgage shall secure unpaid balances of future advances
made after this Mortgage is left for record with the Recorder's Office
of Washington County, Pennsylvania. The maximum amount of the principal
of the unpaid loan indebtedness (which shall consist of unpaid balances
of loan advances made either before or after, or both before and after,
this Mortgage is left for record), which may be outstanding at any time
is ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000), plus accrued and
unpaid interest thereon. In addition to the obligations of Mortgagor
secured hereby, this Mortgage secures unpaid balances of advances made,
with respect to the Mortgaged Property (as defined below), for the
payment of taxes, assessments, maintenance charges, insurance premiums
and costs incurred for the protection of the Mortgaged Property or the
lien of this mortgage, and expenses, including but not limited to costs
1
[PA Recitals]
<PAGE>
and reasonable attorneys' fees, incurred by Mortgagee by reason of
default by Mortgagor under this Mortgage or the Loan Agreement.
Notices pursuant to the Act shall be delivered to:
Wells Fargo Bank, National Association,
as Administrative Agent
333 South Grand Avenue
Los Angeles, California 90071
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
[**For all Pennsylvania mortgages the legal description must contain the
tax parcel identification number for each parcel of real estate.**]
2
[PA Recitals]
<PAGE>
[LA RECITALS]
UNITED STATES OF AMERICA
AND
STATE OF NEW YORK
COUNTY OF NEW YORK
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
Be it known that on this ____ day of February, 1994
before me, the undersigned Notary Public, duly commissioned and
qualified in and for New York, State of New York, and in the presence of
the undersigned competent witnesses, personally appeared Health and
Rehabilitation Property Trust, a real estate investment trust formed
under the laws of the State of Maryland, appearing through David J.
Hegarty, its Chief Financial Officer and Executive Vice President and
John G. Murray, who, after being duly sworn, declared as follows:
This Mortgage, Security Agreement and Fixture Filing
(this "Mortgage"), was executed by Mortgagor on the date set forth above
pursuant to the Consent of Mortgagor's trustees annexed hereto as
Exhibit D and by Mortgagee on the date set forth in the notary block on
page S-2 below, but it is intended by the parties to be dated as of
_________, ___, 1994, between HEALTH AND REHABILITATION PROPERTIES
TRUST, a real estate investment trust formed under the laws of the State
of Maryland, with an address at 400 Centre Street, Newton, Massachusetts
02158 ("Mortgagor"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank
organized under the laws of the United States, with an address at 333
South Grand Avenue, Los Angeles, California 90071, as administrative
agent (in such capacity, "Mortgagee"), for itself, Agent (as defined in
the Loan Agreement defined below) and the other lenders (collectively,
the "Lenders") party to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
1
[LA Recitals]
<PAGE>
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
[**The following sentence should be added to the end of Granting Clause
D in all Louisiana Mortgages.***]
For purposes of any Personal Property located within the State of
Louisiana, the "Code" shall refer to the Louisiana Commercial Laws, La.
R.S. 10:Sec.Sec.1-101 et seq., as from time to time in effect.
2
[LA Recitals]
<PAGE>
Exhibit D
Consent of Mortgagor's Trustees
[See Attached]
D-1
[LA]
<PAGE>
[KA RECITALS]
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
This Open-End Mortgage, Security Agreement and Fixture
Filing (this "Mortgage") is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, with an address at
400 Centre Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a bank organized under the laws of the
United States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
Upon request the Lenders may, in their discretion, make
future advances to Mortgagor pursuant to the Loan Agreement (as
hereinafter defined). Any future advance and the interest payable
thereon shall be secured by this Mortgage, shall be evidenced by the
Promissory Notes (as hereinafter defined), copies of which are annexed
hereto as Exhibit C, and shall be recorded on the books and records of
the Lenders, provided, however, at no time shall the principal amount of
the Loans (as hereinafter defined) secured by this Mortgage exceed the
maximum principal amount of __________, nor shall the maturity of any
future advance secured hereby extend beyond the maturity of the original
mortgage debt as set forth in the Promissory Notes.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994 (the terms and provisions of
which are incorporated herein by reference), among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
1
[KA Recitals]
<PAGE>
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, the final maturity date of the Loans evidenced
by the Promissory Notes is January 2, 1997; and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general business purposes of Mortgagor.
[**The following paragraph should be added to all Kansas Mortgages and
should replace the paragraph currently marked as Section 26.2.2**]*
26.2.2 Mortgagee shall be entitled forthwith, without
notice or demand, to the extent permitted by applicable law, (i) to
institute suit to enforce the rights of Mortgagee and (ii) to enforce,
at Mortgagee's continuing option, payment of all sums secured hereby by
action to foreclose this Mortgage, either or both, concurrently or
otherwise; and one action or suit shall not abate or be a bar to or
waiver of Mortgagee's right to institute or maintain the other, provided
that Mortgagee shall have only one payment and satisfaction of the
indebtedness.
26.2.3 Mortgagee shall have the right from time to
time to take action to recover any sums, whether interest, principal or
any installment of either, or any other sums required to be paid under
the terms of this Mortgage, the Notes or any of the other Security
Instruments, as the same become due, without regard to whether or not
the principal or any other sums evidenced by the Notes shall be due, and
without prejudice to the right of Mortgagee thereafter to bring an
action of foreclosure, or any other action, for an Event of Default by
Mortgagor existing at the time such earlier action was commenced.
26.2.4 Mortgagee may (a) immediately sell the
Mortgaged Property either in whole or in separate parcels, as prescribed
by applicable law, under power of sale, which power hereby is granted to
Mortgagee to the full extent permitted by applicable law at the time of
such sale, and thereupon, make and execute to any purchaser(s) thereof
deeds of conveyance pursuant to applicable law or (b) immediately
foreclose this Mortgage by action.
2
[KA Recitals]
<PAGE>
[**The following paragraph should be added to all Kansas Mortgages as a
new Section 26.4**]*
26.4 To the extent permitted by law, Mortgagor agrees not
at any time to insist upon, plead, claim or take any benefit or
advantage, in any way whatsoever, whether now or in the future, of any
of the following: (a) any stay, extension or moratorium law, or any
exemption from execution or sale of all or any part of the Mortgaged
Property, which may affect the covenants and terms of performance of
this Mortgage, (b) any law providing for the valuation or appraisal of
all or any part of the Mortgaged Property prior to or after any sale or
sales made pursuant to this Mortgage, or pursuant to the decree,
judgment, or order of any court of competent jurisdiction, or (c) any
right under any statute to redeem all or any part of the property so
sold. Mortgagor wholly waives, for Mortgagor and those who claim under
Mortgagor, (i) all rights and periods of redemption provided under
applicable law, and (ii) all right to have the Mortgaged Property or any
other assets which secure the indebtedness marshaled upon any
foreclosure under this Mortgage.
3
[KA Recitals]
<PAGE>
[WY RECITALS]
Prepared by, recording requested by
and after recording return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
OPEN-END MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
This Open-End Mortgage, Security Agreement and Fixture
Filing (this "Mortgage") is dated as of February __, 1994, between
HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland and [registered
with the State of Wyoming pursuant to that certain ______________
recorded in the office of the Albany County Clerk on November __, 1994
in ______________ and in the office of the Washakie County Clerk on
November __, 1993 in _______________,] with an address at 400 Centre
Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a bank organized under the laws of the United
States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
[***WY local counsel to supply additional comments***] This is an
"OPEN-END MORTGAGE" and the holder(s) hereof shall have all of the
rights, powers and protection to which the holder of an OPEN-END
MORTGAGE is entitled under Connecticut law. Upon request the Lenders
may, in their discretion, make future advances to Mortgagor pursuant to
the Loan Agreement (as hereinafter defined). Any future advance and the
interest payable thereon shall be secured by this Mortgage, shall be
evidenced by the Promissory Notes (as hereinafter defined), copies of
which are annexed hereto as Exhibit D, and shall be recorded on the
books and records of the Lenders. At no time shall the principal amount
of the debt secured by this Mortgage exceed the original loan
authorized, nor shall the maturity of any future advance secured hereby
extend beyond the maturity of the original mortgage debt as set forth in
the Promissory Notes (as hereinafter defined).
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
1
[WY Recitals]
<PAGE>
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
2
[WY Recitals]
<PAGE>
[KY RECITALS]
This instrument was drafted by and after
recording should be returned to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attention: Robert H. Bienstock, Esq.
__________________________________________________________
(Space Above This Line Reserved For Recorder's Use)
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
This Mortgage, Security Agreement and Fixture Filing
(this "Mortgage"), is dated as of February __, 1994, between HEALTH AND
REHABILITATION PROPERTIES TRUST, a real estate investment trust formed
under the laws of the State of Maryland, with an address at 400 Centre
Street, Newton, Massachusetts 02158 ("Mortgagor"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION, a bank organized under the laws of the United
States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity,
"Mortgagee"), for itself, Agent (as defined in the Loan Agreement
defined below) and the other lenders (collectively, the "Lenders") party
to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan
Agreement dated as of February ____, 1994, among Mortgagor, Mortgagee,
Kleinwort Benson Limited, as agent for itself and the other Lenders (in
such capacity, the "Agent"), and the Lenders (as the same may be amended
from time to time, the "Loan Agreement"), the Lenders have agreed to
make loans to Mortgagor, which loans shall, in the aggregate, not exceed
ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (collectively, the
"Loans"), as evidenced by Mortgagor's promissory notes of even date
herewith (together with any promissory note or notes made and delivered
by Mortgagor to each or any of the Lenders in substitution therefor or
extension or replacement thereof, in whole or in part, the "Promissory
Notes" or the "Notes") payable to each of the Lenders or order in the
aggregate principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes); and
WHEREAS, pursuant to the Loan Agreement, the proceeds of
the Loans secured hereby are to be used by Mortgagor for the acquisition
of certain real property, for the funding or acquisition of certain
1
[KY Recitals]
<PAGE>
mortgage loans, for the repayment of certain outstanding indebtedness of
Mortgagor and for general corporate purposes of Mortgagor.
[**The following paragraphs should be added to all Kentucky Mortgages at
the end of Section 36.**]*
36. __ The powers conferred on Mortgagee hereunder are
solely to protect its interest in the Mortgaged Property and shall not
impose any duty upon it to exercise any such powers. Except for (a)
treatment by Mortgagee of any of the Mortgaged Property in its
possession, (b) exercise of rights by Mortgagee with respect to the
Mortgaged Property or any portion thereof, or (c) performance by
Mortgagee of obligations of Mortgagor with respect to the Mortgaged
Property or any portion thereof (in each case to the extent exercised or
undertaken at Mortgagee's option), that is less than substantially
equivalent to that which Mortgagee, in its individual capacity, accords
its own property, rights or obligations of a similar nature, and the
accounting for moneys actually received by it hereunder, Mortgagee shall
have no duty as to the Mortgaged Property or any portion thereof, or as
to the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to the Mortgaged Property or any
portion thereof.
36.__ Mortgagor represents and warrants to Mortgagee
that none of the proceeds of the indebtedness are being used for the
construction of any improvements to the Premises.
36.__ UNTIL THIS MORTGAGE IS RELEASED OF RECORD,
LENDERS MAY MAKE ADDITIONAL ADVANCES AND READVANCES TO MORTGAGOR,
NUMEROUS TIMES AND FROM TIME TO TIME, AND ALL SUCH ADVANCES AND
READVANCES SHALL BECOME PART OF THE INDEBTEDNESS TO THE FULLEST EXTENT
PERMITTED BY LAW AND BE SECURED BY THIS MORTGAGE WITH THE SAME PRIORITY
AS THE SECURITY INSTRUMENTS TO THE FULLEST EXTENT PERMITTED BY LAW, FROM
THE DATE OF RECORDATION OF THIS MORTGAGE, AND SHALL ALSO BE DEEMED
EVIDENCED BY THE SECURITY INSTRUMENTS AND THIS MORTGAGE. MORTGAGOR
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO REQUIRE MORTGAGOR TO
RELEASE THE LIEN OF THIS MORTGAGE AS TO ANY AMOUNT AS PROVIDED IN
SECTION 382.520(2) OF THE KENTUCKY REVISED STATUTES.
IN ADDITION, CERTAIN OF THE SECURITY INSTRUMENTS ARE
REVOLVING PROMISSORY NOTES AND THERE MAY BE PAY-DOWNS AND DISBURSEMENTS
OF PRINCIPAL FROM TIME TO TIME SO THAT THE TOTAL PRINCIPAL AMOUNT
DISBURSED MAY EXCEED ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000);
PROVIDED, HOWEVER, THE OUTSTANDING PRINCIPAL BALANCE OF ALL SECURITY
INSTRUMENTS SHALL NOT EXCEED ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000) AT ANY TIME.
2
[KY Recitals]
<PAGE>
EXHIBIT E-2
FORM OF
DEED OF TRUST
Prepared by, recording
requested by and when
recorded return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attn: Robert Bienstock, Esq.
______________________________________________________
(Space Above This Line Reserved For Recorder's Use)
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING
This Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing (the "Deed of Trust"), is dated as of
February __, 1994, by HEALTH AND REHABILITATION PROPERTIES TRUST, a real
estate investment trust formed under the laws of the State of Maryland
("Grantor" [Note: In California and Arizona forms this defined term will
be replaced by the term "Trustor"]), with an address at 400 Centre
Street, Newton, Massachusetts 02158, to [MO - Larry D. Irick, Esq.; CA -
Continental Lawyers Title Company; CO - the public trustee of [county],
Colorado; AZ - Lynn T. Ziolko, a member of the State Bar of Arizona; NC -
Theresa A. Cerezola, Esq.], as trustee, (the "Trustee"), with an
address at [MO - c/o Smith, Gill, Fisher & Butts, One Kansas City Place,
35th Floor, 1200 Main Street, Kansas City, Missouri 64105; CA - 1845
Business Center Drive, Suite 200, San Bernardino, California 92408; AZ -
101 North First Avenue, Suite 2700, Phoenix, Arizona; NC - c/o O'Melveny
& Myers, 153 East 53rd Street, New York, New York 10022], in trust for
the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank organized
under the laws of the United States, with an address at 333 South Grand
Avenue, Los Angeles, California 90071, as administrative agent (in such
capacity, "Beneficiary"), for itself, Agent (as defined in the Loan
Agreement defined below) and the other lenders (collectively, the
"Lenders") party to such Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan Agreement of
even date herewith, among Grantor, Beneficiary, Kleinwort Benson
Limited, as agent for itself and the other Lenders (in such capacity,
the "Agent"), and the Lenders (as the same may be amended from time to
time, the "Loan Agreement"), the Lenders have agreed to make loans to
Grantor, which loans shall, in the aggregate, not exceed ONE HUNDRED
DEED OF TRUST E-2-1
<PAGE>
FIFTY MILLION DOLLARS ($150,000,000) (collectively, the "Loans"), as
evidenced by Grantor's promissory notes of even date herewith (together
with any promissory note or notes made and delivered by Grantor to each
or any of the Lenders in substitution therefor or extension or
replacement thereof, in whole or in part, the "Promissory Notes" or
"Notes") payable to each of the Lenders or order in the aggregate
principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
interest may vary from time to time as specified in the Promissory
Notes);
WHEREAS, pursuant to the Loan Agreement, the proceeds of the
Loans secured hereby are to be used by Grantor for the acquisition of
certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Grantor and for general corporate purposes of Grantor.
NOW THEREFORE, KNOW ALL MEN, that in consideration of said
debt and for other good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor
hereby: (a) grants, mortgages, warrants, affects, specially
hypothecates, bargains, sells, conveys, releases, transfers, assigns,
forever, and pledges, with power of sale, to Trustee, its heirs,
successors and assigns, IN TRUST WITH POWER OF SALE for the benefit of
Beneficiary those portions of the Mortgaged Property (as hereinafter
defined) that constitute real property under the laws of the State
wherein located (the "Real Estate Collateral"); (b) grants a security
interest to Beneficiary, its heirs, successors and assigns, forever, in
those portions of the Mortgaged Property (as hereinafter defined) that
either are fixtures or are not Real Estate Collateral; and (c) assigns
and transfers to Beneficiary all of the Rents (as hereinafter defined)
and other benefits derived from any Leases (Grantor Lessor) (as
hereinafter defined), whether now existing or hereafter created, all
subject to the Assignment of Rents (as hereinafter defined). For
purposes of this Deed of Trust the following described real and personal
property, none of which real or personal property is used principally or
at all for agricultural or farming purposes, is herein collectively
referred to as the "Mortgaged Property":
A. LAND:
The land described in Exhibit A-I attached hereto and by this
reference incorporated herein (the "Fee Land") and all right title and
interest of Grantor in and to each leasehold estate (individually, a
"Leasehold Estate" and collectively, the "Leasehold Estates") created
pursuant to the lease or leases more particularly described in Exhibit B
attached hereto and by this reference incorporated herein (such lease or
leases, together with any amendments, modifications, extensions,
renewals or substitutions therefor are referred to herein individually,
as a "Lease (Grantor Lessee)" and collectively as the "Leases (Grantor
Lessee)"), or otherwise, and affecting all or the portions indicated in
Exhibit B of those certain parcels of land more particularly described
DEED OF TRUST E-2-2
<PAGE>
in Exhibit A-II attached hereto and by this reference incorporated
herein (the "Leased Land") (the Fee Land and the Leased Land being
sometimes hereinafter collectively referred to as the "Land") (Exhibit
A-I and Exhibit A-II are collectively referred to as "Exhibit A").
B. IMPROVEMENTS:
All buildings, structures, facilities and other improvements
now located on or to be constructed on any of the Land or added thereto,
together with all fixtures now or hereafter owned by Grantor, or in
which Grantor has an interest, and placed in or upon any of the Land or
the buildings or other improvements thereon (collectively, the
"Improvements").
C. EASEMENTS:
All easements, servitudes, bridges, rights of way, licenses,
privileges, tenements, hereditaments, royalties, air rights, water and
water rights, mineral rights and appurtenances belonging to or inuring
to the benefit of the Land; and all right, title and interest of Grantor
in and to the land lying within any street or roadway adjoining the
Land; and all right, title and interest of Grantor in and to any vacated
or hereafter vacated streets or roads adjoining any of the Land
(collectively, the "Easements").
D. PERSONAL PROPERTY:
All fixtures, machinery, equipment and other personal property
of every kind, description and nature whatsoever, now or hereafter
located in or upon or affixed to the Land or Improvements, or any part
thereof, or now or hereafter used or to be used in connection with any
present or future operation thereof or construction thereon, and now
owned or hereafter acquired by Grantor, including, without in any way
limiting the generality of the foregoing, any and all: (i) heating,
lighting, incinerating, refrigerating, ventilating, air conditioning,
air cooling, lifting, fire extinguishing, plumbing, cleaning,
communications and power equipment and apparatus; (ii) gas, water and
electrical equipment and apparatus; (iii) elevators, escalators,
switchboards, engines, motors, tanks, pumps, partitions, conduits, ducts
and compressors, together with any renewals, replacements or additions
thereto or substitutions therefor and (iv) all Goods, Fixtures and
Equipment, as such terms are defined within the meaning of the Uniform
Commercial Code (as from time to time in effect in the State or
Commonwealth in which the Personal Property as hereinafter defined is
located, the "Code"); it being understood and agreed that all such
fixtures, machinery, apparatus, equipment and other personal property
are a part of and are declared to be a portion of the security for the
indebtedness hereby secured, whether physically attached to the
Improvements or not (collectively, the "Personal Property").
DEED OF TRUST E-2-3
<PAGE>
E. LEASES AND RENTS:
All of the landlord's right, title and interest, owned by
Grantor in and to all leases (which term, as used herein, shall include
all occupancy agreements excluding however, agreements with respect to
the provision of care for patients of the Operator (as defined below),
licenses, concession agreements and all other agreements or tenancies,
however denominated, affecting the occupancy of the Mortgaged Property,
or any portion thereof) now or hereafter affecting or pertaining to the
Mortgaged Property and the business operations conducted thereon,
including without limitation, that certain lease described on Schedule I
attached hereto and incorporated herein by reference, between Grantor,
as lessor and the operator lessee (the "Operator"), described in said
Schedule I (such lease, as in effect on the date hereof, without giving
effect to any amendments, modifications or supplements from time to time
entered into unless the same shall be approved in writing by both
Beneficiary and Agent, the "Lease (Grantor Lessor)"), together with all
of Grantor's right, title and interest in and to all rents, revenues,
issues, profits, royalties, revenues, income and other benefits derived
from the Mortgaged Property or the Land or from any other leases,
subleases or licenses of, or any concessions, franchises or similar
agreements with respect to, the Mortgaged Property whether now or
hereafter existing (collectively, the "Rents"), in each case subject to
the terms and provisions of that certain Assignment of Leases and Rents
and Credit Support Agreements dated as of the date hereof (the
"Assignment of Rents") from Grantor to Beneficiary and subject to the
rights, powers and authorities hereinafter given to Beneficiary as set
forth in Article 2 hereof.
F. RECORDS:
A security interest in and to all of the records and books of
account now or hereafter maintained by Grantor in connection with the
operation of the Mortgaged Property.
G. PROCEEDS, AWARDS AND OTHER MONEYS:
A security interest in all proceeds, including insurance
proceeds, paid for any damage or loss to the Mortgaged Property or any
part thereof, all awards, including interest and insurance proceeds, in
connection with any condemnation or other taking of the Mortgaged
Property, or any part thereof, or for conveyance in lieu thereof, and
any and all other moneys which may from time to time become subject to
the lien hereof (including, without limitation, all sums held by
Beneficiary), whether by conversion, voluntary or involuntary, of any of
the foregoing into cash or liquidated claims or otherwise (collectively,
the "Proceeds").
DEED OF TRUST E-2-4
<PAGE>
H. REPLACEMENTS AND SUBSTITUTIONS:
All of Grantor's right, title and interest in and to all
replacements, substitutions, betterments and additions of or to any or
all of the foregoing.
SUBJECT, HOWEVER, to the Permitted Exceptions as defined in
the Loan Agreement.
This Deed of Trust and conveyance is made to secure (herein,
the "indebtedness"):
(1) Payment of the indebtedness of Grantor to the Lenders
evidenced by the Promissory Notes, together with interest on said
indebtedness at the rate specified therein;
(2) Payment by Grantor of all sums expended or advanced by
Trustee, Beneficiary, the Agent or the Lenders from time to time
pursuant to any term or provision of the Notes, the Loan Agreement or
this Deed of Trust;
(3) Payment, performance and observance by Grantor of each
and every covenant, condition and obligation contained in the Notes,
this Deed of Trust, the Loan Agreement and/or any other document now or
hereafter given by Grantor either as additional security for the payment
of the indebtedness hereby secured, or otherwise executed and delivered
in connection therewith (all of such instruments being hereinafter
sometimes collectively referred to as the "Security Instruments"); and
(4) Payment and performance of all obligations of Grantor
to Beneficiary, Trustee, Agent and the Lenders for fees, costs and
expenses (including attorney's fees) under the Security Instruments.
This Deed of Trust is given to secure not only existing
indebtedness, but also such future advances made after the date hereof,
whether such advances are obligatory or are to be made at the option of
the Lenders, or otherwise, as are made within twenty (20) years from the
date hereof, to the same extent as if such future advances were made on
the date of the execution of this Deed of Trust. Such advances are and
will be evidenced by the Notes and the Security Instruments. The
maturity date of the unpaid balances of the indebtedness shall be
January 2, 1997 (or earlier as provided in the Loan Agreement). The
total amount of indebtedness that may be so secured may decrease or
increase from time to time, but the total unpaid principal balance so
secured at one time shall not exceed $150,000,000 plus interest thereon
and any disbursements made by Trustee, Beneficiary or any of the Lenders
to or on behalf of Grantor pursuant to the terms of this Deed of Trust,
the Loan Agreement or the Security Instruments, including, but not
limited to, disbursements made for the payment of taxes, levies or
insurance on the Mortgaged Property, in each case with interest thereon
from date of expenditure at the rate of default interest specified in
Section 2.4(b) of the Loan Agreement.
DEED OF TRUST E-2-5
<PAGE>
The Notes are hereby incorporated herein by reference, with
the same force and effect as if each such Note, and all of the terms,
conditions and provisions thereof, were set forth herein in its
entirety, and copies of all such Notes shall be maintained, and made
available to parties having an interest therein, at the principal
offices of Kleinwort Benson Limited, or any successor agent under the
Loan Agreement, at New York, New York.
CERTAIN OF PERSONAL PROPERTY COVERED BY THIS DEED OF TRUST ARE
OR ARE TO BECOME FIXTURES RELATED TO THE LAND. THIS DEED OF TRUST IS
ALSO INTENDED TO BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A
FIXTURE FILING WITH RESPECT TO THE SECURITY INTEREST GRANTED HEREIN IN
SUCH PERSONAL PROPERTY. THE GRANTOR IS THE DEBTOR AND THE BENEFICIARY
IS THE SECURED PARTY FOR SUCH PURPOSES AND THE MAILING ADDRESS OF THE
GRANTOR AND BENEFICIARY ARE AS SET FORTH ON THE FIRST PAGE OF THIS DEED
OF TRUST.
Grantor hereby further covenants and agrees with Trustee and
Beneficiary to pay, perform or observe, as the case may be, all of the
following additional covenants and agreements:
ARTICLE 1
Performance
1.1 Grantor shall pay all indebtedness hereby secured at the
time or times and in the manner provided herein or in the Notes, and
shall pay or cause to be paid, as and when the same respectively become
due and payable, all premiums for insurance maintained on the Mortgaged
Property and all expenses of repair to the Mortgaged Property.
1.2 Grantor shall promptly and fully keep, perform and comply
with all the terms, provisions, covenants and conditions imposed upon
Grantor hereunder, under the Notes, the Loan Agreement and under the
other Security Instruments.
ARTICLE 2
Assignment of Leases and Rents
Grantor hereby assigns, sets over, and transfers to
Beneficiary, all leases, licenses, concession agreements, occupancy
agreements and all other tenancy agreements, including, without
limitation, the Lease (Grantor Lessor), and all of the Rents, subject,
however, to the terms and conditions of the Assignment of Rents and
further subject to any other assignment of leases and rents from time to
time delivered by Grantor to Beneficiary with respect to the Mortgaged
Property.
ARTICLE 3
DEED OF TRUST E-2-6
<PAGE>
Insurance
3.1 Grantor shall keep, or shall cause the Operator to keep,
the Improvements constantly and satisfactorily insured against the
following risks:
(i) Loss or damage by fire, vandalism and malicious mischief,
extended coverage perils, and all physical loss perils insurance,
if available and economically feasible, including but not limited
to sprinkler leakage, in an amount not less than one hundred
percent (100%) of the then full replacement cost thereof (as
defined below in Section 3.2) and in an amount which is sufficient
to prevent Grantor from becoming a co-insurer;
(ii) Business interruption or loss of rental under a rental
value insurance policy covering risk of loss during the lesser of
the first twelve (12) months of reconstruction or the actual
reconstruction period necessitated by the occurrence of any of the
hazards described in Section 3.1(i), if available and economically
feasible, in such amounts as may be customary for comparable
properties in the area and in an amount sufficient to prevent
Grantor from becoming a coinsurer;
(iii) Claims for personal injury or property damage under a
policy of comprehensive general public liability insurance, if
available and economically feasible, with amounts not less than
Five Million Dollars ($5,000,000.00) per occurrence in respect of
bodily injury and death and One Million Dollars ($1,000,000.00) for
property damage;
(iv) Claims arising out of malpractice in an amount not less
than Five Million Dollars ($5,000,000.00) for each person and for
each occurrence; provided, however, that if such malpractice
insurance, with such limit, at any time is not available at rates
which are economically feasible in relation to the risks covered,
Grantor may permit the Operator to self-insure as to such
malpractice claims in accordance with the provisions of Section 3.5
below; and
(v) Flood (when the Improvements are located in whole or in
part within a designated flood plain area) and such other hazards
and in such amounts as may be customary for comparable properties
in the area and are available from insurance companies, insurance
pools, or other appropriate companies authorized to do business in
the State or Commonwealth in which the Mortgaged Property is
located, at rates which are economically practicable in relation to
the risks covered.
3.2 The term "full replacement cost" as used herein, shall
mean the actual replacement cost of the Mortgaged Property requiring
replacement from time to time including an increased cost of
construction endorsement, if available and economically feasible, less
exclusions provided in the standard form of fire insurance policy.
DEED OF TRUST E-2-7
<PAGE>
3.3 In addition to the insurance described above, Grantor
shall require the Operator to maintain such additional insurance as may
be reasonably required from time to time by either Beneficiary or Agent.
Grantor shall at all times cause the Operator to maintain adequate
worker's compensation insurance coverage for all persons employed by the
Operator on the Mortgaged Property. Such worker's compensation
insurance shall be in accordance with the requirements of applicable
local, state and federal law.
3.4 Notwithstanding anything to the contrary contained in
this Article 3, Grantor's obligations to carry or cause to be carried
the insurance provided for herein may be brought within the coverage of
a so-called blanket policy or policies of insurance carried and
maintained by Grantor or the Operator, as the case may be; provided,
however, that the coverage afforded will not be reduced or diminished or
otherwise be different from that which would exist under a separate
policy meeting all other requirements of this Deed of Trust by reason of
the use of such blanket policy of insurance, and provided further that
the requirements of this Article 3 are otherwise satisfied.
3.5 With respect to the risks specified in Section 3.1(iv)
only, Grantor may permit the Operator to self-insure (pursuant to a
prudent program of self-insurance no less stringent than any program of
self-insurance maintained by the Operator with respect to its other
properties, with reserves therefor in such amounts as would conform to
the requirements of generally accepted accounting principles) against
the risks, and in the amounts hereinabove described and shall not be
required to maintain insurance hereunder, except that, until such time
as the Operator is rated in one of the highest three ratings by either
Moody's or Standard & Poor's, the Operator shall only self-insure an
amount equal to the greater of $250,000 or 3.0% of its Consolidated
Tangible Net Worth as hereafter defined. "Consolidated Tangible Net
Worth" shall mean the aggregate of the par or stated value of all
outstanding capital stock, capital surplus, and retained earnings set
forth on a consolidated balance sheet prepared in accordance with
generally accepted accounting principles, less the sum of (A) all
intangibles included on the asset side of said consolidated balance
sheet, including, without limitation, goodwill (including any assets
designated on such balance sheet representing the excess of the purchase
price paid for assets or stock acquired over the value assigned hereto
on the books of the Operator and its subsidiaries), patents, trademarks,
trade names, copyrights, and similar intangibles, and (B) deferred
charges.
3.6 All such insurance except as otherwise provided in the
Loan Agreement, shall (i) be evidenced by valid and enforceable policies
written by insurance companies qualified to do business in the State or
Commonwealth in which the Mortgaged Property is located, (ii) to the
extent provided by Section 5.15 of the Loan Agreement, be made payable
to Beneficiary by means of a standard non-contributory mortgagee clause
in favor of Beneficiary as administrative agent on behalf of Lenders,
(iii) to the extent provided by Section 5.15 of the Loan Agreement,
contain an endorsement requiring thirty (30) days written notice to
DEED OF TRUST E-2-8
<PAGE>
Beneficiary prior to cancellation or modification in the coverage, scope
or amount of any such policy or policies, (iv) to the extent provided by
Section 5.15 of the Loan Agreement, provide that any loss shall be
payable to Beneficiary notwithstanding any act or negligence of Grantor
or Beneficiary which might otherwise result in a forfeiture of said
insurance, and (v) to the extent provided by Section 5.15 of the Loan
Agreement, in the case of liability coverage, name Beneficiary, as
administrative agent for itself and the other Lenders, as additional
insured. Beneficiary agrees that a $25,000 deductible in such policies
is acceptable. A certificate from the insurer setting forth the limits
of the insurance coverage shall be delivered to Beneficiary concurrently
with the execution and delivery of this Deed of Trust, and thereafter
all renewal or replacement certificates shall be delivered to
Beneficiary not less than thirty (30) days prior to the expiration date
of the policy to be renewed or replaced, accompanied, if requested by
Beneficiary, by evidence satisfactory to Beneficiary and Agent that all
premiums payable with respect to such policies have been paid in full.
3.7 All property insurance policies carried by either the
Operator or Grantor covering the Mortgaged Property, including without
limitation, contents, fire and casualty insurance, shall expressly waive
any right of subrogation on the part of the insurer against any other
party. The parties hereto agree that their policies will include such
waiver clause or endorsement so long as the same are obtainable without
extra cost, and in the event of such an extra charge the other party, at
its election, may pay the same, but shall not be obligated to do so.
3.8 Beneficiary shall have the right and is hereby
constituted and appointed the true and lawful attorney-in-fact,
irrevocable and coupled with an interest, of Grantor (with full power of
substitution, delegation and revocation), in the name and stead of
Grantor, but in the discretion of said attorney, (i) to demand, adjust,
sue for, compromise and collect any amounts due under such insurance
policies in the event of loss, and (ii) to give releases for any and all
amounts received in settlement of losses under such policies; provided,
however, that unless and until an Event of Default shall have occurred
and be continuing, Grantor reserves to itself the right to take any such
action, without the consent or participation of Beneficiary therein.
3.9 Grantor shall not on Grantor's own initiative or pursuant
to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with
that required in this Article, to be furnished by, or which may
reasonably be required to be furnished by, Grantor, or increase the
amount of the existing insurance by securing an additional policy or
additional policies, unless all parties having an insurable interest in
the subject matter of the insurance, including in all cases Beneficiary,
are included therein as additional insureds, and the loss is payable
under said insurance in the same manner as losses are payable under this
Deed of Trust. Grantor shall immediately notify Beneficiary of the
receipt of any notice from the Operator of the taking out of any such
separate insurance.
DEED OF TRUST E-2-9
<PAGE>
3.10 In the event of the occurrence of a casualty or other
loss with respect to a Mortgaged Property, Beneficiary, at its election
(except as provided in subsection 3.10.1 below), may apply all amounts
received by reason of such casualty or other loss, after first deducting
the costs of collection, to the payment of the indebtedness secured
hereby, whether or not then due, or to reimbursement of any taxes,
assessments, charges, insurance premiums or other obligations paid by
Beneficiary pursuant hereto, or, notwithstanding the claims of any
subsequent lienor, amounts so received with respect to casualty loss may
be used or paid over to Grantor for use in repairing or replacing
damaged buildings and improvements on such Mortgaged Property.
3.10.1 Notwithstanding the foregoing, however, provided that
no Event of Default hereunder shall have occurred and be continuing, in
the event the Operator (i) is entitled or has elected to restore such
Mortgaged Property in accordance with the applicable provisions of the
Lease (Grantor Lessor) pertaining to such Mortgaged Property or (ii)
elects to substitute a new property for such Mortgaged Property in
accordance with the provisions of such Lease (Grantor Lessor) and in the
manner provided in such Lease (Grantor Lessor), then all amounts
received by reason of such casualty or other loss shall (A) in the event
of repair or restoration, be made available for such repair and
restoration in the manner provided in the following paragraph or (B) in
the event the Operator has offered to substitute a property for such
Mortgaged Property, which offer has been accepted by Grantor with the
consent of both Beneficiary and Agent, and which substitute property
shall be subject to a first deed of trust and security interest and a
collateral assignment of leases and rents in favor of Beneficiary, and
such other certificates, documents and instruments as may be reasonably
required by Beneficiary and/or Agent, be paid to the Operator in
accordance with such Lease (Grantor Lessor) upon completion of said
substitution.
3.10.2 Provided that no Event of Default hereunder shall have
occurred and be continuing, if Beneficiary elects to permit the use of
casualty insurance proceeds for repair and restoration of damaged
buildings and improvements or if the Operator elects to restore such
Mortgaged Property in accordance with the applicable provisions of such
Lease (Grantor Lessor), then the amounts payable to Beneficiary pursuant
to this Article, or so much thereof as may be required for such purpose,
shall be paid out from time to time as the work of repair or replacement
progresses, upon such architects' certificates or other certificates,
including certificates from title insurance companies, as Beneficiary
and Agent may from time to time require, with respect to the cost of
such repair or replacement and the status of title to such Mortgaged
Property; provided, however, Beneficiary shall not be required to
release or pay any portion of such proceeds unless (i) Grantor shall
first furnish additional funds from sources other than the net amount of
such proceeds which, together with said proceeds, shall be sufficient to
cover the cost of repair or replacement as established by the
certificate of an architect or engineer employed by Beneficiary at
Grantor's expense, which certificate shall provide that such Mortgaged
Property can reasonably be restored to substantially the same condition
DEED OF TRUST E-2-10
<PAGE>
as existed immediately prior to such damage or destruction; (ii) the
proceeds of the business interruption insurance required to be carried
pursuant to Section 3.1(ii) hereof are available for the payment of rent
due under such Lease (Grantor Lessor); and (iii) such repair or
replacement shall be effected promptly and in accordance with plans and
specifications submitted to and approved by Beneficiary and Agent and
diligently pursued to completion. Beneficiary shall at no time
whatever, whether in possession of such Mortgaged Property or not, have
any obligation to advance or make funds other than said proceeds
available for the repair or replacement of such Mortgaged Property.
Provided that no Event of Default shall have occurred and be continuing,
any excess proceeds remaining after restoration shall be paid to
Grantor.
3.11 If Beneficiary shall in any manner acquire title to the
Mortgaged Property, it shall thereupon become the sole and absolute
owner of all insurance policies pertaining to such Mortgaged Property
and held by or required hereunder to be delivered to Beneficiary, with
the sole right to collect and retain all unearned premiums and dividends
thereon, and Grantor shall only be entitled to a credit, in reduction of
the then outstanding indebtedness secured hereby, in the amount of the
short rate cancellation refund.
3.12 Grantor shall comply, or shall cause the Operator to
comply, with all requirements of the issuer of any policy of insurance
required to be carried pursuant to Section 3.1 hereof.
ARTICLE 4
Payment of Taxes
4.1 Grantor shall, or shall cause the Operator to, promptly
pay, when due, all taxes, assessments, water and sewer charges and all
other charges of whatever nature which may at any time be assessed
against, levied upon or constitute a lien on, the whole or any portion
of the Mortgaged Property and any tax assessed against Beneficiary or
Trustee with respect to this Deed of Trust or the indebtedness hereby
secured, whether under statutes now in force or that may hereafter be
enacted; and Grantor shall promptly pay or cause to be paid, when due,
all other taxes (including corporate taxes and personal property taxes),
assessments or charges that might become a lien prior to this Deed of
Trust or that might have priority in distribution of the proceeds of a
judicial sale. Grantor shall not suffer or permit any such taxes, as-
sessments or charges on the Mortgaged Property to become or remain
delinquent or permit any part thereof or any interest therein to be sold
for any such taxes, assessments or charges; and further shall furnish to
Beneficiary, in each instance prior to the date when they would become
delinquent, certificates or receipts of the proper officer showing full
payment of all taxes, assessments and charges.
4.2 Notwithstanding the foregoing provisions of this Article,
Grantor shall not be required to pay and discharge or cause to be paid
DEED OF TRUST E-2-11
<PAGE>
and discharged any such tax, assessment or charge so long as the
validity thereof shall be contested in good faith by appropriate
proceedings in accordance with the applicable provisions of the Lease
(Grantor Lessor) pertaining to permitted contests and Article 6 hereof;
provided, however, that payment in full with respect to any such tax,
assessment or charge shall be made not less than five (5) days before
the first day upon which the Mortgaged Property, or any portion thereof,
may be seized and sold in satisfaction thereof.
4.3 Grantor hereby assigns to Beneficiary all rights of
Grantor now or hereafter arising in and to any refunds or abatements of
any such tax, assessment or charge, which refunds and abatements shall
be applied by Beneficiary in reduction of the principal indebtedness
under the Notes; provided, however, that until an Event of Default shall
have occurred and be continuing, Grantor shall be entitled to any such
refunds or abatements.
ARTICLE 5
Payment of Liens
5.1 Grantor shall pay or cause to be paid, when the same
shall become due and payable, all lawful claims and demands of
mechanics, materialmen, laborers and others which, if unpaid, might
result in or permit the creation of a lien on the Mortgaged Property or
any part thereof, other than Permitted Exceptions.
5.2 Nothing contained in the Notes, this Deed of Trust or any
other Security Instrument and no action or inaction by Beneficiary shall
be construed as (i) constituting the request of Beneficiary, express or
implied, to any contractor, sub-contractor, laborer, materialman or
vendor to or for the performance of any labor or services or the
furnishing of any materials or other property for the construction,
alteration, addition, repair or demolition of or to the Mortgaged
Property or any part thereof, or (ii) giving Grantor any right, power or
permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Beneficiary in
respect thereof or to make any agreement that may create, or in any way
be the basis for any right, title, interest, lien, claim or other
encumbrance upon the estate of Beneficiary in the Mortgaged Property, or
any portion thereof.
5.3 Notwithstanding the foregoing provisions of this Article,
Grantor shall not be required to pay and discharge or cause to be paid
and discharged any such claim so long as the validity thereof shall be
contested diligently and in good faith by appropriate proceedings in
accordance with the applicable provisions of the Lease (Grantor Lessor)
and Article 6 hereof; provided, however, that if at any time payment of
any obligation imposed upon the Grantor by this Article shall become
necessary to prevent the sale or forfeiture of the Mortgaged Property,
because of nonpayment, to prevent the cancellation of the insurance
DEED OF TRUST E-2-12
<PAGE>
required to be carried pursuant to Article 3 of this Deed of Trust or to
protect the lien of this Deed of Trust, then Grantor shall forthwith pay
the same and forthwith take all other actions necessary or appropriate
to prevent the sale or forfeiture of the Mortgaged Property, the
cancellation of said insurance or to protect the lien of this Deed of
Trust, as the case may be.
ARTICLE 6
Permitted Contests
Pursuant to the provisions of the Lease (Grantor Lessor)
relating to permitted contests, the Operator shall have the right to
contest the amount or validity of any tax or imposition or any [**Legal
Requirement or Insurance Requirement**] (as such terms are defined in
the Lease (Grantor Lessor)) or any lien, attachment, levy, encumbrance,
charge or claim ("Claims"), by appropriate legal proceedings in good
faith and with due diligence on the condition, however, that such legal
proceedings shall not cause the sale or forfeiture of the Mortgaged
Property, or any part thereof, to satisfy the same or cause Beneficiary
or Grantor to be in default under any mortgage or deed of trust
encumbering the Mortgaged Property or any interest therein. Upon the
reasonable request of Beneficiary or Agent, Grantor shall cause the
Operator either (i) to provide a bond or other assurance reasonably
satisfactory to Beneficiary and Agent that all Claims which may be
assessed against the Mortgaged Property together with interest and
penalties, if any, thereon will be paid, or (ii) deposit within the time
otherwise required for payment with a bank or trust company as trustee,
as security for the payment of such Claims, money in an amount
sufficient to pay the same, together with interest and penalties in
connection therewith and all Claims which may be assessed against or
become a Claim on the Mortgaged Property, or any part thereof, in said
legal proceedings. Grantor shall cause the Operator to furnish
Beneficiary with reasonable evidence of such deposit within five (5)
days of making the same. Grantor hereby assigns to Beneficiary all
right, title and interest of Grantor in and to any and all bonds,
deposits, or other assurances provided by the Operator in accordance
with said provisions of the Lease (Grantor Lessor).
ARTICLE 7
Beneficiary's Right to Pay Insurance Charges, Taxes and Liens
If Grantor fails to insure or cause the insurance of the
Mortgaged Property, or to pay and furnish receipts for all taxes,
assessments and other charges, or to pay for all labor and materials,
all as provided herein, Beneficiary may, at its option upon ten (10)
days notice to Grantor (or upon lesser notice or without notice if
Beneficiary reasonably deems the same is required to protect
Beneficiary's interest in the Mortgaged Property): procure such
insurance; pay such taxes, assessments and charges and any penalty, and
DEED OF TRUST E-2-13
<PAGE>
interest thereon, redeem the Mortgaged Property or any part thereof from
any tax sale or procure such receipts; and pay for such labor and
materials; and Grantor shall immediately pay to Beneficiary all sums
which Beneficiary shall have so paid, together with interest thereon
from date of expenditure at the rate of default interest specified in
Section 2.4(b) of the Loan Agreement, and for payment thereof, this Deed
of Trust shall stand as security in like manner and effect as for the
payment of the indebtedness evidenced by the Notes. The failure of
Beneficiary to procure such insurance, to pay such taxes, assessments
and charges or to redeem the Mortgaged Property or any part thereof from
any tax sale, or to pay for labor and materials, shall in no way render
Beneficiary liable to Grantor. If Beneficiary shall elect to advance
insurance premiums, taxes, assessments or charges, or redeem from tax
sale, or pay for labor or materials, the receipt of the insurance
company, the proper tax official or supplier shall be conclusive
evidence of the amount, validity and the fact of payment thereof.
ARTICLE 8
Insurance and Tax Deposits
Beneficiary may, at its election, such election to be made
only after the occurrence and during the continuance of an Event of
Default, while such Event of Default is continuing and remains uncured,
require Grantor to pay to Beneficiary, on the first day of each calendar
month, a sum (hereinafter referred to as the "Deposited Funds") equal to
(i) one-twelfth (1/12) of the aforesaid annual taxes, assessments, water
and sewer charges and all other charges upon the Mortgaged Property
and/or upon Beneficiary with respect to the Mortgaged Property (for the
purposes of this paragraph, collectively referred to as the "taxes") and
(ii) one-twelfth (1/12) of the annual premiums for the insurance
required hereunder to be maintained on the Mortgaged Property, the
respective amounts of such taxes and premiums to be reasonably estimated
from time to time by Beneficiary. Beneficiary shall apply the Deposited
Funds to the payment of such taxes and premiums and shall render an
annual accounting to Grantor of all disbursements of the Deposited
Funds. Although each such monthly payment of the Deposited Funds is to
be in a lump sum, each component thereof shall be deemed to be held
separately by Beneficiary for, and shall be applied only to, the
particular item for which it was paid over by Grantor. If the amount of
the Deposited Funds shall exceed the amount necessary to pay such taxes
and premiums for the then current year, such excess shall be credited
against future monthly deposits required hereunder; provided, however,
upon the curing of such Event of Default, and so long as no other Event
of Default is continuing, all Deposited Funds shall promptly be refunded
to Grantor. No interest shall be paid on the Deposited Funds, and the
Deposited Funds may be commingled with Beneficiary's general funds.
Upon payment in full of all sums secured by this Deed of Trust any
excess Deposited Funds shall be refunded to Grantor. Upon the
occurrence of an Event of Default hereunder (until such time as the same
may be cured as described above), Beneficiary, may apply against the
DEED OF TRUST E-2-14
<PAGE>
indebtedness secured hereby, in such manner as Beneficiary may
determine, any of the Deposited Funds then held by Beneficiary.
ARTICLE 9
Maintenance and Repair
9.1 Grantor shall at all times keep and maintain, or cause
the Operator to keep and maintain, the Mortgaged Property, including all
Improvements and Personal Property now or hereafter installed or located
thereon or used in connection therewith, in good order, and repair and
operating condition, reasonable wear and tear excepted.
9.2 Grantor shall not: permit any strip or waste of the
Mortgaged Property; permit the violation of any law, ordinance or
governmental regulation affecting the same or the use thereof; permit
any conditions to exist which would wholly or partially invalidate any
insurance on the Mortgaged Property; or permit anything to be done to
the Mortgaged Property that might materially diminish the value thereof.
9.3 Grantor shall permit Beneficiary and/or Agent, and their
respective officers, agents and servants, to enter upon the Mortgaged
Property at all reasonable times upon forty-eight (48) hours prior
notice to view and inspect the same; in addition, after the occurrence
and during the continuance of an Event of Default, Grantor shall permit
Lenders and their respective officers, agents and servants to enter upon
the Mortgaged Property upon forty-eight (48) hours prior notice to view
and inspect the same.
9.4 Grantor shall, promptly after demand by Beneficiary (or
immediately upon demand in case of emergency), make, or cause to be
made, such repairs, replacements, renewals, or additions, or perform
such items of maintenance to the Mortgaged Property as Beneficiary may
reasonably require in order to maintain the Mortgaged Property at the
standards required by this Article; provided, however, that if such
required action cannot reasonably be completed within the time herein
provided, then if Grantor shall so notify Beneficiary and immediately
commence and carry out such action in a prompt and diligent manner, the
time for completion thereof shall be extended to the period of time
necessary to complete the same in a prompt and diligent manner.
9.5 Grantor shall replace, or cause the Operator to replace,
all worn out or obsolete fixtures or other personal property which form
a part of the Improvements or the Personal Property with fixtures or
personal property comparable thereto unless replacement of such fixtures
or personal property is not necessary to the operation of the
Improvements in compliance with all licensure and certification
requirements and with all other applicable legal and insurance
requirements and otherwise in accordance with customary practice for
comparable properties. Grantor shall not and shall not permit the
Operator to, without the prior written consent of Beneficiary, remove
from the Improvements any fixtures or personal property covered by this
DEED OF TRUST E-2-15
<PAGE>
Deed of Trust (except to repair the same) unless the same is no longer
necessary to the operation or maintenance of the Improvements in
compliance with all licensure and certification requirements and with
all other applicable legal and insurance requirements and otherwise in
accordance with customary practice for comparable properties, or unless
the same is replaced by Grantor with an article of comparable
suitability owned by Grantor or the Operator free and clear of all liens
and encumbrances except Permitted Exceptions.
ARTICLE 10
Alterations
Except as otherwise permitted by the Lease (Grantor Lessor)
without the consent of Grantor or by the Loan Agreement, Grantor, shall
not and shall not permit the Operator to:
10.1 remove or demolish any of the Improvements;
10.2 make changes or alterations to the Improvements which
would change their general character or size;
10.3 alter the design or structural character of the
Improvements;
10.4 make any other material alteration or addition thereto;
or
10.5 do or permit anything to be done to the Improvements
that might diminish the value thereof,
without in each instance having first obtained the prior written
consent of Beneficiary and Agent.
ARTICLE 11
Compliance With Leases, Etc.
11.1 Grantor shall promptly and fully keep, perform and
comply with all the terms, provisions, covenants, conditions and
agreements imposed upon or assumed by Grantor as landlord, licensor or
guarantor under any lease, license, concession, occupancy or other
tenancy agreement, now or hereafter in effect (including, without
limitation, the Lease (Grantor Lessor)), including, in each case, any
amendments or supplements thereto, covering any part of the Mortgaged
Property or any other property owned or controlled by Grantor that is
affected by the terms, provisions, covenants, conditions and agreements
imposed upon or assumed by Grantor in such lease, and Grantor shall not
do or permit to be done, or omit and refrain from doing, any act or
thing the doing or omission of which will give any tenant, licensee,
concessionaire or other occupant a right to terminate any such lease,
DEED OF TRUST E-2-16
<PAGE>
license, concession, occupancy or other tenancy agreement or to abate
the rental due thereunder.
11.2 If Grantor shall, in any manner, fail to comply with
Section 11.1 above, Beneficiary may (but shall not be obliged to) take,
upon ten (10) days prior written notice to Grantor, any action
Beneficiary deems necessary or desirable to prevent or cure any default
by Grantor in the performance of or compliance with any of Grantor's
covenants or obligations as landlord, licensor or guarantor under any
such lease, license, concession, occupancy or other tenancy agreement.
Beneficiary may rely on any notice of default received from any tenant,
licensee, concessionaire or other occupant and may act thereon as herein
provided even though the existence of such default or the nature thereof
may be questioned or denied by Grantor or any party acting on behalf of
Grantor, and such notice of default shall be conclusive evidence that a
default exists for the purposes of this Article. Grantor shall promptly
deliver to Beneficiary a copy of any notice of default received from any
tenant that is a party to any such lease, license, concession, occupancy
or other tenancy agreement. Beneficiary shall have the right to enter
upon the Mortgaged Property, and any other property owned or controlled
by Grantor which is affected by any of the terms, conditions,
provisions, covenants, and agreements of any such lease, license,
concession, occupancy or other tenancy agreement, as often as
Beneficiary reasonably deems necessary or desirable in order to prevent
or cure any such default by Grantor. Beneficiary may expend such sums
of money as are reasonable and necessary for any such purpose, and
Grantor hereby agrees to pay to Beneficiary, immediately upon demand,
all sums so expended by Beneficiary, together with interest thereon from
date of expenditure at the rate of default interest specified in Section
2.4(b) of the Loan Agreement. All sums so expended by Beneficiary, and
the interest thereon shall be added to and secured by the lien of this
Deed of Trust.
ARTICLE 12
Operation
12.1 To the best of Grantor's knowledge, the Improvements and
the present and contemplated use and/or occupancy thereof comply with
all applicable laws, ordinances, rules, regulations, and directions of
governmental authorities having jurisdiction over the Mortgaged Property
and Grantor shall cause the Improvements to be continuously operated in
an efficient and first class manner and in compliance with all
applicable laws, ordinances, rules, regulations and directions of
governmental authorities having jurisdiction over the Mortgaged
Property, and also in compliance with the requirements of all policies
of insurance on the Mortgaged Property and of the national or local
Boards of Fire Underwriters, and Grantor shall also cause the Operator
to procure, maintain and comply with all permits, licenses and other
authorizations needed for the operation of such Mortgaged Property;
subject, however, in each such instance, to the right of the Operator to
postpone compliance with governmental requirements to the extent and in
DEED OF TRUST E-2-17
<PAGE>
the manner provided in the provisions of the Lease (Grantor Lessor)
relating to permitted contests and Article 6 hereof.
ARTICLE 13
Financial Reports
13.1 Grantor shall furnish to Beneficiary such financial
statements and other information bearing on the financial condition of
Grantor and the status and progress of the operation of the Mortgaged
Property as may from time to time be required by Beneficiary pursuant to
Sections 5.1 and 5.2 of the Loan Agreement.
ARTICLE 14
Condemnation
14.1 Forthwith upon the receipt by Grantor of notice of the
institution of any proceeding or negotiations for the taking of the
Mortgaged Property, or any part thereof, in condemnation or by the
exercise of the power of eminent domain, Grantor shall give notice
thereof to Beneficiary and Trustee. Beneficiary may appear in any such
proceedings together with Grantor and participate in any such
negotiations and may be represented by counsel. Grantor,
notwithstanding that Beneficiary may not be a party to any such
proceeding, shall promptly give to Beneficiary copies of all notices,
pleadings, judgments, determinations and other papers received by
Grantor therein. Grantor shall not enter into any agreement for the
taking of a Mortgaged Property, or any part thereof, with anyone
authorized to acquire the same in condemnation or by eminent domain
unless Beneficiary and Agent shall first have consented thereto in
writing.
14.2 Any award, whether paid as a result of a negotiated
settlement or judgment, shall be paid to Beneficiary and applied as
provided in Section 14.3 and 14.4 below (Grantor hereby assigning such
award to Beneficiary), and Beneficiary is hereby constituted and
appointed the true and lawful attorney-in-fact, irrevocable and coupled
with an interest, of Grantor for such purpose and as such Beneficiary is
duly authorized and empowered to collect and receive the total amount of
such award, including interest, and to give proper receipts and
acquittances therefor.
14.3 If all or substantially all of the Mortgaged Property
shall be taken by condemnation or otherwise as a result of the exercise
of such power so as to result in termination of the Lease (Grantor
Lessor) and the Operator fails to offer substitute property (pursuant to
and in accordance with the applicable provisions of the Lease (Grantor
Lessor)) which is accepted by Grantor with the consent of Beneficiary
and Agent, then, all awards paid or payable to Grantor on account of
such taking shall be paid to Beneficiary and applied to the payment and
DEED OF TRUST E-2-18
<PAGE>
discharge of the indebtedness secured hereby, such application to be in
the following order of priority: (i) repayment of all amounts expended
or advanced by Beneficiary in the discharge of Grantor's obligations
hereunder or under the Security Instruments; (ii) payment of accrued
interest under the Notes; and (iii) payment of unpaid principal under
the Notes. To the extent that such award or awards exceed the amount
required to pay in full the principal and interest under the Notes and
all other sums and charges then secured hereby, Beneficiary shall pay
over to the person or persons legally entitled thereto the amount of
such excess; provided, however, that until the actual vesting of title
in the condemning authority in such proceeding or pursuant to any
agreement in lieu or in settlement thereof, the obligations of Grantor
to perform the terms, covenants and conditions of the Notes and this
Deed of Trust shall continue unimpaired. In no event shall Beneficiary
be required to satisfy or discharge this Deed of Trust until the
principal, interest and all other sums and charges secured hereby are
paid in full. In the event Grantor shall accept Operator's offer to
substitute a new property for such Mortgaged Property, which acceptance
shall be given only with the prior consent of Beneficiary and Agent, and
which substitute property shall be subject to a first deed of trust and
security interest in favor of Trustee for the benefit of Beneficiary,
and a collateral assignment of leases and rents in favor of Beneficiary
and such other certificates, documents and instruments as may be
reasonably required by Beneficiary, upon completion of said substitution
all awards shall be payable to the Operator.
14.4 In the event of a taking of less than all or
substantially all of a Mortgaged Property, in condemnation or by eminent
domain, or by agreement or conveyance in lieu thereof, provided no Event
of Default has occurred and is continuing hereunder, all awards payable
to Grantor as a result of such taking shall forthwith be paid to and
applied by Beneficiary to restoration of such Mortgaged Property in the
manner provided in the Lease (Grantor Lessor). To the extent that the
net proceeds of such awards exceed the cost of restoration, such excess
shall be paid to and applied by Beneficiary in accordance with Section
14.3 hereof.
14.5 Anything to the contrary herein contained notwithstand-
ing, if at the time of such taking or conveyance, an Event of Default
shall have occurred and be then continuing, or in the event that
Grantor, or the Operator, as the case may be, does not promptly commence
and diligently pursue such repair or restoration to completion in
accordance herewith, the total amount of such award shall be applied in
accordance with Section 14.3 hereof.
14.6 As used in this Article, taking of "all or substantially
all" of the Mortgaged Property shall mean a taking of so much of the
Mortgaged property so as, in the reasonable judgment of Grantor, such
Mortgaged Property cannot be operated on a commercially practicable
basis for its Primary Intended Use (as defined in the Lease (Grantor
Lessor)), taking into account, among other relevant factors the number
of usable beds, the amount of square footage, and the amount of revenues
affected by such taking.
DEED OF TRUST E-2-19
<PAGE>
ARTICLE 15
Senior or Junior Indebtedness
Grantor shall pay all indebtedness secured by any mortgage
creating a senior and prior lien (if any) or junior and subordinate lien
(if any) on the whole or any part of the Mortgaged Property and perform
all covenants, terms and conditions contained in any such mortgage on
the part of Grantor to be performed and observed, all within the periods
provided for payment, performance and observance in any such mortgage,
thereby preventing an event of default from occurring thereunder.
Nothing contained herein shall be deemed to give Beneficiary any rights
to encumber the Mortgaged Property except as set forth in Section 6.8 of
the Loan Agreement.
ARTICLE 16
Government Regulations
Grantor shall promptly comply with all present and future
laws, ordinances, rules, regulations, directives and other requirements
of all governmental authorities whatsoever having jurisdiction over the
Mortgaged Property or the use or occupation thereof; provided, however,
that Grantor, acting alone or through the Operator, shall have the right
to contest the validity or legality of any such governmental requirement
in the manner provided in the provisions of the Lease (Grantor Lessor)
pertaining to permitted contests and Article 6 hereof.
ARTICLE 17
Interest in Mortgaged Property
Except as otherwise expressly permitted by the provisions of
this Deed of Trust relating to permitted contests, and except as the
Loan Agreement may otherwise expressly provide, Grantor shall not,
directly or indirectly, sell, convey, mortgage, pledge, hypothecate,
encumber, lease, assign or otherwise transfer the Mortgaged Property or
any portion thereof or any interest therein, except to the Operator
pursuant to and in accordance with a specific provision in the Lease
(Grantor Lessor) granting such Operator an option to purchase the
Mortgaged Property in which event the purchase price paid therefor shall
be paid to Beneficiary to reduce the indebtedness secured hereby,
without in each instance obtaining the prior written consent of
Beneficiary and Agent. In the event Grantor breaches its obligations
pursuant to this Article 17, then the entire indebtedness secured hereby
shall become immediately due and payable at the option of Beneficiary.
DEED OF TRUST E-2-20
<PAGE>
ARTICLE 18
Impairment of Mortgage
Grantor shall not do or suffer any act or thing to be done, or
omit to do any act or thing, if such act or thing, or such forbearance
or omission, would impair the security of the payment of the
indebtedness secured hereby or the lien of this Deed of Trust.
ARTICLE 19
Recording Fees, Stamp and Other Taxes
Grantor shall pay any and all taxes (including any stamp tax
or mortgage recording tax), charges, filing, registration and recording
fees, excises and levies imposed by any governmental authority by reason
of or in connection with (i) the execution, recordation, assignment or
discharge of this Deed of Trust, or the Notes, the Loan Agreement or any
other Security Instrument, or any other instrument executed and
delivered or assigned to Trustee or Beneficiary in connection with this
Deed of Trust or any mortgage supplemental hereto, any security
instrument with respect to any Personal Property or any instrument of
further assurance, (ii) the exercise by Trustee or Beneficiary of any of
its remedies hereunder, or (iii) the indebtedness secured hereby.
ARTICLE 20
Changes in Tax Laws Relating to Mortgages
In the event of the passage, after the date of this Deed of
Trust, of any law imposing upon Trustee or Beneficiary the obligation to
pay, in whole or in part, the taxes, assessments, charges or liens
herein required to be paid by Grantor, or changing in any way the laws
for the taxation of mortgages or debts secured by mortgages for state or
local purposes or the manner of the collection of any such taxes, so as
to affect this Deed of Trust, then the indebtedness hereby secured
without deduction shall, at the option of Beneficiary, upon thirty (30)
days' written notice to Grantor, become immediately due and payable,
notwithstanding anything contained in this Deed of Trust or any law
heretofore or hereafter enacted; provided, however, that if in the
opinion of Beneficiary's counsel it be lawful in all respects for
Grantor to pay such taxes, assessments, charges or liens imposed under
any such future law or reimburse Trustee or Beneficiary therefor (and
the same will not amount to an exaction of interest in excess of the
highest rate permitted by law), and Grantor lawfully makes payment
thereof or reimburses Trustee or Beneficiary therefor, then the unpaid
balance of the indebtedness hereby secured shall not be so accelerated
on account of the matters hereinabove set forth.
DEED OF TRUST E-2-21
<PAGE>
ARTICLE 21
Amendments
No change, amendment, modification, cancellation or discharge
of this Deed of Trust, or any part hereof, shall be valid unless in
writing and signed by the party to be charged therewith or its
respective successors and assigns.
ARTICLE 22
Collection Costs
In the event that the indebtedness secured by this Deed of
Trust, or any part thereof, is collected by suit or action, or this Deed
of Trust be foreclosed, or in the event said indebtedness or Deed of
Trust is put into the hands of an attorney for collection, suit, action
or foreclosure, or in the event of the foreclosure of any mortgage prior
to or subsequent to this Deed of Trust, in which proceeding Beneficiary
and/or Agent is made a party, or in the event of the bankruptcy of
Grantor, or an assignment by Grantor for the benefit of creditors,
Grantor, its successors or assigns, shall be chargeable with all costs
of collection, including an amount as reasonable attorneys' fees not to
exceed such maximum amount as may be permitted by law, including
reasonable attorneys' fees for all appellate proceedings involved
therein, which shall be due and payable at once; the payment of which
charges and fees, together with all costs and expenses, shall be secured
hereby, and may be recovered in any suit or action hereupon or
hereunder.
ARTICLE 23
Events of Default
The happening and continuance for the period, if any,
hereinafter indicated, of any of the following events shall constitute
an "Event of Default" hereunder:
23.1 The failure of Grantor to pay any amount payable
under this Deed of Trust or any supplement, modification or extension
hereof, unless such failure is cured within the applicable grace period
(or in the absence of any such grace period, within five (5) days of the
due date therefor);
23.2 The occurrence of any breach or default under Article
17, except that, in the event of an involuntary encumbrance, the same
shall not constitute an Event of Default if removed or cured within
thirty (30) days of the occurrence of such breach or default;
23.3 The failure of Grantor to perform any of its other
obligations, covenants, or agreements contained in, or the occurrence of
DEED OF TRUST E-2-22
<PAGE>
a default under, this Deed of Trust and the continuance of such failure
or default for thirty (30) days (or such longer or shorter period of
time as may herein expressly be provided) after written notice thereof
from Beneficiary to Grantor; provided, however, that if such default is
susceptible of cure but such cure cannot be accomplished with reasonable
diligence within said period of time, and if Grantor commences to cure
such default promptly after receipt of notice thereof from Beneficiary,
and thereafter prosecutes the curing of such default with reasonable
diligence, such period of time, shall be extended to such period of time
(not to exceed an additional sixty (60) days) as may be necessary to
cure such default with reasonable diligence;
23.4 If, at any time, Grantor abandons the Mortgaged Property
or any portion thereof;
23.5 A breach or default under any condition or obligation
contained in the Lease (Grantor Lessee) which is not cured within any
applicable cure period provided therein to Grantor;
23.6 The occurrence of any event or condition which gives the
lessor under the Lease (Grantor Lessee) a right to terminate or cancel,
as against the Grantor, the applicable Lease (Grantor Lessee); or
23.7 The occurrence of any Event of Default, as defined
therein, under the Loan Agreement.
ARTICLE 24
No Waiver or Forbearance
No waiver, forbearance, extension of time or other indulgence
shown by Beneficiary to Grantor or to any person now or hereafter
interested herein or in any of the Mortgaged Property or in the Notes or
Security Instruments or any other instrument evidencing indebtedness of
Grantor to Beneficiary with respect to any or any combination of
conditions, covenants or agreements on the part of the Grantor to be
performed or observed as set forth or referred to herein or in the
Notes, the Security Instruments, or said other instruments, shall affect
the right of Beneficiary thereafter to require performance or observance
of the same or any other condition, covenant or agreement.
ARTICLE 25
Beneficiary Appointed Attorney
Beneficiary shall be and hereby is authorized and empowered,
for and in the name or names and on behalf of Grantor and/or
Beneficiary, and for the purposes hereinafter set forth, Beneficiary
shall be and is hereby made, constituted and appointed the true and
lawful attorney-in-fact, irrevocable and coupled with an interest, of
Grantor (with full power of substitution, delegation and revocation):
DEED OF TRUST E-2-23
<PAGE>
25.1 In the event of foreclosure of this Deed of Trust or any
transfer of title to the Mortgaged Property to a third-party purchaser
pursuant to the powers hereinafter granted Beneficiary, to surrender up
the policies of insurance covering such Mortgaged Property and to
collect any amounts due thereunder or, at its option, to transfer its
right, title and interest in and to said policies and the proceeds
thereof to any purchaser of such Mortgaged Property without obligation
to account therefor to any person claiming title to such Mortgaged
Property; provided,
however, that any amounts received by Beneficiary under said policies by
way of refunds, dividends or otherwise, as aforesaid, shall be applied
to the payment of the indebtedness secured hereby, and any surplus shall
be paid over as a surplus on foreclosure;
25.2 In the event of the sale of the Mortgaged Property
pursuant to the powers hereinafter granted, to sell all parcels which
comprise the Mortgaged Property, notwithstanding the fact that the
proceeds of such sale may exceed the amounts then secured hereby;
25.3 To cause the assignment to Beneficiary of any lease,
license, concession, occupancy or other tenancy agreement with respect
to the Mortgaged Property which has not been so assigned by Grantor
after request therefor from Beneficiary;
25.4 If at any time any portion of the Improvements or
Personal Property shall be unprotected, unguarded, vacant or deserted,
to employ, at its option, watchmen for the Improvements and Personal
Property and to expend any monies deemed by it necessary to protect the
same from waste, depredation or injury; and the amount of monies
expended for such purposes, with interest from the time of payment at
the highest rate then prevailing under the terms of the Notes for
overdue payments of principal, shall be due from and payable by Grantor
to Beneficiary on demand and shall be added to the indebtedness of
Grantor to Beneficiary, bear interest at the highest rate then
prevailing under the terms of the Notes for overdue payments of
principal, and together with such interest, be secured by this Deed of
Trust;
25.5 In any action or other proceeding with respect to the
Mortgaged Property in which Beneficiary shall become a party or which
may affect any rights of Beneficiary hereunder with respect to such
Mortgaged Property or the lien of this Deed of Trust thereon, to appear,
prosecute, defend, intervene and retain counsel in such action or
proceeding and to take such other and further action in connection
therewith as Beneficiary and its successors or assigns, shall deem
advisable; and the costs thereof (including reasonable attorneys' fees
and all applicable statutory costs, allowances and disbursements) shall
be paid by Grantor to Beneficiary on demand and, until paid, shall be a
lien on such Mortgaged Property, prior to any right or title to,
interest in or claim upon such Mortgaged Property attaching or accruing
subsequent to the lien of this Deed of Trust, and shall be deemed to be
secured by this Deed of Trust; and
DEED OF TRUST E-2-24
<PAGE>
25.6 Upon the occurrence of any Event of Default hereunder,
to seek the immediate appointment by any court of competent jurisdiction
of a receiver for the Mortgaged Property (which receiver, to the extent
permitted by law, may be Beneficiary), and the business of Grantor in
connection therewith and of the rents and profits arising therefrom,
which receiver shall be entitled to immediate possession of such
Mortgaged Property, whether or not occupied by Grantor, subject,
however, to the rights of the Operator as set forth in any
subordination, non-disturbance and attornment agreement now or hereafter
entered into between Beneficiary and the Operator or any other lessee,
sublessee or occupant of such Mortgaged Property. Beneficiary shall be
entitled to the appointment of such a receiver as a matter of right
without consideration of the value of the Mortgaged Property or other
security for the amounts due Beneficiary or the solvency of any person
or corporation liable for the payment of such amounts. If Grantor is
then in possession of such Mortgaged Property or any portion thereof,
Grantor shall immediately, upon the appointment of such receiver, vacate
such Mortgaged Property or such portion thereof, as the case may be, or
pay a reasonable rental for the use thereof, during such receivership,
to be agreed upon between said receiver and Grantor or to be fixed by
the court in which said receiver shall have been appointed; and the
relationship between said receiver and Grantor shall be that of landlord
and tenant.
ARTICLE 26
Beneficiary's and Trustee's Rights Upon Default
Upon the occurrence of any Event of Default hereunder
Beneficiary shall have the right, forthwith, at its election, to
exercise any and all rights and remedies granted to Beneficiary under
this Deed of Trust or otherwise available to Beneficiary at law or in
equity, all of which rights and remedies shall be cumulative and not
exclusive, and which shall include, without limitation, the rights set
forth in Section 32.3 hereof and the following:
26.1 Beneficiary shall have the right, forthwith, at its
election to declare the entire indebtedness secured hereby immediately
due and payable.
26.2 Subject to the rights of the Operator or any other
tenant of the Mortgaged Property pursuant to a subordination, non-
disturbance and attornment agreement between Beneficiary and such
Operator or tenant:
26.2.1 Beneficiary shall have the right forthwith to commence
foreclosure proceedings and/or, at its election, and without further
notice or demand and without the commencement of any action to foreclose
this Deed of Trust, to enter immediately upon and take possession of the
Mortgaged Property without further consent or assignment by Grantor,
with the right to lease the Mortgaged Property, or any part thereof, and
to collect and receive, with or without the appointment of a receiver,
DEED OF TRUST E-2-25
<PAGE>
at its sole option, all of the rents, issues and profits, and all other
amounts past due, due or to become due to Grantor by reason of its
ownership of the Mortgaged Property, and to apply the same, after the
payment of all necessary charges and expenses in connection with the
operation of the Mortgaged Property (including any managing agent's
commission, at the option of Beneficiary), on account of interest and
principal amortization under the Notes, taxes, water and sewer charges,
assessments and insurance premiums with respect to the Mortgaged
Property, and any advance made by Beneficiary for improvements,
alterations or repairs to the Mortgaged Property or on account of any
other indebtedness hereby secured. Grantor hereby irrevocably appoints
Beneficiary as its attorney-in-fact (which appointment is coupled with
an interest), to institute summary proceedings against any tenant,
licensee, concessionaire or other occupant of any portion of the
Mortgaged Property who shall fail to comply with the provisions of any
covenant, agreement or condition applicable to the possession or
occupancy of the Mortgaged Property by such tenant, licensee,
concessionaire or other occupant. If Grantor or any other person
claiming by, through or under it, is occupying all or any part of the
Mortgaged Property, it is hereby agreed that Grantor and each such other
person shall, at the option of Beneficiary, either immediately surrender
possession of the Mortgaged Property to Beneficiary and vacate the
premises so occupied or pay a reasonable rental for the use thereof,
monthly in advance, to Beneficiary;
26.2.2 Beneficiary shall have the right forthwith, at its
election, to reduce any claim to judgment;
26.2.3 Beneficiary shall have the right forthwith, at its
election, to foreclose any and all liens and security interests granted
to the Trustee or to Beneficiary by this Deed of Trust and otherwise
enforce any and all rights and remedies the Trustee, or Beneficiary may
have in or with respect to the Mortgaged Property or any part thereof;
26.2.4 Beneficiary shall have the right forthwith, at its
election, to request Trustee to proceed with foreclosure of this Deed of
Trust and the lien hereby granted and created as to the Mortgaged
Property. In such event, the Trustee is hereby authorized and
empowered, and it shall be his duty, subject to any mandatory
requirements of applicable law, to sell or have sold the Mortgaged
Property, or interests therein or any part thereof at one or more sales,
as an entirety or in parcels, at such place or places and otherwise in
such manner and upon such notice as may be required by applicable law or
by this Deed of Trust, or in the absence of any such requirement, as
Beneficiary or Trustee may deem appropriate. After such sale, Trustee
shall make to the purchaser or purchasers at such sale good and
sufficient deeds and assignments, conveying the Mortgaged Property, or
part thereof, so sold to such purchaser or purchasers. Sale of a part
of the Mortgaged Property shall not exhaust the power of sale, but sales
may be made from time to time until the indebtedness secured hereby is
paid and performed in full. It shall not be necessary to have present
or to exhibit at any such sale any of the accessories. The Beneficiary
may direct the Trustee to sell, not only the real property, but also the
DEED OF TRUST E-2-26
<PAGE>
Collateral (as hereinafter defined) and other interests constituting a
part of the Mortgaged Property, or any part thereof, along with the
Land, or any part thereof, all as a unit and as part of a single sale,
or may sell any part of the Mortgaged Property separately from the
remainder the Mortgage Property.
26.2.5 Beneficiary shall have the right forthwith, at its
election, at once or at any time while any portion of the indebtedness
secured hereby remains unpaid and without a declaration that the
indebtedness is due and payable, to enforce this trust and direct the
Trustee to sell the Mortgaged Property subject to such unmatured
indebtedness and the liens securing its payment, as provided in
Subsection 26.2.4. After such sale, Trustee shall make due conveyance
to the purchaser or purchasers. Sales made without maturing the
indebtedness may be made hereunder whenever there is an Event of Default
in the payment of any sum due on the indebtedness without exhausting the
power of sale granted hereby and without affecting in any way the power
of sale granted under subsection 26.2.4 with respect to the 26.2.4
unmatured balance of the indebtedness secured hereby or the liens and
security interests securing payment of the indebtedness. In any deed or
deeds given by the Trustee under Subsection 26.2.4 or this subsection,
any and all statements of fact or other recitals therein made as to the
identity of the Trustee or the Beneficiary, or as to the occurrence of
an Event of Default, or as to the acceleration of the maturity of the
indebtedness, or any part thereof, or as to the request to sell, notice
of sale, time, place, terms, and manner of sale, and receipt,
distribution, and application of the money realized therefrom, or as to
any other act or thing having duly been done by Trustee or Beneficiary,
shall be taken by all courts of law and equity as prima facie evidence
that such statement or recitals are true and correct;
26.2.6 Beneficiary shall have the right forthwith, at its
election to proceed by suit or suits, at law or in equity, to foreclose
the liens hereby created as against all or any part of the Mortgaged
Property, and to have all or any part of the Mortgaged Property sold
under the judgment or decree of a court of competent jurisdiction; and
26.2.7 Beneficiary shall have the right forthwith, at its
election to apply against the indebtedness, as a matter of right and
without regard to the sufficiency of the security, and without any
showing of insolvency, fraud, or mismanagement on the part of the
Grantor, and without the necessity of filing any judicial or other
proceeding other than the proceeding for appointment of a receiver or
receivers, the Mortgaged Property, or any part of it, and of the income,
rents, issues and profits thereof; and
26.2.8 Beneficiary shall have the right forthwith, at its
election, to exercise any and all other remedies available at law or in
equity, including, but not limited to, the additional rights, if any,
set forth on Schedule II hereto and incorporated herein by reference.
26.3 Subject to Grantor's right to cure as provided in
Article 8, Beneficiary may apply against the indebtedness secured
DEED OF TRUST E-2-27
<PAGE>
hereby, in such manner as Beneficiary may determine any of the Deposited
Funds then held by Beneficiary.
ARTICLE 27
Beneficiary's Rights to Release and Negotiate
27.1 Without affecting the liability of Grantor, or any other
person (except any person expressly released in writing), for payment of
the indebtedness hereby secured or for the performance of any
obligations set forth or referred to in this Deed of Trust, the Notes or
the Security Instruments, and without affecting any lien or other
security not expressly released in writing, Beneficiary at any time, and
from time to time, either before or after maturity of the Notes, and
without notice or consent, may:
27.1.1 release any person liable for payment of said
indebtedness, or for the performance of any of said obligations;
27.1.2 make any agreement extending the time, or otherwise
altering the terms of payment of said indebtedness, or modifying or
waiving any of said obligations, or subordinating, modifying or
otherwise dealing with the lien securing payment of the Notes;
27.1.3 exercise or refrain from exercising or waive any right
Beneficiary may have;
27.1.4 accept additional security of any kind; and/or
27.1.5 release or otherwise deal with any property, real or
personal, securing said indebtedness, including all or any part of the
Mortgaged Property.
27.2 In the event that Grantor conveys its interest in the
Mortgaged Property to a third party or parties, Beneficiary may, without
notice to Grantor, deal with such successor or successors in interest
with reference to this Deed of Trust and the Notes secured hereby,
either by way of forbearance on the part of Beneficiary or extension of
the time of payment of the indebtedness or any sum hereby secured,
without in any way modifying or affecting the conveyance under this Deed
of Trust or the original liability of Grantor for the indebtedness
secured hereby, either in whole or in part. Nothing in this paragraph,
however, shall be deemed to render unnecessary the consent of
Beneficiary to the conveyance by Grantor of any interest in the
Mortgaged Property, as previously required hereunder.
27.3 Except as otherwise specifically provided herein, all
payments on the indebtedness and advancements, if any, hereby secured,
and all proceeds from foreclosure sales, shall be applied first to the
satisfaction of all unpaid and accrued liabilities arising from or
relating to the ownership or operation of the Mortgaged Property, second
to advancements made to or on behalf of Grantor, if any, in the order of
DEED OF TRUST E-2-28
<PAGE>
their maturity, and third in the order of priority established in
Section 2.10 of the Loan Agreement.
ARTICLE 28
Reaffirmation of Security
28.1 Grantor, within fifteen (15) days after request by
Beneficiary, shall furnish to Beneficiary a written statement, duly
acknowledged, of the amount of the unpaid balance of the Notes, of the
existence of any offsets or defenses against the Notes, and such other
information as Beneficiary may reasonably request.
28.2 At any time and from time to time until payment of the
indebtedness secured hereby and upon request of Beneficiary, Grantor
shall promptly execute, notarize and deliver to Beneficiary such
additional instruments as Beneficiary may reasonably require to further
evidence the lien of this Deed of Trust, correct any defects contained
herein and further to protect the security position of Beneficiary with
respect to the property subject to this Deed of Trust, including,
without limitation, additional chattel mortgages, security agreements,
financing statements, continuation statements and the like, covering
items of personal property, replacements thereof and additions thereto.
28.3 If the lien, security interest, validity or propriety of
this Deed of Trust, or if title or any of the rights of Grantor, Trustee
or Beneficiary in or to the Mortgaged Property, shall be endangered or
legally challenged, or shall be attacked directly or indirectly, or if
any action or proceeding is instituted against Grantor, Trustee or
Beneficiary with respect thereto, Grantor shall promptly notify
Beneficiary thereof to the extent Grantor has notice thereof and shall
diligently endeavor to cure any defect on which such challenge, action
or proceeding is based except to the extent caused by the act or
omission of Beneficiary, and shall take all necessary and proper steps
for the defense of such action or proceeding, including the employment
of counsel, the prosecution or defense of litigation and, subject to
Beneficiary's and Agent's approval, such approval not to be unreasonably
withheld, the compromise, release or discharge of any and all adverse
claims. If Grantor shall have failed to comply with its obligations
under this Section 28.3, Beneficiary (whether or not named as a party to
such actions or proceedings) is hereby authorized and empowered (but
shall not be obligated) to take such steps as Beneficiary may reasonably
deem necessary or proper for the defense of any such action or
proceeding or the protection of the lien, security interest, validity or
priority of this Deed of Trust or of such title or rights, including the
employment of counsel, the prosecution or defense of litigation, the
compromise, release or discharge of such adverse claims, the purchase of
any tax title and the removal of such prior liens and security
interests. Grantor shall immediately reimburse Beneficiary for all
reasonable expenses (including attorney's fees and disbursements)
incurred by Beneficiary in connection with the foregoing matters. All
such costs and expenses of Beneficiary, until reimbursed by Grantor,
DEED OF TRUST E-2-29
<PAGE>
shall become part of the indebtedness secured hereby and shall be deemed
to be secured by this Deed of Trust.
ARTICLE 29
Surrender Possession
In the event of any sale of the Mortgaged Property under the
provisions hereof, Grantor shall forthwith surrender possession thereof
to the purchaser, subject however, to the right of the Operator under
the Lease (Grantor Lessor) and in accordance with the terms of any
subordination, non-disturbance and attornment agreement entered into
between the Operator and Beneficiary. Upon failure to do so, Grantor
shall thereupon be a tenant at sufferance of such purchaser, and upon
its failure to surrender possession of the Mortgaged Property upon
demand, such purchaser, his heirs or assigns, shall be entitled to
institute and maintain an appropriate action for possession of the
Mortgaged Property.
ARTICLE 30
Improvements and Personal Property Subject Hereto
As between the parties hereto and all others except holders of
prior liens, it is agreed that all additions to the Improvements,
including all machinery, equipment and fixtures useful in the operation
and management of the Mortgaged Property regardless of the manner in
which they are attached to the Improvements, which are owned by Grantor
and are a part of any of the Land (or shall become a part thereof if
hereafter placed thereon), are, or shall be upon affixation, subject to
the lien hereof. This provision shall be cumulative and not exclusive.
This provision shall not apply to items installed by the Operator or any
other tenant which remain the property of the tenant pursuant to the
terms of the tenant's lease.
ARTICLE 31
Preservation of Easements and Licenses
Grantor shall maintain, preserve and renew all rights of way,
easements, grants, privileges, licenses and franchises necessary for the
use of the Mortgaged Property from time to time and shall not, without
the prior consent of Beneficiary and Agent, except as otherwise may be
required under the Lease (Grantor Lessor), (i) initiate, join in or
consent to any private restrictive covenant or other public or private
restriction as to the use of the Mortgaged Property, (ii) initiate or
support by taking action any zoning reclassification of the Mortgaged
Property which reclassification would prohibit the use of the Mortgaged
Property as currently operated, (iii) modify, amend or supplement any of
the Permitted Exceptions except to eliminate any such encumbrance or
reduce its effect on the Mortgaged Property, (iv) impose any restrictive
DEED OF TRUST E-2-30
<PAGE>
covenants or encumbrances upon any of the Land or the Improvements
(other than easements of access and operation to public utility
companies granted in connection with the delivery of utility service by
such company to any of the Land and the Improvements), execute or file
any subdivision plat affecting the Land or the Improvements, transfer
any air rights or development rights or consent to the annexation of the
Mortgaged Property to any municipality, or (v) permit or suffer the
Mortgaged Property to be used by the public or any person in such manner
as might make possible a claim of adverse usage or possession of or any
implied dedication or easement. Grantor shall, however, comply with all
restrictive covenants which may at any time affect the Mortgaged
Property, and all zoning ordinances and other public or private
restrictions as to the use of the Mortgaged Property.
ARTICLE 32
Security Agreement
32.1 It is the intent of the parties hereto that this
instrument shall constitute a security agreement within the meaning of
the Code with respect to the Personal Property above referred to and
with respect to any other portion of the Mortgaged Property that
constitutes personal property under the Code, and all replacements
thereof, substitutions therefor, additions thereto and proceeds thereof
(said property being sometimes hereinafter referred to as the
"Collateral"), and Grantor hereby grants a security interest therein and
said security interest shall attach thereto for the benefit of
Beneficiary to secure the indebtedness evidenced by the Notes and all
other indebtedness secured by this Deed of Trust, and all other sums and
charges which may become due hereunder or thereunder.
32.2 Grantor warrants and covenants that:
32.2.1 no financing statement covering any of the Collateral
or any proceeds thereof is on file in any public office; and except for
the security interest granted hereby, Grantor is, or upon acquiring
rights in any of the Collateral will be, the owner of the Collateral
free from any other lien, security interest or encumbrance other than
Permitted Exceptions; and Grantor shall defend the security interest of
Beneficiary in the Collateral against claims and demands of all persons
at any time claiming the same or any interest therein; and
32.2.2 at the request of Beneficiary from time to time,
Grantor shall join with Beneficiary in executing one or more financing
and/or continuation statements pursuant to the Code in form satisfactory
to Beneficiary and shall pay the costs of filing or recording the same
in all public offices wherever filing or recording is deemed by
Beneficiary to be necessary or desirable, and to the extent permitted by
law, Grantor hereby further authorizes Beneficiary to file such
financing and continuation statements and amendments thereto without the
signature of Grantor or to sign such financing and continuation
statements and amendments on behalf of Grantor (Beneficiary being for
DEED OF TRUST E-2-31
<PAGE>
such purposes by this instrument duly and irrevocably appointed as
Grantor's agent and attorney-in-fact, coupled with an interest and with
full power of substitution, delegation and revocation).
32.3 Upon the occurrence of an Event of Default under this
Deed of Trust, Beneficiary, pursuant to the Code and subject to any
rights of the Operator under the Lease (Grantor Lessor) in accordance
with the terms and provisions of any subordination, non-disturbance and
attornment agreement entered into between the Operator and Beneficiary,
shall have the right, at its option:
32.3.1 to proceed as to both the real and personal property
covered by this Deed of Trust in accordance with its rights and remedies
in respect of said real property, in which event (i) the default
provisions of the Code shall not apply, and (ii) the sale of the
Collateral in conjunction with and as one parcel with said real estate
(or any portion thereof) shall be deemed to be a commercially reasonable
manner of sale; or
32.3.2 to proceed as to the Collateral separately from the
Land and Improvements, in which event the requirement of reasonable
notice shall be met by mailing notice of the sale, postage prepaid, to
Grantor or any other person entitled thereto at least ten (10) days
before the time of the sale or other disposition of any of the
Collateral.
32.4 The Collateral shall be kept at the Land, and until
installed will be suitably and safely stored thereon.
32.5 Grantor shall not remove or permit to be removed from
the Land any of the Collateral without the prior written consent of
Beneficiary and Agent.
32.6 The foregoing shall not prohibit Grantor or the Operator
under the Lease (Grantor Lessor) or any other tenant from (a) making
replacements of fixtures and equipment from time to time in the usual
course of business or (b) leasing or purchasing fixtures and equipment
on conditional bill of sale, security agreement or other title retention
agreement, and the lien of Beneficiary thereon shall be subject and
subordinate to the rights or lien of the lessor, conditional vendor or
other lienor thereof; provided, however, that Grantor shall duly and
punctually pay, perform, observe and comply with, each and every
obligation of Grantor under any such lease, conditional bill of sale,
security agreement or other title retention agreement to the end that no
default shall occur thereunder which would allow any tenant, conditional
vendor or other lienor to reclaim possession of the property in
question.
32.7 Grantor shall, from time to time, on request of
Beneficiary, deliver to Beneficiary an inventory of the Collateral in
reasonable detail, including an itemization of all items leased to
Grantor or subject to a conditional bill of sale, security agreement or
other title retention agreement.
DEED OF TRUST E-2-32
<PAGE>
32.8 To the extent permitted by law, a carbon, photographic
or other reproduction of this Deed of Trust or a financing statement
shall be sufficient as a financing statement.
ARTICLE 33
Certain Environmental Matters
33.1 Grantor covenants that except in compliance with all
statutes, laws, ordinances, rules and regulations, Grantor (i) has not
stored and shall not store and has not disposed and shall not dispose of
any hazardous wastes, contaminants, oils, radioactive or other
materials, (including, without limitation, any material or substance
which is (a) any chemical, material or substance defined as or included
in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," or "toxic substances" or any other formulations
intended to define, list or classify substances by reason of deleterious
properties under any applicable Federal, state or local statutes, laws,
ordinances, rules or regulations, (b) any biomedical wastes, (c) any
oil, petroleum or petroleum derived substance, any drilling fluids,
produced waters and other wastes associated with the exploration,
development or production of crude oil, any flammable substances or
explosives, any radioactive materials, any toxic wastes or substances or
any other materials or pollutants which (y) pose a hazard to the
Mortgaged Property or to persons on or about such Mortgaged Property or
(z) cause such Mortgaged Property to be in violation of any applicable
Federal, state or local statutes, laws, ordinances, rules or
regulations, (d) asbestos in any form which is or could become friable,
urea formaldehyde foam insulation, electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million, and (e) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any Federal, state or local statutes, laws,
ordinances, rules or regulations or that may or could pose a hazard to
the health and safety of the owners, occupants or any persons
surrounding the Mortgaged Property (collectively, "hazardous
substances")) on the Mortgaged Property; (ii) has not transported or
arranged for the transportation of and shall not transport or arrange
for the transportation of any hazardous substances, (iii) has not
suffered or permitted, and shall not permit or suffer, any owner,
tenant, occupant or Operator of the Mortgaged Property to do any of the
foregoing; and (iv) has not been identified in any litigation,
administrative proceeding or investigation as a responsible party for
any liability under any Federal, state or local statutes, laws,
ordinances, rules or regulations relating to hazardous substances.
33.2 Grantor covenants and agrees to maintain the Mortgaged
Property at all times free of any hazardous substance (except in
compliance with all statutes, laws, ordinances, rules and regulations).
Grantor agrees promptly: (i) to notify Beneficiary in writing of any
change in the nature or extent of hazardous substances maintained on or
DEED OF TRUST E-2-33
<PAGE>
with respect to the Mortgaged Property; (ii) to transmit to Beneficiary
copies of any citations, orders, notices or other material
communications received with respect thereto; (iii) to observe and
comply with any and all statutes, laws, ordinances, rules and
regulations, licensing requirements or conditions relating to the use,
maintenance and disposal of hazardous substances and all orders or
directives from any official, court or agency of competent jurisdiction
relating to the use or maintenance or requiring the removal, treatment,
containment or other disposition thereof; (iv) to pay or otherwise
dispose of any fine, charge or imposition related thereto which, if
unpaid, would constitute a lien on the Mortgaged Property, unless (a)
contested in accordance with and in the manner provided in the Lease
(Grantor Lessor) and Article 6 hereof and (b) the right to the use of
and the value of the Mortgaged Property is not materially and adversely
affected thereby.
ARTICLE 34
Invalidity of Provisions
34.1 All agreements between Grantor and Beneficiary contained
herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Notes,
or otherwise, shall the amount paid or agreed to be paid to Beneficiary
for the use, forbearance or detention of the principal amount evidenced
by the Notes and secured by this Deed of Trust exceed the maximum
permissible under applicable law the benefit of which may be asserted by
the Grantor as a defense, and if, from any circumstance whatsoever,
fulfillment of any provision of the Notes and this Deed of Trust, at the
time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, or if from any
circumstances Beneficiary should ever receive as interest under the
Notes or this Deed of Trust such an excessive amount, then, ipso facto,
the amount which would be excessive interest shall be applied to the
reduction of the principal balance as evidenced by the Notes and secured
by this Deed of Trust and not to the payment of interest. This
provision shall control every other provision of all agreements between
Grantor and Beneficiary.
34.2 In case any one or more of the provisions contained in
the Notes or in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect any other provision
hereof or thereof, but each shall be construed as if such invalid,
illegal or unenforceable provision had never been included.
DEED OF TRUST E-2-34
<PAGE>
ARTICLE 35
Notices
All notices, requests, demands, consents or other
communications given hereunder or in connection herewith shall be deemed
given when given at the addresses and in the manner provided in Section
5.8 of the Loan Agreement.
ARTICLE 36
General Provisions
36.1 Beneficiary and the Operator intend to enter into a
subordination, non-disturbance and attornment agreement pursuant to
which the Lease (Grantor Lessor) will be subordinated to this Deed of
Trust on the terms and conditions set forth therein. Notwithstanding
the foregoing, at the option of Beneficiary this Deed of Trust shall
become subject and subordinate, in whole or in part, (but not with
respect to priority of entitlement to insurance proceeds or any award in
condemnation) to any and all leases of all or any part of the Mortgaged
Property upon the execution by Beneficiary, and if necessary, by
Trustee, and recording thereof, at any time hereafter, with the
appropriate land records in and for the county wherein such Mortgaged
Property is situated, of a unilateral declaration to that effect.
36.2 The captions in this Deed of Trust are for convenience
and reference only and do not define, limit or describe the scope of the
provisions hereof.
36.3 This Deed of Trust shall inure to the benefit of and
bind (i) the successors and assigns of Trustee and Beneficiary and (ii)
the heirs, administrators, executors, successors and assigns of Grantor,
as if all the aforesaid were herein mentioned whenever the parties
hereto are referred to. This instrument shall be so construed that
whenever applicable with reference to any of the parties hereto, the use
of the singular number shall include the plural number, the use of the
neuter gender with respect to Grantor shall include the masculine and
feminine gender, and shall likewise be so construed as applicable to and
including a corporation or corporations or any other entity that may be
a party or parties hereto.
36.4 Neither this Deed of Trust nor any provision hereof may
be waived, changed, amended, discharged or terminated orally.
36.5 This Deed of Trust shall be and the Loan Agreement and
the other Security Instruments provide that they are to be governed by,
and construed and enforced in accordance with, the laws of the State of
New York. Notwithstanding such provisions, however, (i) matters
respecting title to the Mortgaged Property and the creation, perfection,
priority and foreclosure of liens on, and security interests in, the
Mortgaged Property shall be governed by, and construed and enforced in
DEED OF TRUST E-2-35
<PAGE>
accordance with, the internal law of the state or commonwealth in which
the Mortgaged Property is situated without giving effect to the
conflicts-of-law rules and principles of such state or commonwealth;
(ii) Grantor agrees that whether or not deficiency judgments are
available under the laws of the state or commonwealth in which the
Mortgaged Property is situated after a foreclosure (judicial or
nonjudicial) of the Mortgaged Property, or any portion thereof, or any
other realization thereon by Beneficiary or any of the Lenders,
Beneficiary and the Lenders shall have the right to seek such a
deficiency judgment against Grantor in other states or foreign
jurisdictions; (iii) Grantor agrees that, to the extent Trustee,
Beneficiary or any of the Lenders obtain a deficiency judgment in any
other state or foreign jurisdiction then such party shall have the right
to enforce such judgment in the state or commonwealth in which the
Mortgaged Property is situated, as well as in other states or foreign
jurisdictions[California only:, including, without limitation, the State
of California; (iv) without limiting the generality of the foregoing,
Trustor hereby waives, to the maximum extent permitted by law, any
rights it may have under the California Code of Civil Procedure Sections
580d and 726 with respect to the Mortgaged Property and the enforcement
or realization by Beneficiary of its rights and remedies under this Deed
of Trust or with respect to the Mortgaged Property; and (v) hereby
agrees that no action, proceeding or judgment initiated, pursued or
obtained by Trustee, Beneficiary or any of the Lenders in the State of
New York with respect to the Mortgaged Property or this Deed of Trust
shall be considered a "judgment" for the purposes of such Section 580d
or an "action" for the purposes of such Section 726.].
36.6 Beneficiary shall not be deemed to be a partner or joint
venturer with Grantor for any reason, including, without limitation, on
account of its becoming a mortgagee in possession or exercising any
rights pursuant to this Deed of Trust or any other Security Instrument
or otherwise.
36.7 The condition of this Deed of Trust is such that if
the Notes shall be well and truly paid according to their respective
tenor, and if all of the obligations therein and herein imposed upon
Grantor shall be fully performed, then this Deed of Trust shall be null
and void, otherwise to remain in full force and effect.
36.8 NOTWITHSTANDING ANY OTHER PROVISION IN THIS DEED OF
TRUST, THE NOTES OR ANY OTHER SECURITY INSTRUMENT, GRANTOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN CONNECTION WITH, OR WITH RESPECT TO, ANY SUIT, ACTION OR OTHER LEGAL
PROCEEDING RELATING TO THIS DEED OF TRUST OR THE NOTES OR ANY OF THE
OTHER SECURITY INSTRUMENTS, ANY RIGHT TO A JURY TRIAL.
36.9 If both the lessor's and lessee's estate under any
lease, including, without limitation, any Lease (Grantor Lessee), or any
portion thereof which constitutes a part of the Mortgaged Property shall
at any time become vested in one owner, this Deed of Trust and the lien
created hereby shall not be destroyed or terminated by application of
the doctrine of merger unless Beneficiary so elects as evidenced by
DEED OF TRUST E-2-36
<PAGE>
recording a written declaration so stating and, unless and until
Beneficiary so elects, Beneficiary shall continue to have and enjoy all
of the rights and privileges of Beneficiary as to the separate estates.
In addition, upon the foreclosure of the lien created by this Deed of
Trust on the Mortgaged Property pursuant to the provisions hereof, any
leases or subleases then existing and affecting all or any portion of
the Mortgaged Property shall not be destroyed or terminated by
application of the law of merger or as a matter of law or as a result of
such foreclosure unless Beneficiary or any purchaser at such foreclosure
shall so elect. No act by or on behalf of Beneficiary or any such
purchaser shall constitute a termination of any lease or sublease unless
Beneficiary or such purchaser shall give written notice thereof to such
tenant or subtenant.
36.10 Grantor represents and warrants that (i) it holds good
and marketable fee simple title to the Mortgaged Property (other than
the Leasehold Estates) and, pursuant to the Lease (Grantor Lessee) and
filed or recorded memoranda thereof, it holds a good and valid leasehold
estate in and record title to each Leasehold Estate; (ii) it has
authority to grant this Deed of Trust on the same; (iii) the Mortgaged
Property is free and clear of all liens and encumbrances whatsoever,
except the Permitted Exceptions; and (iv) it will forever warrant and
defend title to the Mortgaged Property against the lawful claims of all
persons until all the indebtedness has been satisfied or performed in
full.
ARTICLE 37
Leasehold Protections
37.1 If a leasehold estate or any other right, title or
interest of Grantor under a Lease (Grantor Lessee) constitutes a portion
of the Mortgaged Property, Grantor shall, within ten days after written
request therefor by Beneficiary, deliver to Beneficiary a true, correct
and complete copy of the applicable lease and all amendments thereto and
memoranda thereof and Grantor agrees not to amend, change, terminate or
modify, in a material or adverse manner, any Lease (Grantor Lessee) or
any interest therein without the prior written consent of both
Beneficiary and Agent. Consent to one amendment, change, agreement or
modification shall not be deemed to be a waiver of the right to require
consent to other, future or successive amendments, changes, agreements
or modifications. Grantor agrees to perform all obligations and
agreements under the Lease (Grantor Lessee) and shall not take any
action or omit to take any action which would effect or permit the
termination of the Lease (Grantor Lessee). Grantor agrees to promptly
notify Beneficiary in writing with respect to any default or alleged
default by any party thereto and to deliver to Beneficiary copies of all
notices, demands, complaints or other communications received or given
by Grantor with respect to any such default or alleged default.
Beneficiary after receipt of Agent's prior written consent, shall have
the option to cure any such default of Grantor and to perform any or all
of Grantor's obligations thereunder. All sums expended by Beneficiary
DEED OF TRUST E-2-37
<PAGE>
in curing any such default shall be secured hereby and shall be
immediately due and payable without demand or notice and shall bear
interest from date of expenditure at the rate of default interest
specified in Section 2.4(b) of the Loan Agreement.
ARTICLE 38
Nonliability of HRPT Trustees
38.1 THE DECLARATION OF TRUST ESTABLISHING GRANTOR, DATED
OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH
AND REHABILITATION PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT
OF GRANTOR SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, GRANTOR. ALL
PERSONS DEALING WITH GRANTOR, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS
OF GRANTOR FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
ARTICLE 39
Trustee
Section 39.1 Trustee may resign by the giving of notice of
such resignation in writing addressed to Beneficiary or be removed at
any time with or without cause by an instrument in writing duly executed
by Beneficiary. In case of the death, resignation or removal of
Trustee, a successor Trustee may be appointed by Beneficiary without
other formality than an appointment and designation in writing unless
otherwise required by applicable law. Such appointment and designation
will be full evidence of the right and authority to make the same and of
all facts therein recited, and upon the making of any such appointment
and designation, this Deed of Trust will vest in the named successor
trustee all the right, title and interest of Trustee in the Mortgaged
Property and said successor will thereupon succeed to all the rights,
powers, privileges, immunities and duties hereby conferred upon Trustee;
provided, however, that Beneficiary may at its option, appoint and
designate several successor trustees, and in such manner, appoint and
designate a different successor trustee for each county wherein a
portion of the Mortgaged Property is located, as described in such
written appointment and designation, and upon the making of any such
appointment and designation, this Deed of Trust will vest in each such
named successor trustee all of the right, title and interest of Trustee
in that portion of the Mortgaged Property ascribed to such named
successor trustee, and each such named successor trustee will thereupon
succeed to all the rights, powers, privileges, immunities and duties
hereby conferred upon Trustee in that portion of the Mortgaged Property
ascribed to such named successor trustee. All references herein to
DEED OF TRUST E-2-38
<PAGE>
Trustee will be deemed to refer to the trustee or trustees from time to
time acting hereunder.
Section 39.2 At any time, or from time to time without
liability therefor and without notice, upon written request of
Beneficiary and presentation of this Deed of Trust and the Notes for
endorsement, and without affecting the personal liability of any person
for payment of the indebtedness secured hereby or the effect of this
Deed of Trust upon the remainder of the Mortgaged Property, Trustee may
(a) reconvey any part of the Mortgaged Property, (b) consent in writing
to the making of any map or plat thereof, (c) join in granting any
easement thereon, or (d) join in any extension agreement or any
agreement subordinating the lien or charge hereof.
Section 39.3 To the extent Trustee's signature is necessary
on any full reconveyance of this Deed of Trust then, upon written
request of Beneficiary stating that all sums secured hereby have been
paid and upon surrender of this Deed of Trust and the Notes to Trustee
for cancellation and retention (or disposal in accordance with
applicable law) and upon payment by Grantor of Trustee's fees, Trustee
shall reconvey to Grantor, or to the person or persons legally entitled
thereto, without warranty, any portion of the Mortgaged Property then
held hereunder. The recitals in such reconveyance of any matters or
facts shall be conclusive proof of the truthfulness thereof. The
grantee in any reconveyance may be described as "the person or persons
legally entitled thereto."
Section 39.4 Beneficiary shall indemnify Trustee against all
claims, actions, liabilities, judgments, costs, attorneys' fees or other
charges of whatsoever kind or nature made against or incurred by
Trustee, and arising out of the performance by Trustee of the duties of
Trustee hereunder.
DEED OF TRUST E-2-39
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
____________________ By: ______________________
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
___________________
Print Name:
By: _______________________
John G. Murray
Treasurer
[Seal]
S-1
<PAGE>
[CA, AZ]
IN WITNESS WHEREOF, Trustor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
____________________ By: _______________________
Print Name: David J. Hegarty
Chief Financial Officer and
Executive Vice President
___________________
Print Name:
By: ________________________
John G. Murray
Treasurer
[Seal]
S-1
[CA, AZ]
<PAGE>
[WA]
IN WITNESS WHEREOF, Grantor has caused this instrument to be
duly executed under seal as of the date first above written.
PLEASE BE ADVISED THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, OR FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES AS TO BOTH:
By:
Print Name David J. Hegarty
Chief Financial Officer and
Executive Vice President
Print Name
By:
John G. Murray
Treasurer
[Seal]
S-1
[WA]
<PAGE>
[NC]
IN WITNESS WHEREOF, Grantor has caused this instrument to be
duly executed under seal as of the date first above written.
HEALTH AND REHABILITATION PROPERTIES
TRUST, a Maryland real estate
investment trust
WITNESSES:
By:
Print Name: John G. Murray
Treasurer
Print Name:
ATTEST:
By:
David J. Hegarty
Its: Assistant Secretary
[Seal]
S-1
[NC]
<PAGE>
[CO]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 1994, before me personally
appeared David J. Hegarty, Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, to me known and
known by me to be the party executing the foregoing instrument for and
on behalf of the Trustees of said entity and he acknowledged said
instrument by him executed, to be his free act and deed in his capacity
as aforesaid, and the free act and deed of Health and Rehabilitation
Properties Trust.
_____________________________
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of 1994, before me personally appeared John
G. Murray, Treasurer of Health and Rehabilitation Properties Trust, to
me known and known by me to be the party executing the foregoing
instrument for and on behalf of the Trustees of said entity and he
acknowledged said instrument by him executed, to be his free act and
deed in his capacity as aforesaid, and the free act and deed of Health
and Rehabilitation Properties Trust.
_________________________
Notary Public
My commission expires:
N-2
[CO]
<PAGE>
[MO]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me, the
undersigned, a Notary Public in and for said state, personally appeared
John G. Murray, to me personally known, who, being by me duly sworn, did
say that he is the Treasurer of Health and Rehabilitation Properties
Trust, a Maryland real estate investment trust, and that the foregoing
instrument was signed in behalf of said real estate investment trust by
authority of its Trustees, and said John G. Murray acknowledged said
instrument to be the free act and deed of said real estate investment
trust for the purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Printed Name:
Notary Public in and for said State
Commissioned in __________ County
[SEAL]
My commission expires:
N-3
[MO]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of February, 1994, before me, the
undersigned, a Notary Public in and for said state, personally appeared
David J. Hegarty, to me personally known, who, being by me duly sworn,
did say that he is the Chief Financial Officer and Executive Vice
President of Health and Rehabilitation Properties Trust, a Maryland real
estate investment trust, and that the foregoing instrument was signed in
behalf of said real estate investment trust by authority of its
Trustees, and said David J. Hegarty acknowledged said instrument to be
the free act and deed of said real estate investment trust for the
purposes therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal, the day and year last above written.
Printed Name:
Notary Public in and for said State
Commissioned in __________ County
[SEAL]
My commission expires:
N-4
[MO]
<PAGE>
[CA]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On February ___, 1994, before me ____________________,
personally appeared John G. Murray and David J. Hegarty, personally
known to me (or proved to me on the basis of satisfactory evidence) to
be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized
capacities, and that by their signatures on the instrument the entity on
behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
Notary Public
N-5
[CA]
<PAGE>
[AZ]
State of New York )
) ss.:
County of New York )
The foregoing instrument was acknowledged before me this _____
day of February, 1994 by John G. Murray, Treasurer and by David J.
Hegarty, the Chief Financial Officer and Executive Vice President, of
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real estate
investment trust, on behalf of the Trust.
Notary Public
[Print name: ]
My commission expires:
N-1
[AZ]
<PAGE>
[WA]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I certify that I know or have satisfactory evidence that David
J. Hegarty and John G. Murray are the persons who appeared before me,
and said persons acknowledged that they signed this instrument, on oath
stated that they were authorized to execute the instrument and
acknowledged it as the Chief Financial Officer and Executive Vice
President and as the Treasurer respectively, of HEALTH AND
REHABILITATION PROPERTIES TRUST, a Maryland real estate investment
trust, to be the free and voluntary act of such trust for the uses and
purposes mentioned in the instrument.
Dated this ____ day of February, 1994,
_________________________________
(Signature of Notary)
___________________________________
(Legibly Print or Stamp Name of Notary)
Notary Public in and for the state of New York,
residing at _____________________
My appointment expires:
N-1
[WA]
<PAGE>
[NC]
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
I, ____________________, Notary Public certify that David J.
Hegarty personally came before me this day and acknowledged that he is
the Assistant Secretary of HEALTH AND REHABILITATION PROPERTIES TRUST, a
Maryland real estate investment trust, and that by authority duly given
and as the act of the corporation, the foregoing instrument was signed
in its name by John G. Murray, its Treasurer, sealed with its corporate
seal, and attested to by himself as its Assistant Secretary.
My commission expires __________________.
Witness my hand and official seal this the _____ day of
February, 1994.
________________________
Notary Public
Seal
N-1
[NC]
<PAGE>
Exhibit A-I
Legal Description
Fee Land
A-I-1
<PAGE>
Exhibit A-II
Legal Description
Leased Land
A-II-1
<PAGE>
Exhibit B
Leases (Grantor Lessee)
The land covered by such Leases (Grantor Lessee) is described on Exhibit
A-II of this instrument.
B-1
<PAGE>
Schedule I
Lease (Grantor Lessor)
SCH-I-1
<PAGE>
Schedule II
Certain Remedies
SCH-II-1
[LA]
<PAGE>
Missouri Deed of Trust Modifications
[** The following paragraphs should be added as new Sections
23.8 and 26.4 respectively to all Missouri Deeds of Trust. **]
23.8 Grantor shall give any notice pursuant to Section
443.055, R.S.MO., or otherwise by which Grantor elects to terminate the
operation of this Deed of Trust as security for future advances or
future obligations made or incurred after the date Beneficiary receives
such notice, or Grantor shall take any other action for the purpose of
limiting or attempting to limit the operation of this Deed of Trust as
such security.
26.4 Until a sale shall be held hereunder, the Trustee
hereby lets the Mortgaged Property to Grantor upon the following terms
and conditions: Grantor, and any and all persons claiming or possessing
the Mortgaged Property, and any part thereof, by through, or under it,
shall pay rent therefor at the rate of one cent per month, payable
monthly upon demand and Grantor shall surrender peaceable possession of
the Mortgaged Property and any and every part thereof to the Trustee,
any of its successors and assigns, or purchasers thereof, without notice
or demand therefor, immediately after any such sale.
[** The minimum notice requirement in Section 32.3.2 should be changed
from five days to ten days in all Missouri Deeds of Trust. **]
MO-1
<PAGE>
California Deed of Trust Modifications
[** The following paragraph should be added to all California Deeds of
Trust in lieu of the current Sections 26.2.4 and 26.2.5 **]
26.2.4 Upon the occurrence of an Event of Default, upon the
delivery of all notices required by law to Trustor, Beneficiary may
cause Trustee to sell the Mortgaged Property in accordance with the
provisions of California law.
CA-1
<PAGE>
Washington Deed of Trust Modifications
Prepared by, recording
requested by and when
recorded return to:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
Attn: Robert Bienstock, Esq.
______________________________________________________
(Space Above This Line Reserved For Recorder's Use)
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING
This Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing (the "Deed of Trust"), dated as of February
__, 1994, by HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate
investment trust formed under the laws of the State of Maryland
("Grantor"), with an address at 400 Centre Street, Newton, Massachusetts
02158, to Western Title Company of Washington Inc., as trustee, (the
"Trustee"), with an address at 600 University Street, 2428 One Union
Square Building, Seattle Washington 98101, in trust for the benefit of
Lenders (as that term is defined below) and of WELLS FARGO BANK,
NATIONAL ASSOCIATION, a bank organized under the laws of the United
States, with an address at 333 South Grand Avenue, Los Angeles,
California 90071, as administrative agent (in such capacity and together
with Lenders, "Beneficiary"), for itself, Agent (as defined in the Loan
Agreement defined below) and the other lenders (collectively, the
"Lenders") party to such Loan Agreement. Whenever any action is
required or permitted to be taken by Beneficiary hereunder, such action
may be taken by Wells Fargo Bank, National Association, in its capacity
as Administrative Agent for all of the Lenders, as more particularly set
forth in the Loan Agreement.
WHEREAS, pursuant to that certain Revolving Loan Agreement of
even date herewith, among Grantor, Beneficiary, Kleinwort Benson
Limited, as agent for itself and the other Lenders (in such capacity,
the "Agent"), and the Lenders (as the same may be amended from time to
time, the "Loan Agreement"), the Lenders have agreed to make loans to
Grantor, which loans shall, in the aggregate, not exceed ONE HUNDRED
FIFTY MILLION DOLLARS ($150,000,000) (collectively, the "Loans"), as
evidenced by Grantor's promissory notes of even date herewith (together
with any promissory note or notes made and delivered by Grantor to each
or any of the Lenders in substitution therefor or extension or
replacement thereof, in whole or in part, the "Promissory Notes" or
"Notes") payable to each of the Lenders or order in the aggregate
principal amount of up to ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000), together with interest thereon (the rate of which
<PAGE>
interest may vary from time to time as specified in the Promissory
Notes);
WHEREAS, pursuant to the Loan Agreement, the proceeds of the
Loans secured hereby are to be used by Grantor for the acquisition of
certain real property, for the funding or acquisition of certain
mortgage loans, for the repayment of certain outstanding indebtedness of
Grantor and for general corporate purposes of Grantor.
[** The following paragraph should be added to all Washington Deeds of
Trust in lieu of the current Section 26.2.3.**]
26.2.3 Beneficiary shall have the right forthwith, at its
election, to foreclose any and all liens and security interests granted
to the Trustee or to Beneficiary by this Deed of Trust judicially, in
the manner provided for the foreclosure of mortgages under Washington
law and to otherwise enforce any and all rights and remedies the
Trustee, or Beneficiary may have in or with respect to the Mortgaged
Property or any part thereof;
[** The following paragraph should be added to all Washington Deeds of
Trust in lieu of the current Section 26.2.4.**]
26.2.4 Beneficiary shall have the right forthwith, at its
election, to foreclose this Deed of Trust nonjudicially through exercise
of the trustee's power of sale in accordance with the Deed of Trust Act
of the State of Washington (RCW 61.24), as now existing or hereafter
amended, in that regard, and upon written request therefor by
Beneficiary specifying the nature of the default, or the nature of the
several defaults, and the amount or amounts due and owing, Trustee shall
execute a written notice of breach and of its election to cause the
Mortgaged Property to be sold through exercise of the trustee's power of
sale and in accordance with the Deed of Trust Act in partial
satisfaction of the obligation secured hereby, and shall cause such
notice to be recorded and otherwise given according to law. Notice of
sale having been given as then required by law and not less than the
time then required by law having elapsed after recordation of such
notice of breach, Trustee, without demand on Grantor, shall sell the
Mortgaged Property at the time and place of sale specified in the
notice, as provided by statute, either as a whole or in separate parcels
and in such order as it may determine, at public auction to the highest
and best bidder for cash in lawful money of the United States, payable
at time of sale. Grantor agrees that such a sale (or a sheriff's sale
pursuant to judicial foreclosure) of all the Mortgaged Property as real
estate constitutes a commercially reasonable disposition thereof, but
that with respect to all or any part of the Mortgaged Property which may
be personal property Trustee and/or Beneficiary shall have and exercise,
at Beneficiary's sole election, all the rights and remedies of a secured
party under the Code. Whenever notice is permitted or required
hereunder or under the Code, ten (10) days shall be deemed reasonable.
Trustee may postpone sale of all or any portion of the Mortgaged
Property, and from time to time thereafter may postpone such sale, as
provided by statute. Trustee shall deliver to the purchaser its deed
and bill of sale conveying the property so sold, but without any
covenant or warranty, express or implied. The recital in such deed and
<PAGE>
bill of sale of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person other than Trustee, including Grantor
or Beneficiary, may purchase at such sale. After deducting all costs,
fees and expenses of Trustee and of this trust, including the cost of
evidence of title search and reasonable counsel fees in connection with
sale, Trustee shall apply the proceeds of sale to payment of: all sums
expended under the terms hereof not then repaid, with accrued interest
at the Default Rate of interest specified in the Note; all other sums
then secured hereby; and the remainder, if any, to the clerk of the
superior court of the county in which the sale took place, as provided
in RCW 61.24.080."
<PAGE>
North Carolina Deed of Trust Modifications
[** The following paragraphs should be added to all North Carolina Deeds
of Trust in Section 36.**]
36.__ Any provision of this Deed of Trust requiring the
payment or reimbursement by Grantor of attorneys' fees or Trustee's fees
or the payment or reimbursement by Grantor of other costs and expenses
shall be interpreted as being limited to such attorneys' fees, Trustee's
fees or such other costs and expenses actually incurred.
36.__ This Deed of Trust secures all present and future
disbursements made under the Loan Agreement, the Notes, the Security
Instruments and all other sums from time to time owing by the Grantor
under the Loan Agreement, the Notes or the Security Instruments. The
maximum principal amount which may be secured hereby that any one time
is One Hundred Fifty Million Dollars ($150,000,000) plus interest
thereon, and all disbursements made for the payment of taxes, levies,
insurance or otherwise pursuant to the terms of this Deed of Trust,
together with interest on all such disbursements and interest. The time
period within which such future disbursements are to be made is the
period between the date hereof and the date fifteen (15) years from the
date hereof. Disbursements secured hereby shall not be required to be
evidenced by "written instrument or notation" as described in Section
45-68(2) of the North Carolina General Statutes, it being the intent of
the parties that the requirements of Section 45-68(2) for a "written
instrument or notation" for each advance shall not be applicable to
disbursements made under the Loan Agreement, the Notes and the Security
Instruments. Pursuant to the terms of the Loan Agreement, certain sums
repaid by Grantor may be re-borrowed so that the total principal amount
of indebtedness that may be secured by this Deed of Trust may decrease
or increase from time to time, but the total unpaid principal balance
secured by this Deed of Trust at any one time shall not exceed
$150,000,000.00 plus interest thereon, and all disbursements made for
the payment of taxes, levies, insurance or otherwise pursuant to the
terms of this Deed of Trust, together with interest on all such
disbursements and interest. It is the intent of the parties that all
such advances and readvances be secured by this Deed of Trust with the
same priority as of the date of the filing of this Deed of Trust and,
therefore, to the extent applicable, this Deed of Trust shall be
governed by N.C. Gen. Stat. 45-81 et seq.
NC-1
<PAGE>
EXHIBIT F
FORM OF
NON-DISTURBANCE AGREEMENT
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(this ``Agreement'') is made as of the ___ day of November, 1994,
between WELLS FARGO BANK, NATIONAL ASSOCIATION, a bank organized under
the laws of the United States, as administrative agent (in such
capacity, ``Administrative Agent'') for itself, and the other lenders
(collectively, the ``Lenders'') named in the Loan Agreement (as
hereinafter defined) with respect to this Agreement, the Loan Agreement
and the Security Instruments (as hereinafter defined) and
_____________________________________, a ______________
[corporation/limited/general partnership] with its place of business at
________________________________, __________________, (``Tenant'').
W I T N E S S E T H
WHEREAS, Tenant has entered into a certain lease described on
Schedule I attached hereto and incorporated herein by reference (the
``Lease'') with Health and Rehabilitation Properties Trust, a real
estate investment trust formed under the laws of the state of Maryland
(``Landlord''), with respect to the premises described on Exhibit A
attached hereto and incorporated herein by reference (the ``Premises'');
WHEREAS, pursuant to the Revolving Loan Agreement dated as of
February ____, 1994, among Landlord, the Lenders, Kleinwort Benson
Limited as Agent (in such capacity, ``Agent'') and Administrative Agent
(as the same may be amended from time to time, the ``Loan Agreement''),
the Lenders have agreed to make loans to Landlord, which loans shall, in
the aggregate, not exceed ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000) (collectively, the ``Loan''), as evidenced by Landlord's
promissory notes of even date herewith (together with any promissory
note or notes issued in substitution therefor or extension or
replacement thereof, in whole or in part, the ``Notes''), secured, inter
alia, by a deed of trust or mortgage and security agreement of even date
herewith from Landlord to (or in the case of a deed of trust, for the
benefit of) Administrative Agent (as amended from time to time, the
``Mortgage''), encumbering the Premises and by an assignment of leases
and rents and certain other security instruments with respect thereto
(such Mortgage and other security instruments being hereinafter
collectively referred to as the ``Security Instruments''); and
WHEREAS, it is a precondition to the Loan that the Lease be
subordinated to the Security Instruments;
NON-DIS./ATTORNMENT AGMT. F-1
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants
hereinafter set forth, Administrative Agent and Tenant hereby agree as
follows:
1. The Lease is and shall be subject and subordinate to
the terms, covenants and provisions of the Security Instruments and the
lien thereof, and to any and all advances made thereunder, and to all
renewals, modifications, amendments, consolidations, replacements and
extensions thereof, to the full extent of the principal sum from time to
time secured thereby, all interest and charges thereon, and all payments
made thereunder by Administrative Agent in respect of the Premises that
are secured by the Security Instruments, said subordination to be with
the same effect as though the Security Instruments and any and all such
renewals, modifications, amendments, consolidations, replacements and
extensions had been executed, acknowledged, delivered and recorded, and
all advances thereunder have been made, prior to the execution,
acknowledgement, delivery and recording of the Lease and any notice
thereof.
2. In the event that Administrative Agent forecloses the
Mortgage, or in the event of possession in lieu of foreclosure, so long
as no default or event of default has occurred and is continuing under
the Lease beyond the expiration of all applicable notice and/or cure
periods and Tenant duly and promptly keeps and performs all of its
obligations under the Lease and this Agreement, Administrative Agent
will not disturb the possession of Tenant, terminate the Lease or join
Tenant in foreclosure proceedings, or any other proceeding to obtain
possession of the Premises, and Administrative Agent, or any other
purchaser at a foreclosure sale or transferee who acquires the Premises
and Landlord's interest therein by deed in lieu of foreclosure, will
comply with the provisions of the Lease, if any, which grant purchase
options in favor of Tenant, including all other options, substitution
and other rights of Tenant under the Lease.
3. So long as no event of default has occurred and is
continuing under either the Lease or the Mortgage beyond the expiration
of all applicable notice and/or cure periods, Administrative Agent will
perform all of its obligations under Section 3.10 and Sections 14.3 and
14.4 of the Mortgage respecting the application of certain insurance
awards and the application of condemnation awards.
4. Tenant shall attorn to and recognize Administrative
Agent or any other purchaser at a foreclosure sale under the Mortgage,
or any transferee who acquires the Premises and Landlord's interest
therein by deed in lieu of foreclosure, and their respective successors
and assigns, as landlord under and for the unexpired balance (and any
extensions, if exercised) of the term of the Lease upon the same terms
and conditions set forth therein, including all options, substitution
and other rights of Tenant under the Lease. Said attornment shall be
effective and self-operative without the execution on the part of any
party of any further instrument and with the same force and effect as a
direct contract between agent and Tenant; provided, however, that Tenant
shall promptly execute and deliver any instrument that the successor
NON-DIS./ATTORNMENT AGMT. F-2
<PAGE>
landlord may reasonably request to evidence further such attornment.
Tenant hereby waives any right it may have under the Lease or by law to
terminate the Lease on foreclosure.
5. [** Include this paragraph to the extent the Lease
contains such provisions **] Upon the occurrence of certain events
relating to damage to, or destruction or condemnation of the Premises,
Tenant has the right, pursuant to certain provisions of the Lease and
subject to Landlord's consent, to offer to acquire the Premises or
substitute a new property for the Premises. Upon the occurrence of
certain conditions set forth in Article __ of the Lease, Tenant has the
right to offer, subject to Landlord's right to reject such offer, to
substitute a new property for the Premises. Tenant hereby acknowledges
that such offers to so purchase or substitute for the Premises shall
also be subject to Agent's consent; provided, however, if Agent has not
responded to any such request of Tenant (or of Landlord) for such
consent within twenty-one (21) days after receipt by Agent of all
documents and/or information reasonably requested by Agent in connection
with such consent, such consent shall be deemed to have been given.
6. In the event Administrative Agent succeeds to the
interest of Landlord under the Lease, Administrative Agent shall not be
a. liable for any act or omission of Landlord, or any prior
Landlord;
b. bound by any rent or additional rent which Tenant might have
prepaid for more than the then current rent period under the
Lease unless such rent has been delivered to and received by
Administrative Agent;
c. subject to any credits, offsets, defenses or claims, except as
otherwise provided herein, that Tenant then has against
Landlord or any prior landlord;
d. bound by any covenants to complete any improvements to the
Premises or the buildings located thereon;
e. liable to return or otherwise account for any security deposit
unless the same has been delivered to and received by
Administrative Agent; or
f. bound by any material amendment or modification of the Lease
made without its consent.
7. Tenant shall give prompt written notice to
Administrative Agent and Agent of any default of Landlord in performance
of its obligations under the Lease if such default is of such a nature
as to give Tenant a right to terminate the Lease, reduce rent or to
credit or offset any amounts against future rents, and Tenant shall
permit Administrative Agent to cure any such default on Landlord's
behalf within any applicable cure period.
NON-DIS./ATTORNMENT AGMT. F-3
<PAGE>
8. Tenant consents to the assignment to Administrative
Agent of Landlord's interest in and rents payable by Tenant under the
Lease, Tenant hereby confirming that it has no knowledge of any other or
prior assignment, hypothecation or pledge of such Lease or rents;
provided, however, until Tenant receives written notice from
Administrative Agent of the exercise by Administrative Agent of its
rights under said assignment, Tenant shall not be liable to
Administrative Agent for any rents paid to Landlord.
9. Tenant hereby covenants not to enter into any
amendment or modification of the Lease which is materially adverse to
Landlord without the prior written consent of Administrative Agent.
10. Tenant hereby represents and warrants to the Lenders
that it has not deferred any maintenance that would otherwise have been
required to have been performed pursuant to the Lease.
11. Tenant's address for notice pursuant to this
Agreement, is: ____________________; Administrative Agent's address for
notice pursuant to this agreement is
_______________________________________________________; and Agent's
address for notice pursuant to this agreement is P.O. Box 560, 20
Frenchurch Street, London, EC3P3DB, England, Attention:
____________________, with a copy to Kleinwort Benson (North America),
Incorporated, 200 Park Avenue, 25th Floor, New York, New York 10166,
Attention: ____________________.
12. Tenant hereby affirms its obligations under the Lease
and Tenant agrees to make all payments due thereunder in accordance with
the terms and provisions of the Lease.
13. Anything herein or in the Lease to the contrary
notwithstanding, in the event the Lenders shall acquire title to the
Premises, the Lenders shall have no obligation, nor incur any liability,
beyond the Lenders' then interest, if any, in the Premises (including
the rents therefrom and proceeds of sale thereof) and Tenant shall look
exclusively to such interest of the Lenders, if any, in the Premises for
the payment and discharge of any obligations imposed upon the Lenders
hereunder or under the Lease and the Lenders are hereby released or
relieved of any other liability hereunder and under the Lease. Tenant
agrees that with respect to any money judgement which may be obtained or
secured by Tenant against the Lenders, Tenant shall look solely to the
estate or interest owned by the Lenders in the Premises (and the
proceeds from the sale thereof) and Tenant will not collect or attempt
to collect any such judgment out of any other assets of the Lenders.
14. Any amendment of this Agreement shall be effective
only if in writing and executed by both Tenant and Administrative Agent.
15. Matters of construction, validity and performance
relating to this Agreement shall be governed by and construed in
accordance with the laws of the state in which the Premises is located.
NON-DIS./ATTORNMENT AGMT. F-4
<PAGE>
16. Provided Administrative Agent complies with its
obligations hereunder, Tenant will not take any act which would impair
or adversely affect the lien of the Mortgage.
17. Tenant agrees that the execution of this Agreement by
Administrative Agent and performance by Administrative Agent of its
obligations hereunder shall satisfy the requirements of the Lease
relating to subordination thereof.
18. Nothing herein shall be construed or deemed to impair
the lien of the Security Instruments.
19. This Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an
original and all of which together shall constitute but one and the same
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute these presents, under seal, which
shall be binding upon and inure to the benefit of their respective
successors and assigns, as of the day and year first above written.
TENANT:
WITNESS:
By:
Title:
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
WITNESS:
as Administrative Agent as
aforesaid
By:
Title:
NON-DIS./ATTORNMENT AGMT. F-5
<PAGE>
The undersigned Landlord under the Lease hereby acknowledges and
agrees to the provisions requiring the Lenders' consent as set forth in
Paragraph 5 hereof.
HEALTH AND REHABILITATION
PROPERTIES TRUST, a Maryland
Real Estate Investment Trust
By:
Title:
NON-DIS./ATTORNMENT AGMT. F-6
<PAGE>
STATE OF )
)
COUNTY OF )
I, , a Notary Public in and for the said
County, in the State aforesaid, DO HEREBY CERTIFY that
, of , a , who
is personally known to me to be the same person whose name is subscribed
to the foregoing instrument s such of said
, appeared before me this day in person and
acknowledged that he signed and delivered the said instrument as his own
free act and deed and as the free act and deed of said
, for the uses and purposes therein set forth.
GIVEN under my hand and Notarial Seal this day of ,
1991.
Notary Public
My Commission Expires:
STATE OF )
)
COUNTY OF )
I, , a Notary Public in and for the said
County, in the State aforesaid, DO HEREBY CERTIFY that
, of , a , who
is personally known to me to be the same person whose name is subscribed
to the foregoing instrument s such of said
, appeared before me this day in person and
acknowledged that he signed and delivered the said instrument as his own
free act and deed and as the free act and deed of said
, for the uses and purposes therein set forth.
GIVEN under my hand and Notarial Seal this day of ,
1991.
Notary Public
My Commission Expires:
NON-DIS./ATTORNMENT AGMT. F-7
<PAGE>
SCHEDULE I
Description of the Lease
S-1
<PAGE>
Exhibit A
Legal description of the Premises
A-1
<PAGE>
EXHIBIT G
FORM OF
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is dated as of
February , 1994 among HRPT ADVISORS, INC., a Delaware corporation
(together with its successors and assigns, the "Subordinated Creditor"),
WELLS FARGO BANK, NATIONAL ASSOCIATION (the Administrative Agent"), on
behalf of itself, the Agent (as defined below) and the other lenders
(the "Lenders") named in the Loan Agreement (as defined below) and the
other holders or obligees from time to time of or with respect to the
Senior Obligations (as defined below) as beneficiaries hereof (the
Administrative Agent, Agent, Lenders and such other holders and
obligees, together the "Senior Creditors" and each a "Senior Creditor"),
and HEALTH AND REHABILITATION PROPERTIES TRUST, a real estate investment
trust formed under the laws of the State of Maryland, and its successors
and assigns (the "Borrower").
WHEREAS, pursuant to the Loan Agreement, each of the Lenders
has extended a commitment to make Loans (as defined in the Loan
Agreement) to the Borrower; and
WHEREAS, pursuant to the Advisory Agreement (as defined
below), the Borrower engaged the Subordinated Creditor for the purpose
of, among other things, providing the Borrower management and
administrative services with respect to the Borrower's health care and
related properties; and
WHEREAS, it is a condition precedent to the Lenders'
obligation to make Loans to the Borrower pursuant to the Loan Agreement
that the Advisor and the Borrower enter into this Agreement.
NOW, THEREFORE, in consideration of the Loans to be made by
the Lenders to the Borrower pursuant to the Loan Agreement, and in
consideration of the mutual agreements set forth herein, the parties
hereto hereby agree as follows:
SECTION 1.
1.1 As used herein the following terms shall have the
following meanings:
"Administrative Agent" has the meaning set forth in the
recitals hereto and shall include any other Senior Creditor appointed to
act as administrative agent under the Loan Agreement instead of such
Administrative Agent.
SUBORDINATION AGREEMENT G-1
<PAGE>
"Advisory Agreement" means the Advisory Agreement dated
as of November 20, 1986 between the Borrower and the Subordinated
Creditor, as amended by an Amendment Agreement dated August 26, 1987 and
a Second Amendment dated February ____, 1994, as the same may be
amended, supplemented or modified from time to time.
"Agent" means Kleinwort Benson Limited, as agent under
the Loan Agreement.
"Borrower" has the meaning set forth in the recitals
hereto.
"Lenders" has the meaning set forth in the recitals
hereto.
"Loans" means the loans made or to be made by the Lenders
to the Borrower pursuant to the Loan Agreement.
"Loan Agreement" means the Revolving Loan Agreement dated
as of February ____, 1994, among the Borrower, the Agent, the
Administrative Agent and the Lenders, as the same may be amended,
supplemented or modified from time to time.
"Loan Documents" has the meaning set forth in the Loan
Agreement.
"Notes" shall mean, collectively, the promissory notes of
the Borrower to the Lenders outstanding from time to time under the Loan
Agreement.
"Senior Creditor" has the meaning set forth in the
recitals hereto.
"Senior Obligations" shall mean (a) the principal amount
of, and accrued interest on (including, without limitation, any interest
which accrues or would accrue after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Borrower, whether or not allowed as a claim in
such case, proceeding or other action), the Loans and the Notes, and (b)
all other indebtedness, obligations and liabilities of the Borrower to
the Agent, Administrative Agent or any of the Lenders now existing or
hereafter incurred or created under the Notes, the Loan Agreement and
any other Loan Document.
"Subordinated Creditor" has the meaning set forth in the
recitals hereto.
"Subordinated Obligations" shall mean any and all fees,
commissions, compensation and other amounts (other than reimbursements
for reasonable out of pocket expenses of the Advisor) payable to the
Advisor or any of its affiliates from time to time pursuant to the
Advisory Agreement or any other agreement now or hereafter entered into
by the Borrower and the Advisor.
SUBORDINATION AGREEMENT G-2
<PAGE>
1.2 Other Definitional Provisions.
(a) All terms used in this Agreement and defined in the
Loan Agreement and not otherwise defined herein shall have the meanings
so defined in the Loan Agreement.
(b) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, schedule and exhibit references are to this
Agreement unless otherwise specified and, where appropriate, the
singular shall include the plural.
SECTION 2.
2.1 The Subordinated Creditor agrees, for itself and any
future holder of the Subordinated Obligations, that the Subordinated
Obligations are and shall at all times during the term hereof be
expressly subordinate and junior in right of payment (as defined in
Section 2.2) to all Senior Obligations, and that it shall not at any
time during such term file or participate in the filing of any petition
to initiate proceedings under the U.S. Bankruptcy Code, 11 U.S.C. Sec.
101 et seq., against the Borrower.
2.2 "Subordinate and junior in right of payment" shall mean
that:
(a) At any time prior to the payment in full of all
Senior Obligations no direct or indirect payment on account of
the Subordinated Obligations shall be made, nor shall any
property or assets of the Borrower or any of its Subsidiaries
be applied to the satisfaction of the Subordinated
Obligations, in whole or in part, nor shall the Subordinated
Creditor take, demand, receive or institute legal proceedings
to recover, and the Borrower will not make, give or permit,
directly or indirectly, by set-off, redemption, purchase or in
any other manner, any payment or security for the whole or any
part of the Subordinated Obligations (all of the foregoing
actions being hereinafter referred to as "Restricted
Actions"), if at the time of or immediately after giving
effect to such Restricted Action a Default or an Event of
Default exists or would exist and is or would be continuing.
(b) (i) In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any substantial part
of the property, assets or business of the Borrower or the
proceeds thereof, to any creditor or creditors of the Borrower
other than in the ordinary course of business or as permitted
in the Loan Agreement or (ii) upon any indebtedness of the
Borrower becoming due and payable (or a proof of claim in
respect thereof being filed in any applicable proceeding) by
reason of any liquidation, dissolution or other winding up of
SUBORDINATION AGREEMENT G-3
<PAGE>
the Borrower or its business or by reason of any sale,
receivership, insolvency, reorganization or bankruptcy
proceedings, assignment for the benefit of creditors,
arrangement or any proceeding by or against the Borrower for
any relief under any bankruptcy, reorganization or insolvency
law or laws, Federal or state, or any law, Federal or state,
relating to the relief of debtors, readjustment of
indebtedness, reorganization, composition, or extension, or
(iii) in the event that any amounts owing under the Loan
Agreement, the Notes or any of the other Loan Documents have
become, or have been declared to be, due and payable (and have
not been paid in accordance with their terms), then and in any
such event, any payment or distribution of any kind or
character in respect of the Borrower, whether in cash,
property or securities, which, but for the subordination
provisions contained herein, would otherwise be payable or
deliverable to the Subordinated Creditor pursuant to or in
respect of the Subordinated Obligations, shall instead be paid
over or delivered to the Administrative Agent on behalf of the
Senior Creditors which have Senior Obligations which are then
due and payable (or in respect of which a proof of claim has
been filed in any applicable proceeding) and promptly be
applied (subject to applicable law) as a payment or prepayment
on account of the Senior Obligations which are then due and
payable pro rata in accordance with the amounts thereof then
due and payable (or in respect of which a proof of claim has
been filed in any applicable proceeding) and in the order of
priority for payment of Senior Obligations set forth in the
Loan Agreement, and the Subordinated Creditor shall not
receive any such payment or distribution or any benefit
therefrom unless and until the Senior Obligations which are
then due and payable (or in respect of which a proof of claim
has been filed in any applicable proceeding) shall have been
fully and finally paid and satisfied.
SECTION 3.
3.1 The Subordinated Creditor irrevocably authorizes and
empowers the Administrative Agent on behalf of the Senior Creditors
under the circumstances set forth in clause (i) or (ii) of Section
2.2(b), to demand, sue for, collect and receive every such payment or
distribution referred to in such Section and give acquittance therefor,
and take such other proceedings, in the name of the Senior Creditors or
in the name of the Subordinated Creditor or otherwise, as the
Administrative Agent may deem reasonably necessary or advisable for the
enforcement of the subordination provisions of this Agreement. The
Subordinated Creditor hereby agrees, under the circumstances set forth
in clause (i) or (ii) of Section 2.2(b), duly and promptly to take such
action as may be reasonably requested at any time and from time to time
by the Administrative Agent to file appropriate proofs of claim in
respect of the Subordinated Obligations, and to execute and deliver such
powers of attorney, assignments or other instruments as may be
reasonably requested by the Administrative Agent in order to enable the
SUBORDINATION AGREEMENT G-4
<PAGE>
Administrative Agent on behalf of the Senior Creditors to enforce any
and all claims upon or in respect of the Subordinated Obligations and to
collect and receive any and all payments or distributions which may be
payable or deliverable at any time upon or in respect of the
Subordinated Obligations. Any such amounts received by the
Administrative Agent shall be applied (subject to applicable law) to the
payment of the Senior Obligations pro rata in accordance with the
amounts thereof then due and payable (or in respect of which proofs of
claim have been filed in any applicable proceeding) and in the order of
priority for payment of Senior Obligations set forth in the Loan
Agreement.
3.2 Should any payment or distribution or security, or the
proceeds of any thereof, be collected or received by the Subordinated
Creditor pursuant to or in respect of the Subordinated Obligations, and
such collection or receipt is at the time prohibited hereunder (or the
making of such payment or distribution was so prohibited on the date of
making thereof), the Subordinated Creditor will forthwith turn over the
same to the Administrative Agent, in the form received (except for the
endorsement or the assignment of the Subordinated Creditor when
necessary) and, until so turned over, the same shall be held in trust by
the Subordinated Creditor as the property of the Senior Creditors. Any
such amounts received by the Administrative Agent shall be applied
(subject to applicable law) to the payment of the Senior Obligations pro
rata in accordance with the amounts thereof then due and payable (or in
respect of which proofs of claim have been filed in any applicable
proceeding) and in the order of priority for payment of Senior
Obligations set forth in the Loan Agreement.
3.3 (a) Subject to the provisions of paragraph (b) of this
Section 3.3, the Subordinated Creditor shall be subrogated to the rights
of the Senior Creditors to receive payments or distributions of cash,
property or securities made on the Senior Obligations until the Senior
Obligations shall be paid in full; and, for the purposes of such
subrogation, payments or distributions to the Senior Creditors of any
cash, property or securities to which the Subordinated Creditor would be
entitled except for the provisions of this Agreement shall, as between
the Borrower and its creditors other than the Senior Creditors and the
Subordinated Creditor, be deemed to be a payment by the Borrower to or
on account of Subordinated Obligations, it being understood that the
provisions of this Agreement are and are intended solely for the purpose
of defining the relative rights of the Subordinated Creditor, on the one
hand, and the Senior Creditors, on the other hand. The purpose of this
Section 3.3 is to grant to the Subordinated Creditor the same rights
against the Borrower with respect to the aggregate amount of such
payments or distributions as the Senior Creditors would have against the
Borrower if such aggregate amount were considered overdue Senior
Obligations.
(b) Notwithstanding any payment or payments made by the
Subordinated Creditor hereunder or any application of funds of the
Subordinated Creditor by the Administrative Agent or any Senior
Creditor, the Subordinated Creditor shall not be entitled to be
SUBORDINATION AGREEMENT G-5
<PAGE>
subrogated to any of the rights of any Senior Creditor against the
Borrower or against or under any collateral security or guarantee or
right of offset held by or for the benefit of any Senior Creditor for
the payment of the Senior Obligations, nor shall the Subordinated
Creditor seek any reimbursement from the Borrower or against or under
any collateral security or guarantee or right of offset in respect of
payments made by the Subordinated Creditor hereunder, until all amounts
owing to each Senior Creditor by the Borrower for or on account of the
Senior Obligations are finally paid in full.
SECTION 4.
4.1 The Subordinated Creditor represents, warrants and
covenants that:
(a) The Advisory Agreement delivered to the
Administrative Agent on the date hereof has been duly and
validly executed and constitutes the only Contractual
Obligation of the Borrower to the Advisor and of the Advisor
to the Borrower;
(b) Subordinated Obligations currently or hereafter
payable to the Subordinated Creditor by the Borrower (i) are
or will be payable free and clear of any security interests,
liens, charges or encumbrances whatsoever arising from,
through or under the Subordinated Creditor other than the
interest of the Senior Creditors under this Agreement, and
(ii) are or will be payable solely and exclusively to the
Subordinated Creditor and to no other Person (other than to
the Administrative Agent on behalf of the Senior Creditors
hereunder), without deduction for any defense, offset or
counterclaim;
(c) the Subordinated Creditor has full power, authority
and legal right to execute, deliver and perform this
Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on
the part of the Subordinated Creditor, do not require any
authorization or other action on the part of its shareholders,
do not require any approval or consent of any trustee or
holders of any indebtedness or obligations of the Subordinated
Creditor (other than those which have been obtained) and will
not violate any Requirement of Law or Contractual Obligation
applicable to the Subordinated Creditor;
(d) no consent, authorization of, filing with, or other
act by or in respect of any Governmental Authority is required
in connection with the authorization, execution, delivery and
performance by the Subordinated Creditor of this Agreement
(other than those which have been obtained and are in full
force and effect); and
SUBORDINATION AGREEMENT G-6
<PAGE>
(e) this Agreement constitutes a legal, valid and
binding obligation of the Subordinated Creditor, enforceable
against the Subordinated Creditor in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally applicable to, and
in any proceeding under such laws relating to, the
Subordinated Creditor as debtor or insolvent.
4.2 The Borrower represents, warrants and covenants
that:
(a) the Borrower has full power, authority and legal
right to execute, deliver and perform this Agreement, and the
execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of
the Borrower, do not require any authorization or other action
on the part of its shareholders, do not require any approval
or consent of any trustee or holders of any indebtedness or
obligations of the Borrower (other than those which have been
obtained) and will not violate any Requirement of Law or
Contractual Obligation applicable to the Borrower;
(b) no consent, authorization of, filing with, or other
act by or in respect of any Governmental Authority is required
in connection with the authorization, execution, delivery and
performance by the Borrower of this Agreement (other than
those which have been obtained and are in full force and
effect); and
(c) this Agreement constitutes a legal, valid and
binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors' rights
generally applicable to, and in any proceeding under such laws
relating to, the Borrower as debtor or insolvent.
SECTION 5.
5.1 No payment or payments made by the Borrower or any other
Person or received or collected by the Administrative Agent or any
Senior Creditor from the Borrower or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at
any time or from time to time in reduction or payment of the Senior
Obligations shall be deemed to modify, reduce, release or otherwise
affect the obligations of the Subordinated Creditor hereunder or the
subordination provided for herein which shall, notwithstanding any such
payment or payments, continue until the Senior Obligations are paid in
full. The Subordinated Creditor hereby consents that, without the
necessity of any reservation of rights against the Subordinated Creditor
and without notice to or further assent by the Subordinated Creditor,
any demand for payment of any of the Senior Obligations made by the
SUBORDINATION AGREEMENT G-7
<PAGE>
Administrative Agent or any Senior Creditor may be rescinded in whole or
in part by the Administrative Agent or such Senior Creditor and any of
the Senior Obligations continued, and the Senior Obligations, or the
liability of any other party upon or for any part thereof, and the Loan
Agreement, other Loan Documents or any other collateral security
document, collateral security or guarantee from time to time therefor or
relating thereto, or other document or right with respect thereto, with
respect to the Senior Creditors or any particular Senior Creditor may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, supplemented, accelerated, compromised, waived, sold,
exchanged, or be surrendered or released or terminated or be
unconsummated, or otherwise dealt with in any manner specified above or
otherwise, in whole or in part, as such Senior Creditor or Senior
Creditors or the Administrative Agent may deem advisable from time to
time, all without the necessity of any reservations of rights against
the Subordinated Creditor and without notice to or further assent by the
Subordinated Creditor, which will remain bound hereunder and all without
affecting the subordination provided for herein, notwithstanding any of
the foregoing events or circumstances. The Administrative Agent and the
Senior Creditors shall have no obligation or duty to take, accept,
protect, secure, perfect, preserve or insure, or enforce or make demand
in respect of, any security interest, pledge, mortgage or other lien or
encumbrance, collateral security document or collateral security at any
time held or contemplated to be held as security for, or any guarantee
or contemplated guarantee of, the Senior Obligations. When making any
demand hereunder against the Subordinated Creditor, the Administrative
Agent may in its sole discretion, but shall be under no obligation to,
make a similar demand on the Borrower or any co-obligor or guarantor, or
proceed against any collateral security or under any collateral security
document or guarantee or other document or right, and any failure by the
Administrative Agent to make any such demand or to collect any payments
from the Borrower or any such co-obligor or guarantor, or proceed
against any collateral security or under any collateral security
document or guarantee or other document or right, or any release of the
Borrower or such co-obligor or guarantor or under or in respect of any
collateral security or any collateral security document or guarantee or
other document or right, shall not affect the subordination provided for
herein or relieve the Subordinated Creditor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the
Administrative Agent or any Senior Creditor against the Subordinated
Creditor. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
5.2 The Subordinated Creditor irrevocably waives any and all
notice of the creation, renewal, extension or accrual of any of the
Senior Obligations and notice of or proof of reliance by any Senior
Creditor upon this Agreement, and the Senior Obligations, existing and
future, and all dealings between the Borrower or the Subordinated
Creditor and the Administrative Agent and each Senior Creditor, and any
of them, shall conclusively be deemed and presumed to have been created,
contracted, incurred, had or consummated in reliance upon this
Agreement. The Subordinated Creditor irrevocably waives notice of or
SUBORDINATION AGREEMENT G-8
<PAGE>
proof of reliance on this Agreement and diligence, protest, demand for
payment and notice of default or nonpayment and any other notice or
demand whatsoever to or upon the Borrower or the Subordinated Creditor
with respect to the Senior Obligations and any right to notice of resale
of any collateral security, and, in respect of the Administrative Agent
and the Senior Creditors, any other rights of a "debtor" under the
Uniform Commercial Code as in effect from time to time in the State of
New York (or any other relevant jurisdiction) (collectively, the "UCC"),
and irrevocably agrees not to assert in any suit, action or other legal
proceeding relating to this Agreement, or otherwise, that it has, in
respect of the Administrative Agent and the Senior Creditors, status as,
or any rights of, a "debtor" under the UCC, or any defense to or
discharge of its obligations hereunder or the subordination contemplated
herein based on any such rights. This Agreement shall be construed as a
continuing, absolute, unconditional and irrevocable subordination
without regard to the validity, regularity or enforceability of any of
the Loan Documents, any of the Senior Obligations or any security
interest, pledge, mortgage or other lien or encumbrance, or other
collateral security or collateral security document, or any guarantee
therefor or other document or right with respect thereto at any time or
from time to time held by or in favor of any Senior Creditor and without
regard to any defense, set-off or counterclaim which may at any time be
available to or be asserted by the Borrower, the Subordinated Creditor
or any other Person against the Administrative Agent or any Senior
Creditor, or any other circumstance whatsoever (with or without notice
to or knowledge of the Borrower or the Subordinated Creditor or any
other Person) which constitutes, or might be construed to constitute, an
equitable or legal discharge or defense of the Borrower for or to any of
the Senior Obligations, or an equitable or legal discharge or defense of
the Subordinated Creditor under this Agreement or otherwise, in
bankruptcy or in reorganization or in any other instance, and the
obligations and liabilities of the Subordinated Creditor hereunder and
the subordination contemplated herein shall not be conditioned or
contingent upon the pursuit by the Administrative Agent, any Senior
Creditor or any other Person at any time of any right or remedy against
the Borrower or against any other Person which may be or become liable
in respect of all or any part of the Senior Obligations or against or
under any security interest, pledge, mortgage or other lien or
encumbrance, or other collateral security or collateral security
document, or any guarantee or other document or right with respect
thereto. This Agreement shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon the
Borrower and the Subordinated Creditor and the successors and assigns
thereof, and shall inure to the benefit of each Senior Creditor, and its
successors, indorsees, transferees and assigns, until the Loan Agreement
and all other Loan Documents have been terminated in accordance with
their terms and all the Senior Obligations and the obligations and
liabilities of the Subordinated Creditor under this Agreement shall have
been satisfied by final payment or performance in full.
5.3 This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Senior Obligations is rescinded or must otherwise
SUBORDINATION AGREEMENT G-9
<PAGE>
be restored or returned by any Senior Creditor upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower
or the Subordinated Creditor, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or the Subordinated Creditor or any
substantial part of their respective property, or for any other reason
whatsoever, all as though such payments had not been made.
SECTION 6.
6.1 The Subordinated Creditor will not (a) sell, assign, or
otherwise transfer, in whole or in part, the Subordinated Obligations or
any interest therein to any Person unless (x) such Person has expressly
acknowledged to the Administrative Agent, in writing in form and
substance satisfactory to the Administrative Agent, the subordination
provided for herein and agrees to be bound by all the terms hereof, and
(y) the Subordinated Creditor has expressly guaranteed to the
Administrative Agent, in writing in form and substance satisfactory to
the Administrative Agent, the performance by such Person of such
Person's obligations under Section 3.2 of this Agreement; or (b) create,
incur or suffer to exist any security interest, lien, charge or other
encumbrance whatsoever upon the Subordinated Obligations in favor of any
Person unless the Subordinated Creditor has obtained the prior written
consent of the Administrative Agent (which consent may be withheld in
the Administrative Agent's sole discretion) and such Person expressly
acknowledges to the Administrative Agent in writing the subordination
provided for herein and agrees to be bound by all of the terms hereof.
Without the prior written consent of the Administrative Agent the
Subordinated Creditor and the Borrower will not amend or supplement the
Advisory Agreement as in effect on the date hereof or enter into any
other agreement that directly or indirectly (a) increases the
Subordinated Obligations payable to the Advisor or modifies the basis on
which any Subordinated Obligations are payable in a manner which could
increase the Subordinated Obligations payable to the Advisor or provides
for any additional Subordinated Obligations to be paid to the Advisor,
or (b) provides for or results in Subordinated Obligations becoming due
and payable earlier than is contemplated by the Advisory Agreement as in
effect on the date hereof or (c) provides for or results in any services
of the Advisor contemplated by the Advisory Agreement being performed by
any Person (including any Affiliate of the Advisor) other than the
Advisor.
6.2 Except as otherwise expressly set forth herein, this
Agreement is intended to create a relationship among independent
contractors and nothing in this Agreement shall be deemed to create a
fiduciary, agency or trust relationship in favor of the Advisor or the
Borrower.
6.3 The Advisor hereby acknowledges receipt of copies of the
Loan Agreement and all other Loan Documents.
6.4 The Advisor hereby agrees that it will not amend Sections
7 and 13 of the Amended and Restated Voting Trust Agreement dated as of
SUBORDINATION AGREEMENT G-10
<PAGE>
June 30, 1992 between the Advisor and AMS Properties, Inc., a Delaware
corporation, or any other provision of that Amended and Restated Voting
Trust Agreement the amendment of which adversely impacts Administrative
Agent and/or any of the Lenders' interests under any of the Loan
Documents, without the prior written consent of the Administrative
Agent.
SECTION 7.
7.1 CHOICE OF LAW. THIS AGREEMENT SHALL BE A CONTRACT UNDER
AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS THEREOF.
7.2 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; ETC.
NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, THE SUBORDINATED
CREDITOR HEREBY IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE PERSONAL
JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK IN
ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING RELATING TO THIS AGREEMENT;
(b) AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR OTHER
LEGAL PROCEEDING MAY BE HEARD AND DETERMINED IN, AND ENFORCED IN AND BY,
ANY SUCH COURT; (c) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO VENUE IN ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM; (d) AGREES TO SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY TELEX, OR IN ANY
OTHER MANNER PERMITTED BY LAW, TO ANY THEN DESIGNATED AGENT FOR SERVICE
OF PROCESS ("PROCESS AGENT") AT ANY SPECIFIED ADDRESS OR TO THE
SUBORDINATED CREDITOR AT ITS ADDRESS SET FORTH HEREIN OR TO SUCH OTHER
ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED IN
WRITING (SUCH SERVICE TO BE EFFECTIVE ON THE EARLIER OF RECEIPT THEREOF
OR, IN THE CASE OF SERVICE BY MAIL, THE 5TH DAY AFTER DEPOSIT OF SUCH
SERVICE IN THE MAILS AS AFORESAID), AND HEREBY WAIVES ANY CLAIM OF ERROR
ARISING OUT OF SERVICE OF PROCESS BY ANY METHOD PROVIDED FOR HEREIN OR
ANY CLAIM THAT SUCH SERVICE WAS NOT EFFECTIVELY MADE; (e) AGREES THAT
THE FAILURE OF ITS PROCESS AGENT FOR SERVICE OF PROCESS TO GIVE ANY
NOTICE OF ANY SUCH SERVICE OF PROCESS TO IT SHALL NOT IMPAIR OR EFFECT
THE VALIDITY OF SUCH SERVICE OR ANY JUDGMENT BASED THEREON; (f) TO THE
EXTENT THAT THE SUBORDINATED CREDITOR HAS ACQUIRED, OR HEREAFTER MAY
ACQUIRE, ANY IMMUNITY FROM JURISDICTION OF ANY SUCH COURT OR FROM LEGAL
PROCESS THEREIN, WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, SUCH IMMUNITY; (g) WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN CONNECTION WITH, OR WITH RESPECT TO, ANY SUIT, ACTION
OR OTHER LEGAL PROCEEDING RELATING TO THIS AGREEMENT, (i) ANY CLAIM THAT
IT IS IMMUNE FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO IT OR ANY OF ITS PROPERTY, (ii) ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT,
AND (iii) ANY RIGHT TO A JURY TRIAL; AND (h) AGREES THAT THE
ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO BRING ANY LEGAL PROCEEDINGS
(INCLUDING A PROCEEDING FOR ENFORCEMENT OF A JUDGMENT ENTERED BY ANY OF
THE AFOREMENTIONED COURTS) AGAINST THE SUBORDINATED CREDITOR IN ANY
OTHER COURT OR JURISDICTION IN ACCORDANCE WITH APPLICABLE LAW.
NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION SHALL AFFECT THE
SUBORDINATION AGREEMENT G-11
<PAGE>
RIGHT OF THE ADMINISTRATIVE AGENT TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT IN THE COURTS OF ANY OTHER JURISDICTION OR
THE RIGHT, IN CONNECTION WITH ANY LEGAL ACTION OR PROCEEDING WHATSOEVER,
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE
SUBORDINATED CREDITOR HEREBY IRREVOCABLY DESIGNATES THE FIRM OF SULLIVAN
& WORCESTER, WITH OFFICES AT 767 THIRD AVENUE, NEW YORK, NEW YORK 10017,
ATTENTION: CHARLES M. DUBOFF (AND AT SUCH OTHER OFFICES OF PROCESS AGENT
IN NEW YORK, NEW YORK AS PROCESS AGENT SHALL NOTIFY ADMINISTRATIVE AGENT
IN WRITING), AS ITS PROCESS AGENT TO RECEIVE SERVICE OF ANY AND ALL
PROCESS AND DOCUMENTS ON ITS BEHALF IN ANY LEGAL PROCEEDING IN THE STATE
OF NEW YORK AND SUCH PROCESS AGENT, BY ITS ACKNOWLEDGMENT BELOW,
IRREVOCABLY AGREES TO SO ACT AS PROCESS AGENT FOR SERVICE OF PROCESS.
IF SUCH PROCESS AGENT SHALL FOR ANY REASON FAIL TO ACT, OR BE PREVENTED
FROM ACTING, AS SUCH PROCESS AGENT, NOTICE THEREOF SHALL IMMEDIATELY BE
GIVEN TO THE ADMINISTRATIVE AGENT BY REGISTERED OR CERTIFIED MAIL AND
THE SUBORDINATED CREDITOR AGREES PROMPTLY TO DESIGNATE ANOTHER PROCESS
AGENT IN THE CITY OF NEW YORK, SATISFACTORY TO THE ADMINISTRATIVE AGENT
TO SERVE IN PLACE OF SUCH PROCESS AGENT AND DELIVER TO THE
ADMINISTRATIVE AGENT WRITTEN EVIDENCE OF SUCH SUBSTITUTE PROCESS AGENT'S
ACCEPTANCE OF SUCH DESIGNATION. SUCH ACTING PROCESS AGENT SHALL
NEVERTHELESS CONTINUE TO SERVE AS PROCESS AGENT UNTIL ITS SUCCESSOR IS
DULY APPOINTED.
7.3 Notices; Certain Payments. (a) All notices, consents
and other communications to the Borrower, the Subordinated Creditor or
the Administrative Agent relating hereto to be effective shall be in
writing and shall be deemed made (i) if by mail or facsimile, when
received, (ii) if by telex, when sent answerback received, and (iii) if
by courier, when receipted for, in each case addressed to them as
follows or at such other address as either of them may designate by
written notice to the other: (w) the Borrower: Health and Rehabilitation
Properties Trust, 215 First Street, Cambridge, Massachusetts 02142,
Attention: Mark J. Finkelstein. (Fax no. (617) 661-3112) with a copy to
Sullivan & Worcester, One Post Office Square, Boston, Massachusetts,
Attention: Lena G. Goldberg, Esq. (Twix: 7103211976, Answerback:
SULWORBSN); (x) the Subordinated Creditor: HRPT Advisors, Inc., 215
First Street, Cambridge, Massachusetts 02142, Attention: Mark J.
Finkelstein (Fax no. (617) 661-3112) with a copy to Sullivan &
Worcester, One Post Office Square, Boston, Massachusetts, Attention:
Lena G. Goldberg, Esq. (Twix: 7103211976, Answerback: SULWORBSN); (y)
the Administrative Agent: Wells Fargo Bank, National Association,
Corporate Banking, 420 Montgomery Street (a), San Francisco, California
94163, Attention: Kathleen J. Harrison (telecopier no. 1-415-421-1352).
(b) All payments to the Administrative Agent or
the Senior Creditors required to be made hereunder shall be made to
Administrative Agent for the account of the Senior Creditors at:
Wells Fargo Bank,
National Association
San Francisco, California
ABA No. 121000248
Account Name: Health and Rehabilitation
SUBORDINATION AGREEMENT G-12
<PAGE>
Properties Trust
Account No. 4518073184
together with irrevocable instructions to Administrative Agent to apply
such payment under this Agreement. The Administrative Agent may by
written notice to the Borrower and the Subordinated Creditor specify or
change its account and address for payment instructions hereunder.
7.4 No Waivers; Cumulative Remedies; Entire Agreement;
Headings; Successors and Assigns; Counterparts; Severability. No
action, failure, delay or omission by the Administrative Agent in
exercising any rights and remedies under the Loan Agreement or any of
the other Loan Documents, this Agreement or otherwise, shall constitute
a waiver of, or impair, any of the rights or privileges of any Senior
Creditor hereunder. No single or partial exercise of any such right or
remedy shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. Such rights and remedies are
cumulative and not exclusive of any rights and remedies provided by law
or otherwise available. No waiver of any such right or remedy shall be
effective unless given in writing by the Administrative Agent. No
waiver of any such right or remedy shall be deemed a waiver of any other
right or remedy hereunder or thereunder. Every right and remedy given
by this Agreement or by applicable law to or for the benefit of any
Senior Creditor may be exercised from time to time and as often as may
be deemed expedient by the Administrative Agent on behalf of such Senior
Creditor. Except as expressly set forth herein, this Agreement
constitutes the entire agreement of the parties relating to the subject
matter hereof and thereof and there are no verbal agreements relating
hereto or thereto. Section headings herein shall have no legal effect.
This Agreement (including all covenants, representations, warranties,
privileges, rights, and remedies made or granted herein or therein)
shall inure to the benefit of, and be enforceable by, the Administrative
Agent on behalf of each Senior Creditor and its successors and assigns,
except as otherwise expressly provided in this Agreement. The
Subordinated Creditor may not directly or indirectly assign or transfer
(whether by agreement, by operation of law or otherwise) any of its
rights or obligations and liabilities hereunder without the prior
written consent of the Administrative Agent. Each Senior Creditor may
grant participations in or otherwise sell or dispose of, any of its
rights hereunder to the extent permitted by and in accordance with the
provisions of the Loan Agreement. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed an
original and all of which taken together shall be deemed to constitute
one and the same instrument. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal, or
unenforceable provisions.
SUBORDINATION AGREEMENT G-13
<PAGE>
7.5 The obligations of the Subordinated Creditor and the
Borrower under this Agreement shall survive the repayment of the Loan
and the cancellation of the Notes and the termination of the other Loan
Documents and the Senior Obligations, in the circumstances described in
Section 5.3.
7.6 The Subordinated Creditor and the Borrower agree to
execute and deliver such further documents and to do such other acts and
things as the Administrative Agent may reasonably request in order fully
to effect the purposes of this Agreement.
7.7 The subordination provisions contained herein are for the
benefit of the Administrative Agent and the Senior Creditors and their
respective successors and assigns as holders from time to time of Senior
Obligations and may not be rescinded or cancelled or modified in any
way, nor, unless otherwise expressly provided for herein, may any
provision of this Agreement be waived or changed without the express
prior written consent thereto of the Administrative Agent.
7.8 The Borrower and Subordinated Creditor will cause each
executed copy of the Advisory Agreement, any instrument or other writing
evidencing any of the obligations arising thereunder and any amendment,
modification or supplement thereto to bear a statement or legend to the
effect that the Subordinated Obligations are subordinate and junior in
right of payment to the Senior Obligations in the manner and to the
extent herein set forth.
7.9 For purposes of this Agreement, Senior Obligations shall
cease to be such, or the outstanding principal amount thereof shall be
deemed reduced, only (i) upon actual receipt by the Subordinated
Creditor of a notice from the holder or holders of such Senior
Obligations or obligee or obligees with respect thereto terminating the
constitution of such indebtedness, obligations and/or liabilities as
senior obligations under this Agreement or reducing the amount of such
indebtedness, obligations and/or liabilities so constituted or (ii) when
the Senior Obligations have in fact been finally paid in full and the
Loan Agreement and all other Loan Documents have been terminated in
accordance with their terms and the Subordinated Creditor shall have
received notice from the Administrative Agent of such fact. The
Administrative Agent shall within seven Business Days following receipt
of a written request therefor from the Subordinated Creditor confirm in
writing to the Subordinated Creditor whether or not the Senior
Obligations have ceased to be such, pursuant to clause (ii) of the
previous sentence. At the request of the Administrative Agent, the
Subordinated Creditor will confirm in writing to any Senior Creditor
that the indebtedness, obligations and/or liabilities held by such
Senior Creditor and constituted as Senior Obligations hereunder are
Senior Obligations. However, the failure or refusal of the Subordinated
Creditor to issue any such confirmation shall not affect the status as
Senior Obligations of any indebtedness, obligations and/or liabilities
constituting Senior Obligations in accordance with the provisions of
this Agreement.
SUBORDINATION AGREEMENT G-14
<PAGE>
7.10 THE DECLARATION OF TRUST ESTABLISHING BORROWER, DATED
OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH
AND REHABILITATION PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT
OF BORROWER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, BORROWER. ALL
PERSONS DEALING WITH BORROWER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS
OF BORROWER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
[remainder of page intentionally left blank]
SUBORDINATION AGREEMENT G-15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed and delivered as of the day
and year first above written.
HEALTH AND REHABILITATION
PROPERTIES TRUST
By:________________________
Name:
Title:
HRPT ADVISORS, INC.
By:________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
individually and as
Administrative Agent on behalf of the
Senior Creditors
By:__________________________
Name:
Title:
Appointment as Process Agent
hereby acknowledged as of the
day and year first above written.
SULLIVAN & WORCESTER
By:__________________________
Name:
Title:
S-1
<PAGE>
EXHIBIT H
FORM OF
NOTICE OF ANTICIPATED BORROWING
Pursuant to that certain Revolving Loan Agreement dated as of
February ____, 1994 (such agreement, as it may be or may have been
amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"; capitalized terms used herein without definition
shall have the respective meanings assigned to those terms in the Credit
Agreement) among Health and Rehabilitation Properties Trust
("Borrower"), the Lenders party thereto, Kleinwort Benson Limited, as
Agent, and Wells Fargo Bank, National Association, as Administrative
Agent, this certificate represents Borrower's Notice of Anticipated
Borrowing under Section 2.3(a) of the Credit Agreement for the borrowing
described below (the "Proposed Borrowing"). The information relating
to the Proposed Borrowing required by Section 2.3(a) of the Credit
Agreement is as follows:
(i) The anticipated Borrowing Date is _____, 19__, which
date is a Business Day.
(ii) The anticipated aggregate amount of the Proposed
Borrowing is $__________.
(iii) The anticipated aggregate amount of the Proposed
Borrowing which shall be General Corporate Loans is $___________
[and the anticipated aggregate amount of the Proposed Borrowing
which, as contemplated by Section 2.11 of the Credit Agreement,
shall be used to repay the Prior Loan Agreement is $__________ and
shall be used to repay debt to DLJ is $__________].
[(iv) [With respect to any portion of the Proposed Borrowing
which is not a General Corporate Loan and is not to be used to
repay the Prior Loan Agreement or debt to DLJ pursuant to Section
2.11 of the Credit Agreement, the following information is
provided: [Name of Operator or Mortgagor], a [jurisdiction where
organized][form of organization], owns and operates [name of
Facility] in [location of Facility], a Facility in which Borrower
intends to acquire [describe interest to be acquired] with the
proceeds of the proposed Borrowing. [The Appraised Value of the
[Mortgage Interest to be acquired in that][Facility] is
$__________.]]
(v) Enclosed herewith are the following documents for your
review in connection with this Proposed Borrowing: [list any
enclosures, including title, date and preparer thereof]
[Borrower confirms to you pursuant to Section 2.3(a) of the
Credit Agreement that Borrower has irrevocably requested the Proposed
NOTICE OF ANTICIPATED BORROWING
H-1
<PAGE>
Borrowing under the Credit Agreement pursuant to the telephone
conversation on [date] between ____________ and __________.]
DATED: __________ HEALTH AND REHABILITATION PROPERTIES TRUST
By: ____________________________________
Its: ____________________________________
NOTICE OF ANTICIPATED BORROWING
H-2
<PAGE>
EXHIBIT I
FORM OF
NOTICE OF BORROWING
Pursuant to that certain Revolving Loan Agreement dated as of
February ____, 1994 (such agreement, as it may be or may have been
amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"; capitalized terms used herein without definition
shall have the respective meanings assigned to those terms in the Credit
Agreement) among Health and Rehabilitation Properties Trust
("Borrower"), the Lenders party thereto, Kleinwort Benson Limited, as
Agent, and Wells Fargo Bank, National Association, as Administrative
Agent, this certificate represents Borrower's Notice of Borrowing under
Section 2.3(c) of the Credit Agreement for the borrowing described below
(the "Borrowing"). The information relating to the Borrowing required
by Section 2.3(c) of the Credit Agreement is as follows:
(i) The proposed Borrowing Date is [date].
(ii) The proposed Borrowing is of $_________ in
Eurodollar Loans] [and] [$__________ in Base Rate Loans].
[(iii) The initial Interest Period applicable to the
Eurodollar Loans, if applicable, is [one, two, three or six
months][state other period].]
[(iv) [$__________ of the proposed Borrowing of Eurodollar
Loans] [and] [$__________ of the proposed Borrowing of Base Rate
Loans] shall be General Corporate Loans.]
[(v)] Borrower's representations and warranties contained
in the Loan Documents are true, correct and accurate in all
material respect to the same extent as though made on and as of the
date hereof unless stated in the relevant Loan Document to relate
to a specific earlier date, in which case such representations and
warranties shall be true, correct and complete in all material
respects as of such earlier date.
[(vi)] No event has occurred and is continuing or would
result from the proposed Borrowing that would constitute a Default
or Event of Default.
[(vii)] The amount of the proposed Borrowing will not cause
the aggregate outstanding principal amount of the Loans to exceed
the Maximum Aggregate Availability currently in effect.
[(viii)] The amount of the proposed Borrowing will not cause
the aggregate amount of all General Corporate Loans outstanding to
exceed the lesser of $20,000,000 or 16% of the Maximum Aggregate
Availability currently in effect.
<PAGE>
[(ix)] The proceeds of the proposed Borrowing (other than
any proceeds in respect of General Corporate Loans) shall be used
to make payment on the proposed Borrowing Date for the purchase
price and costs of acquiring interests in one or more Facilities
due and payable on such Borrowing Date.
[Borrower confirms to you pursuant to Section 2.3(c) of the
Credit Agreement that Borrower has irrevocably given telephonic notice
of such borrowing under the Credit Agreement pursuant to the telephone
conversation on [date] between ____________ and __________.]
Please pay the proceeds of such Loans into the account whose
details are given below:
______________________________
______________________________
______________________________
DATED: __________ HEALTH AND REHABILITATION PROPERTIES TRUST
By: ____________________________________
Its: ____________________________________
NOTICE OF BORROWING
I-2
<PAGE>
EXHIBIT J
FORM OF
NOTICE OF CONTINUATION/CONVERSION
Pursuant to that certain Revolving Loan Agreement dated as of
February ____, 1994 (such agreement, as it may be or may have been
amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement"; capitalized terms used herein without definition
shall have the respective meanings assigned to those terms in the Credit
Agreement) among Health and Rehabilitation Properties Trust
("Borrower"), the Lenders party thereto, Kleinwort Benson Limited, as
Agent, and Wells Fargo Bank, National Association, as Administrative
Agent, this certificate represents Borrower's Notice of
Continuation/Conversion under Section 2.5(b) of the Credit Agreement for
the Loans specified below.
Borrower hereby requests to [continue as Eurodollar Loans
$__________ in aggregate principal amount of the outstanding Eurodollar
Loans, the current Interest Period of
which ends on __________, 19__][and][convert to [Base Rate
Loans][Eurodollar Loans] $__________ in aggregate principal amount of
the outstanding [Eurodollar Loans, the current Interest Period of which
ends on __________][Base Rate Loans][Alternate Rate Loans]]. The date
for such [continuation] [and] [conversion] shall be . [The
Interest Period for such continued or converted (as applicable)
Eurodollar Loans is requested to be [a __________ month period][a
__________ period, if agreed by all Lenders.]
Borrower hereby certifies that:
(i) No event has occurred and is continuing or would
result from the proposed Borrowing that would constitute a Default
or Event of Default.
(ii) Borrower's representations and warranties contained
in the Loan Documents are true, correct and accurate in all
material respect to the same extent as though made on and as of the
date hereof unless stated in the relevant Loan Document to relate
to a specific earlier date, in which case such representations and
warranties shall be true, correct and complete in all material
respects as of such earlier date.
NOTICE OF CONTINUATION/CONVERSION J-1
<PAGE>
[Borrower confirms to you pursuant to Section 2.5(b) of the
Credit Agreement that Borrower has irrevocably given telephonic notice
of such continuation/conversion under the Credit Agreement pursuant to
the telephone conversation on [date] between ____________ and
__________.]
DATED: __________ HEALTH AND REHABILITATION PROPERTIES TRUST
By: ____________________________________
Its: ____________________________________
NOTICE OF CONTINUATION/CONVERSION J-2
<PAGE>
EXHIBIT K
FORM OF BORROWING BASE CERTIFICATE
Date of Determination: [insert last day of month then ended]
I. Borrowing Base.
A. Aggregate Allowed Value of Leasehold
Interests Which are Eligible Properties
(aggregate of column 2 on attached worksheet
for each such Leasehold Interest): $______________
B. Aggregate Allowed Value of Fee Interests
which are Eligible Properties (aggregate
of column 2 on attached worksheet for each
such Fee Interest): $______________
C. Allowed Value of Eligible Mortgages
(aggregate of column 2 on attached worksheet
for each Eligible Mortgage): $______________
D. Borrowing Base (A plus B plus C): $______________
E. 40% of Borrowing Base (40% of D): $______________
F. Aggregate Commitments in effect: $______________
G. Maximum Aggregate Availability
(lesser of E and F): $______________
H. Lesser of $20,000,000 and 16% of Maximum
Aggregate Availability (lesser of
$20,000,000 and 16% of G)
$______________
I. Aggregate amount of outstanding Loans: $______________
J. Aggregate amount of outstanding General
Corporate Loans: $______________
K. Availability Generally (G minus I): $______________
L. General Corporate Loans Availability
(H minus J) $______________
BORROWING BASE CERTIFICATE
K-1
<PAGE>
II. Eligible Properties and Eligible Mortgages.
Since the date of determination set forth in the last Borrowing Base
Certificate:
A. The following have become Eligible Properties:
[name] [address] [Allowed Value]
B. The following have become Eligible Mortgages:
[name] [address] [Allowed Value]
C. The following have ceased (whether because of a disposal or
otherwise) to be Eligible Properties:
[name] [address] [Allowed Value] [specify reason]
D. The following have ceased (whether because of a disposal or
otherwise) to be Eligible Mortgages:
[name] [address] [Allowed Value] [specify reason]
E. The following Properties or Mortgage Interests which are not
Eligible Properties or Eligible Mortgages, respectively, have been
acquired or disposed of:
[give relevant details, including approximate value of transaction to
Borrower]
Executed this __ day
of __________, 19__
HEALTH AND REHABILITATION PROPERTIES TRUST
By: ____________________________________
Its: ____________________________________
BORROWING BASE CERTIFICATE
K-2
<PAGE>
EXHIBIT L
FORM OF
LOCAL COUNSEL OPINION
[Date]
Kleinwort Benson Limited,
as Agent for the Lenders
under the Loan Agreement
(as described below)
200 Park Avenue
New York, New York 10166
Wells Fargo Bank, N.A.
as Administrative Agent
for the Lenders
under the Loan Agreement
333 South Grand Avenue
Los Angeles, California 90071
The Lenders under the Loan Agreement
Re: $110,000,000 Revolving Loan to Health and
Rehabilitation Properties Trust
Ladies and Gentlemen:
We have acted as special local counsel for Health and
Rehabilitation Properties Trust (``Borrower''), in connection with
certain loans (collectively the ``Loan'') in the aggregate principal
amount of $110,000,000 made to Borrower pursuant to that certain
Revolving Loan Agreement (the ``Loan Agreement''), dated the date
hereof, among Borrower, the lenders listed on the signature pages
thereof (collectively the ``Lenders''), Kleinwort Benson Limited, as
agent for itself and the other Lenders (in such capacity, ``Agent'') and
Wells Fargo Bank, National Association, as administrative agent (in such
capacity, ``Administrative Agent''). This opinion is delivered to you
in connection with Section 4.1 of the Loan Agreement. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed
to such terms in the Loan Agreement.
In connection with the Loan and for the purposes of this
opinion, we have made such investigations of fact and considered such
questions of law as we have deemed necessary. In addition we have
reviewed execution copies of the following documents (collectively the
``Documents''), each dated as of February __, 1994
a. [Open-End] [Mortgage[s]/Deed[s] of Trust] and Security
Agreement from Borrower, as mortgagor, to Administrative Agent, as
O'M&M OPINION L-1
<PAGE>
[Date]
Page 2
mortgagee, in proper form for recording in the land records of
_____________, _____________ [and _____________, _____________]
(the ``Mortgage[s]''), which Mortgage[s] refer[s] to certain real
property located in _______________, _______________ [and
_____________, _____________] (the property covered by each such
Mortgage, collectively, the ``Property'');
b. Assignment[s] of Leases and Rents from Borrower, as
assignor, to Administrative Agent, as assignee, in proper form for
recording in the land records of _____________, ______________
[and_____________, ______________] (the ``Assignment[s] of
Leases'');
[c. Collateral Assignment of Mortgage from Borrower, as
assignor, to Administrative Agent, as assignee, in proper form for
recording in the land records of _______________ (the
``Assignment[s] of Mortgage'');]
d. A Power of Attorney from Borrower appointing
Administrative Agent as the true and lawful attorney-in-fact of
Borrower in proper form for recording in ______________ (the
``Power of Attorney'').
e. A form of financing statement, Form UCC-1, naming
Borrower, as debtor, and Administrative Agent, as agent for the
Lenders, as secured party, which is in proper form to be filed in
the Office of the Secretary of State of the State of ____________
[and in _____________ county] with respect to the Property
([collectively] the ``Financing Statement[s]''); and
f. A form of financing statement, Form UCC-1, naming
Borrower, as debtor, and Administrative Agent, as agent for the
Lenders, as secured party, which is in proper form to be recorded
in the land records of __________________ (the ``Fixture
Filing[s]'').
In addition, we have examined and relied upon the originals or
copies, certified or otherwise identified to our satisfaction, of all
such corporate records of Borrower, such other instruments and other
certificates of public officials, officers and representatives of
Borrower and such other persons, and have investigated such questions of
fact and law as we have, in each case, deemed appropriate as a basis for
the opinions expressed below.
In rendering this opinion we have assumed, without having made
any independent investigation of the facts, except with respect to
matters of ________ law on which we have opined below, the following:
(1) that the execution and delivery by Borrower of the
Documents to which it is a party and the performance by Borrower of
O'M&M OPINION L-2
<PAGE>
[Date]
Page 3
its obligations under each thereof, and the granting by the
Borrower of the security interests and other liens provided for in
such Documents: (a) have been duly authorized by all necessary
corporate action by Borrower; and (b) do not and will not
contravene (1) any provision of the Declaration of Trust or By-Laws
of Borrower; (2) any present requirement of law applicable to
Borrower, any property of Borrower or any of Borrower's other
assets; or (3) any indenture, mortgage, deed of trust, guaranty,
lease, agreement, or other instrument to which Borrower is a party
or by which it or any of its property is bound, or any court order
or consent decree;
(2) that Borrower has all requisite power and authority to:
(a) own its property and conduct its business as currently
conducted by it; (b) enter into and perform its obligations under
the Documents to which it is a party; (c) obtain the Loan
contemplated by the Loan Agreement; and (d) grant the security
interests and other liens as provided in the Documents;
(3) that Borrower owns the Property;
(4) that each of the Mortgage[s], the Assignment[s] of Leases,
the Assignment[s] of Mortgage and the Power of Attorney were
executed in accordance with the laws of the state in which such
Documents were executed;
(5) that the Documents have been duly authorized and executed
by all parties thereto;
(6) that the Documents have been delivered to the Escrow
Agent pursuant to that certain Security Document Escrow Agreement;
and
(7) a part or all of the loan proceeds, evidenced by the
promissory notes (the ``Notes''), dated the date hereof, executed
by Borrower in connection with the Loan Agreement, will be advanced
on the date hereof.
Based upon the foregoing and subject to the qualifications set
forth below, it is our opinion that:
1. Borrower has all requisite power and authority under
the laws of the State of __________: (i) to own and mortgage the
Property and other real property in the State of _____________;
(ii) to own and administer loans secured by mortgages that encumber
real property in the State of _____________; (iii) to enter into
and to perform its obligations under the Documents; (iv) to obtain
the Loan contemplated by the Loan Agreement; (v) to grant the
security interest and other liens provided for by it in the
O'M&M OPINION L-3
<PAGE>
[Date]
Page 4
Documents; and (vi) to grant the rights and authority provided for
in the Power of Attorney.
2. The execution and delivery by Borrower of the
Documents and the performance by Borrower of its obligations under
each thereof, and the granting by Borrower of the security
interests and other liens provided for in the Documents: (i) does
not require any filing or registration by Borrower with, or
approval or consent to Borrower of, any governmental authority in
the State of ___________ except those which have been duly made or
obtained and which are in full force and effect, and (ii) does not
contravene any statutory or regulatory requirement of the State of
______________ applicable to the Property.
3. If the Mortgage[s], the Assignment[s] of Leases and
the Assignment[s] of Mortgage were to be released by the Escrow
Agent and delivered to Administrative Agent on the date of this
opinion, the Mortgage[s], the Assignment[s] of Leases and the
Assignment[s] of Mortgage would be the legal, valid and binding
obligations of Borrower, enforceable against Borrower in accordance
with their respective terms.
4. If the Power of Attorney were to be released by the
Escrow Agent and delivered to Administrative Agent on the date of
this opinion, the Power of Attorney would be legal, valid and
irrevocable and sufficient in form and content to grant
Administrative Agent the right and power to (i) cause the
Mortgage[s], the Assignment[s] of Leases, the Assignment of
Mortgage[s], the Financing Statement[s] and the Fixture Filing[s]
to be recorded and/or filed in the places described in Paragraphs
6, 7 and 8, and (ii) to make any modification to the Mortgage[s],
the Assignment[s] of Leases, the Assignment of Mortgage[s], the
Financing Statement[s] and the Fixture Filing[s] that Agent deems
necessary or proper to effect such recording and/or filings.
5. Neither the execution, acknowledgment and delivery
by Borrower to the Escrow Agent nor the delivery by the Escrow
Agent to Administrative Agent of the Mortgage[s], the Assignment[s]
of Leases and the Assignment[s] of Mortgage and the acceptance of
the same by Administrative Agent without recordation will not
render invalid or unenforceable any of such Documents or the
indebtedness evidenced by the Notes.
6. Upon proper recordation of the Mortgage[s] in the
land records of the county clerk of the county where the applicable
Property is located, Administrative Agent will have a valid and
perfected mortgage lien on the Property for the benefit of the
Lenders.
O'M&M OPINION L-4
<PAGE>
[Date]
Page 5
7. The proper place of recordation of the Assignment[s]
of Leases and the Assignment[s] of Mortgage is the land records of
the county clerk of the county where the applicable Property is
located.
8. Upon proper recordation of the Fixture Filing[s] in
the land records of the county clerk of the county where the
applicable Property is located, and upon proper filing of the
Financing Statement[s] with the county clerk of the county where
the applicable Property is located and the Office of the Secretary
of State of the State of ______________, Administrative Agent will
have a perfected security interest in the collateral described in
such Fixture Filing[s] and Financing Statement[s].
9. Except as otherwise stated in this opinion, no other
documents need to be recorded, registered or filed other than the
Documents and no other act needs to be performed other than such
recordation, registration or filing of the Documents in order to
perfect the liens and security interests in favor of Administrative
Agent created by the Documents upon the interest of Borrower in any
of the collateral or other property described therein.
10. The interest payable on the Loan, including all
commissions, fees and other amounts payable by Borrower or
receivable by the Lenders pursuant to the Documents, which could be
characterized as interest, does not exceed, in the aggregate, the
maximum interest permissible under the law of the State of
______________, is lawful, and is not usurious nor subject to any
defense of usury.
11. Neither the making of the Loan, the granting of the
Power of Attorney, the ownership of the Notes, the Mortgage[s] or
the other Documents, nor the enforcement thereof in the State of
____________, will (i) constitute ``doing business'' in the State
of _____________ requiring qualification of the Lenders, Agent or
Administrative Agent within such state, or (ii) subject the
Lenders, Agent or Administrative Agent to any taxes imposed by such
state, other than those taxes which the Mortgage[s] require
Borrower to pay upon recordation of the Mortgage (either because
there is no statute of the State of __________ which purports to
propose any such tax on foreign lenders or because any such statute
has been construed to be inapplicable to any out-of-state lender,
provided that its only contact with such state is the taking of
mortgages as security for loans such as the Loan).
12. No taxes or other charges, including, without
limitation, intangible, documentary, stamp, mortgage, transfer or
recording taxes or similar charges are payable to the State of
_______________ or to any jurisdiction located therein on account
of the execution, delivery or ownership of the Documents, the
O'M&M OPINION L-5
<PAGE>
[Date]
Page 6
creation of the liens and security interests thereunder or the
filing, recording or registration of the Documents except for
nominal filing or recording fees.
The opinions set forth above are qualified as follows:
F. We have made no examination of title to the Property
and, therefore, we express no opinion as to any matter relating to
title thereto.
G. Certain rights, remedies, and waivers contained in
the Documents may be limited or rendered ineffective by applicable
State of ______________ laws or judicial decisions governing such
provisions, but such laws and judicial decisions do not render the
Documents invalid as a whole, and there exists in the Documents or
pursuant to applicable law legally adequate remedies for a
realization of the principal benefits and/or security intended to
be provided by the Documents.
[Note: Do not include exception C in any opinion except
Connecticut unless required by the law of the jurisdiction.]
H. We specifically express no opinion as to the
enforceability of the Mortgage[s] or the Assignment[s] of Leases:
(i) to the extent that such agreements purport to permit
extra-judicial foreclosure on any of the Property; and/or (ii) to
the extent that the Mortgage[s] and/or the Assignment[s] of Leases
purport to secure any indebtedness other than: (A) the maximum
principal amount of the indebtedness evidenced by the Notes, plus
interest thereon; (B) costs of enforcing the Mortgage[s], including
reasonable attorney's fees; (C) advancements made by the Lenders
for repairs, alterations or improvements to the Property up to an
aggregate of $1,000; (D) premiums of insurance, taxes and
assessments paid by the Lenders pursuant to the Mortgage[s]; and
(E) payments by the Lenders pursuant to the Mortgage[s] of interest
or installments of principal due on any prior mortgage or lien to
protect their respective interests thereon.
I. We note that in connection with any modification,
extension, renewal or amendment of the Mortgage[s] and in
connection with any extension of the maturity date of the
indebtedness secured by the Mortgage[s] or substitution, extension
or replacement of the Notes: (i) such modification, substitution,
extension, renewal, replacement and/or amendment should be
evidenced by a written instrument in recordable form, signed by
Borrower and Administrative Agent and recorded on the appropriate
land records; and (ii) the rights of Administrative Agent under the
Mortgage[s] may be subject to the rights of intervening
encumbrancers.
O'M&M OPINION L-6
<PAGE>
[Date]
Page 7
J. The opinions expressed in paragraph 3 of this letter
are qualified to the extent that enforcement may be limited by: (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other laws of general application relating to or
affecting the enforcement of the rights of creditors or for the
relief of debtors; and (ii) the exercise of judicial discretion in
accordance with general equitable principles.
K. As used in paragraph 3 of this letter, the term
``enforceable'' in respect of the Mortgage[s] shall not imply any
opinion as to the availability of equitable remedies other than the
judicial foreclosure of the Mortgage[s].
L. The opinions expressed in Paragraph 8 of this letter
are qualified as follows: (i) we express no opinion with respect to
collateral, the perfection of a security interest in which under
the Uniform Commercial Code, as in effect in the State of
______________ (the ``UCC''), can only be accomplished by a secured
party taking possession of the collateral; (ii) we express no
opinion as to the creation or perfection of security interests in
collateral, the ownership of which is established by documents of
title or is subject to requirements other than or in addition to
the requirements set forth in the UCC; (iii) we note that the
enforceability of a security interest in after acquired collateral
is subject to the limitations set forth in Section 9-108 of the
UCC; (iv) we note that the grant of, and realization on, security
interests in governmental licenses, permits, authorizations and
other rights, in contracts with governments or governmental
instrumentalities, commissions, boards or agencies and in the
proceeds thereof are or may be subject to restrictions or
limitations set forth therein or in applicable statutes, laws,
rules or regulations and we express no opinion as to the creation
or perfection of security interests in such rights, contracts or
proceeds; (v) we express no opinion as to the creation or
perfection of security interests in any interest or claim in or
under any policy of insurance under the UCC, except to the extent
permitted by Section 9-306 of the UCC; (vi) we note that pursuant
to the UCC, continuation statements are required from time to time
to be filed in order to preserve the perfection of a security
interest and that additional financing statements may be required
in order to preserve the perfection of the security interest if the
collateral is moved from its location as of the date hereof or if
Borrower changes its name, identity or corporate structure; and
(vii) we note that pursuant to Section 9-306 of the UCC, under some
circumstances, the right of a secured party to enforce a perfected
security interest in the cash proceeds of and collections pursuant
to collateral may be limited.
We are licensed to practice law only in the State of
______________. Accordingly, the foregoing opinion applies only with
O'M&M OPINION L-7
<PAGE>
[Date]
Page 8
respect to the laws of the State of ______________ or of the United
States of America and we express no opinion with respect to the laws of
any other jurisdiction.
This opinion may not be relied upon by any person or entity,
other than Agent, Administrative Agent, the Lenders and their respective
successors, assigns and participants, and any of their respective legal
counsel, nor may copies be delivered or furnished to any other person or
entity nor may all or portions of this opinion be quoted, circulated, or
referred to in any other document without our prior written consent.
Very truly yours,
______________________________
O'M&M OPINION L-8
<PAGE>
EXHIBIT M
FORM OF
PLEDGE ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as of
February ____, 1994 by and among SULLIVAN & WORCESTER, a Massachusetts
general partnership (the "Escrow Agent"), HEALTH AND REHABILITATION
PROPERTIES TRUST, a real estate investment trust formed under the laws
of the State of Maryland ("Borrower"), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, a bank organized under the laws of the United States of
America, as Administrative Agent (including any successor Administrative
Agent under the Credit Agreement, the "Administrative Agent") under the
Revolving Loan Agreement dated as of February ____, 1994 (as amended,
supplemented or modified from time to time, the "Credit Agreement")
among Borrower, the lenders party thereto, Kleinwort Benson Limited, as
Agent, and Administrative Agent.
R E C I T A L S
WHEREAS, Borrower has entered into the Credit Agreement with
the parties thereto; and
WHEREAS, upon the occurrence of a Document Release Event
(capitalized terms used in this Agreement and not otherwise defined are
used as defined in the Credit Agreement) Borrower shall grant to
Administrative Agent a security interest in certain collateral pursuant
to the Assignments of Mortgages; and
WHEREAS, Agent (i) at any time at the request of Majority
Banks shall, and (ii) upon the occurrence of a Default or Event of
Default may, direct the Administrative Agent to take such reasonable
steps as are available to it to perfect the Liens under the Assignments
of Mortgages; and
WHEREAS, Borrower and Administrative Agent wish to appoint
Escrow Agent as escrow agent (i) to hold the documents described in
Section 2 of the Assignments of Mortgages and any of the Credit Support
Agreements that constitute "instruments" under the provisions of the
Uniform Commercial Code as in effect in the State of New York
(collectively, the "Note Documents") prior to the occurrence of a
Perfection Event, and (ii) to deliver the Note Documents to or to the
order of Borrower or Administrative Agent, as the case may be, in
accordance with the terms of this Agreement.
PLEDGE ESCROW AGREEMENT M-1
<PAGE>
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Escrow Agent. Borrower and Administrative
Agent hereby together appoint and designate Escrow Agent to receive,
hold and distribute, as escrow agent, the Note Documents, and Escrow
Agent hereby accepts such appointment and designation.
2. Delivery into Escrow.
(a) Escrow Agent hereby acknowledges receipt of the Note
Documents listed on Schedule I hereto. Borrower may deliver additional
Note Documents from time to time to the Escrow Agent, together with a
supplement to Schedule I listing such additional Note Documents, and
shall obtain a written receipt from Escrow Agent for the additional Note
Documents listed on such supplement. Escrow Agent shall deliver a copy
of such supplement to Administrative Agent and Agent promptly following
the giving of its receipt to Borrower for such additional Security
Documents. Escrow Agent shall attach such supplements to this
Agreement, but each such supplement shall be a part of Schedule I for
all purposes from the date Escrow Agent gives its receipt to Borrower
for the additional Security Documents listed thereon, notwithstanding
any failure by Escrow Agent to so attach such supplement. All Note
Documents delivered to Escrow Agent pursuant hereto, for as long as such
documents remain subject to the escrow described herein, are referred to
as the "Escrowed Documents".
(b) Escrow Agent shall hold the Escrowed Documents in its
possession on its premises, and shall use the same degree of care and
skill in storing the Escrowed Documents as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
3. Conditions of Escrow.
(a) Escrow Agent shall hold the Escrowed Documents until the
occurrence of (i) an Administrative Agent Delivery Event, or (ii) a
Borrower Delivery Event, as such terms are defined below; provided, that
Escrow Agent may release to Borrower any document or documents with the
prior written consent of Agent and Administrative Agent. Any document
or documents so released shall be deemed deleted from Schedule I hereto
upon such release and shall upon its release cease to be an Escrowed
Document.
(b) Upon the occurrence of an Administrative Agent Delivery
Event, Escrow Agent shall promptly deliver (notwithstanding any
objection to such delivery received from Borrower or any other Person
other than as specifically provided in Section 4 below) the Escrowed
Documents to Administrative Agent or such other Person as shall be
nominated for such purpose by Administrative Agent. Subject to Section
4 below and unless Administrative Agent in writing objects to such
delivery and such objection is received by Escrow Agent before such
PLEDGE ESCROW AGREEMENT M-2
<PAGE>
delivery, upon the occurrence of a Borrower Delivery Event, Escrow Agent
shall, promptly following the fifth Business Day after such occurrence,
deliver the Escrowed Documents described in the relevant Borrower
Delivery Event Notice to Borrower or such other Person as shall be
nominated by Borrower. Subject to Section 4 below, Escrow Agent shall
under no circumstances deliver any Escrowed Documents to Borrower or any
Person nominated by Borrower if Escrow Agent is in receipt of an
objection to such delivery from Administrative Agent.
(c) For purposes of this Agreement:
"Administrative Agent Delivery Event" means the delivery by
Administrative Agent to Escrow Agent of a notice in substantially
the form of Exhibit A hereto duly signed by Administrative Agent;
"Administrative Agent Delivery Event Notice" means a notice
referred to in the definition of Administrative Agent Delivery
Event;
"Borrower Delivery Event" means the delivery, at such time as
an Administrative Agent Delivery Event has not occurred, by
Administrative Agent and Borrower to Escrow Agent of a notice in
substantially the form of Exhibit B hereto duly signed by Borrower
and, if required, acknowledged by Administrative Agent; and
"Borrower Delivery Event Notice" means a notice referred to in
the definition of Borrower Delivery Event.
4. Settlement of Disputes. Any disputes which may arise
under this Escrow Agreement with respect to (i) the delivery, ownership
and/or right of possession of the Escrowed Documents, (ii) the facts
upon which Escrow Agent's determinations are based, (iii) the duties of
Escrow Agent hereunder and (iv) any other matters arising under this
Agreement, shall be settled either by mutual agreement of the parties to
such dispute, evidenced by appropriate instructions in writing to Escrow
Agent signed by Borrower and Administrative Agent, or by a final
judgment, order or decree of a court of competent jurisdiction in the
United States of America ("Competent Court"), the time for appeal
therefrom having expired and no appeal having been perfected. Escrow
Agent shall be under no duty to institute or defend any such proceedings
and none of the costs and expenses of any such proceedings shall be
borne by Escrow Agent. In the event the terms of a settlement of a
dispute hereunder increase the duties or liabilities of Escrow Agent
hereunder and Escrow Agent has not participated in such settlement so as
to be bound thereby, then such settlement shall be effective as to
Escrow Agent in respect of such increase in its duties or liabilities
only upon Escrow Agent's written assent thereto. Prior to the
settlement of any dispute as provided in this Section 4, Escrow Agent is
authorized and directed to retain in its possession, without liability
to anyone, such portion of the Escrowed Documents which is the subject
of, or involved in, the dispute; provided that Escrow Agent shall
deliver the Escrowed Documents to Administrative Agent upon the
occurrence of an Administrative Agent Delivery Event regardless of any
PLEDGE ESCROW AGREEMENT M-3
<PAGE>
dispute with Borrower, including without limitation as to any
certification contained in the relevant Administrative Agent Delivery
Event Notice, unless (and only for so long as) Escrow Agent is otherwise
directed by order or other compulsory process of a Competent Court.
5. Escrow Agent Duties and Indemnification.
(a) Escrow Agent undertakes to perform such duties and only
such duties as are expressly set forth herein, and no implied covenants
or obligations shall be read into this Agreement against Escrow Agent.
(b) Escrow Agent may rely upon, and shall be protected in
acting or refraining from acting upon, and shall not be bound to make
any investigation into the facts or matters stated in, any written
notice, instruction or request furnished to it hereunder and believed by
it to be genuine.
(c) Notwithstanding any other provisions of this Agreement,
each of the Borrower and Administrative Agent agrees that Escrow Agent
shall not be liable for any action taken or not taken by it in
connection with this Agreement (i) with the consent or at the request of
Administrative Agent, or (ii) in the absence of its gross negligence or
willful misconduct. Escrow Agent may consult with counsel of its own
choice and shall have full and complete authorization and protection for
any action taken or suffered by it hereunder reasonably, in good faith
and in accordance with the opinion of such counsel.
(d) Borrower hereby agrees to indemnify Escrow Agent for, and
hold Escrow Agent harmless against, any loss, liability or expense
(including without limitation attorneys' fees and expenses) incurred
without gross negligence or wilful misconduct or bad faith on the part
of Escrow Agent arising out of or in connection with this Agreement
and/or carrying out Escrow Agent's duties hereunder, including costs and
expenses of successfully defending Escrow Agent against any claim of
liability with respect thereto.
(e) Escrow Agent may, in its individual or any other
capacity, generally engage in any kind of business with Borrower,
including without limitation acting as counsel to Borrower in connection
with any disputes under the Credit Agreement, this Escrow Agreement and
the other Loan Documents or otherwise, as if it were not Escrow Agent
hereunder. The parties acknowledge that Barry M. Portnoy is a partner
of Escrow Agent, a shareholder of the Advisor and a Trustee of Borrower.
6. Other Matters. Escrow Agent (and any successor escrow
agent or agents) may resign as escrow agent at any time, provided thirty
days' prior written notice is given to the other parties hereto, and
provided further that a mutually acceptable successor escrow agent has
been designated by Borrower and Administrative Agent. In the event that
Borrower and Administrative Agent are not able to agree to a successor
escrow agent within such thirty day period, Escrow Agent may petition
any court having jurisdiction to designate a successor escrow agent.
The resignation of Escrow Agent (and any successor escrow agent or
PLEDGE ESCROW AGREEMENT M-4
<PAGE>
agents, as the case may be) shall be effective only upon delivery of the
Escrowed Documents to the successor escrow agent. Borrower and
Administrative Agent reserve the right jointly to remove Escrow Agent,
at any time, provided thirty days' prior written notice is given to
Escrow Agent.
7. Termination. This Agreement shall be terminated upon the
final delivery by Escrow Agent of the Escrowed Documents in accordance
with the terms hereof, or otherwise by written mutual consent signed by
all parties hereto.
8. Notice. All notices, demands, requests or other
communications which may be or are required to be given, served or sent
by any party to any other party pursuant to this Agreement shall be in
writing and shall be hand delivered (including delivery by courier), or
mailed by first class, registered or certified mail, return receipt
requested, postage prepaid, addressed, (a) if to Escrow Agent, as
follows:
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
United States of America
Attn: Barry M. Portnoy, Esq.
or such other address as Escrow Agent may indicate by written notice to
the other parties, and (b) if to any other party hereto as specified in
the Credit Agreement. Each notice, demand, request or communication
which shall be given or made in the manner above shall be deemed
sufficiently given or made for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery
receipt or the affidavit of messenger being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
9. Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns as permitted hereunder. No person or
entity other than the parties hereto is or shall be entitled to bring
any action to enforce any provisions of this Agreement against any of
the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto or their respective successors and assigns
permitted hereunder. No party to this Agreement may assign this
Agreement or any rights hereunder without the prior written consent of
the parties hereto; provided that Administrative Agent's rights and
obligations hereunder shall automatically (without requirement for
further action) be deemed assigned to any successor Administrative
Agent.
10. Entire Agreement; Amendment. This Agreement contains the
entire agreement among the parties with respect to the subject matter
hereof and supersedes all prior oral or written agreements, commitments
PLEDGE ESCROW AGREEMENT M-5
<PAGE>
or understandings with respect to such matters. This Agreement may not
be changed orally, but only by an instrument in writing signed by the
party against whom enforcement of any waiver, change, modification,
extensions or discharge is sought.
11. Headings. The headings of the sections contained in this
Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
12. Governing Law. THIS AGREEMENT SHALL BE A CONTRACT UNDER
AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
13. Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed an
original and all of which taken together shall be deemed to constitute
one and the same instrument.
14. Non-liability of Trustees. THE DECLARATION OF TRUST
ESTABLISHING BORROWER, DATED OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF BORROWER SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, BORROWER. ALL PERSONS DEALING WITH BORROWER, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF BORROWER FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
PLEDGE ESCROW AGREEMENT M-6
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered in its name and on its
behalf, all as of the date and year first above written.
HEALTH AND REHABILITATION PROPERTIES TRUST,
as Borrower
By: ________________________
Its: _______________________
SULLIVAN & WORCESTER, as Escrow Agent
By: ________________________
Its: _______________________
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By: _______________________
Its: ______________________
S-A-1
<PAGE>
SCHEDULE I TO PLEDGE ESCROW AGREEMENT
Note Documents
SCH-I-A-1
<PAGE>
Exhibit A to Pledge Escrow Agreement
[FORM OF NOTICE FROM ADMINISTRATIVE AGENT]
[date]
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
United States of America
Attn: Barry M. Portnoy, Esq.
Ladies and Gentlemen:
[Wells Fargo Bank, National Association], as Administrative
Agent (the "Administrative Agent") for purposes of and as defined in the
Escrow Agreement dated as of February __, 1994 (as amended, supplemented
or otherwise modified prior to the date hereof, the "Escrow Agreement")
among Administrative Agent, Health and Rehabilitation Properties Trust
and Sullivan & Worcester, as Escrow Agent (the "Escrow Agent"), hereby
demands pursuant to the Escrow Agreement that you release [the Escrowed
Documents (as defined in the Escrow Agreement) to us][specify delivery
of some or all Escrowed Documents to one or more Persons], and certifies
that a Perfection Event, as defined in the Credit Agreement described in
the Escrow Agreement, has occurred.
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By: ___________________________________
Its: __________________________________
A-A-1
<PAGE>
Exhibit B to Pledge Escrow Agreement
[FORM OF NOTICE FROM BORROWER]
[date]
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
United States of America
Attn: Barry M. Portnoy, Esq.
Ladies and Gentlemen:
I, [insert name of authorized officer], of Health and
Rehabilitation Properties Trust ("Borrower"), for purposes of Section 3
of the Escrow Agreement dated as of February __, 1994 among Borrower,
Wells Fargo Bank, National Association, as Administrative Agent, and
Sullivan & Worcester, as Escrow Agent, as such Escrow Agreement may have
been amended to date (the "Escrow Agreement"), do hereby certify as
follows:
[the release of the following Escrowed Documents (as defined
in the Escrow Agreement) are necessary for the following reasons:
[specify reason involving requirement for recordation, re-
recordation, use in connection with foreclosure proceedings or
other actions, suits or proceedings relating thereto, or for the
purpose of enforcing or realizing upon any right represented
thereby];] [or]
[the release of the following Escrowed Documents is required
under the Credit Agreement (as defined in the Escrow Agreement) in
connection with the grant of Liens permitted by clause (iii) of
Section 6.8 of such Credit Agreement: [specify documents]; and the
financing to which such Liens will relate is as follows: [give
brief details]; [or]
[the release of certain Escrowed Documents is required in
connection with the conveyance, sale, lease or other disposal under
Section 6.3(b) of the following: [give details]; the Escrowed
Documents required to be released are as follows: [specify
documents]; [or]
[all Commitments under the Credit Agreement (as defined in the
Escrow Agreement) have terminated, and all amounts outstanding from
Borrower under the Credit Agreement have been indefeasibly paid in
full].
I hereby further certify that the release requested hereby will not give
rise to an Event of Default or otherwise contravene the terms of the
Loan Documents.
B-A-1
<PAGE>
A copy of this certificate is being delivered by us to
Administrative Agent concurrently herewith. Please release the Escrow
Documents specified to us after the lapse of five Business Days from the
date you receive this certificate.
IN WITNESS WHEREOF, I have signed this certificate as of the
day of , 19 .
HEALTH AND REHABILITATION PROPERTIES TRUST
By: _______________________________________
Its: ______________________________________
Acknowledged and agreed:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: __________________________________
Its: _________________________________
B-A-2
<PAGE>
EXHIBIT N
FORM OF
SECURITY DOCUMENTS ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as of
__________ __, 199_ by and among O'MELVENY & MYERS, a California general
partnership (the "Escrow Agent"), HEALTH AND REHABILITATION PROPERTIES
TRUST, a real estate investment trust formed under the laws of the State
of Maryland ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a
bank organized under the laws of the United States of America, as
Administrative Agent (including any successor Administrative Agent under
the Credit Agreement, the "Administrative Agent") under the Revolving
Loan Agreement dated as of February ____, 1994 (as amended, supplemented
or modified from time to time, the "Credit Agreement") among Borrower,
the lenders party thereto, Kleinwort Benson Limited, as Agent, and
Administrative Agent.
R E C I T A L S
WHEREAS, Borrower has entered into the Credit Agreement with
the parties thereto; and
WHEREAS, upon the occurrence of a Document Release Event
(capitalized terms used in this Agreement and not otherwise defined are
used as defined in the Credit Agreement) Borrower shall grant to
Administrative Agent a security interest in certain collateral pursuant
to certain Security Documents; and
WHEREAS, Borrower and Administrative Agent wish to appoint
Escrow Agent as escrow agent (i) to hold such Security Documents pending
the occurrence of a Document Release Event and (ii) to deliver such
Security Documents to or to the order of Borrower or Administrative
Agent, as the case may be, in accordance with the terms of this
Agreement.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Escrow Agent. Borrower and Administrative
Agent hereby together appoint and designate Escrow Agent to receive,
hold and distribute, as escrow agent, the Security Documents, and Escrow
Agent hereby accepts such appointment and designation.
SECURITY DOC. ESCROW AGMT.
N-1
<PAGE>
2. Delivery into Escrow.
(a) Escrow Agent hereby acknowledges receipt of the Security
Documents listed on Schedule I hereto. Borrower may deliver additional
Security Documents from time to time to the Escrow Agent, together with
a supplement to Schedule I listing such additional Security Documents,
and shall obtain a written receipt from Escrow Agent for the additional
Security Documents listed on such supplement. Escrow Agent shall
deliver a copy of such supplement to Administrative Agent and Agent
promptly following the giving of its receipt to Borrower for such
additional Security Documents. Escrow Agent shall attach such
supplements to this Agreement, but each such supplement shall be a part
of Schedule I for all purposes from the date Escrow Agent gives its
receipt to Borrower for the additional Security Documents listed
thereon, notwithstanding any failure by Escrow Agent to so attach such
supplement. All Security Documents delivered to Escrow Agent pursuant
hereto and in accordance with the requirements of this Section 2(a), for
as long as such documents remain subject to the escrow described herein,
are referred to as the "Escrowed Documents".
(b) Escrow Agent shall hold the Escrowed Documents in its
possession on its premises, and shall use the same degree of care and
skill in storing the Escrowed Documents as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
3. Document Release Event. Borrower and Administrative
Agent hereby agree that, notwithstanding the terms of any of the
Escrowed Documents, such Escrowed Documents shall not be deemed
delivered by Borrower to Administrative Agent until the occurrence of a
Document Release Event. Upon and as from the date of the occurrence of
a Document Release Event, all such Escrowed Documents shall be deemed
delivered by Borrower to Administrative Agent and fully in effect among
the parties thereto, without notice to Borrower or Escrow Agent or the
requirement of any other notice or action from Administrative Agent or
any other party. Notwithstanding the foregoing, Borrower shall have no
right to revoke its delivery of the Escrowed Documents to Escrow Agent
nor, except as expressly provided in this Agreement, any right to
request the release of any of the Escrowed Documents.
4. Conditions of Escrow.
(a) Escrow Agent shall hold the Escrowed Documents until the
occurrence of (i) an Administrative Agent Delivery Event, or (ii) a
Borrower Delivery Event, as such terms are defined below; provided, that
Escrow Agent may release to Borrower any document or documents with the
prior written consent of Agent and Administrative Agent. Any document
or documents so released shall be deemed deleted from Schedule I hereto
upon such release, and shall upon its release cease to be an Escrowed
Document.
(b) Upon the occurrence of an Administrative Agent Delivery
Event, Escrow Agent shall promptly deliver (notwithstanding any
SECURITY DOC. ESCROW AGMT.
N-2
<PAGE>
objection to such delivery received from Borrower or any other Person
other than as specifically provided in Section 5 below) the Escrowed
Documents to Administrative Agent or such other Person as shall be
nominated for such purpose by Administrative Agent. Subject to Section
5 hereof and unless Administrative Agent in writing objects to such
delivery and such objection is received by Escrow Agent before such
delivery, upon the occurrence of a Borrower Delivery Event, Escrow Agent
shall, promptly following the fifth Business Day after such occurrence,
deliver the Escrowed Documents described in the relevant Borrower
Delivery Event Notice to Borrower or such other Person as shall be
nominated by Borrower. Subject to Section 5 below, Escrow Agent shall
under no circumstances deliver any Escrowed Documents to Borrower or any
Person nominated by Borrower if Escrow Agent is in receipt of an
objection to such delivery from Administrative Agent.
(c) For purposes of this Agreement:
"Administrative Agent Delivery Event" means the delivery by
Administrative Agent to Escrow Agent of a notice in substantially
the form of Exhibit A hereto duly signed by Administrative Agent;
"Administrative Agent Delivery Event Notice" means a notice
referred to in the definition of Administrative Agent Delivery
Event;
"Borrower Delivery Event" means the delivery, at such time as
neither a Document Release Event nor an Administrative Agent
Delivery Event has occurred, by Administrative Agent and Borrower
to Escrow Agent of a notice in substantially the form of Exhibit B
hereto duly signed by Borrower and, if required, acknowledged by
Administrative Agent; and
"Borrower Delivery Event Notice" means a notice referred to in
the definition of Borrower Delivery Event.
5. Settlement of Disputes. Any disputes which may arise
under this Escrow Agreement with respect to (i) the delivery, ownership
and/or right of possession of the Escrowed Documents, (ii) the facts
upon which Escrow Agent's determinations are based, (iii) the duties of
Escrow Agent hereunder and (iv) any other matters arising under this
Agreement, shall be settled either by mutual agreement of the parties to
such dispute, evidenced by appropriate instructions in writing to Escrow
Agent signed by Borrower and Administrative Agent, or by a final
judgment, order or decree of a court of competent jurisdiction in the
United States of America ("Competent Court"), the time for appeal
therefrom having expired and no appeal having been perfected. Escrow
Agent shall be under no duty to institute or defend any such proceedings
and none of the costs and expenses of any such proceedings shall be
borne by Escrow Agent. In the event the terms of a settlement of a
dispute hereunder increase the duties or liabilities of Escrow Agent
hereunder and Escrow Agent has not participated in such settlement so as
to be bound thereby, then such settlement shall be effective as to
Escrow Agent in respect of such increase in its duties or liabilities
SECURITY DOC. ESCROW AGMT.
N-3
<PAGE>
only upon Escrow Agent's written assent thereto. Prior to the
settlement of any dispute as provided in this Section 5, Escrow Agent is
authorized and directed to retain in its possession, without liability
to anyone, such portion of the Escrowed Documents which is the subject
of, or involved in, the dispute; provided that Escrow Agent shall
deliver the Escrowed Documents to Administrative Agent upon the
occurrence of an Administrative Agent Delivery Event regardless of any
dispute with Borrower, including without limitation as to any
certification contained in the relevant Administrative Agent Delivery
Event Notice, unless (and only for so long as) Escrow Agent is otherwise
directed by order or other compulsory process of a Competent Court.
6. Escrow Agent Duties and Indemnification.
(a) Escrow Agent undertakes to perform such duties and only
such duties as are expressly set forth herein, and no implied covenants
or obligations shall be read into this Agreement against Escrow Agent.
(b) Escrow Agent may rely upon, and shall be protected in
acting or refraining from acting upon, and shall not be bound to make
any investigation into the facts or matters stated in, any written
notice, instruction or request furnished to it hereunder and believed by
it to be genuine.
(c) Notwithstanding any other provisions of this Agreement,
each of the Borrower and the Administrative Agent agrees that Escrow
Agent shall not be liable for any action taken or not taken by it in
connection with this Agreement (i) with the consent or at the request of
Administrative Agent, or (ii) in the absence of its gross negligence or
willful misconduct. Escrow Agent may consult with counsel of its own
choice and shall have full and complete authorization and protection for
any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
(d) Borrower hereby agrees to indemnify Escrow Agent for, and
hold Escrow Agent harmless against, any loss, liability or expense
incurred without gross negligence or wilful misconduct or bad faith on
the part of Escrow Agent arising out of or in connection with Escrow
Agent's entering into this Agreement and carrying out Escrow Agent's
duties hereunder, including costs and expenses of successfully defending
Escrow Agent against any claim of liability with respect thereto.
(e) Escrow Agent may, in its individual or any other
capacity, generally engage in any kind of business with Agent,
Administrative Agent and/or any Lenders, including without limitation
acting as counsel to any of the foregoing in connection with any
disputes under the Credit Agreement, this Escrow Agreement and the other
Loan Documents or otherwise, as if it were not Escrow Agent hereunder.
7. Other Matters. Escrow Agent (and any successor escrow
agent or agents) may resign as escrow agent at any time, provided thirty
days' prior written notice is given to the other parties hereto, and
provided further that a mutually acceptable successor escrow agent has
SECURITY DOC. ESCROW AGMT.
N-4
<PAGE>
been designated by Borrower and Administrative Agent. In the event that
Borrower and Administrative Agent are not able to agree to a successor
escrow agent within such thirty day period, Escrow Agent may petition
any court having jurisdiction to designate a successor escrow agent.
The resignation of Escrow Agent (and any successor escrow agent or
agents, as the case may be) shall be effective only upon delivery of the
Escrowed Documents to the successor escrow agent. Borrower and
Administrative Agent reserve the right jointly to remove Escrow Agent,
at any time, provided thirty days' prior written notice is given to
Escrow Agent.
8. Termination. This Agreement shall be terminated upon the
final delivery by Escrow Agent of the Escrowed Documents in accordance
with the terms hereof, or otherwise by written mutual consent signed by
all parties hereto.
9. Notice. All notices, demands, requests or other
communications which may be or are required to be given, served or sent
by any party to any other party pursuant to this Agreement shall be in
writing and shall be hand delivered (including delivery by courier), or
mailed by first class, registered or certified mail, return receipt
requested, postage prepaid, addressed, (a) if to Escrow Agent, as
follows:
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
United States of America
Attn: Theresa A. Cerezola
or such other address as Escrow Agent may indicate by written notice to
the other parties, and (b) if to any other party hereto as specified in
the Credit Agreement. Each notice, demand, request or communication
which shall be given or made in the manner above shall be deemed
sufficiently given or made for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery
receipt or the affidavit of messenger being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
10. Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns as permitted hereunder. No person or
entity other than the parties hereto is or shall be entitled to bring
any action to enforce any provisions of this Agreement against any of
the parties hereto, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto or their respective successors and assigns
permitted hereunder. No party to this Agreement may assign this
Agreement or any rights hereunder without the prior written consent of
the parties hereto; provided that Administrative Agent's rights and
obligations hereunder shall automatically (without requirement for
SECURITY DOC. ESCROW AGMT.
N-5
<PAGE>
further action) be deemed assigned to any successor Administrative
Agent.
11. Entire Agreement; Amendment. This Agreement contains the
entire agreement among the parties with respect to the subject matter
hereof and supersedes all prior oral or written agreements, commitments
or understandings with respect to such matters. This Agreement may not
be changed orally, but only by an instrument in writing signed by the
party against whom enforcement of any waiver, change, modification,
extensions or discharge is sought.
12. Headings. The headings of the sections contained in this
Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
13. Governing Law. THIS AGREEMENT SHALL BE A CONTRACT UNDER
AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
14. Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed an
original and all of which taken together shall be deemed to constitute
one and the same instrument.
15. Nonliability of Trustees. THE DECLARATION OF TRUST
ESTABLISHING BORROWER, DATED OCTOBER 9, 1986, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME "HEALTH AND REHABILITATION PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF BORROWER SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, BORROWER. ALL PERSONS DEALING WITH BORROWER, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF BORROWER FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
[remainder of page intentionally left blank]
SECURITY DOC. ESCROW AGMT.
N-6
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered in its name and on its
behalf, all as of the date and year first above written.
HEALTH AND REHABILITATION PROPERTIES TRUST,
as Borrower
By: ________________________
Its: _______________________
O'MELVENY & MYERS, as Escrow Agent
By: ________________________
Its: _______________________
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By: _______________________
Its: ______________________
S-1
<PAGE>
SCHEDULE I TO SECURITY DOCUMENTS ESCROW AGREEMENT
Security Documents
SCH-I-1
<PAGE>
Exhibit A to Security Documents Escrow Agreement
[FORM OF NOTICE FROM ADMINISTRATIVE AGENT]
[date]
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
United States of America
Attn: Theresa A. Cerezola
Ladies and Gentlemen:
[Wells Fargo Bank, National Association], as Administrative
Agent (the "Administrative Agent") for purposes of and as defined in the
Escrow Agreement dated as of February __, 1994 (as amended, supplemented
or otherwise modified prior to the date hereof, the "Escrow Agreement")
among Administrative Agent, Health and Rehabilitation Properties Trust
("Borrower") and O'Melveny & Myers, as Escrow Agent (the "Escrow Agent")
and the Revolving Loan Agreement dated as of February ____, 1994 (as
amended, supplemented or modified from time to time, the "Credit
Agreement") among Borrower, the lenders party thereto, Kleinwort Benson
Limited, as Agent, and Administrative Agent (capitalized terms used in
this notice and not otherwise defined are used as defined in the Credit
Agreement), hereby demands pursuant to the Escrow Agreement that you
release [the Escrowed Documents (as defined in the Escrow Agreement) to
us][specify delivery of some or all Escrowed Documents to one or more
Persons], and certifies that (a) a Perfection Event has occurred; or (b)
[based on information provided by Borrower to Administrative Agent, the
Lenders or any other Person]4 an event of the type described in clauses
(i) or (ii) of the definition of Document Release Event contained in the
Credit Agreement has occurred.
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Administrative Agent
By: _____________________________
Its:_____________________________
4Insert bracketed language if necessary.
A-1
<PAGE>
Exhibit B to Security Documents Escrow Agreement
[FORM OF NOTICE FROM BORROWER]
[date]
O'Melveny & Myers
153 East 53rd Street
New York, New York 10022
United States of America
Attn: Theresa A. Cerezola
Ladies and Gentlemen:
I, [insert name of authorized officer], of Health and
Rehabilitation Properties Trust ("Borrower"), for purposes of Section 4
of the Escrow Agreement dated as of __________ __, 1994 among Borrower,
Wells Fargo Bank, National Association, as Administrative Agent, and
O'Melveny & Myers, as Escrow Agent, as such Escrow Agreement may have
been amended to date (the "Escrow Agreement"), do hereby certify as
follows:
[the release of the following Escrowed Documents is required under
the Credit Agreement (as defined in the Escrow Agreement) in
connection with the grant of Liens permitted by clause (iii) of
Section 6.8 of such Credit Agreement: [specify documents]; and the
financing to which such Liens will relate is as follows: [give
brief details]; [or]
[the release of certain Escrowed Documents is required in
connection with the conveyance, sale, lease or other disposal of
the following permitted under Section 6.3(b) of the Credit
Agreement (as defined in the Escrow Agreement): [give details];
the Escrowed Documents required to be released are as follows:
[specify documents]; [or]
[all Commitments under the Credit Agreement have terminated, and
all amounts outstanding from Borrower under the Credit Agreement
have been indefeasibly paid in full].
I hereby further certify that the release requested hereby will not give
rise to an Event of Default or otherwise contravene the terms of the
Loan Documents.
A copy of this certificate is being delivered by us to
Administrative Agent concurrently herewith. Please release the Escrow
Documents specified to us after the lapse of five Business Days from the
date you receive this certificate.
IN WITNESS WHEREOF, I have signed this certificate as of the
day of , 19 .
B-1
<PAGE>
HEALTH AND REHABILITATION PROPERTIES
TRUST
By: __________________________________
Its:__________________________________
Acknowledged and agreed:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: __________________________________
Its: _________________________________
B-2
<PAGE>
SCHEDULE 1
LENDERS' COMMITMENTS
Lender Commitment
Kleinwort Benson Limited $20,000,000
Daiwa Bank, Ltd. $20,000,000
Barclays Bank PLC, New York Branch $15,000,000
Fleet Bank of Massachusetts $15,000,000
National Westminster Bank, USA $15,000,000
Wells Fargo Bank, N.A. $15,000,000
Corestates Bank $10,000,000
SCHEDULE-1-1
<PAGE>
SCHEDULE 2
LIST OF LEASES AND MORTGAGE INTEREST AGREEMENTS
LIST OF CREDIT SUPPORT AGREEMENT FOR LEASES
LIST OF CREDIT SUPPORT AGREEMENTS FOR MORTGAGES
LIST OF LEASES AND MORTGAGE INTEREST AGREEMENTS
PROPERTY LEASE/MORTGAGE
Greenery Extended Care Lease between HRPT and
Center at Cheshire Connecticut Subacute
50 Hazel Drive Corporation II, dated
Cheshire, CT 06410 (1) 2/11/94.
Greenery Extended Care Lease Agreement between HRPT
Center as Landlord and Horizon
59 Acton Street Healthcare Corporation as
Worcester, MA 01602 (2) Tenant dated 2/11/94.
Purchase Option Agreement,
dated 2/11/94.
Greenery Healthcare Center Mortgage and Security
at Howell Agreement by Horizon
3003 West Grand River Healthcare Corporation to
Avenue HRPT, dated 11/29/93
Howell, MI 48843 (3) effective 2/11/94.
Assignment of Leases and
Rents from Horizon
Healthcare Corporation to
HRPT, dated 2/11/94.
Promissory Note in the
original principal amount of
$5,100,000 from Horizon
Healthcare Corporation to
HRPT, dated 2/11/94.
Greenery Rehabilitation and Lease between HRPT as
Skilled Nursing Center at Landlord and Horizon
the Gulf Coast Healthcare Corporation as
1400 Lindberg Drive Tenant dated 2/11/94.
Slidell, LA 70458 (4)
Purchase Option Agreement,
dated 2/11/94.
SCHEDULE-2-1
<PAGE>
PROPERTY LEASE/MORTGAGE
Greenery Rehabilitation and Lease between HRPT as
Skilled Nursing Center at Landlord and Horizon
Meadowlands Healthcare Corporation as
RD #1, Box 146 Tenant, dated 2/11/94.
Route 519 South
Canonsburg, PA 15317 (5) Purchase Option Agreement,
dated 2/11/94.
Greenery Rehabilitation and Lease between HRPT as
Skilled Nursing Center of Landlord and Horizon
Middleboro Healthcare Corporation as
Isaac Street Tenant, dated 2/11/94.
P.O. Box 1330
Middleboro, MA 02346 (6) Purchase Option Agreement,
dated 2/11/94.
Greenery Rehabilitation and Lease between HRPT as
Skilled Nursing Center at Landlord and Horizon
Hyannis Healthcare Corporation as
89 Lewis Bay Road Tenant, dated 2/11/94.
Hyannis, MA 02601 (7)
Purchase Option Agreement,
dated 2/11/94.
Greenery Extended Care Lease between HRPT as
Center of North Andover Landlord and Horizon
75 Park Street Healthcare Corporation as
North Andover, MA 01845 (8) Tenant, dated 2/11/94.
Purchase Option Agreement,
dated 2/11/94.
Clifton House Lease between HRPT as
Rehabilitation Center Landlord and Connecticut
181 Clifton Street Subacute Corporation II as
New Haven, CT 06513 (9) Tenant, dated 2/11/94.
Greenery Lease between HRPT as
Rehabilitation Landlord and Connecticut
Center at Waterbury Subacute Corporation II as
177 Whitewood Road Tenant, dated 2/11/94.
Waterbury, CT 06708 (10)
The Phoenix Rehabilitation Lease between HRPT as
Center Landlord and Sunrise
555 16th Avenue Healthcare Corporation as
Seattle, WA 98122 (11) Tenant, dated 11/1/93
SCHEDULE-2-2
<PAGE>
PROPERTY LEASE/MORTGAGE
New Forestville Health and Master Lease between HRPT
Rehabilitation Center (Lessor) and Connecticut
23 Fair Street Subacute Corporation
Forestville, CT 06010 (12) (Lessee) dated 7/23/93
[Not in BB]
Facility Lease between the
same parties dated 7/23/93
Ten Broeck Hospital Master Lease between HRPT
8521 Le Grange Road (Landlord) and KMI/Hickory
Louisville, KY 40242 (13) Partnership, dated 10/2/87
[Not in BB] Amendments:
11/4/87, 12/30/88
Ten Broeck Property is leased under the
One Third Avenue, N.W. same Lease described with
Hickory, NC 28601 (14) respect to property number
[Not in BB] (13) above.
Waterford Health and Lease dated November 1,
Rehabilitation Center 1993, between HRPT as
171 Rope Ferry Road Landlord and Sunrise
Waterford, CT 06385 (15) Healthcare Corporation as
Tenant.
Westcott Care Center Property is leased under the
65 Westcott Road same Lease described with
Killingly, CT 06239 (16) respect to property number
(15) above.
Windham Hills Care Center Property is leased under the
595 Valley Street same Lease described with
Willimantic, CT 06226(17) respect to property number
(15) above
Wyant Woods Care Center Master lease between HRPT
200 Wyant Road (Lessor) and Horizon
Akron, OH 44313 (18) Healthcare Corporation
(Lessee) 5/15/87.
Facility Lease dated 5/15/87
between same parties.
First Amendment: 2/19/88
Second Amendment: 3/31/89
Amendment to Master Lease
and Termination of Leases
dated November 1, 1993.
SCHEDULE-2-3
<PAGE>
PROPERTY LEASE/MORTGAGE
Flagship Healthcare Center Master Lease between HRPT as
466 Flagship Road Landlord and AMS Properties,
Newport Beach, CA 92663 Inc. (``AMS'') as tenant
(19) dated
12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90.
Golden Hill Health Care Master Lease between HRPT as
Center Landlord and AMS as tenant
1201 34th Street dated
San Diego, CA 92102 (20) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90.
Lancaster Convalescent Master Lease between HRPT as
Hospital Landlord and AMS as tenant
1642 West Avenue J dated
Lancaster, CA 93534 (21) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90.
Pacific Gardens Master Lease between HRPT as
Convalescent Hospital Landlord and AMS as tenant
577 South Peach Street dated
Fresno, CA 93727 (22) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties
12/28/90.
Sublease dated as of March
31, 1993, between AMS, as
sublessor, and Pleasant Care
Corporation, as subtenant.
SCHEDULE-2-4
<PAGE>
PROPERTY LEASE/MORTGAGE
Palm Springs Healthcare Master Lease between HRPT as
277 South Sunrise Way Landlord and AMS as tenant
Palm Springs, CA 92262 (23) dated
12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90.
Friendship Manor Nursing Master Lease between HRPT as
Home Landlord and AMS as tenant
305 Friendship Drive dated
Nashville, IL 62233 (24) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90.
Sublease dated December 23,
1992, between AMS
Properties, Inc., as
sublessor and Friendship
Manor Health Center, Inc.,
as subtenant.
Christopher East Health Master Lease between HRPT as
Care Center Landlord and AMS as tenant
1132 E. Knapp Street dated
Milwaukee, WI 53202 (25) 12/28/90
(Same as Property (35))
Amendment: 12/29/93
Facility lease between same
parties 3/27/92
Greentree Healthcare Center Master Lease between HRPT as
70 Greentree Road Landlord and AMS as tenant
Clintonville, WI 54929 (26) dated
12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
SCHEDULE-2-5
<PAGE>
PROPERTY LEASE/MORTGAGE
Northwest Health Center Mortgage from AMS to HRPT
7800 West Fond Du Lac Ave. dated 12/28/90
Milwaukee, WI 53218 (27)
$15,000,000 Promissory Note
dated as of 12/28/90 made by
AMS to HRPT, together with
Reformation of Promissory
Note dated as of 12/28/90
Tarzana Extended Care Master Lease between HRPT as
Center Landlord & AMS as Tenant
5650 Reseda Blvd. 12/28/90
Tarzana, CA 91356 (28)
Amendment: 12/29/93
Facility Lease between same
parties 12/28/90
Thousand Oaks Health Care Master Lease between HRPT as
Center Landlord & AMS as Tenant
93 West AV DE Los Arboles 12/28/90
Thousand Oaks, CA 91360
(29) Amendment: 12/29/93
Facility Lease between same
parties 12/28/90
Van Nuys Health Care Center Master Lease between HRPT
6835 Hazeltine Street (Landlord) and AMS (Tenant)
Van Nuys, CA 91405 (30) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
Cedars Health Care Center Master Lease between HRPT as
1599 Ingals Landlord and AMS as tenant
Lakewood, CO 80214 (31) dated
12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
SCHEDULE-2-6
<PAGE>
PROPERTY LEASE/MORTGAGE
Cherrelyn Manor Master Lease between HRPT as
5555 South Elati Street Landlord and AMS as tenant
Littleton, CO 80120 (32) dated
12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
Park Manor Health Care Master Lease between HRPT as
Center Landlord and AMS as tenant
1824 East Park Place dated
Milwaukee, WI 53211 (33) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
Pine Manor Health Care Master Lease between HRPT as
Center Landlord and AMS as tenant
P.O. Box 30 dated
Clintonville, WI 54929 (34) 12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
River Hills East Health [Same as property #25]
Care Center (35)
[Same address as
property #25]
River Hills West Health Mortgage dated 12/28/90 from
Care Center AMS to HRPT
321 Riverside Drive
Pewaukee, WI 53072 (36) $15,000,000 Promissory Note
dated as of 12/28/90 made by
AMS to HRPT, together with
Reformation of Promissory
Note dated as of 12/28/90
Sunnyhill Healthcare Center Master Lease between HRPT as
4325 Nakoma Road Landlord and AMS as tenant
Madison, WI 53711 (37) dated
12/28/90
Amendment: 12/29/93
Facility lease between same
parties 12/28/90
SCHEDULE-2-7
<PAGE>
PROPERTY LEASE/MORTGAGE
Virginia Health Care Center Master Lease between HRPT as
1471 Waukesha Avenue Landlord and AMS as Tenant,
Waukesha, WI 53186 (38) 12/28/90
Amendment: 12/29/93
Facility Lease between same
parties 12/28/90
Woodland Health Center Master Lease between HRPT as
18741 West Bluemound Road Landlord and AMS as Tenant,
Brookfield, WI 53005 (39) 12/28/90
Amendment: 12/29/93
Facility Lease between same
parties 12/28/90
La Mesa Care Center Master Lease between HRPT,
2470 S. Arizona Avenue as Landlord and GCI Health
Yuma, AZ 85364 (40) Care Centers, Inc., as
Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
SunQuest Village of Yuma Master Lease between HRPT,
265 E. 24th Street as Landlord and GCI Health
Yuma, AZ 85364 (41) Care Centers, Inc., as
Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
Village Green Nursing Home Master Lease between HRPT,
2932 N. 14th Street as Landlord and GCI Health
Phoenix, AZ 85014 (42) Care Centers, Inc., as
Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
SCHEDULE-2-8
<PAGE>
PROPERTY LEASE/MORTGAGE
LaSalette Rehabilitation Master Lease between HRPT,
and Convalescent Hospital as Landlord and GCI Health
537 E. Fulton Care Centers, Inc., as
Stockton, CA 95204 (43) Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
Huron Nursing Home Master Lease between HRPT,
15th & Michigan as Landlord and GCI Health
P.O. Box 1277 Care Centers, Inc., as
Huron, SD 57350 (44) Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
Mom & Dad's Home & Health Master Lease between HRPT,
Care Center as Landlord and GCI Health
3600 S. Norton Care Centers, Inc., as
Sioux Falls, SD 57105 (45) Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
SunQuest Village of Huron Master Lease between HRPT,
1251 Arizona SW as Landlord and GCI Health
Huron, SD 57350 (46) Care Centers, Inc., as
Tenant, dated 6/30/92.
Amendment: 6/30/92
Amendment: 12/29/93
Facility Lease between the
same parties: 6/30/92
SCHEDULE-2-9
<PAGE>
PROPERTY LEASE/MORTGAGE
Gentry Care North Lease and Security
2452 North Broadway Agreement, dated as of
Council Bluffs, Iowa 51501 September 1, 1990, by and
(74) between SAFECARE Company,
Inc. and Estate of Elizabeth
A. Lynn, as landlord, and
Quality Care of Council
Bluffs North, Inc., as
tenant, as amended by Loan
Agreement dated June 25,
1992, as assigned to Health
and Rehabilitation
Properties Trust pursuant to
Assignment and Assumption of
Leases, Contracts and
Agreements, dated as of June
4, 1993 by and between
SAFECARE-E.A. LYNN HOMES,
VENTURE 12, a Washington
joint venture and Health and
Rehabilitation Properties
Trust.
SCHEDULE-2-10
<PAGE>
PROPERTY LEASE/MORTGAGE
Beverly Manor Lease and Security
1317 North 36th Street Agreement, dated as of March
St. Josephs, Missouri (75) 10, 1975 between SAFECARE
Company, Inc., as original
landlord and David Cathcart
and Beverly J. Cathcart, as
original tenant, as amended
by letter, dated January 9,
1976 between original
landlord and original tenant
and by a second amendment to
lease (``Second Amendment'')
dated as of May 1, 1991
between original landlord,
original tenant and Beverly
Manor, Inc. (``Tenant''),
and as assigned (i) by
original tenant to Tenant
pursuant to the Second
Amendment and (ii) by
original landlord to Health
and Rehabilitation
Properties Trust pursuant to
an Assignment and Assumption
of Leases, Contracts and
Agreements dated as June
4,1993, by and between
original landlord and Health
and Rehabilitation
Properties Trust
Monterey Nursing Inn Lease and Security
3929 Hoover Road Agreement, dated as of
Grove City, Ohio (76) December 1, 1990, by and
between SCIT, Inc., as
landlord and The MacIntosh
Company, as tenant, as
assigned to Health and
Rehabilitation Properties
Trust pursuant to an
Assignment and Assumption of
Leases, Contracts and
Agreements, dated as of June
4, 1993 by and between SCIT,
Inc. and Health and
Rehabilitation Properties
Trust.
SCHEDULE-2-11
<PAGE>
PROPERTY LEASE/MORTGAGE
Greenery Extended Care Mortgage and Security
Center 34225 Grand River Agreement by Horizon
Avenue Healthcare Corporation to
Farmington, MI 48335 (77) HRPT, dated 11/29/93,
effective 2/11/94.
Promissory Note in original
principal amount of
$4,300,000 from Horizon
Healthcare Corporation to
HRPT, dated 2/11/94.
Assignment of Leases and
Rents dated 2/11/94 from
Horizon Healthcare
Corporation to HRPT.
SCHEDULE-2-12
<PAGE>
LIST OF CREDIT SUPPORT AGREEMENTS FOR LEASES
HORIZON HEALTHCARE CORPORATION (other than the
leased premises located at 200 Wyant Road, Fairlawn, Ohio)
1. Mortgage and Security Agreement dated as of February 11, 1994
from Horizon Healthcare Corporation to Health and Rehabilitation
Properties Trust, regarding the mortgaged property described therein
located in the township of Howell, Livingston County, Michigan.
2. Mortgage and Security Agreement dated as of February 11, 1994,
from Horizon Healthcare Corporation to Health and Rehabilitation
Properties Trust, regarding the mortgaged property described therein
located in Farmington, Oakland County, Michigan.
3. Assignment of Leases and Rents granted as of February 11, 1994
by Horizon Healthcare Corporation to Health and Rehabilitation
Properties Trust relating to certain premises located in Howell,
Livingston County, Michigan.
4. Assignment of Leases and Rents granted February 11, 1994, by
Horizon Healthcare Corporation to Health and Rehabilitation Properties
Trust relating to certain premises located in Farmington, Oakland
County, Michigan.
5. Purchase Option Agreement dated as of February 11, 1994,
between Horizon Healthcare Corporation and Health and Rehabilitation
Properties Trust.
HORIZON HEALTHCARE CORPORATION
(Leased Premises at 200 Wyant Road, Fairlawn, Ohio only).
None.
CONNECTICUT SUBACUTE CORPORATION II.
1. Guaranty dated as of February 11, 1994 made by Horizon
Healthcare Corporation to Health and Rehabilitation Properties Trust.
SUNRISE HEALTHCARE CORPORATION
1. Guaranty dated November 1, 1993 made by Sun Health Care Group,
Inc. in favor of Health and Rehabilitation Properties Trust.
AMS PROPERTIES, INC. AND GCI HEALTH CARE SERVICES, INC.
1. Acquisition agreement, dated as of December 28, 1990 among
GranCare, Inc., (f/k/a AMS Holding Co.) ("GranCare"), American Medical
Services, Inc. ("AMS"), AMS Properties, Inc. ("AMS Properties"),
SCHEDULE-2-13
<PAGE>
HostMasters, Inc. ("HMI") and Health and Rehabilitation Properties Trust
("HRP") as modified by (a) an Amendment No. 1 to Acquisition Agreement,
Agreement to Lease and Mortgage Loan Agreement, and Amendment No. 1 to
Renovation Funding Agreement dated as of December 28, 1990, (b) an
Amendment to Security Agreements, and Amendment No. 2 and Waiver to
Acquisition Agreement, Agreement to Lease and Mortgage Loan Agreement,
dated as of July 31, 1991, (c) an Amendment No. 3 to Acquisition
Agreement, Agreement to Lease and Mortgage Loan Agreement and Amendment
No. 1 to Renovation Escrow Agreement, dated as of September 13, 1991,
(d) an Amendment No. 4 and Waiver to Acquisition Agreement, Agreement to
Lease and Mortgage Loan Agreement, dated as of September 30, 1991, (e)
an Amendment to Transaction Documents, dated as of January 13, 1992 (f)
an Amendment to Transaction Documents, dated as of March 28, 1992, (f)
an Amendment to Transaction Documents, dated as of March 28, 1992, (g)
an Amendment to AMS Transaction Documents, dated as of July 31, 1992,
(h) an Amendment to AMS Transaction Documents, dated as of September 25,
1992, (i) an Amendment to AMS Transaction Documents, dated as of October
23, 1992, (j) an Amendment to AMS Properties Transaction Documents dated
as of December 21, 1992, (k) an Amendment to AMS Properties Transaction
Documents dated as of January 28, 1993 and (l) an Amendment to AMS
Properties Transaction Documents dated as of February 26, 1993.
2. Guaranty dated as of December 28, 1990 made by GranCare in
favor of HRP.
3. Subordination agreement, dated as of December 28, 1990, among
GranCare as subordinate creditor, AMS Properties, Inc. as debtor, and
HRP as senior creditor, pursuant to which all obligations of AMS
Properties, Inc. to the subordinated creditor are subordinated.
4. Pledge Agreement dated as of December 28, 1990, from AMS to
HRP, consented to by AMS Properties, Inc., as supplemented by a Pledge
Agreement Supplement dated as of December 29, 1993, from GranCare (as
successor to AMS) to HRP.
5. Security Agreement dated as of December 28, 1990 from AMS
Properties, Inc. to HRP.
6. An Amended and Restated Renovation Funding Agreement dated as
of January 13, 1992, as amended, between AMS Properties, Inc. and HRP.
7. Renovation Loan Agreement, dated as of March 28, 1992, by and
between AMS Properties, Inc. and HRP.
8. Promissory Note, dated as of March 28, 1992, in the original
principal amount of $1,250,000, executed by AMS Properties, Inc. and
accepted by HRP.
9. Amended and Restated HRP Share's Pledge Agreement, dated as of
June 30, 1992 between AMS Properties, Inc. and HRP.
10. Amended and Restated Voting Trust Agreement, dated as of June
30, 1992 between AMS Properties, Inc. and HRPT Advisors, Inc., as voting
trustee.
SCHEDULE-2-14
<PAGE>
11. Guaranty, Cross Default and Cross Collateralization Agreement,
dated as of June 30, 1992 among AMS Properties, Inc., GCI Health Care
Centers, Inc. and HRP.
12. Collateral Assignment of Contracts and Permits dated as of
December 28, 1990, from AMS Properties, Inc. to HRP.
13. Pledge Agreement dated as of June 30, 1992 among GranCare, GCI
Health Care Centers, Inc. and HRP.
14. Guaranty dated as of June 30, 1992 among GranCare, GCI Heath
Care Centers, Inc. and HRP.
15. Security Agreement dated as of June 30, 1992 between GCI
Health Care Centers, Inc. and HRP.
16. Assignment of Contracts, Licenses and Permits dated as of June
30, 1992 made by GCI Health Care Centers, Inc. to HRP.
17. Subordination Agreement dated as of June 30, 1992 by and among
GCI Health Care Centers, Inc., HRP and GranCare.
18. Subordination Agreement dated as of June 30, 1992 by and among
GCI Health Care Centers, Inc., HRP and AMS Properties, Inc.
19. A Subordination Agreement dated as of December 28, 1990 among
HMI as subordinate creditor, AMS Properties, Inc. as debtor and HRP as
senior creditor;
20. A Subordination Agreement dated as of December 28, 1990 among
HMI Convalescent Care, Inc. as subordinate creditor, AMS Properties,
Inc. as debtor and HRP as senior creditor.
21. A Subordination Agreement dated as of December 28, 1990 among
AMS Greentree, Inc. as subordinate creditor, AMS Properties, Inc. as
debtor and HRP as senior creditor.
22. A Subordination Agreement dated as of December 28, 1990 among
AMS Leisure, Inc. as subordinate creditor, AMS Properties, Inc. as
debtor and HRP as senior creditor.
23. A Subordination Agreement dated as of December 28, 1990 among
American-Cal Medical Services, Inc. as subordinate creditor, AMS
Properties, Inc. as debtor and HRP as senior creditor.
24. A Subordination Agreement dated as of December 28, 1990 among
American-Cal Medical Services No. 1, Inc. as subordinate creditor, AMS
Properties, Inc. as debtor and HRP as senior creditor.
25. Mortgage and Security Agreement dated as of December 28, 1990
made by AMS Properties, Inc. to HRP, regarding the mortgaged property
described therein located in the City of Milwaukee, County of Milwaukee,
State of Wisconsin.
SCHEDULE-2-15
<PAGE>
26. Mortgage and Security Agreement dated as of December 28, 1990
made by AMS Properties, Inc. to HRP, regarding the mortgaged property
located in Village of Pewaukee, County of Waukesha, State of Wisconsin.
THE MACINTOSH COMPANY5
1. Guaranty of Lease dated December 1, 1990 made by Robert D.
Murtha and E. Murtha to SCIT, Inc., as assigned to Health and
Rehabilitation Properties Trust.
2. Other agreements assigned to Health and Rehabilitation
Properties Trust pursuant to Assignment and Assumption Agreement dated
as of June 4, 1993.
BEVERLY MANOR, INC.
None.
QUALITY CARE OF COUNCIL BLUFFS NORTH, INC.
1. Guaranty of Lease dated as of September 1, 1990, made by
Timothy J. Juilfs and Sally M. Juilfs and Quality Health Care, Inc., in
favor of Safecare Company, Inc. and the estate of Elizabeth A. Lynn, as
assigned to Health and Rehabilitation Properties Trust pursuant to that
certain Assignment and Assumption Agreement dated as June 4, 1993.
5 Borrower never received any of the Credit Support
Agreements with respect to The MacIntosh Company lease.
Accordingly, none of those agreements have been
delivered to the Lenders.
SCHEDULE-2-16
<PAGE>
LIST OF CREDIT SUPPORT AGREEMENTS FOR MORTGAGE INTERESTS
MORTGAGES GRANTED BY HORIZON HEALTHCARE CORPORATION
None.
MORTGAGES GRANTED BY AMS PROPERTIES, INC.
See Credit Support Agreements For Leases with respect to the properties
leased to AMS Properties, Inc.
SCHEDULE-2-17
<PAGE>
SCHEDULE 3
TITLE REPORTS FOR ALL ELIGIBLE PROPERTIES
AND ELIGIBLE MORTGAGES AS OF THE FIRST BORROWING DATE
PROPERTY TITLE REPORT
(001) Owner's Policy #85-00-988561
5/4/88 @ 10:33 a.m.
Greenery Extended Issuer: Lawyer's Title Insurance Corp.
Care Center at HRPT is insured.
Cheshire
50 Hazel Drive Commitment #NH17551b
Cheshire, CT 6/8/92 @ 8:00 a.m.
06410 Issuer: Lawyers Title Ins. Corp.
HRPT and KB are insured.
Loan Policy #82-02-311-454
6/28/88 @ 11:32 a.m.
Issuer: Lawyers Title Ins. Co.
KB is insured, HRPT has fee.
RDC through 11/17/93, Lawyer's Title
Insurance Corp., Red Oak Title
Services as agent
(002) Owner's Policy #8500953388
11/3/87 @ 1:52 p.m.
Greenery Extended Issuer: Lawyer's Title Insurance Corp.
Care Center HRPT is insured.
59 Acton Street
Worcester, MA Commitment #15670
01602 8/23/93 (no time)
Insured: TBD
Issuer: First American
Loan Policy #82-02-477465
6/29/88 @ 2:31 p.m.
KB insured, HRPT has fee.
Issuer: Lawyers Title Ins. Co.
SCHEDULE-3-1
<PAGE>
PROPERTY TITLE REPORT
(003) Owner's Policy #85-00-832917
6/6/87 @ 8:00 a.m.
Greenery Issuer: Lawyer's Title Insurance Corp.
Healthcare Center HRPT has fee, named insured.
at Howell
3003 West Grand Commitment #L-104654
River Avenue 8/4/93 @ 8:00 a.m.
Howell, MI 48843 Insured: Horizon
Proposed loan policy insured is HRPT.
Issuer: First American
Markup of Loan Title Comm. #L-104654
11/30/93
Fee in Horizon, HRPT has mortgage
Deed In, Deed Out, and Confirmatory
Deed relating to transfer of Parcel D.
(004) Owner's Policy #113-00-351365
4/1/91
Greenery HRPT is insured
Rehabilitation Issuer: Lawyer's Title Insurance Corp.
and Skilled
Nursing Center at Commitment #______________
the Gulf Coast 7/23/93 @ 8:00 a.m.
1400 Lindberg Insured: TBD
Drive Issuer: First American
Slidell, LA 70458
(005) Owner's Policy #85-00-271392
3/1/91 (no time)
Greenery HRPT is insured
Rehabilitation Issuer: Lawyer's Title Insurance Corp.
and Skilled
Nursing Center at Commitment # L-1918
Meadowlands 9/13/93 (no time)
RD #1, Box 146 Proposed insured: TBD
Route 519 South Issuer: First American
Canonsburg, PA
15317
(006) Owner's policy #20139929
5/12/92 (no time)
Greenery HRPT is insured
Rehabilitation Issuer: First American
and Skilled
Nursing Center of Commitment #15669
Middleboro 8/24/93 (no time).
Isaac Street Insured: TBD
P.O. Box 1330 Issuer: First American
Middleboro, MA
02346
SCHEDULE-3-2
<PAGE>
PROPERTY TITLE REPORT
(007) Owner's Policy #20139928 5/13/92
HRPT insured.
Greenery Issuer: First American
Rehabilitation
and Skilled Commitment #15667
Nursing Center at 8/24/93 (no time)
Hyannis Insured: TBD
89 Lewis Bay Road Issuer: First American
Hyannis, MA 02601
(008) Owner's policy #20118084
5/12/92
Greenery Extended HRPT insured
Care Center of Issuer: First American
North Andover
75 Park Street Commitment # 15668 9/7/93
North Andover, MA Issuer: First American
01845 (Proposed insured TBD.)
Substitute Tax Bill from Town of North
Andover dated 12/9/93 showing all
taxes are current.
Commitment # 9420 12/10/93
Issuer: First American
(Proposed insured TBD.)
(009) Owner's Policy # 811078
5/12/92 @ 3:54 p.m.
Clifton House HRPT insured, has fee.
Rehabilitation Issuer: First American
Center
181 Clifton RDC through 11/17/93, Lawyer's Title
Street Insurance Corp., Red Oak Title
New Haven, CT Services as agent
06513
(010) Owner's Policy # 811079
5/12/92 @ 3:48 p.m.
Greenery HRPT insured
Rehabilitation Issuer: First American
Center at
Waterbury Corrected sameness endorsement
177 Whitewood received 11/29/93 from First American.
Road
Waterbury, CT RDC through 11/18/93, Lawyer's Title
06708 Insurance Corp., Red Oak Title
Services as Agent
SCHEDULE-3-3
<PAGE>
PROPERTY TITLE REPORT
(011) Owner's Policy #264964-5
11/1/93 @ 12:35 P.M.
The Phoenix Insured: HRPT
Rehabilitation Issuer: First American
Center
555 16th Avenue
Seattle, WA
98122
(012) Owner's Policy #85-00-718598
12/27/86 @ 2:20 p.m.
New Forestville HRPT insured
Health and Issuer: Lawyers Title Ins. Corp.
Rehabilitation
Center Loan Policy #82-02-429649
23 Fair Street 12/1/89 @ 3:44 p.m.
Forestville, CT Barclay's insured, fee in HRPT.
06010 Issuer: Lawyers Title Ins. Co.
RDC through 11/17/93, Lawyers Title
Insurance Corp., Red Oak Title
Services as agent
(013) Owner's Policy #85-00-866152
Insured: HRPT. Fee Simple.
Ten Broeck Issuer: Lawyers Title Ins. Corp.
Hospital Policy: 10/2/87 @ 1:00 p.m.
8521 Le Grange
Road Loan Policy #112-00-025415
Louisville, KY Insured: Barclays Bank, HRPT has fee
40242 Issuer: Lawyers Title Ins. Corp.
Policy: 12/1/88 @ 12:17 p.m.
RDC through 11/19/93, Lawyers Title
Insurance Corp., Robert K. Rainey,
Esq. as agent
(014) Owner's Policy:
#85-01-014639-0
Ten Broeck Insured: HRPT
One Third Avenue, Issuer: Lawyers Title Ins. Corp.
N.W. Policy: 10/2/87 @ 12:25 p.m.
Hickory, NC 28601
Loan Policy, #82-02-355708-M
Insured: Barclays Bank, HRPT has fee
Issuer: Lawyers Title Ins. Corp.
Policy: 12/2/88 @ 12:33 p.m.
RDC through 11/30/93, Lawyers Title
Insurance Corp., Tate, Young, et. al.,
as agents
SCHEDULE-3-4
<PAGE>
PROPERTY TITLE REPORT
(015) Owner's Policy #8641-41092 5/15/87
HRPT is insured
Waterford Health Issuer: Chicago Title Ins. Co.
and
Rehabilitation Loan Policy #8841-40133
Center 6/29/88
171 Rope Ferry KB insured. HRPT has fee.
Road Issuer: Chicago Title Ins. Co.
Waterford, CT Priority Endorsement 6/9/92
06385
Loan Policy Commitment #8841-40133
6/8/92 @ 9:15 a.m.
KB is insured, Fee in HRPT
Issuer: Chicago Title Ins. Co.
RDC through 11/29/93, Lawyer's Title
Insurance Corp., Connecticut East
Abstracting Services as agent
(016) Owner's Policy #8641-50222
5/17/87
Westcott Care HRPT is insured
Center Issuer: Chicago Title Ins. Co.
65 Westcott Road
Killingly, CT Commitment 8841-50014
06239 6/8/92 @ 11:30 a.m.
Insured: KB Fee in HRPT.
Issuer: Chicago Title Ins. Co.
Loan Policy #8841-50014, 6/29/88
KB insured, HRPT has fee.
Issuer: Chicago Title Ins. Co.
Priority Endorsement 6/9/92
RDC through 11/22/93, Lawyers Title
Insurance Corp., Connecticut East
Abstracting Services as agent
SCHEDULE-3-5
<PAGE>
PROPERTY TITLE REPORT
(017) Owner's Policy #8641-50223 5/15/87
HRPT insured
Windham Hills Issuer: Chicago Title Ins. Co.
Care Center
595 Valley Street Owner's Policy #07116193001001
Willimantic, CT 7/2/91 @ 2:58 p.m.
06226 HRPT insured
Issuer: Chicago Title Ins. Co.
(Pertains to additional parcels
conveyed to HRPT)
Loan Policy #8841-50062
6/29/89
KB insured
Fee in HRPT
(Priority endorsement 6/9/92)
Issuer: Chicago Title Ins. Co.
Commitment #8891-50062
6/8/92 @ 1:15 p.m.
KB insured, Fee in HRPT.
Issuer: Chicago Title Ins. Co.
RDC through 11/24/93, Lawyers Title
Insurance Corp., Connecticut East
Abstracting Services as agent
RDC through 12/2/93, Chicago Title
Insurance Company, (For Second Parcel)
(018) Owner's Policy #444664
5/15/87 @ 1:03 p.m.
Wyant Woods Care HRPT insured
Center Issuer: Chicago Title Ins. Co.
200 Wyant Road
Akron, OH 44313 Loan Policy #AK224629M
6/29/88 @ 3:00 p.m.
KB insured, HRPT has fee.
Priority endorsement 6/10/92.
Issuer: Chicago Title Ins. Co.
RDC through 11/5/93, Lawyers Title
Insurance Corp.
(019) Owner's Policy #6071858
1/15/91 @ 12:10 p.m.
Flagship HRPT insured
Healthcare Center Issuer: Chicago Title Ins. Co.
466 Flagship Road
Newport Beach, CA RDC, through 11/4/93, Continental
92663 Lawyers Title Co.
SCHEDULE-3-6
<PAGE>
PROPERTY TITLE REPORT
(020) Owner's Policy #911838-A04
1/9/91 @ 8:00 a.m.
Golden Hill Insured: HRPT
Health Care Issuer: Chicago Title Ins. Co.
Center
1201 34th Street RDC, through 11/15/93, Continental
San Diego, CA Lawyers Title Co.
92102
(021) Owner's Policy #9000715
Insured: HRPT.
Lancaster Issuer: Chicago Title Ins. Co.
Convalescent 12/31/90 @ 3:31 p.m.
Hospital
1642 West Avenue RDC, through 11/15/93, Continental
J Lawyers Title Co.
Lancaster, CA
93534
(022) Owner's Policy #408372
12/31/90 @ 1:20 p.m.
Pacific Gardens HRPT insured
Convalescent Issuer: Chicago Title Ins. Co.
Hospital
577 South Peach RDC, through 11/12/93, Landmark Title
Street Co.
Fresno, CA 93727
(023) Leasehold Owner's Policy
#8924180A-30
Palm Springs 9/17/91 @ 8:30 a.m.
Healthcare HRPT insured
277 South Sunrise Issuer: Chicago Title Ins. Co.
Way
Palm Springs, CA RDC, through 11/12/93, Continental
92262 Lawyers Title Co.
(024) Owner's Policy,
#14-0209-04-00349
Friendship Manor Insured: HRPT
Nursing Home Issuer: Chicago Title Ins. Co.
305 Friendship 1/9/91 @ 4:00 p.m.
Drive
Nashville, IL RDC, through 11/8/93, Metro East Title
62233 Co.
SCHEDULE-3-7
<PAGE>
PROPERTY TITLE REPORT
(025) Loan Policy #50-901-021007054 1/3/91
Insured is HRPT
Christopher East Issuer: Chicago Title Ins. Co.
Health Care
Center Owners Policy #50-901-106 1018751
1132 E. Knapp 4/2/92 @ 8:00 a.m.
Street Insured is HRPT
Milwaukee, WI Issuer: Chicago Title Ins. Co.
53202
RDC, through 11/4/93, Lawyers Title
Insurance Corp.
Lender's Summary dated 11/30/93
Issuer: Chicago Title Ins. Co.
(026) Owner's Policy #50-0029-04-003567
1/2/91 @ 2:30 p.m.
Greentree HRPT insured
Healthcare Center Issuer: Chicago Title Ins. Co.
70 Greentree Road
Clintonville, WI RDC, through 11/10/93, Lawyers Title
54929 Insurance Co., Wisconsin Title, as
agent
(027) Loan Policy, #50-901-021007055
Insured: HRPT as mortgagee, fee is in
Northwest Health AMS Properties, Inc.
Center Issuer: Chicago Title Ins. Co.,
7800 West Fond Du 1/8/91 @ 8:00 a.m.
Lac Ave.
Milwaukee, WI RDC, through 11/3/93, Lawyers Title
53218 Insurance Corp.
(028) Owner's Policy #8938928-39
12/31/90 @ 3:31 p.m.
Tarzana Extended HRPT insured
Care Center Issuer: Chicago Title Ins. Co.
5650 Reseda Blvd.
Tarzana, CA 91356 RDC, through 11/15/93, Continental
Lawyers Title Co.
(029) Owner's Policy #176683-S
12/31/90 @ 8:00 a.m.
Thousand Oaks HRPT is insured
Health Care Issuer: Chicago Title Insurance
Center Company
93 West AV DE Los
Arboles RDC, through 11/4/93, Lawyers Title
Thousand Oaks, CA Insurance Co., Continental Lawyers
91360 Title Co., as agent
SCHEDULE-3-8
<PAGE>
PROPERTY TITLE REPORT
(030) Owner's Policy 900 0770 39
12/31/90 @ 3:31 p.m.
Van Nuys Health HRPT insured
Care Center Issuer: Chicago Title Ins. Co.
6835 Hazeltine
Street RDC, through 11/15/93, Lawyers Title
Van Nuys, CA Insurance Co., Continental Lawyers
91405 Title Co., as agent
(031) Owner's Policy, #060054 93 000008
Insured: HRPT
Cedars Health Issuer: Chicago Title Ins. Co.
Care Center 1/2/91 @ 8:00 a.m.
1599 Ingals
Lakewood, CO RDC, through 10/29/93, Lawyers Title
80214 Insurance Corp., Title Services, Inc.,
as agent
(032) Owner's Policy, #06005493000010
Insured: HRPT
Cherrelyn Manor Insurer: Chicago Title Ins. Co.
5555 South Elati 1/2/91 @ 8:00 a.m.
Street
Littleton, CO RDC, through 10/29/93, Title Services,
80120 Inc.
(033) Owner's Policy: #50-901-041007059
Insured: HRPT
Park Manor Health Insurer: Chicago Title Ins. Co.,
Care Center 1/3/91 @ 8:00 a.m.
1824 East Park
Place RDC, through 11/3/93, Lawyers Title
Milwaukee, WI Insurance Corp.
53211
(034) Owner's Policy, #50-0029-04-003568
Insured: HRPT
Pine Manor Health Issuer: Chicago Title Ins. Co. 1/2/91
Care Center @ 2:30 p.m.
P.O. Box 30
Clintonville, WI RDC, through 11/10/93, Lawyers Title
54929 Insurance Co., Wisconsin Title, as
agent
(035) [Same as property #25]
River Hills East
Health Care
Center
[Same address as
property #25]
SCHEDULE-3-9
<PAGE>
PROPERTY TITLE REPORT
(036) Loan Policy, #50-903-021007058
Insured: HRPT as mortgagee, fee is in
River Hills West AMS Properties, Inc.
Health Care Issuer: Chicago Title Ins. Co. 1/3/91
Center @ 8:00 a.m.
321 Riverside
Drive RDC through 11/10/93, Lawyers Title
Pewaukee, WI Insurance Corp.
53072
(037) Owner's Policy, #50-0065-04-012016
Insured: HRPT
Sunnyhill Issuer: Chicago Title Ins. Co. 1/3/91
Healthcare Center @ 7:00 a.m.
4325 Nakoma Road
Madison, WI 53711 RDC, through 11/4/93, Lawyers Title
Insurance Corp., Wisconsin Land Title,
as agent
(038) Owner's Policy #50-903- 041007057
1/3/91 @ 8:00 a.m.
Virginia Health HRPT insured
Care Center Issuer: Chicago Title Ins. Co.
1471 Waukesha
Avenue RDC through 11/10/93, Lawyers Title
Waukesha, WI Insurance Corp.
53186
(039) Owner's Policy, #50-903-041007056
Insured: HRPT
Woodland Health Issuer: Chicago Title Ins. Co., 1/3/91
Center @ 8:00 a.m.
18741 West Commitment, # 1037073
Bluemound Road Insured: HRPT
Brookfield, WI Issuer: Chicago Title Ins. Co.,
53005 9/29/93 @ 8:00 a.m.
RDC through 11/10/93, Lawyers Title
Insurance Corp.
(040) Owner's Policy, #9106161
Insured: HRPT
La Mesa Care Issuer: Chicago Title Ins. Co., 7/1/92
Center @ 12:00 p.m.
2470 S. Arizona
Avenue RDC through 11/10/93, Lawyers Title
Yuma, AZ 85364 Insurance Corp., First American Title
Insurance Agency of Yuma, Inc. as
agent
SCHEDULE-3-10
<PAGE>
PROPERTY TITLE REPORT
(041) See La Mesa Care Center, Yuma, AZ.
SunQuest Village
of Yuma
265 E. 24th
Street
Yuma, AZ 85364
(042) Owner's Policy #9105639.
Insured: HRPT
Village Green Issuer: Chicago Title Ins. Co.
Nursing Home Policy: 7/1/92 @ 7:30 a.m.
2932 N. 14th
Street RDC through 11/4/94, Lawyers Title
Phoenix, AZ 85014 Insurance Corp., Lawyers Title of
Arizona, Inc. as agent,
with additional tax rundown as of
12/3/93 showing all taxes as current
(043) Owner's Policy #604147
Insured: HRPT
LaSalette Issuer: Chicago Title Ins. Co. 7/1/92
Rehabilitation @ 12:01 a.m.
and Convalescent
Hospital RDC through 11/8/93, Lawyers Title
537 E. Fulton Insurance Corp., Fidelity National
Stockton, CA Title of California as agent
95204
(044) Owner's Policy #AA488427-A
Insured: HRPT
Huron Nursing Issuer: Chicago Title Ins. Co. 7/1/92
Home @ 12:01 a.m.
15th & Michigan
P.O. Box 1277 RDC through 11/29/93, Lawyers Title
Huron, SD 57350 Insurance Corp.
(045) Owner's Policy #AA488427-B.
Insured. HRPT
Mom & Dad's Home Issuer: Chicago Title Ins. Co. 7/1/92
& Health Care @ 12:01 a.m.
Center
3600 S. Norton RDC through 11/29/93, Lawyers Title
Sioux Falls, SD Insurance Corp.
57105
(046) See: Huron Nursing Home, Huron, S.D.
SunQuest Village RDC through 11/29/93, Lawyers Title
of Huron Insurance Corp.
1251 Arizona SW
Huron, SD 57350
SCHEDULE-3-11
<PAGE>
PROPERTY TITLE REPORT
(074) Owner's Policy; Order #28572
Insured: HRPT
Gentry Care North Issuer: Chicago Title Ins. Co.
2452 North Policy: 6/4/93, 2:00 p.m.
Broadway
Council Bluffs,
Iowa 51501
(075) Owner's Policy; Order #28571
Insured: HRPT
Beverly Manor Issuer: Chicago Title Ins. Co.
1317 North 36th 6/4/93 @ 1:25 p.m.
Street
St. Josephs,
Missouri
(076) Owner's Policy; Order #36009260014466
Insured: HRPT
Monterey Nursing Issuer: Chicago Title Ins. Co.
Inn 3929 Hoover 6/4/93 @ 5:00 p.m.
Road, Grove City,
Ohio
(077) Commitment #63-336597
8/24/93 @ 8:00 a.m.
Greenery Extended Insured: Horizon as Owner and HRPT as
Care Center mortgagee
34225 Grand River Issuer: First American
Avenue, Revision dated 11/13/93 @ 8:01 a.m.
Farmington, MI
48335 Discharges of liens received 11/29/93
from Honigman Miller Schwartz & Conn.
Markup of Title Policy of Commitment
#63-336597
Fee in Horizon, HRPT has mortgage
SCHEDULE-3-12
<PAGE>
SCHEDULE 4
ENVIRONMENTAL REPORTS FOR ALL PROPERTIES
AND ALL ELIGIBLE MORTGAGES AS OF THE FIRST BORROWING DATE
PROPERTY ENVIRONMENTAL REPORT
(001) ERT Report 5/6/88
Greenery Extended ENSR Report 5/13/91.
Care Center at
Cheshire Letter from Administrator dated
50 Hazel Drive 11/19/93 re CTDEP order
Cheshire, CT 06410
Letter from Administrator dated
2/18/94 re: Hook-up with town sewer.
(002) ERT Assessment 6/88
Greenery Extended ENSR Report 5/13/91
Care Center
59 Acton Street
Worcester, MA
01602
(003) ERT Report 7/88.
Greenery ENSR Report 5/6/92
Healthcare Center
at Howell
3003 West Grand
River Avenue
Howell, MI 48843
(004) ERM Report 8/25/89
Greenery 2/25/91 Report
Rehabilitation and
Skilled Nursing 5/92 ENSR Report
Center at the Gulf
Coast
1400 Lindberg
Drive
Slidell, LA 70458
SCHEDULE-4-1
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(005) ERS Report 6/2/89
Greenery ERM Transfer Assessment 8/23/89
Rehabilitation and
Skilled Nursing ENSR Report 2/29/91
Center at
Meadowlands ENSR Report 5/6/92
RD #1, Box 146
Route 519 South
Canonsburg, PA
15317
(006) ERM Transfer Assessment (undated).
Greenery ERM Assessment 5/6/92
Rehabilitation and
Skilled Nursing
Center of
Middleboro
Isaac Street
P.O. Box 1330
Middleboro, MA
02346
(007) ERM Assessment 8/25/89
Greenery ERM Update 5/7/92
Rehabilitation and
Skilled Nursing
Center at Hyannis
89 Lewis Bay Road
Hyannis, MA 02601
(008) ERM Report 8/89
Greenery Extended 9/15/89 letter from New England Power
Care Center of Service.
North Andover
75 Park Street ERM Site Assessment 5/7/92
North Andover, MA
01845
(009) ERM Assessment 8/24/89
Clifton House ERM Follow-up 5/6/92
Rehabilitation
Center
181 Clifton Street
New Haven, CT
06513
SCHEDULE-4-2
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(010) ERM Report 9/12/89
Greenery ERM Assessment 5/16/92
Rehabilitation
Center at
Waterbury
177 Whitewood Road
Waterbury, CT
06708
(011) ENSR Phase I Examination, October,
1993.
The Phoenix
Rehabilitation
Center
555 16th Avenue
Seattle, WA 98122
(012) ERT Report 6/88
New Forestville
Health and
Rehabilitation
Center
23 Fair Street
Forestville, CT
06010
(013) ERT Report 6/88
Ten Broeck
Hospital
8521 Le Grange
Road
Louisville, KY
40242
(014) ERT Report 6/88
Ten Broeck Asbestos Letter: Western Asbestos,
One Third Avenue, 11/88 and 12/88.
N.W.
Hickory, NC 28601 Tank Test Report, 12/88
State of North Carolina
U.S.T. leak letter, 7/2/90
Supplemental correspondence and
reports
SCHEDULE-4-3
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(015) ERT Report 1988
Waterford Health 6/29/88 letter from Clean Harbors
and Rehabilitation Systems documents.
Center
171 Rope Ferry 3/13/91 ENSR Report
Road
Waterford, CT Test 6/17/91 by American Tank
06385 Testing, Inc.
(016) ERT Report 5/3/88
Westcott Care ENSR Report 5/13/91
Center
65 Westcott Road 7/1/91 letter from L. Attella, Jr.
Killingly, CT
06239
(017) ERT Report 4/29/88
Windham Hills Care ENSR Report 5/13/91
Center
595 Valley Street
Willimantic, CT
06226
(018) ENSR Report 5/13/91
Wyant Woods Care
Center
200 Wyant Road
Akron, OH 44313
(019) Swanson Environmental Inc.:
Environmental Report;
Flagship Groundwater flow review (12/2/90);
Healthcare Center Red Bag Waste Report (12/4/90)
466 Flagship Road
Newport Beach, CA
92663
(020) Swanson Environmental Inc.:
Environmental Report;
Golden Hill Health Groundwater flow review (12/7/90);
Care Center Red Bag Waste Report (12/4/90)
1201 34th Street
San Diego, CA
92102
SCHEDULE-4-4
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(021) Swanson Environmental Inc. Report
Red Bag Waste Report, 12/4/90
Lancaster Supplemental Correspondence and
Convalescent Reports
Hospital
1642 West Avenue J
Lancaster, CA
93534
(022) Swanson Environmental Inc.:
Environmental Report;
Pacific Gardens Red Bag Waste Procedures Report
Convalescent (12/4/90)
Hospital
577 South Peach
Street
Fresno, CA 93727
(023) Undated, unattributed, one page site
assessment.
Palm Springs
Healthcare Swanson Environmental Inc.:
277 South Sunrise Environmental Report;
Way Red Bag Waste Procedures Report
Palm Springs, CA (12/4/90)
92262
Boen's Service Station Maintenance
Report 11/9/90
Swanson Environmental Inc. Report
12/11/90
(024) Swanson Environmental Inc. Report
Asbestos Test, 12/18/89
Friendship Manor Tightness Test, 11/90
Nursing Home Asbestos Survey, 12/5/90
305 Friendship Red Bag Waste Procedures, 12/4/90
Drive Supplemental Correspondence and
Nashville, IL Reports
62233
(025) Swanson Environmental Inc. Report
4/2/92
Christopher East Asbestos Report, 12/19/89
Health Care Center Red Bag Waste Procedures, 12/4/90
1132 E. Knapp Asbestos Survey, 12/5/90
Street Supplemental Correspondence and
Milwaukee, WI Reports
53202
SCHEDULE-4-5
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(026) Swanson Environmental Inc. Report
12/18/89
Greentree Field Inspection
Healthcare Center
70 Greentree Road Swanson Environmental Inc. Report
Clintonville, WI 12/4/90
54929 Red Bag Waste Procedures Report
(027) Swanson Environmental Inc. Report
Red Bag Waste Procedures, 12/4/90
Northwest Health Tank Test, 11/26/90
Center Tank Removal Estimate, 12/11/90
7800 West Fond Du Supplemental Correspondence and
Lac Ave. Reports
Milwaukee, WI
53218
(028) Swanson Environmental Inc. Site
Inspection 12/6/89
Tarzana Extended
Care Center Swanson Environmental Inc.
5650 Reseda Blvd. Groundwater Flow Review 12/7/90
Tarzana, CA 91356
Swanson Environmental Inc. Report
12/4/90
Red Bag Waste Procedures Report
(029) Swanson Environmental Inc. Site
Inspection 12/6/87
Thousand Oaks
Health Care Center Swanson Environmental Inc. Report
93 West AV DE Los 12/4/90
Arboles Red Bag Waste Procedures Report
Thousand Oaks, CA Supplemental Correspondence and
91360 Reports
(030) Field notes 12/5/87
Van Nuys Health Swanson Environmental Asbestos Test
Care Center 12/18/89
6835 Hazeltine
Street Swanson Environmental Inc.
Van Nuys, CA 91405 Site Inspection 12/15/90
Report 12/4/90
Red Bag Waste Procedures Report
(031) Swanson Environmental Inc. Report
Asbestos Report, 12/18/89
Cedars Health Care Red Bag Report, 12/4/90
Center Asbestos Survey, 12/5/90
1599 Ingals Groundwater Flow Review, 12/7/90
Lakewood, CO 80214 Supplemental Correspondence and
Reports
SCHEDULE-4-6
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(032) Swanson Environmental Inc. Report
Asbestos Report, 12/18/89
Cherrelyn Manor Red Bag Report, 12/4/90
5555 South Elati Supplemental Correspondence and
Street Reports
Littleton, CO
80120
(033) Swanson Environmental Inc. Report
Asbestos Report, 12/13/89
Park Manor Health Red Bag Report, 12/4/90
Care Center Supplemental Correspondence and
1824 East Park Reports
Place
Milwaukee, WI
53211
(034) Swanson Environmental Inc. Report
Asbestos Report, 12/19/89
Pine Manor Health Red Bag Report, 12/4/90
Care Center Asbestos Survey, 12/5/90
P.O. Box 30 Supplemental Correspondence and
Clintonville, WI Reports
54929
(035) [Same property as property #25]
River Hills East
Health Care Center
[Same address as
property #25]
(036) Swanson Environmental Inc. Report
Asbestos Report, 12/18/89
River Hills West Red Bag Report, 12/4/90
Health Care Center Asbestos Survey, 12/5/90
321 Riverside Supplemental Correspondence and
Drive Reports
Pewaukee, WI 53072
(037) Swanson Environmental Inc. Report
Sunnyhill Asbestos Report, 12/18/89
Healthcare Center
4325 Nakoma Road Red Bag Report, 12/4/90
Madison, WI 53711
Supplemental Correspondence and
Reports
SCHEDULE-4-7
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(038) Swanson Environmental Inc.
Site Inspection 12/5/89
Virginia Health
Care Center Swanson Environmental Inc. Report
1471 Waukesha 12/4/90
Avenue Red Bag Waste Procedures Report
Waukesha, WI 53186
(039) Swanson Environmental Inc. Report
Red Bag Report, 12/4/90
Woodland Health Asbestos Survey, 12/5/90
Center Supplemental Correspondence and
18741 West Reports
Bluemound Road
Brookfield, WI
53005
(040) ERM-West Report 12/19/91
Supplemental Correspondence and
La Mesa Care Reports
Center
2470 S. Arizona
Avenue
Yuma, AZ 85364
(041) ERM-West Report 12/19/91
SunQuest Village
of Yuma
265 E. 24th Street
Yuma, AZ 85364
(042) ERM-West Report 12/19/91
Supplemental Correspondence and
Village Green Reports
Nursing Home
2932 N. 14th
Street
Phoenix, AZ 85014
(043) ERM-West Report 12/19/91
LaSalette Asbestos Survey
Rehabilitation and
Convalescent Supplemental Correspondence and
Hospital Reports
537 E. Fulton
Stockton, CA 95204
SCHEDULE-4-8
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(044) ERM-West Report 12/19/91
Huron Nursing Home Asbestos Report, 12/23/91
15th & Michigan
P.O. Box 1277 Supplemental Correspondence and
Huron, SD 57350 Reports
(045) ERM-West Report 12/19/91
Mom & Dad's Home & Supplemental Correspondence and
Health Care Center Reports
3600 S. Norton
Sioux Falls, SD
57105
(046) ERM-West Report 12/19/91
SunQuest Village
of Huron
1251 Arizona SW
Huron, SD 57350
(074) Groundwater Technology, Inc. Report
5/11/93
Gentry Care North
2452 North Supplemental Correspondence and
Broadway Reports
Council Bluffs,
Iowa 51501
(075) Groundwater Technology, Inc. Report
5/11/93
Beverly Manor
1317 North 36th Supplemental Correspondence and
Street Reports
St. Josephs,
Missouri
(076) Groundwater Technology, Inc. Report
5/11/93
Monterey Nursing
Inn 3929 Hoover Asbestos Report, 9/27/90
Road, Grove City,
Ohio Supplemental Correspondence and
Reports
SCHEDULE-4-9
<PAGE>
PROPERTY ENVIRONMENTAL REPORT
(077) ENSR Phase I Report dated November,
1993
Greenery Extended
Care Center
34225 Grand River
Avenue,
Farmington, MI
48335
SCHEDULE-4-10
<PAGE>
SCHEDULE 5
PERMITTED EXCEPTIONS
1. Liens of landlords, mechanics, materialmen and other Liens
imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith;
provided that, in each case, any such Lien is not reasonably
likely to cause a MAC; and provided further that, in the case
of any Liens being so contested, (v) the amount secured
thereby is not material in relation to the Allowed Value of
the affected Property or Mortgage Interest, (w) such Property
or any interest therein would not be in any danger of being
sold, forfeited or lost by reason of such contest; (y) no
insurance coverage required to be maintained pursuant to this
Agreement shall be cancelled or jeopardized as a result of the
contest; and (z) if required by Agent, Borrower shall have
furnished to Agent a bond, or other security satisfactory to
Borrower, to protect Lenders from any liability to which it
may be exposed or any loss or impairment of the Lien of the
Security Documents as a result of such contest.
2. In the case of a Property, all Leases for such Property and
the rights of the Operators under such Leases and any Credit
Support Agreements relating to such Leases.
3. In the case of a Mortgaged Property, the Mortgaged Interest
Agreements for such Mortgaged Property and any Credit Support
Agreements relating thereto.
4. Liens for taxes, assessments, water rates, sewer or other
governmental charges or claims, the payment of which is not,
at the time, due.
5. Easements, rights-of-way, rights of access, encroachments upon
or by any Property, in respect of which affirmative insurance,
without payment of additional premiums, has been provided by a
reputable title insurance company.
6. Easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar
charges or encumbrances that, in respect of any Property,
could not reasonably be likely to result in a MAC.
7. Liens arising from the filing or recording of any of the
Security Documents.
8. Liens resulting from equipment financings or similar security
arrangements entered into by an Operator.
SCHEDULE-5-1
<PAGE>
SCHEDULE 6
EXCLUDED GCI AND AMS CREDIT SUPPORT AGREEMENTS
1. A security agreement, dated as of December 28, 1990, from AMS
Holding Co. (``AMSHC'') to Borrower granting Borrower a security
interest in all tangible personal property and all accounts receivable,
contract rights and general intangibles of AMSHC.
2. A pledge agreement, dated as of December 28, 1990, from AMSHC
to Borrower and consented to by American Medical Services, Inc.
(``AMS''), pursuant to which all shares of the capital stock of AMS were
pledged to Borrower, together with certificates relating to the shares
of AMS and stock powers relating to such shares.
3. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from AMSHC to Borrower assigning to Borrower all
contracts and permits of AMSHC.
4. A guaranty, dated as of December 28, 1990, from AMS in favor
of Borrower pursuant to which all obligations of AMS Properties under
the Transaction Documents are guaranteed.
5. A security agreement, dated as of December 28, 1990, from AMS
to Borrower granting Borrower a security interest in all tangible
personal property and all accounts receivable, contract rights and
general intangibles of AMS.
6. Leasehold mortgages, each dated as of December 28, 1990,
between AMS as mortgagor and Borrower as mortgagee with respect to each
of the Following leased properties of AMS:
a. Camellia Health Care Center located at Aurora,
Colorado; and
b. Valley Manor Health Care Center located at Aurora,
Colorado.
7. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from AMS to Borrower assigning to Borrower all
contracts and permits of AMS.
8. A subordination agreement, dated as of December 28, 1990,
among AMS as subordinate creditor, AMS Properties as debtor and Borrower
as senior creditor.
9. A pledge agreement, dated as of December 28, 1990, from AMS to
Borrower and consented to by AMS Greentree, Inc., a Wisconsin
corporation and a wholly-owned subsidiary of AMS (``AMS Greentree''),
pursuant to which all shares of the capital stock of AMS Greentree were
pledged to Borrower, together with certificates relating to the shares
of AMS Greentree and stock powers relating to such shares.
10. A pledge agreement, dated as of December 28, 1990, from AMS to
Borrower and consented to by AMS Leisure, Inc., a Wisconsin corporation
Sch.-6-2
<PAGE>
and a wholly-owned subsidiary of AMS (``AMS Leisure''), pursuant to
which all shares of the capital stock of AMS Leisure were pledged to
Borrower, together with certificates relating to the shares of AMS
Leisure and stock powers relating to such shares.
11. A pledge agreement, dated as of December 28, 1990, from AMS to
Borrower and consented to by AMS Rehab, Inc., a Delaware corporation and
a wholly-owned subsidiary of AMS (``AMS Rehab''), pursuant to which all
shares of the capital stock of AMS Rehab were pledged to Borrower,
together with certificates relating to the shares of AMS Rehab and stock
powers relating to such shares.
12. A pledge agreement, dated as of December 28, 1990, from AMS to
Borrower and consented to by American-Cal Medical Services, Inc., a
California corporation and a wholly owned subsidiary of AMS
(``Am-Cal''), pursuant to which all shares of the capital stock of
AM-Cal were pledged to Borrower, together with certificates relating to
the shares of Am-Cal and stock powers relating to such shares.
13. A pledge agreement, dated as of December 28, 1990, from AMS to
Borrower and consented to by American-Cal Medical Services, No. 1, Inc.,
a California corporation and a wholly owned subsidiary of AMS (``Am-Cal
No. 1''), pursuant to which all shares of the capital stock of AM-Cal
No. 1 were pledged to Borrower, together with certificates relating to
the shares of Am-Cal No. 1 and stock powers relating to such shares.
14. A leasehold mortgage, dated as of December 28, 1990, between
AMS and AMS Greentree as mortgagors and Borrower as mortgagee with
respect to the leased property of AMS and AMS Greentree known as AMS
Greentree Health Care Center located at Glendale, Wisconsin (``AMS
Greentree Facility'').
15. A renovation escrow agreement, dated as of December 28, 1990,
between AMS Properties and Borrower pursuant to which Borrower agreed to
hold certain proceeds from the sale by AMS Properties of the Mortgaged
Property for the purposes of making certain renovations, repairs and
improvements to the Collective Lease Properties as provided therein.
16. A Memorandum of option and Right of First Refusal, dated as of
December 28, 1990, between AMS Properties and Borrower, to purchase the
Lakefront Health Care Center, located at Mequon, Wisconsin
(``Lakefront''), as the same may be amended, modified or supplemented
from time to time.
17. A guaranty, dated as of December 28, 1990, from Hostmasters,
Inc., a California corporation (``HMI'') in favor of Borrower pursuant
to which all obligations of AMS Properties under the Acquisition
Agreement, Agreement to Lease, Mortgage Loan Agreement, Lease,
Promissory Note, Security Documents and each of the other documents,
instruments, and agreements delivered pursuant thereto (the
``Transaction Documents'') are guaranteed.
Sch.-6-3
<PAGE>
18. Leasehold mortgage, dated as of December 28, 1990, between HMI
as mortgagor and Borrower as mortgagee with respect to the following
leased property of HMI:
a. Cambridge Care Center, Petaluma, CA;
b. Redwood Christian Convalescent Hospital, Napa, CA;
c. Vale Care Center, San Pedro, CA;
d. Brighton Convalescent Center, Pasadena, CA;
e. Pineridge Care Center, Sylamar, CA; and
f. Desert Valley Rehab Medical Center located in Phoenix,
Arizona.
19. A security agreement, dated as of December 28, 1990, from HMI
to Borrower granting Borrower a security interest in tangible personal
property and all accounts receivable, contract rights and general
intangibles of HMI.
20. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from HMI to Borrower assigning to Borrower all
contracts and permits of HMI. and
21. A pledge agreement dated as of December 28, 1990, from HMI to
Borrower and consented to by AMSHC, pursuant to which all shares of the
capital stock of AMSHC were pledged to Borrower, together with
certificates fort he shares and stock powers relating thereto.
22. A subordination agreement, dated as of December 28, 1990,
among HMI as subordinate creditor, AMS Properties as debtor and Borrower
as senior creditor, as the same may be amended, modified or supplemented
from time to time.
23. A guaranty, dated as of December 28, 1990, from HMI
Convalescent Care, Inc., a California corporation and a wholly-owned
subsidiary of HMI (``HMICC'') in favor of Borrower pursuant to which all
obligations of AMS Properties under the Transaction Documents are
guaranteed.
24. Leasehold mortgages each dated as of December 28, 1990 between
HMICC as mortgagor and Borrower as mortgagee with respect to each of the
following leased properties of HMICC:
a. Pacific Care Convalescent Hospital located in Oakland, CA; and
b. Fruitvale Care Convalescent Hospital located in Oakland, CA.
25. A security agreement, dated as of December 28, 1990 from HMICC
to Borrower granting Borrower a security interest in all tangible
personal property and all accounts receivable, contract rights and
general intangibles of HMICC.
26. A collateral assignment of contracts and permits, dated as of
December 28, 1990 from HMICC to Borrower assigning to Borrower all
contracts and permits of HMICC.
Sch.-6-4
<PAGE>
27. A subordination agreement dated as of December 28, 1990 among
HMICC as subordinate creditor, AMS Properties as debtor and Borrower as
senior creditor.
28. A guaranty, dated as of December 28, 1990, from AMS Greentree
in favor of Borrower pursuant to which all obligations of AMS Properties
under the Transaction Documents are guaranteed.
29. A leasehold mortgage, dated as of December 28, 1990, between
AMS and AMS Greentree as mortgagors and Borrower as mortgagee with
respect to the AMS Greentree Facility.
30. A security agreement, dated as of December 28, 1990, from AMS
Greentree to Borrower granting Borrower a security interest in all
tangible personal property and all accounts receivable, contract rights
and general intangibles of AMS Greentree.
31. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from AMS Greentree to Borrower assigning to Borrower
all contracts and permits owned by AMS Greentree.
32. A subordination agreement, dated as of December 28, 1990,
among AMS Greentree as subordinate creditor, AMS Properties as debtor
and Borrower as senior creditor.
33. A guaranty, dated as of December 28, 1990, from AMS Leisure in
favor of Borrower pursuant to which all obligations of AMS Properties
under the Transaction Documents are guaranteed.
34. A security agreement, dated as of December 28, 1990, from AMS
Leisure to Borrower granting Borrower a security interest in all
tangible personal property and all accounts receivable, contract rights
and general intangibles of AMS Leisure.
35. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from AMS Leisure to Borrower assigning to Borrower
all contracts and permits owned by AMS Leisure.
36. A subordination agreement, dated as of the closing Date, among
AMS Leisure as subordinate creditor, AMS Properties as debtor and
Borrower as senior creditor.
37. A guaranty, dated as of December 28, 1990, from AMS Rehab in
favor of Borrower pursuant to which all obligations of AMS Properties
under the Transaction Documents are guaranteed.
38. A leasehold mortgage, dated as of December 28, 1990, between
AMS-Rehab as mortgagor and Borrower as mortgagee with respect to the
leased property of AMS-Rehab known as Saline (Rehab) Health Care Center,
and located at Ann Arbor, Michigan.
39. A security agreement, dated as of December 28, 1990, from AMS
Rehab to Borrower granting Borrower a security interest in all tangible
Sch.-6-5
<PAGE>
personal property and all accounts receivable, contract rights and
general intangibles of AMS Rehab.
40. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from AMS Rehab to Borrower assigning to Borrower all
contracts and permits owned by AMS Rehab.
41. A subordination agreement, dated as of December 28, 1990,
among AMS Rehab as subordinate creditor, AMS Properties as debtor and
Borrower as senior creditor.
42. A guaranty, dated as of December 28, 1990, from Am-Cal in
favor of Borrower pursuant to which all obligations of AMS Properties
under the Transaction Documents are guaranteed.
43. Leasehold mortgages, each dated as of December 28, 1990,
between Am-Cal as mortgagor and Borrower as mortgagee with, respect to
each of the following leased properties of Am-Cal:
a. Inglewood Health Care Center located at Los Angeles, CA; and
b. Santa Monica Health Care Center Located at Los Angeles, CA.
44. A security agreement, dated as of December 28, 1990 from
Am-Cal to Borrower granting Borrower a security interest in all tangible
personal property and all accounts receivable, contract rights and
general intangibles of Am-Cal.
45. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from Am-Cal to Borrower assigning to Borrower all
contracts and permits owned by Am-Cal.
46. A subordination agreement, dated as of December 28, 1990,
among Am-Cal as subordinate creditor, AMS Properties as debtor and
Borrower as senior creditor.
47. A guaranty, dated as of December 28, 1990, from Am-Cal No. 1
in favor of Borrower, pursuant to which all obligations of AMS
Properties under the Transaction Documents are guaranteed.
48. Leasehold mortgages, each dated as of December 28, 1990,
between AM-Cal No. 1 as mortgagor and Borrower as mortgagee with respect
to each of the following leased properties of Am-Cal No. 1:
a. Newport Villa Health Care Center located at Newport Beach, CA;
and
b. Newport Villa West Health Care Center located at Newport
Beach, CA.
49. A security agreement, dated as of December 28, 1990, from
Am-Cal No. 1 to Borrower granting Borrower a security interest in all
tangible personal property and all accounts receivable, contract rights
and general intangibles of Am-Cal No. 1.
Sch.-6-6
<PAGE>
50. A collateral assignment of contracts and permits, dated as of
December 28, 1990, from Am-Cal No. 1 to Borrower assigning to Borrower
all contracts and permits owned by Am-Cal No. 1.
51. A subordination agreement, dated as of December 28, 1990,
among Am-Cal No. 1 as subordinate creditor, AMS Properties as debtor and
Borrower as senior creditor.
52. Any other credit support currently granted to Borrower by any
subsidiary or affiliate of GranCare other than AMS Properties, Inc. and
GCI Health Care Centers, Inc.
Sch.-6-7
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is
executed as of the ____ day of __________, 1994, by HMH
PROPERTIES, INC., a Delaware corporation with its principal
office at 10400 Fernwood Road, Bethesda, Maryland 20817 ("HMH
Properties"), and HMC RETIREMENT PROPERTIES, INC., a Delaware
corporation with its principal office at 10400 Fernwood Road,
Bethesda, Maryland 20817 ("HMC Retirement"), as sellers
(collectively, "Sellers" and each individually a "Seller"), and
HEALTH AND REHABILITATION PROPERTIES TRUST, a Maryland real
estate investment trust with its principal office at 400 Centre
Street, Newton, MA 02158 ("Purchaser").
ARTICLE I
Definition of Terms
1.01 Definition of Terms
When used in this Agreement, the following terms shall
have the meanings indicated:
"Accountant" means a firm of certified public
accountants mutually agreeable to Sellers and Purchaser appointed
to perform the functions of a public accountant as described in
or required by this Agreement.
"Assignment and Assumption of Leases" means the
assignment by Sellers and the assumption by Purchaser of
Facilities Leases conveying to Purchaser Sellers' lessor interest
in the Facilities Leases and assignment of Guarantees relating to
each Site, such assignment and assumption to be in form and
substance reasonably satisfactory to Sellers and Purchaser.
"Assignment of Ground Lease" means the assignment of
ground lease HMC Retirement is to deliver to Purchaser at Closing
dated the Closing Date, conveying to Purchaser HMC Retirement's
leasehold interest in the Site relating to the Colonnades
(including the consent of the landlord under such ground lease to
the assignment thereof to Purchaser, if any such consent is
required), such assignment to be in form and substance reasonably
satisfactory to Sellers and Purchaser.
"Bills of Sale" means the bill of sale, assignment and
assumption agreements Sellers are to deliver to Purchaser at
Closing, each dated as of the Closing Date, conveying to
Purchaser all of Sellers' right, title and interest in and to the
FF&E, rights and warranties under Contracts and Equipment Leases
and Miscellaneous Assets, such Bills of Sale to be in form and
substance reasonably satisfactory to Sellers and Purchaser.
"Calusa Harbour Lease Amendment" means the amendment to
the Facilities Lease relating to the Calusa Harbour Facility to
reflect Sellers' payment of the bonds relating to such Facility
and providing for the payment by MSLS of Minimum Rental (as
defined in the Facility Lease) with respect to the Calusa Harbour
Facility of not less than $2,040,000, such amendment to be
consented to by Marriott International, as guarantor, and
otherwise in form and substance reasonably acceptable to
Purchaser.
"Closing" means the consummation of the purchase and
sale of the Facilities, as contemplated by this Agreement.
"Closing Date" means the date upon which the Closing
occurs, which shall be a date no later than June 15, 1994
(subject to extension as set forth in this Agreement or otherwise
by mutual agreement of the parties), or which shall be such
earlier date as may be designated in a written notice by
Purchaser to Sellers delivered no fewer than five (5) days before
the Closing is to occur.
"Colonnades" means the Facility commonly known as The
Colonnades Senior Living Community at Charlottesville, Virginia.
"Contract Date" means the date upon which this
Agreement is executed fully by Purchaser and Sellers, as
evidenced by the last date indicated on the signature page
hereof.
"Contracts" means the service, maintenance, supply, and
other contracts related to the maintenance or operation of the
Facilities identified by Sellers by written notice to Purchaser
given on or before April 1, 1994 or, if Sellers shall fail to
give such notice, then there shall be deemed to be none.
"Deeds" means the special warranty deeds (or local
equivalent) Sellers are to deliver to Purchaser at Closing, each
dated the Closing Date, conveying to Purchaser Sellers' fee
simple interest in each Facility, including the Site, with
respect to each Fee Facility.
"Encumbrance(s)" means liens, mortgages, deeds of
trust, security interests, pledges, charges, options,
encroachments, easements, covenants, leases, reservations or
restrictions of any kind.
"Equipment Leases" means the leases identified by
Sellers by written notice given to Purchaser on or before April
1, 1994 or, if Sellers shall fail to give such notice, then there
shall be deemed to be none.
"Facility" or "Facilities" means, individually or
collectively, as the context may require, the fourteen (14)
Marriott senior living communities listed on Exhibit A, being
comprised of the thirteen (13) Fee Facilities and the Colonnades.
The term "Facility" or "Facilities" shall include, as appropriate
to the context, (a) in the case of the Fee Facilities, the legal
and beneficial fee simple title to and interest in the applicable
Sites and, in the case of the Colonnades, the Sellers' leasehold
interest in the applicable Site; (b) all easements and other
rights and obligations appurtenant to the Sites; (c) the legal
and beneficial fee simple title to all buildings and other
improvements that are located on the Sites; (d) all related
Contracts, to the extent assignable; (e) all related Equipment
Leases, to the extent assignable; (f) all related FF&E; (g) all
related Miscellaneous Assets, to the extent transferable, (h)
Sellers' lessor interest in the applicable Facilities Lease and
Sellers' interest in the Guaranty for each Site, and (i) all
other easements, privileges, licenses, rights and appurtenances
relating to any of the foregoing. The term "Facility" or
"Facilities" for purposes of consummating the Closing shall not
include any Facilities which have been deleted from this
Agreement pursuant to the terms hereof.
"Facilities Leases" means each of the facilities lease
agreements, dated as of October 8, 1993, between HMC Retirement
or HMH Properties, as landlord, and MSLS, as tenant, related to
the operation of the Facilities, together with all amendments
thereto.
"Fee Facility" or "Fee Facilities" means, individually
or collectively, as the context may require, the thirteen (13)
Facilities listed on Exhibit A as "Fee Facilities."
"FF&E" means all appliances, machinery, devices,
fixtures, appurtenances, equipment, furniture, furnishings and
articles of tangible personal property of every kind and nature
whatsoever owned by any Seller and located in or at, or used in
connection with the ownership, operation or maintenance of, all
or any of the Facilities (except Excluded Items).
"Guarantees" means the fourteen (14) guarantees by
Marriott International of each of the Facilities Leases dated as
of October 8, 1993, together with all amendments thereto.
"Healthcare Approvals" means, with respect to any
Facility or Facilities, all material licenses, certificates or
determinations of need, permits, exemptions, certifications,
accreditations, approvals, permissions, consents and agreements
from all federal, state and local agencies and accrediting and
certifying organizations having jurisdiction over such Facility
or Facilities which are required to operate the Facility or
Facilities in the manner in which it or they are currently
operated or to receive reimbursement for care provided to
patients covered under the federal Medicare program and any
applicable state Medicaid program to the extent such
reimbursements are currently received.
"Host Marriott" means Host Marriott Corporation, a
Delaware corporation.
<PAGE>
"Lease Amendments" means amendments to the Facilities
Leases in form and substance reasonably acceptable to MSLS,
Sellers and Purchaser to become effective upon the Closing.
"Marriott International" means Marriott International,
Inc., a Delaware corporation.
"MSLS" means Marriott Senior Living Services, Inc. a
Delaware corporation and a wholly-owned subsidiary of Marriott
International.
"Miscellaneous Assets" means, to the extent related to
any Facility and only to the extent in a Seller's possession
and/or control, all surveys, all architectural, consulting and
engineering blueprints, all plans and specifications, all
drawings, and all reports, all Permits (to the extent
transferable), all books and records (financial and otherwise),
and all personal property relating to the ownership or operation
of any of the Facilities that are owned by or leased to Sellers
as of the Closing Date, excluding FF&E, Contracts, Equipment
Leases and Excluded Items.
"Permits" means all licenses, franchises, certificates
of occupancy, consents, permits, approvals and other
authorizations (other than Healthcare Approvals) issued by any
governmental authority or any third party and used in or
necessary to the use and operation of the Facilities (or any of
them) as fully functioning Marriott senior living communities as
currently operated.
"Permitted Encumbrances" means (a) liens for taxes,
assessments and governmental charges not yet due and payable or
due and payable but not yet delinquent; (b) applicable zoning
regulations and ordinances provided the same do not prohibit or
impair use of the facilities as currently operated and
constructed; (c) occupancy rights of any Facility residents;
(d) with respect to the Colonnades, the applicable ground lease;
(e) the Facilities Leases; (f) the bond debt financing documents
and liens relating to the Church Creek, Illinois Facility (other
than the mortgage liens granted to Allied Irish Bank plc with
respect to the Church Creek, Illinois Facility and the Villa
Valencia, California Facility); (g) such other nonmonetary
Encumbrances as do not, in the Purchaser's reasonable opinion,
impair marketability and do not materially interfere with the use
of the applicable Facility as a fully functioning Marriott senior
living community as currently operated and constructed; and (h)
such other nonmonetary Encumbrances which are not objected to by
Purchaser in accordance with Article IV.
"Review Period" means the period commencing on the
Contract Date and ending at 5:00 p.m. Eastern Standard Time on
April 8, 1994 (subject to extension as set forth herein);
provided, however, if Sellers fail to provide Purchaser by April
1, 1994, with information required to be provided herein in order
for Purchaser to finish its due diligence, the Review Period
shall be extended to the later of 5:00 p.m. Eastern Standard Time
on (a) the date ten (10) days after Sellers provide such
information to Purchaser and (b) April 22, 1994.
"Sellers" means HMH Properties and HMC Retirement,
collectively, together with each affiliate thereof conveying, or
currently owning, any interest in the assets to be conveyed
hereunder, and "Seller" means any one of the foregoing, as the
context may require.
"Site" or "Sites" means, individually or collectively,
as the context may require, the parcels of land on which the
Facilities are located, including all right, title, and interest
of Sellers, if any, in and to all easements, rights and other
interests appurtenant thereto. "Sites" does not include
buildings and other improvements.
"Title Company" means Commonwealth Land Title Insurance
Company or such other title insurance company as shall be
reasonably acceptable to Purchaser and Sellers.
1.02 Terms Defined in Other Sections
As used in this Agreement, the following terms have the
meanings specified in the sections listed below:
"Agreement" -- Preamble.
"ALTA" -- Section 3.01(a).
"Brokerage Compensation" -- Section 13.01.
"Code" -- Section 2.04.
"Confidentiality Agreement" -- Section 4.03.
"Defective Facility" -- Section 2.07(a).
"Deposit" -- Article VII.
"Environmental Law" -- Section 5.10(a).
"Escrow Instructions" -- Article VIII.
"Excluded Items" -- Section 2.02.
"FIRPTA Certificate" -- Section 8.01(a)(vii).
"Hazardous Materials" -- Section 5.10.
"HMH Properties" -- Preamble.
"HMC Retirement" -- Preamble.
"HSR Act" -- Section 13.08.
"Purchase Price" -- Section 2.03.
"Purchaser" -- Preamble.
"Purchaser's Title Policies" -- Section 3.01(a).
"Section 1542" -- Section 2.06(b).
"Sellers' Funds" -- Section 8.01(b)(i).
"Study" -- Section 4.01(c).
""Termination Notice" -- Section 4.02.
"Title Commitments" -- Section 4.01(a).
ARTICLE II
Purchase and Sale
2.01 Purchase and Sale.
(a) Purchase. Sellers agree to sell, convey and
assign to Purchaser, and Purchaser agrees to purchase, accept and
assume from Sellers, upon the terms, covenants and conditions set
forth in this Agreement, the Facilities (other than the Excluded
Items).
(b) Obligations upon Closing. At Closing, Sellers
shall convey the Facilities to Purchaser free of all liens and
Encumbrances other than the Permitted Encumbrances. Upon
Closing, Sellers shall transfer and convey to Purchaser and
Purchaser shall assume all obligations of Sellers in connection
with the Facilities Leases, Contracts, Equipment Leases and
Miscellaneous Assets arising on and after the Closing Date.
2.02 Excluded Items
Sellers shall not be obligated to sell to Purchaser,
and Purchaser shall not be entitled to purchase from Sellers, the
following, all of which shall remain the sole and exclusive
property of Sellers, Host Marriott, Marriott International, MSLS,
or any of their affiliates, as appropriate (collectively, the
"Excluded Items"):
(a) Except as otherwise provided in the
Facilities Leases, any right, title, or interest in the
name or signage containing the name "Marriott",
"Brighton Gardens", "Bedford Court", "Stratford Court"
"The Stratford Court" and other marks used by Sellers,
Host Marriott, Marriott International, MSLS, or any of
their affiliates.
(b) Cash, and all balances on deposit in the name
of or to the credit of Sellers (or MSLS for the benefit
of Sellers), and all cash equivalent investments.
(c) Except as otherwise provided in the
Facilities Leases, all property owned by Sellers, Host
Marriott, Marriott International or MSLS, or any of
their affiliates, not normally located at the
Facilities and used, but not used exclusively, in
connection with the Facilities.
(d) Residential condominium units at the
condominium known as The Jefferson Condominium and
located in Arlington, Virginia.
Except as otherwise provided in the Facilities Leases, nothing
herein shall be construed to convey any information or materials
that are the proprietary property of Marriott International or
MSLS, or any of their affiliates.
2.03 Purchase Price
(a) The purchase price (the "Purchase Price") shall be
the sum of THREE HUNDRED TWENTY MILLION DOLLARS ($320,000,000),
subject to adjustment as set forth in Sections 2.07 and 8.03, and
shall be payable by Purchaser to Sellers on the Closing Date (a)
in cash or (b) by wire transfer of immediately available funds to
such account or accounts as Sellers may designate by written
notice given to Purchaser not less than two (2) days prior to the
Closing Date.
2.04 Allocation of Purchase Price
On or before the expiration of the Review Period, the
Purchase Price attributable to each Facility shall be allocated
among the Facilities and the applicable (a) buildings and
improvements, (b) FF&E, and (c) value of the leasehold or value
of the Site, located thereon, as applicable, in a manner
consistent with the appraisals to be obtained by Purchaser as
hereinafter provided and otherwise as mutually agreed by the
parties. Sellers and Purchaser agree to file all federal income
tax returns and reports necessary in connection with the Closing,
including, without limitation, any filings contemplated by
Section 1060 of the Internal Revenue Code of 1986, as amended,
and the regulations issued thereunder (the "Code"), consistent
with the allocations made pursuant to this Section 2.04.
2.05 Employees at Facilities
Purchaser acknowledges that all personnel employed or
engaged in connection with the operation of the Facilities are
employees of Marriott International or MSLS. Each Seller
represents that it has no employees engaged in the day-to-day
operation of the Facilities. The parties agree that any matters
pertaining to Facility employees are to be worked out and
resolved between Purchaser and MSLS subject to the applicable
provisions of the Facilities Leases.
<PAGE>
2.06 Sellers' Disclaimer
(a) Except as otherwise expressly provided in this
Agreement, in the Deeds or any other documents to be delivered to
Purchaser at Closing, Sellers disclaim the making of any
representations or warranties, express or implied, regarding the
Facilities or matters affecting the Facilities, whether made by
Sellers, on Sellers' behalf or otherwise, or included or set
forth within any Miscellaneous Asset, including, without
limitation, the physical condition of the Facilities, title to or
the boundaries of the Sites, pest control matters, soil
conditions, the presence, existence or absence of hazardous
wastes, toxic substances or other environmental matters,
compliance with building, health, safety, land use and zoning
laws, regulations and orders, structural and other engineering
characteristics, traffic patterns, market data, economic
conditions or projections, and any other information pertaining
to the Facilities or the market and physical environments in
which they are located. Purchaser acknowledges (i) that
Purchaser has entered into this Agreement with the intention of
making and relying upon its own investigation or that of third
parties with respect to the physical, environmental, economic and
legal condition of each Facility and (ii) that Purchaser is not
relying upon any statements, representations or warranties of any
kind, other than those specifically set forth in this Agreement,
in the Deeds or in any document to be delivered to Purchaser at
Closing, made (or purported to be made) by Sellers or anyone
acting or claiming to act on Sellers' behalf. Purchaser further
acknowledges that it has not received from or on behalf of
Sellers any accounting, tax, legal, architectural, engineering,
property management or other advice with respect to this
transaction and is relying solely upon the advice of third party
accounting, tax, legal, architectural, engineering, property
management and other advisors. Subject to the provisions of this
Agreement, Purchaser shall purchase the Facilities in their "as
is" condition on the Closing Date.
(b) Except with respect to any claims arising out of
any breach of covenants, representations or warranties set forth
in this Agreement or in the Deeds and other documents and
instruments to be delivered to Purchaser at Closing or as
otherwise provided herein or therein, Purchaser, for itself and
its agents, affiliates, successors and assigns, hereby releases
and forever discharges Sellers, their respective affiliates,
successors and assigns from any and all rights, claims,
liabilities, obligations, and demands, at law or in equity,
whether known or unknown at the time of this Agreement, which
Purchaser has or may have in the future, arising out of the
physical, environmental, economic or legal condition of the
Facilities. To the extent consistent with the foregoing,
Purchaser hereby specifically waives the provisions of Section
1542 of the California Civil Code ("Section 1542") and any
similar law of any other state, territory or jurisdiction.
Section 1542 provides:
A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing the release,
which if known by him must have materially
affected his settlement with the debtor.
Purchaser hereby specifically acknowledges that Purchaser has
carefully reviewed this subsection and discussed its import with
legal counsel and that the provisions of this subsection are a
material part of this Agreement.
/s/ Barry M. Portnoy
Trustee
2.07 Defective Facilities
(a) Defective Facilities Identified During the Review
Period. In the event (i) Purchaser reasonably determines that a
Facility has structural, environmental, legal or operational
defects or conditions that would require expenditures equal to or
greater than seven and one-half percent (7.5%) of the amount of
the Purchase Price allocated to such Facility in order to bring
such Facility into a satisfactory condition in accordance with
prevailing senior living community industry standards (any such
Facility being hereinafter referred to as a "Defective
Facility"), and (ii) Purchaser provides written notice thereof to
Sellers no later than the expiration of the Review Period, time
being of the essence, specifying the Facility or Facilities
Purchaser wishes to be deleted, Sellers, shall, subject to
paragraph (c) below, be required to delete such Facility or
Facilities from the sale contemplated hereunder. Prior to
Closing, Sellers agree to enforce all rights available against
third parties, including, without limitation, MSLS, and to cause
any and all defects or conditions so identified by Purchaser to
be corrected, it being expressly understood and agreed that
nothing contained herein shall be construed to relieve any such
parties from any obligations with respect to such matters.
(b) Risk of Loss Following the Review Period. If,
prior to Closing, (i) any Facility suffers a casualty or
condemnation which would cause such Facility to become a
Defective Facility, (ii) MSLS fails, at its sole cost and
expense, to restore the Defective Facility to a condition
substantially the same as the condition thereof immediately prior
to such casualty or condemnation or to commit so to restore and
provide evidence to Purchaser that it has adequate funds
therefor, and (iii) Purchaser provides written notice of same to
Sellers no later than the Closing Date, time being of the
essence, Sellers shall, subject to paragraph (c) below, be
required to delete such Facility or Facilities from the sale
contemplated hereunder. Promptly upon learning of the same,
Sellers covenant and agree to provide Purchaser with prompt
written notice of any casualty or condemnation affecting any
Facility.
(c) Termination. If Purchaser timely identifies any
Defective Facilities Purchaser wishes to delete from this
Agreement pursuant to this Section 2.07, then the Purchase Price
shall be reduced by the amount allocated to such Facilities as
herein provided. Notwithstanding the foregoing, if more than two
(2) Facilities are identified as Defective Facilities, whether
pursuant to this Section 2.07, Article IV, or otherwise, either
party may terminate this Agreement and the transactions
contemplated hereby, in which case the Deposit shall be returned
to Purchaser and neither party shall have any further obligations
hereunder (except as specified in Section 13.02(b) hereof);
provided, however, that in the event Sellers shall be the
terminating party, Purchaser shall have the option, exercisable
by notice given within ten (10) days after Sellers' notice to
terminate, to proceed to Closing on one or more such Facility or
Facilities designated by Purchaser such that the total amount of
Facilities delieted by Purchaser prusuant to this Section 2.07
shall not be greater than twelve (12) Facilities. In the event
Purchaser shall elect to proceed to Closing as aforesaid, any
notice of termination given by Sellers shall be null and void and
of no further force or effect.
ARTICLE III
Conditions Precedent
3.01 Conditions Precedent for the Benefit of Purchaser
Purchaser's obligation to purchase the Facilities shall
be subject to and contingent upon the satisfaction (to
Purchaser's reasonable satisfaction), or the waiver by Purchaser,
as of the Closing Date, or such earlier date specified below, of
the following conditions precedent:
(a) The Title Company shall have committed to
issue as of the Closing Date, upon the sole condition
of payment of its regularly scheduled premium and
satisfaction of its standard requirements, a standard
American Land Title Association ("ALTA") extended
coverage owner's policy of title insurance (Form 1992)
for each Facility (the "Purchaser's Title Policies"),
in an amount equal to the allocated value with respect
to the Facility for which the policy is being issued,
determined as herein provided, insuring that title to
the Facility on the Closing Date is vested of record in
Purchaser, subject only to the printed conditions and
exceptions (other than the so-called standard
exceptions) of such policy and Permitted Encumbrances
together with affirmative coverages for zoning, where
available, survey, access and contiguity, if
applicable.
(b) Sellers' representations and warranties set
forth in Article V shall be true and complete in all
material respects as if made on and as of the Closing
Date, and Sellers shall have delivered to Purchaser a
certificate to that effect.
(c) Sellers and each of MSLS, the ground lessor
with respect to the Colonnades, the Condominium
Association with respect to The Jefferson and Marriott
International, as the case may be, shall have
reasonably approved Purchaser's form of estoppel
certificates to be delivered at Closing (the form of
which certificates must be drafted by Purchaser and
approved by Sellers on or before the expiration of the
Review Period) and on or before the Closing Date,
Sellers and each of MSLS, the ground lessor with
respect to the Colonnades, the Condominium Association
with respect to The Jefferson and Marriott
International as the case may be, shall have delivered
such certificates to the Title Company indicating the
absence of defaults by Sellers and otherwise in the
form so agreed upon.
(d) Sellers shall have performed in all material
respects all covenants set forth in this Agreement
which are to be performed by Sellers on or before the
Closing Date.
(e) If there exist any recorded covenants,
interests or agreements relating to a Facility or to a
Site that require the consent or approval of third
parties to the transactions contemplated hereby,
Sellers shall have delivered such consents or approvals
to Purchaser in writing on or before the Closing Date
(or, if possible, the Title Company shall have provided
to Purchaser affirmative insurance over any such
matters (Sellers and Purchaser covenanting to cooperate
in agreeing on the form of all such consents and other
notices and in seeking to obtain the same promptly upon
execution of this Agreement).
(f) HMC Retirement shall have delivered to
Purchaser the following:
(A) a copy of HMC Retirement articles
of incorporation, as most recently amended or
modified, certified (i) as of a date reasonably
current, but in no event earlier than two (2)
weeks prior to the Closing Date, by the Delaware
Secretary of State, and (ii) as of the Closing
Date by the secretary or assistant secretary of
HMC Retirement, as being true and complete;
(B) a copy of HMC Retirement's bylaws
and any amendments or modifications thereto,
certified as of the Closing Date by the secretary
or assistant secretary of HMC Retirement as being
true and complete;
(C) original corporate resolutions
authorizing HMC Retirement to enter into the sale
of the Facilities contemplated by this Agreement
and to consummate the transactions contemplated
hereby, certified by the secretary or assistant
secretary of HMC Retirement as being true,
complete and fully effective as of the Closing
Date;
(D) an incumbency certificate for HMC
Retirement, in form and content reasonably
acceptable to Purchaser;
(E) a certificate of good standing for
HMC Retirement, issued as of a date reasonably
current, but in no event earlier than two (2)
weeks prior to the Closing Date, by the Delaware
Secretary of State;
(F) an opinion of Pamela J. Murch,
counsel to HMC Retirement, in form and content
reasonably satisfactory to Purchaser and
Purchaser's counsel as to the due authorization,
execution and delivery by HMC Retirement of this
Agreement and all other instruments to be
delivered to Purchaser or the Title Company
pursuant hereto, and as to certain non-
contravention matters; and
(G) such other instruments and
documents as Purchaser or the Title Company
reasonably determine to be necessary or
appropriate for the consummation of the
transactions contemplated hereby.
(g) HMH Properties shall have delivered to
Purchaser the following:
(A) a copy of HMH Properties articles
of incorporation, as most recently amended or
modified, certified (i) as of a date reasonably
current, but in no event earlier than two (2)
weeks prior to the Closing Date, by the Delaware
Secretary of State, and (ii) as of the Closing
Date by the secretary or assistant secretary of
HMH Properties, as being true and complete;
(B) a copy of HMH Properties' bylaws
and any amendments or modifications thereto,
certified as of the Closing Date by the secretary
or assistant secretary of HMH Properties as being
true and complete;
(C) original corporate resolutions
authorizing HMH Properties to enter into the sale
of the Facilities contemplated by this Agreement
and to consummate the transactions contemplated
hereby, certified by the secretary or assistant
secretary of HMH Properties as being true,
complete and fully effective as of the Closing
Date;
(D) an incumbency certificate for HMH
Properties, in form and content reasonably
acceptable to Purchaser;
(E) a certificate of good standing for
HMH Properties, issued as of a date reasonably
current, but in no event earlier than two (2)
weeks prior to the Closing Date, by the Delaware
Secretary of State;
(F) an opinion of Pamela J. Murch,
counsel to HMH Properties, in form and content
reasonably satisfactory to Purchaser and
Purchaser's counsel as to the due authorization,
execution and delivery by HMH Properties of this
Agreement and all other instruments to be
delivered to Purchaser or the Title Company
pursuant hereto, and as to certain non-
contravention matters; and
(G) such other instruments and
documents as Purchaser or the Title Company
reasonably determine to be necessary or
appropriate for the consummation of the
transactions contemplated hereby.
(h) Purchaser, in its reasonable judgment,
shall have approved the settlement statements prepared
by the Title Company in connection with the Closing.
(i) No later than the expiration of the Review
Period, Purchaser shall have obtained the appraisals
referenced in Section 4.01(d) for each Facility which
appraisals shall conform with the requirements of
Purchaser's declaration of trust or other
organizational and governing documents.
(j) No later than the expiration of the Review
Period, the board of trustees or other governing body
of Purchaser shall have approved, authorized or
ratified (A) the purchase and sale contemplated
pursuant to the terms and conditions set forth in this
Agreement and (B) the other transactions contemplated
hereby.
(k) On or before the expiration of the Review
Period, MSLS and Purchaser shall have agreed to the
form of Lease Amendments and the Calusa Harbour Lease
Amendment, and or before the Closing Date, MSLS shall
have consented to, executed and delivered the Lease
Amendments and the Calusa Harbour Lease Amendment to
the Title Company.
<PAGE>
(l) On or before the Closing Date, MSLS and
Purchaser shall have obtained all Healthcare Approvals.
(m) On or before the Closing Date, Purchaser
and Sellers shall have obtained all consents and
satisfied all requirements relating to Purchaser's
assumption of the bond financing relating to the Church
Creek, Illinois Facility, and the mortgage liens with
respect to the Church Creek and Villa Valencia
Facilities shall have been released.
(n) Prior to the expiration of the Review
Period, Sellers shall have delivered to Purchaser an
agreement, in form and substance reasonably
satisfactory to Purchaser, of MSLS and Marriott
International waiving their respective rights pursuant
to Article VI of that certain Senior Living Services
Operating and Indemnity Agreement dated as of October
8, 1993.
3.02 Conditions Precedent for the Benefit of Sellers
Notwithstanding anything in this Agreement to the
contrary, Sellers' obligation to sell the Facilities shall be
subject to and contingent upon the satisfaction (to Sellers'
reasonable satisfaction), or the waiver by Sellers, as of the
Closing Date, or such earlier date specified below, of the
following conditions precedent:
(a) Purchaser shall have delivered to Sellers,
the following:
(A) a copy of Purchaser's declaration
of trust and other governing documents, as most
recently amended or modified, certified (i) if
available, as of a date reasonably current, but in
no event earlier than two (2) weeks prior to the
Closing Date, by the Maryland Secretary of State,
and (ii) as of the Closing Date by an officer or
trustee of Purchaser, as being true and complete;
(B) a copy of Purchaser's bylaws, and
any amendments or modifications thereto, certified
as of the Closing Date by an officer or trustee of
Purchaser as being true and complete;
(C) original resolutions authorizing
Purchaser to enter into the sale of the Facilities
contemplated by this Agreement and to consummate
the transactions contemplated hereby, certified by
an officer or trustee of Purchaser as being true,
complete and fully effective as of the Closing
Date;
(D) an incumbency certificate for
Purchaser in form and content reasonably
acceptable to Seller;
(E) if available, a certificate of good
standing or existence for Purchaser, issued as of
a date reasonably current, but in no event earlier
than two (2) weeks prior to the Closing Date, by
the Maryland Secretary of State;
(F) a certificate of qualification to
do business for Purchaser, issued as of a date
reasonably current, but in no event earlier than
two (2) weeks prior to the Closing Date, by the
Secretary of State for each jurisdiction in which
the Facilities are located;
(G) an opinion of counsel to Purchaser
in form and content reasonably satisfactory to
Sellers and Sellers' counsel as to the due
authorization, execution and delivery by Purchaser
of this Agreement and all other instruments to be
delivered to Sellers or the Title Company pursuant
hereto and as to certain non-contravention
matters; and
(H) such other instruments and
documents as Sellers or the Title Company
reasonably determine to be necessary for the
consummation of the transactions contemplated
hereby.
(b) On or before the termination of the Review
Period, the board of directors or executive committee
of each of Sellers and Host Marriott shall have
approved, authorized or ratified the consummation of
the purchase and sale contemplated hereunder.
(c) Sellers, in their reasonable judgment,
shall have approved the settlement statements prepared
by the Title Company in connection with the Closing.
3.03 Failure or Waiver of Conditions Precedent
Purchaser and each of Sellers agree to use reasonable
efforts to satisfy or cause to be satisfied no later than the
expiration of the Review Period or the Closing Date, as the case
may be, the conditions set forth in Sections 3.01 and 3.02, as
applicable. In the event any of the conditions set forth in
Section 3.01 or 3.02 are not timely satisfied or waived,
Purchaser or Sellers, as the case may be, shall have the right,
at their sole option, (a) to extend the time period for
satisfaction of such conditions, or (b) to terminate this
Agreement, whereupon all rights and obligations hereunder of each
party shall be at an end (except as provided in Section 13.02(b)
hereof), whereupon Sellers shall return the Deposit to Purchaser;
provided, however, that in the event the conditions regarding the
HSR Act or other third party consents or obtaining applicable
Permits or Healthcare Approvals shall not be satisfied as herein
provided, unless such failure results from the default of either
party, the date for satisfaction thereof shall be automatically
extended to a date mutually agreed upon by Purchaser and Sellers
but in no event later than December 31, 1994. In addition,
Purchaser shall have the option, by giving written notice thereof
to Sellers, to extend the Closing Date from June 15, 1994 to June
30, 1994. Either party may, at its election, at any time or
times on or before the date specified for the satisfaction of any
condition precedent, waive in writing the benefit of any of the
conditions. In any event, Purchaser's or Sellers' consent to the
close of escrow pursuant to this Agreement shall conclusively be
deemed to be a waiver of any remaining unfulfilled conditions for
the benefit of such party.
ARTICLE IV
Due Diligence; Confidentiality
4.01 Title Inspection; Review Period
(a) Prior to the Contract Date, Purchaser has received from
Sellers recent commitments for title insurance and as-built
surveys for each Facility, all of which were prepared for another
transaction. On or before the date which is four (4) days after
the Contract Date, Sellers, at their own expense, shall request
that the surveyors update the surveys to certify to Purchaser and
to the Title Company (and, if requested by Purchaser, to
Purchaser's lender), (such certificate to be in a form to be
delivered by Purchaser prior to the expiration of such four (4)
day period or, if Purchaser shall fail to deliver such form, in
the form customarily used by Sellers), and shall request that the
Title Company issue binding commitments or endorsements for
Purchaser's benefit (the "Title Commitments"), for extended
coverage owner's title policies on the standard ALTA form, for
each Facility. Purchaser shall be responsible for the ordering
and cost of providing its lender title insurance coverage and
related surveys, if any. Each Title Commitment shall be in the
amount and in the form sufficient to satisfy the requirements set
forth in Section 3.01(a). Within seven (7) days after receipt
thereof, Purchaser agrees to notify Sellers of any objections to
exceptions appearing in the Title Commitments. Purchaser agrees
that it shall not raise objections to the items set forth in
clauses (a) through (g) in the definition of Permitted
Encumbrances. On or before the date which is five (5) days after
Sellers' receipt of any such objections, Sellers shall notify
Purchaser either that they will cure all title objections prior
to the Closing Date or specifying exceptions which they will not
eliminate. If Sellers elect not to remove all exceptions to
title to which Purchaser has reasonably objected, Purchaser may,
upon notice given to Sellers on the later to occur of four (4)
days after receipt of Sellers' election not to cure and the last
day of the Review Period, elect to treat the Facilities having
such title and/or survey defects as Defective Facilities for
purposes of Section 2.07(c), time being of the essence with
respect to the giving of any such notice.
(b) Prior to the Contract Date, Purchaser has received
from Sellers (i) the ground lease for the Colonnades, the
Facilities Leases for each Facility and the Guarantees related to
each Facilities Lease. During the Review Period, Sellers shall
provide, or cause to be provided, to Purchaser (i) a list of all
Contracts and Equipment Leases then in effect, and copies of all
such Contracts and Equipment Leases; (ii) access to the legal
permanent document files for each Facility; (iii) copies of
historical and projected rental stream/revenues for 5 years;
(iv) copies of any Permits, and Healthcare Approvals, plans and
specifications and zoning and land use diligence related to the
Facilities, to the extent such Permits, plans and specification
are in Sellers' possession; and (v) such other records and
documents as Purchaser may reasonably request.
(c) Prior to the Contract Date, Purchaser has received
from Sellers recent engineering reports and draft environmental
reports for each Facility, all of which were prepared for another
transaction. On or before the date which is four (4) days after
the Contract Date, Sellers, at their own expense, shall request
updates to the engineering and environmental reports addressed to
Purchaser and Seller. During the Review Period, Purchaser shall
have the right, upon reasonable notice to Sellers, at its own
risk, cost and expense, to enter, or cause its agents or
representatives to enter, upon any of the Sites for the purpose
of making surveys or other tests, test borings, inspections,
investigations and/or studies of the Facilities (each a "Study").
Purchaser shall not make any physical alterations to the
Facilities, such entry shall not interfere with the residents or
management of the Facilities, and Purchaser shall hold harmless,
indemnify and defend Sellers against any and all costs, claims or
expenses in connection with Purchaser's entry and performance of
all such Studies and shall repair any damage to any Facility or
Site suffered or occasioned by any such Study. In order to
prepare environmental site assessments for the Sites, Sellers and
Purchaser have agreed to use the contractors which prepared the
reports delivered to Purchaser. Purchaser agrees to use only the
approved contractors and to coordinate with and keep Sellers
apprised of the scope, status and drafting of such assessments.
Specifically, Sellers shall have the opportunity to review and
comment on the drafts of all assessments. In the event the
Closing does not occur, Purchaser shall return to Sellers all
assessments and provide to Sellers at no charge copies of any
report, document or Study created in connection with any Study.
Purchaser's obligation shall survive Closing or the termination
of this Agreement.
(d) On or before the date which is four (4) days after
the Contract Date, Purchaser shall request that American
Appraisal, Inc. prepare appraisals on each Facility. As soon as
possible but no later than the expiration of the Review Period,
Purchaser shall notify Sellers whether it has obtained appraisals
for each Facility which appraisals conform with the requirements
of Purchaser's declaration of trust or other organizational and
governing documents.
(e) In the event that this Agreement requires that the
parties agree to any matter prior to the expiration of the Review
Period and the parties, acting reasonably and in good faith, are
unable so to agree, either party may terminate this Agreement by
giving written notice thereof to the other. In addition, if
prior to the expiration of the Review Period, Purchaser
reasonably rejects any of the Contracts or Equipment Leases to
which either Seller is a party, unless Sellers agree, at their
sole cost, to cause the same to be terminated prior to the
Closing, Purchaser may terminate this Agreement by the giving of
written notice thereof prior to the expiration of the Review
Period.
4.02 Termination Prior to Expiration of Review Period
If, prior to the expiration of the Review Period,
Purchaser gives Sellers written notification (the "Termination
Notice") pursuant to Section 4.01 or otherwise in accordance with
this Agreement that Purchaser elects not to consummate the
Closing in accordance with the terms of this Agreement, this
Agreement shall terminate and the Deposit shall be refunded to
the Purchaser. If the Termination Notice is given, this
Agreement shall immediately be terminated, and neither party
shall have any further liability to the other under this
Agreement (except as specified in this Section 4.02 or in Section
13.02(b) hereof). If Purchaser does not give the Termination
Notice by the expiration of the Review Period, time being of the
essence, this Agreement shall remain in full force and effect,
and Purchaser shall be bound to purchase the Facilities in
accordance with the terms hereof.
4.03 Confidentiality
All examinations, investigations, surveys, tests,
studies, inventories and other reviews or Studies of the
Facilities by Purchaser prior to the Closing shall be conducted
pursuant to the provisions of the Confidentiality Agreement,
dated March 2, 1994, among Purchaser and Sellers (the
"Confidentiality Agreement"), the terms of which are incorporated
herein by this reference as if set forth in full in this
Section 4.03; provided, however, that nothing in this Agreement
shall be construed to supersede any provision of the
Confidentiality Agreement. Notwithstanding the foregoing, the
parties hereto agree that each party and its affiliates may issue
such press and publicity releases with respect to the
transactions contemplated by this Agreement as such party may
reasonably deem necessary or appropriate. Each party shall
cooperate and coordinate with one another in connection with the
making of any such press and publicity releases.
ARTICLE V
Sellers' Representations, Warranties, and Covenants
In order to induce Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby,
each Seller, with respect to itself and its respective
Facilities, represents and warrants to, and covenants with,
Purchaser as follows:
5.01 Good Standing
Each of HMH Properties and HMC Retirement is a
corporation duly organized, validly existing, and in good
standing under the laws of Delaware, is authorized to conduct the
business in which it is now engaged, and is duly qualified and in
good standing in each jurisdiction in which any property to be
conveyed hereunder by such Seller is located. Each of HMH
Properties and HMC Retirement has the full corporate power and
authority to execute and deliver this Agreement and to perform
its respective obligations hereunder.
5.02 Due Authorization
The execution, delivery, and performance by each of
Sellers of this Agreement and the consummation by such Seller of
the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate actions, of such Seller
(none of which actions have been modified or rescinded, and all
of which actions are in full force and effect). This Agreement
and each document to be executed and delivered by such Seller at
Closing constitutes, or at the time of execution will constitute,
a valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms.
5.03 No Violations or Defaults
The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated
hereby by each of Sellers will not violate any law or any order
of any court or governmental authority with proper jurisdiction,
which violation or default will, in any one case or in the
aggregate, materially adversely affect the operation of any of
the Facilities or such Seller's ability to consummate the
transactions contemplated hereby; result in a breach or default
under any material Contract or any provision of the
organizational documents of such Seller; require any consent, or
approval or vote of any court or governmental authority or of any
third person or entity that, as of the Closing Date, has not been
given or taken and does not remain effective; or result in any
Encumbrance, other than a Permitted Encumbrance, against any
Facility.
5.04 Litigation
To the best of Sellers' knowledge, except as disclosed
in writing on or before April 1, 1994, there are no actions,
suits, arbitrations, governmental investigations, or other
proceedings pending or threatened against such Seller before any
court or governmental authority, an adverse determination of
which might materially and adversely affect (a) such Seller's
ability to enter into or perform this Agreement, or (b) such
Seller's title to any Facility, or the condition or operation of
any Facility (including the validity of any material Permits
relating thereto), (c) the business, operation, affairs or
condition of an of the Facilities, or (d) or result in any
material liability.
5.05 Compliance with Laws
To the best of Sellers' knowledge without inquiry and,
with respect to the period prior to the Closing, except as
previously disclosed with respect to the Healthcare Approvals,
each Facility is in compliance in all material respects with all
laws, rules, regulations, health and sanitation codes, and zoning
ordinances and with the terms of all Permits applicable to each
of its Facilities, non-compliance with which would have a
material adverse effect on such Seller, any such Facilities or
the use or operation thereof.
5.06 Financial Information
The historical financial information regarding the
Facilities provided by Sellers to Purchaser prior to the Contract
Date is true and accurate in all material respects and contains
no material misstatement and does not omit any statement or fact
necessary to make the information contained therein not
materially misleading. Purchaser acknowledges that the
aforementioned financial information relates solely to historical
performance of the Facilities and in no way represents a
projection of future performance, and Sellers make no
representations as to the future performance of any Facility.
5.07 Insurance
Sellers have not received notice from any insurance
company of any defects or inadequacies in any Facility that would
adversely affect its insurability or increase the cost of
insurance. To Sellers' knowledge (based upon receipt from
Marriott International of certificates of insurance dated on or
about the Contract Date), all insurance required to be maintained
under the Facilities Leases is in full force and effect.
5.08 Condemnation Actions
To the best of Sellers' knowledge without inquiry,
there are no pending condemnation actions or special assessments
of any nature with respect to any of its Facilities or any part
thereof that would materially impair any such Facilities economic
viability as a Marriott senior living facility, and Sellers have
not received any notice of any such threatened or contemplated
condemnation action or special assessment.
<PAGE>
5.09 Operation of the Facilities Before Closing
Until the Closing Date, Sellers shall cause the
Facilities to be operated in a good and businesslike fashion
consistent with their past practices and shall cause such
Facilities to be maintained in good working order and condition
in a manner consistent with their past practice.
5.10 Hazardous Materials
Except as disclosed to Purchaser or as described in any
environmental Study delivered to Purchaser,
(a) "Hazardous Materials" means any asbestos-
containing materials, polychlorinated biphenyls (PCBs), and any
materials, wastes, substances, or chemicals that are deemed
hazardous, toxic, a pollutant or a contaminant under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C.
Section 1801, et seq.), or the Resource Conservation and Recovery
Act of 1976, as amended (42 U.S.C. Section 6901, et seq.), or any
other contaminant, oil, radioactive or other material, the
removal which is required or maintenance of which is prohibited
or penalized by any law, ordinance, statute, rule or regulation
(each, an "Environmental Law").
(b) During the time in which Sellers have owned the
Facilities, to the best of each Seller's knowledge, neither such
Seller nor any third party has used, generated, stored, or
disposed of on, under or about the Facilities, or transported to
or from any of the Facilities, any Hazardous Materials other than
in compliance with applicable Environmental Laws. For purposes
of this Section 5.10, "knowledge" of Sellers shall be based on
inquiries to the general manager and regional engineer applicable
to each of the Facilities, with no obligation to inquire further.
5.11 Contracts and Equipment Leases
There are no events or conditions that, with notice or
lapse of time or both, would constitute a default by such Seller
(nor, to the best of such Seller's knowledge, by any other party
thereto) in any material respect of any Facilities Lease, any
Guaranty, the ground lease with respect to the Colonnades, the
condominium documents with respect to the Jefferson or any
Contract or Equipment Lease. The Facilities Leases, the
Guarantees, the Ground Lease with respect to the Colonnades, the
condominium documents with respect to the Jefferson or any and
all Contracts and Equipment Leases material to the maintenance
and operation of the Facilities are in full force and effect.
<PAGE>
5.12 Modification of Agreements. Except as required by
this Agreement, between the date hereof and the Closing Date,
such Seller shall not, without the prior written consent of
Purchaser, enter into, modify, or terminate any Facility Lease,
Guaranty, the ground lease with respect to the Colonnades, or the
condominium documents with respect to the Jefferson and shall
not, without the prior written consent of Purchaser enter into,
modify or terminate any other agreement or other instrument
affecting the Facilities if such action would have a material
adverse effect on any of the Facilities or the operation thereof,
and such Seller shall not, without the prior written consent of
Purchaser, enter into any contract or make any purchase relating
to any of the Facilities other than in the ordinary course of
business that would not be terminable or cancelable by Purchaser
without the payment of premium or penalty on thirty (30) days'
notice or less.
5.13 Existing Lease, Agreements, Etc. Sellers have not
entered into any material contracts or agreements with respect to
the Facilities other than the Facilities Leases and the
Contracts. The copies of the Facility Leases and Guarantees
heretofore made available by Sellers to Purchaser for examination
are true, correct and complete copies thereof, have not been
amended, except as evidenced by amendments similarly delivered or
required pursuant to this Agreement and constitute the entire
agreement between Sellers and the applicable other parties. To
Sellers' knowledge, the Facilities Leases and the Guarantees are
in full force and effect and to Sellers' knowledge without
inquiry, no event has occurred which with notice and/or lapse of
time would constitute a default by Marriott International or MSLS
thereunder.
5.14 Utilities, Etc. To Sellers' knowledge without
inquiry, all utilities and services necessary for the use and
operation of the Facilities (including, without limitation, road
access, gas, water, electricity and telephone), are available
thereto, are of sufficient capacity to meet adequately all needs
and requirements necessary for the use and operation of such
Facilities for their respective historical purposes. To Seller's
knowledge without inquiry, no fact, condition or proceeding
exists which would result in the termination or impairment of the
furnishing of such utilities to the Facilities.
5.15 Permits. To Sellers' knowledge without inquiry
and except as disclosed to Purchaser, there are presently in
effect all Permits necessary for the current use, occupancy and
operation thereof. To Sellers' knowledge without inquiry,
Sellers have not been advised in writing of any threatened
request, application, proceeding, plan, study or effort which
would materially adversely affect the present use or zoning of
the Facilities or which would modify or realign any adjacent
street or highway.
5.16 Taxes. To Sellers' knowledge without inquiry, no
taxes or special assessments of any kind (special, bond or
otherwise) are or have been levied with respect to the
Facilities, or any portion thereof, which are outstanding or
unpaid, other than amounts not yet due and payable or, if due and
payable, not yet delinquent and, to Sellers' knowledge, none will
be levied prior to the Closing.
5.17 Not A Foreign Person. Neither of Sellers is a
"foreign person" within the meaning of Section 1445 of the United
States Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.
5.18 Construction. Sellers have caused all
construction obligations pertaining to the Facilities, including,
without limitation, any planned capital improvement programs, to
be performed and paid in full or will cause such construction
obligations to be performed and paid in full. Sellers hereby
agree to indemnify and hold harmless Purchaser from and against
any loss, cost or damage arising from a breach of the foregoing
warranty.
5.19 Disclosure. To Sellers' knowledge without
inquiry, there is no fact or condition which materially and
adversely affects the business or condition of the Facilities
which has not been set forth in this Agreement or in the other
documents, certificates or statements furnished to Sellers in
connection with the transactions contemplated hereby.
5.20 Additional Covenant. Sellers shall use best
efforts to satisfy Sellers' obligations under this Agreement.
ARTICLE VI
Purchaser's Representations, Warranties and Covenants
In order to induce Sellers to enter into this Agreement
and to consummate the transactions contemplated hereby, Purchaser
represents and warrants to, and covenants with, Sellers as
follows:
6.01 Good Standing
Purchaser warrants that it is a Maryland real estate
investment trust duly organized, validly existing, and in good
standing under the laws of Maryland and is qualified to do
business in Maryland and, to the extent required, will, at the
Closing, be qualified in each jurisdiction in which any of the
Facilities is located.
6.02 Due Authorization
Purchaser warrants that, prior to the expiration of the
Review Period, the execution of this Agreement and the
consummation of the transactions contemplated hereby shall have
been duly and validly authorized by all necessary action of
Purchaser (none of which actions have been modified or rescinded,
and all of which actions are in full force and effect). This
Agreement and each document to be executed and delivered by
Purchaser at or in connection with the Closing constitutes, or at
the time of execution will constitute, a valid and binding
obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
6.03 No Violations or Defaults
The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated
hereby will not violate any law or any order of any court or
governmental authority with proper jurisdiction, which violation
or default will, in any one case or in the aggregate, adversely
affect Purchaser's ability to consummate the transactions
contemplated hereby; result in a breach or default under any
contract binding upon Purchaser or its assets or any provision of
the organizational documents of Purchaser; or require any
consent, approval or vote of any court or governmental authority
or of any third person or entity that, as of the Closing Date,
has not been given or taken.
6.04 Litigation
There are no suits, arbitrations, proceedings, or
governmental investigations that are pending or, to the knowledge
of Purchaser, threatened against Purchaser, an adverse
determination in which might materially and adversely affect
Purchaser's ability and right to enter into this Agreement or to
consummate the transactions contemplated hereby.
6.05 Bankruptcy Matters
Purchaser has not made a general assignment for the
benefit of creditors, filed any voluntary petition in bankruptcy
or suffered the filing of an involuntary petition by its
creditors, suffered the appointment of a receiver to take
possession of all or substantially all of its assets, suffered
the attachment or other judicial seizure of all or substantially
all of its assets, admitted its inability to pay its debts as
they come due, or made an offer of settlement, extension or
composition to its creditors generally. Purchaser is not
insolvent and will not be rendered insolvent by the consummation
of the transactions contemplated hereby.
6.06 Additional Covenants. Purchaser shall use its
best efforts to satisfy Purchaser's obligations under this
Agreement and, without limiting the foregoing, agrees to obtain,
on or before the Closing Date, sufficient funds to consummate the
transactions contemplated hereby.
<PAGE>
ARTICLE VII
Deposit
Purchaser shall deliver to Sellers, no later than 5:00
P.M. Eastern Standard Time on March 18, 1994, a deposit (together
with any interest earned thereon, the "Deposit") in the amount of
TWENTY-FIVE MILLION DOLLARS ($25,000,000), comprised of
immediately available funds (the "Deposit"). Sellers shall hold
the Deposit in an interest bearing account until Closing or
termination of this Agreement. Interest on the Deposit shall be
the actual interest earned thereon by Sellers from receipt of the
Deposit (i) if the Deposit is returned to Purchaser or retained
by Sellers, to the date of refund or (ii) if Closing occurs, to
the Closing Date, whereupon the Deposit shall be credited against
the Purchase Price.
ARTICLE VIII
Escrow and Closing
8.01 Escrow Arrangements
An escrow for the purchase and sale contemplated by
this Agreement shall be opened by Sellers with the Title Company
subject to escrow instructions in form and substance reasonably
satisfactory to Sellers and Purchaser (the "Escrow
Instructions"). On or before the Closing Date, Sellers and
Purchaser shall each deliver the Escrow Instructions in such form
to the Title Company consistent with this Article VIII, with a
copy to the other party, and the parties shall deposit in escrow
the following funds and documents:
(a) Sellers shall deposit:
(i) the duly executed and acknowledged Deeds;
(ii) the duly executed Bills of Sale;
(iii) a duly executed counterpart of the
Assignment of Ground Lease;
(iv) the certificates required by Section 3.01(b);
(v) any written consents required by Section
3.01(e);
(vi) a duly executed counterpart of the Assignment
and Assumption of Leases;
(vii) certificates from Sellers certifying the
information required by Sec. 1445 of the Code to
establish, for the purposes of eliminating Purchaser's
tax withholding obligations, that neither Seller is a
"foreign person" as defined in Sec. 1445(f)(3) of the
Code (the "FIRPTA Certificates");
(viii) duly executed counterparts of the Lease
Amendments and the Calusa Harbour Lease; and
(ix) all other documents to be delivered to
consummate the transactions contemplated hereby.
(b) Purchaser shall deposit:
(i) funds in the amount of the balance of the
Purchase Price, subject to adjustment as set forth in
Sections 2.07, 8.03 and 8.04 (the "Sellers' Funds"),
plus sufficient additional cash to pay Purchaser's
share of all Closing costs and expenses as provided in
Section 8.04;
(ii) a duly executed counterpart of the Assignment
of Ground Lease;
(iii) a duly executed counterpart of the
Assignment and Assumption of Leases;
(iv) duly executed counterparts of the Lease
Amendments and the Calusa Harbour Lease; and
(v) all other documents to be delivered to
consummate the transactions contemplated hereby.
(c) In addition, Sellers shall furnish to Purchaser
outside of escrow:
(i) satisfactory evidence that Sellers have filed
all tax returns required to be filed before the Closing
Date with respect to the Facilities and have paid (or
provided for the payment of, by escrow, closing
adjustment or otherwise) all amounts shown due for all
state, county and municipal real estate, sales,
purchase and use taxes, all assessments for local
improvements, and any and all other taxes, assessments,
charges and fees, the non-payment of which may result
in a lien on the Facilities or liability on the part of
Purchaser; and
(ii) all original Facilities Leases, Guarantees,
the Colonnades ground lease, the loan documents with
respect to Church Creek, Permits, Contracts, and
Equipment Leases which are in Sellers' possession and
control and are being assigned to Purchaser.
8.02 Closing
The escrow instructions to be delivered by the parties
shall instruct the Title Company, upon satisfaction of the
conditions set forth therein (which shall in all respects be
consistent with the terms and conditions of this Agreement), to
close escrow by:
(a) causing the applicable Deeds to be recorded in the
official records of the counties in which the Facilities are
located;
(b) paying or causing to be paid all recording, filing
and transfer taxes, fees or expenses necessary in connection with
the recordings and filings described in clause (a) above;
(c) filing with the appropriate governmental
instrumentality all necessary transfer and other tax returns;
(d) paying in full or causing to be paid in full the
indebtedness encumbering the Calusa Harbour, Florida Facility and
recording or requesting recordation of a release of such
encumbrance at or as soon as possible after the Closing;
(e) issuing or causing to be issued the Purchaser's
Title Policies to Purchaser;
(f) delivering to Sellers and Purchaser originals of
the Bills of Sale and the Assignment of Ground Lease and
Assignment and Assumption of Leases and delivering to Purchaser
the FIRPTA Certificates and any consents referred to in Section
3.01(e); and
(g) taking such other actions as any party may
reasonably require.
8.03 Closing Adjustments
(a) The "Rentals" as defined in the Facilities Leases
shall be adjusted between Purchaser and Sellers as of 12:01 a.m.
on the Closing Date.
(b) The Purchase Price shall be reduced by the
outstanding principal amount owing with respect to the Church
Creek bonds.
(c) The provisions of this Section 8.03 may not
specify all adjustments properly to be made in a transaction of
this nature. Representatives of Purchaser and Sellers shall
perform all of the adjustments, including any not specifically
referred to herein, which are appropriate and usual. The
adjustments hereunder shall be calculated or paid in an amount
based upon a fair and reasonable estimated accounting performed
and agreed to by representatives of Sellers and Purchaser at the
Closing. Subsequent final adjustments and payments shall be made
in cash or other immediately available funds as soon as
practicable after the Closing Date, and in any event within
ninety (90) days after the Closing Date, based upon an agreed
accounting performed by representatives of Sellers and Purchaser.
In the event the parties have not agreed with respect to the
adjustments required to be made pursuant to this Section 8.03
within such ninety-day period, upon application by either party,
the Accountant shall determine any such adjustments which have
not theretofore been agreed to between Sellers and Purchaser.
The charges of the Accountant shall be borne fifty percent (50%)
by Sellers and fifty percent (50%) by Purchaser.
(d) Sellers and Purchaser agree that the Title Company
shall retain from the Sellers' Funds such amounts as may be
necessary to discharge any monetary encumbrances (other than
Permitted Encumbrances) affecting any Facility. The closing
statement agreed to among the Title Company, Sellers and
Purchaser shall reflect such use of the Sellers' Funds.
(e) Purchaser and Sellers acknowledge that (x) MSLS
has applied for and there is pending with respect to the Facility
located in Silver Spring, Maryland a Certificate of Need for
forty (40) skilled nursing beds and (y) the Purchase Price has
been determined and agreed upon in recognition of the fact that
such Certificate of Need will not be granted prior to the
Closing. If, for any reason, such Certificate of Need is
irrevocably approved and issued prior to the Closing, the
Purchase Price shall be increased by an amount equal to
$1,000,000. Furthermore, if such Certificate of Need shall be
irrevocably approved and issued on or before the date two (2)
years after the Closing Date, Purchaser shall pay to Sellers,
within ten (10) days thereafter, $1,000,000 in immediately
available federal funds to such account or accounts as Sellers
may designate. The provisions of this section shall survive the
Closing.
(f) Purchaser and Sellers acknowledge that the
Purchase Price of $320,000,000 is based in part on the minimum
and percentage rentals payable by MSLS as tenant under the
Facilities Leases. Under the Facilities Leases, the percentage
rents are equal to the product of net receipts over an aggregate
sales breakpoint of $71,513,000. If, prior to the Closing Date,
the aggregate sales breakpoint is reduced pursuant to lease
amendments to the Facilities Leases, in form and substance
reasonably acceptable to Purchaser, the Purchase Price shall be
increased by an amount equal to nine (9) times the product of (x)
the reduction in the aggregate net sales breakpoint and (y) 4.5%;
provided, however, in no event shall the Purchase Price increase
pursuant to this Section by an amount in excess of Two Million
Dollars ($2,000,000). An example of such an adjustment is set
forth on Exhibit B.
8.04 Closing Costs
At Closing, Sellers and Purchasers shall share equally
all costs and expenses associated with the transaction
contemplated hereby except that (x) all costs and expenses
incurred in connection with any purchase money financing obtained
in respect of the Facilities (other than legal and administrative
fees with respect to Church Creek, which shall be shared
equally), including, without limitation, all costs and expenses
relating to a lender's title insurance policy, surveys and all
mortgage recording taxes and filing fees, shall be paid by
Purchaser and (y) each party shall pay its own attorneys' and
accountants' fees and costs in connection with this transaction.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
Default; Remedies
10.01 Default by Sellers. If Sellers shall have
made any representation or warranty herein which shall be untrue
or misleading in any material respect, or if Sellers shall fail
to perform any of the material covenants and agreements contained
herein to be performed by them and such failure continues for a
period of ten (10) days after notice thereof from Purchaser,
Purchaser may terminate this Agreement and/or Purchaser may
pursue any and all remedies available to it at law or in equity,
including, but not limited to, a suit for specific performance or
other equitable relief. In addition to, and not in limitation
of, the foregoing, Purchaser may require Sellers to return the
Deposit.
10.02 Default by Purchaser. If Purchaser shall
have made any representation or warranty herein which shall be
untrue or misleading in any material respect, or if Purchaser
shall fail to perform any of the covenants and agreements
contained herein to be performed by it and such failure shall
continue for a period of ten (10) days after notice thereof from
Sellers, Sellers may terminate this Agreement. In such event
Sellers shall, as their sole and exclusive remedy, at law and in
equity, retain the Deposit.
ARTICLE XI
Waiver and Partial Invalidity
11.01 Waiver
The failure of either party to insist on strict
performance of any of the provisions of this Agreement or to
exercise any right granted to it under this Agreement shall not
be construed as a relinquishment or future waiver; rather, the
provision or right shall continue in full force. No waiver of
any provision or right shall be valid unless it is in writing and
signed by the party giving it.
11.02 Partial Invalidity
If any part of this Agreement is declared invalid by a
court of competent jurisdiction, this Agreement shall be
construed as if such portion had never existed, unless this
construction would operate as an undue hardship on Sellers or
Purchaser or would constitute a substantial deviation from the
general intent of the parties as reflected in this Agreement.
ARTICLE XII
Indemnification
12.01 Agreement to Indemnify
Subject to any express provisions of this Agreement to
the contrary, (a) Sellers shall hold harmless, indemnify, and
defend Purchaser against any and all obligations, claims, losses,
damages, liabilities, and expenses (including, without
limitation, reasonable attorneys' and accountants' fees and
disbursements) arising out of (i) events, contractual
obligations, acts, or omissions of Sellers that occurred in
connection with the ownership or operation of any Facility prior
to the Closing or (ii) any damage to property of others or injury
to or death of any person or any claims for any debts or
obligations occurring on or about or in connection with any
Facility or Site or any portion thereof at any time or times
prior to the Closing, and (b) Purchaser shall hold harmless,
indemnify, and defend Sellers against any and all obligations,
claims, losses, damages, liabilities and expenses (including,
without limitation, reasonable attorneys' and accountants' fees
and disbursements) arising out of (i) events, contractual
obligations, acts, or omissions of Purchaser that occur in
connection with the ownership or operation of any Facility after
the Closing, or (ii) any damage to property of others or injury
to or death of any person or any claims for any debts or
obligations occurring on or about any Facility or Site or any
portion thereof at any time or times after the Closing.
12.02 Indemnification Regarding Assumed Obligations
Whenever it is provided in this Agreement that an
obligation of Sellers will be assumed by Purchaser after the
Closing, Purchaser shall be deemed to have also agreed to
indemnify, defend, and hold harmless Sellers and their respective
successors and assigns from all claims, losses, damages,
liabilities, costs, and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) arising
from any failure of Purchaser to perform the obligation so
assumed after the Closing.
12.03 Notice and Cooperation on Indemnification
Whenever either party shall learn through the filing of
a claim or the commencement of a proceeding or otherwise of the
existence of any liability for which the other party is or may be
responsible under this Agreement, the party learning of such
liability shall notify the other party promptly and furnish such
copies of documents (and make originals thereof available) and
such other information as such party may have that may be used or
useful in the defense of such claims and shall afford said other
party full opportunity to defend the same in the name of such
party and shall generally cooperate with said other party in the
defense of any such claim.
ARTICLE XIII
Miscellaneous
13.01 Brokerage Commissions and Finder's Fees
Each party to this Agreement warrants to the other that
only Merrill Lynch, and no person or entity, can properly claim a
right to a real estate commission, real estate finder's fee, real
estate acquisition fee or other real estate brokerage-type
compensation based upon the acts of that party with respect to
the transactions contemplated by this Agreement (collectively,
"Brokerage Compensation"). Purchaser covenants to pay, at
closing, the Real Estate Compensation to Merrill Lynch and to
indemnify and hold Sellers harmless from any claim by Merrill
Lynch. Each party shall indemnify, defend and hold the other
harmless from any and all claims, suits, obligations,
liabilities, damages, losses, costs, and expenses (including,
without limitation, reasonable attorneys' and accountants fees
and returned commissions) resulting from any claim for Brokerage
Compensation by any person or entity based upon the acts of such
party or from payment of Brokerage Compensation to any person by
such party or by any entity affiliated with such party. This
Section 13.01 shall survive closing and the termination of this
Agreement.
13.02 Representations, Warranties, and Covenants
(a) The representations and warranties contained in
this Agreement shall be effective as of the date made or deemed
made only and shall not continue beyond the Closing or
termination of this Agreement; provided, however, that any
liability with respect to breach thereof on or as of the Closing
Date shall survive the Closing for a period of no more than one
(1) year.
(b) The following obligations of Purchaser and Sellers
shall survive the Closing:
(i) the indemnification provisions set forth in
Sections 2.01, 4.01(c), 5.18, 12.01, 12.02, 12.03 and
13.01; and
(ii) the Confidentiality Agreement referred to in
Section 4.03 (to the extent provided therein); and
(iii) the provisions of Section 8.03.
13.03 Assignment
(a) Neither party shall assign or transfer or permit
the assignment or transfer of its rights or obligations under
this Agreement without the prior written consent of the other, in
its sole and absolute discretion, and any such assignment or
transfer without such prior written consent is hereby declared to
be null and void; provided, however, the foregoing prohibition
and consent requirements shall not apply to a wholly-owned
subsidiary of either party so long as the assigning party
notifies the other party of any such assignment.
(b) In the event either party consents to an
assignment of this Agreement by the other, no further assignment
shall be made without another written consent from the consenting
party, unless the assignment may otherwise be made without
consent under this Agreement. An assignment by either Sellers or
Purchaser of interest in this Agreement shall not relieve Sellers
or Purchaser, as the case may be, from its obligations, but this
Agreement shall then inure to the benefit of, and be binding on,
the assignee and its successors, heirs, legal representatives,
and permitted assigns. All assignees shall be subject to this
Section 13.03 as though they were an original party to this
Agreement.
<PAGE>
13.04 Period for Making Claims
Except as otherwise expressly provided herein, all
claims by a party hereto, whether for amounts due or otherwise,
under any provision of this Agreement, must be made in writing
to the other parties by the date which is one (1) year from the
Closing Date.
13.05 Applicable Law
This Agreement shall be governed by the laws of the
State of Maryland (excluding the choice of law provisions
thereof), except that any matter of real estate law affecting any
Facility shall be governed by the law of the jurisdiction in
which such Facility is located.
13.06 Headings
The headings of articles and sections of this Agreement
are inserted only for convenience; and are not to be construed as
a limitation of the scope of the particular provision to which
they refer or otherwise to affect the interpretation of any
provision hereof.
13.07 Notices
Notices and other communications required by this
Agreement shall be in writing and (a) delivered by hand against
receipt, (b) transmitted by telecopy and confirmed by telephone
or (c) sent by certified or registered mail, postage prepaid,
with return receipt requested, or by nationally-recognized
overnight courier. All notices shall be addressed as follows:
If to Sellers:
c/o Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Mr. Bruce D. Wardinski
Treasury Department 72/924.11
with a copy to:
Host Marriott Corporation
10400 Fernwood Drive
Bethesda, Maryland 20817
Attention: Pamela J. Murch, Esq.
Law Department 72/923
If to Purchaser:
Health and Rehabilitation Properties Trust
400 Centre Street
Newton, MA 02158
Attention: Mr. David J. Hegarty
with a copy to:
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Attention: Barry M. Portnoy, Esq. and
Jennifer Babbin Clark, Esq.
or to such other address as may be designated in writing by a
proper notice delivered by one party to the other. Any properly
mailed notice shall be effective upon receipt (and confirmation
by telephone, if sent by telecopy) or, if refused, upon refusal
to accept delivery by the party to be charged with notice.
13.08 HSR Act Matters
The parties have jointly discussed with and confirmed
in writing to the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
rules and regulations promulgated thereunder (collectively, the
"HSR Act"), that no filings under the HSR Act are required to be
made with regard to the transactions contemplated hereby. In the
event any HSR Act filing(s) are required, the parties agree to
cooperate in making such filing.
13.09 Cooperation
Each of Purchaser and Sellers shall cooperate with one
another in consummating the transactions contemplated hereby and
assist one another in satisfying each party's obligations
hereunder.
13.10 Entire Agreement
This Agreement, and the exhibits attached hereto,
constitutes the entire agreement between the parties with respect
to the purchase and sale of the Facilities and supersedes all
prior oral and written understandings. Amendments to this
Agreement shall not be effective unless in writing and signed by
the party against whom enforcement of the amendment is sought.
13.11 Counterparts.
This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same instrument.
13.12 Purchaser's Liability.
The Declaration of Trust of Purchaser (the
"Declaration") is duly filed in the Office of the Department of
Assessments and Taxation of the State of Maryland, and provides
that the name "Health and Rehabilitation Properties Trust" refers
to the trustees under the Declaration collectively as Trustees,
but not individually or personally, and that no trustee, officer,
shareholder, employee or agent of Purchaser shall be held to any
personal liability, jointly or severally, for any obligation of,
or claim against, Purchaser. All persons dealing with Purchaser,
in any way, shall look only to the assets of Purchaser for the
payment of any sum or the performance of any obligation.
13.13 Tax Free Exchange
(a) Sellers have indicated to Purchaser that Sellers
may wish to use one or more of the Facilities as a part of a tax
free exchange of property with a third party. If Sellers or any
subsidiary or affiliate thereof to which Sellers have assigned
its interest in this Agreement shall have in good faith entered
into an agreement for such exchange, then Sellers or any such
subsidiary or affiliate thereof shall have the right to assign
their interest in this Agreement with respect to the identified
Facility or Facilities to the third party participating in such
exchange.
(b) If Sellers shall assign their interest in this
Agreement to effectuate a tax free exchange as aforesaid, then
Sellers shall promptly so notify Purchaser and shall deliver to
Purchaser a copy of any applicable assignments or other documents
or agreements. Purchaser shall thereafter, at Sellers' cost,
cooperate with Sellers to effectuate such tax free exchange.
Sellers shall pay any additional transfer taxes, recording fees
or similar closing costs resulting from such tax free exchange.
(c) Sellers hereby indemnify and agree to defend and
save Purchaser harmless from and against any additional claims or
liabilities arising as a result of Purchaser's participation in
such tax free exchange.
<PAGE>
IN WITNESS WHEREOF, Sellers and Purchaser have caused
this Agreement to be executed by their duly authorized officers
as of the date set forth below.
Attest/Witness: HEALTH AND REHABILITATION
PROPERTIES TRUST
By: /s/ Jennifer B. Clark By:/s/ Barry M. Portnoy
Title/Name: Jennifer B. Clark Title: Trustee
Date: March 17, 1994
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
Attest: HMH PROPERTIES, INC.
By: /s/ Pamela J. Murch By: /s/ Robert E. Parsons
Title/Name: Assistant Secretary Title: Vice President and
Treasurer
[CORPORATE SEAL]
Date: March 17, 1994
Attest: HMC RETIREMENT PROPERTIES,
INC.
By: /s/ Pamela J. Murch
By: /s/ Robert E. Parsons
Title/Name: Assistant Secretary
Title: Vice President and Treasurer
[CORPORATE SEAL]
Date: March 17, 1994
The undersigned hereby guarantees full performance all of the
obligations of HMH Properties, Inc. and HMC Retirement
Properties, Inc. under the foregoing Agreement.
HOST MARRIOTT CORPORATION
By: /s/ Robert E. Parsons
Its: Vice President and
Treasurer
F:\PMURCH\SLSREIT\SALE.6<PAGE>
PURCHASE AGREEMENT
AMONG
HMC RETIREMENT PROPERTIES, INC.
AND
HMH PROPERTIES, INC.
as Sellers
AND
HEALTH AND REHABILITATION PROPERTIES TRUST,
as Purchaser
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I -- Definition of Terms
1.01 Definition of Terms . . . . . . . . . . . . . 1
1.02 Terms Defined in Other Sections . . . . . . . 5
ARTICLE II -- Purchase and Sale of the Facilities
2.01 Purchase and Sale . . . . . . . . . . . . . . 6
2.02 Excluded Items. . . . . . . . . . . . . . . . 6
2.03 Purchase Price. . . . . . . . . . . . . . . . 7
2.04 Allocation of Purchase Price. . . . . . . . . 7
2.05 Employees at Facilities . . . . . . . . . . . 7
2.06 Sellers' Disclaimer . . . . . . . . . . . . . 8
2.07 Defective Facilities. . . . . . . . . . . . . 9
ARTICLE III -- Conditions Precedent
3.01 Conditions Precedent for the Benefit of Purchaser
10
3.02 Conditions Precedent for the Benefit of Sellers
14
3.03 Failure or Waiver of Conditions Precedent . . 15
ARTICLE IV -- Due Diligence; Confidentiality
4.01 Title Inspection; Review Period . . . . . . . 16
4.02 Termination . . . . . . . . . . . . . . . . . 18
4.03 Confidentiality . . . . . . . . . . . . . . . 18
ARTICLE V -- Sellers' Representations, Warranties, and Covenants
5.01 Good Standing . . . . . . . . . . . . . . . . 19
5.02 Due Authorization . . . . . . . . . . . . . . 19
5.03 No Violations or Defaults . . . . . . . . . . 19
5.04 Litigation. . . . . . . . . . . . . . . . . . 19
5.05 Compliance with Laws. . . . . . . . . . . . . 20
5.06 Financial Information . . . . . . . . . . . . 20
5.07 Insurance . . . . . . . . . . . . . . . . . . 20
5.08 Condemnation Actions. . . . . . . . . . . . . 20
5.09 Operation of the Facilities Before Closing. . 21
5.10 Hazardous Materials . . . . . . . . . . . . . 21
5.11 Contracts and Equipment Leases. . . . . . . . 21
5.12 Modification of Agreements. . . . . . . . . . 22
5.13 Existing Lease, Agreements, Etc.. . . . . . . 22
5.14 Utilities, Etc. . . . . . . . . . . . . . . . 22
5.15 Permits.. . . . . . . . . . . . . . . . . . . 22
5.16 Taxes.. . . . . . . . . . . . . . . . . . . . 22
5.17 Not A Foreign Person. . . . . . . . . . . . . 23
5.18 Construction. . . . . . . . . . . . . . . . . 23
5.19 Disclosure. . . . . . . . . . . . . . . . . . 23
5.20 Additional Covenant . . . . . . . . . . . . . 23
ARTICLE VI -- Purchaser's Representations, Warranties and
Covenants
6.01 Good Standing . . . . . . . . . . . . . . . . 23
6.02 Due Authorization . . . . . . . . . . . . . . 23
6.03 No Violation or Defaults . . . . . . . . . . 24
6.04 Litigation. . . . . . . . . . . . . . . . . . 24
6.05 Bankruptcy Matters. . . . . . . . . . . . . . 24
6.06 Additional Covenants. . . . . . . . . . . . . 24
ARTICLE VII -- Deposit . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII -- Escrow and Closing
8.01 Escrow Arrangements . . . . . . . . . . . . . 25
8.02 Closing . . . . . . . . . . . . . . . . . . . 27
8.03 Closing Adjustments . . . . . . . . . . . . . 27
8.04 Closing Costs . . . . . . . . . . . . . . . . 29
ARTICLE IX -- Intentionally Omitted
ARTICLE X -- Default; Remedies
10.01 Default by Sellers. . . . . . . . . . . . . . 29
10.02 Default by Purchaser. . . . . . . . . . . . . 29
ARTICLE XI -- Waiver and Partial Invalidity
11.01 Waiver. . . . . . . . . . . . . . . . . . . . 30
11.02 Partial Invalidity. . . . . . . . . . . . . . 30
ARTICLE XII -- Indemnification
12.01 Agreement to Indemnify. . . . . . . . . . . . 30
12.02 Indemnification Regarding Assumed Obligations
31
12.03 Notice and Cooperation on Indemnification . . 31
ARTICLE XIII -- Miscellaneous
13.01 Brokerage Commissions and Finder's Fees . . . 31
13.02 Representations, Warranties, and Covenants. . 32
13.03 Assignment. . . . . . . . . . . . . . . . . . 32
13.04 Period for Making Claims. . . . . . . . . . . 33
13.05 Applicable Law. . . . . . . . . . . . . . . . 33
13.06 Headings. . . . . . . . . . . . . . . . . . . 33
13.07 Notices . . . . . . . . . . . . . . . . . . . 33
13.08 HSR Act Matters . . . . . . . . . . . . . . . 34
13.09 Cooperation . . . . . . . . . . . . . . . . 34
13.10 Entire Agreement. . . . . . . . . . . . . . . 34
13.11 Counterparts. . . . . . . . . . . . . . . . . 35
13.12 Purchaser's Liability . . . . . . . . . . . . 35
13.13 Tax Free Exchange . . . . . . . . . . . . . . 35
EXHIBITS
Exhibit A The Facilities
Exhibit B Purchase Price Adjustment
<PAGE>
EXHIBIT A
The Facilities
1. The Colonnades Senior Living Community at Charlottesville,
Virginia
Fee Facilities
2. Brighton Gardens at Sun City, Arizona
3. Villa Valencia Senior Living Community at Laguna Hills,
California
4. Brighton Gardens at Port St. Lucie, Florida
5. Horizon Club Senior Living Community at Deerfield Beach,
Florida
6. The Stratford Court Senior Living Community at Palm Harbor,
Florida
7. Bedford Court Senior Living Community at Silver Spring,
Maryland
8. Brighton Gardens at Bellaire, Texas
9. Brighton Gardens at Virginia Beach, Virginia
10. The Jefferson Senior Living Community at Arlington, Virginia
11. The Stratford Court Senior Living Community at Boca Raton,
Florida
12. Brighton Gardens of Scottsdale, Arizona
13. Calusa Harbour Senior Living Community at Lee County,
Florida
14. Church Creek Senior Living Community at Cook County,
Illinois
<PAGE>
EXHIBIT B
Current Sales Breakpoint
Less: Revised Sales Breakpoint
Times: 4.5%
Times: 9
Equals: Purchase Price Adjustment
(Subject to a $2,000,000 Price Adjustment Cap)
Example:
Current Sales Breakpoint = $71,513,000
Less: Revised Breakpoint 67,513,000
Equals: Change in Breakpoint 4,000,000
Times: Percentage Rent Factor x 4.5%
Equals: Increase in Percentage Rent 180,000
Times: Purchase Price Multiplier x 9
Equals: Increase in Purchase Price $ 1,620,000
POWER OF ATTORNEY
The undersigned Trustees and Officers of Health and
Rehabilitation Properties Trust (the "Trust") hereby severally
constitute Mark J. Finkelstein, Gerard M. Martin and Barry M.
Portnoy, and each of them, to sign for us and in our names in the
capacities indicated below, the Trust's annual report on Form 10-
K for the year ended December 31, 1993 and any and all amendments
thereto.
Witness our hands and common seal on the dates set forth
below.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Mark J. Finkelstein President and Chief March 22, 1994
Mark J. Finkelstein Executive Officer
/s/ David J. Hegarty Executive Vice March 22, 1994
David J. Hegarty President and Chief
Financial Officer
/s/ John L. Harrington Trustee March 18, 1994
John L. Harrington
/s/ Arthur G. Koumantzelis Trustee March 22, 1994
Arthur G. Koumantzelis
/s/ Justinian Manning, C.P. Trustee March 22, 1994
Rev. Justinian Manning,
C.P.
/s/ Gerard M. Martin Trustee March 22, 1994
Gerard M. Martin
/s/ Barry M. Portnoy Trustee March 22, 1994
Barry M. Portnoy
</TABLE>
