SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9317
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland No. 04-6558834
(State of Incorporation) (I.R.S. Employer Identification No.)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive office) (Zip Code)
(617) 332-3990
(Telephone number, including area code)
HEALTH AND REHABILITATION PROPERTIES TRUST
(Former name, former address and former fiscal year, if changed since last
report)
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
Number of Common Shares outstanding at the latest practicable date,
July 29, 1994: 57,385,000 shares of beneficial interest, $.01 par value.
HEALTH AND RETIREMENT PROPERTIES TRUST
FORM 10-Q
June 30, 1994
INDEX
PART I Financial Information Page
Item 1. Financial Statements
Balance Sheets - December 31, 1993 and
June 30, 1994 1
Statements of Income - Quarters and Six Months
Ended June 30, 1993 and 1994 2
Statements of Cash Flows - Six Months Ended
June 30, 1993 and 1994 3
Notes to Financial Statements 4-8
Item 2. Management's Discussion and Analysis of Financial 9-13
Condition and Results of Operations
PART II. Other Information
Item 4. Submission of Matters to a Vote of 14
Securities Holders
Item 6. Exhibits and Reports on Form 8-K 14
Signatures
<TABLE>
HEALTH AND RETIREMENT PROPERTIES TRUST
BALANCE SHEETS
(dollars in thousands)
(Unaudited)
<CAPTION>
December 31, June 30,
1993 1994
ASSETS
<S> <C> <C>
Real estate properties, at cost:
Land $ 33,450 $ 46,710
Buildings and improvements 330,988 462,337
Equipment 20,373 31,800
384,811 540,847
Less accumulated depreciation 34,969 36,073
349,842 504,774
Real estate mortgages and notes, net 157,281 152,887
Cash and cash equivalents 13,887 24,597
Interest and rent receivable 3,039 3,674
Deferred interest and finance costs,
net and other assets 3,613 4,705
$527,662 $690,637
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank borrowings $ 73,000 $ 62,000
Security deposits 8,300 3,800
Due to affiliates 709 316
Accounts payable and accrued expenses 4,518 5,687
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, 44,121,000 shares and
57,372,500 shares issued and
outstanding, respectively 441 574
Additional paid-in capital 470,572 652,805
Cumulative net income 118,889 147,913
Distributions of funds
from operations (148,767) (182,458)
Total shareholders' equity 441,135 618,834
$527,662 $690,637
</TABLE>
See accompanying notes
<TABLE>
HEALTH AND RETIREMENT PROPERTIES TRUST
STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Quarter Ended Six Months
June 30, Ended June 30,
1993 1994 1993 1994
Revenues:
<S> <C> <C> <C> <C>
Rental income $11,463 $13,531 $22,852 $26,001
Interest income 2,300 6,385 3,561 11,462
Total revenues 13,763 19,916 26,413 37,463
Expenses:
Interest 1,178 1,069 2,447 2,328
Advisory fees 625 852 1,199 1,627
Depreciation and amortization 2,216 3,337 4,429 5,955
General and administrative 208 324 393 569
Total expenses 4,227 5,582 8,468 10,479
Income before gain on sale of
properties and extraordinary
items 9,536 14,334 17,945 26,984
Gain on sale of properties - - - 3,994
Extraordinary items - early
extinguishment of debt and
termination costs of interest
rate hedging arrangements - ( 1,953) ( 3,392) ( 1,953)
Net income $ 9,536 $12,381 $14,553 $29,025
Weighted average shares
outstanding 35,114 51,395 33,432 48,014
Per share amounts:
Income before gain on sale of
properties and extraordinary
items $ .27 $ .28 $ .54 $ .56
Net income $ .27 $ .24 $ .44 $ .60
</TABLE>
See accompanying notes
<TABLE>
HEALTH AND RETIREMENT PROPERTIES TRUST
STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1993 1994
Cash flows from operating activities:
<S> <C> <C>
Net income $14,553 $ 29,025
Adjustments to reconcile net income to
cash provided by operating activities:
Gain on sale of properties - ( 3,994)
Loss on early extinguishment of debt 3,392 1,953
Depreciation and amortization 4,429 5,955
Amortization of interest costs 251 317
Decrease in security deposits - ( 4,500)
Deferred finance costs ( 183) ( 3,659)
Changes in assets and liabilities:
Increase in interest and
rent receivable and other assets ( 2,122) ( 769)
(Decrease) increase in accounts
payable and accrued expenses ( 1,161) 1,169
Increase (decrease) in due
to affiliate 20 ( 393)
Cash provided by operating
activities 19,179 25,104
Cash flows from investing activities:
Investment in mortgage loans ( 73,325) ( 13,257)
Repayment of mortgage loans 4,316 17,651
Real estate acquisitions ( 6,292) (184,863)
Sale of real estate - 28,400
Cash used in
investing activities ( 75,301) (152,069)
Cash flows from financing activities:
Proceeds from issuance of shares, net 123,138 182,366
Proceeds from borrowings 54,000 95,000
Payments on borrowings ( 88,590) (106,000)
Termination costs of debt and
interest rate hedging arrangements ( 2,843) -
Payment related to stock surrender ( 3,000) -
Dividends paid ( 22,040) ( 33,691)
Cash provided by
financing activities 60,665 137,675
Increase in cash and cash equivalents 4,543 10,710
Cash and cash equivalents at
beginning of period 14,104 13,887
Cash and cash equivalents at end of period $ 18,647 $ 24,597
Supplemental cash flow information:
Interest paid $ 2,997 $ 1,287
</TABLE>
See accompanying notes
<PAGE>
HEALTH AND RETIREMENT PROPERTIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1993 and 1994
(dollars in thousands, except per share data)
(Unaudited)
1. Basis of presentation
The financial statements of Health and Retirement Properties Trust,
formerly known as Health and Rehabilitation Properties Trust, ("the
Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the full year.
2. 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.
3. Dividends
On July 7, 1994, the Trustees declared a dividend on the Company's
common shares of beneficial interest with respect to the quarter ended June
30, 1994 of $.33 per share, which will be paid on or about August 30, 1994
to shareholders of record at the close of business on July 29, 1994.
Dividends are principally based on funds from operations which means
net income excluding gains (or losses) from debt restructuring and sales of
property plus depreciation and amortization. Dividends in excess of net
income are a return of capital.
4. Leases
On February 11, 1994, in connection with the merger of Greenery
Rehabilitation Group Inc. (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 $3,994 on the sale of these properties. In addition, Horizon
has leased seven facilities previously leased to Greenery, on substantially
similar terms except the leases were extended through 2005. The Company
has also granted Horizon a ten year option to buy, at the rate of no more
HEALTH AND RETIREMENT PROPERTIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1993 and 1994
(dollars in thousands, except per share data)
(Unaudited)
4. Leases-continued
than one facility per year, the seven leased facilities. Also, the
Company leased the three remaining Greenery facilities to a newly formed
corporation, Connecticut Subacute Corporation II (CSC II), 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.
On March 17, 1994, the Company entered into an agreement with Host
Marriott Corporation to acquire 14 retirement communities containing 3,952
residences or beds for $320,000, subject to adjustments. The communities
are triple net leased through December 31, 2013 to a wholly owned
subsidiary of Marriott International, Inc. (Marriott). The leases provide
for fixed rent aggregating approximately $28,000 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 are guaranteed by Marriott. In
connection with the execution of the purchase and sale agreement for the
Marriott transaction, the Company provided a $25,000 cash deposit. As of
July 29, the Company has completed the acquisition of 11 of the 14
communities for $228,991 funded from the proceeds of the equity offering
described in Note 7, application of a portion of the cash deposit,
borrowings under the Company's revolving credit facility and proceeds of
the debt offering described in Note 6. The remaining purchase price will
be funded by the assumption of $17,600 of existing debt bearing interest at
8.75%, proceeds of the debt offering described in Note 6, available cash,
application of the balance of the cash deposit, and/or drawings under the
Company's revolving credit facility. The remainder of this acquisition is
expected to close in August 1994.
5. Real Estate Mortgages and Notes
On February 11, 1994, in connection with the Horizon - Greenery
merger, 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 mature December 31, 2000.
During the first half of 1994, mortgage loans, secured by eight
properties, with outstanding principal balances totalling $18,563 were
repaid.
HEALTH AND RETIREMENT PROPERTIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1993 and 1994
(dollars in thousands, except per share data)
(Unaudited)
6. Borrowings
On February 24, 1994, the Company closed a new $110,000 revolving
credit facility from a syndicate of banks. The new credit facility, which
replaced the Company's $40,000 revolving credit facility scheduled to
mature in January 1995, will mature in 1997, unless extended by the
parties. Borrowings under the new credit facility bear interest, at the
Company's option, at a spread over LIBOR or prime. The Company has drawn
on the new credit facility, upon its closing, to repay the $40,000
outstanding on the previously existing revolving credit facility and, on
April 1, 1994, to repay the $33,000 term loan. On May 13, 1994, the
Company repaid all $73,000 outstanding under the new credit facility with
proceeds of the offering described in Note 7. On June 15, 1994, the
Company amended the revolving credit facility, among other things, to
reduce the interest rate spread over LIBOR, to increase the facility to
$120,000 with provision for possible further increases to $150,000 before
August 31, 1994 and to make the facility unsecured. In connection with the
closing of this new revolving credit facility and the prepayment of the
$33,000 term loan and borrowings under the previous revolving credit
facility, the Company wrote off deferred charges of $1,953 which has been
reported as an extraordinary item. During June the Company borrowed
$62,000 under the revolving credit facility to fund a portion of the
Marriott transaction. Such borrowings were repaid in July with the
proceeds of a debt offering described below and cash on hand.
On July 13, 1994, the Company received net proceeds of $197,270 from
the offering of $200,000 in floating rate senior notes due in 1999. The
notes were issued in two series. The Series A Notes, in an aggregate
principal amount of $75,000, bear interest at LIBOR plus 105 basis points
and may be called by the Company beginning April 13, 1995. The Series B
Notes, in an aggregate principal amount of $125,000, were issued at a
discount (99.0159% of par), bear interest at LIBOR plus 72 basis points and
may be called by the Company beginning July 13, 1996. A portion of these
proceeds were used to fund part of the Marriott transaction and to repay
$56,000 of borrowings under the Company's revolving credit facility. The
Company expects to apply the balance to fund the remainder of the Marriott
transaction and future real estate acquisitions.
7. Common Shares of Beneficial Interest
On January 19, 1994, the Company received net proceeds of
approximately $8,301 and issued 601,500 shares of the Company's stock in
connection with the exercise of the underwriter's over-allotment option
granted in connection with a public offering of the Company's stock in
December 1993. The proceeds were used as part of the initial deposit on
the Marriott transaction.
HEALTH AND RETIREMENT PROPERTIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1993 and 1994
(dollars in thousands, except per share data)
(Unaudited)
7. Common Shares of Beneficial Interest-Continued
On May 13, 1994, the Company received net proceeds of approximately
$174,065 from the public offering of 12,650,000 shares of the Company's
stock. These proceeds were used, in part, to repay $73,000 in borrowings
under the Company's revolving credit facility and the balance to fund part
of the Marriott transaction.
8. Financing Commitments
During the quarter ended June 30, 1994, the Company provided
improvement financing at existing properties of approximately $3,202.
As of June 30, 1994, the Company has commitments to provide additional
improvement financing at existing properties totalling approximately
$17,377.
9. Concentration of Credit Risk
Substantially all of the Company's assets are invested in income
producing health care real estate. At June 30, 1994, a total of 47% of the
Company's real estate properties, net and real estate mortgages and notes,
net were subject to mortgages and leases with Marriott and Horizon. The
financial statements of Marriott have been filed as a part of Marriott's
Quarterly Form 10-Q, file number 1-12188, for the twenty four weeks ended
June 17, 1994. The financial statements of Horizon have been filed as a
part of Horizon's Quarterly Form 10-Q, file number 1-9369, for the nine
months ended February 28, 1994.
10. Pro Forma Information (Unaudited)
The following summarized Pro Forma Statements of Income assume that
all of the Company's real estate financing transactions during 1993, both
1993 share offerings, the January 19, 1994 over-allotment option exercise,
the Horizon-Greenery merger and the Marriott transaction and the related
equity offering completed in May 1994 and debt offering completed in July
1994, had occurred on January 1, 1993 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 Marriott transaction and the related
equity offering completed in May 1994 and debt offering completed in July
1994, had occurred on June 30, 1994.
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.
HEALTH AND RETIREMENT PROPERTIES TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1993 and 1994
(dollars in thousands, except per share data)
(Unaudited)
Year Ended Six Months Ended
December 31, June 30,
1993 1993 1994
Pro Forma Statements of Income
Total revenues $94,985 $47,082 $48,772
Total expenses 35,497 18,730 20,575
Net income $59,488 $28,352 $28,197
Weighted average shares
outstanding 57,373 57,373 57,373
Net income per share $ 1.04 $ .49 $ .49
June 30,
1994
Pro Forma Balance Sheet
Real estate properties, net $651,671
Real estate mortgages and notes, net 152,887
Other assets 41,679
Total Assets $846,237
Borrowings $217,600
Other liabilities 9,803
Shareholder's equity 618,834
Total Liabilities and
Shareholder's Equity $846,237
HEALTH AND RETIREMENT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Quarter Ended June 30, 1994 versus 1993
Total revenues for the quarter ended June 30, 1994, increased to
$19,916,000 from $13,763,000 for the quarter ended June 30, 1993. Rental
income increased to $13,531,000 from $11,463,000 and interest income
increased to $6,385,000 from $2,300,000 during the comparable period.
Rental income increased primarily as a result of new investments in real
estate subsequent to June 30, 1993. Interest income increased primarily
due to the acquisition of three pools of performing mortgage loans between
May and December, 1993.
Total expenses for the quarter ended June 30, 1994, increased to
$5,582,000 from $4,227,000 for the quarter ended June 30, 1993. The
increase is primarily the result of increases in depreciation and
amortization of $1,121,000 as a result of new investments since the 1993
quarter.
Income before gain on sale of properties and extraordinary item
increased to $14,334,000 or $.28 per share for the 1994 quarter from
$9,536,000 or $.27 per share for the 1993 quarter. The increase in income
before gain on sale of properties and extraordinary items is primarily a
result of the new investments since June 30, 1993. Net income for the
quarters ended June 30, 1994 and 1993, was $12,381,000 ($.24 per share) and
$9,536,000 ($.27 per share), respectively.
The Company bases its dividend primarily on funds from operations
during the quarter. Funds from operations means net income excluding gains
(or losses) from debt restructuring and sales of property, plus
depreciation and amortization. Cash available for distribution may not
necessarily equal funds from operations as the cash flow of the Company is
affected by other factors not included in the funds from operations
calculation. Funds from operations for the 1994 quarter was $17,860,000 or
$.35 per share for the 1994 quarter and $11,895,000 or $.34 per share, for
the 1993 quarter.
The dividends declared which relate to these quarters were $18,937,050
or $.33 per share in 1994 and $11,236,000 or $.32 per share in 1993.
Dividends for the 1994 quarter exceeded, in the aggregate, the funds from
operations because dividends were declared on 12,620,500 shares, which were
not outstanding for the entire quarter.
HEALTH AND RETIREMENT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Six Months Ended June 30, 1994 versus 1993
Total revenues for the six months ended June 30, 1994 increased to
$37,463,000 from $26,413,000 for the six months ended June 30, 1993.
Rental income increased to $26,001,000 from $22,852,000 and interest income
increased to $11,462,000 from $3,561,000 during the comparable period.
Rental income increased as a result of new real estate investments,
primarily the Community Care of America transaction in December 1993. The
increase in interest income reflects the purchases between May and December
1993 of three pools of performing mortgage loans.
Total expenses for the six months ended June 30, 1994 increased to
$10,479,000 from $8,468,000 in 1993. Advisory fees and depreciation and
amortization increased by $428,000 and $1,526,000, respectively, in the
1994 period as a result of new investments, including those mentioned
above, that occurred near the end of, or subsequent to, the 1993 period and
therefore, did not materially affect expenses during the six months ended
June 30, 1993.
Funds from operations for the six months ended June 30, 1994 and 1993
was $33,318,000 ($.69 per share) and $22,638,000 ($.68 per share),
respectively, income before gain on sale of properties and extraordinary
items was $26,984,000 ($.56 per share) and $17,945,000 ($.54 per share),
respectively, and net income was $29,025,000 ($.60 per share) and
$14,553,000 ($.44 per share), respectively. Income before gain on sale of
properties and extraordinary items increased primarily as a result of new
investments since June 1993. Dividends declared relating to the six months
ended June 30, 1994 and 1993 were $37,870,000 ($.66 per share) and
$22,040,000 ($.64 per share), respectively. Dividends for the 1994 period
exceeded funds from operations because dividends were declared on
12,620,500 shares which were not outstanding for the entire period.
LIQUIDITY AND CAPITAL RESOURCES
Assets of the Company increased to $690,637,000 at June 30, 1994 from
$527,662,000 at December 31, 1993. The increase is principally the net
result of increases in real estate properties, net, and cash and cash
equivalents of $154,932,000 and $10,710,000, respectively and a decrease in
real estate mortgages and notes, net, of $4,394,000. The increase in cash
and cash equivalents is attributable principally to $11,086,000 of cash on
deposit with Host Marriott Corporation and not available to reduce debt.
The increase in real estate properties is the net result of the acquisition
of nine retirement communities in connection with the Marriott transaction,
improvement financings for existing tenants and the sale of three
properties in connection with the February 11, 1994 merger of Greenery
Rehabilitation Group, Inc. (Greenery) into Horizon Healthcare Corporation
HEALTH AND RETIREMENT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES-Continued
(Horizon). Real estate mortgages and notes, net, decreased principally due
to the prepayment of mortgage investments totalling $18,563,000 net of new
mortgage financings of $10,557,000.
On February 11, 1994, in connection with the Horizon-Greenery merger,
the Company sold to Horizon for $28,400,000 three facilities that had been
leased to Greenery. The Company realized a capital gain of approximately
$3,994,000 on the sale of these properties. In addition, Horizon has
leased seven facilities previously leased to Greenery, on substantially
similar terms except the leases were 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, the Company
leased the three remaining Greenery Facilities to a newly formed
corporation, Connecticut Subacute Corporation, II (CSC II), 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.
On February 11, 1994, in connection with the Horizon-Greenery merger,
the Company provided Horizon with $9,400,000 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 mature December 31, 2000.
On March 17, 1994, the Company entered into an agreement with Host
Marriott Corporation to acquire 14 retirement communities containing 3,952
residencies or beds for $320,000,000 subject to adjustments. The
communities are triple net leased through December 31, 2013 to a wholly
owned subsidiary of Marriott International, Inc. (Marriott). The leases
provide for fixed rent aggregating approximately $28,000,000 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 are guaranteed by
Marriott. In connection with the execution of the purchase and sale
agreement for the Marriott transaction, the Company provided a $25,000,000
cash deposit. As of July 29, the Company has completed the acquisition of
11 of the 14 communities for $228,991,000 which was funded from cash on
hand, the proceeds of an equity offering discussed below, application of a
portion of the cash deposit, drawings under the Company's revolving credit
facility and a portion of the proceeds from a floating rate note offering
described below. The balance of the purchase price will be funded by the
assumption of $17,600,000 of existing debt bearing interest at 8.75%,
available cash, application of the remainder of the cash deposit and
additional proceeds of the $200,000,000 floating rate note offering. The
remainder of the acquisition is expected to close in August, 1994.
HEALTH AND RETIREMENT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES - continued
At June 30, 1994, the Company had $24,597,000 of cash and cash
equivalents, including the remaining $11,086,000 cash deposit with
Marriott, and the ability to borrow up to an additonal $58,000,000 under
its revolving credit facility. At June 30, 1994, the Company had
outstanding commitments to provide $17,377,000 in improvement financing for
existing investments. On May 13, 1994 the Company received net proceeds of
approximately $174,541,000 from the public offering of 12,650,000 common
shares of beneficial interest (including the underwriter's over-allotment
option). A portion of the proceeds were used to repay the outstanding
balance of $73,000,000 on the Company's revolving credit facility and the
remainder to fund part of the Marriott transaction.
On July 13, 1994, the Company received net proceeds of $197,270,000
from the offering of $200,000,000 in floating rate senior notes due in
1999. The notes were issued in two series. The Series A Notes, in an
aggregate principal amount of $75,000,000, bear interest at LIBOR plus 105
basis points and may be called by the Company beginning April 13, 1995.
The Series B Notes, in an aggregate principal amount of $125,000,000, were
issued at a discount (99.0159% of par), bear interest at LIBOR plus 72
basis points and may be called by the Company beginning July 13, 1996. A
portion of these proceeds were used to fund part of the Marriott
transaction and to repay $56,000,000 in borrowings under the Company's
revolving credit facility. The Company expects to apply the balance to
fund the remainder of the Marriott transaction and future real estate
acquisitions. This senior note offering was drawn under a shelf
registration statement for the offering of up to $345,000,000 of debt
securities, preferred shares of beneficial interest, common shares of
beneficial interest and common share warrants. An additional $145,000,000
of securities may be issued under this registration statement.
The Company is continuing to seek new investments to expand and
diversify its portfolio of leased and mortgaged health care related real
estate. The Company believes that the new investments described above
substantially improve the quality and diversity of lessees and mortgagors
in its portfolio and also the security of its future cash flows and
dividends. Upon completion of the Marriott transaction approximately 70%
of the Company's portfolio will be leased to or mortgage financed with
seven New York Stock Exchange listed companies. Also, Marriott, which is
an A- investment grade rated company, will be the Company's largest single
tenant.
HEALTH AND RETIREMENT PROPERTIES TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES - continued
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 June 30,
1994, the Company's debt as a percentage of total capitalization was
approximately 9% and upon completion of the $200,000,000 floating rate note
offering in July 1994 was approximately 24%. Current expenses and
dividends are provided for by funds from operations.
HEALTH AND RETIREMENT PROPERTIES TRUST
Part II Other Information
Item 4. Submission of Matters to a Vote of Securities Holders.
The Company's Annual Shareholders Meeting was held on May 17, 1994.
Rev. Justinian Manning, C.P. and Gerard M. Martin were re-elected to serve
as Trustees in Group II on the Board of Trustees. There were 34,290,024
shares and 34,321,761 shares voted in favor of and 274,658 shares and
242,921 shares withheld from voting, for the re-election of Rev. Justinian
Manning, C.P. and Gerard M. Martin, respectively. Trustees in Groups I and
III, John L. Harrington, Barry Portnoy and Arthur G. Koumantzelis continued
in office as Trustees, after the meeting.
Also on May 17, 1994, a proposed amendment to the Company's
Declaration of Trust to change the Company's name to "Health and Retirement
Properties Trust" was approved. There were 33,958,032 shares voted in
favor, 185,731 shares voted against, and 420,919 shares abstained on the
amendment.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Amended and Restated Revolving Credit Facility
10.2 - Letter Amendments dated June 13, 1994 and July 25,
1994 to the Marriott Purchase Agreement
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K, dated
July 1, 1994 in connection with the amendment and
restatement of its declaration of trust to reflect the
change in the Company's name
HEALTH AND RETIREMENT PROPERTIES TRUST
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 duly authorized.
HEALTH AND RETIREMENT
PROPERTIES TRUST
(Registrant)
DATE August 11, 1994 BY /s/ Mark J. Finkelstein
Mark J. Finkelstein, President
DATE August 11, 1994 BY /s/ David J. Hegarty
David J. Hegarty, Chief Financial
Officer
HEALTH AND REHABILITATION PROPERTIES TRUST
AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
DATED AS OF JUNE 15, 1994
This AMENDED AND RESTATED REVOLVING LOAN AGREEMENT is dated as
of June 15, 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) or 9.4, 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"),
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"), and NATIONAL WESTMINSTER BANK,
USA, a national banking association, as co-agent (in such capacity,
"Co-Agent").
WHEREAS, Borrower, Kleinwort Benson Limited, as agent, Wells
Fargo Bank, National Association, as administrative agent, and the
lenders described therein are parties to that certain Revolving Loan
Agreement dated as of February 24, 1994 (as such agreement may have been
amended, supplemented or modified from time to time prior to the date
hereof, the "Existing Loan Agreement");
WHEREAS, Borrower desires that Lenders increase the size of
their aggregate commitments under the Existing Loan Agreement, terminate
any security interests granted to support Borrower's obligations under
the Existing Loan Agreement and make certain amendments to the Existing
Loan Agreement and amend and restate it in its entirety; and
WHEREAS, Lenders desire to make such increase, terminate such
security interests and make such amendments and such amendment and
restatement.
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 any Property or
Mortgage Interest, that more than 50% of the licensed beds of the
NY1-287959.V2
REVOLVING LOAN AGREEMENT 1
<PAGE>
Property or, in the case of a Mortgage Interest, 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 as of
November 20, 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, 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 Amended and Restated 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 or Property (as the context
may require), the lesser of (a) the acquisition cost of Borrower in
respect of such Eligible Property or Property, (b) the Appraised Value of
such Eligible Property or Property as set forth in the then most recent
Appraisal with respect to such Eligible Property or Property less the
value attributable to any capital improvements made by the Operator of
such Eligible Property or Property financed by such Operator, and (c) the
minimum purchase price (howsoever denominated) that would be payable to
Borrower by the Operator of such Eligible Property or Property or any
other Person if it purchased such Eligible Property or 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 or 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 (ii) with respect to each Eligible Mortgage or
Mortgage Interest (as the context may require), the lesser of (a) the
outstanding principal amount due to Borrower from the relevant Mortgagor
in respect of such Eligible Mortgage or Mortgage Interest, and (b) the
Appraised Value of the Mortgaged Property which is covered by the
relevant Eligible Mortgage or Mortgage Interest as set forth in the most
recent Appraisal with respect to such Eligible Mortgage or Mortgaged
Property.
NY1-287959.V2
REVOLVING LOAN AGREEMENT 2
<PAGE>
"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.
"Applicable Margin" means, in the case of a Base Rate Loan, a
margin of zero and, in the case of a Eurodollar Loan or an Alternate Rate
Loan which is not a Base Rate Loan, a margin of one and one-quarter
percentage points (1.25%) per annum; provided that if, at any date of
determination, Borrower's long-term unsecured senior debt is not rated
BBB- or higher by Standard & Poor's Corporation or Baa3 or higher by
Moody's Investors Service, Inc. (or similarly rated by any successor to
either of such rating services), then, in the case of all Loans, the
Applicable Margin otherwise applicable (including any increase under the
next proviso) shall be increased by an additional one-quarter percentage
point (0.25%) per annum; provided further that if, at any date of
determination, Loans have been outstanding in an aggregate principal
amount equal to or greater than $100,000,000 for a period of 12
consecutive months or longer, then, in the case of all Loans, the
Applicable Margin otherwise applicable (including any increase under the
previous proviso) shall be increased by an additional one-quarter
percentage point (0.25%) per annum, with any additional margin under this
further proviso to remain in effect until the first Business Day next
following the first period of 30 consecutive days after such increase
became effective during which the aggregate principal amount of Loans
outstanding has been less than $100,000,000.
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 3
<PAGE>
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.
"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 Date" means the Business Day specified in a Notice
of Borrowing as the date on which Borrower requests the Lenders to make
Loans hereunder.
"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.
NY1-287959.V2
REVOLVING LOAN AGREEMENT 4
<PAGE>
"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 four most recent financial quarters (or,
if financial reporting for such Cash Flow is provided on an annual basis,
over its last reported financial year), 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 four most recent financial quarters (or last
reported financial year, as the case may be), 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.
"Code" means the Internal Revenue Code of 1986, as amended 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 5
<PAGE>
( "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 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
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.
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 6
<PAGE>
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.
"Current" means, at any date of determination, in respect of
cash flow information of an Operator or Mortgagor required in a Real
Property Statement, (a) for a fiscal year of that Operator or Mortgagor,
that such information relates to its fiscal year then current or the
fiscal year ended not more than one hundred and fifty days prior thereto
or (b) for a fiscal quarter of that Operator or Mortgagor, that such
information relates to its fiscal quarter then current or a fiscal
quarter ended not more than seventy five days prior thereto.
"Declaration of Trust" means the Declaration of Trust
establishing Borrower, dated October 9, 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
Declaration 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.
"EBI" means, with respect to Borrower and its Subsidiaries, if
any, for any period of time, without duplication of counting, the sum of
(i) the net income from operations 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.
"Effective Date" means the date when the conditions precedent
set forth in Section 4 are first satisfied, or are waived pursuant to
Section 9.6.
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 7
<PAGE>
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.
Section 9601 et seq.), the Hazardous Material Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq.), each as amended or
supplemented, and any analogous future or present local, municipal, state
and federal statutes and 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.
"Existing Loan Agreement" has the meaning set forth in the
introduction to this Agreement.
"Existing Loans" has the meaning set forth in Section 2.1(a).
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 8
<PAGE>
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
real property interest (including, without limitation, the Fee Interests
and/or Leasehold Interests and/or Mortgage 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.
"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.
"Final Borrowing Date" means the earlier of (i) February 24,
1996 and (ii) such date as the Commitments shall terminate as provided
herein.
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 9
<PAGE>
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"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.
"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.
"HRPT Advisors" means HRPT Advisors, Inc., a Delaware
corporation.
"IDFA Indebtedness" means the Indebtedness, in an aggregate
principal amount not to exceed $17,700,000 plus accrued interest thereon,
existing pursuant to (a) that certain Loan Agreement dated as of April
15, 1991 between the Illinois Development Finance Authority and Marriott
Retirement Communities, Inc. and relating to the Illinois Development
Finance Authority Revenue Refunding Bonds Series 1991A, and (b)
that certain Loan Agreement dated as of April 15, 1991 between the
Illinois Development Finance Authority and Marriott Retirement
Communities, Inc. and relating to the Illinois Development Finance
Authority Revenue Refunding Bonds Series 1991B, which Indebtedness is to
be assumed by Borrower pursuant to that certain Purchase Agreement dated
NY1-287959.V2
REVOLVING LOAN AGREEMENT 10
<PAGE>
March 17, 1994 among HMC Retirement Properties, Inc., HMH Properties,
Inc. and Borrower.
"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
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.
"Insolvency Event", with respect to any Person, means that
(i) such Person shall have suspended or discontinued its business or
NY1-287959.V2
REVOLVING LOAN AGREEMENT 11
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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 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 March,
June, September and December of each year and the date such Loan (or any
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REVOLVING LOAN AGREEMENT 12
<PAGE>
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 other period of less than six months 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 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.
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 13
<PAGE>
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 any leases or subleases relating to the
Properties in respect of which Borrower is the lessor.
"Lender" has the meaning set forth in the first paragraph of
this Agreement.
"Lending Office" means the branch or Affiliate office of each
Lender designated as the Lending Office of such Lender indicated 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 (expressed as a percentage and
rounded to the nearest one ten thousandth of one percent) 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 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
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 Existing Loans and 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 14
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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 Leases, the Mortgage Interest Agreements and the Credit Support
Agreements insofar as they relate to Eligible Properties and Eligible
Mortgages.
"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).
"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.
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REVOLVING LOAN AGREEMENT 15
<PAGE>
"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.
"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 (including attorneys'
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 (including attorneys' 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 (or from refinancing of such 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.
NY1-287959.V2
REVOLVING LOAN AGREEMENT 16
<PAGE>
"Notes" has the meaning set forth in Section 2.2.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit B 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.
"Notice of Continuation/Conversion" means a notice
substantially in the form of Exhibit C 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.
"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.
"Permitted Exceptions" means those exceptions to title set
forth on Schedule 2.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"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.
"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.
NY1-287959.V2
REVOLVING LOAN AGREEMENT 17
<PAGE>
"Preferred Shares" means Borrower's preferred shares of
beneficial interest authorized under the Declaration of Trust.
"Primary Credit Support Obligor" means each Credit Support
Obligor in respect of obligations of a Primary Operator/Mortgagor.
"Primary Operator/Mortgagor" means any Operator and/or
Mortgagor which is a lessee or sublessee with respect to Facilities
and/or an obligor or mortgagor with respect to Mortgage Interests or
Facilities representing, in aggregate, 10% or more of the aggregate
Allowed Value of the Properties and Mortgage Interests.
"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.
"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 any Property or
Mortgage Interest, that more than 50% of the licensed beds of the
Property or, in the case of a Mortgage Interest, 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" means, in respect of any Property or
Mortgaged Property, all certificates of occupancy, permits, licenses,
franchises, approvals and authorizations 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 the 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.
"Real Property Statement" means a certificate of a Responsible
Officer providing each of the following:
(i) a list of all Facilities owned by Borrower or in which
Borrower has an interest at the date of such certificate,
identifying the nature of such interest and certifying the Appraised
NY1-287959.V2
REVOLVING LOAN AGREEMENT 18
<PAGE>
Value, if available, and each of the other costs, values and prices
referred to in the definition of "Allowed Value" relating to each
Facility;
(ii) specification in respect of each Facility of each of
the following:
(a) whether as of the date of such certificate such
Facility is an Eligible Property or a Mortgaged Property
covered by an Eligible Mortgage;
(b) in respect of each Eligible Property, the acquisition
cost of Borrower in respect of such Eligible Property; and
(c) in respect of each Eligible Mortgage, the then
outstanding principal amount due to Borrower from the
relevant Mortgagor in respect of such Eligible Mortgage;
(iii) with respect to each such Eligible Property or
Eligible Mortgage, certification as to the ratio of (A) the Cash
Flow of the Operator or Mortgagor thereof (as applicable) over the
four most recent financial quarters (or, if financial reporting for
such Cash Flow is provided on an annual basis, over its last
reported financial year) attributable to that Eligible Property or
Eligible Mortgage to its (B) Fixed Charges over the same period for
such Eligible Property or Eligible Mortgage and, further,
certification that, with respect to each Eligible Property or
Eligible Mortgage, the details of cash flows of the Operator or
Mortgagor thereof used by Borrower in its calculations are Current;
provided that if such Eligible Property or Eligible Mortgage is part
of a group of Cross Guarantied Assets, in addition to the
certification required for each individual Eligible Property or
Eligible Mortgage, Borrower also shall provide certification as to
the ratio of (A) the Cash Flow of the Operators or Mortgagors (as
applicable) for such group determined on an aggregate basis over
their respective four most recent financial quarters (or last
reported financial year, as the case may be) attributable to the
group of Cross Guarantied Assets to (B) their Fixed Charges over the
same period for such group of Cross Guarantied Assets; and
(iv) certification that there has been no MAC in any of
the circumstances set forth in Section 2.16(c), other than, in each
case, a MAC which has ceased to be in effect.
"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.
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"Reference Banks" means Kleinwort Benson Limited and Wells
Fargo Bank, National Association.
"Rehabilitation Treatment Asset" means, in respect of any
Property or Mortgage Interest, that more than 50% of the licensed beds of
the Property or, in the case of a Mortgage Interest, 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.
"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 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 20
<PAGE>
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.
"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 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 amended and restated
subordination agreement among Administrative Agent, the Advisor and
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<PAGE>
Borrower substantially in the form of Exhibit D, as such agreement may be
amended, supplemented or modified from time to time.
"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.
"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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 22
<PAGE>
under Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan.
"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 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.
"Trigger Date" has the meaning set forth in Section 5.14.
"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 continue the Existing Loans
outstanding on the Effective Date, to make Loans to Borrower from time to
time during the period from the Effective 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 (including, without limitation, the amount of any
Existing Loans) 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. Upon
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REVOLVING LOAN AGREEMENT 23
<PAGE>
satisfaction of the conditions set forth in Section 4, (i) all loans
outstanding under the Existing Loan Agreement as of, and at the time of,
the Effective Date ("Existing Loans") and all rights relating to the
Existing Loans and all other rights arising under the Existing Loan
Agreement and all documents relating thereto, except to the extent
specifically amended and restated by this Agreement, shall be assigned
(without any further action or authorization being required) by the
lenders under the Existing Loan Agreement to the Lenders proportionately
to their respective Pro Rata Shares of the Commitments without recourse,
representation or warranty (except for representations and warranties
made in this Section 2.1(a)) of any nature, express or implied, by any
such lender and such Existing Loans shall be continued and deemed to be
Loans for all purposes under this Agreement and (ii) each Lender shall
pay to Administrative Agent its Pro Rata Share of the Existing Loans or,
if less, the amount by which such Pro Rata Share exceeds its outstanding
Existing Loans (if any), for distribution to the lenders under the
Existing Loan Agreement that are not Lenders and to the other Lenders
that have funded such Loans, in accordance with their respective
Commitments, and each Lender's share of the Existing Loans shall be
adjusted accordingly. In connection with such assignment, each Lender
that is also a lender under the Existing Loan Agreement shall be deemed
to represent and warrant to each other Lender that (i) it is, and will be
on the Effective Date, prior to the assignment of its interests pursuant
to this Section 2.1(a), the legal and beneficial owner of the interests
being assigned and such interests are, and will be on the Effective Date,
free and clear of any adverse claim and (ii) the total aggregate
principal amount and accrued interest, fees and other amounts due to such
Lender under the Existing Loan Agreement on June 15, 1994 are as set
forth on Schedule 3 annexed hereto. Any amounts of accrued interest,
commitment fees or other amounts (other than principal) owed (whether or
not presently due and payable) by Borrower to the lenders under or in
respect of the Existing Loans shall, as of the Effective Date, be deemed
to be due and payable to the lenders under the Existing Loan Agreement.
The continuation of the Existing Loans hereunder shall not be deemed to
be a repayment thereof, and Borrower shall not be required to deliver any
notice of prepayment or notice of borrowing or to satisfy any condition
relating to minimum amounts of prepayments or minimum amounts of
borrowings hereunder with respect to such continuance of the Existing
Loans.
(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
set forth opposite its name on Schedule 1 annexed hereto and the
aggregate original amount of the Commitments is $120,000,000; 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 Commitments
or (ii) cause the aggregate amount of the General Corporate Loans then
NY1-287959.V2
REVOLVING LOAN AGREEMENT 24
<PAGE>
outstanding to exceed 25% of the Commitments. The foregoing
notwithstanding, if prior to August 31, 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; and if an existing Lender shall notify Borrower and
Agent of its agreement to increase its Commitment above its original
Commitment and such agreement is accepted by Borrower and Agent, then
upon notification thereof by Agent to the other parties hereto (or, if
later, upon the effective date for such increase stated in such
notification), in each case not later than August 31, 1994, such existing
Lender's Commitment shall be increased as set forth in such notification;
provided that no such additional lender shall become a Lender (and no
such increase shall become effective) without the consent of Borrower and
all Lenders if such additional lender's Commitment (or such increase)
would make the aggregate Commitments exceed $150,000,000. The other
terms of this Agreement notwithstanding, such additional lender or Lender
increasing its Commitment shall, on the first day thereafter which is the
last day of an Interest Period (or on such day if such day is the last
day of an Interest Period), pay to Administrative Agent (i) its Pro Rata
Share of the Loans then outstanding (if any) or, if less, the amount by
which such Pro Rata Share exceeds its outstandings hereunder (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 Effective 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 25
<PAGE>
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 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 both a Notice of Borrowing and a Real Property Statement to
Administrative Agent (with a copy of each 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
Commitments currently in effect, or (B) the aggregate amount of the
General Corporate Loans then outstanding to exceed 25% of the
Commitments, (ix) that the proceeds of the proposed borrowing (other than
any proceeds 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 and (x) 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 26
<PAGE>
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 each of the other costs,
values and prices referred to in the definition of "Allowed
Value" therefor, 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
calculation of Indebtedness permitted under Section 6.8(a)
after giving effect to such Loan, certification to that effect.
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 and a Real Property Statement 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.
(b) 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(a) (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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 27
<PAGE>
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.
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(a) or as selected pursuant to
Section 2.5 (or, in the case of any Existing Loans, as in effect on the
Effective Date), 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 (or, in the case of any Existing Loans, from the Effective
Date) to maturity (whether by accelerations or otherwise), at the
interest rates specified as follows:
NY1-287959.V2
REVOLVING LOAN AGREEMENT 28
<PAGE>
(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 in
effect from time to time;
(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 in effect from time to time;
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 in effect from time to time.
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). In addition, Borrower shall pay accrued
interest on the principal amount of any Loans prepaid in accordance with
Section 2.8 on the date of any such prepayment.
(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,
NY1-287959.V2
REVOLVING LOAN AGREEMENT 29
<PAGE>
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.
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 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 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 30
<PAGE>
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.
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 one quarter of one percent (0.25%)
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 Effective Date to and excluding the
Final Borrowing Date; provided that if, at any date of determination,
Borrower's long-term unsecured senior debt is not rated BBB- or higher by
Standard & Poor's Corporation or Baa3 or higher by Moody's Investors
Service, Inc. (or similarly rated by any successor to either of such
rating services), then the Commitment fee otherwise payable shall be
increased by an additional one-eighth of one percent (0.125%) per annum.
(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 April 6, 1994 letter
from Agent to prospective Lenders.
(c) Borrower shall pay to Administrative Agent for its account
an annual administration 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.
NY1-287959.V2
REVOLVING LOAN AGREEMENT 31
<PAGE>
(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 dated March 28, 1994 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 Sections 2.8(f) and 2.15, Borrower may, at its
option, prepay any Loans on any Business Day in whole or in part, without
premium, upon at least three Business Days', in the case of Eurodollar
Loans, or one Business Day's, in the case of Base Rate Loans, 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 integral
multiples of $500,000 in excess of that amount.
(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, 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; provided that with
respect to a particular transaction or a related series of transactions
giving rise to Net Property Proceeds or Net Mortgage Proceeds, prepayment
of the Loans shall be required from such Net Property Proceeds or Net
Mortgage Proceeds only to the extent that the same exceed $1,000,000.
(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, within thirty days after such offering or incurrence,
Borrower shall apply all Net Securities Proceeds arising from such
offering or incurrence to the prepayment of the Loans; provided, that
such Net Securities Proceeds may, at Borrower's option, first be applied
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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 Commitments, 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 Commitments. If
at any time the principal balance of the General Corporate Loans then
outstanding exceeds 25% of the Commitments, 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 25% of the Commitments.
(f) Subject to the application of the payment 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
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
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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 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
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REVOLVING LOAN AGREEMENT 34
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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 that 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.
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 the Existing Loans may be continued for
the same purposes as they were made under the Existing Loan Agreement,
and shall not be treated as General Corporate Loans.
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
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REVOLVING LOAN AGREEMENT 35
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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 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
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REVOLVING LOAN AGREEMENT 36
<PAGE>
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 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
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
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REVOLVING LOAN AGREEMENT 37
<PAGE>
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).
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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 38
<PAGE>
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 shall be
reconverted 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
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 any 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
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REVOLVING LOAN AGREEMENT 39
<PAGE>
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, 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.
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REVOLVING LOAN AGREEMENT 40
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2.15. Indemnities. Borrower shall indemnify each Lender on
demand for, from and against any actual loss (including, without
limitation, any loss of anticipated profits) 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 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 Cash Flow Event with respect to such Mortgaged Property,
(iv) 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 and (v) such Mortgage Interest is not subject to
a Lien otherwise permitted pursuant to Section 6.9(i) or 6.9 (iv).
(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) such Operator is not in default
under any payment obligation or in any material respect under any other
NY1-287959.V2
REVOLVING LOAN AGREEMENT 41
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Contractual Obligation between such Operator and Borrower, including
without limitation such Lease, any other Lease or any Mortgage Interest
Agreement, (iv) there has been no Cash Flow Event with respect to such
Property, (v) 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 and (vi) such Property is not
subject to a Lien otherwise permitted pursuant to Section 6.9(i) or 6.9
(iv).
(c) No Mortgage Interest shall be an Eligible Mortgage and no
Property shall be an Eligible Property unless, on any relevant date,
there has been no MAC in respect of such (i) Property (or any Operator or
Credit Support Obligor for the Lease thereof), or (ii) Mortgaged Property
(or any Mortgagor or Credit Support Obligor for the Mortgage Interest
Agreements in respect thereof), in each case since December 31, 1993 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; provided that for the purposes of this Section
2.16, failure to comply with clause (ii) of Section 5.5(a) in connection
with an Eligible Property or an Eligible Mortgage shall be deemed to
constitute a MAC in respect of such Eligible Property or Eligible
Mortgage.
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, December 31, 1992 and December 31, 1993 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.
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.
3.2. No Material Adverse Effect. Since December 31, 1993 (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
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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
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
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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, on the terms
and conditions of the Loan Documents and to authorize the execution,
delivery and performance of each of the Loan Documents. 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, 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.
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,
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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 cases described in this Section 3.9, 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 Wells
Fargo Bank, National Association, as collateral agent, to secure
obligations of Borrower pursuant to the Existing Loan Agreement, which
mortgages and security interests shall have been terminated as provided
in Section 4.1(g), and (ii) 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
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
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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.
(f) 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 Liens securing obligations of
Borrower under the Existing Loan Agreement, which will be discharged on
the Effective Date, and except for Liens permitted by Section 6.9.
Borrower has not collected any rents becoming due under any Lease more
than 30 days in advance (except (i) an amount equal to one month's
instalment of rent under a Lease or (ii) in the case of a lease acquired
from Host Marriott Corporation and its Affiliates pursuant to the
transaction (or one on substantially similar terms) described in the Form
S-3 Registration Statement of Borrower filed with the Commission on March
29, 1994, an amount equal to no more than three months' instalment of
rent under such 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
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<PAGE>
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 a 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.
(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 Liens securing obligations of Borrower under the
Existing Loan Agreement, which will be discharged on the Effective Date,
and Liens permitted by Section 6.9.
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
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REVOLVING LOAN AGREEMENT 47
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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.
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 had 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, 1992 and 1993. 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. 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
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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.
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 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 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 Agreement 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
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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 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 Effectiveness. This Agreement shall become
effective only upon satisfaction of all of the following conditions
precedent:
(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) Legal Opinion. Agent shall have received, with a
counterpart for each Lender, a favorable opinion of Sullivan & Worcester,
as counsel to Borrower and the Advisor, addressed to Agent and the
Lenders and dated the Effective Date, and in form and substance
satisfactory to Agent.
(c) Organizational Documents. Agent shall have received
certified copies of the Declaration of Trust, by-laws 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.
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(d) 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, dated a
recent date prior to the Effective Date, to the effect that Borrower 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.
(e) Advisory Agreement and Subordination Agreement. Agent
shall have received copies of the Advisory Agreement certified by a
Responsible Officer and an original copy of the Subordination Agreement
duly executed by the Advisor.
(f) Debt Rating. Agent shall have received evidence that
Borrower's long-term unsecured senior debt is rated BBB- or higher by
Standard & Poor's Corporation or Baa3 or higher by Moody's Investors
Service, Inc.
(g) Existing Loan Agreement and Release of Security.
(i) Borrower shall have paid all accrued interest, fees,
commissions and other amounts (other than principal)
accrued or owed under the Existing Loan Agreement, whether
or not presently due and payable.
(ii) Agent shall have received any documentation or
other evidence as it may request relating to the
termination of the Security Documents Escrow Agreement and
the Pledge Escrow Agreement (both such terms being used
as defined in the Existing Loan Agreement), and any
instruments releasing Liens or security interests in favor
of the lenders under the Existing Loan Agreement or other
third parties and other encumbrances as may be required to
be released or discharged pursuant to the terms of this
Agreement or other evidence satisfactory to Agent
evidencing the satisfaction or discharge of such Liens,
security interests and other encumbrances.
(iii) No Default or Event of Default (both such terms
being used as defined in the Existing Loan Agreement)
shall have occurred and be continuing under the Existing
Loan Agreement.
(iv) Agent shall have received a release and
termination letter with respect to each lender under the
Existing Loan Agreement which is not also a Lender, in
each case, signed by Borrower, such lender and the agent
and the administrative agent under the Existing Loan
Agreement.
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(h) 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, 1993.
(i) 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
Effective Date hereunder or otherwise in connection with the financing
contemplated hereby shall have been satisfied.
(j) Real Property Statement. Agent shall have received a Real
Property Statement dated the Effective Date.
(k) 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
contemplated by this Agreement and the other Loan Documents shall be
satisfactory in form and substance to Agent and its counsel.
4.2. Conditions Precedent to Loans. The obligations of
Lenders to make Loans on each Borrowing Date and to continue any Existing
Loans on the Effective Date (which, for purposes of this Section 4.2
shall be deemed to be a Borrowing Date) are subject to the following
further conditions precedent:
(a) 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.
(b) 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.
(c) 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.
(d) 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, 1993.
(e) Solvency of Borrower. Both after and immediately before
the making of any Loans on the Borrowing Date, Borrower shall be Solvent.
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(f) 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 B, with
appropriate insertions and attachments satisfactory in form and substance
to Agent and its counsel, executed by a Responsible Officer; provided
that while no Notice of Borrowing shall be required with respect to any
Existing Loans continued on the Effective Date, on the Effective Date
Agent shall have received a certificate of a Responsible Officer
certifying as to the matters set forth in clauses (v)-(vii) of the Notice
of Borrowing with respect to such Existing Loans.
(g) Borrowing Limits. After the making of the Loans on any
Borrowing Date, the aggregate principal amount of all Loans outstanding
shall not exceed the Commitments, the aggregate principal amount of all
General Corporate Loans outstanding shall not exceed 25% of the
Commitments and Agent and Administrative Agent shall have received a
certificate dated as of a date not more than five (5) Business Days prior
to the relevant Borrowing Date to such effect.
(h) Real Property Statement. Administrative Agent shall have
received a Real Property Statement dated, or dated as of, the Borrowing
Date.
SECTION 5. AFFIRMATIVE COVENANTS
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 (and shall cause each of
its Subsidiaries to):
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 Primary
Operator/Mortgagor and Primary Credit Support Obligor, a copy of each of
the following (except for any thereof to the extent none of the related
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 Primary Operator/Mortgagor and Primary 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
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(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 Primary Operator/ Mortgagor and Primary Credit
Support Obligor, copies of each of the following (except for any thereof
to the extent none of the related 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 Primary Operator/Mortgagor and Primary Credit
Support Obligor, 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).
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 Sections 5.1(a) and (b) above, (i) a
certificate of a Responsible Officer (A) 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
(B) showing in detail the calculations supporting such statement in
respect of Sections 6.1(a), 6.1(b) and 6.1(c) and 6.8 (including,
without limitation, certification and details as to all Indebtedness of
Borrower and its Subsidiaries, if any) and (ii) a Real Property
Statement;
(c) within forty-five days after the end of each calendar
quarter following the Effective Date, a written report signed by a
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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;
(d) 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 same basis as the
financial statements of Borrower then current and that such officer has
no reason to believe they are incorrect or misleading in any material
respect;
(e) promptly after the same are sent, copies of all financial
statements and reports which Borrower sends to its holders of Common
Shares, Preferred Shares or other equity securities, and promptly after
the same are filed by Borrower copies of all financial statements and
reports which Borrower may make to, or file with, the Commission or any
successor or analogous Governmental Authority; and
(f) promptly, such additional financial and other information
respecting the financial or other condition of the Primary
Operators/Mortgagors, the Primary 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.
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5.5. Leases and Mortgage Interests; Credit Support
Agreements. (a) (i) 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 (ii) 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(a)
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.
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 with
respect to its property and business of such a nature, with such terms
and in such amounts, as is customary in the case of business entities of
established reputation engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts
customarily insured against and for by such business entities, 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;
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(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
Primary Operator/Mortgagor or any Primary Credit Support Obligor in which
the amount involved is $100,000 or more and is 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 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 proposed transaction or event which may give rise
to Net Property Proceeds, Net Mortgage Proceeds or Net Securities
Proceeds;
(g) 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; and
(h) 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
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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.
5.9. Appraisals and Other Valuations. (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. 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 certificate of a Responsible Officer
delivered to Agent pursuant to Section 4.1(j), or (ii) an Event of
Default has occurred.
(b) In addition to the Appraisals referred to in Section
5.9(a), from time to time during the term of this Agreement, if so
requested by Agent, in its sole discretion, Borrower shall furnish to
Administrative Agent, with sufficient copies for each Lender, a
certificate of a Responsible Officer certifying as to the value of one or
more of the Eligible Properties and/or Mortgaged Properties covered by
Eligible Mortgages.
5.10. Meetings. Within one hundred 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. Refinancing of Loans. If at any date of
determination (the "Trigger Date"), Loans are outstanding in an aggregate
principal amount equal to or greater than $100,000,000, Borrower shall
promptly (but in no event later than 12 months after the Trigger Date)
take action to obtain financing in an amount at least equal to
$100,000,000 or, if at the date of consummation of any such financing
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less than $100,000,000 aggregate principal amount of Loans are
outstanding, such lesser amount. Borrower shall have completed such
financing transaction within 15 months of the Trigger Date and the
proceeds thereof shall be used to prepay the Loans in an amount equal to
that required by the first sentence of this Section 5.14. Any such
financing shall be in the form of either equity or of Indebtedness which
shall not have any instalment of principal due earlier than three months
after the Termination Date.
5.15. Further Assurances; Restrictions on Negative
Pledges.
(a) At any time upon the request of Agent, Borrower
will, promptly and at its expense, execute, acknowledge and deliver such
further documents and do such other acts and things as Agent may
reasonably request to provide for payment of the Loans made hereunder and
interest thereon in accordance with the terms of this Agreement.
(b) If Borrower or any of its Subsidiaries shall
agree to any "negative pledge" or like agreement more restrictive (or
otherwise more generous to its beneficiaries) in its scope than Section
6.9, then, without any further action being required, the provisions of
such agreement relating to the prohibition on Liens shall be deemed
incorporated by reference (with appropriate modifications as may be
necessary) into this Agreement for the benefit of Lenders.
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 (and shall not permit any of
its Subsidiaries to) directly or indirectly:
6.1. Financial Covenants.
(a) Tangible Net Worth of Borrower. Suffer or permit its
Tangible Net Worth at any time to be less than the aggregate of
(i) $400,000,000, plus (ii) 75% 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 the ratio of
Borrower's Total Liabilities to Borrower's Tangible Net Worth to be
greater than 1 to 1 at any time.
6.2. Restricted Payments.
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(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 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 (or, in the case of a Mortgage Interest where the
consideration is less than fair market value, the board of directors of
Borrower shall have determined that the consideration received or to be
received is in an amount consistent with the best financial interests of
Borrower) and no default under any other provision hereof results
therefrom or (B) such conveyance, sale, lease or other disposition is
pursuant to the exercise of an option contained in a Lease, and, in
either case, the proceeds of such disposition are used to prepay the
Loans to the extent required by Section 2.8(b).
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.
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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. Indebtedness. (a) Suffer or permit its total
Indebtedness, other than the IDFA Indebtedness, Indebtedness in the
nature of bridge financings described in the exception to Section 6.8(b)
and Indebtedness described in Section 6.8(c), at any time to be greater
than 50% of the aggregate Allowed Value of all Eligible Properties and
all Eligible Mortgages.
(b) Suffer or permit to exist any Indebtedness unless the
earliest date for any payment of principal or other settlement thereof is
at least three months after the Termination Date, except for (i) the IDFA
Indebtedness, the terms of which provide for mandatory redemption prior
to the Termination Date upon the occurrence of certain extraordinary
events, and (ii) Indebtedness in the nature of bridge financings to
effect acquisitions of Fee Interests or Mortgage Interests by Borrower so
long as the final date for payment or other settlement of all such bridge
financing Indebtedness is less than one year from the date of its
incurrence or issuance and Borrower promptly commences (and diligently
pursues) the refinancing thereof; provided that, at any time either after
total Indebtedness in the nature of bridge financings exceeds
$100,000,000 or would as a result of any proposed further bridge
financing exceed $100,000,000, not less than thirty days prior to the
incurrence or issuance of any additional bridge financing, Borrower shall
provide Lenders with such details of the terms and conditions thereof as
Lenders (acting through Agent) may reasonably request (and Borrower shall
promptly advise Agent of any subsequent material changes to such
details), and if after a review of such details Majority Lenders (each in
its respective absolute discretion) determine that no further Loans may
be made and the Termination Date shall be brought forward to a date which
is the earlier of the maturity date for such additional bridge
Indebtedness and a date eleven months after the incurrence or issuance
thereof, then, effective upon the incurrence or issuance of such
Indebtedness and without any further action being required, no further
Loans shall be made and the definition of "Termination Date" shall be so
amended; provided that if Majority Lenders (acting through Agent) have
not advised Borrower of such a determination within fifteen days of
receipt of all such details as they may have requested, then, subject to
the opportunity to review any subsequent material changes to the details
provided and to make a contrary determination based thereon, Majority
Lenders shall be deemed not to have made such a determination and no
change to this Agreement shall be effected pursuant to this Section
6.8(b).
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(c) Suffer or permit the aggregate of Indebtedness which is
(i) secured by a Lien covering property or assets acquired by Borrower,
(ii) Indebtedness of a Person acquired by Borrower or (iii) Indebtedness
to which the assets of a Person acquired by Borrower are subject, which
in the case of any of clause (i), (ii) or (iii) is outstanding at the
time of the relevant acquisition and remains outstanding following such
acquisition, to exceed $50,000,000 at any time; provided that, in
addition to Indebtedness otherwise permitted under this Section 6.8(c),
Borrower may suffer or permit to exist the IDFA Indebtedness.
6.9. No Liens. Suffer or permit after the date hereof any
Lien on any Facility, Lease, Mortgage Interest, or Credit Support
Agreement, except (i) Liens granted to secure Indebtedness in the nature
of bridge financings (but not any subsequent refinancing or any other
restructuring of such bridge financing) permitted under Section 6.8(b),
so long as such Liens are granted only on the properties or interests
acquired with such Indebtedness; provided that any such property or
interest which is the subject of such a Lien shall not be an Eligible
Property or an Eligible Mortgage, (ii) Permitted Exceptions, (iii) 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
granted by Borrower, which Liens, in the aggregate, would not be
reasonably likely to cause or create a Material Adverse Effect and (iv)
(A) Liens securing Indebtedness permitted by Section 6.8(c) (other than
the IDFA Indebtedness) so long as neither such Indebtedness nor such
Liens were incurred or granted in contemplation of such acquisition and
such Liens are granted only on the related properties or interests
acquired by Borrower and (B) Liens existing on the Effective Date
securing the IDFA Indebtedness and any Liens in continuation thereof or
replacement or substitution therefor so long as the Allowed Value of the
subject property or interest is not greater than the Allowed Value on the
Effective Date of the property or interest then the subject of such
permitted Liens; provided that any property or interest which is the
subject of a Lien permitted under this clause (iv) shall not be an
Eligible Property or an Eligible Mortgage.
6.10. Fiscal Year. Change the fiscal year end of Borrower
from December 31 to any other date without the prior written consent of
Agent.
6.11. Chief Executive Office. Change the name of Borrower or
the chief executive office of Borrower unless Borrower has given
Administrative Agent at least 15 Business Days' prior written notice of
any such change, except that the parties agree that shorter notice may be
given both under this Agreement and under Section 6.11 of the Existing
Loan Agreement, and has been properly given, by Borrower with respect to
the proposal to change (and any resulting change to) Borrower's name to
"Health and Retirement Properties Trust" the annual meeting of Borrower's
shareholders to be held on May 17, 1994.
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6.12. 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.
6.13. Payments Not to Exceed Appraised Value. Pay
consideration in an amount greater than the Appraised Value for the
acquisition of any Facility.
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 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
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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 7.1(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
(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
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(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) Investment Grade Operators and Mortgagors. More than 50%
of the aggregate Allowed Value of the Properties and Mortgage Interests
shall be attributable to Properties and Mortgage Interests having the
same "investment grade Person" (or any of that Person's Affiliates) as
Mortgagor or Operator thereof (with an "investment grade Person" being
one whose long-term senior debt is rated BBB- or higher by Standard &
Poor's Corporation or Baa3 or higher by Moody's Investors Service, Inc.
(or similarly rated by any successor to either of such rating agencies));
or
(m) Operators and Mortgagors Generally. Except in the case of
Mortgagors or Operators which are "investment grade Persons" (as defined
in Section 7.01(l)), 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; or
(n) Rehabilitation Treatment Assets. More than 40% of the
aggregate Allowed Value of the Properties and Mortgage Interests shall be
attributable to Properties and Mortgages consisting of Rehabilitation
Treatment Assets; or
(o) Acute Care Assets. More than 15% of the aggregate
Allowed Value of the Properties and Mortgage Interests shall be
attributable to Properties and Mortgages consisting of Acute Care Assets;
or
(p) 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; or
(q) 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
(r) Loan Documents. From and after the Effective 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 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;
then, and in any such event, (a) if such event is an Event of Default
specified in paragraph (g) above, automatically the Commitments shall
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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, together with such other powers as are reasonably incidental
thereto. In furtherance of the foregoing, each Lender that is also a
lender under the Existing Loan Agreement hereby authorizes Administrative
Agent (in its capacity as administrative agent under the Existing Loan
Agreement) to enter into written consents for the termination of the
Security Documents Escrow Agreement and the Pledge Escrow Agreement (both
such terms being used as defined in the Existing Loan Agreement), as
contemplated by Section 4.1(g). 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 (including, without limitation,
any Appraisal or valuation or any certificate or other report relating to
the value of any Property or any Mortgage Interest), or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency 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 property of Borrower or any
other Person.
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(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,
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
or hereinbefore taken in connection with the Existing Loan Agreement,
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
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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 requirements applicable
to such Lender. Each Lender expressly acknowledges that its
representation in the previous sentence shall not be restricted or
construed in any way to import any reliance on either Loan Agent or any
other Lender as a result of any duties or other actions which may have
been undertaken by that Loan Agent or other Lender in connection with the
Existing Loan Agreement, and, where such Lender is itself also a party to
the Existing Loan Agreement, that such Lender's decision to make its
Loans hereunder and enter into this Agreement is made independently of
its decisions to enter into the Existing Loan Agreement and to make any
loans thereunder. 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) and hold each Loan 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 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 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 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
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from such Loan 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
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
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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 or Appraisal, or other report or document with respect
to which the approval of such Lender is required hereunder, 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.
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
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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 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, San Francisco, California 94163, Attention: (in the case of a
Notice of Anticipated Borrowing or Notice of Borrowing) Lupe Barajas
NY1-287959.V2
REVOLVING LOAN AGREEMENT 73
<PAGE>
(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
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,
NY1-287959.V2
REVOLVING LOAN AGREEMENT 74
<PAGE>
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 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 (w) the extension of the
maturity of any Note or the time of payment of interest thereon, (x) the
reduction of the rate of interest payable hereunder, (y) the reduction of
any other amount payable hereunder 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 75
<PAGE>
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 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 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 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 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 76
<PAGE>
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 Effective
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.
NY1-287959.V2
REVOLVING LOAN AGREEMENT 77
<PAGE>
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 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 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT 78
<PAGE>
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,
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.
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:/S/John G. Murray
Name: John G. Murray
Title: Treasurer
NY1-287959.V2
REVOLVING LOAN AGREEMENT 1
<PAGE>
KLEINWORT BENSON LIMITED,
as Agent and as Lender
By:/S/ Patrick Donelan
Name: Patrick Donelan
Title: Executive Vice President
Lending Office:
20 Fenchurch Street
London EC3P 3DB
England
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as Lender
By:/S/ Kathleen J. Harrison
Name: Kathleen J. Harrison
Title: Vice President
Lending Office:
Corporate Banking
420 Montgomery Street
San Francisco, California 94163
NY1-287959.V2
REVOLVING LOAN AGREEMENT S-2
<PAGE>
NATIONAL WESTMINSTER BANK, USA,
as Co-Agent and as Lender
By:/S/ Paul Chau
Name: Paul Chau
Title: Assistant Vice President
By:/S/ J. Michael Sutka
Name: J. Michael Sutka
Title: Vice President
Lending Office as shown on
Schedule 1
FLEET BANK OF MASSACHUSETTS
By:/S/ Ginger Stolzenthaler
Name: Ginger Stolzenthaler
Title: Vice President
Lending Office as shown on
Schedule 1
THE DAIWA BANK, LIMITED
By:/S/ Daniel G. Eastman
Name: Daniel G. Eastman
Title: Vice President/Manager
By:/S/ Stephen F. O'Sullivan
Name: Stephen F. O'Sullivan
Title: E.O.
Lending Office as shown
on Schedule 1
MITSUI LEASING (USA) INC.
By:/S/ Seiji Sano
Name: Seiji Sano
Title: President
Lending Office as shown
on Schedule 1
NY1-287959.V2
REVOLVING LOAN AGREEMENT 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:/s/ Lena G. Goldberg
<PAGE>
EXHIBIT A
[FORM OF PROMISSORY NOTE]
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 Amended and Restated Revolving
Loan Agreement (including, without limitation, any Existing Loans (as
defined therein)) 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 Amended and Restated Revolving Loan Agreement
until paid in full (both before and after judgment). The holder of this
Note is authorized to endorse form 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 Amended and Restated 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 Amended and
Restated Revolving Loan Agreement dated as of June 15, 1994 among the
Borrower, the Lenders named therein, Kleinwort Benson Limited, as Agent,
Wells Fargo Bank, National Association, as Administrative Agent, and
National Westminster Bank, USA, as Co-Agent (as the same may be amended,
supplemented or modified from time to time, the "Amended and Restated
Revolving Loan Agreement. Terms defined in the Amended and Restated
Revolving Loan Agreement. Terms defined in the Amended and Restated
Revolving Loan Agreement and not otherwise defined herein are used herein
with the same meanings. Reference is made to the Amended and Restated
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-1
<PAGE>
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
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
PROPERTIES TRUST
By:______________________________
Name:
Title:
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-2
<PAGE>
PROMISSORY NOTE (Cont'd)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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
</TABLE>
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-3
<PAGE>
EXHIBIT B
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Amended and Restated Revolving Loan
Agreement dated as of June 15, 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, Wells Fargo Bank, National Association, as Administrative Agent,
and National Westminster Bank, USA, as Co-Agent, this certificate
represents Borrower's Notice of Borrowing under Section 23.(a) of the
Credit Agreement for the borrowing described below (the "Borrowing").
The information relating to the Borrowing required by Section 2.3(a) 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 Commitments currently in effect.
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-1
B-1
<PAGE>
[(viii)] The amount of the proposed Borrowing will not cause
the aggregate amount of all General Corporate Loans outstanding to
exceed 25% of the Commitments currently in effect.
[(ix)] The proceeds of the proposed Borrowing (other than any
proceeds 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.
[(x)] With respect to the proceeds of the proposed Borrowing
(other than any proceeds of General Corporate Loans):
(a) the name(s) of the proposed [Operators] [and/or
Mortgagors] of the Facility or Facilities to which such
Borrowing relates are ____________________, and the name(s) of
any Credit Support Obligors in relation thereto are
____________________;
(b) the name(s) and location(s) of such Facility or Facilities
are _____________________;
(c) (1) [with respect to each Eligible Property or Property:
the Appraised Value(s) thereof in the most recent Appraisal(s)
are $____________________; the acquisition costs of Borrower
therefor are $________________; the value(s) attributable to
any capital improvements made and financed by such Operators
are $________________; and the minimum purchase prices which
would be payable to Borrower by such Operators or any other
Person if purchased on the date of this Notice pursuant to the
exercise of any right of purchase are $________________;] and
[with respect to each Eligible Mortgage or Mortgage Interest:
the Appraised Value(s) of the Mortgaged Properties in the most
recent Appraisal(s) are $_________________; and the outstanding
principal amounts due to Borrower from Mortgagors are:
$______________;] and
(2) description of interests of Borrower to be acquired with
proceeds of such Borrowing: _________________________; and
(d) the proceeds of such Loan [will/will not] be used to
acquire an interest in any Facility which interest is required
to be an [Eligible Property] [Eligible Mortgage] included in
the calculation of Indebtedness permitted under Section 6.8(a)
after giving effect to such Loan.
[Borrower confirms to you pursuant to Section 2.3(a) of the Credit
Agreement that Borrower has irrevocably given telephonic notice of such
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-2
B-2
<PAGE>
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: _____________________________
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-3
B-3
<PAGE>
EXHIBIT C
[FORM OF NOTICE OF CONTINUATION/CONVERSION]
NOTICE OF CONTINUATION/CONVERSION
Pursuant to that certain Amended and Restated Revolving Loan
Agreement dated as of June 15, 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, Wells Fargo Bank, National Association, as Administrative Agent,
and National Westminster Bank, USA, as Co-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.
[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
____________________.]
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DATED: _______________ HEALTH AND REHABILITATION
PROPERTIES TRUST
By: ______________________________
Its: _____________________________
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EXHIBIT D
FORM OF
SUBORDINATION AGREEMENT
AMENDED AND RESTATED SUBORDINATION AGREEMENT
THIS AMENDED AND RESTATED SUBORDINATION AGREEMENT (this
"Agreement") is dated as of June , 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 and the Co-Agent
(both 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,
Co-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 or continue 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 or continue 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 or
continued 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:
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"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.
"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 Agreement dated December 6, 1993, 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.
"Co-Agent" means National Westminster Bank, USA, as co-
agent under the Loan Agreement.
"Lenders" has the meaning set forth in the recitals
hereto.
"Loans" means the loans made or continued or to be made by
the Lenders to the Borrower pursuant to the Loan Agreement.
"Loan Agreement" means the Amended and Restated Revolving
Loan Agreement dated as of June , 1994, among the Borrower, the
Agent, the Administrative Agent, the Co-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, the Co-Agent or any of the Lenders now
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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.
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. Section
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
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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
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.
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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 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
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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 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
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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
(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
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(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 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
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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 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 (if any), 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
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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
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
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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
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;
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-13
C-13
<PAGE>
(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 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
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-14
C-14
<PAGE>
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, 400 Centre Street, Newton, Massachusetts 02158,
Attention: John Murray. (Fax no. (617) 332-2261) 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., 400 Centre Street,
Newton, Massachusetts 02158, Attention: John Murray. (Fax no. (617)
332-2261) 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
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
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-15
C-15
<PAGE>
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.
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.
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-16
C-16
<PAGE>
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.
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
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-17
C-17
<PAGE>
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]
NY1-287959.V2
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended
and Restated Subordination Agreement to be duly executed and delivered as
of the day and year first above written.
HEALTH AND REHABILITATION
PROPERTIES TRUST
By:
Name:John G. Murray
Title: Treasurer
HRPT ADVISORS, INC.
By:
Name: John G. Murray
Title: Treasurer
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
individually and as
Administrative Agent on behalf of the
Senior Creditors
By:
Name: Kathleen J. Harrison
Title: Vice President
Appointment as Process Agent
hereby acknowledged as of the
day and year first above written.
SULLIVAN & WORCESTER
By:__________________________
Name:
Title:
NY1-287959.V2
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<PAGE>
S-1
NY1-287959.V2
REVOLVING LOAN AGREEMENT A-20
C-20
<PAGE>
SCHEDULE 1
LENDERS' COMMITMENTS
Lender Commitment
Kleinwort Benson Limited $ 27,500,000
National Westminster Bank, USA $ 25,000,000
The Daiwa Bank, Limited $ 20,000,000
Fleet Bank of Massachusetts $ 20,000,000
Wells Fargo Bank, N.A. $ 15,000,000
Mitsui Leasing (U.S.A.) Inc. $ 12,500,000
CERTAIN LENDING OFFICES
National Westminster Bank, USA
175 Water Street, 28th Floor
New York, New York 10038
Fleet Bank of Massachusetts
75 State Street
Boston, Massachusetts 02109
The Daiwa Bank, Limited
233 South Wacker Drive
Suite 5400
Chicago, Illinois 60606
Attn: Vice President/Credit Administration
Mitsui Leasing (U.S.A.) Inc.
200 Park Avenue, Suite 3214
New York, New York 10166
Tel: (212) 557 0454
Fax: (212) 490 1684
Attn: Ms. Takako Sumi
NY1-287959.V2
REVOLVING LOAN AGREEMENT
SCHEDULE-1-1
C-1
<PAGE>
SCHEDULE 2
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 resulting from equipment financings or similar security
arrangements entered into by an Operator.
NY1-287959.V2
REVOLVING LOAN AGREEMENT
SCHEDULE-2-1
C-1
<PAGE>
SCHEDULE 3
AMOUNTS OWED UNDER THE EXISTING LOAN AGREEMENT
Kleinwort Benson Limited
1. Aggregate principal amount of Existing
Loans outstanding on June 15, 1994 $ 4,237,288.14
2. Aggregate interest accrued (whether
or not due and payable) on June 15, 1994 $ 4,498.49
3. Aggregate commitment fee accrued (whether
or not due and payable) on June 15, 1994 $ 8,878.13
Wells Fargo Bank, N.A.
1. Aggregate principal amount of Existing
Loans outstanding on June 15, 1994 $ 3,177,966.09
2. Aggregate interest accrued (whether
or not due and payable) on June 15, 1994 $ 3,373.87
3. Aggregate commitment fee accrued (whether
or not due and payable) on June 15, 1994 $ 6,658.67
Fleet Bank of Massachusetts
1. Aggregate principal amount of Existing
Loans outstanding on June 15, 1994 $ 3,177,966.10
2. Aggregate interest accrued (whether
or not due and payable) on June 15, 1994 $ 3,373.87
3. Aggregate commitment fee accrued (whether
or not due and payable) on June 15, 1994 $ 6,658.60
NY1-287959.V2
REVOLVING LOAN AGREEMENT
SCHEDULE-3-1
C-2
<PAGE>
The Daiwa Bank, Limited
1. Aggregate principal amount of Existing
Loans outstanding on June 15, 1994 $ 4,237,288.14
2. Aggregate interest accrued (whether
or not due and payable) on June 15, 1994 $ 4,498.49
3. Aggregate commitment fee accrued (whether
or not due and payable) on June 15, 1994 $ 8,878.13
National Westminster Bank, USA
1. Aggregate principal amount of Existing
Loans outstanding on June 15, 1994 $ 4,872,881.36
2. Aggregate interest accrued (whether
or not due and payable) on June 15, 1994 $ 5,173.26
3. Aggregate commitment fee accrued (whether
or not due and payable) on June 15, 1994 $ 9,203.80
NY1-287959.V2
REVOLVING LOAN AGREEMENT C-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
HRPT Health & Rehabilitation 6 Joelle Drive Tobacco Road
Properties Trust Portland, Connecticut 06480 P.O. Box 150
(203) 347-6300 Eaton, New Hampshire 03833
(603) 447-1940
400 Centre Street
Newton, Massachusetts 02158
(617) 332-5990
Telecopier No. (617) 332-2281
<CAPTION>
June 13, 1994
By Telecopy
HMC Retirement Properties, Inc.
HMH Properties, Inc.
Host Marriott Corporation
10400 Fernwood Drive
Bethesda, Maryland 20817
Attn: Mr. Bruce D. Wardinski
Treasury Department 72/924.12
Amended and Restated Purchase and
Exchange Agreement Effective March 17, 1994
Dear Bruce:
Reference is made to the captioned agreement (as amended on April 7, 1994, the "Purchase Agreement"). Capitalized
terms used and not otherwise defined herein shall have the meaning ascribed to such terms in the Purchase Agreement.
The purpose of this letter is to confirm our understanding regarding certain matters with respect to the Purchase
Agreement. We have agreed as follows:
1. On June 17, 1994, Purchaser and Sellers will close on any Facilities as to which the conditions precedent set
forth in the Purchase Agreement have been satisfied, provided that the aggregate allocable Purchase Prices with respect thereto
shall not exceed Seventy Five Million Dollars ($75,000,000).
2. With respect to all other Facilities, pursuant to Section 3.03 of the Purchase Agreement, Purchaser hereby elects
to extend the Closing Date to June 30, 1994.
3. If any term or condition of this letter conflicts with the terms and conditions of the Purchase Agreement, the
terms and conditions of this letter shall prevail. As amended hereby, the Purchase Agreement is and remains in full force and
effect.
If the foregoing accurately sets forth our agreement, kindly sign this letter where indicated below and return a copy of
this letter so signed to us.
Very truly yours,
HEALTH AND REHABILITATION PROPERTIES TRUST
By:/s/ David J. Hegarty
Its:Executive Vice President
ACCEPTED AND AGREED TO:
HMC RETIREMENT PROPERTIES, INC.
By:/s/ C.G. Townsend
Its:Vice President
HMH PROPERTIES, INC.
By:/s/ C.G. Townsend
Its:Vice President
HOST MARRIOTT CORPORATION
By:/s/ C.G. Townsend
Its:Vice President
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<PAGE>
HRPT Health & Rehabilitation 6 Joelle Drive Tobacco Road
Properties Trust Portland, Connecticut 06480 P.O. Box 150
(203) 347-6300 Eaton, New Hampshire 03833
(603) 447-1940
400 Centre Street
Newton, Massachusetts 02158
(617) 332-5990
Telecopier No. (617) 332-2281
<CAPTION>
July 25, 1994
HMH Properties, Inc.
HMC Retirement Properties, Inc.
Host Marriott Corporation
10400 Fernwood Drive
Bethesda, Maryland 20817
Amended and Restated Purchase
Agreement and Exchange Agreement
Effective as of March 17, 1994
Ladies and Gentlemen:
Reference is made to the captioned Agreement (the "Purchase Agreement"). Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
The purpose of this letter is to confirm that, as of the date hereof, Purchaser has increased the Deposit by Ten Million
Dollars ($10,000,000).
Notwithstanding anything to the contrary set forth in the Purchase Agreement, such increased deposit shall be applied
entirely to the acquisition of the Facilities known as Church Creek and Villa Valencia.
Kindly confirm your agreement with the foregoing by signing below where indicated and returning a copy of this letter so
signed to us.
Very truly yours,
HEALTH AND RETIREMENT PROPERTIES TRUST
By:/s/ David J. Hegarty
Its:Executive Vice President
<PAGE>
AGREED:
HMH PROPERTIES, INC.
By:/s/ Bruce D. Wardinski
Its:Vice President
HMC RETIREMENT PROPERTIES, INC.
By:/s/ Bruce D. Wardinski
Its:Vice President
</TABLE>
