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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 16, 1997
AMERICAN HEALTH PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-9381 95-4084878
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6400 SOUTH FIDDLER'S GREEN CIRCLE, SUITE 1800
ENGLEWOOD, COLORADO 80111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 796-9793
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
10.1 Executive Employment Agreement dated as of April 15, 1996
between American Health Properties, Inc. and Thomas T. Schleck.
10.2 First Amendment to Credit Agreement dated as of December 10,
1996 between American Health Properties, Inc. and Wells Fargo
Bank, N.A., as agent for the Lenders.
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 hereunto duly authorized.
Date: January 16, 1997 AMERICAN HEALTH PROPERTIES, INC.
(Registrant)
By: /s/ Michael J. McGee
Michael J. McGee
Treasurer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
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<S> <C>
10.1 Executive Employment Agreement dated as of April 15, 1996
between American Health Properties, Inc. and Thomas T. Schleck.
10.2 First Amendment to Credit Agreement dated as of December 10,
1996 between American Health Properties, Inc. and Wells Fargo
Bank, N.A., as agent for the Lenders.
</TABLE>
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EXHIBIT 10.1
AMERICAN HEALTH PROPERTIES, INC.
EXECUTIVE EMPLOYMENT AGREEMENT
WITH
THOMAS T. SCHLECK
This Executive Employment Agreement (the "Agreement") is entered into
as of April 15, 1996, between AMERICAN HEALTH PROPERTIES, INC., a Delaware
corporation (the "Company") and THOMAS T. SCHLECK, an individual ("Executive").
1. EMPLOYMENT AND TERM
The Company agrees to employ Executive for the period commencing on
the day and the year first written above and ending on the earlier of: (a) the
date of termination of Executive's employment in accordance with Section
4(a)-(c) below or (b) the date that is two (2) years from the date the Company
provides Executive with written notice of termination of Executive's
employment. The Board of Directors of the Company (the "Board") shall review
the terms of Executive's employment on an annual basis and shall make such
modifications to the terms as the Board in its discretion shall deem
appropriate and as Executive shall consent.
2. DUTIES
(a) Executive shall serve in the capacity of Senior Vice President
and Chief Investment Officer. Executive shall perform such services and duties
as are usually associated with such positions as well as those decided upon by
the President and the Board.
(b) Executive shall devote his full business time and energy to
the business and affairs of the Company and shall use his best efforts and
abilities faithfully and diligently to promote the business interests of the
Company and its subsidiaries as directed by and to the reasonable satisfaction
of the President and the Board.
(c) Executive's services shall be rendered in accordance with such
policies as the Company may establish for the conduct of its officers and
employees.
(d) Provide leadership in the Company's efforts to develop a
merchant banking or similar vehicle as the lead executive.
(e) Provided such services or investments do not violate any
applicable law, regulation or order or interfere in any way with the faithful
and diligent performance by Executive of services to the Company otherwise
required or contemplated by this Agreement or requested by the Board, Executive
may:
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(i) Serve as a director, trustee, or in any other
similar capacity of any business enterprise or any civic, educational,
charitable or trade organization if the Board has been informed of
such service and the Board has not expressly requested Executive to
refuse, or to discontinue, such service, and
(ii) Make and manage personal business investments of
Executive's choice that are consistent with the conflict-of-interest
policies of the Company.
3. COMPENSATION
Commencing as of April 15, 1996, the Company shall compensate
Executive as follows:
(a) Base Salary. Executive shall receive a Base Salary at the
rate of Two Hundred Thousand Dollars ($200,000) per annum which shall be
payable in semi-monthly installments in conformity with the Company's policy
relating to its employees generally as in effect from time to time. Executive's
Base Salary shall be reviewed periodically by the Board and may be increased by
action of the Board upon such review, but Executive's salary shall not be
decreased except as provided in Sections 4 and 5.
(b) Incentive Compensation. The Board may, in its discretion,
award an annual bonus in addition to base compensation. Such bonus, if any,
shall be paid in such amount and based upon such criteria as are from time to
time adopted by the Board.
(c) Additional Benefits. Executive also shall be entitled to
receive all benefits for which he is eligible under the terms of any stock
incentive plan, pension plan, SERP, life, medical, dental, vision and
disability insurance and reimbursement programs, and any other plans or
arrangements, which the Company may provide for executive officers from time to
time ("Additional Benefits"). Additional Benefits shall in all respects be paid
in accordance with the then-existing plans, or policies, programs, or
arrangements establishing or governing such Additional Benefits. The Company
reserves the right to add, terminate, or amend any existing plans, policies,
programs, or arrangements during the term of this Agreement and at all other
times.
(d) Vacation. Vacation, at full pay, of four (4) weeks per
calendar year. Vacation not used during any calendar year may not be carried
over to the following year.
All compensation paid to Executive shall be subject to withholding for
taxes and subject to payroll and other taxes as required by applicable law and
in conformity with the Company's policies relating thereto as in effect from
time to time.
4. TERMINATION OF EMPLOYMENT BY THE COMPANY
The compensation provided for in Section 3 of this Agreement and
Executive's employment by the Company may be terminated by the Company prior to
expiration of the term set forth in Section 1(b) as provided for below:
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(a) Disability. If Executive becomes either partially or totally
unable to perform his duties because of any physical or mental disability
during the term of his employment hereunder for three (3) consecutive calendar
months or for shorter periods aggregating 90 or more business days in any
12-month period, Executive's employment may be terminated by the Company at any
time during the continuance of such disability. Upon termination as described
in this Section 4(a), Executive shall be entitled to receive the Base Salary
provided for in Section 3(a) of this Agreement for a period of 90 days after
such termination. The Company shall offset against such Base Salary payments
any payments received by Executive as a result of such illness or injury
pursuant to any federal or state program or any salary continuation or similar
program or disability insurance established by the Company.
Upon termination as described in this Section 4(a), Executive shall
resign from his offices as an officer of the Company and its subsidiaries and
the Company shall continue Executive's coverage under any and all life,
medical, dental, vision and disability insurance plans for a period of 120 days
after such termination at the expense of the Company. Other Additional
Benefits shall be made available to Executive as required by applicable laws,
including the health coverage continuation provisions of the Consolidated
Omnibus Budget Reconciliation Act, 29 U.S.C. Sections 1161- 1168 ("COBRA"),
and by the terms of the Additional Benefit plans, policies, programs, and
arrangements in effect at the time of termination. Executive's period of
coverage under COBRA (29 U.S.C. Section 1162(2)), shall begin on the date of
the termination of his employment under this Section 4(a). Executive agrees to
execute such documents as may be requested by the Company in order to comply
with its obligations under this Section 4(a) and under COBRA and other
applicable laws. The Company shall provide Executive with the health coverage
continuation benefits specified by COBRA whether or not the Company is
obligated under COBRA to do so.
(b) Death. If Executive dies during the term of this Agreement,
Executive's Beneficiary or Beneficiaries, as defined in Section 7 of this
Agreement, shall be entitled to receive the Base Salary provided for in Section
3(a) of this Agreement for a period of 90 days after the date such death
occurs. Additional Benefits shall be made available to the Beneficiaries of
Executive under the life, medical, dental, vision and other Additional Benefit
plans, policies, programs, and arrangements, as required by applicable laws,
including COBRA, and by the terms of the Additional Benefit plans, policies,
programs, and arrangements in effect at the time of Executive's death. The
Company shall provide Executive's Beneficiaries with the health coverage
continuation benefits specified by COBRA whether or not the Company is
obligated under COBRA to do so.
(c) For Cause. The Company may upon 14 days' notice to Executive
terminate this Agreement and all of its obligations hereunder to Executive
accruing after the date of such termination if the termination is for "cause."
A termination for cause is a termination effected by the Board on one or more
of the following grounds: (i) that Executive has been declared of unsound mind
by a court, (ii) that Executive has been convicted of a felony, (iii) that
Executive has been convicted of a misdemeanor involving moral turpitude, or
(iv) that Executive has repeatedly committed a material breach of this
Agreement (provided that Executive has been notified of the prior breach).
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Except as expressly required by applicable laws, including COBRA if
applicable, and by the terms of the Additional Benefits plans, policies,
programs, and arrangements then in effect, upon such termination, Executive's
rights under Section 3 of this Agreement shall terminate on the date of the
termination of his employment under this Section 4(c). Executive's period of
coverage under COBRA (29 U.S.C. Section 1162(2)), if any, shall begin on the
date of the termination of his employment under this Section 4(c). Upon
termination as described in this Section 4(c), Executive shall resign from his
offices as an officer of the Company and its subsidiaries. Executive agrees to
execute all documents as may be requested by the Company in order to comply
with its obligations under this Section 4(c) and under COBRA, if applicable,
and any other applicable laws.
(d) Other Termination. The Company may by notice to Executive
terminate Executive's employment for reasons other than those specified in
Sections 4(a) through (c) above. In the event notice of termination of
Executive's employment is given by the Company for reasons other than those
specified in Sections 4(a) through (c), from the date of such notice of
termination Executive shall be entitled to receive only the compensation
specifically provided below:
(i) The Executive's annual Base Salary in effect at the
time of termination until the expiration of the employment period as
provided in Section 1(b) of this Agreement.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of stock options
and acceleration of the lapse of restrictions of any restricted stock
awards held by Executive that would have vested or lapsed during the
period between notice of termination of Executive's employment and the
expiration of Executive's employment period as provided in Section
1(b).
Upon termination of Executive's employment as described in this
Section 4(d), Executive shall resign from his offices as an officer of the
Company and its subsidiaries and the Company shall, at the option of Executive,
(i) continue installment payments to Executive on the periodic basis described
in Section 3(a) at the rate and for the duration of the employment period
specified in Section 4(d)(i); or (ii) make a lump sum payment to Executive
equal to seventy-five percent (75%) of the amounts due Executive under Section
4(d)(i) for the duration of the employment period specified therein. A lump sum
payment in accordance with this paragraph shall be made within ten (10) working
days of Executive's election.
Upon termination of Executive's employment as described in this
Section 4(d), Additional Benefits shall be made available to Executive as
required by applicable laws, including COBRA.
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Executive's period of coverage under COBRA (29 U.S.C. Section 1162(2)), for
purposes of this Section 4(d) shall begin on the date of the termination of the
benefits to which Executive is entitled pursuant to Section 4(d)(ii). Executive
agrees to execute such documents as may be requested by the Company in order to
comply with its obligations under this Section 4(d) and under COBRA and any
other applicable laws. The Company shall provide Executive with the health
coverage continuation benefits specified by COBRA whether or not the Company is
obligated under COBRA to do so.
(e) Constructive Termination. The occurrence of any of the
following events shall be deemed a termination of Executive's employment under
Section 4(d) above:
(i) Failure to elect or reelect or otherwise to maintain
Executive in the office or the position, or a substantially equivalent
office or position, with the Company which Executive holds as of the
date of this agreement (or which may be increased from time to time).
(ii) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or duties
attached to Executive's position with the Company, a reduction in
Executive's Base Salary, as increased from time to time, or the
termination or denial of Executive's rights to a substantial amount of
Additional Benefits as herein provided, any of which is not remedied
within 10 calendar days after receipt by the Company of written notice
from Executive of such change, reduction or termination, as the case
may be.
(iii) The Company shall relocate its principal executive
offices, or require Executive to have his principal location of work
changed, to any location which is in excess of 25 miles from its
present location.
(iv) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the Company or any
successor thereto.
5. TERMINATION RELATING TO CHANGE OF CONTROL
(a) Any of the following events shall constitute a "Change of
Control" hereunder:
(i) any "person" (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years (not
including any period prior to the execution of this Agreement)
individuals who at the beginning of such period constitute the Board
of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
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beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
(b) Within 180 days of a Change of Control, Executive may
terminate employment with the Company by delivering written notice of such
termination to the Company, accompanied by Executive's resignation from his
offices as an officer of the Company and its subsidiaries. Upon Executive's
termination of employment as specified in the preceding sentence, or if the
Company (or any successor) terminates Executive's employment for any reason
within 180 days of a Change of Control, Executive shall be entitled to receive:
(i) A lump sum payment equal to two (2) times Executive's
Average Annual Compensation. "Average Annual Compensation" shall mean
the average of Executive's combined salary plus Bonus for the two
calendar years immediately preceding the date of determination. If for
either of the two calendar years in the calculation period Executive
was employed for less than a full year by the Company, Executive's
salary and Bonus for such year(s) shall be computed on an annualized
basis. "Bonus" shall mean the cash portion of any incentive
compensation paid to Executive plus an amount in cash equal to the
value of any restricted stock or stock options received by Executive
as a deferral of or in lieu of a cash bonus.
(ii) Additional Benefits under any life, medical, dental,
vision and disability insurance and reimbursement programs in which
Executive was participating at the time of notice of termination of
Executive's employment, which benefits shall be continued until the
earlier to occur of the expiration of Executive's employment period as
provided in Section 1(b) or Executive's acceptance of comparable
employment. Additional Benefits under the terms of any stock incentive
plan, pension plan and SERP will not be continued except as expressly
required by applicable laws or by the terms of the Additional Benefits
plans, policies, programs, and arrangements then in effect.
(iii) Immediate acceleration of vesting of all stock
options and immediate lapse of restrictions on all restricted stock
awards held by Executive.
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(c) In connection with any termination of employment pursuant to
this Section 5, the Company shall provide Executive with outplacement services
from an outplacement firm of Executive's choice up to a maximum cost of
$10,000.
(d) If any dispute arises between the Company (or any successor)
and Executive regarding Executive's rights under this Section 5, Executive
shall be entitled to recover his attorneys' fees and costs incurred in
connection with such dispute.
(e) If the aggregate of all amounts received by Executive as a
result of termination of employment pursuant to this Section 5 equals or
exceeds an amount that would cause Executive to be deemed to receive an "excess
parachute payment" as defined in Internal Revenue Code Section 280G and
subjects Executive to an excise tax liability under Internal Revenue Code
Section 4999, Executive shall also be entitled to receive a lump sum payment
equal to the "grossed-up" amount of such excise tax liability and regular
federal and state tax liabilities with respect to the lump sum payment made
under this Section 5(e).
(f) Any payments under Sections 5(b)-(e) shall be in lieu of any
payments under Section 4(d).
6. TERMINATION OF EMPLOYMENT BY EXECUTIVE.
(a) In addition to his rights under Section 5 hereof, Executive
may terminate employment with the Company without cause as of a specified date
not less than 30 days after delivering written notice of such termination to
the Company. Upon the effective date of such termination, Executive's right to
receive the compensation provided for in Section 3 of this Agreement shall
terminate. The Company may at any time in its sole discretion waive all or
part of the notice period and specify any day in such period that has not yet
occurred as the date of termination for purposes of this Section 6(a); in the
event of such occurrence, the Company shall pay Executive the amount of the
compensation provided for in Section 3 of this Agreement for the remainder of
the notice period given by Executive.
(b) Upon termination as described in Section 6(a), Additional
Benefits will be made available to Executive as required by applicable laws,
including COBRA, if applicable, and by the terms of the Additional Benefit
plans, policies, programs, and arrangements in effect at the time of
termination. Executive's period of coverage under COBRA (29 U.S.C. Section
1162(2)), if any, shall begin on the date of the termination of his employment
under Section 6(a). Executive agrees to execute such documents as may be
requested by the Company in order to comply with its obligations under this
Section 6(b) and under COBRA, if applicable, and any other applicable laws.
7. DESIGNATION OF BENEFICIARY
Executive may designate one or more persons or entities (including a
trust or trusts or his estate) to receive any compensation payable to him under
Section 4(b) ("Beneficiaries"). If Executive shall designate more than one
Beneficiary, he shall set forth the proportion in which each is to receive such
compensation; any such designation which fails to set forth such proportion
shall be an invalid
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designation as to all those so designated. Executive also may designate one or
more successor Beneficiaries who shall succeed to the rights of the
Beneficiaries originally designated, in case the latter should die prior to the
receipt of full payment. Executive may from time to time change any
designation so made, and that last designation shall be controlling. If
Executive designates a person other than, or in addition to, his spouse, his
spouse shall specifically approve his designation and authorize the Company to
pay his compensation as designated. In the absence of a valid designation by
Executive meeting the requirements of this Section 7, or in the event of the
death of a Beneficiary for whom no successor Beneficiary has been validly
designated, Executive's compensation, or the portion of such compensation then
payable to such deceased Beneficiary, shall be paid to the administrator or
executor of Executive's estate, who shall in that event be deemed a Beneficiary
under this Section 7.
Executive's designation and his spouse's approval and authorization,
if necessary, must be in the form of a signed writing witnessed by two adult
persons (other than any designated Beneficiary) and must have been delivered to
the Company prior to Executive's death.
8. REIMBURSEMENT OF EXPENDITURES
During the term of this Agreement, the Company shall reimburse
Executive for business expenses reasonably and necessarily incurred by him on
its behalf in accordance with its business-expense reimbursement policies as in
effect from time to time and subject to Executive's furnishing such
substantiation of such expenses as the Company may require.
9. CONFIDENTIAL INFORMATION
During the term of this Agreement, Executive shall not disclose to any
persons (other than another employee of the Company) any confidential
information relating to the business of the Company obtained by him while in
the employ of the Company, without the consent of the Board, except as
necessary or appropriate in the discharge of his obligations to the Company and
its shareholders.
10. NONASSIGNMENT OF EXECUTIVE'S OBLIGATIONS AND DUTIES
The obligations and duties of Executive hereunder shall be personal
and not assignable.
11. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and shall be binding upon
the Company and its respective successors and assigns, including any purchaser
of all or substantially all of its assets, and shall be binding upon
Executive's assigns, executors, administrators, Beneficiaries, or their legal
representatives.
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12. NOTICES
Any notices provided for in this Agreement shall be sent to the
Company at American Health Properties, Inc., 6400 Fiddlers Green Circle, Suite
1800, Englewood, Colorado 80111, Attention: Chairman, Compensation Committee,
or at such other address as the Company may from time to time in writing
designate, and to Executive at 6400 Fiddlers Green Circle, Suite 1800,
Englewood, Colorado 80111, or at such other address as he may from time to time
in writing designate. All notices will be deemed to have been delivered (i) as
of the first to occur of actual receipt or two (2) business days after being
sent by certified mail, return receipt requested, postage paid and properly
addressed to the designated address of the party to whom addressed or (ii) if
notice is given in any other manner, when actually received.
13. ENTIRE AGREEMENT
This instrument contains the entire agreement between the Company and
Executive relating to the subject of Executive's employment by the Company,
except to the extent that the terms and provisions of Additional Benefits,
expense reimbursement policies and Company policies governing executives and
employees generally are (as referred to herein) set forth in other documents.
This Agreement supersedes all prior and contemporaneous oral and written
agreements, understandings, and representations, if any, among the parties.
14. TERMINATION OF AGREEMENT
This Agreement shall terminate at the end of the period of Executive's
employment, as described in Section 1 of this Agreement (or at the end of any
different period specifically set forth herein for the termination of
Executive's employment), and may be continued thereafter only upon the
execution of a writing to that effect signed by the Company and Executive. If
Executive's employment continues after the termination of this Agreement for
any period during which no such writing is in effect, Executive shall be deemed
to be employed at the will of the Company and his employment may be terminated
at any time with or without notice and with or without cause and without
obligation of any party to any other party.
15. WAIVERS
The waiver or breach of any term or condition of this Agreement will
not be deemed to constitute the waiver of any other breach of the same or any
other term or condition.
16. GOVERNING LAW
This Agreement will be governed by and construed in accordance with
the laws of Colorado.
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17. SEVERABILITY
If any provision or clause of any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
18. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
be one and the same instrument.
19. NO CONFLICT WITH PRIOR AGREEMENTS AND RIGHTS
Executive hereby represents and warrants to the Company that neither
the execution of this Agreement nor performance by Executive of his obligations
hereunder conflicts with any contractual commitment on his part to any third
party or violates or interferes with any right of any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN HEALTH PROPERTIES, INC.
By /s/ JOSEPH P. SULLIVAN
-----------------------------
Joseph P. Sullivan
President and
Chief Executive Officer
/s/ THOMAS T. SCHLECK
- ----------------------
Executive
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EXHIBIT 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT dated as of December 10, 1996
by and among American Health Properties, Inc. (together with its successors
and assigns, the "Company"), the banks listed on the signature pages hereto
(the "Lenders") and Wells Fargo Bank, N.A., as agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Agent".
W I T N E S S E T H:
WHEREAS, the Company, the Lenders, Banque Paribas, as Co-Agent, First
Union National Bank of North Carolina, as Co-Agent, NationsBank of Texas, N.A.,
as Co-Agent and Wells Fargo Bank, N.A., as Agent, as arranger of the facilities
provided (in such capacity, the "Arranger"), and as the issuer of the Letters
of Credit (in such capacity, together with its successors in such capacity, the
"Facing Bank") entered into that certain Credit Agreement dated as of December
27, 1995 (the "Credit Agreement"), pursuant to which the Lenders agreed to make
available to the Company certain financial accommodations; and
WHEREAS, the Company, the Agent and the Lenders hereby agree, on the
terms and conditions set forth herein, to amend certain covenants contained in
the Credit Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:
Section 1. Amendment to Credit Agreement.
(a) The Credit Agreement is hereby amended by deleting Section
9.5. thereof in its entirety and substituting in lieu thereof the following:
"9.5. INVESTMENTS
Make or permit to remain outstanding any Investments except:
(a) Permitted Investments;
(b) Investments existing on the date hereof and set forth
on Schedule 9.5.;
(c) the ownership of the capital stock of Wholly-Owned
Permitted Subsidiaries by the Company or its Subsidiaries;
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(d) Working Capital Loans made by the Company to
operators of Health Care Facilities in an amount not to exceed
$10,000,000 to any single operator of a Health Care Facility and in an
aggregate amount at any one time outstanding not to exceed
$15,000,000;
(e) (i) Loans from Wholly-Owned Subsidiaries to the
Company permitted pursuant to Section 9.3.(f); (ii) loans from the
Company to Wholly-Owned Subsidiaries (other than to any Subsidiary
owning any PG Assets); and (iii) loans from the Company to
Wholly-Owned Subsidiaries owning PG Assets in an aggregate principal
amount not to exceed the PG Indebtedness;
(f) Investments by the Company or a Subsidiary in Health
Care Facilities so long as (i) the amount of any Investment made
pursuant to this Section 9.5.(f)(i) in any Health Care Facility does
not exceed $75,000,000; and (ii) immediately before and immediately
after the consummation of such Investment, after giving effect
thereto, no Unmatured Default or Event of Default shall exist or would
exist;
(g) Construction and Development Investments;
(i) the aggregate amount of which do not exceed
$75,000,000 at any one time, of which no more than $30,000,000 may be
invested in any one Person and its Affiliates or in any one Health
Care Facility as a Construction and Development Investment; and
(ii) the Board of Directors or other governing
body of the Person in which any such Investment is made approves the
making of such Investment;
(h) Supplies and other similar inventory purchased by the
Company in the ordinary course of business;
(i) Investments by Subsidiaries owning PG Assets used for
the repair, maintenance and improvement of PG Assets and the related
equipment to the extent that the aggregate cost thereof does not
exceed the PG Indebtedness;
(j) Investments in Permitted Subsidiaries that are not
Wholly-Owned Subsidiaries and which are not described in Schedule 9.5.
hereof, in an aggregate amount not to exceed 10% of the Consolidated
Real Estate Assets immediately prior to the date such Subsidiary is
acquired or created, so long as:
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(i) such Subsidiaries are corporations, limited
partnerships or limited liability companies;
(ii) the Company or one or more Wholly-Owned
Subsidiaries owns at least 80%, but less than 100%, of the outstanding
capital stock, partnership or other ownership interest of such
Subsidiary;
(iii) the Company or a Wholly-Owned Subsidiary is
(A) the sole general partner of any such Subsidiary that is a limited
partnership or (B) a member of any such Subsidiary that is a limited
liability company; and
(iv) the business of such Subsidiary will not
cause the Company to violate Section 8.4. hereof; and
(k) Investments by the Company or a Subsidiary consisting
of the purchase of stock or other equity interests in operators of
Health Care Facilities in which the Company or a Subsidiary has made
an Investment pursuant to Sections 9.5.(f) or (g) hereof (or an
Affiliate thereof) so long as:
(i) such Investments do not exceed $5,000,000 in
any fiscal year and $10,000,000 in the aggregate;
(ii) no Investment represents more than (A) 10% of
the voting stock (or other equity interest) and (B) 30% of all stock
(or other equity interest) on a fully-diluted basis of the operator of
any such Health Care Facility (or an Affiliate thereof); and
(iii) no Unmatured Default or Event of Default
would be caused thereby.
Anything in this Section 9.5. to the contrary notwithstanding, any
Investment in a Health Care Facility permitted under this Section 9.5. (other
than Investments permitted by Section 9.5.(k)) which is not in the form of a
loan secured by such Health Care Facility may be made only if such Health Care
Facility is owned entirely by the Company or a Permitted Subsidiary."
(b) The Credit Agreement is hereby further amended by deleting
Section 9.9. of the Credit Agreement in its entirety and substituting in lieu
thereof the following:
3
<PAGE> 4
"9.9. SALE OF ASSETS
Make any Disposition except for:
(a) the Disposition by the Company or its Subsidiaries of
assets, other than PG Assets for not less than the fair market value
thereof, in an aggregate Dollar amount not to exceed, during the term
of this Agreement, 25% of the average aggregate Dollar value of the
Company's assets. For purposes of the preceding sentence, the average
aggregate Dollar value of the Company's assets shall be measured over
any period of 12 consecutive months selected by the Company occurring
after the Closing Date. Such average aggregate Dollar value shall be
the total assets of the Company, determined on a consolidated basis in
accordance with GAAP, less any PG Assets, as shown on the Company's
balance sheet as of the end of each such month;
(b) the sale or other disposition of any of the PG Assets
by the Company or any of its Subsidiaries for not less than the fair
market value thereof;
(c) involuntary sales or other dispositions of any of the
businesses or assets of the Company or its Subsidiaries;
(d) Dispositions of obsolete assets;
(e) Dispositions (whether individually or in a series of
related transactions) of assets at not less than their fair value
which produce Net Available Proceeds of not more than $1,000,000; or
(f) Dispositions of Investments made pursuant to Section
9.5.(k) hereof.
At the time of any sale or other disposition under clause (a) or (b)
of this Section 9.9., the Company shall deliver to the Agent a
certificate, duly executed by the chief executive officer or the chief
financial officer of the Company, setting forth in detail the
determination of the Net Available Proceeds of such sale or other
disposition, and such other information as is necessary to demonstrate
compliance with clause (a) or (b) of this Section 9.9., as
applicable."
Section 2. Conditions Precedent to Effectiveness of Amendment. This
Amendment shall be effective as of the date first written above (the "Amendment
Effective Date") after and subject to the conditions precedent that the Agent
has received each of
4
<PAGE> 5
the following, each to be in form and substance specified below or otherwise
satisfactory to the Agent:
(a) This Amendment duly executed by the Company, the Agent and the
Required Lenders;
(b) A Reaffirmation of Guaranty from the Guarantors (other than
AHP of New Orleans, Inc.), in substantially the form of Exhibit A attached
hereto (the "Reaffirmation");
(c) An opinion letter from Davis, Graham & Stubbs, LLP, counsel to
the Company, in substantially the form of Exhibit B attached hereto;
(d) A Certificate of the Assistant Secretary of the Company
stating that the Company's articles of incorporation and bylaws, copies of
which were delivered in connection with the closing of the Credit Agreement,
remain in full force and effect and have not been amended or repealed;
(e) Certified copies (certified by the Assistant Secretary of the
Company) of all corporate action taken by the Company to authorize the
execution and delivery of this Amendment and the performance of the Credit
Agreement, as amended by this Amendment;
(f) Certificates of incumbency and specimen signatures with
respect to each of the officers of the Company who are authorized to execute
and deliver this Amendment;
(g) A certificate evidencing the good standing of the Company
issued as of a recent date by the Secretary of State of the State of Delaware;
(h) A certificate executed by the chief executive officer and
chief financial officer of the Company, stating that: (a) on such date, and
after giving effect to the transaction contemplated hereby, no Unmatured
Default or Event of Default has occurred and is continuing; (b) no material
adverse change in the financial condition or operations of the business of the
Company or any of its Subsidiaries or the projected cash flow of the Company
and its Subsidiaries has occurred; and (c) the representations and warranties
set forth in Sections 3 and 4 of the Amendment are true and correct in all
material respects on and as of such date with the same effect as though made on
and as of such date.
(i) Evidence of payment of all accrued and due and payableinterest
owing on all Loans; and
(j) Such other documents, agreements, opinions or evidences as the
Agent may reasonably request.
Section 3. Reaffirmation. The Company hereby reaffirms all
representations and warranties made by the Company in the Credit Agreement on
and as of the date hereof
5
<PAGE> 6
with the same force and effect as if such representations and warranties were
set forth in this Amendment in full, except that the Company makes no
representations or warranties with respect to AHP of New Orleans, Inc. which
has been dissolved.
Section 4. Representations. The Company further represents that:
(a) Authorization. The Company has the right and power, and has
taken all necessary action to authorize it, to execute and deliver this
Amendment and to perform the Credit Agreement, all as amended by this
Amendment, in accordance with their respective terms. This Amendment has been
duly executed and delivered by the duly authorized officers of the Company, and
each of this Amendment and the Credit Agreement, as amended by this Amendment,
is a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
generally the enforcement of creditors' rights.
(b) Compliance of Credit Documents with Laws, etc. The execution
and delivery of this Amendment, and the performance of the Credit Agreement, as
amended by this Amendment, in accordance with their respective terms and the
borrowings thereunder do not and will not, by the passage of time, the giving
of notice or otherwise: (i) require any approval from any Governmental Agency
or violate any applicable law relating to the Company; (ii) conflict with,
result in a breach of or constitute a default under the certificate of
incorporation or bylaws of the Company, or any indenture, agreement or other
instrument to which the Company is a party or by which it or any of its
properties may be bound; or (iii) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by the Company other than in favor of the Agent for the
benefit of the Lenders.
(c) No Default. No Unmatured Default or Event of Defaults exists
as of the date hereof and, after giving effect to this Amendment, no Unmatured
Default or Event of Default will occur or exist.
Section 5. References to the Credit Agreement and the Other Credit
Documents. Upon the occurrence of the Amendment Effective Date, each reference
to the Credit Agreement and any of the Credit Documents shall be deemed to be a
reference to the Credit Agreement as amended by this Amendment, and as each may
from time to time be further amended, supplemented, restated or otherwise
modified in the future by one or more other written amendments or supplemental
or modification agreements entered into pursuant to the applicable provisions
of the Credit Agreement. The term "Credit Documents" as defined in the Credit
Agreement shall include the Reaffirmation executed pursuant to Section 2
hereof.
Section 6. Expenses. Pursuant to Section 13.3(a) of the Credit
Agreement, the Company shall reimburse the Agent upon demand for all costs and
expenses (including attorneys' fees) incurred by the Agent in the preparation,
negotiation and execution of this
6
<PAGE> 7
Amendment and the other agreements and documents executed and delivered in
connection herewith.
Section 7. Benefits. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF CALIFORNIA,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AMENDMENT,
EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW
ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY.
Section 9. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement and the other Credit Documents shall remain
in full force and effect.
Section 10. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
Section 11. Definitions. All terms defined in the Credit Agreement
which are used herein shall have the meanings defined in the Credit Agreement,
unless specifically defined otherwise herein. The Credit Agreement shall be
further amended by incorporating all terms defined in this Amendment.
Section 12. No Novation. The parties do not intend that the
amendment to the Credit Agreement effected hereby constitutes a novation of the
indebtedness incurred under, and evidenced by, the Credit Agreement and the
other Credit Documents.
(Signatures Begin on Next Page)
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to Credit Agreement to be executed by their duly authorized officers
as of the date first above written.
AMERICAN HEALTH PROPERTIES, INC.
By: /s/ Michael J. McGee
------------------------------------------
Michael J. McGee
Senior Vice President and
Chief Financial Officer
WELLS FARGO BANK, N.A., as Agent and Lender
By: /s/ Jack Haye
------------------------------------------
Name: Jack Haye
-------------------------------------
Title: Vice President
------------------------------------
BANQUE PARIBAS, as Lender
By: /s/ Clare Bailhe
------------------------------------------
Name: Clare Bailhe
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Stanley R. Berkman
------------------------------------------
Name: Stanley R. Berkman
-------------------------------------
Title: General Manager
Western Region
------------------------------------
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Lender
By: /s/ Joseph H. Towell
------------------------------------------
Name: Joseph H. Towell
-------------------------------------
Title: Senior Vice President
------------------------------------
NATIONSBANK OF TEXAS, N.A., as Lender
By: /s/ Elizabeth Gould
------------------------------------------
Name: Elizabeth Gould
-------------------------------------
Title: Vice President
------------------------------------
(Signatures continued on following page)
8
<PAGE> 9
(Continuation of signatures to the First Amendment to Credit Agreement)
BHF-BANK AKTIENGESELLSCHAFT, as Lender
By: /s/ Evon Contos
------------------------------------------
Name: Evon Contos
-------------------------------------
Title: Vice President
------------------------------------
By: /s/ Dan Dobrjowskyj
------------------------------------------
Name: Dan Dobrjowskyj
-------------------------------------
Title: Assistant Treasurer
------------------------------------
BANQUE NATIONALE DE PARIS, as Lender
By: /s/ Clive Bettles
------------------------------------------
Name: Clive Bettles
-------------------------------------
Title: Senior Vice President & Manager
------------------------------------
By: /s/ Mitchell M. Ozawa
------------------------------------------
Name: Mitchell M. Ozawa
-------------------------------------
Title: Vice President
------------------------------------
COLORADO NATIONAL BANK, as Lender
By: /s/ Jon M. Fish
------------------------------------------
Name: Jon M. Fish
-------------------------------------
Title: Vice President
------------------------------------
FLEET NATIONAL BANK OF MASSACHUSETTS,
as Lender
By: /s/ Ginger Stolzenthaler
------------------------------------------
Name: Ginger Stolzenthaler
-------------------------------------
Title: Vice President
------------------------------------
(Signatures continued on following page)
9
<PAGE> 10
(Continuation of signatures to the First Amendment to Credit Agreement)
KLEINWORT BENSON LIMITED, as Lender
By: /s/ Patrick Donelan
------------------------------------------
Name: Patrick Donelan
-------------------------------------
Title: Director
------------------------------------
AMSOUTH BANK OF ALABAMA, as Lender
By: /s/ William Barnes
------------------------------------------
Name: William Barnes
-------------------------------------
Title: Senior Vice President
------------------------------------
10
<PAGE> 11
EXHIBIT A
FORM OF REAFFIRMATION OF GUARANTY
THIS REAFFIRMATION OF GUARANTY dated as of December 10, 1996, executed
and delivered by each of AMIREIT (Frye), Inc., a North Carolina corporation,
AMIREIT (Kendall), Inc., a Florida corporation, AMIREIT Lucy Lee, Inc., a
Missouri corporation, AMIREIT (North Fulton), Inc., a Georgia corporation,
AMIREIT (Palm Beach Gardens), Inc., a Florida corporation, AHE of California,
Inc., a California corporation, AHE of Irvine, Inc., a California corporation,
American Health Properties of Arizona, Inc., an Arizona corporation, AHP of
Colorado, Inc., a Colorado corporation, AHP of Fayetteville, Inc., an Arkansas
corporation, AHP of Illinois, Inc., an Illinois corporation, AHP of Kansas,
Inc., a Kansas corporation, AHP of South Carolina, Inc., a South Carolina
corporation, AHP of Sunrise, Inc., a Florida corporation, AHP of Tarpon
Springs, Inc., a Florida corporation, AHP of Texas, Inc., a Texas corporation,
AHP of Washington, Inc., a Washington corporation, AHP of West Virginia, Inc.,
a West Virginia corporation, and AHP of Utah, Inc., a Utah corporation,
together with the Subsidiaries of the Company that may from time to time become
a party hereto (each a "Guarantor", and, collectively, the "Guarantors") in
favor of Wells Fargo Bank, N.A., in its capacity as agent (the "Agent"), and in
its capacity as the Facing Bank (the "Facing Bank"), in favor of Banque
Paribas, in its capacity as Co-Agent ("Banque Paribas"), in favor of First
Union National Bank of North Carolina in its capacity as Co-Agent ("First
Union"), in favor of NationsBank of Texas, N.A., in its capacity as Co-Agent
("NationsBank") and in favor of each Lender (present and future) under the
Credit Agreement (as hereinafter defined) (the Lenders, NationsBank, First
Union, Banque Paribas, the Facing Bank and the Agent being collectively
referred to herein as the "Guaranteed Parties").
WHEREAS, the Lenders, Banque Paribas, as Co-Agent, First Union
National Bank of North Carolina, as Co-Agent, NationsBank of Texas, N.A., as
Co-Agent, Wells Fargo Bank, N.A., as Arranger, Agent and Facing Bank and
American Health Properties, Inc. (the "Company") entered into that certain
Credit Agreement dated as of December 27, 1995 (as the same may be amended,
modified, supplemented, or extended from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Guarantors
executed and delivered a Guaranty dated as of December 27, 1995 (the
"Guaranty") in favor of the Guaranteed Parties, providing for the undersigned's
guaranty of repayment of certain indebtedness and obligations of the Company
owing to the Guaranteed Parties;
WHEREAS, the Company and the Lender have entered into that certain
First Amendment to Credit Agreement dated as of the date hereof (the
"Amendment"), to amend certain covenants and for other purposes;
WHEREAS, each Guarantor has reviewed the Amendment;
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<PAGE> 12
WHEREAS, its is a condition precedent to the effectiveness of the
Amendment that the Guarantors execute and deliver this Reaffirmation of
Guaranty;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which each Guarantor hereby acknowledges, each Guarantor hereby
agrees as follows:
Section 1. Reaffirmation. Each Guarantor hereby reaffirms its
continuing obligations to the Guaranteed Parties under the Guaranty and agrees
that neither the transactions contemplated by the Amendment, nor any future
agreements or arrangements whatsoever by the Guaranteed Parties with the
Company relating to the Credit Agreement, any of the other Credit Documents, or
any collateral thereunder, shall in any way affect the validity and
enforceability of the Guaranty or reduce, impair or discharge the obligations
of such Guarantor thereunder.
Section 2. References. Each Guarantor agrees that each reference to
the Credit Agreement or any of the other Credit Documents in any of the Credit
Documents shall be deemed to be a reference to the Credit Agreement or such
other Credit Document as amended by the Amendment, and as each may from time to
time be further amended, supplemented, restated or otherwise modified in the
future by one or more other written amendments or supplemental or modification
agreements entered into pursuant to the applicable provisions of the respective
Credit Document.
Section 3. Defined Terms. Terms not otherwise defined herein are
used herein as defined in the Credit Agreement.
(Signatures on following page)
A-2
<PAGE> 13
IN WITNESS WHEREOF, this Reaffirmation of Guaranty is signed, sealed
and delivered as of the date first written above.
AMIREIT (FRYE), INC.
AMIREIT (KENDALL), INC.
AMIREIT LUCY LEE, INC.
AMIREIT (NORTH FULTON ), INC.
AMIREIT (PALM BEACH GARDENS), INC.
AHE OF CALIFORNIA, INC.
AHE OF IRVINE, INC.
AMERICAN HEALTH PROPERTIES OF
ARIZONA, INC.
AHP OF COLORADO, INC.
AHP OF FAYETTEVILLE, INC.
AHP OF ILLINOIS, INC.
AHP OF KANSAS, INC.
AHP OF SOUTH CAROLINA, INC.
AHP OF SUNRISE, INC.
AHP OF TARPON SPRINGS, INC.
AHP OF TEXAS, INC.
AHP OF WASHINGTON, INC.
AHP OF WEST VIRGINIA, INC.
AHP OF UTAH, INC.
By:
---------------------------------
Michael J. McGee
Vice President
A-3
<PAGE> 14
EXHIBIT B
FORM OF OPINION OF COUNSEL
(Letterhead of Company's Counsel)
December ___, 1996
Wells Fargo Bank, N.A.
as Arranger, Agent and Facing Bank
420 Montgomery Street
San Francisco, California 94163
and
The financial institutions that have or may
become Lenders under the Credit
Agreement described below
RE: First Amendment to Credit Agreement dated as of December 10,
1996, among American Health Properties, Inc., the financial
institutions that are signatories thereto and Wells Fargo
Bank, N.A., as Agent (the "Amendment")
Ladies and Gentlemen:
We have acted as counsel to American Health Properties, Inc., a
Delaware corporation (the "Company"); AMIREIT (Frye), Inc., a North Carolina
corporation ("Frye"); AMIREIT (Kendall), Inc., a Florida corporation
("Kendall"); AMIREIT Lucy Lee, Inc., a Missouri corporation ("Lucy Lee");
AMIREIT (North Fulton), Inc., a Georgia corporation ("North Fulton"); AMIREIT
(Palm Beach Gardens), Inc., a Florida corporation (Palm Beach Gardens"); AHE of
California, Inc., a California corporation ("California"); AHE of Irvine, Inc.,
a California corporation ("Irvine"); American Health Properties of Arizona,
Inc., an Arizona corporation ("Arizona"); AHP of Colorado, Inc., a Colorado
corporation ("Colorado"), AHP of Fayetteville, an Arkansas corporation
('Fayetteville"); AHP of Illinois, Inc., an Illinois corporation ("Illinois");
AHP of Kansas, Inc., a Kansas corporation ("Kansas"); AHP of South Carolina,
Inc., a South Carolina corporation ("South Carolina"), AHP of Sunrise, Inc., a
Florida corporation ("Sunrise"); AHP of Tarpon Springs, Inc., a Florida
corporation ("Tarpon Springs"); AHP of Texas, Inc., a Texas corporation
("Texas"); AHP of Washington, Inc., a Washington corporation ("Washington"),
AHP of West Virginia, Inc., a West Virginia corporation ("West Virginia"); and
AHP of Utah, Inc., a Utah corporation ("Utah") (Frye, Kendall, Lucy Lee, North
Fulton, Palm Beach Gardens, California, Irvine, Arizona, Colorado,
Fayetteville,
B-1
<PAGE> 15
Illinois, Kansas, South Carolina, Sunrise, Tarpon Springs, Texas, Washington,
West Virginia and Utah are herein collectively referred to as the "Guarantors"
and the Guarantors and the Company are herein collectively referred to as the
"Credit Parties") in connection with the preparation, negotiation and delivery
of the above-captioned Amendment. This opinion is being delivered to you
pursuant to Section 2 of the Amendment.
In these capacities we have reviewed the following:
(a) the Credit Agreement;
(b) the Amendment;
(c) the Subsidiary Guaranty; and
(d) the Reaffirmation.
Items (b) and (d) above are sometimes referred to herein as the "Amendment
Documents". Capitalized terms used in this opinion which are defined in the
Amendment have the meaning specified therein, unless otherwise defined herein.
In addition to the foregoing, we have reviewed the articles of
incorporation and bylaws of each of the Credit Parties and certain resolutions
of the boards of directors of each of the Credit Parties (collectively, the
"Organizational Documents"). We have examined originals or copies, certified
or otherwise identified to our satisfaction, of such documents, corporate
records, and other instruments, and made such other investigations of law and
fact, as we have deemed necessary or advisable for the purposes of rendering
this opinion. In our examination of documents, we assumed the genuineness of
all signatures on documents presented to us as originals (other than signatures
on behalf of the Credit Parties) and the conformity to originals of documents
presented to us as conformed or reproduced copies.
Based on the foregoing, and subject to the assumptions and
qualifications set forth below, we are of the opinion that:
1. Each of the Credit Parties (i) is an existing corporation and
in good standing under the laws of its jurisdiction of incorporation and (ii)
has the corporate power to execute, deliver and perform the Amendment Documents
to which it is a party, to own and use its assets, and to conduct its business
as presently conducted and as proposed to be conducted immediately following
the consummation of the transactions contemplated by the Amendment.
2. Each of the Credit Parties has duly authorized the execution
and delivery of the Amendment Documents to which it is a party and all
performance by it thereunder. Each of the Credit Parties has duly executed and
delivered such Amendment Documents.
B-2
<PAGE> 16
3. The execution, delivery and performance by each Credit Party
of each of the Reaffirmation, the Amendment, and the Credit Agreement as
amended by the Amendment to which it is a party (i) require no action or
consent by or in respect of, or filing with, any governmental body, agency or
official of the State of Colorado or of the federal government of the United
States and (ii) do not contravene, or constitute a default under, any provision
of applicable Colorado or United States federal law or regulation or of the
Organizational Documents or Material Contracts of such Credit Party, or, to the
best of our knowledge of any judgment, injunction, order, decree or other
instrument binding on such Credit Party or result in the creation or imposition
of any Lien on any asset of any Credit Party.
4. If the Amendment Documents and the Credit Documents were
governed by the laws of the State of Colorado, each of the Reaffirmation, the
Amendment and the Credit Agreement as amended by the Amendment would constitute
the legal, valid and binding obligation of each Credit Party a party thereto,
enforceable against such Credit Party in accordance with its terms.
5. In a properly presented and argued case, a Colorado state
court or a federal court sitting in Colorado as the forum state, applying
Colorado conflict of laws principles should enforce the choice of law
provisions in the Amendment Documents and the Credit Agreement as amended by
the Amendment.
6. Since December 27, 1995, the date of our prior legal opinion
rendered to the Agent and the Lenders in connection with the Credit Agreement,
no facts or circumstances concerning the Company have come to the attention of
attorneys in this firm who provide services to the Company, which would cause
us to believe that our opinion in Paragraph 10 of such prior opinion concerning
the real estate investment trust status of the Company under the Internal
Revenue Code of 1986, as amended (a) was inaccurate, or (b) would not be
accurate through the date of this opinion.
7. To the best of our knowledge, there does not exist any
litigation or governmental proceedings, pending or threatened against any of the
Credit Parties which purport to affect the legality, validity, binding effect or
enforceability of any of the Amendment Documents or Credit Documents or which
are likely to have a material adverse effect upon the financial condition or
operations of the Company or its Subsidiaries.
This opinion is subject to the following assumptions and
qualifications:
(i) To the extent matters of fact are involved in the opinions set
forth above, we have, with your permission, relied upon
certificates of public officials or of officers of the
Company, copies of which are attached hereto.
(ii) The opinions rendered in Paragraph 4 above relating to the
enforceability of the Amendment Documents are subject to and
limited by the following: (i) applicable bankruptcy,
insolvency, reorganization, moratorium, or other
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<PAGE> 17
similar laws now or hereafter affecting the enforcement of
creditors' rights and generally and (ii) general equitable
principles, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing
(regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law) and (iii)
public policies which may affect the enforceability of certain
remedies or rights provided for in the Amendment Documents.
(iii) The opinions with respect to enforceability of the agreements
referred to herein and as to no conflict or breach of any
federal or Colorado statute are subject to fraudulent
conveyance laws.
The opinions set forth above are limited to the effect of the laws of
the State of Colorado, the federal laws of the United States of America and the
general corporation law of the State of Delaware. We express no opinion with
respect to the laws of any other jurisdiction.
This opinion is furnished to the Agent, the Facing Bank, the Co-Agents
and the Lenders. This opinion may not be relied on by any other person other
than the Arranger, the Agent, the Facing Bank, the Co-Agents, the Lenders, and
Alston & Bird, counsel to the Arranger, the Agent and the Facing Bank.
Sincerely yours,
________________________
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