<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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: 1-11666
GENESIS HEALTH VENTURES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 06-1132947
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
148 West State Street
Kennett Square, Pennsylvania 19348
(Address, including zip code, of principal executive offices)
(610) 444-6350
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
YES [ x ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of August 12, 1996: 31,939,939
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TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION....................................... 1
Item 1. Financial Statements................................... 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 7
PART II. OTHER INFORMATION.......................................... 12
Item 1. Legal Proceedings...................................... 12
Item 2. Changes in Securities.................................. 12
Item 3. Defaults Upon Senior Securities........................ 12
Item 4. Submission of Matters to a Vote of Security Holders.... 12
Item 5. Other Information...................................... 12
Item 6. Exhibits and Reports on Form 8-K....................... 12-15
SIGNATURES........................................................... 16
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 70,626 $ 10,387
Accounts receivable, net of allowance for
doubtful accounts of $9,674 at June 30,
1996 and $6,179 at September 30, 1995 144,036 101,124
Cost report receivables 31,413 26,271
Inventory 16,872 9,601
Other current assets 34,062 43,674
--------- ---------
Total current assets 297,009 191,057
--------- ---------
Property, plant and equipment 375,628 294,769
Accumulated depreciation (62,240) (51,108)
--------- ---------
313,388 243,661
Goodwill and other intangibles, net 196,119 114,947
Other assets 71,832 50,724
--------- ---------
TOTAL ASSETS $ 878,348 $ 600,389
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 64,163 $ 52,522
Current installments of long-term debt 2,512 2,539
Income taxes payable 2,735 1,882
--------- ---------
Total current liabilities 69,410 56,943
--------- ---------
Long-term debt 295,897 308,052
Deferred income taxes 6,586 8,698
Deferred gain and other liabilities 6,217 5,149
Shareholders' Equity:
Common stock, par value $.02, authorized
60,000,000 shares, issued and outstanding,
31,981,680 and 31,936,079 at June 30, 1996;
22,081,267 and 22,035,666 at
September 30, 1995 476 294
Additional paid-in capital 411,677 155,927
Retained earnings 88,328 65,569
--------- ---------
500,481 221,790
Less treasury stock, at cost (243) (243)
--------- ---------
Total shareholders' equity 500,238 221,547
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 878,348 $ 600,389
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
(Unaudited)
-----------
Three Months Ended
June 30,
1996 1995
---- ----
<S> <C> <C>
Net revenues:
Basic healthcare services $ 85,846 $ 69,701
Specialty medical services 78,347 48,188
Management services and other, net 8,643 8,070
-------------- --------------
Total net revenues 172,836 125,959
Operating expenses:
Salaries, wages and benefits 80,919 62,009
Other operating expenses 52,786 34,978
General corporate expense 6,515 4,449
Debenture conversion expense 155 ---
Depreciation and amortization 6,648 5,003
Lease expense 4,086 3,657
Interest expense, net 6,125 4,976
-------------- --------------
Earnings before income taxes and
extraordinary item 15,602 10,887
Income taxes 5,511 4,002
-------------- --------------
Earnings before extraordinary item 10,091 6,885
Extraordinary item, net of tax --- (1,923)
-------------- --------------
Net income $ 10,091 $ 4,962
============== ==============
Per common share data:
Primary
Earnings excluding debenture
conversion expense and
extraordinary item, net of tax $ .37 $ .30
Debenture conversion expense --- ---
Extraordinary item, net of tax --- (.08)
Net income $ .37 $ .22
Weighted average shares of
Common Stock and equivalents 27,507,276 22,635,350
Fully diluted
Earnings excluding ebenture
conversion expense and
extraordinary item, net of tax $ .35 $ .28
Debenture conversion expense --- ---
Extraordinary item, net of tax --- (.07)
Net income $ .35 $ .21
Weighted average shares of
Common Stock and equivalents 31,108,391 28,387,825
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
(Unaudited)
-----------
Nine Months Ended
June 30,
--------
1996 1995
---- ----
<S> <C> <C>
Net revenues:
Basic healthcare services $ 241,107 $ 206,073
Specialty medical services 193,347 128,333
Management services and other, net 25,900 20,059
--------------- ---------------
Total net revenues 460,354 354,465
Operating expenses:
Salaries, wages and benefits 223,244 175,612
Other operating expenses 132,180 99,778
General corporate expense 17,617 12,730
Debenture conversion expense 1,245 ---
Depreciation and amortization 17,883 13,987
Lease expense 11,948 10,388
Interest expense, net 19,104 14,369
--------------- ---------------
Earnings before income taxes and
extraordinary item 37,133 27,601
Income taxes 13,374 10,093
--------------- ---------------
Earnings before extraordinary item 23,759 17,508
Extraordinary item, net of tax --- (1,923)
--------------- ---------------
Net income $ 23,759 $ 15,585
================ ===============
Per common share data:
Primary
Earnings excluding debenture
conversion expense and
extraordinary item, net of tax $ .96 $ .78
Debenture conversion expense (.03) ---
Extraordinary item, net of tax --- (.09)
Net income $ .93 $ .69
Weighted average shares of Common
Stock and equivalents 25,438,335 22,556,985
Fully diluted
Earnings excluding debenture
conversion expense and
extraordinary item $ .91 $ .72
Debenture conversion expense (.03) ---
Extraordinary item, net of tax --- (.06)
Net income $ .88 $ .66
Weighted average shares of Common
Stock and equivalents 29,358,861 28,284,792
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
(Unaudited)
-----------
Nine Months Ended
June 30,
--------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 23,759 15,585
Adjustments to reconcile net income to net cash
provided by operating activities:
Charges (credits) included in operations not
requiring funds:
Provision for deferred taxes 3,343 2,902
Depreciation and amortization 17,883 13,987
Amortization of deferred gain (345) (345)
Debenture conversion expense 1,245 ---
Extraordinary item, net of tax --- 1,923
Changes in assets and liabilities excluding effects
of acquisitions:
Increase in accounts receivable (16,348) (16,425)
Increase in cost report receivables (6,418) (8,000)
Increase in inventory (2,207) (492)
(Increase) decrease in other current assets (9,012) 1,562
Increase (decrease) in accounts payable and
accrued expenses 3,144 (4,265)
Increase (decrease) in income taxes payable (816) 759
-------------- ------------
Total adjustments (9,531) (8,394)
-------------- ------------
Net cash provided by operating activities 14,228 7,191
-------------- ------------
Cash flows from investing activities:
Capital expenditures (26,151) (19,681)
Cash paid, net-- acquisitions (140,816) (8,194)
Deferred and other long-term asset
additions, net (8,856) (10,376)
Increase in trustee-held funds (50) (490)
-------------- ------------
Net cash used in investing activities (175,873) (38,741)
-------------- ------------
Cash flows from financing activities:
Proceeds from issuance of Common Stock 211,250 ---
Stock issuance costs (9,248) ---
Net borrowings under bank credit facility 20,300 19,600
Repayment of long-term debt (1,673) (101,353)
Proceeds from issuance of long-term debt --- 119,700
Debenture conversion expense (1,245) ---
Proceeds from exercise of common stock
options 2,500 981
Debt issuance costs --- (3,600)
-------------- ------------
Net cash provided by financing activities $ 221,884 35,328
-------------- ------------
Net increase in cash and cash equivalents $ 60,239 3,778
-------------- ------------
Cash and cash equivalents:
Beginning of the period 10,387 3,817
End of the period $ 70,626 7,595
-------------- ------------
Supplemental disclosure of cash flow information:
Interest paid $ 22,755 15,818
-------------- ------------
Income taxes paid $ 12,451 9,509
============== ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto included in the Company's annual report for the fiscal year ended
September 30, 1995. The information furnished is unaudited but reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial information for the periods shown. Such
adjustments are of a normal recurring nature. Interim results are not
necessarily indicative of results expected for the full year.
2. Earnings Per Share
Primary and fully-diluted earnings per share are based on the weighted
average number of common shares outstanding and the dilutive effect of stock
options, convertible debentures and other common stock equivalents.
3. Pro Forma Financial Information
In July 1996, the Company and Geriatric and Medical Companies, Inc.
("GEMC") entered into an agreement providing for the merger of GEMC into a
wholly-owned subsidiary of Genesis. The merger, and a related transaction with
an affiliate of GEMC, will add 19 long-term care facilities and eight
residential care and independent living facilities with approximately 3,500 beds
and certain ancillary businesses to Genesis. Under the terms of the merger
agreement, unanimously approved by the board of directors of both companies,
GEMC shareholders would receive $5.75 per share in cash for each GEMC share. The
purchase price of GEMC stock is approximately $91,000,000 and the total value of
the transaction, including approximately $132,000,000 of assumed debt, is
approximately $223,000,000. The Company expects to fund the cash portion of the
transaction through its bank credit facility. Consummation of the transaction is
expected in the fourth quarter of calendar 1996, and is subject to normal
closing conditions, regulatory approvals and GEMC shareholder approval.
In July 1996, the Company acquired the outstanding stock of National
Health Care Affiliates, Inc., Oak Hill Center, Inc., Derby Nursing Center
Corporation, EIDOS, Inc. and Versalink, Inc. (collectively, "National Health").
Prior to the closing of the stock acquisitions, an affiliate of a financial
institution purchased nine of the eldercare centers for $67,700,000 and
subsequently leased the centers to a subsidiary of Genesis under operating lease
agreements. The balance of the total consideration paid to National Health was
funded with available cash ($51,800,000) and assumed debt ($7,900,000). National
Health owns six eldercare centers in Florida with 863 beds, leases four
eldercare centers in Florida with 368 beds, owns five eldercare centers in
Virginia with 851 beds, and leases one eldercare center in Connecticut with 120
beds. National Health also provides enteral nutrition and rehabilitation therapy
services to the eldercare centers which it owns and leases. In addition,
National Health manages four eldercare centers in Colorado with 283 beds
pursuant to an agreement which expires in October 1997.
In June 1996, the Company acquired the outstanding stock of NeighborCare
Pharmacies, Inc. ("NeighborCare"), a privately held institutional pharmacy,
infusion therapy and retail pharmacy business based in Baltimore, Maryland.
Total consideration was approximately $57,250,000,
-5-
<PAGE>
comprised of approximately $47,250,000 in cash and 312,744 shares of Genesis
common stock.
On November 30, 1995, the Company acquired all of the issued and
outstanding stock and partnership interests of McKerley Health Care Centers,
Inc., McKerley Health Care Center - Concord, Inc., McKerley Health Facilities
and McKerley Health Care Center - Concord, L.P. (collectively, the "McKerley
Entities"). The Company acquired the outstanding stock and partnership interests
of the McKerley Entities for approximately $68,700,000, including assumed debt
and after giving effect to the funds placed in escrow by the principals as
described below. An additional $6,000,000 of purchase price is payable if
certain financial objectives are achieved through October 1997. The transaction
was financed with borrowings under the Company's bank credit facility.
Pursuant to certain agreements executed on November 30, 1995, the
Company directly or through one or more subsidiaries, agreed to provide certain
services to the principals during the period ending November 30, 1998, and the
principals agreed to make certain lease payments on behalf of the Company with
respect to certain lease obligations of the McKerley Entities. As security for
the principals' or their affiliates' obligation to make the required payments as
they become due, the principals placed approximately $6,500,000 in an account
with a third party escrow agent.
The following unaudited pro forma statement of operations information
gives effect to the GEMC, National Health, NeighborCare and McKerley
transactions described above as though they had occurred at the beginning of the
periods presented, after giving effect to certain adjustments, including
amortization of goodwill, additional depreciation expense, increased interest
expense on debt related to the acquisitions and related income tax effects. The
pro forma financial information does not necessarily reflect the results of
operations that would have occurred had the acquisitions occurred at the
beginning of the periods presented.
<TABLE>
<CAPTION>
(In thousands, except per share data)
Nine Months Ended
June 30, June 30,
Pro Forma Statement of Operations Information: 1996 1995
---- ----
<S> <C> <C>
Total net revenues $ 710,790 $ 654,092
Net income before extraordinary item and debenture
conversion expense 26,433 19,115
Primary earnings per share before extraordinary
item and debenture conversion expense 1.03 .83
Fully diluted earnings per share before
extraordinary item and debenture conversion
expense .96 .77
</TABLE>
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
Since the Company began operations in July 1985, it has focused its
efforts on providing an expanding array of specialty medical services to elderly
customers. The delivery of these services was originally concentrated in the
eldercare centers owned and leased by the Company, but now also includes managed
eldercare centers, independent healthcare facilities, outpatient clinics and
home health care.
The Company generates revenues from three sources: basic healthcare
services, specialty medical services and management services. The Company
includes in basic healthcare services revenues all room and board charges from
its customers at its owned and leased eldercare centers. Specialty medical
services include all revenues from providing rehabilitation therapies,
institutional pharmacy and medical supply services, subacute care programs, home
health care, physician services, and other specialized services. Management
services include fees earned for management of eldercare centers, development
of life care communities and revenues from the group purchasing, staff
replacement and vending businesses.
Genesis delivers its services through three divisions. The largest, in
terms of revenues, is Genesis ElderCare Centers, which at June 30, 1996 included
68 owned and leased eldercare centers. The second, Genesis ElderCare Services,
provides specialty medical services to all centers owned, leased or managed by
Genesis as well as to over 500 independent healthcare providers. The third,
Genesis ElderCare Network Services, manages 39 eldercare centers.
Certain Transactions
In July 1996, the Company and Geriatric and Medical Companies, Inc.
("GEMC") entered into an agreement providing for the merger of GEMC into a
wholly-owned subsidiary of Genesis. The merger, and a related transaction with
an affiliate of GEMC, will add 19 long-term care facilities and eight
residential care and independent living facilities with approximately 3,500 beds
and certain ancillary businesses to Genesis. Under the terms of the merger
agreement, unanimously approved by the board of directors of both companies,
GEMC shareholders would receive $5.75 per share in cash for each GEMC share. The
purchase price of GEMC stock is approximately $91,000,000 and the total value of
the transaction, including approximately $132,000,000 of assumed debt, is
approximately $223,000,000. The Company expects to fund the cash portion of the
transaction through its bank credit facility. Consummation of the transaction is
expected in the fourth quarter of calendar 1996, and is subject to normal
closing conditions, regulatory approvals and GEMC shareholder approval.
In August 1996, the Company acquired the outstanding stock of Diane
Morgan & Associates and an affiliate. The purchase price was $3,820,000 of which
$3,300,000 was paid from available cash at closing and the balance of the
consideration was in the form of notes issued to the principals.
In July 1996, the Company acquired the outstanding stock of National
Health Care Affiliates, Inc., Oak Hill Center, Inc., Derby Nursing Center
Corporation, EIDOS, Inc. and Versalink, Inc. (collectively, "National Health").
Prior to the closing of the stock acquisitions, an affiliate of a financial
institution purchased nine of the eldercare centers for $67,700,000 and
subsequently leased the centers to a subsidiary of Genesis under operating lease
agreements. The balance of the total consideration paid to National
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<PAGE>
Health was funded with available cash ($51,800,000) and assumed debt
($7,900,000). National Health owns six eldercare centers in Florida with 863
beds, leases four eldercare centers in Florida with 368 beds, owns five
eldercare centers in Virginia with 851 beds, and leases one eldercare center in
Connecticut with 120 beds. National Health also provides enteral nutrition and
rehabilitation therapy services to the eldercare centers which it owns and
leases. In addition, National Health manages four eldercare centers in Colorado
with 283 beds pursuant to an agreement which expires in October 1997.
In June 1996, the Company acquired the outstanding stock of
NeighborCare, a privately held institutional pharmacy, infusion therapy and
retail pharmacy business based in Baltimore, Maryland. Total consideration was
approximately $57,250,000, comprised of approximately $47,250,000 in cash and
312,744 shares of Genesis common stock.
In March 1996, the Company sold four eldercare centers and a pharmacy in
Indiana for approximately $22,250,000.
In March 1996, the Company acquired for total consideration of
approximately $31,900,000, including the payment of assumed debt, the remaining
approximately 71% joint venture interests of four eldercare centers in Maryland
and the remaining 50% joint venture interest of an eldercare center in Florida
which had been acquired as part of the Meridian Transaction (the "Partnership
Interest Purchase").
In March 1996, the Company entered into a strategic alliance with
Doctors Community Hospital, a 250-bed acute care hospital in Maryland, pursuant
to which the Company sold to an affiliate of the hospital a 51% interest in
Magnolia Gardens Center, a 104-bed eldercare center for approximately
$2,900,000. As part of this transaction, the Company entered into a long-term
agreement to manage the center.
In January 1996, the Company acquired the speech therapy, occupational
therapy and physical therapy services businesses of Medical and Rehab Support
Services, Inc., Professional Rehabilitation Network, Inc. and Health Services
Network, Inc. (collectively, "Therapy Companies") for approximately $9,300,000.
The Therapy Companies provide these services in the Company's Baltimore,
Maryland/ Washington, D.C. market. The acquisition was financed with borrowings
under the Company's bank credit facilities.
Prior to January 1, 1996, the Company provided management, development
and marketing services to life care communities operated by Adult Community
Total Services, Inc. ("ACTS"), a Pennsylvania non-profit corporation, pursuant
to a management agreement which was to expire in April 1998. Effective January
1, 1996, Genesis restructured its relationship with ACTS. Under the revised
arrangement, Genesis was paid a $2,000,000 restructuring fee and will no longer
manage the ACTS life care communities. Genesis will continue to provide
development services for a fee in an amount equal to five percent of the total
cost of developing and completing facilities developed by ACTS. The development
portion of the contract has been extended to December 2002 and Genesis is
guaranteed a minimum annual development fee of approximately $1,500,000 per
year. Genesis also continues to provide certain ancillary services to the ACTS
communities.
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<PAGE>
In November 1995, the Company acquired McKerley Health Care Centers,
Inc. and certain related entities (collectively, "McKerley") for total
consideration of approximately $68,700,000. The transaction also provides for up
to an additional $6,000,000 of contingent consideration payable upon the
achievement of certain financial objectives through October 1997. McKerley owns
or leases 15 eldercare centers in New Hampshire and Vermont with a total of
1,535 beds and operates a home healthcare company. The acquisition was financed
with borrowings under the Company's bank credit facilities.
Results of Operations
Three months ended June 30, 1996 compared to three months ended June 30,
1995.
The Company's total net revenues for the quarter ended June 30, 1996
were $172,836,000 compared to $125,959,000 for the quarter ended June 30, 1995,
an increase of $46,877,000, or 37%. Basic healthcare services increased
$16,145,000, or 23% due principally to the acquisition of the McKerley Entities,
the purchase of the remaining partnership interests of five eldercare centers in
March 1996 (which was partially offset by the sale of four eldercare centers in
Indiana), a shift in payor mix from Medicaid to Medicare and rate increases.
Specialty medical services increased $30,159,000, or 63%, of which approximately
$17,222,000 is due primarily to the acquisitions of NeighborCare and the Therapy
Companies, with the remainder due to volume growth in the institutional
pharmacy, medical supply and contract therapy divisions, and an increase in the
relative acuity levels of patients in our owned and leased eldercare centers.
Specialty medical service revenue per patient day in the health centers division
increased 17% to $30.99 in the quarter ended June 30, 1996 as compared to $26.55
for the same quarter in the prior year due primarily to treatment of higher
acuity patients. Management services and other income increased $573,000, or 7%.
Service related business revenues (group purchasing and staff replacement
services) increased approximately $600,000 in the three months ended June 30,
1996 as compared to the corresponding period in the prior year. Transactional
and other net revenues, including a gain on the sale of an investment, in the
three months ended June 30, 1996, increased approximately $900,000 as compared
to the corresponding period in the prior year while management fees recognized
from the management of facilities owned by others decreased $900,000 in the
three months ended June 30, 1996 as compared to the corresponding period in the
prior year.
The Company's operating expenses before debenture conversion expense,
depreciation, amortization and lease expense were $140,220,000 in the quarter
ended June 30, 1996 compared to $101,436,000 in the comparable prior period, an
increase of $38,784,000, or 38%, which was due primarily to the acquisitions of
the McKerley Entities and NeighborCare, an increase in cost of goods sold
related to increased sales of specialty medical services and inflationary wage
and benefit increases.
In the quarter ended June 30, 1996, the Company converted approximately
$8,800,000 of Debentures. In connection with the early conversion of the
Debentures, the Company paid approximately $155,000 representing the prepayment
of interest to converting debenture holders. The non-recurring cash payment is
presented as debenture conversion expense in the result of operations for the
three months ended June 30, 1996. The conversion of a portion of the outstanding
Debentures improves the Company's leverage and provides the Company with the
ability to borrow under its revolving credit facilities at lower rates.
Interest expense increased $1,149,000 or 23%. This increase reflects
increased debt levels used to fund acquisitions and operations and a higher
average prevailing interest rate due to the issuance of $120,000,000 of 9.75%
Senior Subordinated Debentures due 2005 partially offset by the repayment of
approximately $115,480,000 of indebtedness in June 1996 from a part of the net
proceeds of the Company's equity offering and interest income generated from
investment of the remaining net proceeds.
Nine months ended June 30, 1996 compared to Nine months ended June 30,
1995.
The Company's total net revenues for the nine months ended June 30, 1996
were $460,354,000 compared to $354,465,000 for the nine months ended June 30,
1995, an increase of $105,889,000 or 30%. Basic healthcare services increased
$35,034,000 or 17%, which is primarily due to the acquisition of the McKerley
Entities and the purchase of the remaining partnership interests of five
eldercare centers in March 1996 (which was partially offset by the sale of five
eldercare centers in Massachusetts in September 1995), and
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<PAGE>
the sale of four eldercare centers in Indiana in March 1996, along with a shift
in payor mix from Medicaid to Medicare and rate increases. Specialty medical
service revenue increased $65,014,000 or 51%, of which approximately
$30,005,000 is due to acquisitions, with the remainder due to other volume
growth in the institutional pharmacy, medical supply and contract therapy
divisions. Specialty medical service revenue per patient day in the health
centers division increased 21% to $29.38 in the nine months ended June 30, 1996
as compared to $24.31 for the same period in the prior year due primarily to
treatment of higher acuity patients. Management services and other income
increased $5,841,000 or 29% primarily due to an increase in service related
business revenues (group purchasing and staff replacement services) of
approximately $1,700,000 and an increase in transactional gains of approximately
$3,700,000. Transactional and other activity in the nine months ended June 30,
1996 included gains recognized in connection with the sale of an investment, the
sale of four eldercare centers and a pharmacy in Indiana and the sale of a
majority interest in one eldercare center in Maryland.
The Company's operating expenses before debenture conversion expense,
depreciation, amortization and lease expense were $373,041,000 compared to
$288,120,000 in the comparable prior period, an increase of $84,921 or 29%,
which was due to the acquisition of the McKerley Entities, the NeighborCare
transaction, an increase in cost of goods sold related to increased specialty
medical service revenues, and inflationary wage and benefit increases.
In the nine months ended June 30, 1996 the Company converted
approximately $42,300,000 of its 6% Convertible Senior Subordinated Debentures
(the Debentures) due 2003. In connection with the early conversion of the
Debentures, the Company paid approximately $1,245,000 representing the
prepayment of interest to converting debenture holders. The non-recurring cash
payment is presented as debenture conversion expense in the results of
operations for the nine months ended June 30, 1996.
Interest expense increased $4,735,000 or 33%. This increase reflects
increased debt levels used to fund acquisitions and a higher average prevailing
interest rate due to the issuance of $120,000,000 of 9.75% Senior Subordinated
Debentures due 2005 partially offset by the repayment of approximately
$115,480,000 of indebtedness in June 1996 from a part of the net proceeds of the
Company's equity offering and interest income generated from investment of the
remaining net proceeds.
Liquidity and Capital Resources
Working capital increased to $227,599,000 at June 30, 1996 from
$134,114,000 at September 30, 1995 due primarily to cash raised in the May 1996
equity offering which was not used to repay indebtedness. Accounts receivable
increased to $144,036,000 at June 30, 1996 from $101,124,000 at September 30,
1995. Approximately $14,300,000 of this increase relates to accounts receivables
purchased as a part of the NeighborCare acquisition, approximately $4,800,000 of
this increase relates to accounts receivables purchased as part of the
acquisition of the McKerley Entities, approximately $3,000,000 relates to
accounts receivables purchased as part of the acquisition of the Therapy
Companies in January 1996, approximately $3,800,000 relates to the Partnership
Interest Purchase, and the remaining $17,012,000 relates primarily to the
continuing shift in business mix to specialty medical services including the
specialty medical businesses acquired during fiscal 1995. Days of revenue in
accounts receivable increased to 75 from 72 during this period.
In May 1996, the Company completed an offering of 6,500,000 shares of
Common Stock at $32.50 per share, resulting in net proceeds of $202,280,000. The
Company used the net proceeds from the offering to repay a portion of amounts
outstanding under its bank credit facilities and for working capital purposes.
In March 1996, the Company sold four eldercare centers and a pharmacy in
Indiana for approximately $22,250,000. The Company used the net proceeds from
the sale to repay a portion of its revolving credit facility.
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<PAGE>
In November 1995, the Company received in cash approximately $18,000,000
in connection with the September 1995 sale of five facilities in Massachusetts.
The Company used the proceeds from the sale to repay a portion of the revolving
credit facility.
The Company's cash flow from operations for the nine months ended June
30, 1996 was $14,228,000 compared to $7,191,000 for the nine months ended June
30, 1995.
In August 1996, the Company amended and restructured its credit facility
to provide for the termination of its $100,000,000 acquisition credit facility
and to create an $85,000,000 lease financing facility. The lease financing
facility bears interest of a floating into equal, at the Company's option, to
prime rate or LIBOR plus 1.09% and the Company's $200,000,000 revolving credit
facility bears interest at a floating rate equal, at the Company's option, to
prime rate or LIBOR plus 1.25%. Amounts outstanding under the revolving credit
facility in September 1998 convert to a term loan that provides for equal annual
amortization payable quarterly. At June 30, 1996, $86,800,000 was outstanding
under the revolving credit facility and there were no amounts outstanding under
the acquisition credit facility. The Company used the borrowings under the
acquisition credit facility to fund the acquisition of the McKerley Entities,
the Partnership Interest Purchase, and the Therapy Companies. The credit
facilities are secured by the stock of the Company's subsidiaries and first
priority liens on the Company's accounts receivable, inventory and all other
personal property.
In June 1995, the Company completed an offering of $120,000,000 of 9
3/4% Senior Subordinated Notes due 2005 resulting in net proceeds of
approximately $115,800,000. The Company used $100,000,000 of the net proceeds
from the offering to repay in full the term loan component of the credit
facility and the remaining net proceeds to repay a part of the revolving portion
of the credit facility.
The Company believes that its liquidity needs can be met by expected
operating cash flow and availability of borrowings under its bank credit
facilities. At August 10, 1996, $86,600,000 was outstanding under the credit
facility, and $13,200,000 was outstanding under letters of credit issued under
the credit facilities resulting in $100,200,000 of availability under the
revolving credit facility.
Seasonality
The Company's earnings generally fluctuate from quarter to quarter. This
seasonality is related to a combination of factors which include the timing of
Medicaid rate increases, seasonal census cycles, and the number of calendar days
in a given quarter.
Impact of Inflation
The healthcare industry is labor intensive. Wages and other labor costs
are especially sensitive to inflation and resulting marketplace labor shortages.
To date, the Company has offset its increased operating costs by increasing
charges for its services and expanding its services. Genesis has also
implemented cost control measures to limit increases in operating costs and
expenses but cannot predict its ability to control such operating cost increases
in the future.
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<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable
Item 2. Changes in Securities.
Not Applicable
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
3.1 Amendment to Bylaws
10.1(1) Stock Purchase Agreement, dated April 21,
1996, by and among Genesis Health
Ventures, Inc., a Pennsylvania corporation
and NeighborCare Pharmacies, Inc., a
Maryland corporation, Professional
Pharmacy Services, Inc., a Maryland
corporation, Medical Services Group, Inc.,
a Maryland corporation, CareCard, Inc., a
Maryland corporation, Transport Services,
Inc., a Maryland corporation, Michael G.
Bronfein, Jessica Bronfein, Stanton G.
Ades, Renee Ades, The Chase Manhattan
Bank, N.A. and PPS Acquisition Corp., a
Maryland corporation and a wholly-owned
subsidiary of Genesis Health Ventures,
Inc.
10.2(2) Purchase Agreement, dated May 3, 1996, by
and among Mark E. Hamister, Oliver C.
Hamister, George E. Hamister, Julia L.
Hamister, The George E. Hamister Trust,
The Oliver C. Hamister Trust, National
Health Care Affiliates, Inc., Oak Hill
Health Care Center, Inc., Derby Nursing
Center Corporation, Delaware Avenue
Partnership, EIDOS, Inc., VersaLink Inc.,
certain other individuals and Genesis
Health Ventures, Inc.
- ---------------------------------
(1) Incorporated by reference to Form 8-K of Genesis dated April 21, 1996
(2) Incorporated by reference to Form 8-K of Genesis dated May 3, 1996
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<PAGE>
10.3(3) Purchase Agreement Addendum, dated July
24, 1996, by and among Mark E. Hamister,
Oliver C. Hamister, George E. Hamister,
Julia L. Hamister, The George E. Hamister
Trust, The Oliver C. Hamister Trust,
National Health Care Affiliates, Inc., Oak
Hill Health Care Center, Inc., Derby
Nursing Center Corporation, Delaware
Avenue Partnership, EIDOS, Inc., VersaLink
Inc., certain other individuals and
Genesis Health Ventures, Inc.
10.4 Second Amendment and Waiver to Loan
Documents by and among Genesis Health
Ventures, Inc. and certain of its
Subsidiaries and Mellon Bank, N.A., as
agent
10.5 Letter dated July 24, 1996 from Genesis
Health Ventures, Inc. and certain of its
Subsidiaries to Mellon Bank, N.A., as
agent, Terminating Acquisition Credit
Agreement
10.6 Guaranty and Agreement of Suretyship
Regarding Obligations of Lessee and
Affiliates from Genesis Health Ventures,
Inc. and its Material Subsidiaries, Dated
as of July 24, 1996
10.7 Guaranty and Agreement of Suretyship from
Genesis Health Ventures, Inc. and its
Material Subsidiaries, Dated as of July
24, 1996
10.8 Lease and Agreement, Dated as of July 24,
1996, between Mellon Financial Services
Corporation #4, as Lessor, and Genesis
Eldercare Properties, Inc., as Lessee
10.9 Participation Agreement, Dated as of July
24, 1996, among Genesis Eldercare
Properties, Inc., as Lessee, Mellon
Financial Services Corporation #4, as
Lessor, Persons Named on Schedule I, as
Lenders, and Mellon Bank, N.A. not in its
individual capacity except as expressly
stated therein, but solely as Agent
11. Computation of Earnings per Share
27. Financial Data Schedule
- ---------------------------------
(3) Incorporated by reference to Form 8-K of Genesis dated July 26, 1996
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<PAGE>
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated
April 21, 1996, reporting an agreement by the Company to
acquire the outstanding stock of NeighborCare for
consideration of approximately $57,250,000, including
assigned debt.
The Company filed a Current Report on Form 8-K, dated May
3, 1995, reporting the agreement of the Company to
acquire National Health Care Affiliates, Inc. and related
entities which included the following financial
statements:
Audited Combined Financial Statements as of and
for the year ended December 31, 1995.
On May 21, 1996, the Company filed a Current Report on
Form 8-K/A Number 3, dated November 30, 1995, amending
the Company's report of its acquisition of McKerley
Health Care Centers, Inc. and related entities to include
the following financial information of businesses
acquired:
Consolidating Balance Sheet of McKerley Entities
as of December 31, 1994.
Consolidating Income Statement of McKerley
Entities for the year ended December 31, 1994.
Financial Statements and Other Financial
Information (Audited) McKerley Health Care
Centers, Inc. Years ended December 31, 1994 and
1993.
Financial Statements and Other Financial
Information (Audited) McKerley Health Facilities
for the period from March 11, 1994 (date of
initial occupancy) to December 31, 1994.
Financial Statements and Other Financial
Information (Audited) McKerley Health Care
Center-Concord Limited Partnership Years ended
December 31, 1994 and 1993.
Financial Statements and Other Financial
Information (Reviewed) McKerley Pleasant View,
Inc. Years ended December 31, 1994 and 1993.
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<PAGE>
Consolidated Balance Sheet of McKerley Entities
as of November 30, 1995.
Consolidated Income Statement of McKerley
Entities for the eleven months ended November 30,
1995.
Consolidating Balance Sheet of McKerley Entities
as of November 30, 1995.
Consolidating Income Statement of McKerley
Entities for the eleven months ended November 30,
1995.
Balance Sheet and Income Statement (Unaudited)
McKerley Health Care Centers, Inc. Eleven months
ended November 30, 1995.
Balance Sheet and Income Statement (Unaudited)
McKerley Health Facilities Eleven months ended
November 30, 1995.
Balance Sheet and Income Statement (Unaudited)
McKerley Health Care Center-Concord Limited
Partnership Eleven months ended November 30,
1995.
Balance Sheet and Income Statement (Unaudited)
McKerley Pleasant View, Inc. Eleven months ended
November 30, 1995.
Pro Forma Financial Information.
Pro Forma Condensed Consolidated Income
Statement for the year ended September 30,
1995 and six months ended March 31, 1996.
Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1995.
The Company filed a Current Report on Form 8-K, dated
June 5, 1996, reporting the Company's acquisition of
NeighborCare Pharmacies, Inc. and related entities for
consideration of approximately $57,250,000.
The Company filed a Current Report on Form 8-K, dated
July 26, 1996, reporting the Company's acquisition of
National Health Care Affiliates, Inc. and related
entities for consideration of approximately $59,800,000.
Prior to the acquisition, an affiliate of a financial
institution purchased nine eldercare centers owned by
National Health for approximately $67,700,000 and
subsequently leased the centers to a subsidiary of
Genesis under the terms of operating lease agreements.
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<PAGE>
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 thereto duly authorized.
GENESIS HEALTH VENTURES, INC.
Date: August 14, 1996 /s/ George V. Hager, Jr.
------------------------
George V. Hager, Jr.
Senior Vice President and Chief Financial Officer
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<PAGE>
Exhibit 3.1
Section 103.2 of the Bylaws of the Company is hereby amended and
restated in its entirety as follows:
"Section 102.3. Number of Directors. The Board of Directors shall
consist of at least eight (8) directors and be divided into three
classes in accordance with the Corporation's Amended and
Restated Articles of Incorporation."
<PAGE>
Exhibit 10.4
SECOND AMENDMENT AND WAIVER TO LOAN DOCUMENTS
THIS SECOND AMENDMENT AND WAIVER TO LOAN DOCUMENTS (this
"Amendment and Waiver"), dated as of July 19, 1996, by and among GENESIS HEALTH
VENTURES, INC., a Pennsylvania corporation (together with its successors,
"Genesis"), the Subsidiaries of Genesis which are parties to the Revolving
Credit Agreement (as defined below) or the Acquisition Credit Agreement (as
defined below) (such Subsidiaries referred to collectively with Genesis as the
"Borrowers"), MELLON BANK, N.A., a national banking association, as agent for
the Lenders and the Issuer under and as defined in the Revolving Credit
Agreement and under the other Loan Documents (as defined in the Revolving Credit
Agreement) (in such capacity, together with its successors in such capacity, the
"RCA Agent") and as Agent for the Lenders under and as defined in the
Acquisition Credit Agreement and under the other Loan Documents (as defined in
the Acquisition Credit Agreement) (in such capacity, together with its
successors in such capacity, the "ACA Agent" and collectively with the RCA
Agent, the "Agent") and MELLON BANK, N.A. a national banking association, as
Collateral Agent for the Secured Parties (as defined in the Collateral Agency
Agreement referred to in the Revolving Credit Agreement and the Acquisition
Credit Agreement) (in such capacity, together with its successors in such
capacity, the "Collateral Agent");
<PAGE>
WITNESSETH THAT
WHEREAS, certain of the Borrowers, the Lenders party thereto,
the Issuer party thereto, the RCA Agent and the Co-Agent named therein executed
and delivered that certain Amended and Restated Credit Agreement dated as of
September 29, 1995, as previously amended as of April 12, 1996 (the "Existing
Revolving Credit Agreement"); and
WHEREAS, certain of the Borrowers, the Lenders party thereto,
the ACA Agent and the Co-Agent named therein executed and delivered that certain
Acquisition Credit Agreement dated as of September 29, 1995, as amended as of
April 12, 1996 (the "Existing Acquisition Credit Agreement"); and
WHEREAS, the Borrowers wish to enter into a certain Synthetic
Lease, which Lease would replace the Acquisition Credit Agreement; and
WHEREAS, the terms of the Existing Revolving Credit Agreement
and the Existing Acquisition Credit Agreement would not permit the Borrowers to
enter into such a Synthetic Lease; and
WHEREAS, the Borrowers have requested that the Existing
Revolving Credit Agreement, the Existing Acquisition Credit Agreement and
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<PAGE>
certain Loan Documents be amended and certain waivers thereto be granted to
allow for the Synthetic Lease transaction; and
WHEREAS, the Lenders are willing to amend the Existing
Revolving Credit Agreement, the Existing Acquisition Credit Agreement and
certain Loan Documents and enter into certain waivers in the manner set forth in
this Amendment and Waiver.
The Existing Revolving Credit Agreement as previously supplemented and as
amended and modified by this Amendment and Waiver is herein referred to as the
"Revolving Credit Agreement"; the Existing Acquisition Credit Agreement as
previously supplemented and as amended and modified by this Amendment and Waiver
is referred to herein as the "Acquisition Credit Agreement". Capitalized terms
used but not defined in this Amendment and Waiver have the meanings assigned to
them in, or by reference in, the Revolving Credit Agreement, or in the
Acquisition Credit Agreement as the context requires.
NOW, THEREFORE, in consideration of the foregoing premises and
other valuable consideration and intending to be legally bound, the parties
hereto agree as follows:
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<PAGE>
I.
Amendments and Waivers to Existing Revolving Credit Agreement
-------------------------------------------------------------
and Existing Acquisition Credit Agreement
-----------------------------------------
1.1 Definition of Indebtedness. The definition of "Indebtedness" in
Section 1.1 of the Existing Revolving Credit Agreement and Section 1.1 of the
Existing Acquisition Credit Agreement is amended in each of the following
respects:
1.1.1 by deleting the word "and" at the end of clause (g) thereof;
1.1.2 by replacing the period at the end of clause (h) thereof with
a semicolon and the word "and"; and
1.1.3 by adding the following new clause (i) at the end of said
definition following clause (h): "(i) without duplication, all obligations of
Genesis or any of its Subsidiaries under, or in respect of, the Synthetic
Lease."
1.2 Definition of Synthetic Lease. The following new definition shall
be added in its correct alphabetical location in Section 1.1 of the Existing
Revolving Credit Agreement and the Existing Acquisition Credit Agreement:
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<PAGE>
"Synthetic Lease" shall mean a synthetic lease facility entered, or
to be entered, into by Genesis and/or one or more of its
Subsidiaries on substantially the terms set forth in the Outline of
Terms of the Synthetic Lease (Summary of Principal Terms and
Conditions) thereof dated 6/19/96 with such modifications thereto
as the parties to such facility may determine so long as such
modifications would not be reasonably likely to have a material
adverse effect on the Lender Parties together with all agreements,
instruments and documents delivered thereunder or in connection
therewith, and any amendment, supplement, modification,
refinancing, restatement thereto or thereof.
1.3 Permitted Liens. Section 7.02 of the Existing Revolving Credit
Agreement and 6.02 of the Acquisition Credit Agreement are amended in each of
the following respects:
1.3.1 by deleting the word "and" in clause (g) thereof;
1.3.2 by adding the word "and" after the semicolon in clause (h)
thereof; and
1.3.3 by adding the following new clause (i) immediately following
clause (h) thereof: "(i) the Synthetic Lease and the Liens substantially as
described in the Outline of Terms of the Synthetic Lease (Summary of Principal
Terms and Conditions) dated 6/19/96 which secure obligations in respect of the
Synthetic Lease;"
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<PAGE>
1.4 Indebtedness Covenant. Section 7.03 of the Existing Revolving
Credit Agreement and Section 6.03 of the Existing Acquisition Credit Agreement
are amended in each of the following respects:
1.4.1 by deleting the word "and" at the end of clause (h) thereof;
1.4.2 by replacing the period at the end of clause (i) thereof with
a semicolon and the word "and"; and
1.4.3 by adding a new clause (j) immediately following clause (i)
thereof as follows: " (j) Indebtedness in a principal amount not to exceed One
Hundred Eleven Million Dollars ($111,000,000) pursuant to the Synthetic Lease."
1.5 Lease Covenant. Section 7.08 of the Existing Revolving Credit
Agreement and Section 6.08 of the Existing Acquisition Credit Agreement are
amended in each of the following respects:
1.5.1 by deleting the word "and" at the end of clause (c) thereof;
1.5.2 by adding a new clause (d) immediately following clause (c)
thereof as follows: "(d) the Synthetic Lease (including, without limitation, any
subleases and ground leases entered into in connection therewith); and"; and
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<PAGE>
1.5.3 by redesignating the existing clause (d) as clause (e).
1.6 Assets of Lessee as Collateral. Section 10.16 of the Existing
Revolving Credit Agreement and Section 9.16 of the Existing Acquisition Credit
Agreement are amended by adding a new paragraph (i) immediately following
paragraph (h) thereof as follows:
(i) Lessee Assets. Notwithstanding anything to the contrary set
forth herein, if a Subsidiary shall become a Joining Subsidiary
hereunder in connection with the transactions described in the
Outline of Terms of the Synthetic Lease (Summary of Principal Terms
and Conditions) dated 6/19/96, then this Section shall not require
the grant of a security interest in the assets of the Joining
Subsidiary (other than stock of other Joining Subsidiaries) and any
joinders or other documents required hereunder to be delivered by
the Joining Subsidiary shall be modified accordingly.
1.7 Certain Waivers. In addition to the foregoing amendments, in order
to facilitate the Synthetic Lease transaction, each of the Lender Parties hereby
waives provisions of the Existing Revolving Credit Agreement and the Existing
Acquisition Credit Agreement to the extent necessary to permit Genesis and/or
one or more of its Subsidiaries to enter into, and perform its obligations
under, the Synthetic Lease as set forth in the Outline of Terms of
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<PAGE>
the Synthetic Lease (Summary of Principal Terms and Conditions) dated 6/19/96
including, without limitation, the following:
1.7.1 Section 7.04 of Existing Revolving Credit Agreement and
Section 6.04 of the Existing Acquisition Credit Agreement (respecting
limitations on certain guarantees);
1.7.2 Section 7.16 of the Existing Revolving Credit Agreement and
Section 6.16 of the Existing Acquisition Credit Agreement (respecting
limitations on entering into agreements restricting the creation of Liens); and
1.7.3 Section 7.10 of the Existing Revolving Credit Agreement and
Section 6.10 of the Existing Acquisition Agreement (respecting limitations on
dispositions).
II.
Amendments and Waivers to Other Loan Documents
2.1 Synthetic Lease Collateral. It is understood that the Synthetic
Lease obligations are expected to be secured by, among other things, a security
interest in certain assets of the lessee or lessees and any sublessees and a
pledge of the stock or other ownership interests of certain or substantially all
of the Subsidiaries of Genesis. Notwithstanding anything set forth in the
Collateral Agency Agreement or any Shared Security Document to the contrary,
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<PAGE>
each of the Shared Obligors may pledge any such collateral, including the stock
or other ownership interests, to secure its obligations (including, without
limitation, any guaranty obligations) under the Synthetic Lease and any such
provisions to the contrary are hereby waived.
2.2 Sharing of Stock Collateral. To the extent that the stock and other
ownership interests (together with proceeds) so pledged to the lessor and
Persons funding with debt or equity the acquisition of the facilities subject to
the Synthetic Lease (collectively, the "Lease Obligees") constitutes Shared
Collateral previously pledged to the Secured Parties, such collateral (the
"Joint Stock Collateral") shall be held by the Collateral Agent as agent for
both the Secured Parties and the Lease Obligees on an equal and ratable basis
and any distributions of the Joint Stock Collateral (but not other Collateral)
after an Event of Default shall be made by the Collateral Agent on a pro rata
basis to both the Secured Parties and the Lease Obligees based on the then
outstanding amount of the obligations secured thereby. It is understood that no
credit enhancement under or respecting the Synthetic Lease other than the pledge
of the stock and the other ownership interests (together with proceeds thereof)
shall be shared with the Secured Parties.
2.3 Amendments and Waivers. The undersigned recognize that the
Collateral Agency Agreement and certain Shared Security Documents must be
modified to provide for the sharing of the Joint Stock Collateral with the Lease
Obligees. Accordingly, the Collateral Agent, the ACA Agent and the RCA Agent are
hereby authorized and directed by each of the undersigned Secured Parties to
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<PAGE>
enter into such amendments, waivers, and modifications to the Collateral Agency
Agreement and any Shared Security Documents and any supplemental instruments and
agreements as may be consistent with the purposes set forth in the preceding
Section 2.2 including, without limitation, an amendment to Section 4.04 of the
Collateral Agency Agreement to provide for the pro rata distributions with
respect to the Joint Stock Collateral (based on the then outstanding amount of
the obligations secured thereby) and an amendment to Section 6.01 of the
Collateral Agency Agreement to provide that an agent or representative of the
Lease Obligees shall be entitled to similar voting rights as the ACA Agent and
the RCA Agent under the Shared Security Documents on matters affecting the Joint
Stock Collateral. It shall not be necessary for the consent of the Secured
Parties under this Section 2.3 to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
III.
Conditions and Effectiveness
----------------------------
3.1 Conditions Precedent to Effectiveness. The amendments and waivers
set forth above shall become effective, as of the date first above written, upon
the satisfaction of the following conditions precedent:
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<PAGE>
3.1.1 Execution of Amendment and Waiver. The Borrowers, the
Collateral Agent and the Agent shall have executed and delivered this Amendment
and Waiver and the necessary Lenders shall have executed the Consent set forth
below following the signature lines of the Borrowers and Agent.
3.1.2 Additional Matters. The Agent shall have received such other
certificates, opinions, documents and instruments as may be reasonably requested
by the Agent. All corporate and other proceedings, and all documents,
instruments and other matters in connection with the transactions contemplated
by this Amendment, the other Loan Documents (as defined in the Revolving Credit
Agreement) or the other Loan Documents (as defined in the Acquisition Credit
Agreement) shall be satisfactory in form and substance to the Agent.
IV.
Miscellaneous
-------------
4.1 Representations and Warranties. The Borrowers hereby represent
and warrant to each Lender Party that all of the representations and warranties
contained in Article 4 of the Revolving Credit Agreement, all of the
representations and warranties contained in Article 3 of the Acquisition Credit
Agreement and all of the representations and warranties contained in Article 4
of the Security Agreement, in each case after giving effect to the
supplementation previously made pursuant to Section 5.01(a) of the Security
Agreement and after giving effect to the amendments and waivers to be made
hereby, are true in all material respects on and as of the date hereof with the
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<PAGE>
same effect as though made on and as of the date hereof. Further, the Borrowers
hereby represent and warrant to each Lender Party that, both before and after
giving effect to the amendments and waivers set forth above, no condition or
event which constitutes an Event of Default or Potential Default (as such terms
are defined in the Revolving Credit Agreement) or an Event of Default or
Potential Default (as such terms are defined in the Acquisition Credit
Agreement) exists or has occurred and is continuing.
4.2 Effect of Amendments. The Existing Revolving Credit Agreement, the
Existing Acquisition Credit Agreement and each Loan Document, in each case as
previously supplemented and as amended or modified by this Amendment and Waiver,
are in all respects ratified, approved and confirmed and shall, as so
supplemented and amended, remain in full force and effect. From and after the
effective date hereof, all references in any document or instrument to the
Revolving Credit Agreement, the Acquisition Credit Agreement or the Collateral
Agency Agreement or any other Loan Document, as the case may be, shall mean the
Existing Revolving Credit Agreement as previously supplemented and as amended by
this Amendment and Waiver, the Existing Acquisition Credit Agreement as
previously supplemented and as amended by this Amendment and Waiver or the
existing Collateral Agency Agreement or other Loan Document as previously
supplemented and as amended by this Amendment and Waiver, respectively (unless
the context clearly requires otherwise).
-12-
<PAGE>
4.3 Governing Law. This Amendment and Waiver shall be governed by and
shall be interpreted and enforced in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to choice of law principles.
4.4 Headings. The section and other headings contained in this
Amendment and Waiver are for reference purposes only and shall not control or
affect the construction or interpretation of this Amendment and Waiver in any
respect.
4.5 Counterparts. This Amendment and Waiver may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers thereunto duly authorized, have executed and delivered this Agreement
as of the date first above written.
ATTEST: GENESIS HEALTH VENTURES, INC. a
Pennsylvania corporation
By By
--------------------------------- --------------------------------------
Title: Secretary Title: Senior Vice President and
Chief Financial Officer
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<PAGE>
PROFESSIONAL PHARMACY
SERVICES, INC.,
a Maryland Corporation
MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
CARECARD, INC.,
a Maryland Corporation
TRANSPORT SERVICES, INC.,
a Maryland Corporation
NEIGHBORCARE PHARMACIES, INC.,
a Maryland Corporation
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
BREVARD MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partners
CATONSVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
one of its general partners
EASTON MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
its sole general partner
<PAGE>
EDELLA STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS HEALTH VENTURES OF
ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
INDIANA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WEST VIRGINIA, INC.,
a Pennsylvania corporation
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<PAGE>
GENESIS HEALTH VENTURES OF
WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED
CENTER, INC.,
a Pennsylvania corporation
GENESIS MANAGEMENT
RESOURCES,
INC.,
a Pennsylvania corporation
GENESIS ELDERCARE HOME CARE
SERVICES, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICIANS
SERVICES, INC.,
a Pennsylvania corporation
GENESIS PROPERTIES LIMITED
PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures
of Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
HALLMARK HEALTHCARE LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Pharmacy Equities, Inc., a
Pennsylvania corporation,
its sole general partner
<PAGE>
HAMMONDS LANE MERIDIAN
LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
one of its general partners
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN/CONSTELLATION
LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
general partner
MERIDIAN EDGEWOOD LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN HEALTH, INC.,
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
a Pennsylvania corporation
MERIDIAN PERRING LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
-15-
<PAGE>
MERIDIAN VALLEY VIEW LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MILLVILLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
PHARMACY EQUITIES, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE
ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp., its
sole general partner
PHILADELPHIA AVENUE
CORPORATION,
a Pennsylvania corporation
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its sole general
partner
SEMINOLE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its
sole general partner
GENESIS ELDERCARE STAFFING
SERVICES INC.
a Pennsylvania corporation
<PAGE>
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: Genesis Health Ventures, Inc.,
its sole general partner
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES,
INC.
a Pennsylvania corporation
GENESIS ELDERCARE
REHABILITATION SERVICES, INC.,
a Pennsylvania corporation
THERAPY CARE INC.,
a Pennsylvania corporation
THERAPY CARE SYSTEMS, L.P.
a Pennsylvania limited partnership
By: Team Rehabilitation, Inc.,
its sole general partner
THE TIDEWATER HEALTHCARE
SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
VOLUSIA MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its sole
general partner
WYNCOTE HEALTHCARE CORP.,
a Pennsylvania corporation
ASCO HEALTHCARE, INC.,
a Maryland corporation
-16-
<PAGE>
BRINTON MANOR, INC.,
a Delaware corporation
CONCORD HEALTHCARE
CORPORATION,
a Delaware corporation
CRYSTAL CITY NURSING CENTER,
INC.,
a Maryland corporation
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
EASTERN REHAB SERVICES, INC.,
a Maryland corporation
GENESIS HEALTH SERVICES
CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS
HOLDINGS,
INC.,
a Delaware corporation
GENESIS HOLDINGS, INC.,
a Delaware corporation
GENESIS PROPERTIES OF
DELAWARE
CORPORATION,
a Delaware corporation
GENESIS PROPERTIES OF
DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of
Delaware
Corporation, a general partner
<PAGE>
GOVERNOR'S HOUSE NURSING
HOME, INC.,
a Delaware corporation
HEALTH CONCEPTS AND SERVICES,
INC.,
a Maryland corporation
HILLTOP HEALTH CARE CENTER,
INC.,
a Delaware corporation
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
LINCOLN NURSING HOME, INC.,
a Delaware corporation
McKERLEY HEALTH CARE CENTERS,
INC.,
a New Hampshire corporation
McKERLEY HEALTH CARE CENTER-
CONCORD, INC., a New Hampshire
corporation
McKERLEY HEALTH CARE CENTER-
CONCORD
LIMITED PARTNERSHIP,
a New Hampshire limited partnership
By: McKerley Health Care Center-
Concord, Inc., a New Hampshire
corporation, its general partner
McKERLEY HEALTH FACILITIES,
a New Hampshire general partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, and
Meridian Healthcare, Inc., a
Pennsylvania corporation, its
general partners
-17-
<PAGE>
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
ATTEST:
By: By:
---------------------------------- --------------------------------
On behalf of each of the foregoing as Title: Secretary
Senior Vice President and Chief
Financial Officer
-18-
<PAGE>
MELLON BANK, N.A., as RCA Agent,
as ACA Agent and as Collateral Agent
By
---------------------------------
Title: Vice President
AS OF THE DATE FIRST ABOVE WRITTEN, THE FOLLOWING INSTITUTIONS, AS THE LENDERS
UNDER THE REVOLVING CREDIT AGREEMENT REFERENCED ABOVE, AND AS THE LENDERS UNDER
THE ACQUISITION CREDIT AGREEMENT REFERENCED ABOVE, CONSENT TO THE FOREGOING
SECOND AMENDMENT WAIVER TO LOAN DOCUMENTS AND DIRECT THE AGENT TO ENTER INTO THE
SAME:
MELLON BANK, N.A., as a Lender FLEET NATIONAL BANK (formerly
under the Revolving Credit Agreement known as FLEET BANK OF
and as a Lender under the Acquisition MASSACHUSETTS, N.A.)
Credit Agreement
By By
------------------------------------- ---------------------------------
Title: Vice President Title
CITIBANK, N.A. MERIDIAN BANK
By By
-------------------------------------- ---------------------------------
Title: Title:
FIRST UNION NATIONAL BANK OF FLEET BANK, N.A. (formerly known as
NORTH CAROLINA NATWEST BANK N.A.)
By By
-------------------------------------- ---------------------------------
Title: Title:
NATIONSBANK, N.A. LTCB TRUST COMPANY
By By
-------------------------------------- ---------------------------------
Title: Title:
-19-
<PAGE>
CREDITANSTALT-BANKVEREIN
By
--------------------------------------
Title: Gregory F. Mathis
Vice President
By
--------------------------------------
Title: Stacy Harmon
Senior Associate
SIGNET BANK/MARYLAND
By
--------------------------------------
Title:
PNC BANK, NATIONAL ASSOCIATION
By
--------------------------------------
Title:
TORONTO DOMINION (NEW YORK), INC.
By
--------------------------------------
Title:
THE FIRST NATIONAL BANK OF
MARYLAND
By
--------------------------------------
Title:
-20-
<PAGE>
Exhibit 10.5
July 16, 1996
Mellon Bank, N.A., as Agent
AIM 199-5220
P.O. Box 7899
Philadelphia, PA 19101-7899
Attention: Linda Sigler, Loan Administration
Dear Ms. Sigler:
The undersigned, Borrowers under the Amended and Restated Credit Agreement dated
as of September 29, 1995, as previously amended as of April 12, 1996 (the
"Revolving Credit Agreement") and the Acquisition Credit Agreement dated as
September 29, 1995, as amended as of April 12, 1996 (the "Acquisition Credit
Agreement") have requested that the Revolving Credit Agreement, the Acquisition
Credit Agreement and certain Loan Documents be amended and certain waivers
thereto be granted, all as set forth in the form of Second Amendment and Waiver
to Loan Documents (the "Amendment") forwarded to Lenders thereunder on or about
June 29, 1996. In order to induce the Lenders and you, as ACA Agent and Lender,
to execute the Amendment, the undersigned are agreeing as set forth herein with
the intent to be legally bound hereby. Capitalized terms used but not defined in
this letter have the meanings assigned to them in, or by reference in, the
Revolving Credit Agreement, the Acquisition Credit Agreement or the Amendment,
as the context requires.
Each of the undersigned hereby agrees that, except as provided in the
penultimate paragraph of this letter or unless and until otherwise consented to
in writing by the Agent and all of the Lenders (the "Reborrowing Consent"), it
shall not request any loan under the Acquisition Credit Agreement, as the same
may be amended by the Amendment or otherwise. In furtherance of the foregoing
agreement, each of the undersigned represents that there are no outstanding loan
requests and agrees that, prior to the effectiveness of the Reborrowing Consent,
no Lender shall have any obligation to make any Revolving Credit Loan under the
Acquisition Credit Agreement and that any Standard Notice or other request for
such Loan prior to the effectiveness of the Reborrowing Consent will be given no
effect by the Lenders or by the ACA Agent. Each of the undersigned hereby waives
any right which it may have that is inconsistent with this letter and waives any
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 2
claim of any nature whatsoever that it may otherwise have against any Lender or
the ACA Agent for refusing to make such Revolving Credit Loans prior the
effectiveness of a Reborrowing Consent. Each of the undersigned further agrees
that the granting of a Reborrowing Consent shall be within the sole discretion
of each Lender and the ACA Agent and represents that it has received no
assurances that a Reborrowing Consent will be executed by the ACA Agent and all
or any of the Lenders or that no conditions may be imposed under any such
Reborrowing Consent. The undersigned agrees that, notwithstanding this letter,
it shall continue to pay the commitment fee as provided under the Acquisition
Credit Facility and that such fee shall accrue through the date of the
commitment reduction referred to in the following paragraph.
Pursuant to Section 2.02 of the Acquisition Credit Agreement, Genesis, on behalf
of all Borrowers, hereby reduces to zero, effective upon closing under the
Synthetic Lease referred to in the Amendment (the "Synthetic Lease"), the
Revolving Credit Committed Amounts of the Lenders (and each thereof) under the
Acquisition Credit Facility. Except as provided in the following paragraph, such
reduction is irrevocable and permanent and shall occur automatically without the
need for further action, although Genesis agrees to confirm the same in writing
immediately following such closing. The undersigned acknowledge and confirm
that, as provided in the Acquisition Credit Agreement, certain of their
obligations thereunder shall survive the permanent termination of borrowing
rights.
This letter and the agreements respecting borrowing right and commitment
reductions herein are made in anticipation of a closing under the Synthetic
Lease. If the Borrowers shall confirm in writing to the ACA Agent that (a) the
Synthetic Lease has not closed, (b) the Synthetic Lease transaction has been
abandoned and (c) the Amendment shall be deemed void and ineffective and if the
prospective Lessor under the Synthetic Lease shall confirm (a) and (b) above in
writing to the ACA Agent, the reduction of the commitments and the restrictions
on the right to borrow under the Acquisition Credit Agreement herein contained
shall cease to be effective and shall be deemed withdrawn.
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 3
A copy of this letter may be forwarded by you to each of the Lenders.
Sincerely,
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
BREVARD MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partners
CATONSVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
one of its general partners
EASTON MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc.,
a Pennsylvania corporation,
its sole general partner
EDELLA STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS HEALTH VENTURES OF
ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
BLOOMFIELD, INC.,
a Pennsylvania corporation
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 4
GENESIS HEALTH VENTURES OF
CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
INDIANA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF
WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED
CENTER, INC.,
a Pennsylvania corporation
GENESIS MANAGEMENT RESOURCES,
INC.,
a Pennsylvania corporation
GENESIS ELDERCARE HOME CARE SERVICES,
INC.,
a Pennsylvania corporation
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 5
GENESIS ELDERCARE PHYSICIANS SERVICES,
INC.,
a Pennsylvania corporation
GENESIS PROPERTIES LIMITED
PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures
of Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
its sole general partner
HALLMARK HEALTHCARE LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Pharmacy Equities, Inc., a
Pennsylvania corporation,
its sole general partner
HAMMONDS LANE MERIDIAN LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc.,
a Pennsylvania corporation,
one of its general partners
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN/CONSTELLATION LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
general partner
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 6
MERIDIAN EDGEWOOD LIMITED
PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN HEALTH, INC.,
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.,
a Pennsylvania corporation
MERIDIAN PERRING LIMITED PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY LIMITED PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MERIDIAN VALLEY VIEW LIMITED PARTNERSHIP
By: Meridian Healthcare, Inc.,
a general partner
MILLVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
PHARMACY EQUITIES, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp., its
sole general partner
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 7
RIVER STREET ASSOCIATES,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its sole general
partner
SEMINOLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its
sole general partner
GENESIS ELDERCARE STAFFING SERVICES INC.
a Pennsylvania corporation
STATE STREET ASSOCIATES, L.P.,
a Pennsylvania limited partnership
By: Genesis Health Ventures, Inc.,
its sole general partner
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION SERVICES, INC.,
a Pennsylvania corporation
THERAPY CARE INC.,
a Pennsylvania corporation
THERAPY CARE SYSTEMS, L.P.
a Pennsylvania limited partnership
By: Team Rehabilitation, Inc.,
its sole general partner
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC.,
a Pennsylvania corporation
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 8
VOLUSIA MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, its sole
general partner
WYNCOTE HEALTHCARE CORP.,
a Pennsylvania corporation
ASCO HEALTHCARE, INC.,
a Maryland corporation
BRINTON MANOR, INC.,
a Delaware corporation
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
EASTERN REHAB SERVICES, INC.,
a Maryland corporation
GENESIS HEALTH SERVICES CORPORATION,
a Delaware corporation
GENESIS HEALTHCARE CENTERS HOLDINGS,
INC.,
a Delaware corporation
GENESIS HOLDINGS, INC.,
a Delaware corporation
GENESIS PROPERTIES OF DELAWARE
CORPORATION,
a Delaware corporation
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 9
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P.,
a Delaware limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
GOVERNOR'S HOUSE NURSING HOME, INC.,
a Delaware corporation
HEALTH CONCEPTS AND SERVICES, INC.,
a Maryland corporation
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
LINCOLN NURSING HOME, INC.,
a Delaware corporation
McKERLEY HEALTH CARE CENTERS, INC.,
a New Hampshire corporation
McKERLEY HEALTH CARE CENTER-
CONCORD, INC., a New Hampshire
corporation
McKERLEY HEALTH CARE CENTER-CONCORD
LIMITED PARTNERSHIP,
a New Hampshire limited partnership
By: McKerley Health Care Center-
Concord, Inc., a New Hampshire
corporation, its general partner
McKERLEY HEALTH FACILITIES,
a New Hampshire general partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, and
Meridian Healthcare, Inc., a
Pennsylvania corporation, its
general partners
<PAGE>
Mellon Bank, N.A.
July 16, 1996
Page 1
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
PROFESSIONAL PHARMACY SERVICES, INC.,
a Maryland Corporation
MEDICAL SERVICES GROUP, INC.,
a Maryland Corporation
CARECARD, INC.,
a Maryland Corporation
TRANSPORT SERVICES, INC.,
a Maryland Corporation
NEIGHBORCARE PHARMACIES, INC.,
a Maryland Corporation
By:
-----------------------------------
On behalf of each of the foregoing
as Senior Vice President and Chief
Financial Officer
<PAGE>
Exhibit 10.6
===============================================================================
GUARANTY
AND AGREEMENT OF SURETYSHIP
REGARDING OBLIGATIONS
OF LESSEE AND AFFILIATES
from
GENESIS HEALTH VENTURES, INC.
and its
MATERIAL SUBSIDIARIES
Dated as of July 24, 1996
===============================================================================
<PAGE>
GUARANTY
AND AGREEMENT OF SURETYSHIP
REGARDING OBLIGATIONS
OF LESSEE AND AFFILIATES
THIS GUARANTY AND AGREEMENT OF SURETYSHIP REGARDING OBLIGATIONS OF
LESSEE AND AFFILIATES, dated as of July 24, 1996, is made by GENESIS HEALTH
VENTURES, INC., a Pennsylvania corporation ("Genesis") and the Material
Subsidiaries set forth on Schedule 1 (the "Material Subsidiaries") (Genesis and
each of the Material Subsidiaries are individually a "Guarantor" and
collectively referred to herein, in their capacity as guarantors hereunder, as
the "Guarantors") in favor of the Beneficiaries (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, contemporaneously herewith, Genesis Eldercare Properties, Inc.
("Lessee"), as Lessee, Mellon Financial Services Corporation #4 ("Lessor"), as
Lessor, the Persons named on Schedule 2 attached hereto, as Lenders and Mellon
Bank, N.A., as Agent have entered into that certain Participation Agreement, and
Lessee and Lessor have entered into that certain Lease and Agreement, each dated
as of July 24, 1996. The Participation Agreement and the Lease and Agreement, as
they each may be modified, amended or restated from time to time as and to the
extent permitted thereby, are hereinafter referred to as the "Participation
Agreement" and "Lease" respectively. Unless otherwise defined herein or the
context hereof otherwise requires, terms which are defined or defined by
reference in the Participation Agreement or Lease shall have the same meanings
when used herein as such terms have therein; and
WHEREAS, Lessor has entered into a Loan Agreement dated as of even date
herewith (as amended or otherwise modified from time to time, the "Loan
Agreement" by and among Lessor, Lenders and Agent, pursuant to which the Lenders
have agreed to make a loan to Lessor, as evidenced by those certain non-recourse
promissory notes (the "Notes") from Lessor to Agent and secured by those certain
Mortgages and Deeds of Trust (the "Mortgages") made by Lessor to Agent, as agent
for the Lenders and those certain Assignments of Lease from Lessor to Agent, as
agent for the Lenders (the "Assignments of Lease").
WHEREAS, Lessee is a wholly-owned subsidiary of Genesis and each of the
Material Subsidiaries are Subsidiaries of Genesis; and
-1-
<PAGE>
Guaranty
WHEREAS, it is a covenant in the Participation Agreement that Lessee
shall cause the Guarantors to execute and deliver this Guaranty; and
WHEREAS, it is in the best interests of Guarantors that the Overall
Transaction and the Document Closing Date occur; and
WHEREAS, this Guaranty, and the execution, delivery and performance
hereof, have been duly authorized by all necessary corporate action of
Guarantors;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Guarantors, Guarantors hereby agree as follows:
SECTION I. Guarantee and Agreement of Suretyship. Guarantors hereby
jointly and severally, irrevocably and unconditionally guarantee to the
Beneficiaries and agree to act as surety to the Beneficiaries for (a) the full
and prompt payment when due, whether by acceleration or otherwise, and at all
times thereafter, and (b) the full and prompt performance, of all of the
Liabilities (as hereinafter defined), including interest and Yield on any such
Liabilities, whether accruing before or after any bankruptcy or insolvency case
or proceeding involving Lessee or any other Person, and, if interest or Yield on
any portion of such obligations ceases to accrue by operation of law by reason
of the commencement of such case or proceeding, including such interest and
Yield as would have accrued on any such portion of such obligations if such case
or proceeding had not commenced, and further agree to pay all expenses
(including attorneys' fees and legal expenses) paid or incurred by Lessor, Agent
or any of the Lenders (each a "Beneficiary") in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing this Guaranty. The term
"Liabilities", as used herein, shall mean all of the following, in each case
howsoever created, arising or evidenced, whether direct or indirect, joint or
several, absolute or contingent, or now or hereafter existing, or due or to
become due: all amounts payable by Lessee or any Affiliate (now or hereafter) of
Genesis, all obligations to be performed by Lessee or any such Affiliate and all
representations, warranties, covenants, undertakings and agreements of Lessee or
any such Affiliate, under the Lease, the Participation Agreement and any other
Operative Document (whether or not Lessee, any such Affiliate or any other
Person shall be released or relieved from any or all liability or obligation
under any thereof).
-2-
<PAGE>
Guaranty
In any action or proceeding involving any state corporate law, or any
state or federal bankruptcy, insolvency, reorganization or any other law
affecting the rights of creditors generally, if the obligations of Guarantor
under this Guaranty would otherwise be held or determined by a final and
non-appealable order of a court of competent jurisdiction to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Guaranty, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by Guarantor or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable as
determined in such action or proceeding pursuant to such final and
non-appealable order.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessee, or the inability or failure of Lessee to pay debts as they
become due, or an assignment by Lessee for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessee under any
bankruptcy, insolvency or similar laws, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, Guarantors will pay
to the Beneficiaries forthwith the full amount which would be payable hereunder
by Guarantors as if all Liabilities were then due and payable.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessor, or the inability or failure of Lessor to pay debts as they
become due, or an assignment by Lessor for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessor under any
bankruptcy, insolvency or similar laws, and if such event (a "Lessor Bankruptcy
Event") shall occur at a time when any of the Liabilities may not then be due
and payable, Guarantors will pay to the Beneficiaries from time to time all
Liabilities then or thereafter due under the Operative Documents pursuant to
their terms or if the provisions of the immediately preceding paragraph are
applicable, at the time specified in the immediately preceding paragraph, all as
if such Lessor Bankruptcy Event shall not have occurred.
To secure all obligations of Guarantors hereunder, each Beneficiary
shall have a lien upon and security interest in (and may, without demand or
notice of any kind, at any time and from time to time when any amount shall be
due and payable by Guarantors hereunder, appropriate and apply toward the
payment of such amount, in such order of application as the Agent may elect) any
and all balances, credits, deposits, accounts or moneys of or in the name of
Guarantors or any of its Affiliates now or
-3-
<PAGE>
Guaranty
hereafter, for any reason or purpose whatsoever, in the possession or control
of, or in transit to Lessor or any Beneficiary or any agent or bailee for Lessor
or any Beneficiary. Each Beneficiary shall provide prompt written notice to the
Agent of the exercise by such Beneficiary of its rights under this paragraph,
which notice shall set forth in reasonable detail the amount of such application
and shall remit such amount to Agent or as Agent may direct.
The obligations of the Guarantors hereunder are secured by the Joint
Stock Collateral as set forth in that certain Amended and Restated Security
Agreement dated as of September 29, 1995, as amended, among Genesis and certain
of its subsidiaries and Mellon Bank, N.A. as Collateral Agent, subject to the
terms and provisions of that certain Amended and Restated Collateral Agency
Agreement dated as of September 29, 1995, as amended, among Genesis, such
subsidiaries and Mellon Bank, N.A., as RCA Agent, ACA Agent and Collateral
Agent.
This Agreement shall constitute an agreement of suretyship as well as
of guaranty and shall constitute an absolute and unconditional guaranty of
payment and performance (and not of collection) and an absolute and
unconditional undertaking by each Guarantor with respect to the payment and
performance of the Liabilities. This Guaranty shall remain in full force and
effect (notwithstanding, without limitation, the dissolution of any of the
Guarantors). The liability of the Guarantors hereunder shall be direct, joint
and several, and may be enforced without the Beneficiaries being required to
resort to any other right, remedy or security.
Agent on behalf of itself and the other Beneficiaries, may, from time
to time at its discretion and without notice to Guarantors, but subject to the
provisions of the Participation Agreement, take or cause any of the other
Beneficiaries to take, any or all of the following actions, subject to the terms
of the Credit Agreement as in effect on the date hereof as such Credit Agreement
may be amended with the consent of Agent under the Participation Agreement (on
behalf of the Participants) and subject to the provisions of the Collateral
Agency Agreement with respect to the Joint Stock Collateral: (a) retain or
obtain a lien upon or a security interest in any property to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Guarantors, with
respect to any of the Liabilities; (c) extend or renew for one or more periods
(regardless of whether longer than the original period), alter or exchange any
of the Liabilities, or release or compromise any obligation of Guarantors
hereunder or any obligation of any
-4-
<PAGE>
Guaranty
nature of any other obligor with respect to any of the Liabilities; (d) release
or fail to perfect its lien upon or security interest in, or impair, surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any of the Liabilities or any obligation hereunder, or extend
or renew for one or more periods (regardless of whether longer than the original
period) or release, compromise, alter or exchange any obligations of any nature
of any obligor with respect to any such property; and (e) resort to Guarantors,
or any one or more of them, for payment of any of the Liabilities, regardless of
whether Agent or any other Beneficiary shall have resorted to any other Person
any property securing any of the Liabilities or any obligation hereunder or
shall have proceeded against any other obligor primarily or secondarily
obligated with respect to any of the Liabilities (all of the actions referred to
in this paragraph being hereby expressly waived by Guarantors).
SECTION II. Guarantors' Obligations Unconditional. Guarantors'
obligations hereunder are independent in respect of any other Person, and each
Beneficiary may enforce any of its rights hereunder independently of any other
right or remedy that it may at any time hold with respect to the Liabilities or
any security or other guaranty therefor; provided that no double recovery of the
same amount shall be permitted. Such obligations shall be absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Guarantors with their obligations
hereunder), whether based upon any claim that Lessor, Lessee, Agent, any
Beneficiary or any other Person may have against any Beneficiary or any other
Person or otherwise, and shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not Guarantors or any other
Person shall have any knowledge or notice thereof) including, without
limitation:
A. any amendment, modification, addition, deletion, supplement or
renewal to or of or other change in the Liabilities or any
Operative Document or any of the agreements referred to in any
thereof, or any other instrument or agreement applicable to
any Operative Document or any of the parties to such
agreements, or to the Sites, or any assignment, mortgage or
transfer thereof or of any interest therein, or any furnishing
or acceptance of additional security for, guaranty of or right
of offset with respect to, any of the Liabilities; or the
failure of any security or the
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failure of any Beneficiary to perfect or insure any
interest in any collateral;
B. any failure, omission or delay on the part of Lessor or
any Beneficiary to conform or comply with any term of
any instrument or agreement referred to in clause (A)
above;
C. any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect
of any instrument, agreement, guaranty, right of offset
or security referred to in clause (A) above or any
obligation or liability of Lessor or any Beneficiary,
or any exercise or non-exercise by any Beneficiary of
any right, remedy, power or privilege under or in
respect of any such instrument, agreement, guaranty,
right of offset or security or any such obligation or
liability;
D. any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or
similar proceeding with respect to Lessor or any
Beneficiary or any other Person or any of their
respective properties or creditors, or any action taken
by any trustee, receiver or court in any such
proceeding;
E. any limitation on the liability or obligations of any
Person under any Operative Document, the Liabilities,
any collateral security for the Liabilities, any other
guaranty of the Liabilities or any discharge,
termination, cancellation, frustration, irregularity,
invalidity or unenforceability, in whole or in part, of
any of the foregoing or any other agreement,
instrument, guaranty or security referred to in
clause (A) above or any term of any thereof;
F. any defect in the title, compliance with
specifications, condition, design, operation or fitness
for use of, or any damage to or loss or destruction of,
or any interruption or cessation in the use of the
Sites by Lessee or any other Person for any reason
whatsoever (including, without limitation, any
governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of
any governmental or military authority, or any act of
God or of the public enemy) regardless of the duration
thereof (even though such duration would otherwise
constitute a frustration of a lease), whether or not
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resulting from accident and whether or not without
fault on the part of Lessee or any other Person;
G. any merger or consolidation of Lessor, Lessee or
Guarantors into or with any other Person, or any sale,
lease or transfer of any of the assets of Lessor,
Lessee or Guarantors to any other Person;
H. any change in the ownership of any shares of capital
stock of Lessor, Lessee or Guarantors or any corporate
change in Lessor, Lessee or Guarantors;
I. any loan to or other transaction between the
Beneficiaries, or any of them, and Lessee or Lessor;
J. any assignment or consummation of assignment of the
Lease pursuant to Section 12.1 of the Lease; or
K. any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing, and any other
circumstance that might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse
against Guarantors.
The obligations of Guarantors set forth herein constitute the full
recourse obligations of Guarantors enforceable against them to the full extent
of all of their assets and properties, notwithstanding any provision in the
Lease or any other Operative Document or any other document or agreement to the
contrary.
Guarantors waive any and all notice of the creation, renewal, extension
or accrual of any of the Liabilities and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty, and the
Liabilities, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guaranty. Guarantors
unconditionally waive, to the extent permitted by law: (a) acceptance of this
Guaranty and proof of reliance by any Beneficiary hereon; (b) notice of any of
the matters referred to in clauses A through K above, or any right to consent or
assent to any thereof; (c) all notices that may be required by statute, rule of
law or otherwise, now or hereafter in effect, to preserve intact any rights
against Guarantors, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment under any Operative Document, and notice
of default or any failure on the part of Lessor to perform and comply with any
covenant, agreement, term or condition of any Operative Document; (d) any right
to the enforcement, assertion or exercise against
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Lessor of any right, power, privilege or remedy conferred in any Operative
Document or otherwise; (e) any requirement of diligence on the part of any
Person; (f) any requirement of any Beneficiary to take any action whatsoever, to
exhaust any remedies or to mitigate the damages resulting from a default by any
Person under any Operative Document; (g) any notice of any sale, transfer or
other disposition by any Person of any right under, title to or interest in any
Operative Document or the Sites; and (h) any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge, release or defense of
a guarantor or surety, or that might otherwise limit recourse against
Guarantors.
Guarantors agree that this Guaranty shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of itself
or Lessor is rescinded or must be otherwise restored by any Beneficiary whether
as a result of any proceedings in bankruptcy or reorganization or otherwise.
Guarantors further agree that, without limiting the generality of this
Guaranty, if an Event of Default shall have occurred and be continuing and any
Beneficiary is prevented by applicable law from exercising its remedies under
the Operative Documents, such Beneficiary shall be entitled to receive hereunder
from Guarantors, upon demand therefor, the sums which would have otherwise been
due from Lessee had such remedies been exercised.
Section III. Incorporated Financial Covenants. Genesis hereby covenants
and agrees that it shall at all times comply with the Financial Covenants, which
covenants are incorporated herein by this reference, provided that compliance
hereunder with the Financial Covenants shall be waived to the extent that
compliance with such Financial Covenants may be waived from time to time under
and in accordance with the Credit Agreement, exclusive of waivers made in
contemplation of the termination of the Credit Agreement.
Section IV. Waiver of Subrogation. Guarantors hereby irrevocably waive
any claim or other rights which they may now or hereafter acquire against
Lessor.
Section V. Reasonableness and Effect of Waivers. Guarantors warrant and
agree that each of the waivers set forth in this Guaranty is made with full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of such waivers are determined to be contrary to any applicable
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law or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
Section VI. Representations and Warranties of Guarantors. As of the
date hereof, each of the Guarantors makes the representations and warranties set
forth in this Section 6 to each of the Beneficiaries.
A. Due Organization, etc. It is a corporation or partnership
duly organized, validly existing and in good standing under the laws of the
state of its organization and it has full corporate power and authority to
conduct its business as presently and presently proposed to be conducted, to own
or hold under lease its properties, to enter into and perform its obligations
under each of the Operative Documents to which it is or is to be a party and
each other agreement, instrument and document to be executed and delivered by it
on or before the Document Closing Date in connection with or as contemplated by
each such Operative Document to which it is or is to be a party, and it is duly
qualified as a foreign corporation authorized to do business and is in good
standing in every jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect. The information set forth on Schedule 1 hereto
with respect to it is true and correct.
B. Authorization; No Conflict. The execution and delivery by
it of each of the Operative Documents to which it is or is to be a party, and
the performance by it of its obligations under such Operative Documents, have
been duly authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not: (i) contravene any
Applicable Laws and Regulations currently in effect applicable to or binding on
it or the Sites; (ii) violate any provision of its charter or bylaws; (iii)
result in a breach of or constitute a default under any indenture, loan or
credit agreement, or any other agreement or instrument to which it is a party or
by which it or its properties may be bound or affected, which breaches or
defaults would have, individually or in the aggregate, a Material Adverse
Effect; (iv) result in, or require, the creation or imposition of any Lien of
any nature upon or with respect to any of the properties now owned or hereafter
acquired by it (other than the security interests created pursuant to the
Operative Documents); or (v) require any Governmental Action by any Authority,
except for (A) the filings and recordings listed on Schedule 4.1B to the
Participation Agreement to perfect the rights of Lessor, the Lenders and Agent
intended to be created by the Operative Documents, and (B) those Governmental
Actions required with respect to Lessee or any of its Affiliates listed on
Schedule 4.1A to the Participation Agreement, each of which
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have been duly effected and are, or on the initial Advance Date will be, in full
force and effect; and it is not in default under or in violation of its charter
or bylaws. Attached as Schedule 4.1C to the Participation Agreement are correct
and complete computations demonstrating compliance by Genesis with Section 5.9
of the Indenture after giving effect as Indebtedness under such Indenture to the
obligations of Lessee and Guarantors under or in connection with the Operative
Documents.
C. Enforceability, etc. Each Operative Document to which it is
or is to be a party constitutes its legal, valid and binding obligation,
enforceable against it in accordance with the terms thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and by general equitable principles.
D. Litigation. There is no action, proceeding or investigation
pending or threatened which questions the validity of the Operative Documents to
which it is or is to be a party or any action taken or to be taken pursuant to
the Operative Documents to which it is or is to be a party, and there is no
action, proceeding or investigation pending or threatened which, if adversely
determined, would have a Material Adverse Effect.
E. Taxes. It has filed or caused to be filed all United States
Federal and all other material tax returns that are required to be filed by it,
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessment received by it to the extent that such taxes have
become due and payable except to the extent that taxes due, but unpaid, are
being contested in good faith by it by appropriate action or proceeding and, to
the extent (if any) that such taxes are not due and payable, it has established
or caused to be established reserves that are adequate for the payment thereof
in accordance with GAAP.
F. Investment Company Act. It is not an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
G. Public Utility Holding Company. It is not subject to
regulation as a "holding company," an "affiliate" of a "holding company", or a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
H. Solvency. The consummation by Lessee and the Guarantors of
the transactions contemplated by the Operative
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Guaranty
Documents does not and will not render it insolvent, nor was it made in
contemplation of its insolvency; the value of its assets and properties at fair
valuation and at their then present fair salable value is and, after such
transactions, will be greater than its total liabilities, including contingent
liabilities, as they become due; the property remaining in its hands was not and
will not be an unreasonably small amount of capital.
Section VII. Covenants of Guarantors.
A. Consolidation, Merger, Sale, etc. No Guarantor shall
consolidate with any Person, merge with or into any Person or convey, transfer
or lease to any Person all or substantially all of its assets in any single
transaction (or series of related transactions), unless, immediately after
giving effect to such transaction, the conditions set forth in clauses (i)
through (v) shall have been satisfied:
1. the conditions of Section 7.09 or 7.10, as applicable, of
the Credit Agreement shall have been satisfied with respect to such
transaction; provided, that for purposes of this clause (i), (a) all
references in said Sections 7.09 and 7.10 to an Event of Default or
Potential Default shall include (x) a Lease Event of Default or Lease
Default, respectively, and (y) a default under this Guaranty, (b) all
notices, certificates and other documents required to be delivered
under said Section 7.09 shall also be delivered to Agent, on behalf of
the Participants, (c) all references in said Sections 7.09 and 7.10 to
Lender Party or Agent shall include Agent, on behalf of the
Participants, (d) all references in said Sections 7.09 and 7.10 to
Borrower or Borrowers shall be references to Guarantor or Guarantors,
respectively, and (e) all references in said Sections 7.09 and 7.10 to
Loan Obligations shall be references to the obligations of the
applicable parties under the Operative Documents and (f) all references
in said Sections 7.09 and 7.10 to Loan Documents shall be references to
the Operative Documents;
2. (x) the Person formed by such consolidation with or into
which such Guarantor shall be merged or (y) the Person which shall
acquire by conveyance, transfer or lease all or substantially all of
the assets of such Guarantor, if in the case of this clause (y), such
Person is obligated under the terms of the Credit Agreement to become a
party thereto (in the case of clause (x) or clause (y), as applicable,
the "Surviving Company"), if other than such Guarantor immediately
prior to such transaction, shall execute and deliver to each of the
parties hereto an agreement, in form
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and substance reasonably satisfactory to Agent, containing the
assumption by the Surviving Company of the due and punctual payment,
performance and observation of each obligation, covenant and agreement
of such Guarantor under this Guaranty;
3. if the applicable Guarantor is Genesis and the Surviving
Company is not Genesis, such Surviving Company shall be a corporation
that is organized under the laws of the United States of America, a
state thereof or the District of Columbia;
4. the title of Lessor to the Sites and Lessor's rights under
this Guaranty and the other Operative Documents and the first and prior
Lien of the Mortgage on the Collateral shall not be adversely affected;
and
5. Lessee shall have delivered to Agent, on behalf of Lessor
and the Lenders, an Officer's Certificate and an opinion of counsel
reasonably satisfactory to each such Person stating that such
transaction complies with this Section 7, that all conditions to the
consummation of such transaction have been fulfilled and that all
Governmental Actions required in connection with such transaction have
been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company, if
other than the applicable Guarantor immediately prior thereto, shall succeed to,
and be substituted for, and may exercise every right and power of, such
Guarantor immediately prior to such transaction under this Guaranty and each
other Operative Document to which such Guarantor was a party immediately prior
to such transaction, with the same effect as if the Surviving Company had been
named herein and therein. Notwithstanding the foregoing provisions of this
Section 7, no conveyance, transfer or lease of all or substantially all of the
assets of any Guarantor shall release Guarantor from its payment or other
obligations under this Guaranty or any other Operative Document without the
written consent of Lessor and Agent.
B. Existence. Subject to Section 7(A), each Guarantor shall at
all times maintain its existence as a corporation or partnership in good
standing under the laws of the state of its organization and shall use
commercially reasonable efforts to preserve and keep in full force and effect
its franchises material to its business.
C. Senior Indebtedness. This Guaranty is an obligation of the
Guarantors under and in respect of the Lease,
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which lease refunded, refinanced and replaced that certain Acquisition Credit
Agreement, dated as of September 29, 1995, as amended, among Genesis, certain of
its Subsidiaries, Mellon Bank, N.A. ("Mellon") as Agent, Citibank, N.A.
("Citibank") as Co-Agent and the Lenders named therein, which agreement
supplemented that certain Amended and Restated Credit Agreement, dated as of
September 29, 1995, as amended, among Genesis, certain of its Subsidiaries,
Mellon as Issuer of Letters of Credit, Mellon as Agent and Citibank as Co-Agent,
which agreement refunded, refinanced and replaced that certain Credit Agreement,
dated as of November 22, 1993, among Genesis, certain of its Subsidiaries,
Mellon as Agent and the Lenders named therein. The obligations hereunder are
secured and superior in right of payment to the obligations under those certain
debentures issued pursuant to the 1993 Indenture and the 1995 Indenture (each as
hereinafter defined). The obligations hereunder constitute "Indebtedness" as
such term is defined in the 1995 Indenture (as hereinafter defined) and this
guarantee is a "Credit Facility", "Senior Indebtedness" and "Designated Senior
Indebtedness" within the meaning of that certain Indenture, dated as of June 15,
1995, between Genesis and Delaware Trust Company as Trustee (the "1995
Indenture") and is "Senior Indebtedness" within the meaning of that certain
Indenture, dated as of November 30, 1993, between Genesis and First Fidelity
Bank, N.A., Pennsylvania as Trustee (the "1993 Indenture").
Section VIII. Transfers by Beneficiaries. Each Beneficiary may, from
time to time, whether before or after any discontinuance of this Guaranty, at
its sole discretion (subject to the requirements of the Participation Agreement)
and without notice to or consent of Guarantors, assign or transfer any or all of
its portion of the Liabilities or any interest therein; and, notwithstanding any
such assignment or transfer or any subsequent assignment or transfer thereof,
such Liabilities shall be and remain Liabilities for the purposes of this
Guaranty, and each and every immediate and successive assignee or transferee of
any of the Liabilities or of any interest therein shall, to the extent of such
assignee's or transferee's interest in the Liabilities, be entitled to the
benefits of this Guaranty to the same extent as if such assignee or transferee
were such Beneficiary.
Section IX. No Waiver by Beneficiaries. No delay in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this Guaranty be binding upon any Beneficiary
except as expressly set forth in a writing duly
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Guaranty
signed and delivered on its behalf. No action permitted hereunder shall in any
way affect or impair any Beneficiary's rights or Guarantors' obligations under
this Guaranty. For the purposes of this Guaranty, Liabilities shall include all
of the obligations described in the definition thereof, notwithstanding any
right or power of Guarantors or anyone else to assert any claim or defense as to
the invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the obligations of Guarantors hereunder.
Guarantors' obligations under this Guaranty shall be absolute and unconditional
irrespective of any circumstance whatsoever which might constitute a legal or
equitable discharge or defense of Guarantors. Guarantors hereby acknowledge that
there are no conditions to the effectiveness of this Guaranty.
Section X. Joint and Several Obligations; Successors and Assigns. All
obligations under this Guaranty are joint and several to each of the Guarantors
and any other party which hereafter guarantees any portion of the Liabilities,
and shall be binding upon them and upon their successors and assigns. All
references herein to Guarantors shall be deemed to include any successor or
successors, whether immediate or remote, to such Person.
Section XI. Severability. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
Applicable Laws and Regulations, but if any provision of this Guaranty shall be
prohibited by or invalid thereunder, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.
Section XII. Submission to Jurisdiction; Waivers. EACH PARTY
HERETO IRREVOCABLY AND UNCONDITIONALLY:
(A) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR
ANY STATEMENT, COURSE OF CONDUCT, ACT OR OMISSION, OR EVENT OCCURRING IN
CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN
ALLEGHENY COUNTY OR PHILADELPHIA COUNTY, PENNSYLVANIA, SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED BY LAW AGREES
THAT, TO THE EXTENT THAT ANY SUCH COURT HAS OR IS ABLE TO OBTAIN PERSONAL
JURISDICTION OVER THE PARTY AGAINST WHICH SUCH PARTY IS SEEKING TO BRING RELATED
LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM (BUT
NOTHING
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Guaranty
HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM);
(B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH
PARTY;
(C) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO SUCH PARTY'S ADDRESS FOR NOTICES DESCRIBED IN SCHEDULE
II HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(D) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
Section XIII. Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by this Guaranty shall be in writing and shall be deemed to have
been duly given when addressed to the appropriate Person and delivered in the
manner specified in Section 21.3 of the Lease. The initial address for notices
to each of the Guarantors is set forth on Schedule 3 hereto.
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Guaranty
SECTION XIV. GOVERNING LAW. THIS GUARANTY HAS BEEN DELIVERED TO AGENT
AT PENNSYLVANIA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
Section XV. Joinder; Release. Genesis covenants that upon each and
every addition or deletion of a Subsidiary as a party to the Credit Agreement,
it will (i) promptly notify Agent thereof and (ii) cause to be executed and
delivered to Agent, on behalf of the Beneficiaries, a joinder or release in the
form of Exhibit A-1 or Exhibit A-2, respectively, attached hereto evidencing
such addition or deletion of a Material Subsidiary hereunder. Each Guaranty and
each Beneficiary hereby agree that no such joinder shall require the consent of
Agent, any other Beneficiary or any Guarantor. Each of the Beneficiaries hereby
authorizes Agent to execute and deliver any such release from time to time, but
no such release shall require the consent of any other Beneficiary or any
Guarantor. Each Guarantor agrees that no such joinder or release shall affect
the obligations of any Guarantor (other than the Guarantor which shall have
executed and delivered such joinder or release).
[SIGNATURE PAGES FOLLOW]
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Guaranty
IN WITNESS WHEREOF, Guarantors have caused this Guaranty and Agreement
of Suretyship Regarding Obligations of Lessee and Affiliates to be executed and
delivered as of the date first
above written.
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
By:________________________________
Title: Senior Vice President and
Chief Financial Officer
BREVARD MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
CATONSVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of its
sole general partners
EASTON MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
EDELLA STREET ASSOCIATES, a Pennsylvania
limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS HEALTH VENTURES OF ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF BLOOMFIELD, INC.,
a Pennsylvania corporation
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Guaranty
GENESIS HEALTH VENTURES OF CLARKS SUMMIT, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF INDIANA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE NETWORK SERVICES, INC.
f/k/a GENESIS MANAGEMENT RESOURCES, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICAL SERVICES, INC.
f/k/a GENESIS PHYSICIAN SERVICES, INC.,
a Pennsylvania corporation
GENESIS PROPERTIES LIMITED PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
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Guaranty
HALLMARK HEALTHCARE LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Pharmacy Equities, Inc., a
Pennsylvania corporation, its
sole general partner
HAMMONDS LANE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of
its general partner
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
HEALTHCARE SERVICES NETWORK, INC.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.
a Pennsylvania corporation
MILLVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partner
PHARMACY EQUITIES, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp.,
its sole general partner
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
RIVER STREET ASSOCIATES, a
Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its
sole general partner
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Guaranty
SEMINOLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
STAFF REPLACEMENT SERVICES, INC.,
a Pennsylvania corporation
STATE STREET ASSOCIATES, L.P., a
Pennsylvania limited partnership
By: Genesis Health Ventures, Inc.,
its sole general partner
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION SERVICES, INC.
f/k/a TEAM REHABILITATION, INC.
a Pennsylvania corporation
THERAPY CARE SYSTEMS, L.P., a
Pennsylvania limited partnership
By: Team Rehabilitation, Inc., its
sole general partner
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC., a
Pennsylvania corporation
VOLUSIA MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
WYNCOTE HEALTHCARE CORP., a
Pennsylvania corporation
By:
Title (as to each of the foregoing Subsidiaries):
<PAGE>
Guaranty
ASCO HEALTHCARE, INC., a
Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
BRINTON MANOR, INC., a Delaware
corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
EASTERN REHAB SERVICES, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS HEALTH SERVICES CORPORATION,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS HEALTHCARE CENTERS HOLDINGS, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS HOLDINGS, INC.
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GENESIS PROPERTIES OF DELAWARE
CORPORATION, a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P., a Delaware
limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
GOVERNOR'S HOUSE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
HEALTH CONCEPTS AND SERVICES, INC.,
a Maryland corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
LINCOLN NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Guaranty
y SCHEDULE 1
Material Subsidiaries
State of
Name Type of Entity Organization
- ---- -------------- ------------
<PAGE>
Guaranty
SCHEDULE 2
Lenders
Mellon Bank, N.A.
<PAGE>
Guaranty
SCHEDULE 3
Addresses for Notices
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice President and
Chief Financial Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
<PAGE>
Guaranty
EXHIBIT A-1
FORM OF JOINDER
JOINDER AGREEMENT
THIS JOINDER AGREEMENT, dated as of July 25, 1996 (this "Joinder"), is
executed by National Health Care Affiliates, Inc., a Florida corporation (the
"Additional Guarantor"), with its principal place of business located at 651
Delaware Avenue, Buffalo, New York 14202.
BACKGROUND
1. Genesis Eldercare Properties, Inc. ("Lessee"), Mellon Financial
Services Corporation #4 ("Lessor"), the Lenders party thereto, and Mellon Bank,
N.A., as Agent, entered into a Participation Agreement, dated as of July 24,
1996 (as heretofore amended, the "Participation Agreement") pursuant to which
Lessee has made a covenant that it shall cause the Guarantors to execute and
deliver the Guaranty and Agreement of Suretyship Regarding Obligations of Lessee
and Affiliates (the "Guaranty").
2. The Guaranty and Agreement of Suretyship provides that upon each and
every addition of a Subsidiary as a party to the Credit Agreement, Genesis will
cause this Joinder to be executed and delivered by such Subsidiary to Agent.
2. The Additional Guarantor desires to become a Guarantor pursuant to
Section 15 of the Guaranty.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Additional Guarantor hereby agrees as follows:
Section 1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the Participation Agreement.
Section 2. Operative Documents.
The Additional Guarantor hereby agrees that it shall be bound by all
the terms and provisions of, and shall be deemed to be a party to (as if it were
an original signatory to), the Guaranty; from and after the date hereof, the
Additional
<PAGE>
Guaranty
Guarantor shall be a Guarantor of the Liabilities (as defined in the Guaranty).
The Additional Guarantor hereby acknowledges that it has received copies of the
Participation Agreement, the Guaranty and the other Operative Documents.
Section 3. Miscellaneous.
This Joinder shall be governed by, and construed in accordance with,
the internal laws of the Commonwealth of Pennsylvania. This Joinder is hereby
executed by the Additional Guarantor for the benefit of Lessor, the Agent and
the Lenders, and each of the foregoing parties may rely hereon. This Joinder
shall be binding upon, and shall inure to the benefit of, the Additional
Guarantor and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed by its duly authorized officer as of the date and year first above
written.
National Health Care Affiliates, Inc.
By:___________________________
Name: Ira C. Gubernick
Its: Secretary
<PAGE>
Guaranty
EXHIBIT A-2
Form of Release
RELEASE OF GUARANTY
Reference is made to the Guaranty and Agreement of Suretyship Regarding
Obligations of Lessee and Affiliates (the "Guaranty") dated as of July 24, 1996
made by Genesis Health Ventures, Inc. and its Material Subsidiaries for the
benefit of the Beneficiaries. Unless otherwise defined herein, terms used herein
have the meanings assigned to them in Appendix 1 to the Participation Agreement.
_____________________________ is no longer a party to the Credit
Agreement and thus, pursuant to Section 15 of the Guaranty, Agent hereby
releases _____________________ as a Guarantor under the Guaranty.
Dated: _______ __, ____
MELLON BANK N.A., as Agent
By:_______________________________
Title:____________________________
<PAGE>
Exhibit 10.7
Structural Guaranty
===============================================================================
GUARANTY
AND AGREEMENT OF SURETYSHIP
from
GENESIS HEALTH VENTURES, INC.
and its
MATERIAL SUBSIDIARIES
Dated as of July 24, 1996
===============================================================================
<PAGE>
GUARANTY AND AGREEMENT OF SURETYSHIP
THIS GUARANTY AND AGREEMENT OF SURETYSHIP, dated as of July 24, 1996,
is made by GENESIS HEALTH VENTURES, INC., a Pennsylvania corporation ("Genesis")
and the Material Subsidiaries set forth on Schedule 1 (the "Material
Subsidiaries") (Genesis and each of the Material Subsidiaries are individually a
"Guarantor" and collectively referred to herein, in their capacity as guarantors
hereunder, as the "Guarantors") in favor of the Beneficiaries (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, contemporaneously herewith, Genesis Eldercare Properties, Inc.
("Lessee"), as Lessee, Mellon Financial Services Corporation #4 ("Lessor"), as
Lessor, the Persons named on Schedule 2 attached hereto, as Lenders and Mellon
Bank, N.A., as Agent have entered into that certain Participation Agreement, and
Lessee and Lessor have entered into that certain Lease and Agreement, each dated
as of July 24, 1996. The Participation Agreement and the Lease and Agreement, as
they each may be modified, amended or restated from time to time as and to the
extent permitted thereby, are hereinafter referred to as the "Participation
Agreement" and "Lease" respectively. Unless otherwise defined herein or the
context hereof otherwise requires, terms which are defined or defined by
reference in the Participation Agreement or Lease shall have the same meanings
when used herein as such terms have therein; and
WHEREAS, Lessor has entered into a Loan Agreement dated as of even date
herewith (as amended or otherwise modified from time to time, the "Loan
Agreement" by and among Lessor, Lenders and Agent, pursuant to which the Lenders
have agreed to make a loan to Lessor, as evidenced by those certain non-recourse
promissory notes (the "Notes") from Lessor to Agent and secured by those certain
Mortgages and Deeds of Trust (the "Mortgages") made by Lessor to Agent, as agent
for the Lenders and those certain Assignments of Lease from Lessor to Agent, as
agent for the Lenders (the "Assignments of Lease").
WHEREAS, Lessee is a wholly-owned subsidiary of Genesis and each of the
Material Subsidiaries are Subsidiaries of Genesis; and
WHEREAS, it is a covenant in the Participation Agreement that Lessee
shall cause the Guarantors to execute and deliver this Guaranty; and
<PAGE>
Structural Guaranty
WHEREAS, it is in the best interests of Guarantors that the Overall
Transaction and the Document Closing Date occur; and
WHEREAS, this Guaranty, and the execution, delivery and performance
hereof, have been duly authorized by all necessary corporate action of
Guarantors;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Guarantors, Guarantors hereby agree as follows:
SECTION 1. Guarantee and Agreement of Suretyship. Guarantors hereby
jointly and severally, irrevocably and unconditionally guarantee to the
Beneficiaries and agree to act as surety to the Beneficiaries for (a) the full
and prompt payment when due, whether by acceleration or otherwise, and at all
times thereafter, and (b) the full and prompt performance, of all of the
Liabilities (as hereinafter defined), including interest and Yield on any such
Liabilities, whether accruing before or after any bankruptcy or insolvency case
or proceeding involving Lessee or any other Person, and, if interest or Yield on
any portion of such obligations ceases to accrue by operation of law by reason
of the commencement of such case or proceeding, including such interest and
Yield as would have accrued on any such portion of such obligations if such case
or proceeding had not commenced, and further agree to pay all expenses
(including attorneys' fees and legal expenses) paid or incurred by Lessor, Agent
or any of the Lenders (each a "Beneficiary") in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing this Guaranty. The term
"Liabilities", as used herein, shall mean all of the following, in each case
howsoever created, arising or evidenced, whether direct or indirect, joint or
several, absolute or contingent, or now or hereafter existing, or due or to
become due: (i) all of the Equity Amount and Yield accrued thereon; (ii) all
principal of the Notes and any interest accrued thereon; and (iii) all
additional amounts and other sums (other than Basic Rent) at any time due and
owing, and required to be paid, to Lessor and/or the Beneficiaries under the
terms of the Lease, the Participation Agreement or any other Operative Document
(whether or not Lessee or any other Person shall be released or relieved from
any or all liability or obligation under any thereof); provided, however, that
if Lessee duly and timely exercises and consummates the Sale Option pursuant to
Sections 6.3, 6.4 and 6.6 of the Lease, the amount guaranteed under clauses (i)
and (ii) hereof shall not exceed the aggregate amounts required to be paid by
Lessee pursuant to the Lease in connection with such exercise. If Lessee does
not duly and timely exercise and consummate the Sale Option pursuant to
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<PAGE>
Structural Guaranty
Section 6.6, then Guarantors shall be liable for the full amounts due under
clauses (i) through (iii) without limitation.
In any action or proceeding involving any state corporate law, or any
state or federal bankruptcy, insolvency, reorganization or any other law
affecting the rights of creditors generally, if the obligations of Guarantor
under this Guaranty would otherwise be held or determined by a final and
non-appealable order of a court of competent jurisdiction to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on account
of the amount of its liability under this Guaranty, then, notwithstanding any
other provision hereof to the contrary, the amount of such liability shall,
without any further action by Guarantor or any other Person, be automatically
limited and reduced to the highest amount which is valid and enforceable as
determined in such action or proceeding pursuant to such final and
non-appealable order.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessee, or the inability or failure of Lessee to pay debts as they
become due, or an assignment by Lessee for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessee under any
bankruptcy, insolvency or similar laws, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, Guarantors will pay
to the Beneficiaries forthwith the full amount which would be payable hereunder
by Guarantors as if all Liabilities were then due and payable.
Guarantors agree that, in the event of the dissolution, bankruptcy or
insolvency of Lessor, or the inability or failure of Lessor to pay debts as they
become due, or an assignment by Lessor for the benefit of creditors, or the
commencement of any case or proceeding in respect of Lessor under any
bankruptcy, insolvency or similar laws, and if such event (a "Lessor Bankruptcy
Event") shall occur at a time when any of the Liabilities may not then be due
and payable, Guarantors will pay to the Beneficiaries from time to time all
Liabilities then or thereafter due under the Operative Documents pursuant to
their terms or if the provisions of the immediately preceding paragraph are
applicable, at the time specified in the immediately preceding paragraph, all as
if such Lessor Bankruptcy Event shall not have occurred.
To secure all obligations of Guarantors hereunder, each Beneficiary
shall have a lien upon and security interest in (and may, without demand or
notice of any kind, at any time and from time to time when any amount shall be
due and payable by Guarantors hereunder, appropriate and apply toward the
payment of
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<PAGE>
Structural Guaranty
such amount, in such order of application as the Agent may elect) any and all
balances, credits, deposits, accounts or moneys of or in the name of Guarantors
or any of its Affiliates now or hereafter, for any reason or purpose whatsoever,
in the possession or control of, or in transit to Lessor or any Beneficiary or
any agent or bailee for Lessor or any Beneficiary. Each Beneficiary shall
provide prompt written notice to the Agent of the exercise by such Beneficiary
of its rights under this paragraph, which notice shall set forth in reasonable
detail the amount of such application and shall remit such amount to Agent or as
Agent may direct.
The obligations of the Guarantors hereunder are secured by the Joint
Stock Collateral as set forth in the Amended and Restated Security Agreement
dated as of September 29, 1995, as amended, among Genesis and certain of its
subsidiaries and Mellon Bank, N.A. as Collateral Agent, subject to the terms and
provisions of that certain Amended and Restated Collateral Agency Agreement
dated as of September 29, 1995, as amended, among Genesis, such subsidiaries and
Mellon Bank, N.A., as RCA Agent, ACA Agent and Collateral Agent.
This Agreement shall constitute an agreement of suretyship as well as
of guaranty and shall constitute an absolute and unconditional guaranty of
payment and performance (and not of collection) and an absolute and
unconditional undertaking by each Guarantor with respect to the payment and
performance of the Liabilities. This Guaranty shall remain in full force and
effect (notwithstanding, without limitation, the dissolution of any of the
Guarantors). The liability of the Guarantors hereunder shall be direct, joint
and several, and may be enforced without the Beneficiaries being required to
resort to any other right, remedy or security.
Agent on behalf of itself and the other Beneficiaries, may, from time
to time at its discretion and without notice to Guarantors, but subject to the
provisions of the Participation Agreement, take or cause any of the other
Beneficiaries to take, any or all of the following actions, subject to the terms
of the Credit Agreement as in effect on the date hereof as such Credit Agreement
may be amended under the Participation Agreement with the consent of Agent (on
behalf of the Participants) and subject to the provisions of the Collateral
Agency Agreement with respect to the Joint Stock Collateral: (a) retain or
obtain a lien upon or a security interest in any property to secure any of the
Liabilities or any obligation hereunder; (b) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Guarantors, with
respect to any of the Liabilities; (c) extend or renew for one or more periods
(regardless of
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<PAGE>
Structural Guaranty
whether longer than the original period), alter or exchange any of the
Liabilities, or release or compromise any obligation of Guarantors hereunder or
any obligation of any nature of any other obligor with respect to any of the
Liabilities; (d) release or fail to perfect its lien upon or security interest
in, or impair, surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities or any
obligation hereunder, or extend or renew for one or more periods (regardless of
whether longer than the original period) or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to any such
property; and (e) resort to Guarantors, or any one or more of them, for payment
of any of the Liabilities, regardless of whether Agent or any other Beneficiary
shall have resorted to any other Person any property securing any of the
Liabilities or any obligation hereunder or shall have proceeded against any
other obligor primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in this paragraph being hereby
expressly waived by Guarantors).
SECTION 2. Guarantors' Obligations Unconditional. Guarantors'
obligations hereunder are independent in respect of any other Person, and each
Beneficiary may enforce any of its rights hereunder independently of any other
right or remedy that it may at any time hold with respect to the Liabilities or
any security or other guaranty therefor; provided that no double recovery of the
same amount shall be permitted. Such obligations shall be absolute and
unconditional, shall not be subject to any counterclaim, setoff, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by Guarantors with their obligations
hereunder), whether based upon any claim that Lessor, Lessee, Agent, any
Beneficiary or any other Person may have against any Beneficiary or any other
Person or otherwise, and shall remain in full force and effect without regard
to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not Guarantors or any other
Person shall have any knowledge or notice thereof) including, without
limitation:
(A) any amendment, modification, addition, deletion, supplement or
renewal to or of or other change in the Liabilities or any
Operative Document or any of the agreements referred to in any
thereof, or any other instrument or agreement applicable to
any Operative Document or any of the parties to such
agreements, or to the Sites, or any assignment, mortgage or
transfer thereof or of any interest therein, or any furnishing
or acceptance of additional security for, guaranty of
-5-
<PAGE>
Structural Guaranty
or right of offset with respect to, any of the Liabilities; or
the failure of any security or the failure of any Beneficiary
to perfect or insure any interest in any collateral;
(B) any failure, omission or delay on the part of Lessor or any
Beneficiary to conform or comply with any term of any
instrument or agreement referred to in clause (A) above;
(C) any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect of any
instrument, agreement, guaranty, right of offset or security
referred to in clause (A) above or any obligation or liability
of Lessor or any Beneficiary, or any exercise or non-exercise
by any Beneficiary of any right, remedy, power or privilege
under or in respect of any such instrument, agreement,
guaranty, right of offset or security or any such obligation
or liability;
(D) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding
with respect to Lessor or any Beneficiary or any other Person
or any of their respective properties or creditors, or any
action taken by any trustee, receiver or court in any such
proceeding;
(E) any limitation on the liability or obligations of any Person
under any Operative Document, the Liabilities, any collateral
security for the Liabilities, any other guaranty of the
Liabilities or any discharge, termination, cancellation,
frustration, irregularity, invalidity or unenforceability, in
whole or in part, of any of the foregoing or any other
agreement, instrument, guaranty or security referred to in
clause (A) above or any term of any thereof;
(F) any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any
damage to or loss or destruction of, or any interruption or
cessation in the use of the Sites by Lessee or any other
Person for any reason whatsoever (including, without
limitation, any governmental prohibition or restriction,
condemnation, requisition, seizure or any other act on the
part of any governmental or military authority, or any act of
God or of the public enemy) regardless of the duration
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<PAGE>
Structural Guaranty
thereof (even though such duration would otherwise constitute
a frustration of a lease), whether or not resulting from
accident and whether or not without fault on the part of
Lessee or any other Person;
(G) any merger or consolidation of Lessor, Lessee or Guarantors
into or with any other Person, or any sale, lease or transfer
of any of the assets of Lessor, Lessee or Guarantors to any
other Person;
(H) any change in the ownership of any shares of capital stock of
Lessor, Lessee or Guarantors or any corporate change in
Lessor, Lessee or Guarantors;
(I) any loan to or other transaction between the Beneficiaries, or
any of them, and Lessee or Lessor; or
(J) any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing, and any other
circumstance that might otherwise constitute a legal or
equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse
against Guarantors.
The obligations of Guarantors set forth herein constitute the full
recourse obligations of Guarantors enforceable against them to the full extent
of all of their assets and properties, notwithstanding any provision in the
Lease or any other Operative Document or any other document or agreement to the
contrary.
Guarantors waive any and all notice of the creation, renewal, extension
or accrual of any of the Liabilities and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty, and the
Liabilities, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guaranty. Guarantors
unconditionally waive, to the extent permitted by law: (a) acceptance of this
Guaranty and proof of reliance by any Beneficiary hereon; (b) notice of any of
the matters referred to in clauses A through J above, or any right to consent or
assent to any thereof; (c) all notices that may be required by statute, rule of
law or otherwise, now or hereafter in effect, to preserve intact any rights
against Guarantors, including, without limitation, any demand, presentment,
protest, proof or notice of nonpayment under any Operative Document, and notice
of default or any failure on the part of Lessor to perform and comply with any
covenant, agreement, term or condition of any Operative Document; (d) any right
to the enforcement, assertion or exercise against Lessor of any right, power,
privilege or remedy conferred in any
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<PAGE>
Structural Guaranty
Operative Document or otherwise; (e) any requirement of diligence on the part of
any Person; (f) any requirement of any Beneficiary to take any action
whatsoever, to exhaust any remedies or to mitigate the damages resulting from a
default by any Person under any Operative Document; (g) any notice of any sale,
transfer or other disposition by any Person of any right under, title to or
interest in any Operative Document or the Sites; and (h) any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or that might otherwise limit
recourse against Guarantors.
Guarantors agree that this Guaranty shall be automatically reinstated
if and to the extent that for any reason any payment by or on behalf of itself
or Lessor is rescinded or must be otherwise restored by any Beneficiary whether
as a result of any proceedings in bankruptcy or reorganization or otherwise.
Guarantors further agree that, without limiting the generality of this
Guaranty, if an Event of Default shall have occurred and be continuing and any
Beneficiary is prevented by applicable law from exercising its remedies under
the Operative Documents, such Beneficiary shall be entitled to receive hereunder
from Guarantors, upon demand therefor, the sums which would have otherwise been
due from Lessee had such remedies been exercised.
Section 3. Incorporated Financial Covenants. Genesis hereby covenants
and agrees that it shall at all times comply with the Financial Covenants, which
covenants are incorporated herein by this reference, provided that compliance
hereunder with the Financial Covenants shall be waived to the extent that
compliance with such Financial Covenants may be waived from time to time under
and in accordance with the Credit Agreement, exclusive of waivers made in
contemplation of the termination of the Credit Agreement.
Section 4. Waiver of Subrogation. Guarantors hereby irrevocably waive
any claim or other rights which they may now or hereafter acquire against
Lessor.
Section 5. Reasonableness and Effect of Waivers. Guarantors warrant and
agree that each of the waivers set forth in this Guaranty is made with full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of such waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the maximum extent
permitted by law.
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<PAGE>
Structural Guaranty
Section 6. Representations and Warranties of Guarantors. As of the date
hereof, each of the Guarantors makes the representations and warranties set
forth in this Section 6 to each of the Beneficiaries.
(A) Due Organization, etc. It is a corporation or partnership
duly organized, validly existing and in good standing under the laws of the
state of its organization and it has full corporate power and authority to
conduct its business as presently and presently proposed to be conducted, to own
or hold under lease its properties, to enter into and perform its obligations
under each of the Operative Documents to which it is or is to be a party and
each other agreement, instrument and document to be executed and delivered by it
on or before the Document Closing Date in connection with or as contemplated by
each such Operative Document to which it is or is to be a party, and it is duly
qualified as a foreign corporation authorized to do business and is in good
standing in every jurisdiction in which its failure to be so qualified would
have a Material Adverse Effect. The information set forth on Schedule 1 hereto
with respect to it is true and correct.
(B) Authorization; No Conflict. The execution and delivery by
it of each of the Operative Documents to which it is or is to be a party, and
the performance by it of its obligations under such Operative Documents, have
been duly authorized by all necessary corporate action (including any necessary
stockholder action) on its part, and do not and will not: (i) contravene any
Applicable Laws and Regulations currently in effect applicable to or binding on
it or the Sites; (ii) violate any provision of its charter or bylaws; (iii)
result in a breach of or constitute a default under any indenture, loan or
credit agreement, or any other agreement or instrument to which it is a party or
by which it or its properties may be bound or affected, which breaches or
defaults would have, individually or in the aggregate, a Material Adverse
Effect; (iv) result in, or require, the creation or imposition of any Lien of
any nature upon or with respect to any of the properties now owned or hereafter
acquired by it (other than the security interests created pursuant to the
Operative Documents); or (v) require any Governmental Action by any Authority,
except for (A) the filings and recordings listed on Schedule 4.1B to the
Participation Agreement to perfect the rights of Lessor, the Lenders and Agent
intended to be created by the Operative Documents, and (B) those Governmental
Actions required with respect to Lessee or any of its Affiliates listed on
Schedule 4.1A to the Participation Agreement, each of which have been duly
effected and are, or on the initial Advance Date will be, in full force and
effect; and it is not in default under or in violation of its charter or bylaws.
Attached as Schedule
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<PAGE>
Structural Guaranty
4.1C to the Participation Agreement are correct and complete computations
demonstrating compliance by Genesis with Section 5.9 of the Indenture after
giving effect as Indebtedness under such Indenture to the obligations of Lessee
and Guarantors under or in connection with the Operative Documents.
(C) Enforceability, etc. Each Operative Document to which it
is or is to be a party constitutes its legal, valid and binding obligation,
enforceable against it in accordance with the terms thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and by general equitable principles.
(D) Litigation. There is no action, proceeding or
investigation pending or threatened which questions the validity of the
Operative Documents to which it is or is to be a party or any action taken or to
be taken pursuant to the Operative Documents to which it is or is to be a party,
and there is no action, proceeding or investigation pending or threatened which,
if adversely determined, would have a Material Adverse Effect.
(E) Taxes. It has filed or caused to be filed all United
States Federal and all other material tax returns that are required to be filed
by it, and has paid or caused to be paid all taxes shown to be due and payable
on such returns or on any assessment received by it to the extent that such
taxes have become due and payable except to the extent that taxes due, but
unpaid, are being contested in good faith by it by appropriate action or
proceeding and, to the extent (if any) that such taxes are not due and payable,
it has established or caused to be established reserves that are adequate for
the payment thereof in accordance with GAAP.
(F) Investment Company Act. It is not an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(G) Public Utility Holding Company. It is not subject to
regulation as a "holding company," an "affiliate" of a "holding company", or a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(H) Solvency. The consummation by Lessee and the Guarantors of
the transactions contemplated by the Operative Documents does not and will not
render it insolvent, nor was it made in contemplation of its insolvency; the
value of its assets and properties at fair valuation and at their then present
fair
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Structural Guaranty
salable value is and, after such transactions, will be greater than its total
liabilities, including contingent liabilities, as they become due; the property
remaining in its hands was not and will not be an unreasonably small amount of
capital.
Section 7. Covenants of Guarantors.
(A) Consolidation, Merger, Sale, etc. No Guarantor shall
consolidate with any Person, merge with or into any Person or convey, transfer
or lease to any Person all or substantially all of its assets in any single
transaction (or series of related transactions), unless, immediately after
giving effect to such transaction, the conditions set forth in clauses (i)
through (v) shall have been satisfied:
(i) the conditions of Section 7.09 or 7.10, as applicable, of
the Credit Agreement shall have been satisfied with respect to such
transaction; provided, that for purposes of this clause (i), (a) all
references in said Sections 7.09 and 7.10 to an Event of Default or
Potential Default shall include (x) a Lease Event of Default or Lease
Default, respectively, and (y) a default under this Guaranty, (b) all
notices, certificates and other documents required to be delivered
under said Section 7.09 shall also be delivered to Agent, on behalf of
the Participants, (c) all references in said Sections 7.09 and 7.10 to
Lender Party or Agent shall include Agent, on behalf of the
Participants, (d) all references in said Sections 7.09 and 7.10 to
Borrower or Borrowers shall be references to Guarantor or Guarantors,
respectively, and (e) all references in said Sections 7.09 and 7.10 to
Loan Obligations shall be references to the obligations of the
applicable parties under the Operative Documents and (f) all references
in said Sections 7.09 and 7.10 to Loan Documents shall be references to
the Operative Documents;
(ii) (x) the Person formed by such consolidation with or into
which such Guarantor shall be merged or (y) the Person which shall
acquire by conveyance, transfer or lease all or substantially all of
the assets of such Guarantor, if in the case of this clause (y), such
Person is obligated under the terms of the Credit Agreement to become a
party thereto (in the case of clause (x) or clause (y), as applicable,
the "Surviving Company"), if other than such Guarantor immediately
prior to such transaction, shall execute and deliver to each of the
parties hereto an agreement, in form and substance reasonably
satisfactory to Agent, containing the assumption by the Surviving
Company of the due and punctual payment, performance and observation of
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Structural Guaranty
each obligation, covenant and agreement of such Guarantor
under this Guaranty;
(iii) if the applicable Guarantor is Genesis and the Surviving
Company is not Genesis, such Surviving Company shall be a corporation
that is organized under the laws of the United States of America, a
state thereof or the
District of Columbia;
(iv) the title of Lessor to the Sites and Lessor's rights
under this Guaranty and the other Operative Documents and the first and
prior Lien of the Mortgage on the Collateral shall not be adversely
affected; and
(v) Lessee shall have delivered to Agent, on behalf of Lessor
and the Lenders, an Officer's Certificate and an opinion of counsel
reasonably satisfactory to each such Person stating that such
transaction complies with this Section 7, that all conditions to the
consummation of such transaction have been fulfilled and that all
Governmental Actions required in connection with such transaction have
been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company, if
other than the applicable Guarantor immediately prior thereto, shall succeed to,
and be substituted for, and may exercise every right and power of, such
Guarantor immediately prior to such transaction under this Guaranty and each
other Operative Document to which such Guarantor was a party immediately prior
to such transaction, with the same effect as if the Surviving Company had been
named herein and therein. Notwithstanding the foregoing provisions of this
Section 7, no conveyance, transfer or lease of all or substantially all of the
assets of any Guarantor shall release Guarantor from its payment or other
obligations under this Guaranty or any other Operative Document without the
written consent of Lessor and Agent.
(B) Existence. Subject to Section 7(A), each Guarantor shall
at all times maintain its existence as a corporation or partnership in good
standing under the laws of the state of its organization and shall use
commercially reasonable efforts to preserve and keep in full force and effect
its franchises material to its business.
(C) Senior Indebtedness. This Guaranty is an obligation of the
Guarantors under and in respect of the Lease, which lease refunded, refinanced
and replaced that certain Acquisition Credit Agreement, dated as of September
29, 1995, as amended, among Genesis, certain of its Subsidiaries, Mellon Bank,
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Structural Guaranty
N.A. ("Mellon") as Agent, Citibank, N.A. ("Citibank") as Co-Agent and the
Lenders named therein, which agreement supplemented that certain Amended and
Restated Credit Agreement, dated as of September 29, 1995, as amended, among
Genesis, certain of its Subsidiaries, Mellon as Issuer of Letters of Credit,
Mellon as Agent and Citibank as Co-Agent, which agreement refunded, refinanced
and replaced that certain Credit Agreement, dated as of November 22, 1993, among
Genesis, certain of its Subsidiaries, Mellon as Agent and the Lenders named
therein. The obligations hereunder are secured and superior in right of payment
to the obligations under those certain debentures issued pursuant to the 1993
Indenture and the 1995 Indenture (each as hereinafter defined). The obligations
hereunder constitute "Indebtedness" as such term is defined in the 1995
Indenture (as hereinafter defined) and this guarantee is a "Credit Facility",
"Senior Indebtedness" and "Designated Senior Indebtedness" within the meaning of
that certain Indenture, dated as of June 15, 1995, between Genesis and Delaware
Trust Company as Trustee (the "1995 Indenture") and is "Senior Indebtedness"
within the meaning of that certain Indenture, dated as of November 30, 1993,
between Genesis and First Fidelity Bank, N.A., Pennsylvania as Trustee (the
"1993 Indenture").
Section 8. Transfers by Beneficiaries. Each Beneficiary may, from time
to time, whether before or after any discontinuance of this Guaranty, at its
sole discretion (subject to the requirements of the Participation Agreement) and
without notice to or consent of Guarantors, assign or transfer any or all of its
portion of the Liabilities or any interest therein; and, notwithstanding any
such assignment or transfer or any subsequent assignment or transfer thereof,
such Liabilities shall be and remain Liabilities for the purposes of this
Guaranty, and each and every immediate and successive assignee or transferee of
any of the Liabilities or of any interest therein shall, to the extent of such
assignee's or transferee's interest in the Liabilities, be entitled to the
benefits of this Guaranty to the same extent as if such assignee or transferee
were such Beneficiary.
Section 9. No Waiver by Beneficiaries. No delay in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this Guaranty be binding upon any Beneficiary
except as expressly set forth in a writing duly signed and delivered on its
behalf. No action permitted hereunder shall in any way affect or impair any
Beneficiary's rights or Guarantors' obligations under this Guaranty. For the
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Structural Guaranty
purposes of this Guaranty, Liabilities shall include all of the obligations
described in the definition thereof, notwithstanding any right or power of
Guarantors or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any such obligation, and no such claim or defense shall
affect or impair the obligations of Guarantors hereunder. Guarantors'
obligations under this Guaranty shall be absolute and unconditional irrespective
of any circumstance whatsoever which might constitute a legal or equitable
discharge or defense of Guarantors. Guarantors hereby acknowledge that there are
no conditions to the effectiveness of this Guaranty.
Section 10. Joint and Several Obligations; Successors and Assigns. All
obligations under this Guaranty are joint and several to each of the Guarantors
and any other party which hereafter guarantees any portion of the Liabilities,
and shall be binding upon them and upon their successors and assigns. All
references herein to Guarantors shall be deemed to include any successor or
successors, whether immediate or remote, to such Person.
Section 11. Severability. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
Applicable Laws and Regulations, but if any provision of this Guaranty shall be
prohibited by or invalid thereunder, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty.
Section 12. Submission to Jurisdiction; Waivers. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY:
(A) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR
ANY STATEMENT, COURSE OF CONDUCT, ACT OR OMISSION, OR EVENT OCCURRING IN
CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN
ALLEGHENY COUNTY OR PHILADELPHIA COUNTY, PENNSYLVANIA, SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED BY LAW AGREES
THAT, TO THE EXTENT THAT ANY SUCH COURT HAS OR IS ABLE TO OBTAIN PERSONAL
JURISDICTION OVER THE PARTY AGAINST WHICH SUCH PARTY IS SEEKING TO BRING RELATED
LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER FORUM (BUT
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM);
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Structural Guaranty
(B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH
PARTY;
(C) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO SUCH PARTY'S ADDRESS FOR NOTICES DESCRIBED IN SCHEDULE
II HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(D) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
Section 13. Notices. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by this Guaranty shall be in writing and shall be deemed to have
been duly given when addressed to the appropriate Person and delivered in the
manner specified in Section 21.3 of the Lease. The initial address for notices
to each of the Guarantors is set forth on Schedule 3 hereto.
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<PAGE>
Structural Guaranty
SECTION 14. GOVERNING LAW. THIS GUARANTY HAS BEEN DELIVERED TO AGENT AT
PENNSYLVANIA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.
Section 15. Joinder; Release. Genesis covenants that upon each and
every addition or deletion of a Subsidiary as a party to the Credit Agreement,
it will (i) promptly notify Agent thereof and (ii) cause to be executed and
delivered to Agent, on behalf of the Beneficiaries, a joinder or release in the
form of Exhibit A-1 or Exhibit A-2, respectively, attached hereto evidencing
such addition or deletion of a Material Subsidiary hereunder. Each Guaranty and
each Beneficiary hereby agree that no such joinder shall require the consent of
Agent, any other Beneficiary or any Guarantor. Each of the Beneficiaries hereby
authorizes Agent to execute and deliver any such release from time to time, but
no such release shall require the consent of any other Beneficiary or any
Guarantor. Each Guarantor agrees that no such joinder or release shall affect
the obligations of any Guarantor (other than the Guarantor which shall have
executed and delivered such joinder or release).
[SIGNATURE PAGES FOLLOW]
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<PAGE>
Structural Guaranty
IN WITNESS WHEREOF, Guarantors have caused this Guaranty and Agreement
of Suretyship to be executed and delivered as of the date first above written.
GENESIS HEALTH VENTURES, INC.,
a Pennsylvania corporation
By:________________________________
Name: Ira C. Gubernick
Title: Secretary
BREVARD MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
CATONSVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of its
sole general partners
EASTON MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
EDELLA STREET ASSOCIATES, a Pennsylvania
limited partnership
By: Genesis Health Ventures of
Clarks Summit, Inc., its sole
general partner
GENESIS HEALTH VENTURES OF ARLINGTON, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF BLOOMFIELD, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF CLARKS SUMMIT, INC.,
a Pennsylvania corporation
<PAGE>
Structural Guaranty
GENESIS HEALTH VENTURES OF INDIANA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF MASSACHUSETTS, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF NAUGATUCK, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF SALISBURY, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WAYNE, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WEST VIRGINIA, INC.,
a Pennsylvania corporation
GENESIS HEALTH VENTURES OF WINDSOR, INC.,
a Pennsylvania corporation
GENESIS IMMEDIATE MED CENTER, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE NETWORK SERVICES, INC.
f/k/a GENESIS MANAGEMENT RESOURCES, INC.,
a Pennsylvania corporation
GENESIS ELDERCARE PHYSICAL SERVICES, INC.
f/k/a GENESIS PHYSICIAN SERVICES, INC.,
a Pennsylvania corporation
GENESIS PROPERTIES LIMITED PARTNERSHIP,
a Pennsylvania limited partnership
By: Genesis Health Ventures of
Arlington, Inc., its sole
general partner
GREENSPRING MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation, its
sole general partner
HALLMARK HEALTHCARE LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Pharmacy Equities, Inc., a
Pennsylvania corporation, its
sole general partner
<PAGE>
Structural Guaranty
HAMMONDS LANE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation, one of
its general partner
HEALTHCARE RESOURCES CORP.,
a Pennsylvania corporation
HEALTHCARE SERVICES NETWORK, INC.,
a Pennsylvania corporation
KNOLLWOOD MANOR, INC.,
a Pennsylvania corporation
MERIDIAN HEALTH, INC.
a Pennsylvania corporation
MERIDIAN HEALTHCARE, INC.
a Pennsylvania corporation
MILLVILLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Healthcare, Inc., a
Pennsylvania corporation,
its sole general partner
PHARMACY EQUITIES, INC.,
a Pennsylvania corporation
PHILADELPHIA AVENUE ASSOCIATES,
a Pennsylvania limited partnership
By: Philadelphia Avenue Corp.,
its sole general partner
PHILADELPHIA AVENUE CORPORATION,
a Pennsylvania corporation
RIVER STREET ASSOCIATES, a
Pennsylvania limited partnership
By: Genesis Health Ventures of
Wilkes-Barre, Inc., its
sole general partner
SEMINOLE MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
<PAGE>
Structural Guaranty
STAFF REPLACEMENT SERVICES, INC.,
a Pennsylvania corporation
STATE STREET ASSOCIATES, L.P., a
Pennsylvania limited partnership
By: Genesis Health Ventures, Inc.,
its sole general partner
STATE STREET ASSOCIATES, INC.,
a Pennsylvania corporation
SUBURBAN MEDICAL SERVICES, INC.
a Pennsylvania corporation
GENESIS ELDERCARE REHABILITATION SERVICES, INC.
f/k/a TEAM REHABILITATION, INC.
a Pennsylvania corporation
THERAPY CARE SYSTEMS, L.P., a
Pennsylvania limited partnership
By: Team Rehabilitation, Inc., its
sole general partner
THE TIDEWATER HEALTHCARE SHARED
SERVICES GROUP, INC., a
Pennsylvania corporation
VOLUSIA MERIDIAN LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Meridian Health, Inc., a
Pennsylvania corporation,
its sole general partner
WYNCOTE HEALTHCARE CORP., a
Pennsylvania corporation
By:_______________________
Name: Ira C. Gubernick
Title: Secretary
ASCO HEALTHCARE, INC., a
Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
BRINTON MANOR, INC., a Delaware
corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
CONCORD HEALTHCARE CORPORATION,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
CRYSTAL CITY NURSING CENTER, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
EASTERN MEDICAL SUPPLIES, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
EASTERN REHAB SERVICES, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
GENESIS HEALTH SERVICES CORPORATION,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS HEALTHCARE CENTERS HOLDINGS, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS HOLDINGS, INC.
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS PROPERTIES OF DELAWARE
CORPORATION, a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
GENESIS PROPERTIES OF DELAWARE
LTD PARTNERSHIP, L.P., a Delaware
limited partnership
By: Genesis Properties of Delaware
Corporation, a general partner
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
GOVERNOR'S HOUSE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Seretary
HEALTH CONCEPTS AND SERVICES, INC.,
a Maryland corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
HILLTOP HEALTH CARE CENTER, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
KEYSTONE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
LINCOLN NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
WAYSIDE NURSING HOME, INC.,
a Delaware corporation
By:______________________________
Name: Ira C. Gubernick
Title: Secretary
<PAGE>
Structural Guaranty
SCHEDULE 1
Material Subsidiaries
State of
Name Type of Entity Organization
- ---- -------------- ------------
<PAGE>
Structural Guaranty
SCHEDULE 2
Lenders
Mellon Bank, N.A.
<PAGE>
Structural Guaranty
SCHEDULE 3
Addresses for Notices
Suite 100
148 West State Street
Kennett Square, PA 19348
Attention: Senior Vice President and
Chief Financial Officer
Telephone: 610-444-6350
Facsimile: 610-444-3365
<PAGE>
Structural Guaranty
EXHIBIT A-1
FORM OF JOINDER
JOINDER AGREEMENT
THIS JOINDER AGREEMENT, dated as of July 25, 1996 (this "Joinder"), is
executed by National Health Care Affiliates, Inc., a Florida corporation (the
"Additional Guarantor"), with its principal place of business located at 651
Delaware Avenue, Buffalo, New York 14202.
BACKGROUND
1. Genesis Eldercare Properties, Inc. ("Lessee"), Mellon Financial
Services Corporation #4 ("Lessor"), the Lenders party thereto, and Mellon Bank,
N.A., as Agent, entered into a Participation Agreement, dated as of July 24,
1996 (as heretofore amended, the "Participation Agreement") pursuant to which
Lessee has made a covenant that it shall cause the Guarantors to execute and
deliver the Guaranty and Agreement of Suretyship (the "Guaranty").
2. The Guaranty and Agreement of Suretyship provides that upon each and
every addition of a Subsidiary as a party to the Credit Agreement, Genesis will
cause this Joinder to be executed and delivered by such Subsidiary to Agent.
2. The Additional Guarantor desires to become a Guarantor pursuant to
Section 15 of the Guaranty.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Additional Guarantor hereby agrees as follows:
Section 1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the Participation Agreement.
Section 2. Operative Documents.
The Additional Guarantor hereby agrees that it shall be bound by all
the terms and provisions of, and shall be deemed to be a party to (as if it were
an original signatory to), the Guaranty; from and after the date hereof, the
Additional Guarantor shall be a Guarantor of the Liabilities (as defined in the
Guaranty). The Additional Guarantor
<PAGE>
Structural Guaranty
hereby acknowledges that it has received copies of the Participation Agreement,
the Guaranty and the other Operative Documents.
<PAGE>
Structural Guaranty
Section 3. Miscellaneous.
This Joinder shall be governed by, and construed in accordance with,
the internal laws of the Commonwealth of Pennsylvania. This Joinder is hereby
executed by the Additional Guarantor for the benefit of Lessor, the Agent and
the Lenders, and each of the foregoing parties may rely hereon. This Joinder
shall be binding upon, and shall inure to the benefit of, the Additional
Guarantor and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed by its duly authorized officer as of the date and year first above
written.
NATIONAL HEALTH CARE AFFILIATES, INC.
By:___________________________
Name: Ira C. Gubernick
Its: Secretary
<PAGE>
Structural Guaranty
EXHIBIT A-2
Form of Release
RELEASE OF GUARANTY
Reference is made to the Guaranty and Agreement of Suretyship (the
"Guaranty") dated as of July 24, 1996 made by Genesis Health Ventures, Inc. and
its Material Subsidiaries for the benefit of the Beneficiaries. Unless otherwise
defined herein, terms used herein have the meanings assigned to them in Appendix
1 to the Participation Agreement.
_____________________________ is no longer a party to the Credit
Agreement and thus, pursuant to Section 15 of the Guaranty, Agent hereby
releases _____________________ as a Guarantor under the Guaranty.
Dated: _______ __, ____
MELLON BANK N.A., as Agent
By:_______________________________
Title:____________________________
<PAGE>
Exhibit 10.8
===============================================================================
LEASE AND AGREEMENT
Dated as of July 24, 1996
between
MELLON FINANCIAL SERVICES CORPORATION #4,
as Lessor,
and
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
===============================================================================
ALL RIGHT, TITLE AND INTEREST OF LESSOR UNDER THIS LEASE AND AGREEMENT AND THE
PROPERTY SUBJECT HERETO HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF MELLON BANK, N.A., AGENT ("AGENT"), UNDER CERTAIN
MORTGAGES, ASSIGNMENTS OF RENTS AND LEASES, SECURITY AGREEMENTS AND FIXTURE
FILING STATEMENTS (AS SUCH AGREEMENTS AND INSTRUMENTS MAY BE AMENDED AND/OR
SUPPLEMENTED TO THE EXTENT PERMITTED THEREBY), FOR THE BENEFIT OF THE LENDERS
REFERRED TO IN SUCH SECURITY INSTRUMENTS. THIS LEASE AND AGREEMENT HAS BEEN
EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS LEASE AND
AGREEMENT CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS LEASE AND AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR
POSSESSION OF ANY COUNTERPART HEREOF OTHER THAN THE "ORIGINAL EXECUTED
COUNTERPART NO. 1", WHICH SHALL BE IDENTIFIED AS THE COUNTERPART CONTAINING THE
RECEIPT THEREFOR EXECUTED BY AGENT ON OR FOLLOWING THE SIGNATURE PAGE THEREOF.
SEE SECTION 21.20 FOR THE NATURE OF THIS TRANSACTION AND INTENTION OF THE
PARTIES.
THIS COUNTERPART IS [NOT] THE ORIGINAL EXECUTED COUNTERPART NO. 1.
1
<PAGE>
TABLE OF CONTENTS
(Lease and Agreement)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS; LESSEE LIABILITY........................................ 1
ARTICLE II
LEASE OF SITES; LEASE TERM.......................................... 2
SECTION 2.1. Acceptance and Lease of Sites. ............................................ 2
SECTION 2.2. Acceptance Procedure........................................................ 2
SECTION 2.3. Lease Term.................................................................. 2
SECTION 2.4. Lease Renewal............................................................... 2
ARTICLE III
OTHER PROPERTY................................................ 3
ARTICLE IV
RENT..................................................... 3
SECTION 4.1. Basic Rent.................................................................. 3
SECTION 4.2. Supplemental Rent........................................................... 3
SECTION 4.3. Method and Amount of Payment................................................ 3
SECTION 4.4. Late Payment................................................................ 4
SECTION 4.5. Net Lease; No Setoff; Etc................................................... 4
ARTICLE V
UTILITY CHARGES............................................... 6
ARTICLE VI
RENEWAL OPTION; SALE, RETURN AND PURCHASE OPTIONS.............................. 6
SECTION 6.1. Renewal Option.............................................................. 6
SECTION 6.2. Purchase Option............................................................. 7
SECTION 6.3. Sale Option................................................................. 7
SECTION 6.4. Conditions for Sale of the Sites............................................ 8
SECTION 6.5. Early Termination........................................................... 11
SECTION 6.6. Exercise of Options; Failure to Elect....................................... 12
SECTION 6.7. Return of Sites............................................................. 12
SECTION 6.8. Intentionally Omitted....................................................... 13
SECTION 6.9. Failure of Lessee to Sell Sites............................................. 13
ARTICLE VII
CONDITION AND USE OF SITES.......................................... 16
SECTION 7.1. Waivers..................................................................... 16
ARTICLE VIII
LIENS; EASEMENTS............................................... 17
SECTION 8.1. Liens....................................................................... 17
SECTION 8.2. No Lessor Consent or Liability.............................................. 17
SECTION 8.3. Easements................................................................... 18
i
<PAGE>
ARTICLE IX
MAINTENANCE AND REPAIR;
ALTERATIONS AND ADDITIONS................................ 19
SECTION 9.1. Maintenance and Repair; Compliance With
Law......................................................................... 19
SECTION 9.2. Alterations................................................................. 20
SECTION 9.3. Title to Alterations........................................................ 22
SECTION 9.4. Maintenance and Repair Reports.............................................. 23
SECTION 9.5. Permitted Contests.......................................................... 23
ARTICLE X
USE........................................................ 24
ARTICLE XI
INSURANCE..................................................... 24
SECTION 11.1. Required Coverages.......................................................... 24
SECTION 11.2. Delivery of Insurance Certificates.......................................... 26
ARTICLE XII
ASSIGNMENT AND SUBLEASING............................................. 27
SECTION 12.1. Assignment and Subletting................................................... 27
SECTION 12.2. Sublease Subordination...................................................... 29
ARTICLE XIII
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE..................................... 30
SECTION 13.1. Event of Loss; Condemnation or Casualty..................................... 30
SECTION 13.2. Application of Payments Relating to an
Event of Loss............................................................... 31
SECTION 13.3. Application of Certain Payments Relating
to a Condemnation........................................................... 31
SECTION 13.4. Casualty.................................................................... 31
SECTION 13.5. Other Dispositions.......................................................... 32
SECTION 13.6. Negotiations................................................................ 32
SECTION 13.7. No Rent Abatement........................................................... 33
ARTICLE XIV
NON-INTERFERENCE.................................................. 33
SECTION 14.1. Non-Interference............................................................ 33
SECTION 14.2. Certain Duties and Responsibilities of
Lessor...................................................................... 33
ARTICLE XV
INSPECTION AND REPORTS............................................... 34
SECTION 15.1. Inspection.................................................................. 34
SECTION 15.2. Reports..................................................................... 34
ARTICLE XVI
OWNERSHIP, GRANT OF SECURITY INTEREST
AND FURTHER ASSURANCES............................................... 34
SECTION 16.1. Grant of Security Interest.................................................. 34
SECTION 16.2. Attorney-in-Fact............................................................ 35
ii
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ARTICLE XVII
LEASE EVENTS OF DEFAULT................................. 36
ARTICLE XVIII
ENFORCEMENT....................................... 39
SECTION 18.1. Remedies.................................................................... 39
SECTION 18.2. Proceeds of Sale; Deficiency................................................ 43
SECTION 18.3. Grant and Foreclosure on Lessee's Estate.................................... 43
SECTION 18.4. Remedies Cumulative; No Waiver; Consents.................................... 44
ARTICLE XIX
RIGHT TO PERFORM FOR LESSEE......................................... 44
ARTICLE XX
LESSOR LIENS................................................. 45
ARTICLE XXI
MISCELLANEOUS................................................ 45
SECTION 21.2. Severability................................................................ 45
SECTION 21.3. Notices..................................................................... 46
SECTION 21.4. Amendment; Complete Agreements.............................................. 46
SECTION 21.5. Headings.................................................................... 46
SECTION 21.6. Original Lease.............................................................. 46
SECTION 21.7. GOVERNING LAW............................................................... 46
SECTION 21.8. Discharge of Lessee's Obligations by its
Affiliates.................................................................. 47
SECTION 21.9. Liability of Lessor Limited................................................. 47
SECTION 21.10. Estoppel Certificates....................................................... 47
SECTION 21.11. No Joint Venture............................................................ 48
SECTION 21.12. No Accord and Satisfaction.................................................. 48
SECTION 21.13. No Merger................................................................... 48
SECTION 21.14. Successor Lessor............................................................ 49
SECTION 21.15. Survival.................................................................... 49
SECTION 21.16. Transfer of Sites to Lessee or any other
Person...................................................................... 49
SECTION 21.17. Enforcement of Certain Warranties........................................... 49
SECTION 21.18. Investment of Security Funds................................................ 50
SECTION 21.19. Recording of Lease Supplements.............................................. 50
SECTION 21.20. Nature of Transaction....................................................... 51
SCHEDULE I - Description of Sites Delivered on Document
Closing Date
EXHIBIT A - Form of Lease Supplement and Memorandum of
Lease and Agreement
iii
</TABLE>
<PAGE>
Lease Agreement
THIS LEASE AND AGREEMENT dated as of July 24, 1996 (as amended,
supplemented, or otherwise modified from time to time, this "Lease"), is between
MELLON FINANCIAL SERVICES CORPORATION #4, a Pennsylvania corporation, as Lessor
and as mortgagee ("Lessor"), and GENESIS ELDERCARE PROPERTIES, INC., a
Pennsylvania corporation and a wholly-owned subsidiary of Genesis, as Lessee and
as mortgagor ("Lessee").
In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, hereby
agree as follows:
ARTICLE I
DEFINITIONS; LESSEE LIABILITY
For all purposes hereof, the capitalized terms used herein and not
otherwise defined shall have the meanings assigned thereto in Appendix 1 to that
certain Participation Agreement dated as of July 24, 1996, by and among Lessee,
Lessor, the Lenders identified therein, and Mellon Bank, N.A., as Agent (the
"Participation Agreement"). All obligations imposed on the "Lessee" in this
Lease shall be the full recourse liability of Lessee.
This Lease refunds, refinances and replaces that certain Acquisition
Credit Agreement, dated as of September 29, 1995, as amended, among Genesis
Health Ventures, Inc. ("Genesis"), certain of its subsidiaries, Mellon Bank,
N.A., ("Mellon") as Agent, Citibank, N.A. ("Citibank") as Co-Agent and the
lenders named therein, which agreement supplemented that certain Amended and
Restated Credit Agreement, dated as of September 29, 1995, as amended, among
Genesis, certain of its subsidiaries, Mellon as Issuer of Letters of Credit,
Mellon as agent and Citibank as co-Agent, which agreement refunded, refinanced
and replaced that certain Credit Agreement, dated as of November 22, 1993, among
Genesis, certain of its subsidiaries, Mellon as agent and the lenders named
therein. The obligations hereunder are secured and superior in right of payment
to the obligations under those certain Debentures issued pursuant to the 1993
Indenture (as hereinafter defined). This Lease (including all amendments and
supplements hereto including, without limitation, any amendments which may
increase the amount of this facility) is a "Credit Facility" within the meaning
of that certain Indenture, dated as of June 15, 1995, between Genesis and
Delaware Trust Company as Trustee (the "1995 Indenture") and constitutes "Senior
Indebtedness" within the meaning of that certain Indenture, dated
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Lease Agreement
as of November 30, 1993, between Genesis and First Fidelity Bank, N.A.,
Pennsylvania as Trustee (the "1993 Indenture").
ARTICLE II
LEASE OF SITES; LEASE TERM
SECTION 2.1. Acceptance and Lease of Sites. On the Document Closing
Date, Lessor, subject to the satisfaction or waiver of the conditions set forth
in Appendix 2 of the Participation Agreement, hereby agrees to accept delivery
on the Document Closing Date of the Sites pursuant to the terms of the
Participation Agreement and simultaneously to lease the Sites to Lessee
hereunder, and Lessee, subject to the satisfaction or waiver of the conditions
set forth in Appendix 2 of the Participation Agreement, hereby agrees, expressly
for the direct benefit of Lessor, to lease commencing on such Document Closing
Date from Lessor for the Lease Term, such Sites.
SECTION 2.2. Acceptance Procedure. Lessor hereby authorizes one or more
employees of Lessee, to be designated by Lessee, as the authorized
representative or representatives of Lessor to accept delivery of the Sites.
Lessee hereby agrees that such acceptance of delivery by such authorized
representative or representatives and the execution and delivery by Lessee as of
the Document Closing Date, of a Lease Supplement in the form of Exhibit A hereto
or in such other form as may be reasonably acceptable to the Agent and Lessor
(in each case, appropriately completed) shall, without further act, constitute
the irrevocable acceptance by Lessee of the Sites which are the subject thereof
for all purposes of this Lease and the other Operative Documents on the terms
set forth therein and herein.
SECTION 2.3. Lease Term. Unless earlier terminated, the term of this
Lease shall consist of the Basic Term, commencing on and including the Document
Closing Date and ending on the date (the "Basic Term Expiration Date") which is
five years after the Document Closing Date and the Renewal Term, if exercised
and effective (collectively, the "Lease Term").
SECTION 2.4. Lease Renewal. Subject to the consent of Lessor and the
Lenders pursuant to Section 2.10 of the Participation Agreement, Lessee may
elect to renew this Lease for one five-year renewal term (the "Renewal Term")
commencing upon the expiration of the Basic Term (the "Renewal Term Commencement
Date") and ending on the date which is five years after the Renewal Term
Commencement Date, as provided in Article VI and in the applicable Lease
Supplement.
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Lease Agreement
ARTICLE III
OTHER PROPERTY
Lessee may from time to time own or hold under lease from Persons other
than Lessor, furniture, trade fixtures and equipment located on or about the
Sites that is not subject to this Lease. Lessor shall from time to time, upon
the reasonable request, and at the cost and expense of Lessee, which request
shall be accompanied by such supporting information and documents as Lessor may
reasonably require, promptly acknowledge in writing to Lessee or other Persons
that the particular items of furniture, trade fixtures and equipment in question
are not part of the related Site and that, subject to the rights of Lessor under
any other Operative Documents, Lessor does not own or have any other right or
interest in or to such furniture, trade fixtures and equipment.
ARTICLE IV
RENT
SECTION 4.1. Basic Rent. Lessee shall pay to Agent, for the benefit of
Lessor and the Lenders, the amounts of Basic Rent during the Basic Term and, if
applicable, the Renewal Term, determined in accordance with the definition of
"Basic Rent" on each Payment Date.
SECTION 4.2. Supplemental Rent. Lessee shall pay to Agent, for the
benefit of Lessor, or to whomever shall be entitled thereto as expressly
provided herein or in any other Operative Document (and Lessor hereby directs
Lessee, on behalf of Lessor, to so pay such Agent or other Person), any and all
Supplemental Rent promptly as the same shall become due and payable and, in the
event of any failure on the part of Lessee to pay any Supplemental Rent, Lessor
shall have all rights, powers and remedies provided for herein or by law or in
equity or otherwise in the case of nonpayment of Basic Rent. Lessee hereby
reaffirms its obligation to pay as Supplemental Rent (i) any and all Additional
Costs, and (ii) any Transaction Costs not paid on the Document Closing Date, as
further described in Section 9.9 of the Participation Agreement.
SECTION 4.3. Method and Amount of Payment. As long as any obligations
remain outstanding under the Loan Agreement, Basic Rent and Supplemental Rent
shall be paid to Agent (or, in the case of Supplemental Rent, to such Person as
may be entitled thereto) on the due date therefor at such place as Agent shall
specify in writing to Lessee at least two (2) Business Days prior
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Lease Agreement
to the due date therefor. Agent, on behalf of Lessor, shall notify Lessee of the
applicable LIBO Rate or Prime Rate, as applicable, promptly upon the
determination thereof. Each payment of Rent shall be made by Lessee prior to
12:00 noon Philadelphia time (and payments made after such time shall be deemed
to have been made on the next day) at the place of payment in funds consisting
of lawful currency of the United States of America which (in the case of any
amount payable to Lessor, Agent or any Lender) shall be immediately available on
the scheduled date when such payment shall be due, unless the scheduled date
shall not be a Business Day, in which case such payment shall be made on the
next succeeding Business Day (unless the result of such extension would be to
carry such payment into the next calendar month, in which event such payment
shall be made on the next preceding Business Day). The provisions of the
foregoing sentence of this Section 4.3 shall be applicable only to Basic Rent
and to Supplemental Rent payable to, or on behalf of or for the account of,
Lessor, any Lender, Agent and any other Indemnitee. Any amounts payable by
Lessee to Lessor hereunder shall be payable in accordance with Section 9.16 of
the Participation Agreement.
SECTION 4.4. Late Payment. If any Basic Rent shall not be paid when due
(not taking into account any applicable grace period), Lessee shall pay to Agent
on behalf of Lessor and the Lenders, or if any Supplemental Rent payable to or
on behalf or for the account of Lessor, any Lender, Agent or other Indemnitee is
not paid when due (not taking into account any applicable grace period), Lessee
shall pay to whomever shall be entitled thereto, in each case as Supplemental
Rent, interest at the Overdue Rate (to the maximum extent permitted by law) on
such overdue amount from and including the initial due date thereof (not taking
into account any applicable grace period) to but excluding the Business Day of
payment thereof at the Overdue Rate.
SECTION 4.5. Net Lease; No Setoff; Etc. This Lease shall constitute a
net lease and, notwithstanding any other provision of this Lease, it is intended
that Basic Rent and Supplemental Rent shall be paid without counterclaim,
setoff, deduction or defense of any kind and without abatement, suspension,
deferment, diminution or reduction of any kind, and Lessee's obligation to pay
all such amounts, throughout the Basic Term and the Renewal Term, if applicable,
is absolute and unconditional. The obligations and liabilities of Lessee
hereunder shall in no way be released, discharged or otherwise affected for any
reason, including, without limitation, to the maximum extent permitted by law:
(a) any defect in the condition, merchantability, design, construction, quality
or fitness for use of any portion of the
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Lease Agreement
Sites, or any failure of the Sites to comply with all Applicable Laws and
Regulations, including any inability to occupy or use the Sites by reason of
such non-compliance; (b) any damage to, abandonment, loss, contamination of or
Release from or destruction of or any requisition or taking of the Sites or any
part thereof, including eviction; (c) any restriction, prevention or curtailment
of or interference with any use of the Sites or any part thereof, including
eviction; (d) any defect in title to or rights to the Sites or any Lien on such
title or rights or on the Sites; (e) any change, waiver, extension, indulgence
or other action or omission or breach in respect of any obligation or liability
of or by Lessor, Agent or any Lender; (f) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceedings relating to Lessee, Lessor, Agent, any Lender or any other Person,
or any action taken with respect to this Lease by any trustee or receiver of
Lessee, Lessor, Agent, any Lender or any other Person, or by any court, in any
such proceeding; (g) any claim that Lessee has or might have against any Person,
including, without limitation, Lessor, or any Lender; (h) any failure on the
part of Lessor to perform or comply with any of the terms of this Lease, any
other Operative Document or of any other agreement whether or not related to the
Overall Transaction; (i) any invalidity or unenforceability or disaffirmance
against or by Lessee of this Lease or any provision hereof or any of the other
Operative Documents or any provision of any thereof; (j) the impossibility of
performance by Lessee, Lessor or both; (k) any action by any court,
administrative agency or other Authority; any restriction, prevention or
curtailment of or any interference with the construction on or any use of any
Site or any part thereof; or (m) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not Lessee shall have notice
or knowledge of any of the foregoing. Except as specifically set forth in
Section 6.5 or Article XIII of this Lease, this Lease shall be noncancellable by
Lessee for any reason whatsoever, and Lessee, to the extent permitted by
Applicable Laws and Regulations, waives all rights now or hereafter conferred by
statute or otherwise to quit, terminate or surrender this Lease, or to any
diminution, abatement or reduction of Rent payable by Lessee hereunder. If for
any reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise, except as expressly provided in Section 6.5 or
Article XIII of this Lease, Lessee shall, unless prohibited by Applicable Laws
and Regulations, nonetheless pay to Lessor (or, in the case of Supplemental
Rent, to whomever shall be entitled thereto) an amount equal to each Rent
payment at the time and in the manner that such payment would have become due
and payable under the terms of this Lease if it had not been terminated in whole
or in part, and in such case, so long as such
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Lease Agreement
payments are made and no Lease Event of Default shall have occurred and be
continuing, Lessor will deem this Lease to have remained in effect. Each payment
of Rent made by Lessee hereunder shall be final and, absent manifest error in
the computation of the amount thereof, Lessee shall not seek or have any right
to recover all or any part of such payment from Lessor, Agent or any party to
any agreements related thereto for any reason whatsoever. Lessee assumes the
sole responsibility for the condition, use, operation, maintenance, and
management of the Sites and Lessor shall have no responsibility in respect
thereof and shall have no liability for damage to the property of Lessee or any
subtenant of Lessee on any account or for any reason whatsoever other than by
reason of Lessor's willful misconduct or gross negligence or breach of any of
its obligations under any Operative Document.
ARTICLE V
UTILITY CHARGES
Lessee shall pay or cause to be paid all charges for electricity,
power, gas, oil, water, telephone, sanitary sewer service and all other rents
and utilities used in or on a Site during the Lease Term. Lessee shall be
entitled to receive any credit or refund with respect to any utility charge paid
by Lessee and the amount of any credit or refund received by Lessor on account
of any utility charges paid by Lessee, net of the costs and expenses reasonably
incurred by Lessor in obtaining such credit or refund, shall be promptly paid
over to Lessee. All charges for utilities imposed with respect to a Site for a
billing period during which this Lease expires or terminates (except pursuant to
Section 6.2, in which case Lessee shall be solely responsible for all such
charges) shall be adjusted and prorated on a daily basis between Lessor and
Lessee, and each party shall pay or reimburse the other for each party's pro
rata share thereof.
ARTICLE VI
RENEWAL OPTION; SALE, RETURN AND PURCHASE OPTIONS
SECTION 6.1. Renewal Option. Subject to the consent of Lessor and the
Lenders pursuant to Section 2.10 of the Participation Agreement, Lessee shall
have the right, at its option, to request the Participants to renew all (but not
less than all) of the Lease Supplements for the Renewal Term, commencing
immediately following the expiration of the Basic Term. In order to exercise
such option, Lessee shall give irrevocable written notice thereof to Lessor no
earlier than
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Lease Agreement
fifteen (15) months and no later than twelve (12) months prior to the end of the
Basic Term and no Lease Payment/Bankruptcy Default or Lease Event of Default
shall have occurred and be continuing at the time of exercise and at the
commencement of the Renewal Term. If the Renewal Term is applicable, Lessee
shall continue to pay Rent, including Basic Rent (upon the terms agreed to by
Lessee and the Participants for the Renewal Term), during the Renewal Term on
each Payment Date occurring during the Renewal Term. All of the provisions of
this Lease shall remain in effect during the Renewal Term.
SECTION 6.2. Purchase Option. Lessee will have the right, at its option
and upon ten (10) months prior written notice (which notice shall be
irrevocable) to Lessor prior to expiration of the Lease Term, to purchase all
(but not less than all) of the Sites then subject to the Lease Supplements at a
price equal to the Purchase Option Exercise Amount (the "Purchase Option"). If
Lessee shall have elected to purchase the Sites, Lessor shall, upon discharge of
the Lien of the Mortgages pursuant to the provisions thereof, and the payment in
full of an amount sufficient to retire the Notes and pay in full the Equity
Amount, and the payment of all accrued but unpaid Rent and breakage fees, if
any, plus all other amounts (including, without limitation, all Supplemental
Rent), fees and expenses then due and payable, transfer by quitclaim deed all of
Lessor's right, title and interest in and to the Sites to Lessee or its
designee, without recourse or warranty (except as to the absence of Lessor
Liens), and against payment by Lessee of the Purchase Option Exercise Amount in
immediately available funds. Lessee, at its option, may assign its right to
exercise the Purchase Option by written notice thereof to Agent and Lessor;
provided that (i) Lessee shall be bound by any exercise of the Purchase Option
by the assignee, (ii) such assignee shall be bound by the provisions of this
Article VI applicable to the Purchase Option, and (iii) no such assignment shall
release Lessee from its obligations under this Article VI and, without
limitation, Lessee shall remain primarily liable to Lessor for the payment of
all amounts due under this Article VI in respect of the Purchase Option.
SECTION 6.3. Sale Option. If no Lease Payment/Bankruptcy Default or
Lease Event of Default shall have occurred and be continuing, then Lessee may
cause all (but not less than all) of the Sites subject to the Lease Supplements
to be sold on the last day of the Lease Term for cash to a purchaser or
purchasers not affiliated in any way with Lessee (the "Sale Option"); provided
that each Land Interest and the Facility thereon shall be sold to the same
Person and all Land Interests and all Facilities thereon shall be sold to one or
more Persons in the same transaction; and provided further that in connection
with the sale of each
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Lease Agreement
Facility located on a Non-Acquired Land Interest, Lessee shall be obligated to
sell the related Land Interest as well. In the event Lessee timely elects the
Sale Option, on the last day of the Lease Term, Lessee will pay as Supplemental
Rent to Lessor the amounts determined in accordance with Section 6.4(b) until
the Lease Balance and all other amounts payable under the Operative Documents
have been paid in full.
SECTION 6.4. Conditions for Sale of the Sites.
(a) In the event that the Sale Option is applicable, Lessee
shall cause all (but not less than all) of the Sites to be sold in accordance
with the procedures set forth in this Section 6.4. In order to exercise the Sale
Option, Lessee shall give notice of its election of the Sale Option effective at
the expiration of the Basic Term or Renewal Term, as the case may be, not later
than ten (10) months prior to such expiration, which exercise shall be
irrevocable, and any failure of Lessee to so elect the Sale Option shall be
deemed an election of the Purchase Option pursuant to Section 6.2. Subject to
the preceding sentence, during the period commencing on the date ten (10) months
prior to the scheduled end of the Basic Term or the Renewal Term, as the case
may be, Lessee, on behalf of Lessor, shall use best commercial efforts, as
nonexclusive agent for Lessor, to obtain the highest cash bids for the purchase
of the Sites and, in the event it receives any bid, Lessee shall, within five
(5) Business Days after receipt thereof and at least twenty (20) Business Days
prior to the Lease Termination Date, certify to Lessor and Agent in writing the
amount and terms of such bid, and the name and address of the party or parties
(who shall not be Lessee or any Affiliate of Lessee or any Person with whom
Lessee has an understanding or arrangement regarding the future use of the Sites
by Lessee or such Affiliate, but who may be Lessor or a Lender, any Affiliate
thereof or any Person contacted by a Lender) submitting such bid. Lessee will
keep Agent promptly informed of the material terms of any proposed bid. Lessee
shall bear its own expenses and pay, as Supplemental Rent, the reasonable
expenses of Lessor, Agent and each Lender in connection with any such bidding
and sale process pursuant to this Section 6.4 including any recapture costs
incurred under government-funded healthcare programs, as well as all costs and
expenses incurred by any party (including a buyer or potential buyer) to place
the Sites in the condition required by Section 9.1 and costs of repairs,
Alterations or improvements desired by such buyer.
(b) In the event that Lessee contemplates accepting any bid
which, upon payment of all amounts under Section 6.4(b), shall result in any
portion of the Lease Balance or any other
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Lease Agreement
amount due under the Operative Documents remaining outstanding (a "Loss Bid"),
Lessee shall notify Agent and Lessor in writing (a "Loss Bid Notice") of such
fact and the calculation thereof prior to accepting any such bid; and in the
event of such bid, any Participant may submit a bid to Lessee not later than
thirty (30) days after the date of such notice from Lessee. On or before the
Lease Termination Date, so long as no Lease Event of Default or Lease
Payment/Bankruptcy Default shall have occurred and be continuing, and subject to
the release of the security interest with respect to the Sites under the
Mortgages: (i) Lessee shall transfer all of Lessee's right, title and interest
in the Sites, or cause the Sites to be transferred, to the bidder(s), if any,
which shall have submitted the highest bid therefor at least twenty (20) (or, in
the case of a Participant, any Affiliate thereof or Person contacted by a
Participant, five (5)) Business Days prior to such Lease Termination Date, in
the same manner and in the same condition and otherwise in accordance with all
the terms of this Lease; (ii) subject to prior or concurrent payment by Lessee
of all amounts due under clause (iii) of this sentence, Lessor shall exercise
such rights as it has to cause the Sites to be released from the Lien of the
Mortgages and shall, without recourse or warranty (except as to the absence of
Lessor Liens), transfer by quitclaim deed Lessor's right, title and interest in
and to the Sites for cash to such bidder(s); and (iii) Lessee shall
simultaneously pay or cause to be paid to Lessor in immediately available funds
an amount equal to the sum of (p) all unpaid Basic Rent due on or prior to the
Lease Termination Date, and all Supplemental Rent due on or prior to such date
and any other amounts due and payable by Lessee to Lessor, Agent and each Lender
plus (q) the gross sale proceeds of the Sites sold by Lessor (the "Proceeds");
plus (r) the Applicable Percentage Amount. To the extent the sum of the Proceeds
plus the Applicable Percentage Amount shall exceed the Lease Balance, upon
receipt of the amounts described in clause (p) of the preceding sentence, Lessor
shall apply the amount of Proceeds equal to such excess to the amount payable by
Lessee under clause (r); provided, that to the extent that the Proceeds alone
shall exceed the Lease Balance, upon receipt of the amounts described in clause
(p) of the preceding sentence, Lessor shall pay the amount of such excess to
Lessee. For purposes of clause (q), with respect to the gross sales proceeds
relating to the sale of the Non-Acquired Land Interests and the related
Facilities, such gross proceeds shall be allocated between Lessee's interest in
such Non-Acquired Land Interest (as the owner thereof) and Lessor's interest in
such Non-Acquired Land Interest (as the ground lessee thereof) and in the
Facility thereon based upon the respective Fair Market Sales Values of Lessee's
interest in such Non-Acquired Land Interest and Lessor's interest in such Non-
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Lease Agreement
Acquired Land Interest and the Facility thereon as determined by an appraisal
conducted, at Lessee's expense, by an appraiser of nationally recognized
standing, selected and engaged by the Required Participants; provided, that the
maximum portion of the gross sales proceeds allocated to any Non-Acquired Land
Interest shall be Lessee's cost for such Non-Acquired Land Interest as set forth
in the applicable Lease Supplement. The "Applicable Percentage Amount" shall be
based upon the Applicable Percentage for the Lease Supplement applicable to such
Site, and shall be determined in accordance with the definition thereof in
Appendix 1 to the Participation Agreement. The "Applicable Percentage" for each
Lease Supplement shall be determined on or about the Document Closing Date and
shall be set forth in the Lease Supplement provided that the maximum "Applicable
Percentage Amount" will be assumed without causing the present value at the
beginning of the Lease Term of the minimum lease payments, as determined in
accordance with generally accepted accounting principles, to equal or exceed
ninety percent (90%) of the Fair Market Sales Value, at the beginning of this
Lease, of the applicable Site. The Applicable Percentage for any Lease
Supplement shall in no event be less than eighty percent (80%).
(c) If Lessee exercises the Sale Option and a Loss Bid Notice
is to be provided pursuant to Section 6.4(b), then as a condition to Lessee's
right to consummate the Sale Option pursuant to Sections 6.3 and 6.4, Lessee
shall cause to be delivered to Lessor not later than five (5) Business Days
prior to the Lease Termination Date, at Lessee's sole cost and expense, a report
in form and substance reasonably satisfactory to the Agent and Lessor from an
Appraiser selected by Lessee and reasonably acceptable to the Agent and Lessor
(the "End of Term Report") to establish the reason for any impairment to the
value of any of the Sites which are being sold for less than the Allocated
Amount applicable to such Site. Without limiting the indemnities provided in the
Operative Documents, on the Lease Termination Date, Lessee shall pay to Agent,
on behalf of Lessor and the Lenders, an amount equal to the Shortfall Amount
that the End of Term Report demonstrates was the result of any impairment to the
value in any of the Sites due to:
(i) the existence of any Hazardous Materials, Environmental
Concern Materials or violations of Environmental Laws with
respect to a Site occurring or discovered after the date
such Site becomes subject to the Lease (regardless of the
Person so discovering any of the foregoing), or
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Lease Agreement
(ii) any restoration or rebuilding carried out by Lessee
or any failure of Lessee to complete any Alterations,
restoration or rebuilding, or
(iii) any easements or other actions described in
clauses (i) through (viii) of Section 8.3, or
(iv) the failure of Lessor to have good and marketable title to
any Site free and clear of all Liens (including Permitted
Liens (other than Lessor Liens)) and exceptions to title
caused by the acts or omissions of Lessee or any Affiliate
or Subtenant.
As used herein, the term "Shortfall Amount" means the excess, if any, of (i) the
Lease Balance over (ii) the sum of the Proceeds plus the Applicable Percentage
Amount.
SECTION 6.5. Early Termination.
(a) Commencing two years after the Document Closing Date and
provided that no Lease Payment/Bankruptcy Default or Lease Event of Default
shall have occurred and be continuing (or any such defaults are cured
contemporaneously with the consummation of the purchase option under this
Section 6.5(a)), Lessee shall have the option to purchase all (but not less than
all) of the Sites on the next scheduled Payment Date for an amount equal to,
without penalty, the Lease Balance plus all other amounts then due under the
Lease and the other Operative Documents, including, without limitation, accrued
but unpaid Rent and breakage fees, if any, plus all other amounts, fees and
expenses then due and payable.
(b) On any scheduled Payment Date prior to the first year
anniversary of the Document Closing Date, Lessee may, at its option, by giving
at least ninety (90) days' advance written notice to Lessor, purchase all (but
not less than all) of the Sites for an amount equal to the Lease Balance,
accrued but unpaid Rent and breakage fees, if any, all other amounts, fees and
expenses then due and payable plus a prepayment fee equal to 50 basis points of
the Lease Balance. On any scheduled Payment Date after the first year
anniversary of the Document Closing Date, but prior to the second year
anniversary of the Document Closing Date, Lessee may, at its option, by giving
at least ninety (90) days' advance written notice to Lessor, purchase all (but
not less than all) of the Sites for an amount equal to the Lease Balance,
accrued but unpaid Rent and breakage fees, if any, all other amounts, fees and
expenses then due and payable, plus a prepayment fee equal to 25 basis points of
the Lease Balance.
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SECTION 6.6. Exercise of Options; Failure to Elect. In order to
exercise any of its purchase or sale options under this Lease (other than under
Section 6.5), Lessee shall give irrevocable written notice to Lessor not less
than twelve (12) months prior to the end of the Basic Term, that Lessee intends
to exercise one of the options provided in this Article VI and specifying such
option. If Lessee shall fail to deliver such written notice in the time
required, Lessee shall be deemed to have elected to exercise the Purchase Option
pursuant to Section 6.2. Lessee's election (or deemed election) of the Purchase
Option will be irrevocable at the time it is made (or deemed made). If Lessee
has elected the option to sell the Sites under Section 6.3, such option shall be
automatically revoked and such election shall be deemed of no effect if, on or
after the date Lessee elects such option, there exists or occurs a Lease Event
of Default or Lease Payment/Bankruptcy Default or Lessee shall fail in any
manner fully to comply with this Article VI, in which case Lessee shall be
automatically deemed to have elected the Purchase Option pursuant to Section
6.2.
SECTION 6.7. Return of Sites. Unless the Sites shall have been
transferred to Lessee pursuant to Section 6.2 or 6.5, Lessee shall, on the Lease
Termination Date, and at its own expense, transfer the Sites (together with the
reports described in Section 9.4 relating thereto) to the independent purchaser
thereof pursuant to Section 6.3, free and clear of all Liens other than
Permitted Exceptions and Lessor Liens, in as good condition as they were on the
Document Closing Date, ordinary wear and tear excepted, and in compliance with
all Applicable Laws and Regulations and the other requirements of Article IX
(and in any event without (x) any asbestos installed or maintained in any part
of the Site, (y) any polychlorinated byphenyls (PCBs) in, on or used, stored or
located at the Site, and (z) any other Hazardous Materials). Lessee shall
cooperate with the independent purchaser of the Site in order to facilitate the
ownership and operation by such purchaser of the Site after the Lease
Termination Date, including providing all books, reports and records regarding
the maintenance, repair and ownership of the Site and all data and technical
information relating to the physical operation and maintenance of the Site,
granting or assigning (to the extent permitted by law) all licenses necessary
for the operation and maintenance of the Site and cooperating in seeking and
obtaining all necessary Governmental Action. Lessee shall have also paid the
total cost for the completion of all Alterations commenced prior to the Lease
Termination Date. The obligation of Lessee under this Article VI regarding the
Purchase Option shall survive the expiration or termination of this Lease,
except if Lessee duly
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and timely exercises the Sale Option and performs its obligations under Sections
6.3 and 6.4, or Lessee duly and timely exercises its rights under Section 6.5
and performs its obligations thereunder. Unless Lessee shall have exercised or
been deemed to have exercised its option to purchase the Sites, then after the
date which is twelve (12) months prior to the Lease Termination Date, Lessor
shall at Lessee's expense be entitled to perform such investigation, including
obtaining reports of engineers and other experts as to the condition and state
of repair and maintenance required by this Section 6.7 and as to the compliance
with Environmental Laws of the Site, as it deems appropriate. Lessee, at its
sole cost and expense, shall cause the repair or other remediation of any
discrepancies between the actual condition of the Site and the condition
required under the Lease, such repair or remediation to be completed not later
than the expiration of this Lease.
SECTION 6.8. Intentionally Omitted.
SECTION 6.9. Failure of Lessee to Sell Sites. If Lessee shall exercise
the Sale Option and shall fail to arrange for the sale of all of the Sites on or
before the Lease Termination Date in accordance with and subject to the
provisions of Sections 6.4 and 6.6, then Lessee and Lessor hereby agree as
follows:
(a) On the Lease Termination Date, Lessee shall (i) pay to
Agent (on behalf of the Participants) the Applicable Percentage Amount
and (ii) Lessee will do both of the following:
(1) at the option of Agent (on behalf of the
Participants), either (x) cancel the sale of the Sites for
which Lessee has arranged a sale (in which case, all Sites
will constitute "unsold Sites" under this Section 6.9) or (y)
sell the Sites for which Lessee has arranged a sale pursuant
to the provisions of Sections 6.4 and 6.6; and
(2) at the option of Agent (on behalf of the
Participants), either (x) tender to Lessor possession of the
unsold Sites or (y) continue to lease the unsold Sites during
a holdover period (the "Holdover Period") and in the case of
such holdover, Lessee shall continue to market, on a
non-exclusive basis, the Sites for sale on behalf of Lessor in
accordance with the provisions of the Lease. For each such
Site, such Holdover Period shall expire on the earlier of (x)
the sale of such Site and (y) the reduction of the Lease
Balance to zero
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and the payment by Lessee of all Basic Rent, Supplemental Rent
and all other amounts then due and payable under the Operative
Documents, and (z) written notice by Agent, as Agent for the
Lenders, of a date specified for the termination of such
Holdover Period with respect to such Site. The Basic Rent
payable by Lessee for the Sites during any Holdover Period
shall be applied first to payment of the portion of Basic Rent
set forth in clauses (i) and (ii) of the definition thereof,
with any excess being applied to reduce such Lease Balance.
Any proceeds from the sale of any Sites during the Holdover
Period will be applied to reduce the Lease Balance, with such
application being allocated first to the Lenders in respect of
the remaining amount of the Notes, and second to the Equity
Amount. If and when the Lease Balance shall be reduced to
zero, (i) any further proceeds from the sale of any remaining
Sites shall be remitted to Lessee for its own account, (ii) at
the request of either Lessor (or Agent on Lessor's behalf) or
Lessee, Lessor will transfer to Lessee or its designee, and
Lessee will accept or cause its designee to accept the
transfer of, all remaining Sites by quitclaim deed, and Lessee
shall pay or cause to be paid all costs and expenses
(including, without limitation, reasonable attorneys' fees and
expenses of counsel to the Participants) in connection with
such transfer.
(b) On or after the Lease Termination Date, Agent, on behalf
of Lessor and the Lenders, shall have the right, but not the
obligation, to sell the Sites for such purchase price and upon such
terms as Agent shall determine in its sole discretion. In the event
that Agent shall so elect to sell the Sites, Agent shall notify each of
Lessor, Lessee and the Lenders thereof, and each shall have the right
to submit a bid and/or to cause any other Person to submit a bid to
Agent not later than twenty (20) Business Days prior to the date Agent
desires to sell the Sites (as set forth in the aforementioned notice
thereof); provided, however, that Agent, on behalf of Lessor and the
Lenders, shall have the right, in its sole discretion, from time to
time, to defer such proposed sale date, in which event, the rights of
Lessee, Lessor and each Lender to submit a bid and/or to cause any
other Person to submit a bid to Agent shall be extended to the date
that is twenty (20) Business Days prior to the revised proposed sale
date. At no time shall Agent be obligated to accept any bid for the
sale of the Sites
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(whether such bid was obtained by Lessee, Lessor, any Lender or
otherwise) or to consummate any proposed sale.
(c) At any time and from time to time on or after the Lease
Termination Date, Agent, on behalf of Lessor and the Lenders, shall
have the right to withdraw from the Sale Deposit (other than the
portion thereof constituting the Applicable Percentage Amount) amounts
to pay, or reimburse itself for the payment of, expenses of Lessor,
Agent and each Participant in connection with any bidding and sale (or
proposed sale, whether or not consummated) described in clause (b). In
the event that there are insufficient funds remaining from the Sale
Deposit to pay such expenses, Lessee shall pay such expenses from time
to time upon demand.
(d) Contemporaneously with the consummation of any sale of the
Sites by Lessee or Agent pursuant to this Section 6.9, (i) Lessee will
transfer all of Lessee's right, title and interest in the Sites to be
transferred to the purchaser, (ii) subject to prior or concurrent
payment by Lessee of all amounts due under clause (iii) of this
sentence and receipt by Lessor of Proceeds from such sale, Lessor shall
exercise such rights as it has to cause the Sites to be released from
the Lien of the Mortgages and shall, without recourse or warranty
(except as to the absence of Lessor Liens), transfer by quitclaim deed
Lessor's right, title and interest in and to the Sites for cash to such
purchaser; and (iii) Lessee shall simultaneously pay or cause to be
paid to Agent, on behalf of Lessor and the Lenders, in immediately
available funds an amount equal to all unpaid Basic Rent and all
Supplement Rent due on or prior thereto and any other amounts due and
payable by Lessee to Lessor, Agent and each Lender. Any Proceeds in
excess of the sum of (x) the Lease Balance, plus (y) all unpaid Basic
Rent and all Supplemental Rent due on or prior thereto and any other
amounts due and payable by Lessee to Lessor, Agent and each Lender,
shall be remitted to Lessee promptly after receipt.
(e) Until a sale of the Sites by Lessee or Agent pursuant to
this Section 6.9, Lessee shall be bound by all of the obligations and
duties of Lessee under this Lease, notwithstanding the occurrence of
the Lease Termination Date.
(f) Lessor reserves all rights under this Lease and the other
Operative Documents arising out of Lessee's breach of any provisions of
this Lease (including Article VI),
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whether occurring prior to, on or after the Lease Termination Date,
including Lessee's breach of any of its obligations under Sections 6.3
and 6.4, including the right to sue Lessee for damages.
(g) To the greatest extent permitted by law, Lessee hereby
unconditionally and irrevocably waives, and releases Lessor and Agent
from, any right to require Lessor or Agent to sell the Sites at all or
for any minimum purchase price or on any particular terms and
conditions, Lessee hereby agreeing that if Lessee shall elect the Sale
Option, its ability to sell the Sites on or prior to the Lease
Termination Date and its right thereafter to submit a bid or to cause
any other Person to submit a bid to Agent pursuant to Section 6.9(b) in
the event Agent shall elect to sell the Sites, shall constitute full
and complete protection of Lessee's interest hereunder.
ARTICLE VII
CONDITION AND USE OF SITES
SECTION 7.1. Waivers. The Sites are let by Lessor "AS IS" in their
present or then condition, as the case may be, subject to (a) any rights of any
parties in possession thereof, (b) the state of the title thereto existing at
the time Lessor acquired its interest in the Site, (c) any state of facts which
an accurate survey or physical inspection might show (including any survey
delivered on the Document Closing Date), (d) all Applicable Laws and
Regulations, and (e) any violations of Applicable Laws and Regulations which may
exist at the commencement of the Lease Term. Lessee has examined the Site and
(insofar as Lessor is concerned) has found the same to be satisfactory. NEITHER
LESSOR, AGENT NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE TO THE SITES OR TO THE VALUE,
MERCHANTABILITY, HABITABILITY, CONDITION, OR FITNESS FOR USE OF THE SITES, OR
ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE SITES, OR ANY PART THEREOF, AND NEITHER LESSOR,
AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF THE SITES, OR ANY PART THEREOF, TO COMPLY WITH ANY
APPLICABLE LAWS AND REGULATIONS, except that Lessor hereby represents and
warrants that the Site is and shall be free of Lessor Liens. Lessee has been
afforded full opportunity to inspect the Sites, is satisfied with the results of
its inspections and is entering into this Lease solely on the basis of the
results of its own inspections, and all risks
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incident to the matters discussed in the preceding sentence (other than Lessor
Liens), as between Lessor, Agent and the Lenders, on the one hand, and Lessee,
on the other, are to be borne by Lessee. The provisions of this Article VII have
been negotiated, and, except to the extent otherwise expressly stated, the
foregoing provisions are intended to be a complete exclusion and negation of any
representations or warranties by any of Lessor, Agent or the Lenders, express or
implied, with respect to the Sites (or any interest therein), that may arise
pursuant to any law now or hereafter in effect or otherwise.
ARTICLE VIII
LIENS; EASEMENTS
SECTION 8.1. Liens. Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien, defect, attachment, levy, title
retention agreement or claim upon any Site or Alteration, or with respect to the
Sites, any Basic Rent or Supplemental Rent, the title thereto, or any interest
therein, including all Liens which arise out of the possession, use or occupancy
of the Sites or by reason of labor or materials furnished or claimed to have
been furnished to Lessee, or any of its contractors or agents or by reason of
the financing of any Alterations constructed by or for the benefit of Lessee and
not financed by Lessor, except in all cases Permitted Liens. With respect to all
Liens other than Permitted Liens, Lessee shall promptly, but not later than
thirty (30) days (or, in the case of non-consensual Liens, sixty (60) days)
after the filing thereof, at its own expense, take such action as may be
necessary duly to discharge or eliminate or bond in a manner reasonably
satisfactory to Lessor any such Lien if the same shall arise at any time.
SECTION 8.2. No Lessor Consent or Liability. Nothing contained in this
Lease shall be construed as constituting the consent or request of the Lessor,
expressed or implied, to or for the performance by any contractor, mechanic,
laborer, materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of or to any Site or any part thereof. NOTICE IS HEREBY GIVEN THAT
NEITHER LESSOR NOR ANY LENDER OR AGENT IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE
HOLDING A SITE OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO
MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LESSOR, AGENT OR ANY LENDER IN AND TO ANY SITE.
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SECTION 8.3. Easements. Notwithstanding the foregoing paragraph, at the
request of Lessee, Lessor shall, from time to time during the Lease Term and
upon at least thirty (30) days' prior written notice from Lessee, and receipt of
the materials specified in the next succeeding sentence, consent to and join in
any (i) grant of easements, licenses, rights of way, party wall rights and other
rights in the nature of easements, with or without consideration, (ii) release
or termination of easements, licenses, rights of way, party wall rights or other
rights in the nature of easements which are for the benefit of a Site or any
portion thereof, with or without consideration, (iii) dedication or transfer of
portions of a Site, not improved with a building, for road, highway or other
public purposes, with or without consideration, (iv) execution of petitions to
have a Site or any portion thereof annexed to any municipal corporation or
utility district, (v) execution of agreements for the use and maintenance of
common areas, for reciprocal rights of parking, ingress and egress and
amendments to any covenants and restrictions affecting a Site or any portion
thereof, with or without consideration, (vi) request to any Authority for
platting or subdivision or replatting or resubdivision approval with respect to
a Site or any portion thereof or any parcel of land of which a Site or any
portion thereof forms a part or a request for any variance from zoning, (vii)
creation of a governmental special benefit district for public improvements and
collection of special assessments in connection therewith, in lump sum or
installments, and (viii) execution and delivery of any instrument appropriate to
confirm or effect such grant, release, dedication, transfer request or such
other matter, document or proceeding. Lessor's obligations pursuant to the
preceding sentence shall be subject to the requirements that:
(a) any such action shall be at the sole cost and expense of
Lessee, and Lessee shall pay all reasonable out-of-pocket costs of Lessor, Agent
and the Lenders in connection therewith (including, without limitation, the
reasonable fees of attorneys (including allocated costs of internal counsel of
Agent;
(b) Lessee shall have delivered to Lessor a certificate of a
Responsible Officer of Lessee stating that:
(1) such action will not cause the Site or any
portion thereof to fail to comply in any respect with the provisions of
the Lease or any other Operative Documents and in any material respect
with all Applicable Laws and Regulations (including, without
limitation, all applicable zoning, planning, building and subdivision
ordinances, all
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applicable restrictive covenants and all applicable
architectural approval requirements);
(2) all governmental consents or approvals required
prior to such action have been obtained, and all filings required prior
to such action have been made;
(3) such action will not result in any material
down-zoning of the Site or any portion thereof or a material reduction
in the maximum density or development rights available to the Site
under all Applicable Laws and Regulations;
(4) this Lease and Lessee's obligations hereunder
shall continue in full force and effect, without abatement, suspension,
deferment, diminution, reduction, counterclaim, setoff, defense or
deduction;
(5) such action will not materially reduce the Fair
Market Sales Value, utility, remaining economic useful life or residual
value of the Site or Lessor's interest therein; and
(6) such action will not impose or create any
liability or obligation on Lessor;
(c) all consideration received in connection with such
action shall be paid to Lessee; and
(d) no Lease Event of Default shall have occurred and
be continuing.
ARTICLE IX
MAINTENANCE AND REPAIR;
ALTERATIONS AND ADDITIONS
SECTION 9.1. Maintenance and Repair; Compliance With Law. Lessee, at
its own expense, shall at all times (a) maintain the Sites in good repair and
condition, subject to ordinary wear and tear, and in safe repair and condition
(all whether involving interior or exterior, structural or nonstructural,
ordinary or extraordinary, and foreseen or unforeseen circumstances); (b) except
to the extent Section 9.5 shall apply, maintain, manage and monitor the Sites in
accordance with all Applicable Laws and Regulations, whether or not such
maintenance requires structural modifications, noncompliance with which (i)
would have a material adverse effect on Lessee's right to use the Sites or
Lessee's
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business or financial condition, (ii) would cause any of the results enumerated
in Section 9.5 hereof, (iii) would materially adversely affect the Fair Market
Sales Value, utility, remaining economic useful life or residual value of the
Sites, or (iv) would materially adversely affect Lessor's interest in the Sites;
(c) comply with the standards imposed by any insurance policies required to be
maintained hereunder which are in effect at any time with respect to the Sites
or any part thereof; (d) maintain, manage and monitor the Sites in accordance
with all applicable contracts, including service contracts and insurance
contracts; (e) conduct maintenance and repair under the same programs and
subject to the same standards as Lessee or its Affiliates shall maintain and
repair other healthcare facilities owned, leased or operated by Lessee or its
Affiliates; (f) cause the Sites to continue to have at all times the capacity
and functional ability to be used for, on a continuing basis (subject to normal
interruption in the ordinary course of business for maintenance, inspection and
repair) and in commercial operation, the purposes for which it was specifically
designed; (g) maintain appropriate and customary written environmental
operations and maintenance plans (including, where appropriate for
asbestos-containing materials) for the Sites; and (h) procure, maintain and
comply in all material respects with all material licenses, permits, orders,
approvals, consents and other authorizations required for the construction, use,
maintenance and operation of the Sites and for the use, operation, maintenance,
repair and restoration of the Facilities. Lessee waives any right that it may
now have or hereafter acquire to (x) require Lessor to maintain, repair,
replace, alter, remove or rebuild all or any part of the Sites or (y) make
repairs at the expense of Lessor pursuant to any Applicable Laws and Regulations
or other agreements.
SECTION 9.2. Alterations.
(a) At Lessee's own cost and expense, (i) Lessee shall make
alterations, renovations, improvements and additions to any Site(s) or any part
thereof and substitutions and replacements therefor (collectively,
"Alterations") so long as such Alterations are (A) made to repair or maintain
the Site(s) in the condition required by Section 9.1; (B) necessary in order for
the Site(s) to be in compliance with Applicable Laws and Regulations; or (C)
necessary or advisable to restore the Site(s) to their condition existing prior
to a Casualty or Condemnation; and (ii) so long as no Lease Event of Default or
Lease Payment/Bankruptcy Default has occurred and is continuing, Lessee may
undertake Alterations on one or more Sites so long as such Alterations comply
with Applicable Laws and Regulations and with Section 9.1 and subsection (b) of
this Section 9.2.
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(b) The making of any Alterations must be in compliance with
the following requirements; provided that in the case of any Alteration required
by an emergency or by Applicable Laws and Regulations, Lessee shall (x) promptly
notify Agent thereof, (y) not be bound by the provisions of clause (1) below and
(z) effect such Alteration in a manner to avoid (or minimize if it is not
possible to avoid) any violation of clause (5) below:
(1) No such Alterations with a cost exceeding $500,000 (or, in
the case of related Alterations at any one Site, with an aggregate cost
exceeding $500,000) shall be made or undertaken except upon not less
than thirty days' prior written approval of Agent, which approval shall
not be unreasonably withheld. For any Alterations which are subject to
this clause (1), if Agent, in its good faith judgment, believes that
such Alterations may violate the provisions of clause (5) below, Agent
(on behalf of the Participants) may engage an appraiser of nationally
recognized standing, at Lessee's expense, to determine (by appraisal
methods satisfactory to Agent) the projected Fair Market Sales Value of
any Facility following the completion of Alterations relating thereto
and may delay its approval until receipt of such appraisal.
(2) Lessee shall not make any Alterations in violation of the
terms of any restriction, easement, condition or covenant or other
matter affecting title to the Site.
(3) No Alterations shall be undertaken until Lessee shall have
procured and paid for, so far as the same may be required from time to
time, all permits and authorizations relating to such Alterations of
all municipal and other Authorities having jurisdiction over the Site.
Lessor, at Lessee's expense, shall join in the application for any such
permit or authorization and execute and deliver any document in
connection therewith, whenever such joinder is necessary or advisable.
(4) The Alterations shall be expeditiously completed in a good
and workmanlike manner and in compliance with all Applicable Laws and
Regulations then in effect and the standards imposed by any insurance
policies required to be maintained hereunder.
(5) All Alterations shall, when completed, be of such a
character as to not materially adversely affect the Fair Market Sales
Value, utility, remaining economic useful life
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or residual value of the Site from its Fair Market Sales Value,
utility, remaining economic useful life or residual value immediately
prior to the making thereof or, in the case of Alterations being made
by virtue of a Casualty or Condemnation, immediately prior to the
occurrence of such Casualty or Condemnation.
(6) Lessee shall have made adequate arrangements for payment
of the cost of all Alterations when due so that the Site shall at all
times be free of Liens for labor and materials supplied or claimed to
have been supplied to the Site, other than Permitted Liens; provided,
that Lessee shall have the right to contest the amount claimed by any
such supplier of labor or materials in accordance with the applicable
provisions of Section 9.5.
SECTION 9.3. Title to Alterations. Title to Alterations shall without
further act vest in Lessor and shall be deemed to constitute a part of the
related Site and be subject to this Lease in the following cases:
(a) such Alterations shall be in replacement of or in
substitution for a portion of the Facilities and/or the Sites;
(b) such Alterations shall be required to be made
pursuant to the terms of Section 9.1 or 9.2(a)(i) hereof; or
(c) such Alterations shall be Nonseverable.
Lessee, at Lessor's request, shall execute and deliver any
deeds, bills of sale, assignments or other documents of conveyance reasonably
necessary to evidence the vesting of title in and to such Alterations to Lessor.
If such Alterations are not within any of the categories set
forth in clauses (a) through (c) of this Section 9.3, then title to such
Alterations shall vest in Lessee and such Alterations shall not be deemed to be
Alterations which are part of the Site.
All Alterations to which Lessee shall have title may, so long
as removal thereof shall not result in the violation of any Applicable Laws and
Regulations and no Lease Event of Default or Lease Payment/Bankruptcy Default is
continuing, be removed at any time by Lessee. Any such Alterations shall be
removed by Lessee at its expense if Lessor shall so request prior to the return
of the Site to Lessor or sale of the Site in accordance with the provisions of
this Lease, and Lessee shall at its
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expense repair any damage to the Site caused by the removal of such Alterations.
Lessor (or the purchaser of the applicable Site) may purchase from Lessee
Alterations (if not already owned by Lessor) which Lessee notifies Lessor that
Lessee intends to remove from the Site prior to the return of the Site to Lessor
or sale of the Site, which purchase shall be at the Fair Market Sales Value of
such Alterations. Title to any Lessee Alterations shall vest in Lessor (or the
purchaser of the applicable Site) if not removed from the Site by Lessee prior
to the return of the Site to Lessor or sale of the Site.
SECTION 9.4. Maintenance and Repair Reports. Lessee shall keep
maintenance and repair reports in sufficient detail, and as customary for owners
of commercial real estate, to indicate the nature and date of major work done.
Lessee shall prepare and maintain appropriate and customary written operations
and maintenance plans (including, where appropriate for asbestos-containing
materials) for the Sites. Such reports and plans shall be kept on file by Lessee
at its offices during the Lease Term, and shall be made available to Lessor upon
reasonable request. Lessee shall give notice to Lessor and Agent of any
Condemnation or Casualty the cost to repair which is reasonably expected by
Lessee to exceed $250,000, promptly after Lessee has knowledge thereof.
SECTION 9.5. Permitted Contests. If, to the extent and for so long as
(a) a test, challenge, appeal or proceeding for review of any Applicable Laws
and Regulations or any Governmental Action relating to any Site or to the
operation or maintenance of any Facility shall be prosecuted diligently and in
good faith in appropriate proceedings by Lessee or (b) compliance with such
Applicable Laws and Regulations or such Governmental Action shall have been
excused or exempted by a valid nonconforming use permit, waiver, extension or
forbearance, Lessee shall not be required to comply with such Applicable Laws
and Regulations or such Governmental Action but only if and so long as any such
test, challenge, appeal, proceeding or noncompliance shall not, in the
reasonable opinion of Lessor, involve (A) any meaningful risk of (1)
foreclosure, forfeiture or loss of a Site, (2) criminal liability being imposed
on Lessor, Agent, any Lender or the Site or (3) the nonpayment of Rent or (B)
any substantial danger of (1) the sale of, or the creation of any Lien (other
than a Permitted Lien) on, any part of the Site, (2) material civil liability
being imposed on Lessor, Agent, any Lender or the Site, (3) the extension of the
ultimate imposition of such Applicable Laws and Regulations or such Governmental
Action beyond the last day of the Lease Term, or (4) enjoinment of, or
interference with, the use, possession or disposition of the Site
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in any material respect. Lessee shall provide Lessor with notice of any contest
of the type described in clause (a) above in detail sufficient to enable Lessor
to ascertain whether such contest may have an effect of the type described in
clauses (b)(A) and (B) above.
Lessor will not be required to join in any proceedings
pursuant to this Section 9.5 unless a provision of any Applicable Laws and
Regulations requires, or, in the good faith opinion of Lessee, it is helpful to
Lessee that such proceedings be brought by or in the name of Lessor; and in that
event Lessor will join in the proceedings or permit them or any part thereof to
be brought in its name if and so long as no Lease Event of Default or Lease
Payment/Bankruptcy Default is continuing and Lessee pays all related expenses.
ARTICLE X
USE
Lessee may use each Site as a health care facility and for related
ancillary purposes. Lessee shall not use any Site or any part thereof for any
purpose or in any manner that would materially adversely affect the Fair Market
Sales Value, utility, remaining useful life or residual value of the Site or
that would create a materially increased risk of environmental liability or that
would violate or conflict with, or constitute or result in a violation or
default under (a) any Applicable Laws and Regulations whether now existing or
hereafter in effect, foreseen or unforeseen, except to the extent permitted by
Section 9.5, (b) any insurance policies required by Article XI, or (c) any
Operative Document. Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Sites as contemplated by this Lease.
Lessee shall not commit or permit any waste of the Sites or any part thereof.
ARTICLE XI
INSURANCE
SECTION 11.1. Required Coverages. Lessee will keep insured all property
of a character usually insured by corporations engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such corporations, and carry such other
insurance as is usually carried by such corporations, provided that in any event
Lessee will maintain:
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(a) Commercial General Liability Insurance. Combined single
limit insurance against claims for bodily injury, death or third-party property
damage occurring on, in or about each Site (including adjoining streets and
sidewalks) in an amount at least equal to $5,000,000 per person and $5,000,000
per occurrence (subject to a maximum deductible of $350,000 per occurrence) and
$5,000,000 for property damage per occurrence, with a minimum general annual
limit of $5,000,000 and a minimum of $15,000,000 excess of such coverage.
(b) Property Insurance. Insurance against loss of damage
covering each Site or any portion thereof by reason of any Peril (as defined
below) in an amount (subject to such deductibles and/or self-insurance in such
maximum amounts as is approved by Agent from time to time, such approval not to
be unreasonably withheld) at least equal to such minimum amounts as are carried
by corporations owning and/or operating healthcare facilities comparable to the
Sites; provided, however, that at no time shall the amount of such coverage be
less than replacement cost.
(c) Workers' Compensation Insurance. Lessee shall, in the
operation of the Sites, comply with the applicable Workers' Compensation laws
and protect Lessor, Agent and the Lenders against any liability under such laws.
(d) Builder's Risk Insurance. During the construction of any
Alteration, Lessee shall also maintain, for the benefit of Lessor, all-risk
Builders' Risk Insurance in an amount equal to the greater of the replacement
value of the applicable Facility and Alteration and the then outstanding
Allocated Amount of the applicable Site.
(e) Flood Insurance. For any Site located in a special flood
hazard area (as defined in National Flood Insurance Reform Act), Lessee shall
maintain flood insurance, for the benefit of Lessor, Agent and the Lenders, in
an amount at least equal to the then outstanding Allocated Amount of the
applicable Site. Prior to the date hereof and from time to time upon Lessor's
request, Lessee shall deliver to Lessor evidence reasonably satisfactory to
Lessor for each Site establishing whether such Site is located in a special
flood hazard area.
(f) Other Insurance. Such other insurance, including worker's
compensation insurance, malpractice or professional liability insurance,
automobile liability (if applicable) and business interruption insurance, in
each case as is generally carried by owners of similar properties in such
amounts and
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against such risks as are then customary for properties similar in use.
Such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise reasonably
appropriate considering the amount and type of insurance being provided by such
companies. Any insurance company selected by Lessee shall be rated in A.M.
Best's Insurance Guide or any successor thereto (or if there be none, an
organization having a similar national reputation) and shall have a general
policyholder rating of "A-" (or comparable rating for a rating by an
organization other than A.M. Best) and a financial rating of at least "X" (or
comparable rating for a rating by an organization other than A.M. Best) or be
otherwise acceptable to the Required Participants. In the case of liability
insurance maintained by Lessee, it shall name Agent, together with Lessor, as
additional insureds and, in the case of property insurance maintained by Lessee,
it shall name Agent, together with Lessor, as mortgagees and loss payees. Each
policy referred to in this Section 11.1 shall provide that: (i) it will not be
cancelled, materially modified or its limits reduced, or allowed to lapse
without renewal, except after not less than 30 days' prior written notice to
Agent; (ii) the interests of Agent and Lessor shall not be invalidated by any
act or negligence of or breach of warranty or representation by Lessee or any
Person having an interest in a Site or the Facility thereon; (iii) such
insurance is primary with respect to any other insurance carried by or available
to Agent and Lessor; (iv) the insurer shall waive any right of subrogation,
setoff, counterclaim, or other deduction, whether by attachment or otherwise,
against Agent or Lessor; and (v) such policy shall contain a cross-liability
clause providing for coverage of Agent and Lessor as if separate policies had
been issued to each of them. Lessee will notify Agent promptly of any policy
cancellation, reduction in policy limits, modification or amendment. The term
"Peril" shall mean, collectively, fire, lightning, flood, windstorm, hail,
explosion, riot and civil commotion, vandalism and malicious mischief, damage
from aircraft, vehicles and smoke and all other perils covered by the "all risk
endorsement" then in use in the Commonwealth of Pennsylvania.
SECTION 11.2. Delivery of Insurance Certificates. On or before the
Document Closing Date, Lessee shall deliver to Agent and Lessor certificates of
insurance satisfactory to Agent and Lessor evidencing the existence of all
insurance required to be maintained hereunder and setting forth the respective
coverages, limits of liability, carrier, policy number and period of coverage.
Thereafter, throughout the Lease Term, at the time each of Lessee's insurance
policies is renewed (but in no event
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less frequently than once each year), Lessee shall deliver to Agent and Lessor
certificates of insurance evidencing that all insurance required by Section 11.1
to be maintained by Lessee with respect to the Sites is in effect.
ARTICLE XII
ASSIGNMENT AND SUBLEASING
SECTION 12.1. Assignment and Subletting.
(a) Lessee may not assign, mortgage or pledge, in whole or in
part, any of its right, title or interest in, to or under this Lease or any
portion of the Sites to any Person (including an Affiliate of Lessee) at any
time, and any such assignment, mortgage or pledge shall be void; provided,
however, that without the consent of Lessor, Lessee may assign this Lease to a
single-purpose, wholly-owned, direct or indirect Subsidiary of Genesis (the
"Permitted Assignee") provided that the following conditions are met:
(i) The Permitted Assignee must be incorporated under the laws
of the State of Delaware or the Commonwealth of Pennsylvania;
(ii) No Lease Event of Default or Lease Payment/Bankruptcy
Default shall have occurred and be continuing;
(iii) The Permitted Assignee shall, prior to or simultaneously
with the assignment, enter into an assumption agreement, which
agreement shall include all of the representations, warranties
and covenants contained in this Lease;
(iv) Genesis and its Material Subsidiaries shall, prior to or
simultaneously with the assignment of the Lease deliver a
reaffirmation of the Guaranties; and
(v) Lessee shall deliver an opinion of counsel for the
Permitted Assignee, reasonably acceptable to Lessor and Agent,
dated as of the date of the assignment, stating that the
Permitted Assignee has the legal capacity to perform and
fulfill all of the obligations and liabilities contained in
the Lease, and containing other matters as reasonably
requested by Lessor and Agent.
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Lessee may not sublease, in whole or in part, any of its right, title or
interest in, to or under this Lease or any portion of the Sites to any Person at
any time, and any such sublease shall be void and of no force or effect;
provided, however, that without the consent of Lessor, Lessee may sublease any
Site to a wholly-owned direct or indirect Subsidiary of Genesis (any such
permitted sublease is hereinafter referred to as a "Sublease"). Any such
permitted sublessee under any Sublease described in this Section 12.1(a) shall
hereinafter be referred to as a "Subtenant."
Regardless of Lessor's consent, no subletting shall release
Lessee of Lessee's obligation or alter the primary liability of Lessee to pay
Rent hereunder (including, without limitation, Basic Rent and Supplemental Rent)
and to perform all other obligations to be performed by Lessee hereunder. The
acceptance of Rent by Lessor from any other Person shall not be deemed to be a
waiver by Lessor of any provision hereof. Consent to one subletting of one Site
shall not be deemed consent to any subsequent or further subletting of such Site
or any other Site. Lessor may proceed directly against Lessee without the
necessity of exhausting remedies against said successor.
(b) Lessee hereby assigns to Lessor all of Lessee's right,
title and interest in and to all Subleases entered into by Lessee in accordance
with Section 12.1(a), now or hereafter in effect, including but not limited to
all rents and other sums payable to Lessee under each such Sublease. Lessor
shall have no obligation to perform, and Lessee shall not by reason of such
assignment be relieved of its obligation to perform, any of Lessee's covenants
or agreements under this Lease or covenants or agreements of Lessee, as
sublessor, under any such Sublease; provided that, upon the termination of this
Lease or upon termination of Lessee's right to possess the Site following a
Lease Event of Default (the date of such termination shall be referred to herein
as the "Turnover Date") the following shall apply: (A) if Lessee acquires
ownership of the Site in accordance with the terms of this Lease or if Lessee's
right to possess the Site has been terminated following a Lease Event of Default
then, subject to the provisions of Article XVIII, Lessee shall continue to be
liable for all obligations under the Subleases; or (B) if Lessee does not
acquire ownership of the Site, (i) Lessee shall continue to be liable for any
obligations under the Subleases accruing or arising prior to the Turnover Date
and for any tenant improvement obligations arising or accruing prior to the
later of (x) the Turnover Date and (y) the scheduled termination date of the
Basic Term or the Renewal Term or the Extended Renewal Term, as applicable, and
(ii) with respect to any Subleases not terminated in accordance with
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Section 12.2(b), Lessor (or any successor owner of the Site (the "Designated
Owner")) shall assume and be liable for, subject to the limitations on the
liability of the Designated Owner set forth in Section 12.2 and subject to the
limitations on the liability of Lessee set forth in Article XVIII, Lessee's
obligations under the Subleases other than those referred to in clause (i)
above. Prior to the Turnover Date, Lessee shall have the right to collect and
enjoy all rents and other sums of money payable under any Sublease and Lessee
shall have the right to modify, extend, amend or terminate any or all of the
Subleases (except that Lessee shall not have the right to amend or modify any
Sublease, the effect of which would be to cause a Qualified Subtenant (defined
below) to become a non-Qualified Subtenant, unless the modification also revises
the language required in the Sublease pursuant to Section 12.2(a) hereof to be
consistent with the language required by Section 12.2(c) hereof.
SECTION 12.2. Sublease Subordination.
(a) In the case of any proposed Sublease with a Subtenant, not
less than thirty days prior to the consummation of such Sublease (or in the case
of a Sublease to be entered into within ten days after the Document Closing
Date, not later than the fifth day after the Document Closing Date), Lessee
shall deliver to Lessor each of the following: (i) a certification of Lessee
identifying the proposed Subtenant in question and confirming that such proposed
Subtenant satisfies the requirements of Section 12.1(a) and Section 12.2(b), and
(ii) a copy of the proposed Sublease.
(b) In the case of any Sublease, following the Turnover Date
the Designated Owner shall have the right to terminate such Sublease and the
Subtenant's Sublease and right of possession thereunder or, in the alternative
(at the Designated Owner's option), the Designated Owner may require the
Subtenant under such Sublease to attorn to the Designated Owner; and in the case
of such required attornment, the rights (including, without limitation, the
right of possession) of such Subtenant under such Sublease shall not be
disturbed or affected by the Designated Owner so long as no default by such
Subtenant exists under the terms of such Sublease as would enable Lessee (as
sublessor) to terminate such Sublease or would cause termination of such
Sublease or would entitle Lessee (as sublessor) to dispossess the Subtenant
under such Sublease. Each Sublease shall contain the following language:
"The Tenant hereunder agrees that this Lease is subject and
subordinate to the lease under which the Landlord hereunder
occupies the
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Property (the "Overlease", with the landlord under the
Overlease and its successors and assigns in interest to the
Property or this Lease being hereinafter referred to as the
"Overlandlord") and in the event of the termination of the
Overlease or in the event the Overlandlord terminates the
Landlord's right of possession under the Overlease (the date
on which either such termination becomes effective being
referred to herein as the "Turnover Date"), the Overlandlord
shall have (i) the right to terminate this Lease and the
Tenant's right of possession hereunder, or, in the alternative
(at the Overlandlord's option), (ii) the right to require the
Tenant hereunder to attorn to the Overlandlord; and in the
case of such required attornment election, the Tenant
hereunder will attorn to the Overlandlord and pay the
Overlandlord all of the rents and other monies required to be
paid by the Tenant hereunder, and perform all of the terms,
covenants, conditions and obligations contained in this Lease,
and this Lease shall continue as a direct lease between the
Tenant hereunder and the Overlandlord upon all of the terms
and conditions hereof except that in no event shall the
Overlandlord have any obligation to perform any obligation of
the Landlord hereunder with respect to obligations of the
Landlord hereunder accruing prior to the Turnover Date and
that any obligations of the Overlandlord (or any successor
Overlandlord) hereunder arising after the Turnover Date shall
be without recourse to Overlandlord (other than the interest
of the Overlandlord in the property demised by this Lease)."
ARTICLE XIII
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
SECTION 13.1. Event of Loss; Condemnation or Casualty.
(a) If an Event of Loss shall occur, Lessee shall give Lessor
and Agent prompt written notice of such occurrence and the date thereof and
Lessee shall purchase the Site(s) affected thereby from Lessor on the next
succeeding Payment Date after the date such Event of Loss shall have occurred at
a purchase price
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equal to the sum of (A) the Allocated Amount, plus (B) all accrued but unpaid
Rent, plus (C) all other sums due and payable by Lessee to Lessor, Agent or any
Lender with respect to such affected Site(s) under any of the Operative
Documents.
(b) Upon payment in full of all amounts payable pursuant to
Section 13.1(a) and the discharge of the Lien of the Mortgage pursuant to
Section 6.3 thereof, (i) the Lease Term shall end with respect to the affected
Site(s), (ii) the obligations of Lessee hereunder with respect to the affected
Site(s) (other than any obligations expressed herein as surviving termination of
this Lease) shall terminate as of the date of such payment.
SECTION 13.2. Application of Payments Relating to an Event of Loss. All
Net Condemnation Proceeds and property insurance proceeds received at any time
by Lessor, Lessee or Agent from any Authority or other Person with respect to
any Event of Loss of one or more Sites shall be promptly remitted to Lessor and,
in the event Lessee purchases the affected Site(s) pursuant to Section 13.1(a),
be applied against the purchase price payable by Lessee pursuant to Section
13.1(a), and any such Net Condemnation Proceeds and property insurance proceeds
remaining thereafter shall be paid over to, or retained by, Lessee, or as Lessee
may direct.
SECTION 13.3. Application of Certain Payments Relating to a
Condemnation. In case of a requisition for temporary use of all or a portion of
any Site which is not an Event of Taking, this Lease shall remain in full force
and effect, without any abatement or reduction of Rent, and the proceeds
received from any Authority relating to a Condemnation for the affected Site
shall be paid to Lessee, except that any portion of such proceeds that is
awarded with respect to the time period after the expiration or termination of
the Lease Term (unless Lessee shall have exercised an option to purchase the
Sites and no Lease Payment/Bankruptcy Default or Lease Event of Default shall
have occurred and be continuing) shall be paid to Lessor; provided, that if
Lessee has paid the Lease Balance to Lessor, such proceeds (or the portion of
such proceeds in excess of the portion thereof applied to payment of the Lease
Balance) shall be paid over to Lessee.
SECTION 13.4. Casualty. Upon any Casualty with respect to a Site the
cost of repair of which would exceed $250,000, Lessee shall give to Lessor
written notice thereof. As soon as practicable after a Casualty, Lessee shall
repair and rebuild the affected portions of the Site suffering such Casualty (or
cause such affected portions to be repaired and rebuilt) to the
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condition required to be maintained by Section 9.1 hereof; provided, that the
value and functional capability of such item as restored is at least equivalent
to the value and functional capability of such item as in effect immediately
prior to the occurrence of such Casualty. If any insurance proceeds received
with respect to any Casualty shall be in excess of twenty-five percent (25%) of
the Allocated Amount for the applicable Site, the insurance proceeds received
with respect to such Casualty shall be paid over to or retained by Agent (on
behalf of the Participants), to be distributed to Lessee upon completion of such
repairs and rebuilding of the affected portions of the applicable Site in
accordance with the conditions set forth in this Section 13.4; provided that in
such event, at Lessee's request and expense, Agent and Lessee shall enter into
an insurance escrow and disbursement agreement in form and substance reasonably
satisfactory to Agent providing for the disbursement of proceeds (not more often
than once per month and with each monthly disbursement being not less than
$100,000) to Lessee or its contractor during the course of such repair and
rebuilding upon conditions satisfactory to Agent in its reasonable judgment.
SECTION 13.5. Other Dispositions. Notwithstanding the foregoing
provisions of this Article XIII, as long as a Lease Payment/Bankruptcy Default
or Lease Event of Default shall have occurred and be continuing, any amount that
would otherwise be payable to or for the account of, or that would otherwise be
retained by, Lessee pursuant to this Article XIII shall be paid to Agent (or to
Lessor after the Loan Agreement shall have been satisfied and discharged) as
security for the obligations of Lessee under this Lease, shall be invested by
Agent (or Lessor) in accordance with Section 21.18 in Permitted Investments and,
if a Lease Event of Default is continuing, may be applied to the obligations of
Lessee hereunder, and, at such time thereafter as no Lease Payment/Bankruptcy
Default or Lease Event of Default shall be continuing, such amount and gain
thereon shall be paid promptly to Lessee to the extent not previously applied in
accordance with the terms of this Lease.
SECTION 13.6. Negotiations. In the event any part of a Site becomes
subject to condemnation or requisition proceedings, Lessee shall give notice
thereof to Lessor and Agent promptly after Lessee has knowledge thereof and, to
the extent permitted by any Applicable Laws and Regulations, Lessee shall
control the negotiations with the relevant Authority unless a Lease
Payment/Bankruptcy Default or Lease Event of Default shall be continuing, in
which case Lessor shall control such negotiations; provided that in any event
Lessor may participate at Lessor's expense (or if a Lease Payment/Bankruptcy
Default or Lease Event of Default shall be continuing, at Lessee's expense) in
such
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negotiations; and provided in all cases, that no settlement will be made without
Lessor's prior written consent, not to be unreasonably withheld. Lessee shall
give to Lessor and Agent such information, and copies of such documents, which
relate to such proceedings, or which relate to the settlement of amounts due
under insurance policies required by Article XI, and are in the possession of
Lessee, as are reasonably requested by Lessor or Agent. If the proceedings
relate to an Event of Taking, Lessee shall act diligently in connection
therewith.
SECTION 13.7. No Rent Abatement. Rent shall not abate hereunder by
reason of any Casualty, any Event of Loss, any Event of Taking or any
Condemnation of a Site, and Lessee shall continue to perform and fulfill all of
Lessee's obligations, covenants and agreements hereunder notwithstanding such
Casualty, Event of Loss, Event of Taking or Condemnation until the Lease
Termination Date.
ARTICLE XIV
NON-INTERFERENCE
SECTION 14.1. Non-Interference. Lessor covenants that it will not
interfere in Lessee's or any of its Subtenants' use of the Sites in accordance
with this Lease during the Lease Term, so long as no Lease Event of Default has
occurred and is continuing; it being agreed that Lessee's remedies for breach of
the foregoing covenant shall be limited to a claim for damages or the
commencement of proceedings to enjoin such breach. Such right is independent of
and shall not affect Lessor's rights otherwise to initiate legal action to
enforce the obligations of Lessee under this Lease.
SECTION 14.2. Certain Duties and Responsibilities of Lessor. Lessor
undertakes to perform such duties and only such duties as are specifically set
forth herein and in the other Operative Documents, and no implied covenants or
obligations shall be read into this Lease against Lessor, and Lessor agrees that
it shall not, nor shall it have a duty to, manage, control, use, sell, maintain,
insure, register, lease, operate, modify, dispose of or otherwise deal with the
Sites in any manner whatsoever, except as required by the terms of the Operative
Documents and as otherwise provided herein; provided that during the continuance
of a Lease Event of Default or a Lease Payment/Bankruptcy Default, Lessor shall
have no obligation to Lessee to perform any such duties.
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ARTICLE XV
INSPECTION AND REPORTS
SECTION 15.1. Inspection. Upon five (5) Business Days prior notice to
Lessee, each of Agent, Lessor, any Lender and their respective authorized
representatives (the "Inspecting Parties") may inspect (a) any Site and (b) the
books and records of Lessee relating directly and primarily to the Site and make
copies and abstracts therefrom, but only after material related to matters other
than the Site shall have been redacted therefrom. All such inspections shall be
at the expense and risk of the Inspecting Parties, except that if a Lease Event
of Default or Lease Payment/Bankruptcy Default has occurred and is continuing,
Lessee shall reimburse the Inspecting Parties for the reasonable costs of such
inspections and such inspection shall be at Lessee's risk. Lessee shall furnish
to the Inspecting Parties statements accurate in all material respects regarding
the condition and state of repair of the Sites, all at such times and as often
as may be reasonably requested. No inspection shall unreasonably interfere with
Lessee's operations or the operations of any other occupant of the Sites. None
of the Inspecting Parties shall have any duty to make any such inspection or
inquiry, and none of the Inspecting Parties shall incur any liability or
obligation by reason of not making any such inspection or inquiry. None of the
Inspecting Parties shall incur any liability or obligation by reason of making
any such inspection or inquiry unless and to the extent, so long as no Lease
Event of Default has occurred and is continuing at the time of inspection, such
Inspecting Party causes damage to the Site or any property of Lessee or any
other Person during the course of such inspection.
SECTION 15.2. Reports. To the extent permissible under Applicable Laws
and Regulations, Lessee shall prepare and file in timely fashion, or, where
Lessor shall be required to file, Lessee shall prepare and make available to
Lessor and Agent within a reasonable time prior to the date for filing and
Lessor shall file, any reports with respect to the condition or operation of the
Sites that shall be required to be filed with any Authority.
ARTICLE XVI
OWNERSHIP, GRANT OF SECURITY INTEREST
AND FURTHER ASSURANCES
SECTION 16.1. Grant of Security Interest. Lessee hereby
assigns, grants and pledges to Lessor for the benefit of Agent
and the Lenders a security interest in and Lien against all of
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Lessee's right, title and interest, whether now or hereafter existing or
acquired, in the Sites and proceeds therefrom, to secure the payment and
performance of all obligations of Lessee now or hereafter existing under this
Lease or any other Operative Document. Lessee shall, at its expense, do any
further act and execute, acknowledge, deliver, file, register and record any
further documents which Lessor or any Lender may reasonably request in order to
protect Lessor's title to and their perfected Lien in the Sites, subject to no
Liens other than Permitted Liens, and Lessor's rights and benefits under this
Lease. Lessee shall promptly and duly execute and deliver to Lessor such
documents and assurances and take such further actions as Lessor or any Lender
may from time to time reasonably request in order to carry out more effectively
the intent and purpose of this Lease and the other Operative Documents, to
establish and protect the rights and remedies created or intended to be created
in favor of Lessor hereunder and thereunder, and to establish, perfect and
maintain the right, title and interest of Lessor in and to the Sites, subject to
no Lien other than Permitted Liens, or of such financing statements or fixture
filings or other documents with respect hereto as Lessor or any Lender may from
time to time reasonably request, and Lessee agrees to execute and deliver
promptly such of the foregoing financing statement and fixture filings or other
documents as may require execution by Lessee. To the extent permitted by
Applicable Laws and Regulations, Lessee hereby authorizes any such financing
statement and fixture filings to be filed without the necessity of the signature
of Lessee. Upon Lessee's request, Lessor shall at such time as all of the
obligations of Lessee under this Lease or any other Operative Documents have
been indefeasibly paid or performed in full (other than Lessee's contingent
obligations, if any, under Article VII of the Participation Agreement) execute
and deliver termination statements and other appropriate documentation
reasonably requested by Lessee, all at Lessee's expense, to evidence Lessor's
release of its Lien against the Sites.
SECTION 16.2. Attorney-in-Fact. Lessee hereby irrevocably appoints
Agent as Lessee's attorney-in-fact, with full authority in the place and stead
of Lessee and in the name of Lessee or otherwise, from time to time in Lessor's
discretion, upon the occurrence and during the continuance of a Lease Event of
Default, to take any action (including any action that Lessee is entitled to
take) and to execute any instrument which Lessor may deem necessary or advisable
to accomplish the purposes of this Lease (subject to any limitations set forth
in the Operative Documents), including, without limitation:
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(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for money due and to become due under
or in connection with the Sites;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with the foregoing clause
(a);
(c) to file any claim or take any action or institute any
proceedings which Lessor may deem to be necessary or advisable for the
collection thereof or to enforce compliance with the terms and conditions of the
Lease; and
(d) to perform any affirmative obligations of Lessee
hereunder.
Lessee hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 16.2 is irrevocable and coupled with an
interest.
ARTICLE XVII
LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following events,
whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body, shall constitute a "Lease Event of
Default":
(a) Lessee shall fail to make any payment (i) of any
Supplemental Rent payable to Agent or any Participant or of Basic Rent when due
and such failure shall continue for a period of five days, or (ii) of amounts
payable pursuant to the exercise of the Sale Option, or amounts payable pursuant
to Section 13.1, when due, or (iii) of Supplemental Rent payable to any Person
other than Agent or a Participant and such failure under this clause (iii) shall
continue for a period of five days after notice to Lessee from any Person of
such failure;
(b) Lessee or any Guarantor shall fail to make any payment of
any other amount payable hereunder or under any of the other Operative Documents
and such failure shall continue for a period of five days after such amount
first became due and payable (or in the case of any payment to any Person other
than Agent or any Participant, such failure shall continue for a period of five
days after notice to Lessee from any Person of such failure);
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(c) Lessee shall (i) fail to maintain insurance as required by
Section 11.1, or (ii) default in the performance or observance of any term,
covenant, condition or agreement on its part to be performed or observed under
Section 5.2, 5.3, 5.4, 5.7 or 5.11 of the Participation Agreement;
(d) any representation or warranty by Lessee or any Guarantor
in any Operative Document or in any certificate or document delivered to Lessor,
Agent or any Lender pursuant to any Operative Document shall have been incorrect
in any material respect when made and shall remain material when discovered and
if curable shall continue for a period of 30 days; provided that if Lessee or
such Guarantor shall commence such cure within said 30-day period and shall
diligently be pursuing such cure, then said 30-day period shall be extended to
90 days;
(e) Lessee or any Guarantor shall fail in any material respect
timely to perform or observe any covenant, condition or agreement (not included
in any other clause of this Article XVII) to be performed or observed by it
hereunder or under any other Operative Document and such failure shall continue
for a period of 30 days; provided that if Lessee or such Guarantor shall
commence such cure within said 30-day period and shall diligently be pursuing
such cure, then said 30-day period shall be extended to 90 days;
(f) (i) Lessee or any Guarantor shall generally fail to pay,
or admit in writing its inability to pay, its debts as they become due, or shall
voluntarily commence any case or proceeding or file any petition under any
bankruptcy, insolvency or similar law or seeking dissolution, liquidation or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business or to effect a plan or other arrangement with its creditors, or shall
file any answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition filed against it in any bankruptcy,
insolvency or similar case or proceeding, or shall be adjudicated bankrupt, or
shall make a general assignment for the benefit or creditors, or shall consent
to, or acquiesce in the appointment of, a receiver, trustee, custodian or
liquidator for itself or a substantial portion of its property, assets or
business, or (ii) corporate action shall be taken by Lessee or any Guarantor for
the purpose of effectuating any of the foregoing;
(g) involuntary proceedings or an involuntary petition shall
be commenced or filed against Lessee or any Guarantor under any bankruptcy,
insolvency or similar law or seeking the
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dissolution, liquidation or reorganization of Lessee or the appointment of a
receiver, trustee, custodian or liquidator for Lessee or any Guarantor or of a
substantial part of the property, assets or business of Lessee or any Guarantor
or, any writ, judgment, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of the property, assets or
business of Lessee or any Guarantor, and such proceedings or petition shall not
be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded, within 30 days
after commencement, filing or levy, as the case may be;
(h) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against Lessee
or any Guarantor or any Subsidiary of any Guarantor, and such judgment or
judgements remain undischarged, unbonded, unstayed or unsatisfied for a period
(during which execution shall be effectively stayed) of 30 days; provided, that
the aggregate of all such judgments exceeds $500,000;
(i) Lessee or any Guarantor shall directly or indirectly
contest the validity of any Operative Document in any manner in any court of
competent jurisdiction or the Lien granted by this Lease or any Mortgage;
(j) (A) an event of default shall occur in the payment when
due (subject to any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness of Lessee or any Guarantor or any Subsidiary of
any Guarantor that individually or in the aggregate exceeds $1,000,000 or (B)
any other event of default shall occur with respect to any Indebtedness of
Lessee or any Guarantor or any Subsidiary of any Guarantor that individually or
in the aggregate exceeds $1,000,000;
(k) Any one or more Pension-Related Events referred to in
subsection (a)(ii), (b) or (e) of the definition of "Pension-Related Event"
shall have occurred; or any one or more other Pension-Related Events shall have
occurred and the Agent shall determine in good faith (which determination shall
be conclusive) that such other Pension-Related Events, individually or in the
aggregate, could have a Material Adverse Effect;
(l) either of the Guaranties shall no longer be in full force
and effect; or
(m) an Event of Default (as defined in the Credit Agreement)
shall occur under the Credit Agreement.
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ARTICLE XVIII
ENFORCEMENT
SECTION 18.1. Remedies. Upon the occurrence of a Lease Event of
Default, at Lessor's option and without limiting Lessor in the exercise of any
other right or remedy Lessor may have on account of such default (including,
without limitation, the obligation of Lessee to purchase the Sites as set forth
below), and without any further demand or notice, Lessor may cause the following
to occur:
(i) By notice to Lessee, Lessor may terminate
Lessee's right to possession of the Sites. A notice given in connection
with unlawful detainer proceedings specifying a time within which to
cure a default shall terminate Lessee's right to possession if Lessee
fails to cure the default within the time specified in the notice.
(ii) Upon termination of Lessee's right to possession
and without further demand or notice, Lessee shall surrender possession
and vacate the Sites and deliver possession thereof, and Lessor may
re-enter the Sites and remove any persons in possession thereof.
(iii) Upon termination of Lessee's right to
possession, this Lease shall terminate and Lessor may declare to be
immediately due and payable, and Lessor shall be entitled to (x)
recover from Lessee the following amounts and (y) take the following
actions:
(A) Lessee shall pay all accrued and unpaid
Rent hereunder (including, without limitation, Basic Rent and
Supplemental Rent) which had been earned at the time of termination;
(B) Lessor may elect any of the following:
(1) Lessor may demand, by written notice to
the Lessee specifying a Payment Date (the
"Final Rent Payment Date") not earlier than
ten (10) days after the date of such notice,
that Lessee pay to Lessor, and Lessee shall
pay to Lessor, on the Final Rent Payment
Date (in lieu of Basic Rent due after the
Final Rent Payment Date), an amount equal to
the sum of (A) the Lease Balance computed as
of the Final Rent Payment Date, plus (B) all
accrued and unpaid Rent due and unpaid to
and
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including the Final Rent Payment Date, and
upon payment of such amount, and the amount
of all other sums due and payable by Lessee
under this Lease and the other Operative
Documents (and interest at the Overdue Rate
on the amounts payable under this clause
(B)(1) from the Final Rent Payment Date to
the date of actual payment), Lessor shall
transfer by quitclaim deed to Lessee all of
Lessor's right, title and interest in and to
the Sites without recourse or warranty, but
free and clear of Lessor Liens; or
(2) Lessor may sell its interest in the
Sites, in which event Lessee shall pay to
Lessor an amount equal to the excess, if
any, of (x) all amounts due Lessor under
clause (B)(1) above over (y) the net sale
proceeds received by Lessor from the
foregoing sale (provided, that in
calculating such net sale proceeds, all
expenses and taxes incurred by Lessor, Agent
or any of the Lenders in connection with
such sale, including, without limitation,
legal fees, shall be deducted from such
sales proceeds);
(C) Any other amount necessary to compensate
Lessor for all actual damages caused by Lessee's failure to perform
Lessee's obligation under this Lease or which in the ordinary course
of things would be likely to result therefrom, including, but not
limited to, the costs and expenses (including without limitation,
reasonable attorneys' fees, advertising costs and brokers'
commissions) of recovering possession of the Sites, removing persons
or property therefrom, placing the Sites in good order, condition, and
repair, preparing and altering the Sites for reletting, and all other
costs and expenses of reletting; and
(D) Such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by
applicable law.
(iv) Lessor may enforce the Lien given hereunder
pursuant to Section 16.1 hereof, Section 11 of the Lease Supplements,
the Uniform Commercial Code or any other law.
(v) If Lessee has breached this Lease and abandoned
the Site, this Lease shall continue in effect for
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so long as Lessor does not terminate Lessee's right to possession, and
Lessor may enforce all of Lessor's rights and remedies under this
Lease, including the right to recover the Rent hereunder (including,
without limitation, Basic Rent and Supplemental Rent) as it becomes due
under this Lease. Lessee's right to possession shall not be deemed to
have been terminated by Lessor except pursuant to clause (i) above. The
following do not constitute a termination of Lessee's right to
possession:
(A) Acts of maintenance or preservation or
efforts to relet the Sites;
(B) The appointment of a receiver upon the
initiative of Lessor to protect Lessor's interest under this Lease;
(C) Reasonable withholding of consent to an
assignment or subletting, or terminating a subletting or assignment by
Lessee.
(vi) In the event that Lessor elects to continue this
Lease in full force and effect, Lessor may enforce all its rights and
remedies under this Lease, including, but not limited to, the right to
recover Rent hereunder (including, without limitation, Basic Rent and
Supplemental Rent) as it becomes due. During the continuance of a Lease
Event of Default, Lessor may enter the Sites in accordance with
applicable law without terminating this Lease and sublet all or any
part of the Sites for Lessee's account to any Person, for such term
(which may be a period beyond the remaining Lease Term), at such rents
and on such other terms and conditions as are commercially reasonable.
In the event of any such subletting, rents received by Lessor from such
subletting shall be applied (i) first, to the payment of the reasonable
costs incurred by Lessor in maintaining, preserving, altering and
preparing the Sites for subletting and other costs of subletting,
including, but not limited to, brokers' commissions and attorneys' fee;
(ii) second, to the payment of Rent hereunder (including, without
limitation, Basic Rent and Supplemental Rent) then due and payable;
(iii) third, to the payment of future Rent hereunder (including,
without limitation, Basic Rent and Supplemental Rent) as the same may
become due and payable hereunder; (iv) fourth, to the payment of all
other obligations of Lessee hereunder, and (v) fifth, the balance, if
any, shall be paid to Lessee upon (but not before) expiration of the
Lease Term. If the rents received by Lessor from such subletting, after
application as provided
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above, are insufficient in any period to pay the Rent (including,
without limitation, Basic Rent and Supplemental Rent) due and payable
hereunder for such period, Lessee shall pay such deficiency to Lessor
upon demand. Notwithstanding any such subletting for Lessee's account
without termination, Lessor may at any time thereafter, by written
notice to Lessee, elect to terminate this Lease by virtue of a previous
Lease Event of Default.
Upon (but not before) and during the continuance of a Lease
Event of Default, if Lessee has abandoned the Sites, for so long as
Lessor does not terminate Lessee's right to possession of the Sites,
Lessor shall not unreasonably withhold its approval to a sublease of
the Sites; provided, however, that Lessor's withholding of such consent
shall not be deemed unreasonable upon the standard contained in Section
12.1.
(vii) Lessor may exercise any other right or remedy
that may be available to it under Applicable Laws and Regulations or in
equity, or proceed by appropriate court action (legal or equitable) to
enforce the terms or to recover damages for the breach hereof. Separate
suits may be brought to collect any such damages for any Rent
Installment Period(s), and such suits shall not in any manner prejudice
Lessor's right to collect any such damages for any subsequent Rent
Installment Period(s), or Lessor may defer any such suit until after
the expiration of the Basic Term or any Renewal Term, in which event
such suit shall be deemed not to have accrued until the expiration of
the Basic Term, or such Renewal Term; or
(viii) Lessor may retain and apply against Lessor's
damages all sums which Lessor would, absent such Lease Event of
Default, be required to pay to, or turn over to, Lessee pursuant to the
terms of this Lease.
(ix) Lessor may exercise the remedies described in
Section 11 of the Lease Supplement.
In addition to the foregoing, Lessee acknowledges that (i) pursuant to the
Collateral Agency Agreement and the Security Agreement, the Joint Stock
Collateral constitutes additional security for the payment and performance of
Lessee's obligations under this Lease and the other Operative Documents, and
(ii) the Guaranty and Agreement of Suretyship Regarding Obligations Lessee and
Affiliates, as it may be amended from time to time, which constitutes one of the
Guaranties shall constitute further additional security for, among other things,
the payment and
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performance of Lessee's obligations under this Lease and the other Operative
Documents.
SECTION 18.2. Proceeds of Sale; Deficiency. All payments received and
amounts held or realized by Lessor at any time when a Lease Event of Default
shall have occurred and be continuing and after the Lease Balance shall have
been accelerated pursuant to Article XVIII as well as all payments or amounts
then held or thereafter received by Lessor, except for rents received by Lessor
from subletting pursuant to Section 18.1(vi) and the proceeds of sale pursuant
to Section 11 of the Lease Supplements, shall be distributed forthwith upon
receipt by Lessor in the following order of priority:
first: so much of such payments or amounts as shall be
required to reimburse Lessor for any tax (other than any income tax
payable on Basic Rent or interest and on fees and other compensation of
Lessor), expense or other amount owed to Lessor in connection with the
collection or distribution of such payments or amounts to the extent
not previously reimbursed by Lessee (including, without limitation, the
expenses of any sale, taking or other proceeding, expenses in
connection with realizing on any of the Sites, reasonable attorneys'
fees and expenses (including the allocated costs of internal counsel),
court costs and any other reasonable expenditures incurred or
reasonable expenditures or advances made by Lessor in the protection,
exercise or enforcement of any right, power or remedy upon such Lease
Event of Default whether pursuant to Article XVII or otherwise) shall
be so applied by Lessor;
second: so much of such payments or amounts except those
specified in clause third below, which under the terms of this Lease
and the other Operative Documents have accrued shall be so applied;
third: so much of such payments or amounts remaining as shall
be required to pay Agent (on behalf of the Participants) in full the
aggregate unpaid Lease Balance and all Basic Rent (including, to the
extent permitted by applicable law, interest on interest) shall be so
applied (to be distributed by Agent pursuant to Section 3.3 of the Loan
Agreement); and
fourth: so much of such payments or amounts as shall
remain shall be distributed to Lessee.
SECTION 18.3. Grant and Foreclosure on Lessee's Estate. Each Lease
Supplement shall contain a provision by which Lessee
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grants to a trustee, in trust, with power of sale, or grants a mortgage lien to
Lessor in, all of Lessee's right, title and interest in and to the Sites subject
to each such Lease Supplement and, upon the occurrence of a Lease Event of
Default, granting Lessor the power and authority, after fulfillment of certain
conditions, to cause the trustee to sell, or foreclose its mortgage lien
against, the Sites.
SECTION 18.4. Remedies Cumulative; No Waiver; Consents. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Laws and
Regulations, each and every right, power and remedy herein specifically given to
Lessor or otherwise in this Lease shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any right, power or remedy. No delay or omission
by Lessor in the exercise of any right, power or remedy or in the pursuit of any
remedy shall impair any such right, power or remedy or be construed to be a
waiver of any default on the part of Lessee or be an acquiescence therein.
Lessor's consent to any request made by Lessee shall not be deemed to constitute
or preclude the necessity for obtaining Lessor's consent, in the future, to all
similar requests. No express or implied waiver by Lessor of any Lease Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Lease Default or Lease Event of Default. To the extent permitted by
Applicable Laws and Regulations, Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise that may require Lessor (i) to
provide any notice to Lessee, or (ii) to sell, lease or otherwise use the Site
or part thereof in mitigation of Lessor's damages, or (iii) to take any other
action, upon the occurrence of a Lease Event of Default, or that may otherwise
limit or modify any of Lessor's rights or remedies under this Article XVIII.
ARTICLE XIX
RIGHT TO PERFORM FOR LESSEE
If Lessee shall fail to perform or comply with any of its
agreements contained herein, Lessor may, but shall not be obligated to, on five
Business Days' prior notice to Lessee (except in the event of an emergency, in
which case only one Business Day's prior notice shall be required), perform or
comply
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with such agreement, and Lessor shall not thereby be deemed to have waived any
default caused by such failure, and the amount of such payment and the amount of
the expenses of Lessor (including reasonable attorneys' fees and expenses)
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Overdue Rate, shall be deemed Supplemental Rent, payable by Lessee to Lessor
upon demand; provided that in the case of an emergency Lessee shall permit
Lessor so to perform or comply on less than one Business Day's notice unless
Lessee has a good faith reason not to permit Lessor to do so.
ARTICLE XX
LESSOR LIENS
In the event that Lessor shall be obligated to remove any Lessor Liens
from the Sites and shall fail to do so, Lessee shall have a claim against Lessor
for such failure, but shall not have any right of offset.
ARTICLE XXI
MISCELLANEOUS
SECTION 21.1. Binding Effect; Successors and Assigns; Survival. The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor, Lessee, Agent and the Lenders shall be binding upon them
and their respective successors, legal representatives and assigns (including,
in the case of Lessor, any Person to whom Lessor may transfer the Sites or any
interest therein in accordance with the provisions of the Operative Documents),
and inure to their benefit and the benefit of their respective permitted
successors, legal representatives and assigns.
SECTION 21.2. Severability. Any provision of this Lease that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and Lessee shall remain
liable to perform its obligations hereunder except to the extent of such
unenforceability. To the extent permitted by Applicable Laws and Regulations,
Lessee hereby waives any provision of law that renders any provision hereof
prohibited or unenforceable in any respect.
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SECTION 21.3. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be in writing and shall be delivered and shall be deemed to have
been given in accordance with Section 9.3 of the Participation Agreement.
SECTION 21.4. Amendment; Complete Agreements. Neither this Lease nor
any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification shall be sought. This Lease, together with the other Operative
Documents, is intended by the parties as a final expression of their agreement
and as a complete and exclusive statement of the terms thereof, all
negotiations, considerations and representations between the parties having been
incorporated herein and therein. No course of prior dealings between the parties
or their officers, employees, agents or Affiliates shall be relevant or
admissible to supplement, explain, or vary any of the terms of this Lease or any
other Operative Document. Acceptance of, or acquiescence in, a course of
performance rendered under this or any prior agreement between the parties or
their Affiliates shall not be relevant or admissible to determine the meaning of
any of the terms of this Lease or any other Operative Document. No
representations, undertakings, or agreements have been made or relied upon in
the making of this Lease other than those specifically set forth in the
Operative Documents.
SECTION 21.5. Headings. The Table of Contents and headings of the
various Articles and Sections of this Lease are for convenience of reference
only and shall not modify, define or limit any of the terms or provisions
hereof.
SECTION 21.6. Original Lease. The single executed original of this
Lease containing the receipt of Lessor therefor on or following the signature
page thereof shall be the "original executed counterpart" of this Lease. To the
extent that this Lease constitutes chattel paper, as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the "original executed counterpart".
SECTION 21.7. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS RELATING TO THE
CREATION,
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PERFECTION AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS AND THE EXERCISE OF
REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE APPLICABLE SITE IS LOCATED.
SECTION 21.8. Discharge of Lessee's Obligations by its Affiliates.
Lessor agrees that performance of any of Lessee's obligations hereunder by one
or more of its Affiliates or one or more sublessees of the Site or any part
thereof shall constitute performance by Lessee of such obligations to the same
extent and with the same effect hereunder as if such obligations were performed
by Lessee, but no such performance shall excuse Lessee from any obligation not
performed by it or on its behalf under the Operative Documents.
SECTION 21.9. Liability of Lessor Limited. The parties hereto agree
that Lessor shall have no personal liability whatsoever to Lessee or its
respective successors and assigns for any Claim based on or in respect of this
Lease or any of the other Operative Documents or arising in any way from the
transactions contemplated hereby or thereby; provided, however, that Lessor
shall be liable in its individual capacity for (i) Lessor Liens required to be
removed by Lessor under Section 6.2(a) of the Participation Agreement and (ii)
its own willful misconduct or gross negligence. It is understood and agreed
that, except as provided in the preceding proviso: (i) Lessor shall have no
personal liability under any of the Operative Documents; (ii) all obligations of
Lessor to Lessee are solely nonrecourse obligations, recourse being limited to
its interest in the Sites and the Operative Documents (excluding Excluded
Amounts); and (iii) all such personal liability of Lessor is expressly waived
and released as a condition of, and as consideration for, the execution and
delivery of the Operative Documents by Lessor.
SECTION 21.10. Estoppel Certificates. Each party hereto agrees that at
any time and from time to time during the Lease Term, it will promptly, but in
no event later than thirty (30) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to any prospective
purchaser (if such prospective purchaser has signed a commitment letter or
letter of intent to purchase the Sites or any part thereof or to purchase any
Note), assignee or mortgagee or third party designated by such other party, a
certificate stating (a) that this Lease is unmodified and in force and effect
(or if there have been modifications, that this Lease is in force and effect as
modified, and identifying the modification agreements); (b) the date to which
Basic Rent has been paid; (c) in the case of an estoppel certificate to be given
by Lessee, whether or not
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there is any existing default by Lessee in the payment of Basic Rent or any
other sum of money hereunder, and whether or not there is any other existing
Lease Default or Lease Event of Default with respect to which a notice of
default has been served, and, if there is any such default, specifying the
nature and extent thereof; (d) in the case of an estoppel certificate to be
given by Lessee, whether or not, to the knowledge of Lessee after due inquiry
and investigation, there are any purported setoffs, defenses or counterclaims
against enforcement of the obligations to be performed hereunder existing in
favor of Lessee; and (e) other items that may be reasonably requested; provided
that no such certificate may be requested unless the requesting party has a good
faith reason for such request. In addition, Lessee, promptly, but in no event
later than thirty days after request by any other party hereto, shall obtain and
deliver to such other party or to any prospective purchaser (if such prospective
purchaser has signed a commitment letter or letter of intent to purchase the
Site or any part thereof or to purchase any Note), assignee, mortgagee or third
party designated by such other party, an estoppel certificate from each
Subtenant under each Sublease containing such items as reasonably requested by
the party requesting the same; provided that no such certificate may be
requested unless the requesting party has a good faith reason for such request.
SECTION 21.11. No Joint Venture. Any intention to create a joint
venture or partnership relation between Lessor and Lessee is hereby expressly
disclaimed.
SECTION 21.12. No Accord and Satisfaction. The acceptance by Lessor of
any sums from Lessee (whether as Basic Rent or otherwise) in amounts which are
less than the amounts due and payable by Lessee hereunder is not intended, nor
shall be construed, to constitute an accord and satisfaction of any dispute
between Lessor and Lessee regarding sums due and payable by Lessee hereunder,
unless the Required Participants specifically deem it as such in writing.
SECTION 21.13. No Merger. In no event shall the Leasehold Estate of
Lessee hereunder, or the rights and interests of the holder of any Notes secured
by a Lien in this Lease, merge with any interests, estates or rights of Lessor
in or to the Site, it being understood that such Leasehold Estate of Lessee
hereunder, and the rights and interests of the holder of any Notes secured by a
Lien in this Lease, shall be deemed to be separate and distinct from Lessor's
interests, estates and rights in or to the Site, notwithstanding that any such
interests, estates or rights shall at any time or times be held by or vested in
the same Person.
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SECTION 21.14. Successor Lessor. Lessee agrees that, in the case of any
transfer of the Sites to a successor Lessor in accordance with the provisions of
Section 6.2 of the Participation Agreement from time to time, such successor
Lessor shall, upon written notice by such successor Lessor to Lessee, succeed to
all the rights, powers and title of Lessor hereunder and shall be deemed to be
Lessor for all purposes hereof and without in any way altering the terms of this
Lease or Lessee's obligations hereunder. Such transfer to a successor Lessor
shall not exhaust the right to any further transfer to another successor Lessor
pursuant to said Section 6.2, but such right may be exercised repeatedly as long
as this Lease shall be in effect.
SECTION 21.15. Survival. The obligations of Lessee to be performed
under this Lease prior to the Lease Termination Date and the obligations of
Lessee pursuant to Sections 4.1, 4.2, 4.4, 4.5, Article XVIII and Section 21.1
shall survive the expiration or termination of this Lease. The extension of any
applicable statute of limitations by Lessor, Agent, Lessee or any other
Indemnitee shall not affect such survival.
SECTION 21.16. Transfer of Sites to Lessee or any other Person.
Whenever pursuant to any provision of this Lease Lessor is required to transfer
the Sites to Lessee or to any other Person, such transfer shall be made at
Lessee's expense (including, without limitation, all costs of conveyance,
applicable transfer taxes and recording fees without regard to local custom) by
the quitclaim transfer of all of Lessor's right, title and interest in and to
the Sites on an "as is, where is, with all faults" basis free and clear of all
Lessor Liens, but subject to the Lien of the Loan Agreement if and to the extent
it may then attach, and otherwise without recourse, representation or warranty
of any kind, and together with the due assumption by Lessee (or such third
party) of, and due release of Lessor from, all obligations relating to the Sites
or the Operative Documents. Any provision in this Lease or other Operative
Document to the contrary notwithstanding, Lessor shall not be obligated to make
any such transfer until Lessor has received all Rent and other amounts due and
owing hereunder.
SECTION 21.17. Enforcement of Certain Warranties.
(a) Unless a Lease Event of Default shall have occurred and be
continuing, Lessor authorizes Lessee (directly or through agents), at Lessee's
expense, to assert, during the Lease Term, all of Lessor's rights (if any) under
any applicable warranty and any other claim that Lessee or Lessor may have under
the warranties provided to Lessor in connection with the purchase, of the Sites
and Lessor agrees to cooperate, at Lessee's expense,
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with Lessee and its agents in asserting such rights. Any amount recovered by
Lessee under any such warranties shall be paid to Lessee.
(b) Notwithstanding the foregoing provisions of this Section
21.17, so long as a Lease Event of Default or Lease Payment/Bankruptcy Default
shall have occurred and be continuing, any amount that would otherwise be
retained by Lessee pursuant to Section 21.17(a) shall be paid to Lessor as
security for the obligations of Lessee under this Lease, shall be invested by
Lessor in accordance with Section 21.18 in Permitted Investments and, if a Lease
Event of Default is continuing, may be applied to the obligations of Lessee
hereunder, and, at such time thereafter as no Lease Event of Default or Lease
Payment/Bankruptcy Default shall be continuing, such amount and gain thereon
shall be paid promptly to Lessee to the extent not previously applied in
accordance with the terms of this Lease.
SECTION 21.18. Investment of Security Funds. Any amounts not payable to
Lessee and paid to or retained by Lessor pursuant to any provision hereof solely
because a Lease Event of Default or Lease Payment/Bankruptcy Default shall have
occurred and be continuing or because Lessee shall not have performed in full
its obligations under Article XIII shall be held by Lessor as security for the
obligations of Lessee under this Lease and the other Operative Documents. At
such time as no Lease Event of Default or Lease Payment/Bankruptcy Default, or
failure to perform shall be continuing, such amounts, net of any amounts
previously applied to Lessee's obligations hereunder or under any other
Operative Documents, shall be paid to Lessee. Any such amounts which are held
pending payment to Lessee or application hereunder shall be invested by Lessor
(or Agent) as directed from time to time in writing by Lessee (provided,
however, if a Lease Event of Default has occurred and is continuing it will be
directed by Lessor), and at the expense and risk of Lessee, in Permitted
Investments. Any gain (including interest received) realized as the result of
any such investment (net of any fees, commissions and other expenses, if any,
incurred in connection with such investment) shall be applied from time to time
in the same manner as the principal invested. Lessee will promptly pay to Lessor
on demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other expenses, if any, incurred in
connection with such investment), such amount to be held, paid and applied in
the same manner as other amounts subject to this Section 21.18.
SECTION 21.19. Recording of Lease Supplements. Concurrently with the
execution and delivery of this Lease and
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Lease Agreement
concurrently with the execution and delivery of each Lease Supplement, Lessor
and Lessee shall execute, acknowledge and cause to be recorded each such Lease
Supplement in the official records of each County where the Site(s) that are the
subject of this Lease or such Lease Supplement are located. Notwithstanding the
execution, delivery and recording of any such Lease Supplement, the terms,
covenants and conditions of this Lease shall control.
SECTION 21.20. Nature of Transaction. (a) It is the intent of the
parties hereto that: (i) the transaction contemplated hereby constitutes an
operating lease from Lessor to Lessee for purposes of Lessee's financial
reporting, (ii) the transaction contemplated hereby preserves ownership in the
Sites to Lessee for purposes of Federal and state tax and bankruptcy purposes,
(iii) Lessee, pursuant to the Lease, grants a security interest or lien, as the
case may be, in the Sites and the other Collateral to Lessor, (iv) for purposes
of Federal and state tax and bankruptcy purposes, the payment by Lessee of Basic
Rent shall be treated as payments of interest, and the payment by Lessee of any
amounts in respect of the Lease Balance shall be treated as repayments of
principal, and (v) the Mortgage and Assignment of Lease create a lien and
security interest in the Sites, subject to certain limited exceptions.
Nevertheless, Lessee acknowledges and agrees that none of Lessor, Agent or any
Lender has provided or will provide tax, accounting or legal advice to Lessee
regarding the Overall Transaction or made any representations or warranties
concerning the tax, accounting or legal characteristics of the Operative
Documents and that Lessee has obtained and relied upon such tax, accounting and
legal advice concerning the Operative Documents as it deems appropriate.
(b) Specifically, without limiting the generality of subsection (a) of
this Section 21.20, but understanding that the parties' characterization is not
the sole determinant of the issue, the parties hereto intend and agree that with
respect to the nature of the transactions evidenced by this Lease in the context
of the exercise of remedies under the Operative Documents, relating to and
arising out of any insolvency or receivership proceedings or a petition under
the United States bankruptcy laws or any other applicable insolvency laws or
statute of the United States of America or any State or Commonwealth thereof
affecting Lessee, Lessor or any Lender or any enforcement or collection actions,
the transactions evidenced by the Operative Documents are loans made by the
Lenders as unrelated third party lenders to Lessee secured by the Sites.
51
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Lease Agreement
IN WITNESS WHEREOF, the undersigned have each caused this
Lease to be duly executed and delivered by their respective officers thereunto
duly authorized as of the day and year first above written.
MELLON FINANCIAL SERVICES
CORPORATION #4, as Lessor
By:
---------------------------------
Name Printed: Arthur A. Folsom, Jr.
Title: Senior Vice President
Address:
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
By:
---------------------------------
Name Printed: Ira C. Gubernick
Title: Secretary
Address:
148 West State Street
Kennett Square, PA 19348
Attn: George V. Hager, Jr.
52
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Lease Agreement
RECEIPT FOR COUNTERPART NO. 1
MELLON BANK, N.A., as Agent
By:
--------------------------------------------
Name Printed: Carol Paige
Title: Vice President
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Lease Agreement
STATE OF _______________ )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of _______________, State of ____________, this
____ day of July, 1996, by Carol Paige, as Vice President of MELLON BANK, N.A.,
a national banking association, on behalf of the such national banking
association.
[Notarial Seal] _________________________
Notary Public
My commission expires:________________
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Lease Agreement
STATE OF ________ )
) SS.:
COUNTY OF ________ )
The foregoing Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of ______, State of ________, this ____ day of
July, 1996, by Ira C. Gubernick, as Secretary of GENESIS ELDERCARE PROPERTIES,
INC., a Pennsylvania corporation, on behalf of the corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires: _____________________
55
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Lease Agreement
STATE OF ________ )
) SS.:
COUNTY OF ________ )
The foregoing Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of ______, State of ________, this ____ day of
July, 1996, by Arthur A. Folsom, Jr., as Senior Vice President of MELLON
FINANCIAL SERVICES CORPORATION #4, a Pennsylvania corporation, on behalf of the
corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires: ____________________
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Lease Agreement
SCHEDULE I
to
LEASE AGREEMENT
DESCRIPTION OF SITES
DELIVERED ON DOCUMENT CLOSING DATE
Atlantis Rehabilitation and Health Care Center
Old Congress Road, Lantana, Florida;
Bowman's Health Care Center
South Ridgewood, Ormand Beach, Florida;
Eagle Crest Nursing Center
Parental Home Road, Jacksonville, Florida;
Oakwood Rehabilitation and Health Care Center
South East Bay Street, Eustis, Florida;
Tierra Pines Health Care Center
Ulmerton Road, Largo, Florida;
Woodlands Nursing Center
North 46th Street, Tampa, Florida;
Williamsburg Health Care and Rehabilitation Center
Mount Vernon Avenue, Williamsburg, Virginia;
Windham
Main Street, Route 240, Crozet, Virginia;
Woodmont Health Care Center
Dairy Lane, Fredricksburg, Virginia;
Attached hereto are legal descriptions for the above-described Sites.
<PAGE>
Lease Agreement
Atlantis
Legal Description
A tract of land in Section 6, Township 45 South, Range 43 East, Palm Beach
County, Florida, said parcel of land being specifically described as follows, to
wit:
BEGINNING at a point 33.00 feet West of the East line of said Section 6 and
40.00 feet South of the North line of said Section; thence bear South 00(degree)
10' 40" West, along a line parallel to and 33.00 feet West of, as measured at
right angles to, the East line of said Section 6, a distance of 257.00 feet;
thence North 89(degree) 55' 30" West, along a line parallel to the North line of
said Section, a distance of 350.20 feet; thence North 00(degree) 10' 40" East,
along a line parallel to the East line of said Section, a distance of 257 feet
to a point on the South right-of-way line of the Lake Worth Drainage District
Lateral No. 16; thence South 89(degree) 55' 30" East along said South
right-of-way line, said line being parallel to and 40.00 feet South of, as
measured at right angles to, the North line of said Section, a distance of
350.20 feet to the POINT OF BEGINNING.
Said lands situate, lying and being in Palm Beach County, Florida.
Tax Assessor's No. PCN 00-43-45-06-00-000-1051
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Lease Agreement
Bowman's
Legal Description
Lots 7, 8, 9, 10, 11 and 12, Block 2, HAND TRACT IN THE THOMAS FITCH GRANT,
according to the map thereof, as recorded in Map Book P, Page 1, of the Public
Records of Volusia County, Florida.
3
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Lease Agreement
Eagle Crest
Legal Description
That certain piece, parcel or tract of land, situate, lying and being a part of
Farm 10, as shown on the Plat of Love Grove Farms, as recorded in Plat Book 7,
page 3 of the current public records of Duval County, Florida, and being more
particularly described as follows: Beginning at the Southeast corner of those
lands shown on Plat of Sans Souci Estates Unit 2, as recorded in Plat Book 29
page 25 of said public records, said point also being the Southwest corner of
said Farm 10; thence North 2 degrees 06 minutes 20 seconds East along the East
line of said Sans Souci Estates, Unit 2, 342.62 feet; thence North 78 degrees 33
minutes 20 seconds East, 608.72 feet to the Southwesterly right of way line of
Dean Road (a 50-foot right of way as now established by possession and usage);
thence South 19 degrees 20 minutes 20 seconds East along said Southwesterly
right of way line of Dean Road, 215.28 feet to its intersection with the
Westerly right of way line of Parental Home Road (a 66-foot right of way as now
established); thence South 8 degrees 14 minutes 00 seconds West along said
Westerly right of way line of Parental Home Road, 286.04 feet to its
intersection with the South line of said Farm 10; thence North 87 degrees 56
minutes 10 seconds West along said South line of Farm 10, 639.95 feet to the
point of beginning.
4
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Lease Agreement
Oakwood
Legal Description
A tract of land located in the City of Eustis, Section 11, Township 19 South,
Range 26 East, Lake County, Florida, and being Lots 1 to 16, inclusive, of Block
34, in Pendryville, a subdivision in the City of Eustis, Florida, according to
the plat thereof recorded in Plat Book 1, Page 45, of the Public Records of Lake
County, Florida, and also being otherwise described as Lots 1 to 16, inclusive,
of Block 84, in the City of Eustis, Florida, according to the plat thereof
recorded in Plat Book 1, Page 79, Public Records of Lake County, Florida, and
being measured and described as follows:
Beginning at a concrete monument located at the intersection of the Southerly
edge of the right-of-way of Lemon Avenue (a 66-foot wide right-of-way) and the
Westerly edge of Eustis Street (a 66-foot wide right-of-way); thence running
Southerly along the Westerly edge of the right-of-way of Eustis Street, a
distance of 264.35 feet to a concrete monument at the point of intersection of
said Westerly edge of the right-of-way of Eustis Street and the Northerly edge
of the right-of-way of Ward Avenue (a 66-foot wide right-of-way); thence running
Westerly along a course making an interior angle of 89(degree)59'36" with the
preceding course, a distance of 263.96 feet along the Northerly edge of the
right-of-way of Ward Avenue to the point of intersection of said Northerly edge
of the right-of-way of Ward Avenue with the Easterly edge of the right-of-way of
Bay Street (a 66-foot wide right-of-way), said point being marked by an "X" cut
in a retaining wall; thence running Northerly along a course making an interior
angle of 90(degree)07'44" with the preceding course, a distance of 264.29 feet
along the Easterly edge of the right-of-way of Bay Street, to the intersection
of said Easterly right-of-way of Bay Street, with the Southerly edge of Lemon
Avenue, said intersecting point being presently marked by an "X" cut in a
sidewalk to an old residence; thence running Easterly along a course making an
interior angle of 89(degree)53'03" with the preceding course, a distance of
264.59 feet along the Southerly edge of the right-of-way of Lemon Avenue to the
point of beginning.
5
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Lease Agreement
Tierra Pines
Legal Description
Parcel 1:
Commence at the Northeast corner of the Northwest 1/4 of Section 7, Township 30
South, Range 16 East, Pinellas County, Florida; thence North 87 deg 36 min 11
sec West along the North boundary of the Northwest 1/4 of said Section 7, 768.79
feet; thence South 00 deg 18 min 30 sec East, 75.00 feet Westerly of and
parallel to the East boundary of Lot 2 of Pinellas Groves Subdivision of the
Northwest 1/4 of said Section 7, as recorded in Plat Book 1, Page 55 of the
public records of Pinellas County, Florida, 72.08 feet to a Point of Beginning;
thence continue South 00 deg 18 min 30 sec East along the West boundary of a 50
foot wide non-exclusive easement recorded in O.R. Book 4636, Page 1802 of the
public records of Pinellas County, Florida, 606.00 feet; thence North 87 deg 36
min 11 sec West, 215.00 feet; thence North 00 deg 18 min 30 sec West, 606.00
feet; thence South 87 deg 36 min 11 sec East along the Southerly right-of-way
line of Ulmerton Road, 215.00 feet to the Point of Beginning.
Parcel 2:
Commence at the Northeast corner of the Northwest 1/4 of Section 7, Township 30
South, Range 16 East, Pinellas County, Florida; thence North 87 deg 36 min 11
sec West along the North boundary of the Northwest 1/4 of said Section 7, 743.76
feet; thence South 00 deg 18 min 30 sec East, 50.00 feet Westerly of and
parallel to the East boundary of Lot 2 of Pinellas Groves Subdivision of the
Northwest 1/4 of said Section 7, as recorded in Plat Book 1, Page 55 of the
public records of Pinellas County, Florida, 72.08 feet to a Point of Beginning;
thence continue South 00 deg 18 min 30 sec East along the centerline of a 50.00
foot wide non-exclusive easement recorded in O.R. Book 4636, Page 1802 of the
public records of Pinellas County, Florida, 606.00 feet; thence North 87 deg 36
min 11 sec West, 25.03 feet; thence North 00 deg 18 min 30 sec West, 606.00
feet; thence South 87 deg 36 min 11 sec East along the Southerly right-of-way
line of Ulmerton Road, 25.03 feet to the Point of Beginning.
TOGETHER WITH a non-exclusive easement for ingress, egress, utilities and
drainage, described as follows:
The Westerly 25.00 feet of the Easterly 50.00 feet of the Southerly 605.32 feet
of the Northerly 677.32 feet of Lot 2 of Pinellas Groves Subdivision of the
Northwest 1/4 of said Section 7, Township 30 South, Range 16 East, as recorded
in Plat Book 1, Page 55 of the public records of Pinellas County, Florida.
6
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Lease Agreement
Woodlands
Legal Description
The South 1/2 of the Southeast 1/4 of the Northeast 1/4 of the Southwest 1/4 of
Section 4, Township 28 South, Range 19 East, LESS the East 25 feet thereof for
road right-of-way, all lying and being in Hillsborough County, Florida.
7
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Lease Agreement
Williamsburg
Legal Description
ALL those certain lots, pieces or parcels of land located in the City of
Williamsburg, Virginia, on the eastern most line of Mount Vernon Avenue,
together with all improvements thereon and appurtenances thereto belonging,
which are shown on a certain plat of survey dated March 10, 1989, by Harvey L.
Parks, Inc., entitled "PLAT OF TWO PARCELS OF LAND WITH IMPROVEMENTS SHOWN
THEREON, SITUATED ON THE EASTERN MOST LINE OF MOUNT VERNON AVENUE IN THE CITY OF
WILLIAMSBURG, VIRGINIA.", and being more particularly described as follows:
BEGINNING at a rod found on the northern line of Mount Vernon Avenue (55' R/W),
said rod being 196.91' from the intersection with the southern line of
Monticello Avenue, and running from said rod in a northerly direction N 49
degrees 37' 30" E a distance of 199.54' to a rod; thence S 40 degrees 22' 30" E
a distance of 580.62' to a rod; thence S 49 degrees 37' 30" W a distance of
193.75' to a rod on the northern right-of-way line of Mount Vernon Avenue;
thence along the northern right-of-way line of Mount Vernon Avenue along a curve
to the right with a radius of 322.50' a length of 63.59' to a rod; thence along
said right-of-way line N 40 degrees 22' 30" W a distance of 496.95' to a rod;
thence continuing along said right-of-way on a curve to the right with a radius
of 472.50' a length of 20.53' to a rod found, being the point and place of
beginning, containing 2.663 acres, more or less, all in the City of
Williamsburg, Virginia further described as Parcel No. 2 and Parcel No. 3, as
shown on plat of survey made by Harvey L. Parks, Inc., dated March 10, 1989, a
copy of which is attached to the Deed of Trust, recorded February 6, 1990, in
the Clerk's Office, Circuit Court, City of Williamsburg, Virginia, in Deed Book
90, at page 710, reference to which is made for a more particular description.
BEING the same property conveyed to The Industrial Development Authority of the
City of Hopewell, Virginia, by deed from United Health Services, Inc., a
Virginia corporation, dated October 14, 1976, recorded October 15, 1976, in the
Clerk's Office, Circuit Court, City of Williamsburg, Virginia, in Deed Book 54,
page 167.
8
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Lease Agreement
Windham
Legal Description
PARCEL ONE:
ALL that certain lot, piece or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in White Hall District of
Albemarle County, Virginia, containing 0.856 acres according to plat entitled
"Plat Showing 0.856 Acre of Land With Improvements Shown, Situated On The
Western Line of State Route No. 240, Lying in Crozet, White Hall District,
Albemarle County, Virginia", made by Harvey L. Parks, Inc., dated March 15,
1989, and recorded in the Clerk's Office of the Circuit Court of Albermarle
County, Virginia, in Deed Book 1086, page 505.
BEGINNING at a rod found at the intersection of the northern property line of
Parcel 62 owned by National Health Care Affiliates, Inc., and the eastern right
of way line of High Street, running from said rod in a northerly direction N 26
degrees 12' 51" E a distance of 57.17' to a rod; thence S 74 degrees 17' 10" E a
distance of 186.00' to a rod; thence S 58 degrees 47' 06" E a distance of 99.11'
to a rod; thence S 65 degrees 06' 06" E a distance of 100.11' to a rod; thence S
37 degrees 06' 06" E a distance of 42.55' to a P.K. Nail found on the northern
line of State Route No. 240; thence along the northern line of State Route No.
240 S 32 degrees 18' 45" W a distance of 62.72' to a point; thence continuing
along the northern line of State Route No. 240 S 29 degrees 27' 54" W a distance
of 40.88' to a point on the northern boundary line of property owned by the VA.
National Bank (Parcel 60); thence N 64 degrees 36' 31" W a distance of 212.70'
to a rod; thence N 25 degrees 40' 17" E a distance of 31.48' to a rod; thence S
64 degrees 21' 49" E a distance of 30.00' to a rod; thence N 25 degrees 38' 11"
E a distance of 10.22' to a rod; thence S 64 degrees 21' 49" E a distance of
32.00" to a rod; thence N 25 degrees 38' 11" E a distance of 30.00' to a rod,
thence N 64 degrees 21' 49" W a distance of 125.00' to a rod; thence S 25
degrees 38' 11" W a distance of 29.16' to a rod; thence N 64 degrees 19' 43" W a
distance of 134.66' to a rod found, being the point and place of beginning,
containing 0.856 acre, more or less, all in Crozet, White Hall District of
Albemarle County, Virginia, as shown on plat of survey by Harvey L. Parks, Inc.,
dated March 15, 1989.
Together with a non-exclusive easement, with maintenance agreement, 10 feet in
width for vehicular and pedestrian traffic, parking and ingress and egress from
State Route 240, recorded in
9
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Lease Agreement
the Clerk's Office of the Circuit Court of Albermarle County, Virginia, in Deed
Book, 779, page 239.
BEING the same property conveyed to the Industrial Development Authority of
Albemarle County, Virginia, by deed from Windham, Incorporated, a Virginia
corporation, dated January 1, 1980, recorded January 29, 1980, in the Clerk's
Office, Circuit Court, Albemarle County, Virginia, in Deed Book 688, page 476,
and leased to Windham, Incorporated by instrument dated January 1, 1980,
recorded in the Clerk's Office, Circuit Court, Albermarle County, Virginia, in
Deed Book 688, page 481. By Articles of Merger recorded May 21, 1984 in the
aforesaid Clerk's Office in Deed Book 799, page 341, Windham, Incorporated
merged into United Service Industries, Inc. By Certificate of Merger issued by
the Commonwealth of Virginia State Corporation Commission on February 10, 1984,
United Service Industries, Inc., a Virginia corporation merged into National
Health Care Affiliates, Inc., a Florida corporation, thereby vesting fee simple
title in the name of National Health Care Affiliates, Inc.
PARCEL TWO:
ALL that certain lot, piece or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in White Hall District of
Albemarle County, Virginia, containing 0.2905 acre according to plat entitled
"Plat of 0.2905 Acre Of Land, With Improvements Shown, Situated On The Eastern
Line Of High Street, Lying in Crozet, White Hall District of Albemarle County,
Virginia", made by Harvey L. Parks, Inc., dated March 15, 1989, recorded in the
Clerk's Office of the Circuit Court of Albemarle County, Virginia, in Deed Book
1086, page 507.
BEGINNING at a spike found at the intersection of the southern line of High
Street and the northern property line of Va. National Bank (Parcel 60A), and
running from said spike along the southern line of High Street in a northerly
direction N 26 degrees 12' 51" E a distance of 44.91' to a pipe; thence S 64
degrees 19' 43" E a distance of 134.66' to a rod; thence N 25 degrees 38' 11" E
a distance of 29.16' to a rod; thence S 64 degrees 21' 49" E a distance of
125.00' to a rod; thence S 25 degrees 38' 11" W a distance of 30.00' to a rod;
thence N 64 degrees 21' 49" W a distance of 32.00' to a rod; thence S 25 degrees
38' 11" W a distance of 10.22' to a rod; thence N 64 degrees 21' 49" W a
distance of 30.00' to a rod; thence S 25 degrees 40' 17" W a distance of 31.48'
to a rod; thence N 65 degrees 01' 29" W a distance of 198.11' to a spike found,
being the point and place of beginning, containing 0.2905 acre, more or less,
all in Crozet, White Hall District of Albemarle County, Virginia, further
described as Parcel 62, as shown on plat of
10
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Lease Agreement
survey made by Harvey L. Parks, Inc., dated March 15, 1989, recorded in Deed
Book 1086, page 507.
TOGETHER WITH a non-exclusive easement, with maintenance agreement, 10 feet in
width for vehicular and pedestrian traffic, parking and ingress and egress from
State Route 240, recorded in the Clerk's Office of the Circuit Court of
Albemarle County, Virginia, in Deed Book 779, page 239.
BEING the same real estate conveyed to Central Virginia Health Facilities, Inc.,
a Virginia corporation, by deed of exchange from Julia Sharp Vergara, divorced,
dated January 4, 1979, recorded in the Clerk's Office of the Circuit Court of
Albemarle County, Virginia, in Deed Book 664, page 615, and a portion conveyed
to Central Virginia Health Facilities, Inc., recorded in Deed Book 655, page
191. By Consent of Shareholder, dated June 29, 1979; Plan of Merger of Central
Virginia Health Facilities, Inc., with and into United Service Industries, Inc.,
dated June 30, 1979; and by Certificate of Merger issued by the Commonwealth of
Virginia State Corporation Commission on February 10, 1984, United Service
Industries, Inc., a Virginia corporation merged into National Health Care
Affiliates, Inc., a Florida corporation, thereby vesting fee simple title in the
name of National Health Care Affiliates, Inc., a Florida corporation.
PARCEL THREE:
ALL that certain lot of land situated in Albemarle County, Virginia, in Crozet,
fronting on State Route 240 parallel to the C & O Railroad and bounded on the
south by the land owned by the Industrial Development Authority of Albemarle
County and on the west by High Street, on the east by State Route 240 and on the
north by the C & O Railroad.
BEING a portion of the same property conveyed to The Miller Manual School of
Albemarle by the following deeds from:
(i) Abraham Wayland and Martha T. Wayland, dated September 10, 1894, recorded in
the Clerk's Office, Circuit Court, Albemarle County, Virginia, in Deed Book 102,
page 231; and
(ii) R.T.W. Duke, Commissioner of Circuit Court of Albemarle County, dated May
25, 1887, recorded June 13, 1887, in the Clerk's Office, Circuit Court,
Albemarle County, Virginia, in Deed Book 88, page 103.
11
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Lease Agreement
Leased to National Health Care Affiliates by instrument dated January 1, 1979,
recorded in Deed Book 786, page 655.
12
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Lease Agreement
PARCEL FOUR:
ALL that certain lot, piece or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in White Hill District of
Albemarle County, Virginia, containing 0.3927 acre according to plat entitled
"Plat Showing 0.3927 Acre Of Land With Improvements Shown Situated On The
Eastern Line Of High Street, Lying in Crozet, White Hill District of Albemarle
County, Virginia", made by Harvey L. Parks, Inc., dated March 15, 1989, recorded
in the Clerk's Office of the Circuit Court of Albemarle County, Virginia, in
Deed Book 1086, page 506.
BEGINNING at a rod found at the intersection of southern line of High Street and
the northern property line of Stanley P. Wilcox (Parcel 56) and running from
said rod in a northerly direction along the southern line of High Street N 32
degrees 06' 32" E a distance of 60.15' to a spike; thence S 57 degrees 40' 33" E
a distance of 102.86' to a rod; thence S 32 degrees 21' 53" W a distance of
48.93' to a P.K. set; thence S 57 degrees 38' 07" E a distance of 109.00' to a
P.K. set; thence N 32 degrees 21' 53" E a distance of 49.01' to a rod; thence S
57 degrees 40' 33" E a distance of 162.60 feet to a P.K. set on the northern
line of State Route No. 240; thence along the northern line of State Route No.
240 S 34 degrees 00' W a distance of 60.33' to a P.K. set; thence N 57 degrees
34' 43" W a distance of 215.56' to a spike set; thence N 57 degrees 44' 44" W a
distance of 156.91' to a rod found, being the point and place of beginning,
containing 0.3927 acre, more or less, all in Crozet, White Hall District of
Albemarle County, Virginia, as shown on plat of survey made by Harvey L. Parks,
Inc., dated March 15, 1989, recorded in Deed Book 1086, page 506.
TOGETHER WITH the right of way of ingress and egress over 10-foot strip as
described in deed recorded in Deed Book 170, page 370, which strip adjoins the
lot hereby conveyed on its southern boundary by instrument recorded in the
Clerk's Office, Circuit Court, Albemarle County, Virginia, in Deed Book 695,
page 232.
TOGETHER WITH perpetual non-exclusive easement, with maintenance agreement, for
vehicular and pedestrian traffic, parking and ingress and egress as recorded in
the Clerk's Office, Circuit Court, Albemarle County, Virginia, in Deed Book 695,
page 237.
TOGETHER WITH a non-exclusive easement, with maintenance agreement, 10-feet in
width for vehicular and pedestrian traffic, parking and ingress and egress from
State Route 240 recorded in the Clerk's Office, Circuit Court, Albemarle County,
Virginia, in Deed Book 779, page 239.
13
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Lease Agreement
BEING a part of the same real estate conveyed to United Service Industries,
Inc., by the following deeds from:
(i) Virginia National Bank, a national banking association, dated April 25,
1983, recorded June 15, 1983, in the Clerk's Office, Circuit Court, Albemarle
County, Virginia, in Deed Book 766, page 29; and
(ii) Central Fidelity Bank Charlottesville, a Virginia corporation, dated June
13, 1980, recorded June 20, 1980, in the aforesaid Clerk's Office, in Deed Book
695, page 232.
By Certificate of Merger issued by the Commonwealth of Virginia State
Corporation Commission on February 10, 1984, United Service Industries, Inc., a
Virginia corporation merged into National Health Care Affiliates, Inc., a
Florida corporation, thereby vesting fee simple title in the name of National
Health Care Affiliates, Inc.
14
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Lease Agreement
Woodmont
Legal Description
All that certain tract or parcel of land, situate lying and being in Falmouth
District, Stafford County, Virginia, containing 8.770 acres, as shown on plat of
survey shown as Parcels 1 and 2 on plat of survey made by Potts, Minter &
Associates, P.C., dated May 31, 1996, and further described as:
Beginning at a point on the southern line of State Route 607, and from said
point and place of beginning along a curve to the right with a radius of 2754.87
feet and an arc length of 214.97 feet, having a chord bearing South
46(degree)27'37" West and a distance of 214.92 feet to a point; thence along a
curve to the right with a radius of 2277.50 feet, an arc length of 429.29, a
chord bearing South 54(degree)05'44" West, and a distance of 428.65 feet to a
point; thence, North 30(degree)30'14" West 40.00 feet to a point; thence along a
curve to the right with a radius of 2237.50 feet, an arc length of 668.34 feet,
a chord bearing South 68(degree)03'11" West, and a distance of 665.86 feet to a
point; thence, South 76(degree)36'37" West 218.25 feet to a point; thence North
13(degree)23'23" West 362.21 feet to a point; thence, north 66(degree)54'00"
East 209.00 feet to a point; thence, South 23(degree)06'00" East, 55.00 feet to
a point; thence, North 66(degree)54'00" East, 100.00 feet to a point; thence,
North 23(degree)06'00" West, 55.00 feet to a point; thence, North
66(degree)54'00" East, 364.44 feet to a point; thence South 37(degree)25'55"
East, 191.34 feet to a point; thence, along a curve to the left with a radius of
230.00 feet, and an arc length of 370.11 feet to a point; thence along a
non-tangent curve to the left with a radius of 248.41 feet, an arc length of
83.65 feet, a chord bearing North 18(degree)37'39" East 83.27 feet to a point;
thence, North 08(degree)58'45" East, 193.51 feet to a point; thence, along the
centerline of the old Route 607 South 81(degree)01'15" East, 80.01 feet to a
point; thence, continuing along said old Route 607 South 85(degree)03'45" East,
263.09 feet to a point and place of beginning 8.770 acres.
Parcel 1 is the same property conveyed to National Health Care Affiliates, Inc.,
by deed of Industrial Development Authority of Stafford County, Virginia, dated
April 1, 1989, recorded in Deed Book 669, at Page 469, in the Clerk's Office of
the Circuit Court of Stafford County, Virginia.
Parcel 2 is part of the same property conveyed to United Health Services,
Incorporated, by deed from Woodmont, Incorporated, dated November 19, 1975,
recorded in Deed Book 281, page 492 in the aforesaid Clerk's Office. By Articles
of Amendment recorded
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Lease Agreement
in Deed Book 549, page 101, United Health Services, Incorporated changed their
name to United Service Industries, Incorporated. By Articles of Merger recorded
in Deed Book 458, page 158, United Service Industries, Inc. merged into National
Health Care Affiliates, Inc.
16
<PAGE>
EXHIBIT A
TO
LEASE AGREEMENT
FORM OF LEASE SUPPLEMENT AND MEMORANDUM OF LEASE AND AGREEMENT
THIS LEASE SUPPLEMENT AND MEMORANDUM OF LEASE AND AGREEMENT dated
_____________, 19__ (this "Lease Supplement") is between MELLON FINANCIAL
SERVICES CORPORATION #4, as Lessor (the "Lessor"), and GENESIS ELDERCARE
PROPERTIES, INC., a Pennsylvania corporation and a wholly-owned subsidiary of
Genesis Health Ventures, Inc., as Lessee (the "Lessee");
W I T N E S S E T H:
WHEREAS, Lessee and Lessor have heretofore entered into that certain
Lease and Agreement dated as of July 24, 1996 (as amended, supplemented, or
otherwise modified from time to time, the "Lease"). Unless otherwise defined
herein, capitalized terms used herein shall have the meanings specified in the
Lease; and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on the Document Closing Date substantially in the form hereof for the
purpose of confirming the acceptance and lease of certain Sites, specifying the
Rent applicable to such Sites and setting forth certain other matters, all as
required pursuant to the Lease;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Delivery and Acceptance. Lessor hereby delivers and leases
to, and confirms delivery and lease to, Lessee, and Lessee hereby
accepts delivery and leases, and confirms acceptance of delivery and
lease, from Lessor, under the Lease as hereby supplemented, of the
Site(s) listed on Schedule I hereto. The term "Site" includes, without
limitation, all of the right, title and interest of Lessor or Lessee in
and to the following:
<PAGE>
Lease Supplement
(A) the real property described in Schedule III attached to
the Participation Agreement (the "Land"); all buildings, structures and
other improvements now or in the future located on the Land (the
"Improvements"; the Improvements and the Land are sometimes
collectively referred to herein as the "Property");
(B) all the estate, right, title, claim or demand whatsoever
of Lessor or Lessee, in possession or expectancy, in and to the
Property or any part thereof;
(C) all right, title and interest of Lessor in and to all of
the fixtures, furnishings and fittings of every kind and nature
whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each case,
attachments, components, parts and accessories) currently owned or
subsequently acquired by the Mortgagor and now or subsequently attached
to, or contained in or used or usable in any way in connection with any
operation or letting of the Property (all of the foregoing in this
paragraph (C) being referred to as the "Fixtures");
(D) all right, title and interest of Lessor or Lessee in and
to all of the fixtures, chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings and articles of personal
property of every kind and nature whatsoever, and all appurtenances and
additions thereto and substitutions or replacements thereof (together
with, in each case, attachments, components, parts and accessories)
currently owned or subsequently acquired by Mortgagor and now or
subsequently attached to, or contained in or used or usable in any way
in connection with any operation or letting of the Property, including
but without limiting the generality of the foregoing, all screens,
awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs,
storm doors and windows, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilating, air conditioning and air-cooling apparatus, refrigerating,
and incinerating equipment, escalators, refrigerators, elevators,
loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and
antennae), televisions, computers (excluding software), sprinkler
systems and other fire prevention and extinguishing apparatus and
materials, security systems, motors, engines, machinery, pipes, pumps,
tanks, conduits, appliances, fittings and fixtures of every
2
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Lease Supplement
kind and description (all of the foregoing in this paragraph (D) being
referred to as the "Equipment");
(E) all right, title and interest of Lessor or Lessee in and
to all substitutes and replacements of, and all additions and
improvements to, the Improvements and the Fixtures and Equipment,
subsequently acquired by Lessor or Lessee or constructed, assembled or
placed by Lessor or Lessee on the Land, immediately upon such
acquisition, release, construction, assembling or placement, including,
without limitation, any and all building materials whether stored at
the Property or offsite, and, in each such case, without any further
lease, mortgage, conveyance, assignment or other act by Lessor or
Lessee;
(F) all right, title and interest of Lessor or Lessee in, to
and under all books and records relating to or used in connection with
the operation of the Property or the Fixtures or any part thereof; and
all general intangibles related to the operation of the Improvements
now existing or hereafter arising; and
(G) all right, title and interest of Lessor or Lessee in and
to (to the extent assignable) (i) all consents, licenses, building
permits, certificates of occupancy and other governmental approvals
relating to construction, completion, occupancy, use or operation of
the Property or any part thereof and (ii) all plans and specifications
relating to the Property.
2. Warranty. Lessee hereby represents and warrants that no
event which would constitute a Casualty or an Event of Taking and no
notice of such Casualty or Event of Taking has been given to Lessee or
any of its Affiliates with respect to the Sites under the Lease has
occurred with respect to the Sites set forth on Schedule I hereto as of
the date hereof. Lessee hereby reaffirms each of the representations
and warranties set forth at Section 4.1 of the Participation Agreement
as if made on the date hereof, except to the extent any such
representation and warranty relates to an earlier date, including the
Sites set forth on Schedule I hereto are free and clear of all Liens
other than Permitted Liens.
3. Term, Applicable Percentage. The term of this
Lease Supplement shall commence on the date hereof and end
on the Lease Termination Date. The Applicable Percentage on
each Payment Date is set forth in the appropriate portion of
Schedule II.
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Lease Supplement
4. Renewal Terms, Lessee's Cost and Estimated Sales Costs.
With respect to the Sites covered by this Lease Supplement and subject
to the consent of the Participants pursuant to Section 2.10 of the
Participation Agreement, Lessee shall have a five-year renewal option
to be exercised pursuant to Section 6.1 of the Lease. The estimated
sales costs for the Sites are set forth in Schedule II attached hereto.
5. Confirmation. Lessee hereby confirms its agreement, in
accordance with the Lease as supplemented by this Lease Supplement, to
pay Rent to Agent, for the benefit of Lessor, for the Sites leased
hereunder. Nothing herein shall reduce Lessee's obligation to make all
other payments required under the Lease, including those payments to be
made on the last day of the Lease Term pursuant to Article VI of the
Lease.
6. Incorporation into Lease. This Lease Supplement shall be
construed in connection with and as part of the Lease, and all terms,
conditions and covenants contained in the Lease, as supplemented by
this Lease Supplement, shall be and remain in full force and effect and
shall govern the Sites described in Schedule I hereto.
7. References. Any and all notices, requests, certificates and
other instruments executed and delivered concurrently with or after the
execution and delivery of this Lease Supplement may refer to the "Lease
Agreement, dated as of July 24, 1996", or may identify the Lease in any
other respect without making specific reference to this Lease
Supplement, but nevertheless all such references shall be deemed to
include this Lease Supplement, unless the context shall otherwise
require.
8. Recording. Lessor and Lessee agree that this Lease
Supplement shall be recorded at Lessee's sole cost and
expense as required under Section 21.19 of the Lease.
9. Counterparts. This Lease Supplement may be
executed in any number of counterparts, each executed
counterpart constituting an original but all together one
and the same instrument.
10. Nature of Transaction. (A) IT IS THE INTENT OF THE PARTIES
HERETO THAT: (i) THE TRANSACTION CONTEMPLATED HEREBY CONSTITUTES AN
OPERATING LEASE FROM LESSOR TO LESSEE FOR PURPOSES OF LESSEE'S
FINANCIAL REPORTING, (ii) THE TRANSACTION CONTEMPLATED HEREBY PRESERVES
OWNERSHIP IN THE
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Lease Supplement
SITES TO LESSEE FOR PURPOSES OF FEDERAL AND STATE TAX AND BANKRUPTCY
PURPOSES, (iii) LESSEE, PURSUANT TO THE LEASE, GRANTS A SECURITY
INTEREST OR LIEN, AS THE CASE MAY BE, IN THE SITES AND THE OTHER
COLLATERAL TO LESSOR, (iv) FOR PURPOSES OF FEDERAL AND STATE TAX AND
BANKRUPTCY PURPOSES, THE PAYMENT BY LESSEE OF BASIC RENT SHALL BE
TREATED AS PAYMENTS OF INTEREST, AND THE PAYMENT BY LESSEE OF ANY
AMOUNTS IN RESPECT OF THE LEASE BALANCE SHALL BE TREATED AS REPAYMENTS
OF PRINCIPAL, AND (v) THE MORTGAGE AND ASSIGNMENT OF LEASE CREATE A
LIEN AND SECURITY INTEREST IN LESSOR'S INTEREST IN AND TO THE SITES,
THE LEASE AND THE OTHER OPERATIVE DOCUMENTS, SUBJECT TO CERTAIN LIMITED
EXCEPTIONS. NEVERTHELESS, LESSEE ACKNOWLEDGES AND AGREES THAT NONE OF
LESSOR, AGENT OR ANY LENDER HAS PROVIDED OR WILL PROVIDE TAX,
ACCOUNTING OR LEGAL ADVICE TO LESSEE REGARDING THE OVERALL TRANSACTION
OR MADE ANY REPRESENTATIONS OR WARRANTIES CONCERNING THE TAX,
ACCOUNTING OR LEGAL CHARACTERISTICS OF THE OPERATIVE DOCUMENTS AND THAT
LESSEE HAS OBTAINED AND RELIED UPON SUCH TAX, ACCOUNTING AND LEGAL
ADVICE CONCERNING THE OPERATIVE DOCUMENTS AS IT DEEMS APPROPRIATE.
(B) SPECIFICALLY, WITHOUT LIMITING THE GENERALITY OF
SUBSECTION (A) OF THIS SECTION 10, BUT UNDERSTANDING THAT THE PARTIES'
CHARACTERIZATION IS NOT THE SOLE DETERMINANT OF THE ISSUE, THE PARTIES
HERETO INTEND AND AGREE THAT WITH RESPECT TO THE NATURE OF THE
TRANSACTIONS EVIDENCED BY THIS LEASE IN THE CONTEXT OF THE EXERCISE OF
REMEDIES UNDER THE OPERATIVE DOCUMENTS, RELATING TO AND ARISING OUT OF
ANY INSOLVENCY OR RECEIVERSHIP PROCEEDINGS OR A PETITION UNDER THE
UNITED STATES BANKRUPTCY LAWS OR ANY OTHER APPLICABLE INSOLVENCY LAWS
OR STATUTE OF THE UNITED STATES OF AMERICA OR ANY STATE OR COMMONWEALTH
THEREOF AFFECTING LESSEE, LESSOR OR ANY LENDER OR ANY ENFORCEMENT OR
COLLECTION ACTIONS, THE TRANSACTIONS EVIDENCED BY THE OPERATIVE
DOCUMENTS ARE LOANS MADE BY THE LESSOR AND THE LENDERS AS UNRELATED
THIRD PARTY LENDERS TO LESSEE SECURED BY THE SITES.
11. Grant and Foreclosure on Lessee's Estate.1 Lessee hereby
grants to ____________________, as trustee (together with all successor
trustees, the "Trustee"), IN TRUST, WITH POWER OF SALE, all of Lessee's
right, title and interest in and to the Sites listed on Schedule I and,
upon the occurrence of a Lease Event of Default, Lessor shall have the
power and authority, after proper notice and lapse
- --------
1 To be conformed to requirements of local law for each state.
5
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Lease Supplement
of such time as may be required by law, to cause Trustee to sell such
Sites by notifying Trustee of that election and depositing with Trustee
this instrument and receipts and evidence of expenditures made and
secured hereby as Trustee may reasonably require. Upon receipt of any
such notice from Lessor, Trustee shall cause to be recorded, published
and delivered to Lessee such Notice of Default and Election to Sell as
is then required by applicable statutory authority and by this
instrument, which notice shall set forth, among other things, the
nature of the breach(es) or default(s), the action(s) required to
effect a cure thereof and the time period within which that cure may be
effected. If no cure is effected within the statutory time limits
following recordation of the Notice of Default and Election to Sell and
after Notice of Sale has been given as required by the above-referenced
statutes, Trustee may without further notice or demand sell and convey
the Sites in accordance with the above-referenced statutes. The Sites
may be sold as a whole or in separate lots, parcels or items and in
such order as Lessor may direct, at public auction to the highest
bidder for cash in lawful money of the United States payable at the
time of sale. Lessor may purchase all or any part of the Sites at such
sale. Lessee acknowledges that sales for cash or on credit to a
wholesaler, retailer or user of the Sites, at a public or private
auction, are all commercially reasonable. Trustee shall deliver to such
purchaser(s) a good and sufficient deed or deeds conveying the property
so sold, but without any covenant or warranty express or implied. The
recitals in such deed of any matter or fact shall be conclusive proof
of the truthfulness thereof. Any Person, including Lessee, Trustee or
Lessor, may purchase at any sale. After deducting all costs, fees and
expenses of Lessor and Trustee, including costs of evidence of title in
connection with any sale, Lessor shall apply the proceeds of sale, in
the following order of priority, to payment of the following
(collectively, the "Obligations"): (i) first, all amounts expended by
or for the account of Lessor under the terms hereof and not then
repaid, with accrued interest at the Overdue Rate; and (ii) second, all
other amounts then due and owing hereunder including, without
limitation, all Accrued Variable Rent, Supplemental Rent, the full
amount of the Lease Balance as of the date of sale as if this Lease had
been terminated with respect to all of the Sites then subject to this
Lease under Section 6.3, and all other amounts then payable by Lessee
under this Lease and the other Operative Documents, with Lessor having
the right to apply the proceeds of sale to the amounts described above
in this clause (ii) in such order, proportion and priority as Lessor
may elect in its
6
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Lease Supplement
sole and absolute discretion. To the extent permitted by applicable
statutes, Trustee may postpone the sale of all or any portion of the
Sites by public announcement at the time and place of sale, and from
time to time thereafter may again postpone that sale by public
announcement or subsequently noticed sale, and without further notice
may make such sale at the time fixed at the last postponement or may,
in its discretion, give a new notice of sale. A sale of less than all
of the Sites or any defective or irregular sale made hereunder shall
not exhaust the power of sale provided for herein, and subsequent sales
may be made hereunder until all of the Obligations have been satisfied
or the entire Sites sold, without defect or irregularity. No action of
Lessor or Trustee based upon the provisions contained herein or
contained in the applicable statutes, including, without limitation,
the giving of the Notice of Default and Election to Sell or the Notice
of Sale, shall constitute an election of remedies which would preclude
Lessor from pursuing judicial foreclosure before a completed sale
pursuant to the power of sale contained herein. Lessor shall have the
right, with the irrevocable consent of Lessee hereby given and
evidenced by the execution of this instrument, to obtain appointment of
a receiver by any court of competent jurisdiction without further
notice to Lessee, which receiver shall be authorized and empowered to
enter upon and take possession of the Sites, including all personal
property constituting a permanent part of the Site and fixtures thereto
used upon or in connection with the real property herein conveyed (and
any other personal property constituting a part of the Site which
Lessee acquired with the funds of Lessor or the Lenders), to let the
Sites, to receive all the rents, issues and profits, if any, which may
be due or become due in respect to the leasing of the Sites to another
party and apply the rents after payment of all necessary charges and
expenses to reduction of the Obligations in such order, proportion and
priority as Lessor may elect. At the option of Lessor, the receiver
shall accomplish entry and taking possession of the Sites by actual
entry and possession or by notice to Lessee. The receiver so appointed
by a court of competent jurisdiction shall be empowered to issue
receiver's certificates for funds advanced by Lessor for the purpose of
protecting the value of the Sites as security for the Obligations. The
amounts evidenced by receiver's certificates shall bear interest at the
Overdue Rate and may be added to the Obligations if Lessee or a junior
lienholder purchases the Sites at the trustee's sale. Trustee or any
successor acting hereunder may resign and thereupon be discharged of
the trusts hereunder upon thirty (30) days'
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Lease Supplement
prior written notice to Lessor. Regardless of whether Trustee resigns,
Lessor may, from time to time, substitute a successor or successors to
any Trustee named herein or acting hereunder in accordance with any
statutory procedure for such substitution; or if Lessor, in its sole
and absolute discretion, so elects, and if permitted by law, Lessor may
substitute such successors or successors by recording, in the office of
the recorder of the county or counties where a Site is located, a
document executed by Lessor and containing the name of the original
Lessee and Lessor hereunder, the book and page where this instrument
(or a memorandum hereof) is recorded (and/or instrument number, as
applicable) and the name of the new Trustee, which instrument shall be
conclusive proof of proper substitution of such successor Trustee or
Trustees, who shall, without conveyance from the predecessor Trustee,
succeed to the rights, powers and duties hereunder. It is acknowledged
that A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT; A POWER OF
SALE MAY ALLOW LESSOR TO TAKE THE SITES AND SELL THEM WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY LESSEE UNDER THIS
INSTRUMENT.
12. Governing Law. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED
IN, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
EXCEPT THAT FORECLOSURE UPON THE SITES SUBJECT TO THIS LEASE SUPPLEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE SITE SUBJECT TO
THIS LEASE SUPPLEMENT IS LOCATED.
[remainder of page intentionally left blank]
8
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Lease Supplement
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
to be duly executed and delivered on the day and year first above written.
MELLON FINANCIAL SERVICES
CORPORATION, as Lessor
By___________________________
Name Printed:________________
Title:_______________________
Address:
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
GENESIS ELDERCARE PROPERTIES,
INC., as Lessee
By___________________________
Name Printed:________________
Title:_______________________
Address:
148 West State Street
Kennett Square, PA 19348
Attn: George V. Hager, Jr.
[Conform execution and acknowledgments to applicable state
requirements in state where applicable Site is located]
<PAGE>
Lease Supplement
STATE OF _______________ )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _______________, State of
____________, this ____ day of _______________, 19____, by
___________________________, as _________________________ of GENESIS ELDERCARE
PROPERTIES, INC., a Pennsylvania corporation, on behalf of the corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires:________________
[USE APPROPRIATE NOTARY FORMS FOR APPLICABLE STATE]
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Lease Supplement
STATE OF _______________ )
) SS.:
COUNTY OF ______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of _______________, State of
____________, this ____ day of _______________, 19____, by
___________________________, as _________________________ of MELLON FINANCIAL
SERVICES CORPORATION #4, on behalf of the Corporation.
[Notarial Seal] _________________________
Notary Public
My commission expires:________________
[USE APPROPRIATE NOTARY FORMS FOR APPLICABLE STATE]
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Lease Supplement
SCHEDULE I
TO
LEASE SUPPLEMENT
Sites
12
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Lease Supplement
SCHEDULE II
TO
LEASE SUPPLEMENT
Applicable Estimated
Site Percentage Sales Costs
- ---- ---------- -----------
Atlantis Rehabilitation 84.855% 1%
and Health Care Center
Old Congress Road,
Lantana, Florida
Bowman's Health Care Center 84.855% 1%
South Ridgewood
Ormand Beach, Florida
Eagle Crest Nursing Center 84.855% 1%
Parental Home Road
Jacksonville, Florida
Oakwood Rehabilitation 84.855% 1%
and Health Care Center
South East Bay Street
Eustis, Florida
Tierra Pines Health 84.855% 1%
Care Center
Ulmerton Road
Largo, Florida
Woodlands Nursing Center 84.855% 1%
North 46th Street
Tampa, Florida
Williamsburg Health Care 84.855% 1%
and Rehabilitation Center
Mount Vernon Avenue
Williamsburg, Virginia
Windham 84.855% 1%
Main Street, Route 240
Crozet, Virginia
Woodmont Health Care Center 84.855% 1%
Dairy Lane
Fredricksburg, Virginia
13
<PAGE>
Exhibit 10.9
================================================================================
PARTICIPATION AGREEMENT
Dated as of July 24, 1996
Among
GENESIS ELDERCARE PROPERTIES, INC.
as Lessee,
MELLON FINANCIAL SERVICES CORPORATION #4,
as Lessor
PERSONS NAMED ON SCHEDULE I,
as Lenders,
and
MELLON BANK, N.A.
not in its individual capacity except as expressly
stated herein, but solely as Agent
================================================================================
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<PAGE>
TABLE OF CONTENTS
(Participation Agreement)
Page
ARTICLE I
DEFINITIONS.............................................. 2
ARTICLE II
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS. 2
SECTION 2.1 Effectiveness of Agreement............................... 2
SECTION 2.2 Agreement to Acquire and Lease........................... 2
SECTION 2.3 Participation by Lenders................................. 2
SECTION 2.4 Participation by Lessor.................................. 3
SECTION 2.5 Advances for Transaction Costs........................... 3
SECTION 2.6 Structuring/Underwriting Fee............................. 4
SECTION 2.7 Payments to Participants................................. 5
SECTION 2.8 Nature of Transaction.................................... 5
SECTION 2.9 Computations............................................. 6
SECTION 2.10 Renewal Term............................................. 6
SECTION 2.11 Highest Lawful Rate...................................... 9
ARTICLE III
[INTENTIONALLY OMITTED].................................. 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES........................... 12
SECTION 4.1 Representations and Warranties of Lessee................. 12
SECTION 4.2 Representations and Warranties of each Lender............ 20
SECTION 4.3 Representations and Warranties of Lessor................. 22
SECTION 4.4 Representations and Warranties of Agent.................. 24
ARTICLE V
COVENANTS OF LESSEE...................................... 25
SECTION 5.1 Further Assurances....................................... 25
SECTION 5.2 Consolidation, Merger, Sale, etc......................... 26
SECTION 5.3 Corporate Existence...................................... 28
SECTION 5.4 Guaranty................................................. 28
SECTION 5.5 Liens.................................................... 28
SECTION 5.6 Compliance Certificates.................................. 28
SECTION 5.7 Change of Name or Address................................ 29
SECTION 5.8 Environmental Matters.................................... 29
SECTION 5.9 Investigation by Authorities............................. 29
SECTION 5.10 Financial and Other Information.......................... 30
SECTION 5.11 Securities............................................... 32
SECTION 5.12 Interest Rates........................................... 32
SECTION 5.13 Appraisals............................................... 32
-i-
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SECTION 5.14 Environmental Audits..................................... 32
SECTION 5.15 Additional Compensation in Certain Circumstances......... 33
ARTICLE VI
OTHER COVENANTS AND AGREEMENTS........................... 33
SECTION 6.1 Cooperation with Lessee.................................. 33
SECTION 6.2 Covenants of Lessor and Lenders.......................... 34
SECTION 6.3 Restrictions on and Effect of Transfer
by any Lender........................................ 35
SECTION 6.4 Covenants and Agreements of Lenders...................... 38
SECTION 6.5 Future Lenders........................................... 39
SECTION 6.6 Agent under Participation Agreement and Mortgages........ 39
SECTION 6.7 Syndication by Agent..................................... 39
SECTION 6.8 Prepayment by Lessor..................................... 40
SECTION 6.9 Foreclosure against Lessor............................... 40
ARTICLE VII
INDEMNIFICATION.......................................... 40
SECTION 7.1 General Indemnification.................................. 40
SECTION 7.2 General Tax Indemnity.................................... 41
SECTION 7.3 Withholding Tax Exemption................................ 46
SECTION 7.4 Excessive Use Indemnity.................................. 46
SECTION 7.5 Gross Up................................................. 47
ARTICLE VIII
THE AGENT................................................ 47
SECTION 8.1 Appointment of Agent; Powers and
Authorization to Take Certain Actions................ 47
SECTION 8.2 Reliance................................................. 49
SECTION 8.3 Action Upon Instructions Generally....................... 49
SECTION 8.4 Indemnification.......................................... 50
SECTION 8.5 Independent Credit Investigation......................... 51
SECTION 8.6 Refusal to Act........................................... 52
SECTION 8.7 Resignation or Removal of Agent;
Appointment of Successor............................. 52
SECTION 8.8 Separate Agent........................................... 53
SECTION 8.9 Termination of Agency.................................... 53
SECTION 8.10 Compensation of Agency................................... 53
SECTION 8.11 Limitations.............................................. 54
SECTION 8.12 Agent May Be a Participant............................... 54
ARTICLE IX
MISCELLANEOUS............................................ 55
SECTION 9.1 Survival of Agreements................................... 55
SECTION 9.2 No Broker, etc........................................... 55
SECTION 9.3 Notices.................................................. 55
SECTION 9.4 Counterparts............................................. 56
SECTION 9.5 Amendments............................................... 56
SECTION 9.6 Headings, etc............................................ 57
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<PAGE>
SECTION 9.7 Parties in Interest...................................... 57
SECTION 9.8 GOVERNING LAW; Submission to
Jurisdiction; Waiver of Jury Trial.................... 57
SECTION 9.9 Payment of Transaction Costs and Other Costs............. 57
SECTION 9.10 Severability............................................. 58
SECTION 9.11 Limited Liability of Lessor.............................. 58
SECTION 9.12 Liabilities of the Lenders............................... 59
SECTION 9.13 Liabilities of Agent..................................... 59
SECTION 9.14 Reproduction of Documents................................ 59
SECTION 9.15 Consideration for Consents to Waivers
and Amendments........................................ 60
SECTION 9.16 Payment Directions....................................... 60
SECTION 9.17 Action of and Notices to Lessor under
Loan Agreement........................................ 60
SECTION 9.18 Submission to Jurisdiction; Waivers...................... 60
SECTION 9.19 Final Agreement.......................................... 61
-iii-
<PAGE>
APPENDIX 1 Definitions
APPENDIX 2 Conditions to Document Closing
SCHEDULE I Lenders and Commitments
SCHEDULE II Addresses For Notice; Wire Instructions
SCHEDULE III Sites
SCHEDULE IV Stock Sellers
SCHEDULE 4.1A Governmental Actions
SCHEDULE 4.1B Filings and Recordings
SCHEDULE 4.1C Computation under Section 5.9 of 1995 Subordinated
Note Indenture
SCHEDULE 4.1D ERISA Plans
EXHIBIT A Form of Lease and Agreement
Exhibit A - Form of Lease Supplement and
Memorandum of Lease and Agreement
EXHIBIT B-1 Form of Guaranty of Lease
EXHIBIT B-2 Form of Structural Guaranty
EXHIBIT C Form of Loan Agreement
Exhibit A - Form of Note
EXHIBIT D-1 Form of Mortgage
EXHIBIT D-2 Form of Deed of Trust
EXHIBIT E-1 Form of Opinion of In-House Counsel to Lessee
EXHIBIT E-2 Form of Opinion of Special Counsel to Lessee
EXHIBIT E-3 Form of Local Counsel Opinion
EXHIBIT E-4 Form of Opinion of Special Counsel to Lessee
regarding "Senior Indebtedness"
EXHIBIT E-5 Form of Local Counsel Questionnaire
EXHIBIT F Form of Officer's Certificate
EXHIBIT G Form of Investor's Letter
EXHIBIT H Form of Assignment of Lease and Agreement and
Lease Supplements and Memoranda of Lease and
Agreement
EXHIBIT I-1 Form of Amendment to Security Agreement
EXHIBIT I-2 Form of Amendment to Collateral Agency Agreement
EXHIBIT J Form of Assignment of Licenses
EXHIBIT K INTENTIONALLY OMITTED
EXHIBIT L INTENTIONALLY OMITTED
EXHIBIT M Form of Ground Lease
EXHIBIT N Form of Advance Request
EXHIBIT O Form of Assignment and Assumption by Participant
-iv-
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Participation Agreement
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of July 24, 1996 (this
"Agreement"), is among GENESIS ELDERCARE PROPERTIES, INC., as Lessee; MELLON
FINANCIAL SERVICES CORPORATION #4, as Lessor; the Persons named on Schedule I
hereto (together with their respective permitted successors, assigns and
transferees), as Lenders; and MELLON BANK, N.A., a national banking association,
not in its individual capacity except as expressly stated herein, but solely as
Agent for Lessor and Lenders.
W I T N E S E T H:
WHEREAS, Lessee, Lessor, Lenders and Agent have entered into this
Agreement for the purpose of providing financing for the acquisition of certain
parcels of real property (each a "Land Interest") and the acquisition of certain
facilities currently located thereon (each, a "Facility") (each such Land
Interest, together with such Facility and the other real estate or related
interests described in the definition of Site in Appendix 1 hereto, are referred
to individually as a "Site" and collectively as the "Sites"); and
WHEREAS, the Sites are identified on Schedule III hereto; and
WHEREAS, on the Document Closing Date Lessor shall lease the Sites to
Lessee and Lessee shall lease the Sites from Lessor for the Lease Term pursuant
to the Lease in the form of Exhibit A hereto; and
WHEREAS, Lessee shall sublease the Sites (other than the Sites located
at Tierra Pines Health Care Center and Eatle Crest Nursing Center) to
Subtenants pursuant to the Subleases;
WHEREAS, Lessor shall contribute a portion of the Total Costs through
an equity investment in the Sites (the "Equity Amount"); and
WHEREAS, Lessor wishes to obtain, and the Lenders are willing to
provide, financing (the "Financing") of the remaining portion of the Total
Costs; and
WHEREAS, concurrently with the execution and delivery of this Agreement
Lessee shall cause the Guarantors to execute and deliver guaranties (the
"Guaranties") in the forms of Exhibit B-1 and
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Participation Agreement
-----------------------
Exhibit B-2 attached hereto from the Guarantors for the benefit of Lessor,
Lenders and Agent; and
WHEREAS, to secure the Financing, Agent, on behalf of the Lenders, will
have the benefit of a Lien from Lessor on all of Lessor's right, title and
interest in each Site and on substantially all of Lessor's rights against Lessee
under the Lease with respect to each Site.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix 1 hereto
for all purposes hereof.
ARTICLE II
EFFECTIVENESS; ACQUISITION AND LEASE; GENERAL PROVISIONS
SECTION 2.1. Effectiveness of Agreement. This Agreement shall become
effective on the date (on or before July 24, 1996) on which all the conditions
precedent thereto set forth in Appendix 2 hereto shall have been satisfied or
waived by the applicable parties as set forth therein (the "Document Closing
Date").
SECTION 2.2. Agreement to Acquire and Lease. Lessee hereby directs
Lessor to acquire the Sites on the Document Closing Date. On the Document
Closing Date, after Lessor's acquisition of the Sites, Lessor and Lessee shall
enter into the Lease pursuant to which Lessor shall lease the Sites to Lessee,
and Lessor and Lessee shall enter into, and Lessee shall cause to be recorded,
the Lease Supplement.
SECTION 2.3. Participation by Lenders. Subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of each of the parties hereto contained herein or made pursuant
hereto, on the Document Closing Date each Lender shall finance, in part, the
Total Costs by making a secured loan to Lessor (in accordance with Lessor's
payment instructions set forth on Schedule II) in an amount in immediately
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Participation Agreement
-----------------------
available funds on such Document Closing Date equal to such Lender's Commitment
Percentage of the Total Costs and in the aggregate not more than its Commitment
as set forth on Schedule I hereto. Each loan shall be evidenced by one or more
Notes issued to the Lender(s) under and repayable in accordance with the terms
of the Loan Agreement (which shall be substantially in the form of Exhibit A
thereto).
SECTION 2.4. Participation by Lessor. Subject to the terms and
conditions of this Agreement and in reliance on the representations and
warranties of each of the parties hereto contained herein or made pursuant
hereto, on the Document Closing Date Lessor shall acquire an equity interest in
the Overall Transaction by contributing the Equity Amount in immediately
available funds. In consideration for its contribution of the Equity Amount
Lessor shall be paid the Yield on the Equity Amount on each Payment Date.
SECTION 2.5. Advances for Transaction Costs. For Transaction Costs
payable by Lessor pursuant to Section 9.9 below after the Document Closing Date,
the following procedures shall be applicable.
(a) Notices and Closing. At least five (5) Business Days prior
to each Advance Date, Lessee or Agent shall deliver to the other and to the
Participants an irrevocable written notice substantially in the form of Exhibit
N (an "Advance Request"), setting forth:
(i) the proposed Advance Date;
(ii) a description of such Transaction Costs and a
statement specifying the Site or Sites to which such Transaction Costs
are allocable; and
(iii) wire transfer instructions for the disbursement of
funds.
(b) Commitment Limits. The aggregate amount disbursed by the
Participants hereunder shall not exceed the aggregate Commitments. For any
Advance Request made by Lessee, or to be funded, after the occurrence of a Lease
Event of Default, Agent shall have (i) the right, but shall not be obligated
(unless so directed by the Required Participants), to cancel such Advance
Request prior to the honoring of such Advance Request, and (ii) the right, but
shall not be obligated (unless so directed by the Required Participants),
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Participation Agreement
-----------------------
to terminate the Commitments; provided that if Agent shall terminate the
Commitments of the Lenders, the Commitment of Lessor shall automatically be
terminated and Lessor shall have no further obligation to make any other
Advances hereunder.
(c) Required Dates. For Lessor's payment of Transaction
Costs, the Advance Date or Dates for any calendar month shall be the date or
dates selected by Agent, on behalf of Lessor.
(d) Obligations Several. The obligations of the parties hereto
or elsewhere in the Operative Documents shall be several and not joint; and no
party shall be liable or responsible for the acts or defaults of any other party
hereunder or under any other Operative Document.
(e) Termination of Commitment. Notwithstanding anything in
this Agreement to the contrary, no party hereto shall be obligated to make any
fundings pursuant to this Agreement after 5:00 P.M., New York time, on July 31,
1996 (for the initial advance) and September 24, 1996 (for any subsequent
advance for Transaction Costs), and no Advance Date may occur following such
latter date.
(f) Notes and Certificates; Notations. Upon the consummation
of each Advance, each Lender may make a notation on the grid attached to such
Lender's Note indicating the amount of the Loan advanced by such Lender on such
Advance Date, and the Agent, on behalf of Lessor and the Lenders, shall make a
notation on its records indicating the amount of the Loan advanced by each
Lender and the portion of the Equity Amount so advanced by Lessor on such
Advance Date. Each Participant is hereby authorized to record the date and
amount of each Advance made by such Participant, each continuation thereof, the
date and amount of each payment or repayment of principal or Equity Amount
thereof (as the case may be) and the length of each Interest Period with respect
thereto, on the grid annexed to and constituting a part of each Note held by
such Participant or the records of Agent, as applicable, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided, however that the failure to make any such
recordation or any error in such recordation shall not affect the obligation of
Lessor under any Note or the obligation of Lessee to pay Rent.
(g) Initial Interest and Yield on Advances. Interest and Yield
on each Advance shall be determined by reference to the Prime Rate or LIBO Rate,
whichever is applicable, for the period from the date of such Advance until the
commencement of the next succeeding Interest Period.
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Participation Agreement
-----------------------
SECTION 2.6. Structuring/Underwriting Fee. Genesis shall pay to Agent a
fully-earned, non-refundable Structuring/Underwriting Fee (the
"Structuring/Underwriting Fee") to be earned and payable as outlined in the
Commitment Letter, which fee shall be paid by Lessor as part of Transaction
Costs pursuant to Section 2.5 and repaid by Lessee as part of Basic Rent as
specified in clause (iii)(y) of the definition thereof.
SECTION 2.7. Payments to Participants. The parties to this Agreement
hereby agree that any payment required to be made by Lessee to Lessor or any of
the Lenders, or by Lessor to Lenders out of amounts paid by Lessee to Lessor,
pursuant to any Operative Document may be made directly to Agent on behalf of
the applicable Participants by Lessee in lieu of the corresponding payment
required to be made by Lessee to such Participants, or by Lessor to Lenders out
of amounts payable by Lessee to Lessor, pursuant to any Operating Document. Such
payment by Lessee to Agent shall be deemed to constitute (a) the required
payment from Lessee to Lessor or any other applicable Participant and (b) the
corresponding payment by Lessor to the Lenders. Agent shall promptly (and in any
case, within one Business Day) remit to each of the Participants its respective
share of any such amounts.
SECTION 2.8. Nature of Transaction. (a) It is the intent of the parties
hereto that: (i) the transaction contemplated hereby constitutes an operating
lease from Lessor to Lessee for purposes of Lessee's financial reporting, (ii)
the transaction contemplated hereby preserves ownership in the Sites to Lessee
for purposes of Federal and state tax and bankruptcy purposes, (iii) Lessee,
pursuant to the Lease, grants a security interest or lien, as the case may be,
in the Sites and the other Collateral to Lessor, (iv) for purposes of Federal
and state tax and bankruptcy purposes, the payment by Lessee of Basic Rent shall
be treated as payments of interest, and the payment by Lessee of any amounts in
respect of the Lease Balance shall be treated as repayments of principal, and
(v) the Mortgage and Assignment of Lease create a lien and security interest in
the Collateral, subject to certain limited exceptions. Nevertheless, Lessee
acknowledges and agrees that none of Lessor, Agent or any Lender has provided or
will provide tax, accounting, health care regulatory or legal advice to Lessee
regarding the Overall Transaction or made any representations or warranties
concerning the tax, accounting, regulatory or legal characteristics of the
Operative Documents and that Lessee has obtained and relied upon such tax,
5
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Participation Agreement
-----------------------
accounting, regulatory and legal advice concerning the Operative Documents as
it deems appropriate.
(b) Specifically, without limiting the generality of
subsection (a) of this Section 2.8, but understanding that the parties'
characterization is not the sole determinant of the issue, the parties hereto
intend and agree that with respect to the nature of the transactions evidenced
by the Lease in the context of the exercise of remedies under the Operative
Documents, relating to and arising out of any insolvency or receivership
proceedings or a petition under the United States bankruptcy laws or any other
applicable insolvency laws or statute of the United States of America or any
State or Commonwealth thereof affecting Lessee, Lessor or any Lender or any
enforcement or collection actions, the transactions evidenced by the Operative
Documents are loans made by the Lenders as unrelated third party lenders to
Lessee secured by the Sites.
SECTION 2.9. Computations. For all purposes under the Operative
Documents, all computations of interest, Yield and other accrued amounts
(including the Overdue Rate) shall be made on the basis of actual number of days
elapsed in a 360-day year (or in the case of calculations based upon the Prime
Rate, on the basis of actual number of days elapsed in a 365 (366) day year),
except as otherwise specifically provided in any Operative Document.
SECTION 2.10. Renewal Term.
(a) Lessee's Renewal Request. Pursuant to Section 6.1 of the
Lease, so long as no Lease Payment/Bankruptcy Default or Lease Event of Default
shall have occurred and be continuing at the time Lessee delivers the Renewal
Request and at the commencement of the Renewal Term, Lessee may request that
Agent, Lessor and the Lenders extend the Lease and the Financing for the Renewal
Term (such request by Lessee is herein called the "Renewal Request"). In the
event Lessee makes such request, within thirty (30) days, Agent will prepare a
proposal setting forth the terms and conditions upon which Lessor and each
Lender may agree to extend the Lease for the Renewal Term, to present to Lessee,
Lessor and each Lender. Within fifteen (15) days of its receipt of Agent's
proposal, Lessee shall inform Agent in writing of whether Agent's proposal is
acceptable to Lessee, such approval by Lessee being in Lessee's sole discretion.
Failure of Lessee to inform Agent in writing of its approval or rejection within
fifteen (15) days of its receipt of Agent's proposal shall be deemed to
constitute Lessee's rejection thereof, in which event, Lessee's Renewal Request
shall be deemed void and of no force or effect.
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Participation Agreement
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(b) Agent's Solicitation of Lessor and Lenders. If Lessee shall
approve of Agent's proposal in writing, Agent shall solicit approval from each
of Lessor and the Lenders of such proposal; provided, that neither Lessor nor
any Lender shall be required to approve a proposal submitted by Agent. Within
thirty (30) days of solicitation by Agent, Lessor and each Lender shall indicate
its approval or rejection of the proposal submitted by Agent, such approval by
Lessor and each Lender being in such party's sole discretion. Failure of Lessor
or any Lender to indicate its approval or rejection within thirty (30) days of
solicitation shall be deemed to constitute such party's rejection thereof. If
Lessor or any Lender rejects (or is deemed to have rejected) Agent's proposal to
extend the Lease and the Financing for the Renewal Term (such Lessor or Lender,
in either case, is herein called a "Non- Renewing Participant"), then within
five (5) Business Days after the expiration of the aforementioned 30-day period,
Lessee shall be required to take one of the following actions:
(i) Lessee may elect to cancel its Renewal Request, in which
event, Lessee shall not have any right to extend the Lease and the
Financing for the Renewal Term. Lessee shall make such election by
written notice delivered to Agent not later than the end of such five
(5) Business Day period. In the event that Lessee desires then to
elect the Sale Option, Lessee shall make such election in its notice
cancelling its Renewal Request delivered pursuant to the preceding
sentence, and failing such election of the Sale Option, Lessee shall
be deemed to have irrevocably waived such Sale Option and elected the
Purchase Option.
(ii) Lessee may elect to replace the Non-Renewing Participant
with another Person which will constitute a replacement Lessor or
Lender (a "Replacement Participant") upon expiration of the Basic Term,
provided that Lessee certifies that the agreement between Lessee and
the Replacement Participant to become a Replacement Participant is not
based on terms more favorable to the Replacement Participant than terms
available to the other Participants (except for Lessee's payment of
the Replacement Participant's legal fees and expenses). Lessee shall
make such election by written notice delivered to Agent not later than
the end of such five (5) Business Day period, which notice shall
identify the Replacement Participant. The date of expiration of the
Basic Term shall be treated as the Final Maturity Date with respect
to the Non-Renewing Participant, and on such date Lessee shall cause
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Participation Agreement
-----------------------
the Replacement Participant to purchase in immediately available funds
all of the interest of the Non-Renewing Participant in the Sites or
the Notes, as applicable, and the Operative Documents, for cash at a
price equal to: (x) in the case of Lessor, the aggregate outstanding
Equity Amount and accrued but unpaid Yield, or (y) in the case of a
Lender, the aggregate outstanding amount of principal and accrued but
unpaid interest then outstanding on the Notes then held by the
Non-Renewing Participant. Any such transfer of a Non-Renewing
Participant's interests shall comply with the provisions of Section
6.3 of this Agreement, except those provisions that require a
Non-Renewing Participant to pay its own costs and expenses in
connection with such transfer. If Lessee fails (for any reason,
including a default by the Replacement Participant) to cause the
Replacement Participant to pay any such amounts when due pursuant to
the preceding sentence, the Lease shall not be renewed for the Renewal
Term, Lessee shall not be entitled to the Renewal Term, and such date
of expiration of the Basic Term shall be deemed the Final Maturity
Date with respect to all Participants. Each Replacement Participant
shall be subject to each of the terms and conditions of this Agreement
and each of the other Operative Documents imposed upon Lenders (or
upon Lessor in the case of a Replacement Participant for Lessor), and
shall make the representations, warranties and covenants and perform
its obligations required hereunder and thereunder. Specifically,
without limitation, a Person shall not become a Replacement
Participant unless Agent consents to the Replacement Participant (such
consent not to be unreasonably withheld) and Agent shall receive prior
to such Person becoming a Replacement Participant the Non-Renewing
Participant's written assignment and the Replacement Participant's
written assumption of the Non- Renewing Participant's rights and
obligations under the Operative Documents, such assignment and
assumption to be substantially in the form of Exhibit O hereto and to
otherwise be in form and substance reasonably acceptable to Agent.
If Lessee shall fail to duly elect either of the options under clauses (i) and
(ii) above within the applicable five (5) Business Day period, Lessee shall be
deemed to have made its election under clause (i) above and shall be deemed to
have elected the Purchase Option.
8
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Participation Agreement
-----------------------
If at any time after Lessee shall have made a Renewal Request and prior
to the commencement of the Renewal Term, a Lease Event of Default shall have
occurred, then Lessee's rights under this Section 2.10 shall automatically
terminate and Lessee shall not be entitled to the Renewal Term.
Any provision in this Section 2.10 to the contrary notwithstanding, in
the event Lessee, Lessor and the Lenders accept Agent's proposal to renew the
Lease and the Financing for the Renewal Term, then all renewing and replacement
Lenders must extend the Financing upon the same terms and conditions; and if the
foregoing condition shall not be satisfied, Lessee shall not be entitled to the
Renewal Term.
Lessee hereby agrees to pay all reasonable costs and expenses
(including reasonable legal fees and expenses) incurred by Agent, the then
existing Participants (including any Non-Renewing Participants) and any
Replacement Participants in connection with the provisions of this Section 2.10;
provided, however, that Lessee shall not be responsible for any legal fees and
expenses of more than two counsel for all of Agent and the Participants
(including, without limitation, special Credit Agreement counsel) and any
special local counsel required by Agent. Lessee shall not be responsible for the
legal fees and expenses of other counsel for the Non-Renewing Participants and
Replacement Participants unless Lessee and such parties mutually agree on the
amount of such fees and expenses to be paid by Lessee.
SECTION 2.11. Highest Lawful Rate. It is the intention of the parties
hereto to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of (a) Lessee to Lessor under this
Agreement and the Lease, (b) Lessor to the Lenders under this Agreement, the
Notes and the Loan Documents and (c) either Lessee or Lessor or any other party
under any other Operative Document, shall be subject to the limitation that
payments of interest or of other amounts constituting interest under Applicable
Laws and Regulations shall not be required to the extent that receipt thereof
would be in excess of the Highest Lawful Rate (as defined below), or otherwise
contrary to provisions of law applicable to the recipient limiting rates of
interest which may be charged or collected by the recipient. Accordingly, if the
transactions or the amount paid or otherwise agreed to be paid for the use,
forbearance or detention of money under this Agreement, the Lease, the Loan
Documents and any other Operative Document would exceed the Highest Lawful Rate
or otherwise be usurious under Applicable Laws and Regulations (including
without limitation the federal and state laws of the United States of America,
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Participation Agreement
-----------------------
or of any other jurisdiction whose laws may be mandatorily applicable) with
respect to the recipient of any such amount then, in that event, notwithstanding
anything to the contrary in this Agreement, the Lease, the Loan Documents, or
any other Operative Document, it is agreed as follows as to the recipient of any
such amount:
(a) the provisions of this Section 2.11 shall govern and
control over any other provision in this Agreement, the Lease, the Loan
Documents, and any other Operative Document and each provision set
forth therein is hereby so limited;
(b) the aggregate of all consideration which constitutes
interest under Applicable Laws and Regulations that is contracted for,
charged or received under this Agreement, the Lease, the Loan
Documents, or any other Operative Document shall under no circumstances
exceed the maximum amount of interest allowed by Applicable Laws and
Regulations of the Commonwealth of Pennsylvania, excluding any
conflicts law (or, if and to the extent required by the Applicable Laws
and Regulations of any state in which any Site is located, the
Applicable Laws and Regulations of such state), it being the intention
of the parties that the Applicable Laws and Regulations of the
Commonwealth of Pennsylvania, excluding any conflicts laws, shall
govern the determination of the Highest Lawful Rate (such maximum
lawful interest rate, if any, with respect to such Lender herein called
the "Highest Lawful Rate"), and all amounts owed under this Agreement,
the Lease, the Loan Documents and any other Operative Document shall be
held subject to reduction and (i) the amount of interest which would
otherwise be payable to the recipient hereunder and under the Lease,
the Loan Documents and any other Operative Document, shall be
automatically reduced to the amount allowed under Applicable Laws and
Regulations and (ii) any unearned interest paid in excess of the
Highest Lawful Rate shall be credited to the payor by the recipient
(or, if such consideration shall have been paid in full, refunded to
the payee);
(c) all sums paid, or agreed to be paid for the use,
forbearance and detention of the money under this Agreement, the Lease,
the Loan Documents, or any other Operative Document shall, to the
extent permitted by Applicable Laws and Regulations, be amortized,
prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest
is uniform throughout the full term thereof;
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Participation Agreement
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(d) if at any time the interest, together with any other fees,
late charges and other sums payable pursuant to or in connection with
this Agreement, the Lease, the Loan Documents, and any other Operative
Document executed in connection herewith or therewith, and deemed
interest under Applicable Laws and Regulations, exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of
interest and any such fees, charges and sums to accrue to the recipient
of such interest, fees, charges and sums pursuant to the Operative
Documents shall be limited, notwithstanding anything to the contrary in
the Operative Documents to that amount which would have accrued at the
Highest Lawful Rate for the recipient, but any subsequent reductions,
as applicable, shall not reduce the interest to accrue pursuant to the
Operative Documents below the recipient's Highest Lawful Rate until the
total amount of interest payable to the recipient (including all
consideration which constitutes interest) equals the amount of interest
which would have been payable to the recipient (including all
consideration which constitutes interest), plus the amount of fees
which would have been received but for the effect of this Section 2.11.
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of Lessee. As of the date
hereof, Lessee makes the representations and warranties set forth in this
Section 4.1 to each of the other parties hereto.
(a) Due Organization, etc. Lessee is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and Lessee has full corporate power and authority
to conduct its business as presently and presently proposed to be conducted, to
own or hold under lease its properties, to enter into and perform its
obligations under each of the Operative Documents to which it is or is to be a
party and each other agreement, instrument and document to be executed and
delivered by it on or before the Document Closing Date in connection with or as
contemplated by each such Operative Document to which it is or is to be a party
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Participation Agreement
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and it is duly qualified as a foreign corporation authorized to do business and
is in good standing in every jurisdiction in which its failure to be so
qualified would have a Material Adverse Effect. Lessee is a single purpose
corporation wholly-owned by Genesis, the sole purpose of which is to enter into
and perform its obligations under the transactions contemplated by the Operative
Documents and hold its rights in and to the Sites.
(b) Authorization; No Conflict. The execution and delivery by
Lessee of each of the Operative Documents to which it is or is to be a party,
and the performance by Lessee of its obligations under such Operative Documents,
have been duly authorized by all necessary corporate action (including any
necessary stockholder action) on its part, and do not and will not: (i)
contravene any Applicable Laws and Regulations currently in effect applicable to
or binding on it or the Sites; (ii) violate any provision of its charter or
bylaws; (iii) result in a breach of or constitute a default under any indenture,
loan or credit agreement, or any other agreement or instrument to which Lessee
is a party or by which Lessee or its properties may be bound or affected, which
breaches or defaults would have, individually or in the aggregate, a Material
Adverse Effect; (iv) result in, or require, the creation or imposition of any
Lien of any nature upon or with respect to any of the properties now owned or
hereafter acquired by Lessee (other than the security interests created pursuant
to the Operative Documents); or (v) require any Governmental Action by any
Authority, except for (A) the filings and recordings listed on Schedule 4.1B to
perfect the rights of Lessor, the Lenders and Agent intended to be created by
the Operative Documents, and (B) those Governmental Actions required with
respect to Lessee or any of its Affiliates listed on Schedule 4.1A, each of
which have been duly effected and are, or on the initial Advance Date will be,
in full force and effect; and Lessee is not in default under or in violation of
its charter or bylaws. Attached as Schedule 4.1C are correct and complete
computations demonstrating compliance by Genesis with Section 5.9 of the
Indenture after giving effect as Indebtedness under such Indenture to the
obligations of Lessee and Guarantors under or in connection with the Operative
Documents.
(c) Enforceability, etc. Each Operative Document to which
Lessee is or is to be a party constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in accordance with the terms
thereof, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and by
general equitable principles.
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Participation Agreement
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(d) Litigation. There is no action, proceeding or
investigation pending or, to Lessee's knowledge, threatened which questions the
validity of the Operative Documents to which Lessee is or is to be a party or
any action taken or to be taken pursuant to the Operative Documents to which
Lessee is or is to be a party, and there is no action, proceeding or
investigation pending or, to Lessee's knowledge, threatened which, if adversely
determined, would have a Material Adverse Effect.
(e) Taxes. Lessee has filed or caused to be filed all United
States Federal and all other material tax returns that are required to be filed
by Lessee, and has paid or caused to be paid all taxes shown to be due and
payable on such returns or on any assessment received by Lessee to the extent
that such taxes have become due and payable except to the extent that taxes due,
but unpaid, are being contested in good faith by Lessee by appropriate action or
proceeding and, to the extent (if any) that such taxes are not due and payable,
Lessee has established or caused to be established reserves that are adequate
for the payment thereof in accordance with GAAP.
(f) Rights in Respect of the Sites. Lessee is not a party to
any contract or agreement to sell any interest in the Sites or any part thereof
other than pursuant to or in accordance with this Agreement and the Lease.
(g) No Lease Default, Loss, etc. As of the Document Closing
Date: no Lease Default, Lease Event of Default, Event of Loss, Condemnation or
Casualty has occurred and is continuing; there is no action pending or, to the
best of Lessee's knowledge, threatened by an Authority to initiate a
Condemnation; no condition exists that constitutes, or with the giving of notice
or lapse of time or both would constitute an event of default by Lessee under
any material indenture, mortgage, chattel mortgage, deed of trust, lease,
conditional sales contract, loan or credit arrangement or other material
agreement or instrument to which Lessee is a party or by which Lessee or any of
its properties may be bound which individually or in the aggregate with all such
events of default could have a Material Adverse Effect.
(h) Chief Executive Office of Lessee. The principal place of
business and chief executive office, as such terms are used in Section 9-103(3)
of the UCC, of Lessee are each located at 148 West State Street, Kennett Square,
Pennsylvania 19348. Lessee does not do business in more than one county in the
Commonwealth of Pennsylvania.
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(i) Compliance With Law. With respect to each Site, except as
otherwise set forth in the Environmental Audit of such Site, (i) Lessee is in
material compliance with and will comply with all Applicable Laws and
Regulations, including all Environmental Laws, (ii) each Site and the use
thereof by Lessee and its agents, assignees, employees, invitees, lessees,
licensees and tenants complies in all material respects with all Applicable Laws
and Regulations (including all zoning and land use laws and Environmental Laws)
and Insurance Requirements, except for any violations which would not have,
individually or in the aggregate, a Material Adverse Effect on Lessee or any
Site; and (iii) such Facility on such Site do not encroach in any material
manner onto any adjoining land (except as permitted by express written easements
or as insured by appropriate title insurance). Except as otherwise set forth in
the Environmental Audit of such Site, with respect to each Site, there are no
underground storage tanks at such Site and Lessee shall not cause or permit any
underground storage tanks to be constructed or located at any Site. Lessee will
not direct Lessor to acquire any Site pursuant to Section 2.2 unless (x) such
Site and operation and condition thereof shall comply with all Applicable Laws
and Regulations, including all Environmental Laws, except for any violations
which would not have, individually or in the aggregate, a Material Adverse
Effect on Lessee or any Site, and (y) no condition regarding Hazardous Materials
exists on or with respect to such Site except as otherwise set forth in the
Environmental Audit of such Site.
(j) Investment Company Act. Lessee is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
(k) Public Utility Holding Company. Lessee is not subject to
regulation as a "holding company," an "affiliate" of a "holding company", or a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(l) Licenses, Registrations and Permits. Except as set forth
on the Environmental Audit, all material licenses, approvals, authorizations,
consents, permits, easements and rights-of-way, including proof and dedication,
(collectively, the "Permits") required for the use and occupancy of the Sites
and for the operation thereof (including a certificate or certificates of
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occupancy for such Site or other legally equivalent permission to occupy such
Site) have been obtained from the appropriate Authorities having jurisdiction or
from private parties, as the case may be except for those which will not cause a
Material Adverse Effect. Lessee shall deliver to Agent, upon request, true,
correct and complete copies of all Permits issued prior to the date that this
representation is made or remade, as the case may be.
(m) Nature, Condition and Use of Sites. Each Site consists of
a Land Interest on which a Facility exists. Such Land Interest is located in the
United States (but not in California). No notices, complaints or orders of
violation or non-compliance or liability of any nature whatsoever have been
issued or, to Lessee's knowledge, threatened by any Authority with respect to
the Sites or any present or intended future use thereof, except for such
violations and instances of non-compliance as could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on any
Site, and Lessee is not aware of any circumstances which could give rise to the
issuance of any such notices, complaints or orders. There are no material
defects to such Facility including the plumbing, heating, air conditioning and
electrical systems thereof and all water, sewer, electric, gas, telephone and
drainage facilities.
(n) Utility Services. Each Site has available all material
utilities necessary for use and operation of the Facility thereon for its
primary intended purposes and means of access between such Facility and public
highways for pedestrians and motor vehicles. All utilities serving each Site are
located in, and vehicular access to the Facility on such Site is provided by,
either public rights-of-way abutting such Site or by Appurtenant Rights.
(o) Use and Operation of Sites. All material agreements,
easements and other rights, public or private, which are necessary to permit the
lawful use and operation of the Sites as Lessee intends to use the Sites under
the Lease and which are necessary to permit the lawful intended use and
operation of all presently intended utilities, driveways, roads and other means
of egress and ingress to and from the same (including certificates of occupancy)
have been obtained and are in full force and effect and Lessee has no actual
knowledge of any pending modification or cancellation of any of the same.
(p) Securities Act. Neither Lessee nor anyone authorized to
act on its behalf (including, without limitation, any of the Guarantors) has,
directly or indirectly, in violation of
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Section 5 of the Securities Act or any state securities laws, offered or sold
any interest in the Notes, the Sites or the Lease, or in any security or lease
the offering of which, for purposes of the Securities Act or any state
securities laws, would be deemed to be part of the same offering as the offering
of the aforementioned securities or leases, or solicited any offer to acquire
any of the aforementioned securities or leases.
(q) Title. Neither Lessee nor any of its Affiliates has taken
or caused to be taken any action which would have a material adverse effect on
Lessor's title to the Sites from that indicated in the Title Policies delivered
pursuant to Appendix 2. Neither Lessee nor any of its Affiliates has created,
consented to, incurred or suffered to exist any Lien upon any of the Sites other
than Permitted Liens.
(r) Federal Reserve Regulations. Neither Lessee nor any
Affiliate of Lessee will, directly or indirectly, use any of the proceeds of the
sale of the Notes or of the purchase by Lessor of the Sites for the purpose of
purchasing or carrying any "margin security" or "margin stock" within the
meaning of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System, respectively, or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a margin
security or margin stock or for any other purpose which might cause any of the
transactions contemplated by this Agreement or any other Operative Document to
constitute a "purpose credit" within the meaning of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, or for the purpose of
purchasing or carrying any security, and neither Lessee nor any Affiliate of
Lessee has taken or will otherwise take or permit any action by Lessee or any of
its Affiliates in connection with any of the transactions contemplated by any of
the Operative Documents which would involve a violation of Regulation G, T, U,
or X, or any other regulation of the Board of Governors of the Federal Reserve
System.
(s) ERISA. (i) A copy of the most recent Annual Report (5500
Series Form) including all attachments thereto as filed with the Internal
Revenue Service for each Plan (if any) relating to Lessee or Genesis or any
other Guarantor has been provided to the Agent and Lessor and fairly presents
the funding status of such Plan N Health status. There has been no material
deterioration in any Plan's funding status since the date of such Annual Report.
Schedule 4.1D hereto sets forth a list of all Plans and Multiemployer Plans
relating to the Lessee or Genesis or any other Guarantor, and all information
available to Lessee or Genesis or any other Guarantor with respect to the
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direct, indirect or potential withdrawal liability to any Multiemployer Plan of
Lessee or Genesis or any other Guarantor or any Controlled Group Member. Copies
have been provided to Agent of all of the documents provided to Genesis pursuant
to Section 4.16 of the Stock Purchase Agreement and the representations
contained in Section 4.16(d) and (e) are, to the best knowledge of Lessee and
Genesis, true, correct and complete. Except as set forth in such Schedule 4.1D,
none of Lessee or Genesis or any other Guarantor has or (after giving effect to
the consummation of the transactions contemplated by the Stock Purchase
Agreement) will have any liability (contingent or otherwise) in excess of
$100,000 for or in connection with, and none of their respective properties is
subject to a Lien in connection with, any Pension-Related Event. Neither Lessee
nor Genesis nor any other Guarantor nor any Controlled Group Member (both as of
the Document Closing Date and after giving effect to the consummation of the
transactions contemplated by the Stock Purchase Agreement) has or (after giving
effect to the consummation of the transactions contemplated by the Stock
Purchase Agreement) will have any liability (contingent or otherwise) for or in
connection with, any Postretirement Benefits.
(ii) Neither Lessee, nor any Controlled Group Member,
presently maintains, participates in, or contributes to, a Plan (A) which is
subject to Title IV of ERISA, but is not a Multiemployer Plan whose assets do
not at least equal the present value of its accrued benefits based on the
actuarial methods and assumptions included in the most recent actuarial
valuation reports, (B) which is a Multiemployer Plan for which Lessee or any
Controlled Group Member has received notice that the plan is in reorganization
or insolvent, (C) for which material actions, lawsuits or claims have been
asserted, or (D) for which penalties or taxes have been imposed under Sections
502(i) and 502(l) of ERISA or Section 4975 of the Code. Neither Lessee nor any
Controlled Group Member has in the immediate six year period had a complete or
partial withdrawal from any Multiemployer Plan and the liability to which Lessee
or any Controlled Group Member would become subject under ERISA were there to be
a complete withdrawal from all Multiemployer Plans to which Lessee and its
Controlled Group Members contribute is not in excess of $500,000.
(iii) The execution and delivery of this Agreement, including
the issuance and sale of the Notes and the consummation of the transactions
contemplated hereby and thereby under the Operative Documents, will not involve
any prohibited transactions, within the meaning of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Code.
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The representation by Lessee in the preceding sentence is made in reliance upon
and subject to the correctness of the representation by each of the Lenders in
Section 4.2(e) and the representation by Lessor in Section 4.3(i).
(t) Financial Information.
(i) Audited Financial Statements. Lessee has heretofore
furnished to Agent and each Lender the consolidated balance sheet of
Genesis and its Consolidated Subsidiaries (including Lessee) as of
September 30, 1995 and the related consolidated statements of income,
cash flows and changes in stockholders' equity for the fiscal year then
ended, as examined and reported on by KPMG Peat Marwick, independent
certified public accountants for Lessee and Genesis, who delivered an
unqualified opinion in respect thereof. Such financial statements
(including the notes thereto), fairly present, in conformity with GAAP,
the consolidated financial position of Genesis and its Consolidated
Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such fiscal year.
(ii) Interim Financial Statements. Lessee has heretofore
furnished to Agent and each Lender interim consolidated balance sheets
of Genesis and its Consolidated Subsidiaries as of March 31, 1996 and
the related consolidated statements of income, cash flows and changes
in stockholders' equity for the portion of Genesis's fiscal year ended
at the end of such quarter. Such financial statements fairly present,
in conformity with GAAP, the consolidated financial position of Genesis
and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and changes in financial position
for such fiscal quarter, subject to normal year-end auditing
adjustments and except that such financial statements do not contain
all of the footnote disclosures required by GAAP.
(iii) Since March 31, 1996 there has been no Material Adverse
Effect.
(u) No Other Filings. Except for the filings and recordings
listed in Schedule 4.1B, no other filings or recordings are necessary to validly
and effectively convey to Lessor and Agent such interests in the Site and the
Collateral as contemplated by the Operative Documents, in each case free and
clear of all Liens, other than Permitted Liens.
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(v) Zoning. Each Site complies in all material respects with
all applicable zoning and subdivision laws, ordinances, regulations and
restrictive covenants, and all requirements thereof necessary for the use,
occupancy and operation of such Site have been satisfied in all material
respects, and the current use and intended use under the Lease of such Site is a
conforming use in each case, except for violations which would not create a
Material Adverse Effect.
(w) Disclosure. The information disclosed in writing by Lessee
or any of its Affiliates (or any Person authorized or employed by any such
Person as agent or otherwise) to the Lenders in connection with the negotiation
of the Operative Documents and the transactions contemplated thereby, when taken
as a whole with all other written disclosures to such parties, do not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, misleading.
There is no particular fact of which Lessee or any of its
Affiliates has knowledge that has not been disclosed by Lessee or any of its
Affiliates (or by any Person authorized or employed by Lessee or any of its
Affiliates as agent or otherwise) in writing to the Lenders that, as far as
Lessee or any of its Affiliates can reasonably foresee, is reasonably likely to
have a Material Adverse Effect.
(x) Appraisal Data. The information provided by Lessee and its
Affiliates to the Appraiser and forming the basis for the conclusions set forth
in each Appraisal, taken as a whole, was true and correct in all material
respects and did not omit any information known and available to Lessee
necessary to make the information provided not materially misleading.
(y) Subjection to Government Regulation. None of Agent, Lessor
nor any Lender will become (i) solely by reason of entering into the Operative
Documents or consummation of the transactions contemplated thereby (other than
upon exercise of remedies under the Lease or upon the expiration thereof)
subject to ongoing regulation of its operations by any Authority having
jurisdiction, or be required to hold any license, permit or approval, solely by
reason of Lessee's business activities or the nature of the Sites; or (ii)
except for regulation the applicability of which depends upon the existence of
facts in addition to the ownership of, or the holding of any interest in, the
Sites or any interest therein upon the exercise of remedies under the Lease or
upon the expiration thereof, subject to ongoing regulation of its operations by
any Authority having jurisdiction, or be required to hold any license, permit or
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Participation Agreement
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approval, solely by reason of Lessee's business activities or the nature of the
Sites.
SECTION 4.2. Representations and Warranties of each Lender. Each Lender
represents and warrants severally and only as to itself to each of the other
parties hereto as follows:
(a) Due Organization, etc. It is duly organized and validly
existing under the laws of the jurisdiction of its organization and has full
corporate power and authority to enter into and perform its obligations as
Lender under each Operative Document to which it is or is to be a party and each
other agreement, instrument and document to be executed and delivered by it in
connection with or as contemplated by each such Operative Document to which it
is or is to be a party.
(b) Authorization; Enforceability, etc. This Agreement and
each other Operative Document to which it is or is to be a party have been or
will be, duly authorized, executed and delivered by or on behalf of it and are,
or upon execution and delivery will be, legal, valid and binding obligations of
it, enforceable against it in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by general equitable
principles.
(c) No Conflict. Neither the execution and delivery of the
Operating Documents, nor the consummation of the transactions contemplated
thereby, nor compliance by it with any of the terms and provisions thereof (i)
requires any approval of its stockholders or approval or consent of any trustee
or holders of any of its indebtedness or obligations, (ii) contravenes or will
contravene any Applicable Laws and Regulations currently in effect applicable to
or binding on it (except no representation or warranty is made as to any
Applicable Laws and Regulations to which it or the Sites, directly or
indirectly, may be subject because of the lines of business or other activities
of Lessee) or (iii) results in any breach of or constitutes any default under,
any indenture, mortgage, chattel mortgage, deed of trust, lease, conditional
sales contract, loan or credit arrangement, other material agreement or
instrument, corporate charter, by-laws or other agreement or instrument to which
it is a party or by which it or its properties may be bound or affected.
(d) Lessor Liens. Each Site is free and clear of all
Lessor Liens attributable to it.
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(e) ERISA. It is purchasing its interest in the Note(s) with
assets that are either (i) not assets of any Plan (or its related trust) which
is subject to Title I of ERISA or Section 4975 of the Code; or (ii) assets of
any Plan (or its related trust) which is subject to Title I of ERISA or Section
4975 of the Code, but there is available an exemption from the prohibited
transaction rules under Section 406(a) of ERISA and Section 4975 of the Code and
such exemption is immediately applicable to each transaction contemplated by the
Operative Documents to the extent that any other party to such transaction is a
"party in interest" as defined in Section 3(14) of ERISA with respect to such
plan assets.
SECTION 4.3. Representations and Warranties of Lessor. Lessor hereby
represents and warrants to Lessee, Agent and Lenders as set forth in this
Section 4.3.
(a) Chief Executive Office. Lessor's chief executive
office and principal place of business and the place where the
documents, accounts and records relating to the Overall Transaction
are kept is located at One Mellon Bank Center, Rm 151-4444,
Pittsburgh, PA 15258-0001, Attention: Leasing Group.
(b) Due Organization, etc. Lessor is a corporation duly
organized and validly existing in good standing under the laws of the
Commonwealth of Pennsylvania and has full corporate power and authority to
execute, deliver and perform its obligations as Lessor under each Operative
Document to which it is or is to be a party and each other agreement, instrument
and document to be executed and delivered by it in connection with or as
contemplated by each such Operative Document to which it is or is to be a party.
(c) Authorization; Enforceability, etc. This Agreement and
each other Operative Document to which Lessor is or is to be a party have been
or will be, duly authorized, executed and delivered by or on behalf of Lessor
and are, or upon execution and delivery will be, legal, valid and binding
obligations of Lessor, enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by general equitable principles.
(d) No Conflict. Neither the execution and delivery thereof,
nor the consummation of the transactions contemplated thereby, nor compliance
by it with any of the terms and provisions thereof (i) requires any approval of
its stockholders or approval or consent of any trustee or holders of any of its
indebtedness or obligations, (ii) contravenes or will contravene any Applicable
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Laws and Regulations currently in effect applicable to or binding on it (except
no representation or warranty is made as to any Applicable Laws and Regulations
to which it or the Sites, directly or indirectly, may be subject because of the
lines of business or other activities of Lessee) or (iii) results in any breach
of or constitutes any default under, any indenture, mortgage, chattel mortgage,
deed of trust, lease, conditional sales contract, loan or credit arrangement,
other material agreement or instrument, corporate charter, by-laws or other
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected.
(e) Lessor Liens. Each Site is free and clear of all Lessor
Liens attributable to Lessor.
(f) Litigation. There is no action, proceeding or
investigation pending or, to Lessor's knowledge, threatened which questions the
validity of the Operative Documents to which Lessor is or is to be a party or
any action taken or to be taken pursuant to the Operative Documents to which
Lessor is or is to be a party, and there is no action, proceeding or
investigation pending or, to Lessor's knowledge, threatened which, if adversely
determined, would have a Material Adverse Effect.
(g) Use of Proceeds. The Proceeds shall be used solely in
accordance with the terms and provisions of the Operative Documents.
(h) Financial Information. Lessor (i) holds assets other than
the Sites and unrelated to this transaction and (ii) was not created at the
request of Lessee in connection with the transactions contemplated by the
Operative Documents.
(i) ERISA. Lessor is purchasing its interest in the Sites with
assets that are either (i) not assets of any Plan (or its related trust) which
is subject to Title I of ERISA or Section 4975 of the Code; or (ii) assets of
any Plan (or its related trust) which is subject to Title I of ERISA or Section
4975 of the Code, but there is available an exemption from the prohibited
transaction rules under Section 406(a) of ERISA and Section 4975 of the Code and
such exemption is immediately applicable to each transaction contemplated by the
Operative Documents to the extent that any other party to such transaction is a
"party in interest" as defined in Section 3(14) of ERISA with respect to such
plan assets. The representation by Lessor in the preceding sentence is made in
reliance upon and subject to the correctness of the representation by each of
the Lenders in Section 4.2(e).
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SECTION 4.4. Representations and Warranties of Agent. Mellon Bank,
N.A., in its individual capacity, hereby represents and warrants to Lessor and
Lenders as set forth in this Section 4.4.
(a) Organization and Authority. Agent is a national banking
association duly organized and validly existing in good standing under the laws
of the United States of America and has the requisite power and authority to
enter into and perform its obligations under the Operative Documents.
(b) Authorization; Binding Effect. The Operative Documents to
which Agent is or will be a party have been or will be, on the date required to
be delivered hereby, duly authorized, executed and delivered by Agent, and this
Participation Agreement is, and such other Operative Documents are, or, when so
executed and delivered by Agent will be, valid, legal and binding agreements of
Agent, enforceable against Agent in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
(c) Non-Contravention. Neither the execution and delivery by
Agent of the Operative Documents to which it is or will be a party, either in
its individual capacity, as Agent, or both, nor compliance with the terms and
provisions thereof, conflicts with, results in a breach of, constitutes a
default under (with or without the giving of notice or lapse of time or both),
or violates any of the terms, conditions or provisions of: (i) the articles of
organization or by-laws of Agent; (ii) any bond, debenture, note, mortgage,
indenture, agreement, lease or other instrument to which Agent, either in its
individual capacity, as Agent, or both, is now a party or by which it or its
property, either in its individual capacity, as Agent, or both, is bound or
affected, where such conflict, breach, default or violation would be reasonably
likely to materially and adversely affect the ability of Agent, either in its
individual capacity, as Agent or both, to perform its obligations under any
Operative Document to which it is or will be a party, either in its individual
capacity, as Agent, or both; or (iii) any of the terms, conditions or provisions
of any law, rule, regulation, order, injunction or decree of any Authority
applicable to it in its individual capacity, as Agent, or both, where such
conflict, breach, default or violation would be reasonably likely to materially
and adversely affect the ability of Agent, either in its individual capacity, as
Agent or both, to perform its obligations under any Operative Document to which
it is or will be a party.
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(d) Absence of Litigation, etc. There is no litigation
(including derivative actions), arbitration or governmental proceedings pending
or, to the best knowledge of Agent, threatened against it which would be
reasonably likely to adversely affect Agent's ability to perform its obligations
under the Operative Documents to which it is party.
(e) Consents, etc. No authorization, consent, approval,
license or formal exemption from, nor any filing, declaration or registration
with, any Authority, is or will be required in connection with the execution and
delivery by Agent of the Operative Documents to which it is a party or the
performance by Agent of its obligations under such Operative Documents.
ARTICLE V
COVENANTS OF LESSEE
SECTION 5.1. Further Assurances. Lessee, at its own cost and expense,
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as any Lender, Lessor or Agent
reasonably may request from time to time in order to carry out more effectively
the intent and purposes of this Agreement and the other Operative Documents and
the Overall Transaction. Lessee, at its own cost and expense, will cause all
financing statements (including precautionary financing statements), fixture
filings and other documents, to be recorded or filed at such places and times in
such manner, and will take all such other actions or cause such actions to be
taken, as may be necessary or as may be reasonably requested by any Lender,
Lessor or Agent in order to establish, preserve, protect and perfect the title
of Lessor to the Sites and Lessor's and Lenders' rights under this Agreement and
the other Operative Documents and to perfect, preserve and protect the first and
prior Lien of the Mortgage on the Collateral. Without limiting the foregoing,
Lessee shall furnish to Lessor and Agent, by the ninetieth day (but not earlier
than the 180th day) prior to the fifth anniversary of the Document Closing Date,
and if the Renewal Term is entered into, by the ninetieth day (but not earlier
than the 180th day) prior to the expiration of the Renewal Term, an opinion of
counsel with respect to the continued perfection of the security interests
created pursuant to the Operative Documents. Lessee will maintain in full force
and effect all Permits. Upon any transfer of the Sites, whether pursuant to any
provision of the Operative Documents (including Article VI of the Lease) or
after the occurrence of a Lease Event of Default or otherwise, Lessee, at its
own cost and expense, will cause to be promptly and duly taken, executed,
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acknowledged and delivered all such further acts, documents and assurances as
any Lender, Lessor or Agent reasonably may request from time to time in order to
cause the Permits to be transferred or reissued in the name of the Person
acquiring the Sites.
SECTION 5.2. Consolidation, Merger, Sale, etc.
(a) Lessee shall not consolidate with any Person, merge with
or into any Person or convey, transfer or lease to any Person (except as
permitted by Section 12.1 of the Lease) all or substantially all of its assets
in any single transaction (or series of related transactions), unless,
immediately after giving effect to such transaction, the conditions set forth in
clauses (i) through (v) shall have been satisfied:
(i) The Person formed by such consolidation with or into which
Lessee shall be merged or the Person which shall acquire by conveyance,
transfer or lease all or substantially all of the assets of Lessee (the
"Surviving Company"), if other than Lessee immediately prior to such
transaction, shall be a corporation that is organized under the laws of
the United States of America, a state thereof or the District of
Columbia;
(ii) the Surviving Company shall be a single purpose,
wholly-owned direct or indirect subsidiary of Genesis, the sole purpose
of which is to enter into (or assume) and perform its obligations under
the transactions contemplated by the Operative Documents and hold its
rights in and to the Sites;
(iii) the Surviving Company, if other than Lessee immediately
prior to such transaction, shall execute and deliver to each of the
parties hereto an agreement, in form and substance reasonably
satisfactory to Lessor and Agent, containing the assumption by the
Surviving Company of the due and punctual payment, performance and
observation of each obligation, covenant and agreement of Lessee under
this Agreement and each other Operative Document to which, immediately
prior to such transaction, Lessee was a party;
(iv) no Lease Payment/Bankruptcy Default or Lease Event of
Default (including as a result of the breach of Section 3 of either of
the Guaranties) shall have occurred and be continuing or would occur as
a result thereof and no Event of Loss shall have occurred or would
occur as a result thereof;
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(v) the title of Lessor to the Sites and Lessor's and Lenders'
rights under this Agreement and the other Operative Documents and the
first and prior Lien of the Mortgage on the Collateral shall not be
adversely affected; and
(vi) Lessee shall have delivered to Agent, on behalf of Lessor
and the Lenders, an Officer's Certificate and an opinion of counsel
reasonably satisfactory to each such Person stating that such
transaction complies with this Section 5.2, that all conditions to the
consummation of such transaction have been fulfilled and that all
Governmental Actions required in connection with such transaction have
been obtained, given or made.
Upon the consummation of such transaction, the Surviving Company, if
other than Lessee immediately prior thereto, shall succeed to, and be
substituted for, and may exercise every right and power of, Lessee immediately
prior to such transaction under this Agreement and each other Operative Document
to which Lessee was a party immediately prior to such transaction, with the same
effect as if the Surviving Company had been named herein and therein.
Notwithstanding the foregoing provisions of this Section 5.2, no conveyance,
transfer or lease of all or substantially all of the assets of Lessee shall
release Lessee from its payment or other obligations under this Agreement or any
other Operative Document without the written consent of Lessor and Agent.
SECTION 5.3. Corporate Existence. Subject to Section 5.2, Lessee shall
at all times maintain its existence as a corporation in good standing under the
laws of the Commonwealth of Pennsylvania and shall use commercially reasonable
efforts to preserve and keep in full force and effect its franchises material to
its business. Lessee shall remain a single purpose corporation, the sole purpose
of which is to enter into and perform its obligations under the transactions
contemplated by the Operative Documents and hold its rights in and to the Sites.
SECTION 5.4. Guaranty. Concurrently with the execution and delivery of
this Agreement, Lessee shall cause the Guarantors to execute and deliver the
Guaranties attached hereto as Exhibit B-1, which guaranties all obligations of
Lessee under the Lease and other Operative Documents, and Exhibit B-2, which
guaranties (subject to certain limitations therein) payment of all amounts
funded by Lessor and Lenders pursuant to the investment of the Equity Amount and
the Financing.
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SECTION 5.5. Liens. Lessee shall not incur, suffer or permit
to exist any Lien on any of the Sites other than Permitted Liens.
SECTION 5.6. Compliance Certificates.
(a) Lease Defaults. Lessee shall furnish, following the
Document Closing Date and until the termination of the Lease, to Lessor, Agent
and each Lender a certificate of Lessee signed by a Responsible Officer of
Lessee promptly after Lessee obtains knowledge that there exists a Lease Default
or Lease Event of Default, which such certificate shall describe such Lease
Default or Lease Event of Default in reasonable detail, with a statement of
Lessee's action with respect thereto taken or proposed to be taken.
(b) Annual Certificates. Within 90 days after the close of
each fiscal year, Lessee shall deliver to Lessor, Agent and each Lender a
certificate of Lessee signed by a Responsible Officer of Lessee to the effect
that the signer is familiar with or has reviewed the relevant terms of this
Agreement, the Lease and each other Operative Document to which Lessee is a
party and has made, or caused to be made under his or her supervision, a review
of the transactions contemplated hereby and thereby and the condition of the
Sites during the preceding fiscal year, and that such review has not disclosed
the existence during such fiscal year of any condition or event which
constitutes a Lease Event of Default, an Event of Loss, Condemnation (except as
described therein) or Casualty (except as described therein), nor does the
signer have knowledge, after due inquiry, of the existence as of the date of
such certificate, of any condition or event which constitutes a Lease Default, a
Lease Event of Default, an Event of Loss, Condemnation or Casualty or, if any
such condition or event existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken or is taking or proposes to
take with respect thereto.
SECTION 5.7. Change of Name or Address. Lessee shall provide Lessor,
each Lender and Agent thirty (30) days prior written notice of (i) any change in
name, identity or corporate structure or the address of its chief executive
office and principal place of business or the office where it keeps its records
concerning its accounts and the Sites, or (ii) any change with respect to its
places of business whereby it will thereafter have a place of business in only
one county in the Commonwealth of Pennsylvania or will thereafter have no place
of business in the Commonwealth of Pennsylvania.
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SECTION 5.8. Environmental Matters. (a) Lessee shall comply at all
times with all Applicable Laws and Regulations affecting a Site, the
non-compliance of which would have a Material Adverse Effect on such Site and
shall maintain at any Site only such minimum quantities of Hazardous Materials,
if any, as are necessary for the operation of any Site or held for resale by
Lessee, and in all events, such Hazardous Materials shall be held in compliance
with all Applicable Laws and Regulations; (b) Lessee shall not cause or permit
the installation of any underground storage tanks at any Site; and (c) Lessee
shall maintain and comply with appropriate and customary written operations and
maintenance plans (including, without limitation, for asbestos-containing
materials) for the Sites.
SECTION 5.9. Investigation by Authorities. Lessee shall deliver to
Lessor, each Lender and to Agent promptly upon Lessee's receiving written notice
of the intent by any Authority to (x) take an action which would constitute a
Condemnation or an Event of Taking, (y) investigate any Site for a material
violation of any Applicable Laws and Regulations on or at such Site, including
any Environmental Law, under which liability may be imposed upon Lessor, any
Lender or Agent or under which liability having a Material Adverse Effect may be
imposed on Lessee or (z) investigate any Site (other than routine fire,
life-safety and similar inspections) for any violation of Applicable Laws and
Regulations under which criminal liability may be imposed upon Lessor, any
Lender or Agent or under which liability having a Material Adverse Effect may be
imposed on Lessee.
SECTION 5.10. Financial and Other Information. Lessee shall deliver to
Agent, with sufficient counterpart originals for Agent to distribute to Lessor
and each Lender, the following financial and other information:
(a) Audited Statements. As soon as practicable, and in any
event within ninety (90) days after the close of each fiscal year of Lessee, a
consolidated balance sheet of Genesis and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of,
operations, cash flows and changes in stockholders' equity for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year. Such statements shall be accompanied by an opinion of KPMG Peat
Marwick or other certified public accountants of nationally recognized standing
selected by Lessee and satisfactory to Agent. Such opinion shall be without
qualifications that are of "going concern" or like nature or that relate to a
limited scope of examination. Such opinion in any event shall contain a written
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statement of such accountants substantially to the effect that (i) such
accountants examined such financial statements in accordance with generally
accepted auditing standards and accordingly made such tests of accounting
records and such other auditing procedures as such accountants considered
necessary under the circumstances and (ii) in the opinion of such accountants
such financial statements present fairly the financial position of Genesis and
its Consolidated Subsidiaries as of the end of such fiscal year and the results
of their operations and their cash flows and changes in stockholders' equity for
such fiscal year, in conformity with GAAP.
(b) Quarterly Statements. As soon as practicable, and in any
event within forty-five (45) days after the close of each of the first three
fiscal quarters of each fiscal year of Genesis, the consolidated balance sheet
of Genesis and its Consolidated Subsidiaries as of the end of such quarter and
the related consolidated statement of operations and cash flows of Genesis and
its Consolidated Subsidiaries for the portion of Lessee's fiscal year ended at
the end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter of, and the corresponding portion of
Genesis's preceding fiscal year, all certified (subject, in the case of such
quarterly financial statements, to normal year-end auditing adjustments) by a
Responsible Officer of Genesis as to fairness of presentation and preparation in
accordance with GAAP applied on a basis consistent with those used in preparing
the financial statements referred to in Section 5.10(a) hereof (subject to such
changes in accounting principles as shall be described in such certificate and
shall have been approved in writing attached to such certificate by Genesis's
independent accountants);
(c) Compliance Certificates. As soon as practicable, and in
any event within forty-five (45) days after the close of each of the first three
fiscal quarters of each fiscal year of Genesis and ninety (90) days after the
close of each fiscal year of Genesis, a compliance certificate for Genesis and
its Consolidated Subsidiaries. Such certificates shall be certified by a
Responsible Officer of Genesis as presenting fairly the compliance of Genesis
and each Subsidiary with the Financial Covenants as of the end of such fiscal
quarter for the year to date or fiscal year, as the case may be, in conformity
with GAAP (exclusive of principles of consolidation), subject (in the case of
quarterly reports) to normal and recurring year-end audit adjustments.
(d) Shareholder Mailings. Promptly upon the mailing thereof
to the shareholders of Genesis generally, copies of all financial statements,
reports and proxy statements so mailed;
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(e) Supplemental Environmental Information. Promptly upon
receipt thereof, copies of all environmental audits and updates regarding the
environmental condition of any of the Sites; and
(f) Genesis's Funded Debt/Cash Flow Ratio. Lessee shall
deliver to Agent within forty-five (45) Business Days after the end of each
fiscal quarter (including the fourth fiscal quarter) an Officer's Certificate of
Genesis setting forth Genesis's Funded Debt/Cash Flow Ratio (as defined in the
definition of Applicable Margin) as of the last day of the immediately preceding
fiscal quarter of Genesis and setting forth in reasonable detail the manner in
which such ratio was calculated and any other related information requested by
Agent; provided that if at any time Lessee shall fail to deliver such Officer's
Certificate on or before the date such information is required to be delivered,
then for purposes of Section 2.7 of the Loan Agreement, Genesis's Funded
Debt/Cash Flow Ratio shall be deemed to be greater than 4.5 for the applicable
Interest Period(s); and provided, further, that if, when delivered, such
Officer's Certificate sets forth a Funded Debt/Cash Flow Ratio which is less
than that determined in accordance with the foregoing proviso, the amounts
calculated under said Section 2.7 using such deemed Funded Debt/Cash Flow Ratio
shall be revised as of the next fiscal quarter using Genesis's actual Funded
Debt/Cash Flow Ratio for such Interest Period(s), except to the extent that the
Officer's Certificate for such subsequent fiscal quarter shall indicate a change
in the Funded Debt/Cash Flow Ratio from that set forth in the delinquent
Officer's Certificate.
(g) Other. With reasonable promptness, unless disclosure
thereof is prohibited by Applicable Laws and Regulations and subject to
appropriate confidentiality undertakings with respect thereto, such other data
and information (financial or otherwise) which is either maintained in the
ordinary course of Lessee's business or can be obtained or derived without undue
burden to Lessee as to the business of Lessee or as to any Site as from time to
time may be reasonably requested in writing by Agent after a Lease Default or
Lease Event of Default shall have occurred and be continuing.
SECTION 5.11. Securities. Lessee shall not, nor shall it permit anyone
authorized to act on its behalf to, take any action which would subject the
issuance or sale of the Notes, any Site or the Lease, or in any security or
lease the offering of which, for purposes of the Securities Act or any state
securities laws, would be deemed to be part of the same offering as the offering
of the aforementioned securities or leases to the registration requirements of
Section 5 of the Securities Act or any state securities laws.
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SECTION 5.12. Interest Rates. With respect to each
determination of an interest rate pursuant to the Loan Agreement,
Lessee agrees to be bound by Section 2.7 of the Loan Agreement.
SECTION 5.13. Appraisals. Lessee will pay all costs of any Appraisal of
any or all of the Sites which Agent may from time to time require; provided,
however, that Lessee shall only be obligated to pay for appraisals of any Site
once every three years and at any time while a Lease Event of Default shall have
occurred and is continuing; and provided, further, that prior to the occurrence
of a Lease Event of Default, Agent will not require an Appraisal the costs of
which are payable by Lessee under this Section 5.13 unless the Agent, in its
reasonable judgment, determines that such an Appraisal is necessary based upon
the Agent's concern regarding the diminution in value of the applicable Site or
based upon bank regulatory requirements.
SECTION 5.14. Environmental Audits. For each Site, Lessee will deliver
to Agent, upon Agent's request, but not more often than annually, or at any time
upon request while a Lease Event of Default shall have occurred and is
continuing, an Environmental Audit in form and substance satisfactory to Agent,
which (with Agent's consent) may be updates of previously furnished
Environmental Audits; provided, that prior to the occurrence of a Lease Event of
Default, Agent will not require an Environmental Audit under this Section 5.14
unless the Agent, in its reasonable judgment, determines that such an
Environmental Audit is necessary based upon the Agent's concern regarding the
environmental condition of the applicable Site or based upon bank regulatory
requirements. If Lessee shall fail to so deliver any such Environmental Audit,
Agent may obtain such an Environmental Audit and Lessee will pay all reasonable
costs and expenses thereof.
SECTION 5.15. Additional Compensation in Certain
Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc. If any Applicable Laws and
Regulations or guideline or interpretation or application thereof by any
Authority charged with the interpretation or administration thereof or
compliance with any request or directive of any Authority (whether or not having
the force of Applicable Laws and Regulations) now existing or hereafter adopted:
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(i) subjects Lessor or any LIBOR Office to any tax or changes
the basis of taxation with respect to this Participation Agreement, the
Lease, the Notes, the Loans or payments by the Lessee or Genesis of
Basic Rent, the Lease Balance, principal, interest, commitment fee or
other amounts due from any such party hereunder or under the Lease
(except for taxes on the overall net income or overall gross receipts
of Lessor or such LIBOR Office imposed by the jurisdictions (federal,
state and local) in which Lessor's principal office or LIBOR Office is
located),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend
credit extended by, assets (funded or contingent) of, deposits with or
for the account of, or other acquisitions of funds by, Lessor or any
LIBOR Office (other than requirements expressly included herein in the
determination of the LIBO Rate hereunder),
(iii) imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or
contingent) of, or credits or commitments to extend credit extended by,
Lessor or any LIBOR Office, or (B) otherwise applicable to the
obligations of Lessor or any LIBOR Office under this Participation
Agreement, the Lease or any of the other Operative Documents, or
(iv) imposes upon any Lender or any LIBOR Office any other
condition or expense with respect to this Participation Agreement, the
Lease, the Notes or any of the other Operative Documents or its making,
maintenance or funding of any Loan or any security therefor,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Lender, any LIBOR Office or, in the case of clause (iii) hereof, any Person
controlling a Lender, with respect to this Agreement, the Notes or the issuance,
making, maintenance or funding of any Loan (or, in the case of any capital
adequacy or similar requirement, to have the effect of reducing the rate of
return on such Lender's or such controlling Person's capital, taking into
consideration Lessor's or such controlling Person's policies with respect to
capital adequacy) by an amount which Lessor deems to be material (Lessor being
deemed for this purpose to have made, maintained or funded each portion of the
Equity Amount bearing interest based upon LIBO Rate from a Corresponding Source
of Funds), Lessor may from time to time notify the Agent and Lessee, of the
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amount determined in good faith (using any averaging and attribution methods) by
Lessor (which determination shall be conclusive) to be necessary to compensate
Lessor or such LIBOR Office for such increase, reduction or imposition. Such
amount shall be due and payable by Lessee to Lessor 30 days after such notice is
given, together with an amount equal to interest on such amount from the date
two Business Days after the date demanded until such due date at the Prime Rate
plus the Applicable Margin (calculated on the basis of a year of 360 days and
actual days elapsed). A certificate by Lessor as to the amount due and payable
under this Section 5.15(a) from time to time and the method of calculating such
amount shall be conclusive.
(b) Funding Breakage. In addition to all other amounts payable
hereunder, if and to the extent for any reason any part of any portion of the
Equity Amount bearing Yield based upon the LIBO Rate becomes due (by
acceleration or otherwise), or is paid, prepaid or converted to Equity Amount
bearing Yield based upon the Prime Rate (whether or not such payment, prepayment
or conversion is mandatory or automatic and whether or not such payment or
prepayment is then due), on a day other than the last day of the corresponding
LIBO Period, Lessee shall pay Lessor an amount determined as provided below in
this Section 5.15(b).
Furthermore, in addition to all other amounts payable hereunder, if
Standard Notice has been given for the conversion to or renewal of any portion
of the Equity Amount to Equity Amount bearing Yield based upon the LIBO Rate or
for the making of any Advance which shall bear Yield based upon the LIBO Rate or
for the selection of a LIBO Period for any Equity Amount bearing Yield based
upon the LIBO Rate shall be applicable in whole or in part and (x) Lessee
attempts to revoke (expressly, by later inconsistent notices or otherwise) such
Standard Notice or (y) (A) an applicable condition precedent is not satisfied
and (B) such conversion or renewal does not take place as specified in such
Standard Notice or (z) (A) an applicable condition precedent is not satisfied
and (B) the portion of such Advance to bear Yield based upon the LIBO Rate is
not made as specified in such Standard Notice, then in each case Lessee shall
pay Lessor an amount determined as provided below in this Section 5.15(b) if
Lessor has delivered to Lessee and the Agent a certificate stating that Lessor
has incurred costs as a result of the events described in this sentence.
"Funding Breakage Date" shall mean, in a case described in the first
sentence of this Section 5.15(b), the date that any part of any Equity Amount
bearing Yield based upon the LIBO Rate becomes due, or is paid, prepaid or
converted, as described in such sentence, or in a case described in the
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second sentence of this Section 5.15(b), the date for the conversion to or
renewal of Equity Amount bearing Yield based upon the LIBO Rate, or for the
making of a Advance, specified in the Standard Notice described in such
sentence. In a case described in the first sentence of this Section 5.15(b),
"Adjusted Contract Rate" for a particular amount of Equity Amount shall mean the
rate of Yield (including the Applicable Margin) applicable to such amount on the
Funding Breakage Date, less the Applicable Margin, and in a case described in
the second sentence of this Section 5.15(b), "Adjusted Contract Rate" for a
particular principal amount of to-be-made Advances shall mean the rate of Yield
(including the Applicable Margin) which would have applied to such amount on the
Funding Breakage Date absent the failure to renew, convert or borrow, less the
Applicable Margin. "Redeployment Rate" shall mean (x) so long as no
determination by Lessor described in Section 2.11 of the Loan Agreement (mutadis
mutandis) is then applicable, a Yield rate per annum equal to the LIBO Rate
(without the Applicable Margin) determined by the Agent for the applicable
amount using as the LIBO Period a period as equal as practicable to the
Redeployment Period (as hereinafter defined) or (y) if any determination by
Lessor described in Section 2.11 of the Loan Agreement (mutadis mutandis) is
then applicable, a Yield rate per annum equal to the Treasury Rate, in each case
as of or as soon as practicable after the Funding Breakage Date. In each case,
the amount determined as being payable pursuant to this Section 5.15(b) may be
referred to as the "Funding Breakage Indemnity." The calculation of the Adjusted
Contract Rate and the Redeployment Rate shall be made on the assumption that the
LIBO Rate Reserve Percentage shall remain constant throughout the applicable
LIBO Period; in the event that such assumption proves to be inaccurate and
Lessor would have received greater indemnification absent such assumption, then
Lessor shall be entitled to receive such additional indemnification on demand.
The Agent shall calculate Lessor's Funding Breakage Indemnity
as follows:
(i) For each portion of the Equity Amount owing to Lessor
which so became due, or which was so paid, prepaid or converted, or as
to which such Equity Amount were to have been renewed or converted to
Equity Amount bearing Yield based upon the LIBO Rate, or which was to
be disbursed (to the extent applicable to such to-be-borrowed
Advances), the Agent shall calculate the product (the "Future Value
Amount") of
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(1) the amount of such portions of the Equity
Amount
multiplied by
(2) the greater of
(x) zero or
(y) the Adjusted Contract Rate minus the
Redeployment Rate, in each case for such amount,
multiplied by
(3) the number of days from and including the Funding
Breakage Date to but not including the last day of such LIBO
Period (or scheduled LIBO Period in the case of a failure to
renew, convert or borrow) (the "Redeployment Period"), divided
by 360.
(ii) The Agent shall then determine the present value as of the
Funding Breakage Date (discounted at the Treasury Rate as of such
Funding Breakage Date, and calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days in the
Redeployment Period) (each a "Present Value Amount") of each Future
Value Amount (assuming for this purpose that each Future Value Amount
is payable on the last day of the corresponding Funding Period (or
scheduled Funding Period in the case of a failure to renew, convert or
borrow)).
(iii) The Agent finally shall total Lessor's Present Value Amounts
for all of its affected portions of the Loans, and this total shall be
the amount of the Funding Breakage Indemnity to be paid by Lessee to
Lessor.
Such Funding Breakage Indemnity shall be due and payable on demand. In addition,
Lessee shall, on the due date for payment of any Funding Breakage Indemnity, pay
to Lessor an additional amount equal to interest on such Funding Breakage
Indemnity from the Funding Breakage Date to but not including such due date at
the Prime Rate plus the Applicable Margin (calculated on the basis of a year of
360 days and actual days elapsed). The amount payable to Lessor under this
Section 5.15(b) shall be determined in good faith by the Agent, and such
determination shall be conclusive.
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ARTICLE VI
OTHER COVENANTS AND AGREEMENTS
SECTION 6.1. Cooperation with Lessee. Lessor, Agent and each Lender
shall, to the extent reasonably requested by Lessee (but without assuming
additional liability on account thereof), at Lessee's expense, cooperate to
allow Lessee to (a) perform its covenants contained in Section 5.1, including at
any time and from time to time, upon the reasonable request of Lessee, to
promptly and duly execute and deliver any and all such further instruments,
documents and financing statements (and continuation statements related thereto)
as Lessee may request in order to perform such covenants and (b) further
Lessee's requirements as lessee of the Sites, including to file any statement
with respect to any tax abatements or other requirements.
SECTION 6.2. Covenants of Lessor and Lenders.
(a) Discharge of Liens. Lessor covenants that it will not
create or permit to exist at any time, and will, at its own cost and expense,
promptly (and in any event, within 90 days) take such action as may be necessary
duly to discharge, or to cause to be discharged, all Lessor Liens attributable
to it unrelated to the transactions contemplated by the Operative Documents.
Notwithstanding the foregoing, Lessor shall not be required to so discharge any
such Lessor Lien while the same is being contested in good faith by appropriate
proceedings diligently prosecuted so long as such proceedings shall not involve
any meaningful danger of the impairment of the Lien of the Mortgages or of the
sale, forfeiture or loss of, and shall not interfere with the use or disposition
of, any part of the Sites or the Lease or title thereto or any interest therein
or the payment of Rent; provided, however, that Lessor shall discharge or bond
over any such Lessor Lien attributable to it unrelated to the transactions
contemplated by the Operative Documents, whether or not subject to contest as
provided above, upon the purchase of any Site by Lessee pursuant to the Lease.
(b) Change of Principal Place of Business. Lessor shall give
prompt notice to Lessee and Agent, if Lessor's principal place of business or
chief executive office, or the office where the records concerning the accounts
or contract rights relating to the Sites or the Overall Transaction are kept,
shall cease to be located at One Mellon Bank Center, Rm 151-4444, Pittsburgh, PA
15258-0001, Attention: Leasing Group or if it shall change its name or identity.
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(c) Loan Agreement. As between Lessor and Lessee, Lessor and
each Lender hereby agree that, so long as the Lease is in effect, Lessor shall
not consent to or permit any amendment of the terms and provisions of the Loan
Agreement, the Mortgages or any Note, whether or not any Lease Event of Default
shall have occurred and be continuing, if any such amendment or action would
have the effect of increasing the obligations of Lessee or decreasing the rights
of Lessee, in each case without the prior written consent of Lessee, except that
without such consent, Lessor may waive performance by Agent of obligations to
Lessor the non-performance of which does not materially adversely affect Lessee.
(d) Depreciation. From the date hereof unless and until
Lessor's interest in the Sites is unencumbered by the Lease, neither Lessor nor
any Lender shall claim any federal or state tax attributes or benefits
(including depreciation) relating to the Sites unless required to do so by an
appropriate taxing authority or after a clearly applicable change in Applicable
Laws and Regulations or as a protective response to a proposed adjustment by an
Authority; provided, however, that if an appropriate taxing authority shall
require Lessor to claim any such federal or state tax attributes or benefits,
such Person shall promptly notify Lessee thereof and shall permit Lessee to
contest such requirement in a manner similar to the contest rights provided in,
and subject to any applicable limitation to a contest contained in, Section
7.2(b) hereof.
(e) Transfer by Lessor. Lessor shall not transfer its interest
in the Sites (other than a transfer pursuant to the provisions of the Operative
Documents) without the consent of Agent and, so long as no Lease Event of
Default shall have occurred and be continuing, Lessee, each such consent not to
be unreasonably withheld. The foregoing limitation shall not be applicable to
the transfer of any stock or other ownership interests in Lessor, nor of any
assets of Lessor other than its rights in the Sites.
(f) No Voluntary Bankruptcy. Lessor shall not (i) commence any
case, proceeding or other action under any existing or future law of any
jurisdiction (domestic or foreign) relating to bankruptcy, insolvency,
reorganization, arrangement, winding up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (ii) seek appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial benefit of its creditors.
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SECTION 6.3. Restrictions on and Effect of Transfer by any Lender. No
Lender shall assign, convey or otherwise transfer (including pursuant to a
participation) all or any portion of its right, title or interest in, to or
under any of the Operative Documents or any Note, unless the provisions of this
Section 6.3 are satisfied. With respect to any assignment, conveyance or other
transfer, other than a loan participation, the conditions set forth in clauses
(a) through (g) of this Section 6.3 are applicable. With respect to any loan
participation, the conditions set forth in Section 6.4 shall be applicable.
(a) Required Notice and Effective Date. Any Lender desiring to
effect a transfer of its interest shall give written notice of each
such proposed transfer to Lessee and Agent at least ten (10) Business
Days prior to such proposed transfer (other than with respect to
transfers of a Lender's interest on the Document Closing Date, notice
of which may be given on the Document Closing Date), setting forth the
name of such proposed transferee, the percentage or interest to be
retained by such Lender, if any, and the date on which such transfer is
proposed to become effective. All reasonable out-of-pocket costs
incurred by Agent and Lessor in connection with any such disposition by
a Lender under this Section 6.3 shall be borne by such Lender. In the
event of a transfer under this Section 6.3, any expenses incurred by
the transferee in connection with its review of the Operative Documents
and its investigation of the transactions contemplated thereby shall be
borne by such transferee or the relevant Lender, as they may determine,
but shall not be considered costs and expenses which Lessee is
obligated to pay or reimburse under Section 9.9.
(b) Required Consent; Securities Laws. No Lender may make any
such assignment, conveyance or transfer unless (i) Lessee and Agent
shall have consented to the transfer and the transferee, such consents
not to be unreasonably withheld, and (ii) the applicable Lender and
transferee shall have complied with all applicable securities laws with
respect to such transfer.
(c) Employee Benefit Plans. No Lender may make any such
assignment, conveyance or transfer to or in connection with any
arrangement or understanding in any way involving any employee benefit
plan (or its related trust), as defined in Section 3(3) of ERISA, or
with the assets of any such plan (or its related trust), as defined in
Section 4975(e)(1) of the Code (other than a governmental plan, as
defined in Section 3(32) of ERISA), with respect to which Lessee or
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such Lender or any of their Affiliates is a party in interest within
the meaning of ERISA or a "disqualified person" within the meaning of
the Code.
(d) Representations and Warranties. Notwithstanding anything
to the contrary set forth above, no Lender may assign, convey or
transfer its interest to any Person, unless such Person shall have
delivered to Agent and Lessee a certificate confirming the accuracy of
the representations and warranties set forth in Section 4.2 with
respect to such Person (other than as such representation or warranty
relates to the execution and delivery of Operative Documents).
(e) [Intentionally Omitted.]
(f) Assumption of Obligations. Upon satisfaction of all
applicable conditions set forth in this Section 6.3 and the
consummation of the transfer (other than a loan participation), the
obligations of the transferring Lender under the Operative Documents
shall be proportionately released and reduced to the extent of such
transfer. Upon any such transfer as above provided, the transferee
shall be deemed to be bound by all obligations (whether or not yet
accrued) under, and to have become a party to, all Operative Documents
to which its transferor was a party, shall be deemed the pertinent
"Lender" for all purposes of the Operative Documents and shall be
deemed to have made that portion of the payments pursuant to this
Agreement previously made or deemed to have been made by the transferor
represented by the interest being conveyed; and each reference herein
and in the other Operative Documents to the pertinent "Lender" shall
thereafter be deemed a reference to the transferee, to the extent of
such transfer, for all purposes. Upon any such transfer, Agent shall
deliver to Lessor and Lessee new Schedules I and II to this
Participation Agreement, revised to reflect the relevant information
for such new Lender and the Commitment of such new Lender (and the
revised Commitment of the transferor Lender if it shall not have
transferred its entire interest).
(g) Affidavit. If a new Note is to be issued upon transfer,
the transferring Lender shall have the transferee and Lessor execute an
affidavit to the Note, affirming that the Note was executed and
delivered outside of the State of Florida.
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Participation Agreement
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(h) Effect. From and after any transfer of its Notes in
accordance with this Section 6.3 (other than a loan participation) the
transferring Lender shall be released, to the extent assumed by the
transferee, from its liability and obligations hereunder and under the
other Operative Documents relating to the Sites to which such
transferor is a party in respect of obligations to be performed on or
after the date of such transfer. Upon any transfer by a Lender as above
provided, any such transferee shall be deemed a "Lender" for all
purposes of such documents and each reference herein to a Lender shall
thereafter be deemed a reference to such transferee for all purposes,
except as the context may otherwise require. Notwithstanding any
transfer as provided in this Section 6.3, the transferor shall be
entitled to all benefits accrued and all rights vested prior to such
transfer, including rights to indemnification under this Agreement or
any other Operative Document.
(i) Documentation; Agent's Fee. Each such transfer (including,
without limitation, a loan participation) shall be subject to the
requirement that (i) the transferee (or loan participant, as
applicable) shall have executed and delivered to Agent, Lessee and
Lessor a letter in substantially the form of the Investor's Letter
attached hereto as Exhibit G, and (ii) the applicable Lender and
transferee shall have executed and delivered such other documents,
certificates and opinions of counsel which Lessee or Agent shall
reasonably request to confirm the satisfaction of the conditions of
this Section 6.3. The applicable Lender or transferee shall pay to
Agent for each transfer: (i) a fee of $3,000, and (ii) the reasonable
fees and expenses of counsel to Agent. The obligations of the
applicable Lender and the transferee under the immediately preceding
sentence shall be joint and several.
SECTION 6.4. Covenants and Agreements of Lenders.
(a) Participations. Each Lender covenants and agrees that it
will not grant participations in its Notes to any Person (a "Loan Participant")
unless the conditions of clauses (a) through (g) and clause (i) of Section 6.3
shall have been satisfied. In the event of any such sale by a Lender of a
participating interest to a Loan Participant, such Lender's obligations under
this Agreement and under the other Operative Documents shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such
Lender shall remain the holder of its Note for all purposes under this Agreement
and under the other Operative Documents, and Lessor, Agent and, except as set
forth in Section 6.4(b), Lessee shall continue to deal solely and directly with
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Participation Agreement
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such Lender in connection with such Lender's rights and obligations under this
Agreement and under the other Operative Documents. Notwithstanding any such loan
participation, no Loan Participant shall have any right to vote with respect to
the transactions contemplated by the Operative Documents other than with respect
to changes in principal amount of the Note in which such Loan Participant has a
participation, the interest rate payable under such Note and the stated maturity
date of such Note.
(b) Transferee Indemnities. Each Loan Participant shall be
entitled to the benefits of Sections 2.11 and 2.12 of the Loan Agreement with
respect to its Notes or participation in the Loans outstanding from time to
time; provided, that no Loan Participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Lender would have
been entitled to receive in respect of the amount of the Notes or participation
transferred by such transferor Lender to such Loan Participant had no such
transfer or participation occurred.
SECTION 6.5. Future Lenders. Each Lender, by its acceptance of its Note
or Notes, shall be deemed to be bound by and, upon compliance with the
requirements of Section 6.4, will be entitled to all of the benefits of the
provisions of this Agreement.
SECTION 6.6. Agent under Participation Agreement and Mortgages. For
purposes of this Agreement and the Mortgages, the parties hereto agree that
Agent shall be the agent of the Lenders, with Agent's duties and obligations
hereunder and thereunder being subject to the limitations, and Agent being
entitled to the rights, set forth in Article VII of the Loan Agreement. The
foregoing provisions of this Section 6.6 shall not limit the provisions of
Article 8 of this Participation Agreement or the rights and obligations of Agent
as Agent for all of the Participants pursuant to said Article 8.
SECTION 6.7. Syndication by Agent. Lessee acknowledges that promptly
after the Document Closing Date, Agent expects, but shall not be required to,
syndicate the Notes to the lenders under the Credit Agreement or others, and
Lessee shall cooperate, and, on a timely basis, shall cause the Guarantors to
cooperate, with Agent and take, or cause to be taken, all actions and execute
and deliver, or cause to be executed and delivered, all agreements, documents,
certificates, opinions of counsel and other materials reasonably requested by
Agent in connection therewith.
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Participation Agreement
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SECTION 6.8. Prepayment by Lessor. Except as expressly permitted by the
Operative Documents, each Lender acknowledges and agrees that Lessor may not
voluntarily prepay the Notes, or any part thereof, without the written consent
of Lessee; provided, however, that Lessor may prepay, or cause to be prepaid,
all or any portion of the Notes at any time during the continuance of a Lease
Event of Default.
SECTION 6.9. Foreclosure against Lessor. If Lessor's interest in the
Sites is foreclosed by reason of a Loan Event of Default while no Lease Event of
Default shall have occurred and be continuing, Lessee shall not be responsible
for any costs or expenses incurred by Agent in connection with such foreclosure
or as a result thereof.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. General Indemnification. Lessee agrees, whether or not any
of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless on an
after-tax basis (in accordance with Section 7.5) each Indemnitee from and
against any and all Claims that may be imposed on, incurred by or asserted
against such Indemnitee (whether because of action or omission, negligent or
otherwise, by such Indemnitee or otherwise), whether or not such Indemnitee
shall also be indemnified as to any such Claim by any other Person and whether
or not such Claim arises or accrues prior to the Document Closing Date or after
the Lease Termination Date, in any way relating to or arising out of (a) any of
the Operative Documents or any of the transactions contemplated thereby or any
investigation, litigation or proceeding in connection therewith, and any
amendment, modification or waiver in respect thereof; or (b) any Site or any
part thereof or interest therein; or (c) the acquisition, mortgaging, design,
preparation, installation, inspection, delivery, non-delivery, acceptance,
rejection, purchase, ownership, possession, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer or title, redelivery, use, financing,
refinancing, operation, condition, sale (including any sale pursuant to Section
6.3 of the Lease or any sale pursuant to Article XVIII of the Lease), return or
other disposition of all or any part of any interest in the Sites or the
imposition of any Lien (or incurrence of any liability to refund or pay over any
amount as a result of any Lien) thereon, including, without limitation: (i)
Claims or penalties arising from any violation of law, including Applicable Laws
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Participation Agreement
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and Regulations, or in tort (strict liability or otherwise), (ii) loss of or
damage to the environment (including investigation costs, clean-up costs,
response costs, remediation and removal costs, costs of corrective action, costs
of financial assurance, and all other damages, costs, fees and expenses, fines
and penalties, including natural resource damages), or death or injury to any
Person, and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by or
under Environmental Laws, (iii) latent or other defects, whether or not
discoverable by Lessee or any Indemnitee, (iv) any Claims resulting from the
existence or Release of any Hazardous Materials at or from any Site and (v) any
Claim for patent, trademark, tradename or copyright infringement, provided that
the matters in this clause (c) shall be without duplication of any matter for
which indemnification is provided pursuant to the Environmental Indemnity; (d)
the offer, issuance, sale or delivery of the Notes; (e) the breach or alleged
breach by Lessee of any representation or warranty, covenant or agreement made
by it or deemed made by it in any Operative Document; (f) the transactions
contemplated hereby or by any other Operative Document, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA and any
prohibited transaction described in Section 4975(c) of the Code or (g) any other
agreement entered into or assumed by Lessee in connection with any Site
(including, in each case, matters based on or arising from the negligence of any
Indemnitee).
Lessee shall not be required to indemnify under this Section 7.1 for
(1) as to an Indemnitee, any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee, as determined by a court of
competent jurisdiction or to the extent resulting from the breach of
representations, warranties or covenants of such Indemnitee (including, in the
case of clause (f) of this Section 7.1, the representation of such Lender set
forth in Section 4.2(e) and the covenant of such Lender set forth in Section
6.3(c)), (2) any Claims in respect of Taxes (such Claims to be subject to
Section 7.2), other than a payment necessary to make payments under this Section
7.1 on an after-tax basis, provided, that this clause (2) does not apply to any
taxes or penalties included in Claims against which the Indemnitee is provided
an indemnification under clause (f) of this Section 7.1 and (3) as to an
Indemnitee, any Claim resulting from Lessor Liens which such Indemnitee is
responsible for discharging under the Operative Documents. In the event that the
indemnification provided for herein is prohibited by Applicable Laws and
Regulations, Lessee will contribute to a Claim to the maximum extent permitted
by law.
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Participation Agreement
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SECTION 7.2. General Tax Indemnity.
(a) Tax Indemnity. Lessee shall pay, defend and, on written
demand, indemnify and hold each Indemnitee harmless (on an after-tax basis in
accordance with Section 7.5) from and against, any and all Taxes, howsoever
imposed, on or with respect to any Indemnitee, the Sites or any portion thereof,
any Operative Document or Lessee or any sublessee or user of a Site by any
Authority in connection with or in any way relating to (i) the acquisition,
mortgaging, design, preparation, installation, inspection, delivery,
non-delivery, acceptance, rejection, purchase, ownership, possession, rental,
lease, sublease, repossession, maintenance, repair, alteration, modification,
addition or substitution, storage, transfer of title, redelivery, use,
financing, refinancing, operation, condition, sale, return or other application
or disposition of all or any part of the Sites or the imposition of any Lien (or
incurrence of any liability to refund or pay over any amount as a result of any
Lien) thereon, (ii) Basic Rent or Supplemental Rent or the receipts or earnings
arising from or received with respect to the Sites or any part thereof, or any
interest therein or any applications or dispositions thereof, (iii) any other
amount paid or payable pursuant to the Notes or any other Operative Documents,
(iv) the Sites or any part thereof or any interest therein, (v) all or any of
the Operative Documents, any other documents contemplated thereby and any
amendments and supplements thereto, and (vi) otherwise with respect to or in
connection with the transactions contemplated by the Operative Documents;
provided, however, that the indemnification obligation of this Section 7.2(a)
shall not apply to (i) Taxes which are based upon or measured by the
Indemnitee's net income (including taxes based on minimum taxes or capital
gains), or which are expressly in substitution for, or relieve Indemnitee from,
any actual Tax based upon or measured by Indemnitee's net income; (ii) any Tax
or imposition to the extent, but only to such extent, it relates to any act,
event or omission that occurs after the termination of the Lease and the
discharge of all of Lessee's obligations under the Operative Documents which
were matured at the time of such termination (but not any Tax or imposition that
relates to any period prior to the discharge of all of Lessee's obligations
under the Operative Documents which were matured at the time of such
termination) unless such termination is the result of a Lease Event of Default
or the Site has been transferred to Lessee; (iii) any interest or penalties
imposed on an Indemnitee as a result of the failure of such Indemnitee to comply
with its obligations set forth in Section 7.2(d) unless such failure results
from the failure of Lessee to comply with its obligations set forth in Section
7.2(d); (iv) any Taxes which are imposed on an Indemnitee as a result of a
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Participation Agreement
-----------------------
breach of a covenant or representation by such Indemnitee in any Operative
Document (unless caused by the Lessee's breach of its representation, warranties
or covenants) or is a result of the gross negligence or willful misconduct of
such Indemnitee itself (as opposed to gross negligence or willful misconduct
imputed to such Indemnitee), but not Taxes imposed as a result of ordinary
negligence of such Indemnitee; (v) Taxes based upon the voluntary transfer,
assignment or disposition by Agent, Lessor or any Lender of any interest in any
of the Sites (other than a transfer pursuant to the exercise of remedies under
the Operative Documents, transfers pursuant to the exercise of the Sale Option
or Purchase Option, a transfer to Lessee or otherwise pursuant to the Lease) or
any involuntary transfer of any interest in any of the Sites resulting from the
bankruptcy or insolvency of the Agent, Lessor or any Lender (other than in
connection with the existence of a Lease Event of Default or a Credit Agreement
Event of Default); (vi) any gift, inheritance, franchise or estate Taxes (vii)
taxes and impositions that are imposed by any state or local jurisdiction or
taxing authority within any state or local jurisdiction and that are based upon
or measured by the net income or net receipts (including any minimum taxes,
withholding taxes or taxes on or measured by capital, net worth, excess profits
or items of tax preference or taxes that are capital stock, franchise or doing
business taxes); (viii) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions of the
Participation Agreement; (ix) any Taxes or impositions that are enacted or
adopted by their express terms as a substitute for any Tax that would not have
been indemnified against pursuant to the terms of Section 7.2(a) of the
Participation Agreement; (x) any Taxes or impositions to the extent that such
Taxes are actually reimbursed to the Lessor by another Person other than an
Affiliate of the Lessor; (xi) in the event of a voluntary transfer, assignment
or disposition, or any involuntary transfer of any interest in any of the Sites
resulting from the bankruptcy or insolvency of Lessor (other than in connection
with the existence of a Lease Event of Default or a Credit Agreement Event of
Default), any Tax or imposition imposed on a direct or indirect transferee,
successor or assign of the Lessor to the extent of the excess of such Taxes over
the amount of such Taxes that would have been imposed had there not been a
transfer by the original Lessor of an interest arising under the Operative
Documents, unless a Lease Event of Default shall have occurred and be
continuing; and (xii) any Taxes or impositions imposed on the Lessor that are a
result of the Lessor not being considered a "United States person" as defined in
Section 7701(a)(30) of the Code. Notwithstanding the proviso of the preceding
sentence, Lessee shall pay or reimburse, and indemnify and hold harmless, any
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Participation Agreement
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Indemnitee which is not incorporated under the laws of the United States, or a
state thereof, and which has complied with Section 7.3, from any deduction or
withholding of any United States Federal, state or local income tax. All
indemnities contained in this Section 7.2(a) are expressly made for the benefit
of, and shall be enforceable by, each Indemnitee.
(b) Contests. Lessee shall pay on or before the time or times
prescribed by law any Taxes (except any Taxes excluded by the proviso to Section
7.2(a)); provided, however, that Lessee shall be under no obligation to pay any
such Tax so long as the payment of such Tax is not delinquent or is being
contested by a Permitted Contest. If any claim or claims is or are made against
any Indemnitee for any Tax which is subject to indemnification as provided in
Section 7.2(a), Indemnitee shall as soon as practicable, but in no event more
than 20 days after receipt of formal written notice of the Tax or proposed Tax,
notify Lessee and if, in the reasonable opinion of Lessee and (in the case of
any Tax which may reasonably be expected in the aggregate to exceed $50,000) tax
counsel acceptable to the Indemnitee, there exists a basis to contest such Tax
which satisfies the requirements of ABA Formal Opinion 85-352 (and if the
provisos of the definition of "Permitted Contest" continues to be satisfied and
so long as no Lease Event of Default exists), Lessee at its expense may, to the
extent permitted by Applicable Laws and Regulations, contest such Tax, and
subsequently may appeal any adverse determination, in the appropriate
administrative and legal forums; provided that in all other circumstances, upon
notice from Lessee to such Indemnitee that there exists a basis to contest any
such Tax which satisfies the requirements of ABA Formal Opinion 85-352 (as
supported by an opinion of tax counsel to Lessee acceptable to the Indemnitee),
the Indemnitee, at Lessee's expense, shall contest any such Tax. Lessee shall
pay all expenses incurred by the Indemnitee in contesting any such Tax
(including all reasonable attorneys' and accountants' fees, including the
allocated costs of internal counsel), upon demand by the Indemnitee. Lessee
shall have the right to participate in the conduct of any proceedings controlled
by the Indemnitee to the extent that such participation by such Person does not
interfere with the Indemnitee's control of such contest and Lessee shall in all
events be kept informed, to the extent practicable, of material developments
relative to such proceedings. The Indemnitee shall have the right to participate
in the conduct of any proceedings controlled by Lessee and the Indemnitee shall
in all events be kept informed, to the extent practicable, of material
developments relative to such proceedings. The Indemnitees agree that a
contested claim for which Lessee would be required to make a reimbursement
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Participation Agreement
-----------------------
payment hereunder will not be settled or compromised without Lessee's prior
written consent (which consent shall neither be unreasonably delayed nor
withheld), unless the provisos of the definition of "Permitted Contest" would
not continue to be satisfied. Indemnitee shall endeavor to settle or compromise
any such contested claim in accordance with written instructions received from
Lessee, provided that: (x) Lessee on or before the date the Indemnitee executes
a settlement or compromise pays the contested Tax to the extent agreed upon or
makes an indemnification payment to the Indemnitee in an amount acceptable to
the Indemnitee; and (y) the settlement or compromise does not, in the reasonable
opinion of the Indemnitee materially adversely affect the right of such Lessor
to receive Rent or the Lease Balance or any other payment pursuant to the
Operative Documents, or involve a material risk of sale, forfeiture or loss of
any Site or any interest therein or any matter described in the provisos to the
definition of "Permitted Contest". The failure of an Indemnitee to timely
contest a claim against it for any Tax which is subject to indemnification under
Section 7.2(a) and for which it has an obligation to Lessee to contest under
this Section 7.2(b) in the manner required by Applicable Laws and Regulations
where Lessee has timely requested that such Indemnitee contest such claim shall
relieve Lessee of its obligations to such Indemnitee under Section 7.2(a) with
respect to such claim to the extent such failure results in the loss of an
effective contest. If Applicable Laws and Regulations require the payment of a
contested Tax as a condition to, or regardless of, its being contested, and
Lessee chooses to contest such Tax or to direct the Indemnitee to contest such
Tax in accordance with this Section, then Lessee shall provide the Indemnitee
with the funds to pay such Tax, such provision of funds to be deemed a
non-interest bearing loan by Lessee to the Indemnitee to be repaid by any
recovery of such Tax from such contest and any remaining unpaid amount not
recovered to offset Lessee's obligation to indemnify the Indemnitee for such
Tax. Lessee shall indemnify the Indemnitee on a grossed-up basis (in accordance
with Section 7.5) for and against any adverse tax consequences of such
interest-free loan. In the event that the Indemnitee receives a refund (or like
adjustment) in respect of any Tax for which the Indemnitee has been reimbursed
by Lessee, the Indemnitee shall immediately remit the amount of such refund (or
like adjustment) to Lessee, net of all costs and expenses incurred by such
Indemnitee.
(c) Payments. Any Tax indemnifiable under Section 7.2(a) shall
be paid directly to the applicable taxing authority if direct payment is
practicable and permitted. If direct payment to the applicable taxing authority
is not permitted or is otherwise not made, any amount payable to an Indemnitee
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Participation Agreement
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pursuant to Section 7.2(a) shall be paid within thirty (30) days after receipt
of a written demand therefor from such Indemnitee accompanied by a written
statement describing in reasonable detail the amount so payable, but not before
the date that the relevant Taxes are due. Any payments made pursuant to Section
7.2(a) directly to the Indemnitee entitled thereto or Lessee, as the case may
be, shall be made in immediately available funds at such bank or to such account
as specified by the payee in written directions to the payor, or, if no such
direction shall have been given, by check of the payor payable to the order of
the payee by certified mail, postage prepaid at its address as set forth in this
Participation Agreement. Upon the request of any Indemnitee with respect to a
Tax that Lessee is required to pay, Lessee shall furnish to such Indemnitee the
original or a certified copy of a receipt for Lessee's payment of such Tax or
such other evidence of payment as is reasonably acceptable to such Indemnitee.
Taxes imposed with respect to the Property for a billing period during which the
Lease expires or terminates (provided that the Lessee surrenders possession of
the Property to Lessor) shall be adjusted and prorated on a daily basis between
the Lessee and the Lessor, whether or not such Imposition is imposed before or
after such expiration or termination and each party shall pay or reimburse the
other for each party's pro rata share thereof. At Lessee's request, the amount
of any indemnification payment by Lessee pursuant to subsection (a) shall be
verified and certified by an independent public accounting firm mutually
acceptable to Lessee and the Indemnitee. The fees and expenses of such
independent public accounting firm shall be paid by Lessee unless such
verification shall result in an adjustment in Lessee's favor of 5% or more of
the payment as computed by the Indemnitee, in which case such fee shall be paid
by the Indemnitee. In no event shall Lessee have the right to review the
Indemnitee's tax returns or receive any other confidential information from the
Indemnitee in connection with such verification. Any information provided to
such accountants by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the accountants will
confirm in writing that they will treat such information as) the private,
proprietary and confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all such materials
shall be returned to such Person. Such accounting firm shall be requested to
make its determination within 30 days of Lessee's request for verifications and
the computations of the accounting firm shall be final, binding and conclusive
upon Lessee and the Indemnitee. The parties agree that the sole responsibility
of the independent public accounting firm shall be to verify the amount of
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a payment pursuant to this Participation Agreement and that matters of
interpretation of this Participation Agreement are not within the scope of the
independent accounting firm's responsibilities.
(d) Reports. If any report, return or statement is required to
be filed with respect to any Taxes that are subject to indemnification under
Section 7.2(a), Lessee shall, if Lessee is permitted by Applicable Laws and
Regulations, timely prepare and file such report, return or statement; provided,
however, that if Lessee is not permitted by Applicable Laws and Regulations to
file any such report Lessee will promptly so notify the appropriate Indemnitee,
in which case the Indemnitee will file any such report after preparation thereof
by Lessee. Lessee will deliver any such return, together with immediately
available funds for payment of any Tax due, to such Indemnitee at least ten (10)
days in advance of the date such return or payment is due.
SECTION 7.3. Withholding Tax Exemption. On or before the first date on
which any payment is due under any Note for the account of any Lender not
incorporated under the laws of the United States or a state thereof, such Lender
agrees that it will have delivered to each of Lessee, Lessor and Agent (i) two
valid, duly completed copies of United States Internal Revenue Service Form 1001
or 4224, certifying in either case that such Lender is entitled to receive
payments under the Operative Documents without deduction or withholding of any
United States federal income taxes and (ii) a valid, duly completed Internal
Revenue Service Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax. Each
Lender which so delivers a Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, further undertakes to deliver to each of Lessee, Lessor and
Agent two additional copies of such form on or before the date that such form
expires (currently, three successive calendar years for Form 1001 and one
calendar year for Form 4224) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by Lessee, Lessor or Agent, in each case certifying that such Lender
is entitled to receive payments under the Operative Documents without deduction
or withholding of any United States Federal income taxes, unless any change in
treaty, law or regulation has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises Lessee, Lessor and Agent that it
is not capable of receiving payments without any withholding of United States
Federal income tax.
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SECTION 7.4. Excessive Use Indemnity. In the event that at the end of
the Lease Term: (a) Lessee elects the Sale Option; and (b) after paying to
Lessor all amounts due under Section 6.3 of the Lease, including Proceeds and
the aggregate Applicable Percentage Amount, Lessor does not have sufficient
funds to reduce the Lease Balance to zero, then Lessee shall promptly pay over
to Lessor the shortfall unless Lessee delivers a report from an independent
appraiser in form and substance satisfactory to Lessor and the Agent which
establishes that the decline in value in the Sites from the aggregate amount
anticipated for such date in the Appraiser's report delivered with respect to
each Site on or about the Document Closing Date was not due to the excessive use
of any Facility or any Site, failure to maintain any Facility or any Site,
modifications or restorations which reduce the value of any Facility or any
Site, any adverse change in the environmental condition of any Facility or any
Site, any easements granted pursuant to Section 8.3 of the Lease which reduce
the value of any Facility or Site or any other cause or condition within the
power of Lessee to control or affect differing from ordinary wear and tear.
SECTION 7.5. Gross Up. If an Indemnitee shall not be entitled to a
corresponding and equal deduction with respect to any payment or Tax which
Lessee is required to pay or reimburse under any other provision of this Article
VII (each such payment or reimbursement under this Article VII, an "original
payment") and which original payment constitutes income to such Indemnitee, then
Lessee shall pay to such Indemnitee on demand the amount of such original
payment on a grossed-up basis such that, after subtracting all Taxes imposed on
such Indemnitee with respect to such original payment by Lessee (including any
Taxes otherwise excluded by Section 7.2(b) and assuming for this purpose that
such Indemnitee was subject to taxation at the highest Federal marginal rates
applicable to widely held corporations for the year in which such income is
taxable and at an assumed state and local income tax rate of 9.5%, such payments
shall be equal to the original payment to be received or paid (net of any
credits, deductions or other tax benefits then actually recognized that arise
from the payment by such Indemnitee of any amount, including taxes, for which
the payment to be received is made).
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ARTICLE VIII
THE AGENT
SECTION 8.1. Appointment of Agent; Powers and Authorization to Take
Certain Actions.
(a) Each Participant irrevocably appoints and authorizes Agent
to act as its agent hereunder, with such powers as are specifically
delegated to Agent by the terms hereof, together with such other powers
as are reasonably incidental thereto. Each Participant authorizes and
directs Agent to, and Agent agrees for the benefit of the Participant,
that, on the Document Closing Date it will accept the Operative
Documents and thereafter, it will accept all documents to be delivered
to Agent on behalf of the Participants or the Lenders under the
Operative Documents. Specifically, without limitation, Lessor hereby
appoints Agent as its agent hereunder and under the Operative Documents
to accept delivery of all documents to be delivered to Lessor under the
Operative Documents and to take all action on behalf of Lessor required
to be taken by Lessor under the Operative Documents, subject to the
remaining provisions of this Article 8. Agent accepts the agency hereby
created applicable to it and agrees to receive all payments and
proceeds pursuant to the Operative Documents and disburse such payments
or proceeds in accordance with the Operative Documents. Agent shall
have no duties or responsibilities except those expressly set forth in
the Operative Documents. Agent shall not be responsible to any
Participant (or to any other Person) (i) for any recitals, statements,
representations or warranties of any party contained in any of the
Operative Documents or in any certificate or other document referred to
or provided for in, or received by any of them under, the Operative
Documents, other than the representations and warranties made by Agent
in Section 4.4, or (ii) for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Collateral or the
title thereto or of the Loan Agreement or any other document referred
to or provided for therein or (iii) for any failure by any Lessee,
Lessor, any Lender or any other third party (other than Agent) to
perform any of its obligations under any Operative Document. Agent may
employ agents, trustees or attorneys-in-fact, may vest any of them with
any property, title, right or power deemed necessary for the purposes
of such appointment and shall not be responsible for the negligence or
misconduct of any of them selected by it with reasonable care. Neither
Agent nor any of its directors, officers, employees or agents shall be
liable or responsible for any action taken or omitted to be taken by it
or them hereunder, or in connection herewith, except for its or their
own gross negligence or willful misconduct.
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(b) Agent shall not have any duty or obligation to manage,
control, use, operate, store, lease, sell, dispose of or otherwise deal
with any Site, any other Collateral or the Lease, or to otherwise take
or refrain from taking any action under, or in connection with, this
Agreement or any related document to which Agent is a party, except as
expressly provided by the terms hereof, and no implied duties of any
kind shall be read into any Operative Document against Agent. The
permissive right of Agent to take actions enumerated in this Agreement
or any other Operative Document shall never be construed as a duty,
unless Agent is instructed or directed to exercise, perform or enforce
one or more rights by the Required Participants (provided that Agent
has received indemnification reasonably satisfactory to it). Subject to
Section 8.1(c) below, no provision of the Operative Documents shall
require Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its obligations under
the Operative Documents, or in the exercise of any of its rights or
powers thereunder. It is understood and agreed that the duties of Agent
are ministerial in nature.
(c) Except as specifically provided herein, Agent is acting
hereunder solely as agent and, except as specifically provided herein,
is not responsible to any party hereto in its individual capacity,
except with respect to any claim arising from Agent's gross negligence
or willful misconduct or any breach of a representation or covenant
made in its individual capacity.
(d) Agent may accept deposits from, lend money to and
otherwise deal with Lessee or any of its Affiliates with the same
rights as it would have if it were not the named Agent hereunder.
SECTION 8.2. Reliance. Agent may rely upon, and shall not be bound or
obligated to make any investigation into the facts or matters stated in, any
certificate, notice or other communication (including any communication by
telephone, facsimile, telex, telegram or cable) reasonably believed by it to be
genuine and correct and to have been made, signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent with due care
(including any expert selected by Agent to aid Agent in any calculations
required in connection with its duties under the Operative Documents).
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SECTION 8.3. Action Upon Instructions Generally. Subject to Sections
8.4 and 8.6, upon written instructions of the Required Participants, Agent
shall, on behalf of the Participants, give such notice or direction, exercise
such right, remedy or power hereunder or in respect of any Site, and give such
consent or enter into such amendment to any document to which it is a party as
Agent as may be specified in such instructions. Agent shall deliver to each
Participant a copy of each material notice, report and certificate received by
Agent pursuant to the Operative Documents. Agent shall have no obligation to
investigate or determine whether there has been a Lease Default or Lease Event
of Default. Agent shall not be deemed to have notice or knowledge of any Lease
Default or Lease Event of Default unless a Responsible Officer of Agent is
notified in writing of such Lease Default or Lease Event of Default, provided
that Agent shall be deemed to have been notified in writing of any failure of
Lessee to pay Basic Rent in the amounts and at the times set forth in Article IV
of the Lease. If Agent receives notice of a Lease Default or Lease Event of
Default, Agent shall give prompt notice thereof, at Lessee's expense, to each
Participant. Subject to Sections 8.4, 8.6 and 9.5 hereof, and subject to the
terms and provisions of the Collateral Agency Agreement, Agent shall take action
or refrain from taking action with respect to such Lease Default or Lease Event
of Default as directed by the Required Participants or, in the case of a Lease
Event of Default by virtue of the failure of Lessee to pay any portion of Basic
Rent, as directed by any Participant; provided that, unless and until Agent
receives such directions, Agent may refrain from taking any action, or may act
in its discretion, with respect to such Lease Default or Lease Event of Default.
Prior to the date the Lease Balance shall have become due and payable by
acceleration pursuant to Article 18 of the Lease, the Required Participants may
deliver written instructions to Agent to waive, and Agent shall waive pursuant
thereto, any Event of Default and its consequences; provided that in the absence
of written instructions from all Participants, Agent shall not waive any (i)
Lease Event of Default by virtue of the failure of Lessee to pay any portion of
Basic Rent or (ii) covenant or provision which, under Section 9.5, cannot be
modified or amended without the consent of all Participants. As to any matters
not expressly provided for by this Agreement, Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Required Participants and such instructions of the
Required Participants and any action taken or failure to act pursuant thereto
shall be binding on each Participant.
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SECTION 8.4. Indemnification. Each Participant shall reimburse and hold
Agent harmless, ratably in accordance with its Commitment at the time the
indemnification is required to be given, (but only to the extent that any such
indemnified amounts have not in fact been paid to Agent by, or on behalf of,
Lessee in accordance with Section 7.1) from any and all claims, losses, damages,
obligations, penalties, liabilities, demands, suits, judgments, or causes of
action, and all legal proceedings, and any reasonable costs or expenses in
connection therewith, including allocated charges, costs and expenses of
internal counsel of Agent and all other reasonable attorneys' fees and expenses
incurred by Agent, in any way relating to or arising in any manner out of (i)
any Operative Document, the enforcement hereof or thereof or the consummation of
the transactions contemplated thereby, or (ii) instructions from the Required
Participants (including, without limitation, the costs and expenses that Lessee
is obligated to and does not pay hereunder, but excluding normal administrative
costs and expenses incident to the performance by Agent of its agency duties
hereunder other than materially increased administrative costs and expenses
incurred as a result of an Event of Default), provided that no Participant shall
be liable for any of the foregoing to the extent they arise from (a) the gross
negligence or willful misconduct of Agent as determined by a court of competent
jurisdiction, (b) the inaccuracy of any representation or warranty or breach of
any covenant given by Agent in Section 4.4 hereof or in the Loan Agreement, (c)
negligence of Agent in the case of Agent's handling of funds or (d) any taxes,
fees or other charges payable by Agent based on or measured by any fees,
commissions or compensation received by it for acting as Agent in connection
with the transactions contemplated by the Operative Documents.
SECTION 8.5. Independent Credit Investigation. Each Participant by
entering into this Agreement agrees that it has, independently and without
reliance on Agent or any other Participant and based on such documents and
information as it has deemed appropriate, made its own credit analysis of Lessee
and the Guarantors and its own decision to enter into this Agreement and each of
the other Operative Documents to which it is a party and that it will,
independently and without reliance upon Agent or any other Participant and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking action under this
Agreement and any related documents to which it is a party. Agent shall not be
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required to keep itself informed as to the performance or observance by Lessee
of any other document referred to (directly or indirectly) or provided for
herein or to inspect the properties or books of Lessee. Except for notices or
statements which Agent is expressly required to give under this Agreement and
for notices, reports and other documents and information expressly required to
be furnished to Agent alone hereunder or under any other Operative Document,
Agent shall not have any duty or responsibility to provide any Participant with
copies of notices or with any credit or other information concerning the
affairs, financial condition or business of Lessee (or any of its Affiliates)
that may come into the possession of Agent or any of its Affiliates.
SECTION 8.6. Refusal to Act. Except for notices and actions expressly
required of Agent hereunder, Agent shall in all cases be fully justified in
failing or refusing to act unless (a) it is indemnified to its reasonable
satisfaction by Lessor against any and all liability and reasonable expense
which may be incurred by it by reason of taking or continuing to take any such
action (provided that such indemnity shall not be required to extend to
liability or expense arising from any matter described in clauses (a) through
(d) of Section 8.4, it being understood that no action taken by Agent in
accordance with the instructions of the Required Participants shall be deemed to
constitute any such matter) and (b) it is reasonably satisfied that such action
is not contrary to any Operative Document or to any applicable law.
SECTION 8.7. Resignation or Removal of Agent; Appointment of Successor.
Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time by giving 30 days' prior written notice
thereof to Lessor, Lenders and Lessee or may be removed at any time for cause by
30 days' prior written notice from the Required Participants to Agent, the other
Participants and Lessee. Upon any such resignation or removal, the Required
Participants at the time of the resignation or removal shall have the right to
appoint a successor Agent. If, within thirty (30) calendar days after the
retiring Agent's giving of notice of resignation or receipt of a written notice
of removal, a successor Agent is not so appointed and does not accept such
appointment, then the retiring or removed Agent may (but shall not be required
to) appoint a successor Agent and transfer to such successor Agent all rights
and obligations of the retiring Agent. Such successor Agent shall be a Lender if
any Lender shall at the time be willing to become the successor Agent, and if no
Lender is so willing, then the successor Agent shall be a financial institution.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
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rights, powers, privileges and duties of the retiring or removed Agent. Upon the
effective date of resignation or removal, the retiring or removed Agent shall be
discharged from duties and obligations as Agent thereafter arising hereunder and
under any related document, but the provisions of this Agreement and the other
Operative Documents shall inure to its benefit as to any actions taken or
omitted by it while it was Agent under this Agreement and the other Operative
Documents. If the Required Participants or the retiring Agent does not appoint a
successor in accordance with the foregoing provisions of this Section 8.7, any
Participant shall be entitled to apply to a court of competent jurisdiction for
such appointment, and such court may thereupon appoint a successor to act until
such time, if any, as a successor shall have been appointed as above provided.
SECTION 8.8. Separate Agent. Agent may, for the purpose of meeting any
legal requirements of any jurisdiction in which any Site or Collateral may be
located, appoint one or more individuals or corporations either to act as
co-agent jointly with Agent or to act as separate agent of all or any part of
the Collateral, and vest in such individuals or corporations, in such capacity,
such title to such Collateral or any part thereof, and such rights or duties as
Agent may consider necessary or desirable. Agent shall not be required to
qualify to do business in any jurisdiction where it is not now so qualified.
Agent shall execute, acknowledge and deliver all such instruments as may be
required by any such co-agent or separate agent more fully confirming such
title, rights or duties to such co-agent or separate agent. Upon the acceptance
in writing of such appointment by any such co-agent or separate agent, it, she
or he shall be vested with such interest in the Collateral or any part thereof,
and with such rights and duties, not inconsistent with the provisions of the
Operative Documents, as shall be specified in the instrument of appointment,
jointly with Agent (except insofar as local law makes it necessary for any such
co-agent or separate agent to act alone), subject to all terms of the Operative
Documents. Any co-agent or separate agent, to the fullest extent permitted by
legal requirements of the relevant jurisdiction, at any time, by an instrument
in writing, shall constitute Agent its attorney-in-fact and agent, with full
power and authority to do all acts and things and to exercise all discretion on
its behalf and in its name. If any co-agent or separate agent shall die, become
incapable of acting, resign or be removed, the interest in the Collateral or
Sites and all rights and duties of such co-agent or separate agent shall, so far
as permitted by law, vest in and be exercised by Agent, without the appointment
of a successor to such co-agent or separate agent.
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SECTION 8.9. Termination of Agency. The agency created hereby shall
terminate upon the final disposition by Lessor of all Sites and the final
distribution by Agent of all monies or other property or proceeds received
pursuant to the Lease and Loan Agreement in accordance with their respective
terms, provided that at such time Lessee shall have complied fully with all the
terms hereof.
SECTION 8.10. Compensation of Agency. Lessee shall pay Agent (i) the
Structuring/Underwriting Fee pursuant to Section 2.6 hereof and (ii) Agent's
reasonable fees, costs and expenses for the performance of Agent's obligations
hereunder.
SECTION 8.11. Limitations. It is expressly understood and agreed by and
among the parties hereto that, except as otherwise provided herein or in the
other Operative Documents: (a) this Participation Agreement and the other
Operative Documents to which Agent is a party are executed by Agent, not in its
individual capacity (except with respect to the representations and covenants of
Agent in Section 4.4), but solely as Agent under the Operative Documents in the
exercise of the power and authority conferred and vested in it as such Agent;
(b) each and all of the undertakings and agreements herein made on the part of
Agent are each and every one of them made and intended not as personal
undertakings and agreements by Agent, or for the purpose or with the intention
of binding Agent personally, but are made and intended for the purpose of
binding only the interests of Lessor and the Lenders in the Sites and Collateral
unless expressly provided otherwise; (c) actions to be taken by Agent pursuant
to its obligations under the Operative Documents may, in certain circumstances,
be taken by Agent only upon specific authority of the Participants or Required
Participants; (d) nothing contained in the Operative Documents shall be
construed as creating any liability on Agent, individually or personally, or any
incorporator or any past, present or future subscriber to the capital stock of,
or stockholder, officer or director, employee or agent of, Agent to perform any
covenants either express or implied contained herein, all such liability, if
any, being expressly waived by the other parties hereto and by any Person
claiming by, through or under them; and (e) so far as Agent, individually or
personally, is concerned, the other parties hereto and any Person claiming by,
through or under them shall look solely to the Collateral and Lessee for the
performance of any obligation under any of the instruments referred to herein;
provided, however, that nothing in this Section 8.11 shall be construed to limit
in scope or substance the general corporate liability of Agent in respect of its
gross negligence or willful misconduct or those representations, warranties and
covenants of Agent in its individual capacity set forth herein or in any of the
other agreements contemplated hereby.
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SECTION 8.12. Agent May Be a Participant. Lessee and each Participant
(a) acknowledge and agree that Agent may be a Participant and Agent, (as well as
an agent and a Lender under the Credit Agreement and the Collateral Agent under
the Collateral Agency Agreement), and in such other capacities, shall have no
obligation to Lessee or the other Participants greater than it would have were
Agent solely a Participant and not Agent hereunder, or not the agent or a Lender
under the Credit Agreement or Collateral Agent under the Collateral Agency
Agreement and (b) waive any conflict or potential conflict by virtue of Agent
also being a Participant from time to time.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery and the termination or expiration of
this Agreement and any of the Operative Documents, including the termination of
the Lease with respect to any Site, the transfer of the interest in the Sites to
or by Lessor as provided herein or in any other Operative Documents (and shall
not be merged into the Deeds or any other conveyance or transfer document), any
disposition of any interest of Lessor in the Sites, the purchase and sale of the
Notes, payment therefor and any disposition thereof and shall be and continue in
effect notwithstanding any investigation made by any party hereto or to any of
the other Operative Documents and the fact that any such party may waive
compliance with any of the other terms, provisions or conditions of any of the
Operative Documents.
SECTION 9.2. No Broker, etc. Except for Agent (the fees and expenses of
which shall be payable by Lessee in accordance with the provisions of this
Participation Agreement), each of the parties hereto represents to the others
that it has not retained or employed any broker, finder or financial advisor to
act on its behalf in connection with this Agreement, nor has it authorized any
broker, finder or financial adviser retained or employed by any other Person so
to act, nor has it incurred any fees or commissions to which Lessor or any other
Participant might be subjected by virtue of its entering into the transactions
contemplated by this Agreement. Any party who is in breach of this
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representation shall indemnify and hold the other parties harmless from and
against any liability arising out of such breach of this representation.
SECTION 9.3. Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be made in writing and shall be deemed to have been given (i) in
the case of notice by letter, the earlier of when delivered to the addressee by
hand or courier if delivered on a Business Day and, if not delivered on a
Business Day, the first Business Day thereafter or on the third Business Day
after depositing the same in the mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as provided on Schedule II hereto,
and (ii) in the case of notice by facsimile or bank wire, when receipt is
confirmed if delivered on a Business Day and, if not delivered on a Business
Day, the first Business Day thereafter, addressed as provided on Schedule II
hereto, or to such other address as any of the parties hereto may designate by
written notice. Copies of all notices given by facsimile or bank wire shall be
contemporaneously sent by overnight courier.
SECTION 9.4. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 9.5. Amendments. Except as otherwise specifically provided in
any Operative Document, neither this Agreement nor any of the other Operative
Documents nor any of the terms hereof or thereof may be terminated, amended,
supplemented, waived or modified orally, but only by an instrument in writing
signed by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification shall be sought; and no such termination,
amendment, supplement, waiver or modification shall be effective unless a signed
copy thereof shall have been delivered to Lessor, Lessee and Agent. Lessor and
Lessee shall not be permitted to amend, modify or supplement the Lease without
the written consent of the Required Participants; provided, that without the
prior written consent of each Lender, Lessor shall not:
(a) modify any of the provisions of this Section 9.5, change
the definition of "Required Participants" or modify or waive any
provision of any Operative Document requiring action by any of the
foregoing, or release any collateral (except as otherwise specifically
provided in any Operative Document);
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(b) modify, amend, waive or supplement any of the provisions
of Articles XI, XIII, XVI and XVII of the Lease;
(c) reduce, modify, amend or waive any indemnities in favor of
any Lender;
(d) reduce the amount or change the time of payment of Rent or
the Lease Balance;
(e) consent to any assignment of the Lease releasing Lessee
from its obligations to pay Rent or the Lease Balance or changing the
absolute and unconditional character of such obligations; or
(f) permit the creation of any Lien on the Sites or any part
thereof except as contemplated by the Operative Documents, or deprive
any Lender of the benefit of the security interest and lien secured by
the Sites.
SECTION 9.6. Headings, etc. The Table of Contents and headings of the
various Articles and Sections of this Agreement are for convenience of reference
only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
SECTION 9.7. Parties in Interest. Except as expressly provided herein,
none of the provisions of this Agreement is intended for the benefit of any
Person except the parties hereto, their successors and permitted assigns.
SECTION 9.8. GOVERNING LAW; Submission to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT HAS BEEN DELIVERED IN, AND SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE.
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SECTION 9.9. Payment of Transaction Costs and Other Costs.
(a) Transaction Costs. On the Document Closing Date, if the
transactions contemplated by this Agreement are consummated, Lessor shall pay
the Transaction Costs to the Person or Persons entitled to payment as evidenced
by bills or invoices for such payment; provided, however, that Lessor shall not
be required to pay any Transaction Costs in excess of $2,000,000.00 in the
aggregate. Lessee shall elect which Transaction Costs Lessor shall so pay,
provided that such election must include the Structuring/Underwriting Fee and
Agent's attorneys fees, and Lessor shall obtain the funds necessary for such
payment in accordance with Section 2.5. Any additional Transaction Costs shall
be paid by Lessee. If such transactions are not consummated, Lessee shall pay
all of the Transaction Costs.
(b) Continuing Expenses. The Transaction Costs not paid on the
Document Closing Date and the continuing expenses and disbursements (including
reasonable counsel fees and expenses) of Lessor and Agent shall be paid by
Lessee as Supplemental Rent; and provided, further that if Lessor shall not have
paid $2,000,000 of Transaction Costs in the aggregate, Lessor shall continue to
pay Transaction Costs (the specific Transaction Costs being so paid by Lessor
being in Lessor's discretion) in accordance with Section 2.5 until it shall have
paid $2,000,000 of Transaction Costs in the aggregate.
(c) Amendments, Supplements and Appraisal. Without limitation
of the foregoing, Lessee agrees to pay to the Lessor, Agent and the Lenders all
reasonable costs and expenses (including reasonable legal fees and expenses)
incurred by any of them in connection with: (i) the considering, evaluating,
investigating, negotiating and entering into or giving or withholding of any
amendments or supplements or waivers or consents with respect to any Operative
Document; (ii) any Event of Loss or termination of the Lease or any other
Operative Document; (iii) the negotiation and documentation of any restructuring
or "workout," whether or not consummated, of any Operative Document; (iv) the
enforcement of the rights or remedies under the Operative Documents; or (v) any
transfer by Agent or a Lender of any interest in the Operative Documents during
the continuance of a Lease Event of Default; provided, however, that in the case
of clauses (i) and (ii) Lessee shall not be responsible for any legal fees and
expenses of more than two special counsel for all of Agent and the Lenders
(including, without limitation, special Credit Agreement counsel) and any
special local counsel required by Agent.
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SECTION 9.10. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.11. Limited Liability of Lessor. The parties hereto agree
that Lessor shall have no personal liability whatsoever to Lessee, the Lenders,
Agent or any of their respective successors and assigns for any Claim based on
or in respect of this Agreement or any of the other Operative Documents or
arising in any way from the transactions contemplated hereby or thereby;
provided, however, that Lessor shall be personally liable: (a) for its own
willful misconduct or gross negligence, (b) for liabilities that may result from
the incorrectness of any representation or warranty expressly made by it in
Section 4.3 or from the failure of Lessor to perform the covenants and
agreements set forth in Section 6.2(a) hereof, or (c) for any Tax based on or
measured by any fees, commission or compensation received by it for actions
contemplated by the Operative Documents. It is understood and agreed that,
except as provided in the preceding proviso: (i) Lessor shall have no personal
liability under any of the Operative Documents as a result of acting pursuant to
and consistent with any of the Operative Documents; (ii) all obligations of
Lessor to Lessee, the Lenders, Agent or any of their respective successors and
assigns are solely nonrecourse obligations (with liability payable solely out of
the Sites and the other Collateral) except to the extent that it has received
payment from others; (iii) all such personal liability of Lessor is expressly
waived and released as a condition of, and as consideration for, the execution
and delivery of the Operative Documents by Lessor; and (iv) this Participation
Agreement (except as provided in Section 4.3) is executed and delivered by
Lessor solely in the exercise of the powers expressly conferred upon it as
Lessor under the Operative Documents.
SECTION 9.12. Liabilities of the Lenders. No Lender shall have any
obligation to any other Lender or to Lessee, Lessor or Agent with respect to the
transactions contemplated by the Operative Documents except those obligations of
such Lender expressly set forth in the Operative Documents or except as set
forth in the instruments delivered in connection therewith, and no Lender shall
be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
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SECTION 9.13. Liabilities of Agent. Agent shall have no duty, liability
or obligation to any party to this Agreement with respect to the transactions
contemplated hereby except those duties, liabilities, or obligations expressly
set forth in this Agreement or the Loan Agreement, and any such duty, liability
or obligation of Agent shall be as expressly limited by this Agreement or the
Loan Agreement, as the case may be.
SECTION 9.14. Reproduction of Documents. This Agreement, all documents
constituting Schedules or Exhibits hereto, and all documents relating hereto
received by a party hereto, including, without limitation: (a) consents, waivers
and modifications that may hereafter be executed; (b) documents received by the
Lenders, Agent or Lessor in connection with the receipt and/or acquisition of
the Sites; and (c) financial statements, certificates, and other information
previously or hereafter furnished to Agent, Lessor or any Lender may be
reproduced by the party receiving the same by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process. Each of
the parties hereto agrees and stipulates that, to the extent permitted by law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such party in the
regular course of business) and that, to the extent permitted by law, any
enlargement, facsimile, or further reproduction of such reproduction shall
likewise be admissible in evidence.
SECTION 9.15. Consideration for Consents to Waivers and Amendments.
Lessee hereby agrees that it will not, and that it will not permit any of its
Affiliates to, offer or give any consideration or benefit of any kind whatsoever
to any Lender in connection with, in exchange for, or as an inducement to, such
Lender's consent to any waiver in respect of, any modification or amendment of,
any supplement to, or any other consent or approval under, any Operative
Document unless such consideration or benefit is offered ratably to all Lenders.
SECTION 9.16. Payment Directions. It is understood and agreed that
during the Lease Term, for administrative convenience and notwithstanding the
terms and provisions of the Lease or any Loan Document, Lessee will pay all
amounts due Lessor under the Lease and this Agreement, on behalf of Lessor, to
or at the direction of Agent (which direction may change from time to time, so
long as such direction does not require Lessee to make any payment due on any
date to more than one Person) for application in accordance with the terms of
Article III of the Loan Agreement.
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SECTION 9.17. Action of and Notices to Lessor under Loan Agreement.
Notwithstanding anything to the contrary in the Loan Agreement, the Lenders,
Lessor and Lessee hereby agree that any notice or demand to be delivered to
Lessor pursuant to the Loan Agreement and any action to be taken by Lessor under
the Loan Agreement shall, so long as no Lease Event of Default is continuing, be
delivered directly to or taken by Lessee, with a copy to or notice to Lessor.
SECTION 9.18. Submission to Jurisdiction; Waivers. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY: (a) AGREES THAT ANY ACTION, SUIT OR PROCEEDING
BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT OR OMISSION, OR EVENT
OCCURRING IN CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED
LITIGATION") MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN ALLEGHENY COUNTY OR PHILADELPHIA COUNTY, PENNSYLVANIA,
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED
BY LAW AGREES THAT, TO THE EXTENT THAT ANY SUCH COURT HAS OR IS ABLE TO OBTAIN
PERSONAL JURISDICTION OVER THE PARTY AGAINST WHICH SUCH PARTY IS SEEKING TO
BRING RELATED LITIGATION, IT WILL NOT BRING ANY RELATED LITIGATION IN ANY OTHER
FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM);
(b) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE
LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH
PARTY;
(c) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO SUCH PARTY'S ADDRESS FOR NOTICES DESCRIBED IN SCHEDULE
II HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW); AND
(d) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY RELATED
LITIGATION.
SECTION 9.19. Final Agreement. THIS AGREEMENT, TOGETHER WITH THE LEASE,
LOAN DOCUMENTS, THE OTHER OPERATIVE DOCUMENTS AND OTHER DOCUMENTS EXECUTED
64
<PAGE>
Participation Agreement
-----------------------
IN CONNECTION HEREWITH OR THEREWITH REPRESENT THE ENTIRE FINAL AGREEMENT BETWEEN
THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND
CANNOT BE MODIFIED, SUPPLEMENTED, AMENDED, RESCINDED OR CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.
[SIGNATURE PAGES FOLLOW]
65
<PAGE>
Participation Agreement
-----------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
GENESIS ELDERCARE PROPERTIES, INC.,
as Lessee
By:___________________________________
Name Printed: George V. Hager, Jr.
Title: Senior Vice President
MELLON FINANCIAL SERVICES
CORPORATION #4, as Lessor
By:___________________________________
Name Printed: Arthur A. Folsom, Jr.
Title: Senior Vice President
MELLON BANK, N.A., not in its
individual capacity except as
expressly stated herein, but solely
as Agent
By:___________________________________
Name Printed: Carol Paige
Title: Vice President
MELLON BANK, N.A., as Lender
By:___________________________________
Name Printed: Carol Paige
Title: Vice President
66
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Participation Agreement
-----------------------
SCHEDULE I
Lessor and Lender Commitments
Transaction Total
Lessor Acquisition Costs Commitment
- ------ ----------- ----------- ----------
Mellon Financial $ 2,031,000 $60,000.00 $ 2,091,000
Lender
- ------
Mellon Bank, N.A. $65,669,000 $1,940,000 $67,609,000
----------- ----------- -----------
Total $67,700,000 $2,000,000 $69,700,000
67
<PAGE>
Participation Agreement
-----------------------
SCHEDULE II
Notice Information and Funding Offices
Lessee: Genesis Eldercare Properties, Inc.
148 West State Street
Kennett Square, PA 19348
Attention: George V. Hager, Jr.
Telephone: (610) 444-6350
Facsimile: (610) 444-7483
Lessor: Mellon Financial Services
Corporation #4
One Mellon Bank Center
Rm 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
Telephone: (412) 234-0934
Facsimile: (412) 234-3948
Lender and Agent: Mellon Bank, N.A.
(address for notices) Plymouth Meeting Executive Campus
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Attention: Carol Paige
Telephone: (610) 941-8409
Facsimile: (610) 941-4136
Lender and Agent: Mellon Bank, N.A.
(funding office) Loan Administration
701 Market Street
Room 199-5220
Philadelphia, PA 19106
Attention: Sally Gaymon
Telephone: (215) 553-2450
Facsimile: (215) 553-1016
1
<PAGE>
Participation Agreement
-----------------------
SCHEDULE III
Sites
Quarterly
Financing Principal
Sites Seller Amount 1 Amortization
- ----- ------ --------- ------------
Atlantis Rehabilitation NHCA $ 8,030428.36 $0
and Health Care Center
Old Congress Road,
Lantana, Florida
Bowman's Health Care Center NHCA $ 6,486,115.21 $0
South Ridgewood
Ormand Beach, Florida
Eagle Crest Nursing Center NHCA $14,413,589.36 $0
Parental Home Road
Jacksonville, Florida
Oakwood Rehabilitation NHCA $ 7,103,840.47 $0
and Health Care Center
South East Bay Street
Eustis, Florida
Tierra Pines Health NHCA $ 2,264,992.61 $0
Care Center
- ----------------
(1) This amount includes the allocable share of the maximum Transaction Costs
of $2,000,000 which may be funded by Lessor pursuant to Section 2.5 of the
Participation Agreement.
<PAGE>
Participation Agreement
-----------------------
Ulmerton Road
Largo, Florida
Woodlands Nursing Center NHCA $ 2,779,763.66 $0
North 46th Street
Tampa, Florida
Williamsburg Health Care NHCA $12,972,230.43 $0
and Rehabilitation Center
Mount Vernon Avenue
Williamsburg, Virginia
Windham NHCA $ 1,544,313.15 $0
Main Street, Route 240
Crozet, Virginia
Woodmont Health Care Center NHCA $14,104,726.75 $0
Dairy Lane
Fredricksburg, Virginia
Total $69,700,000
(Sites, if any, marked with an asterisk (*) indicate that Lessor is not
acquiring fee title to the applicable Land Interest, but rather is becoming the
ground lessee thereof.)
<PAGE>
Participation Agreement
-----------------------
SCHEDULE IV
Stock Sellers
Mark E. Hamister
George E. Hamister
Julia L. Hamister
The George E. Hamister Trust
The Oliver C. Hamister Trust
National Health Care Affiliates, Inc.
Oak Hill Health Care Center, Inc.
Derby Nursing Center Corporation
Delaware Avenue Partnership
EIDOS, Inc.
VersaLink, Inc.
<PAGE>
Participation Agreement
-----------------------
SCHEDULE 4.1A
Government Actions
No Government Actions are required other than the obtaining of such licenses,
approvals, authorizations, consents, permits (including, without limitation,
environmental permits, licenses, approvals, authorizations and consents),
easements and rights-of-way, including proof and dedication required under
applicable law for the use and occupance of the Sites and for the operation
thereof.
<PAGE>
Participation Agreement
-----------------------
SCHEDULE 4.1B
Filings and Recordings
Recordation of the deeds evidencing the acquisition of a particular site, and
recordation of the Lease Supplement relating to the Site with the appropriate
county office.
In addition, for each State in which a Site is located, all filings and
recordings specified in the local counsel questionnaire delivered by local
counsel for such State pursuant to Appendix 2 shall be deemed included on this
Schedule 4.1B.
<PAGE>
Participation Agreement
-----------------------
SCHEDULE 4.1C
Computation under Section 5.9
of 1995 Subordinated Note Indenture
<PAGE>
Participation Agreement
-----------------------
SCHEDULE 4.1D
ERISA Plans
Meridian Healthcare, Inc. Union Retirement Savings Plan, established December 1,
1989
Genesis Health Ventures, Inc. Retirement Plan, established January 1, 1989
Genesis Health and Welfare Plan
<PAGE>
Definitions Appendix
--------------------
APPENDIX 1
to
Participation Agreement
In the Participation Agreement and each other Operative Document,
unless the context otherwise requires:
(a) any term defined below by reference to another instrument or
document shall continue to have the meaning ascribed thereto whether or not such
other instrument or document remains in effect;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) a reference to a part, clause, section, article, exhibit or
schedule is a reference to a part, clause, section and article of, and exhibit
and schedule to, such Operative Document;
(e) a reference to any statute, regulation, proclamation, ordinance or
law includes all statutes, regulations, proclamations, ordinances or laws
amending, supplementing, supplanting, varying, consolidating or replacing them,
and a reference to a statute includes all regulations, proclamations and
ordinances issued or otherwise applicable under that statute;
(f) a reference to a document includes any amendment or supplement to,
or replacement or novation of, that document;
(g) a reference to a party to a document includes that party's
successors and permitted assigns; and
(h) references to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement
followed by or referable to an enumeration of specific matters to matters
similar to those specifically mentioned.
Further, each of the parties to the Operative Documents and their
counsel have reviewed and revised the Operative Documents, or requested
revisions thereto, and the usual rule of construction that any ambiguities are
to be resolved against the drafting party shall be inapplicable in construing
and interpreting the Operative Documents.
A1-1
<PAGE>
Definitions Appendix
--------------------
"Accrued Variable Rent" means, as of any date of determination, (A)
with respect to the Lease, the sum of the aggregate amount of interest that has
accrued on the outstanding Notes to the date of determination, and (B) with
respect to any Lease Supplement, the product of the Allocated Share in respect
of such Lease Supplement multiplied by the amount determined pursuant to the
preceding clause (A).
"Additional Costs" mean (i) the amounts payable pursuant to Sections
2.11 and 2.12 of the Loan Agreement, (ii) the amounts payable pursuant to
Section 5.15 of the Participation Agreement and (iii) the other amounts due and
payable by the Borrower under any Loan Document other than principal and
interest on the Notes.
"Adjusted Contract Rate" has the meaning set forth in Section
2.12 of the Loan Agreement.
"Advance" means, as the context may require, each advance of a Loan by
a Lender and each advance of a portion of the Equity Amount by Lessor.
"Advance Date(s)" means each of the actual dates, on or prior to the
date on which the Commitments shall terminate as set forth in Section 2.5 of the
Participation Agreement, on which the transactions contemplated in Article II of
the Participation Agreement are completed.
"Advance Request" has the meaning set forth in Section 2.5 of
the Participation Agreement.
"Affiliate" of a Person (the "Specified Person") shall mean (a) any
Person which directly or indirectly controls, is controlled by, or is under
common control with, the Specified Person, (b) any director or officer (or, in
the case of a Person which is not a corporation, any individual having analogous
powers) of the Specified Person or of a Person who is an Affiliate of the
Specified Person within the meaning of the preceding clause (a), and (c) for
each individual who is an Affiliate of the Specified Person within the meaning
of the foregoing clauses (a) or (b), any other individual related to such
Affiliate by consanguinity within the third degree or in a step or adoptive
relationship within such third degree or related by affinity with such Affiliate
or any such individual. For purposes of the preceding sentence, "control" of a
Person means (a) the possession, directly or indirectly, of the power to direct
A1-2
<PAGE>
Definitions Appendix
--------------------
or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract or otherwise and (b) in
any case shall include direct or indirect ownership (beneficially or of record)
of, or direct or indirect power to vote, 5% or more of the outstanding shares of
any class of capital stock of such Person (or in the case of a Person that is
not a corporation, 5% or more of any class of equity interest).
"Agent" means Mellon Bank, N.A., a national banking association, in its
capacity as administrative agent for the Participants under the Loan Agreement
and the Participation Agreement.
"Allocated Amount" means, with respect to a Site, the product of (a)
the Lease Balance multiplied by (b) a fraction, the numerator of which is
Lessor's Cost of such Site and the denominator of which is the aggregate
Lessor's Cost of all Sites.
"Allocated Share", with respect to any Lease Supplement, means a
fraction (expressed as a percentage) the numerator of which is Lessor's Cost of
a Site or Group subject to the Lease Supplement in question and the denominator
of which is the Lease Balance.
"Alterations" has the meaning set forth in Section 9.2(a) of the Lease.
"Amendment to Collateral Agency Agreement" means that certain First
Amendment to Amended and Restated Collateral Agency Agreement dated as of July
24, 1996, among Genesis, as a Borrower and as a Shared Obligor, certain other
Subsidiary Grantors referred to therein, the RCA Lender Parties referred to
therein, by Mellon, as RCA Agent, the ACA Lender Parties referred to therein, by
Mellon, as ACA Agent, the SLT Parties referred to therein, by Mellon, as SLT
Agent, and Mellon as Collateral Agent, in the form of Exhibit I-2 to the
Participation Agreement.
"Amendment to Security Agreement" means that certain First Amendment to
Amended and Restated Security Agreement dated as of July 24, 1996, among Genesis
and certain of its Subsidiaries, as Grantors, and Mellon, as Collateral Agent,
in the form of Exhibit I-1 to the Participation Agreement.
"Applicable Laws and Regulations" mean all existing and future
applicable laws, rules, regulations (including Environmental Laws), statutes,
treaties, codes, ordinances, permits, certificates, orders and licenses of and
interpretations by, any Authority, Insurance Requirements and applicable
A1-3
<PAGE>
Definitions Appendix
--------------------
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other administrative, judicial or quasi-judicial tribunal or
agency of competent jurisdiction (including those pertaining to health, safety
or the environment and those pertaining to the use or occupancy of any Site) and
any restrictive covenant or deed restriction or easement of record affecting a
Site.
"Applicable Margin" means:
(a) for any Interest Period occurring entirely prior to the earlier
of (i) October 1, 1996 and (ii) the date that the Operative
Documents are amended to increase the amount of the Commitments
set forth in Schedule I to the Participation Agreement, zero basis
points for interest determined by reference to the Prime Rate and
100 basis points for interest determined by reference to the LIBO
Rate; and
(b) for any Interest Period occurring in whole or in part after the
earlier of the dates specified in clauses (i) and (ii) of the
immediately preceding clause (a), the Applicable Margin set forth
in the Credit Agreement, with (x) the Applicable Margin thereunder
applicable to the Prime Rate Option thereunder being the
Applicable Margin hereunder for interest determined by reference
to the Prime Rate under the Operative Documents and (y) the
Applicable Margin thereunder applicable to the Euro-Rate Option
being the Applicable Margin hereunder for interest determined by
reference to the LIBO Rate under the Operative Documents;
provided, that the Applicable Margin for the Renewal Term shall be determined by
the mutual agreement of Agent and Lessee; and provided, further, that during any
Holdover Period, the Applicable Margin shall be increased by 50 basis points.
"Applicable Percentage" for each Lease Supplement means, as of the end
of the Basic Term and the Renewal Term, the percentage set forth opposite each
such date on Schedule II to such Lease Supplement, and shall be determined on or
about the Document Closing Date; provided that in no event shall such percentage
be less than 80%.
"Applicable Percentage Amount" means, (a) with respect to any Lease
Supplement, the product obtained by multiplying Lessor's Cost of the Site
covered by such Lease Supplement by the Applicable Percentage of such Lease
A1-4
<PAGE>
Definitions Appendix
--------------------
Supplement and (b) with respect to the Lease, the sum of all amounts determined
pursuant to the foregoing clause (a) for each Lease Supplement then in effect.
"Appraisal" means any appraisal of any one or more Sites prepared by
the Appraiser and delivered to Agent, on behalf of Lessor and the Lenders.
"Appraiser" means Valuation Counselors or such other appraisal firm as
Agent may select from time to time.
"Appurtenant Rights" mean (i) all agreements, easements, rights of way
or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to any Land Interest or the Facilities, including the use of any streets, ways,
alleys, vaults or strips of land adjoining, abutting, adjacent or contiguous to
any Land Interest and (ii) all permits, licenses and rights, whether or not of
record, appurtenant to any Land Interest.
"Assignment of Lease" means the Assignment of Lease and Agreement and
Lease Supplements and Memoranda of Lease and Agreement in the form of Exhibit H
to the Participation Agreement from Lessor in favor of Agent for the benefit of
the Lenders, as the same may be supplemented from time to time, together with
the Consent and Agreement of Lessee attached thereto.
"Assignment of Licenses" means the Collateral Assignment of Licenses,
Permits and Approvals from Lessee, NHCA and the Property Sellers to Agent, in
the form of Exhibit J to the Participation Agreement.
"Authority" means any entity involved in any way in the administration
of Federal or state healthcare-related programs, including the U.S. Department
of Health & Human Services, the Health Care Finance Administration, Medicare
carriers or intermediaries or Medicaid agencies, bureaus or departments and any
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Authorized Officer" means any officer in the Leasing Department of
Mellon who shall be duly authorized to execute the Operative Documents.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978.
A1-5
<PAGE>
Definitions Appendix
--------------------
"Basic Rent" means an amount payable on each Payment Date during the
Basic Term, the Renewal Term, if applicable, and the Holdover Period, if
applicable, equal to the sum of (i) the aggregate amount of interest payable on
such Payment Date on the Notes, plus (ii) the aggregate amount of the Yield
payable on such Payment Date on the Equity Amount (calculated in accordance with
the definition of "Yield" and in a manner consistent with the calculation of the
amounts under clause (i) on such Payment Date) plus (iii) starting with the
Payment Date October 24, 1996, principal amortization equal to the sum of (x)
level principal amortization amounts, if any, for each Site as shown on Schedule
III to the Participation Agreement, plus (y) level principal amortization equal
to the lesser of (1) $100,000 per quarterly Payment Date and (2) the remaining
unamortized portion of Transaction Costs funded by Lessor pursuant to Section
2.5 of the Participation Agreement; provided, however, that upon the occurrence
and during the continuance of a Loan Event of Default under Sections 6.1(a)(ii),
6.1(a)(iii) and 6.1(a)(iv) of the Loan Agreement while no Lease Event of Default
shall have occurred and be continuing, Basic Rent shall be determined on the
basis of calculations made as if the Loan Event of Default shall not have
occurred and the Loans shall not have been accelerated, whether or not in fact
the Loans shall have been accelerated or any other remedies shall have been
taken under the Loan Agreement or with respect to the Collateral.
"Basic Term", means (a) the period commencing upon the Document Closing
Date and ending on the date which is five years after the Document Closing Date
or (b) such shorter period as may result from earlier termination of the Lease
as provided therein.
"Basis Term Expiration Date" has the meaning set forth in
Section 2.3 of the Lease.
"Bill of Sale" means each Bill of Sale from the seller of any Site to
Lessor conveying any portion of the Facility located thereon which under
applicable law does not or may not constitute real estate.
"Board of Directors" means, with respect to a corporation, either the
board of directors or any duly authorized committee of that board of directors
which, pursuant to the by-laws of such corporation, has the same authority as
that board of directors as to the matter at issue.
"Borrower" means Lessor, as the borrower under the Loan Agreement.
A1-6
<PAGE>
Definitions Appendix
--------------------
"Business Day" means (a) any day other than a Saturday, Sunday, public
holiday under the laws of the Commonwealth of Pennsylvania or other day on which
banking institutions are authorized or obligated to close in Philadelphia,
Pennsylvania or in the city in which the Agent's office is located; and
(b) solely with respect to determinations of Interest Periods and
Payment Dates, dealings in United States Dollars are carried on in the London
interbank market.
"Casualty" means an event of damage or casualty relating to any
Facility which does not constitute an Event of Loss.
"Claims" mean liabilities, obligations, damages, losses, demands,
penalties, fines, claims, actions, suits, judgments, settlements, utility
charges, costs, fees, expenses and disbursements (including legal fees and
expenses and costs of investigation which, in the case of counsel or
investigators retained by an Indemnitee, shall be reasonable) of any kind and
nature whatsoever, that may at any time be imposed on, asserted against or
incurred by an Indemnitee as a result of, or arising out of, or in any way
related to or by reason of any of the Operative Documents, as well as the Credit
Agreement or any "Loan Document" referred to therein and without in any way
limiting the generality of the foregoing, including any violation of any
Environmental Laws or any other law by any Borrower or Subsidiary of Borrower or
any Environmental Affiliate of any of them.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, and regulations thereunder, in each case as
in effect from time to time. References to sections of the Code shall be
construed also to refer to any successor sections.
"Collateral" means the property from time to time subject to or
purported to be subject to the Liens of the subsisting Mortgage, the Assignment
of Lease, the Assignment of Licenses and the Joint Stock Collateral subject to
the Security Agreement, as limited by the terms and provisions of the Collateral
Agency Agreement and, collectively, all of the foregoing.
"Collateral Agency Agreement" means the Amended and Restated Collateral
Agency Agreement dated as of September 29, 1995 between Genesis, the Subsidiary
Grantors, RCA Agent, Agent and the Collateral Agent, all as defined therein, as
amended (including, without limitation, by the Amendment to Collateral Agency
Agreement).
A1-7
<PAGE>
Definitions Appendix
--------------------
"Commitment" means as to Lessor or any Lender, its obligation to make
amounts available to Lessor or Loans to the Borrower, as the case may be, in an
aggregate amount not to exceed at any one time outstanding the amount set forth
opposite Lessor's or such Lender's name on Schedule I to the Participation
Agreement.
"Commitment Letter" means that certain letter dated July 16, 1996 from
Mellon Bank, N.A. to, and accepted by, Genesis.
"Commitment Percentage" means as to any Participant, at a particular
time, the percentage of the aggregate Commitments in effect at such time
represented by such Participant's Commitment, as such percentage is shown on
Schedule I to the Participation Agreement.
"Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, occupancy or title to any Site or
any part thereof in, by or on account of any actual or threatened eminent domain
proceeding or other action by any Authority or other Person under the power of
eminent domain or otherwise or any transfer in lieu of or in anticipation
thereof, which in any case does not constitute an Event of Taking. A
Condemnation shall be deemed to have "occurred" on the earliest of the dates
that use, occupancy or title is taken.
"Consolidated Cash Flow" has the meaning specified in the Credit
Agreement.
"Consolidated Funded Indebtedness" at any time for a specified group of
Persons shall mean all Indebtedness (including the current portion thereof) of
such Persons which would at such time be classified in whole or part under GAAP
as a long-term liability of such Persons and shall also and in any event include
(i) any Indebtedness of any such Person having a final maturity more than one
year from the date of creation of such Indebtedness and (ii) any Indebtedness of
any Person, regardless of its term, which is renewable or extendable by such
Person (pursuant to the terms thereof or pursuant to a revolving credit or
similar agreement or otherwise) to a date more than one year from such date or
more than one year from the date of creation of such Indebtedness, all as
determined on a consolidated basis.
"Consolidated Subsidiary" means, as to any Person at any date, any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in such Person's consolidated financial statements as of
such date.
A1-8
<PAGE>
Definitions Appendix
--------------------
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person directly or indirectly guarantees, becomes surety for,
endorses, assumes, agrees to indemnify another Person (the "Deemed Obligor")
against, or otherwise remains liable (contingently or otherwise) for the
Indebtedness, obligation or liability (the "Assured Obligation") of the Deemed
Obligor. Contingent Liability shall be deemed to exist if a Person agrees,
becomes or remains liable (contingently or otherwise), directly or indirectly
(a) to purchase or assume, or to supply funds for the payment, purchase or
satisfaction of, an Assured Obligation, (b) to make any loan, advance, capital
contribution or other investment in, or to purchase or lease any property or
services from, a Deemed Obligor (i) to maintain the solvency of the Deemed
Obligor, (ii) to enable the Deemed Obligor to meet any other financial
condition, (iii) to enable the Deemed Obligor to satisfy any payment of
dividends or other distributions upon the shares of any other Person, or (iv) to
assure the holder of such Assured Obligation against loss, (c) to purchase or
lease property or services from the Deemed Obligor regardless of the
non-delivery of or failure to furnish of such property or services, or (d) in
respect of any other transaction the effect of which is to assure the payment or
performance (or payment of damages or other remedy in the event of nonpayment or
nonperformance) of any Assured Obligation.
"Controlled Group Member" means each trade or business (whether or not
incorporated) which, at any time, together with Lessee, Genesis, National
Health, any Property Seller or any Subsidiary of any thereof is treated as a
single employer under Sections 4001(a)(14) or 4001(b)(1) of ERISA or Sections
414(b), (c), (m) or (o) of the Code.
"Corresponding Source of Funds" means, in the case of any portion of a
LIBO Rate Loan or Equity Amount (to the extent that the Yield is determined by
reference to the LIBO Rate), the proceeds of hypothetical receipts by a LIBOR
Office or by a Lender or Lessor through a LIBOR Office of one or more Dollar
deposits in the interbank eurodollar market at the beginning of the Interest
Period corresponding to such portion of the LIBO Rate Loan having maturities
approximately equal to such portion of the LIBO Rate Loan or Equity Amount and
in an aggregate amount approximately equal to such portion (in the case of
Lessor) or such Lender's pro rata share of such portion (in the case of a
Lender).
"Credit Agreement" means both of the following: (i) that certain
Amended and Restated Credit Agreement dated as of September 29, 1995 by and
among Genesis Health Ventures, Inc. and certain of its subsidiaries, as
borrowers, the institutions identified therein as lenders, Mellon Bank, N.A.,
A1-9
<PAGE>
Definitions Appendix
--------------------
as issuer of letters of credit, Mellon Bank, N.A., as agent and Citibank, N.A.
as co-agent, and (ii) that certain Acquisition Credit Agreement dated as of
September 29, 1995 by and among Genesis Health Ventures, Inc., certain of its
Subsidiaries, the Lenders named therein, Mellon and Citibank, N.A. as co-agent,
as each of the foregoing may be amended, modified, increased (including any
increase in amounts or the commitment thereunder), supplemented, refunded or
replaced from time to time, and if so amended, modified, increased, refunded or
replaced, the amended, modified, increased, supplemented, refunded or replaced
credit agreement. For purposes of the Operative Documents, if the Credit
Agreement (or the Amended and Restated Credit Agreement referred to in clause
(i), as it may be so amended, modified, supplemented, refunded or replaced from
time to time as described above) shall terminate without a replacement agreement
having become effective, references to the financial covenants set forth in the
Credit Agreement shall mean the financial covenants as set forth in the Credit
Agreement immediately prior to its termination, exclusive of any modification to
the terms of such agreement or arrangement that were made in contemplation of
the termination thereof.
"Debt/Equity Fraction" means at any time a fraction the numerator of
which is the aggregate outstanding principal balance of the Notes and the
denominator of which is the sum of (i) the aggregate outstanding principal
balance of the Notes plus (ii) the outstanding Equity Amount.
"Deed" means each Deed from the seller of any Land Interest to Lessor,
conveying the Land Interest and the Facility, if any, or other improvements, if
any, located on the related Site in a form acceptable to the Lenders.
"Designated Owner" has the meaning set forth in Section 12.1(b) of
the Lease.
"Document Closing Date" has the meaning set forth in Section 2.1 of
the Participation Agreement.
"Dollar" and the symbol "$" shall mean lawful money of the United
States of America.
"Early Termination Date" means a Payment Date on which Lessee purchases
all (but not less than all) of the Sites from Lessor pursuant to Section 6.5 of
the Lease.
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Definitions Appendix
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"End of Term Report" has the meaning set forth in Section 6.4(c) of
the Lease.
"Environmental Audit" means a Phase One environmental site assessment
(the scope and performance of which meets or exceeds ASTM Standard Practice
E1527-93 Standard Practice for Environmental Site Assessments: Phase One
Environmental Site Assessment Process) of each Site to be acquired by Lessor on
a Site Acquisition Date or of a Site to be sold pursuant to the Sale Option
under the Lease and any additional environmental assessments (including, without
limitation, a Phase Two environmental site assessment) requested by the Agent.
"Environmental Concern Materials" means (a) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in CERCLA or any similar state
law), (b) any toxic chemical or other substance form or related to industrial,
commercial or institutional activities, and (c) asbestos, gasoline, diesel fuel,
motor oil, waste and used oil, heating oil and other petroleum products or
compounds, polychlorinated biphenyls, radon and urea formaldehyde.
"Environmental Indemnity" means the Environmental Indemnity Agreement
dated as of July 24, 1996 by Lessee.
"Environmental Laws" means any law, whether now existing or
subsequently enacted or amended, relating to (a) pollution or protection of the
environment, including natural resources, (b) exposure of Persons, including but
not limited to employees, to Environmental Concern Materials, (c) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (c)
regulation of the manufacture, use or introduction into commerce of
Environmental Concern Materials including their manufacture, formulation,
packaging, labeling, distribution, transportation, handling, storage or
disposal. Environmental Laws shall include, without limitation, the Resource
Conservation and Recovery Act of 1976, (RCRA) 42 U.S.C. sections 6901-6987, as
amended by the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections
9601-9657, (CERCLA), the Hazardous Materials Transportation Act of 1975, 49
U.S.C. Sections 1801-1812, the Toxic Substances Control Act, 15 U.S.C.
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Definitions Appendix
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Sections 2601-2671, the Clean Air Act, 42 U.S.C. Sections 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et
seq. and all similar federal, state and local environmental laws, ordinances,
rules, orders, statutes, decrees, judgments, injunctions, codes and regulations.
"Environmental Permits" means all permits, licenses, authorizations,
registrations, certificates and approvals of Authorities required by
Environmental Laws.
"Equity Amount" means, with respect to Lessor as of any date of
determination, the aggregate outstanding amount invested by Lessor for the
purchase of the Sites or for Transaction Costs, excluding any portion thereof
funded by the Lenders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"Event of Loss" means (x) the actual or constructive total loss of the
Facility on a Site or damage to the Facility on a Site to an extent rendering
repair impractical or uneconomical, in any case as reasonably determined in good
faith by the Board of Directors of Lessee, such determination to be made
promptly after the occurrence of such event and to be evidenced by an Officer's
Certificate of Lessee delivered to Lessor, each Lender and Agent, (y) damage to
the Facility on a Site which results in an insurance settlement on the basis of
a total loss or a constructive total loss (including title insurance proceeds)
in respect of a total loss of the Facility on a Site, or (z) an Event of Taking.
"Event of Taking" means (A) taking of title to a Site or the Land
Interest or (B) any condemnation (other than a requisition of temporary use) or
requisition of use for a period scheduled to last beyond the end of the Lease
Term, in either case resulting in (i) the loss of use or possession of
substantially all of a Site or (ii) the loss of use or possession of a material
portion of a Site, in either of clause (i) or clause (ii), as reasonably
determined in good faith by a Senior Officer of Lessee, such determination to be
made promptly after the occurrence of such event and to be evidenced by an
Officer's Certificate of such Senior Officer delivered to Lessor and Agent.
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Definitions Appendix
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"Excluded Amounts" mean:
(a) all indemnity payments and expenses to which Lessor (or
the respective successors, assigns, agents, officers, directors or employees of
Lessor) is entitled pursuant to the Operative Documents;
(b) any amounts payable under any Operative Documents to
reimburse Lessor (including the reasonable expenses of Lessor incurred in
connection with any such payment) for performing any of the obligations of
Lessee under and as permitted by any Operative Document;
(c) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies payable to Lessor
(or the respective successors, assigns, agents, officers, directors or employees
of Lessor);
(d) any insurance proceeds under policies maintained by
Lessor and not required to be maintained by Lessee under the Lease;
(e) any amount payable to Lessor pursuant to Section 9.9 of
the Participation Agreement;
(f) prior to completion of any foreclosure of the Mortgage
or deed in lieu thereof, any expense reimbursements to Lessor or Agent; and
(g) any payments of interest on payments referred to in
clauses (a) through (f) above.
"Facilities" mean all buildings, structures and fixtures located on the
Land Interest, but excluding the Land Interest.
"Facility" has the meaning set forth in the Recitals to the
Participation Agreement.
"Fair Market Sales Value" with respect to any Site or any portion
thereof means, as of the date of the determination, the fair market sales value
as determined by an independent appraiser chosen by Agent (at the direction of
the Required Participants) that would be obtained in an arm's-length transaction
between an informed and willing buyer (other than a buyer currently in
possession) and an informed and willing seller, under no compulsion to buy or
sell, and neither of which is related to Lessee, for the purchase of such Site.
Such fair market sales value shall be calculated as the value for the use of the
Site, assuming, in the determination of such fair market sales value,
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Definitions Appendix
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that the Site is in the condition and repair required to be maintained by the
terms of the Lease (unless such fair market sales value is being determined for
purposes of Section 9.2(b) of the Lease, in which case this assumption shall not
be made).
"Final Maturity Date" means July 24, 2001, subject to extension through
the end of the Renewal Term if the Renewal Term is entered into pursuant to
Section 2.10 of the Participation Agreement and Section 2.4 of the Lease.
"Final Rent Payment Date" has the meaning set forth in Section
18.1(iii)(B)(1) of the Lease.
"Financial Covenants" means any covenant set forth in the Credit
Agreement from time to time which applies a test for determining net worth, or
which sets forth financial ratios, net income, debt or value levels or
limitations, and as of the Document Closing Date, includes Sections 7.01 through
7.18 of the Credit Agreement.
"Financing" has the meaning set forth in the Recitals to the
Participation Agreement.
"Force Majeure" means acts of God, fire, windstorm, flood, explosion,
collapse of structures, riot, war, labor disputes, delays or restrictions by
governmental bodies (other than delays or restrictions resulting from Lessee's
actions or failures to take reasonably foreseeable actions), inability to obtain
or use necessary materials or reasonable substitutes, or any other cause beyond
the reasonable control of Lessee, other than lack of funds; provided, that in no
event shall an event of Force Majeure be deemed to exist for more than thirty
(30) days.
"Funded Debt/Cash Flow Ratio" means, as of a specified Rolling Period
Ending Date, the ratio of (i) Consolidated Funded Indebtedness of Genesis and
its Consolidated Subsidiaries as of such Rolling Period Ending Date divided by
(ii) Consolidated Cash Flow for the Rolling Period ending on such Rolling Period
Ending Date.
"Funding Breakage Date" has the meaning set forth in Section 2.12 of
the Loan Agreement.
"Funding Breakage Indemnity" has the meaning set forth in Section 2.12
of the Loan Agreement.
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Definitions Appendix
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"Future Value Amount" has the meaning set forth in Section 2.12 of
the Loan Agreement.
"GAAP" means generally accepted accounting principles in the United
States, applied on a basis consistent with the principles used in preparing the
financial statements of Genesis and its Consolidated Subsidiaries as of March
31, 1996 and for the fiscal year then ended.
"Genesis" means Genesis Health Ventures, Inc., a Pennsylvania
corporation.
"Governmental Action" means all applicable permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, decrees, licenses, exemptions, publications, filings, notices to and
declarations of or with, or required by, any Authority, or required by any
Applicable Laws and Regulations, and shall include, without limitation, all
citings, Environmental Permits and operating permits and licenses that are
required for the use, occupancy, zoning and operation of the Facilities.
"Ground Lease" means, with respect to any Non-Acquired Land Interest, a
ground lease agreement leasing such Non-Acquired Land Interest, executed by
Lessee, as lessor under such ground lease, and Lessor, as lessee under such
ground lease, and dated as of the applicable Site Acquisition Date,
substantially in the form of Exhibit M to the Participation Agreement, with such
modifications as may be necessary or desirable in the opinion of Lessor or
Lessor's counsel to comply with all Applicable Laws and Regulations and,
consistent with the provisions thereof, to set forth the provisions customarily
used with respect to the applicable jurisdiction.
"Group" means a group of Sites designated as a group by Lessee
for accounting purposes.
"Guaranties" has the meaning set forth in the Recitals to the
Participation Agreement.
"Guarantors" mean, as of the Document Closing Date, Genesis and all
Affiliates of Genesis who are parties to the Credit Agreement as of the Document
Closing Date, and thereafter from time to time, Genesis and all Affiliates of
Genesis who at such time are or become parties to the Credit Agreement.
A1-15
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Definitions Appendix
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"Hazardous Material" means any substance, waste or material which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous by listing characteristic or definition under
any Environmental Law, including petroleum, crude oil or any fraction thereof,
petroleum derivatives, by-products and other hydrocarbons and is or becomes
regulated by any Authority, including any agency, department, commission, board
or instrumentality of the United States, the States in which any Site is located
or any political subdivision thereof and also including asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls ("PCBs") and radon gas.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"Holdover Period" shall mean any period after the Lease Termination
Date until the earliest of (i) the sale of the Sites pursuant to Section 6.9 of
the Lease, (ii) the reduction of the Lease Balance to zero and the payment by
Lessee of all Basic Rent, Supplemental Rent and all other amounts then due and
payable under the Operative Documents, and (iii) written notice by the Agent, as
agent for the Participants, terminating the Holdover Period pursuant to Section
6.9 of the Lease.
"Highest Lawful Rate" has the meaning set forth in Section 2.11 of the
Participation Agreement.
"Indebtedness" has the meaning specified in the Credit Agreement.
"Indemnitee" means each Lessor, Lender, Agent (in its individual
capacity and as agent) and Lessor and the respective Affiliates, successors,
permitted assigns, permitted transferees, invitees, contractors, servants,
employees, officers, directors, shareholders, partners, participants,
representatives, attorneys and agents of each of the foregoing Persons;
provided, however, that in no event shall Lessee be an Indemnitee.
"Indenture" has the same meaning as "1995 Subordinated Note Indenture"
set forth in the Credit Agreement.
"Insolvency Event" means (a) a proceeding shall have been instituted
with respect to any Person (i) seeking to have an order for relief entered in
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Definitions Appendix
--------------------
respect of such Person, or seeking a declaration or entailing a finding that
such Person is insolvent or a similar declaration or finding, or seeking
dissolution, winding-up, charter revocation or forfeiture, liquidation,
reorganization, arrangement, adjustment, composition or other similar relief
with respect to such Person, its assets or its debts under any law, relating to
bankruptcy, insolvency, relief of debtors or protection of creditors,
termination of legal entities or any other similar law now or hereafter in
effect, or (ii) seeking appointment of a receiver, trustee, liquidator,
assignee, sequestrator or other custodian for such Person or for all or any
substantial part of its property and such proceeding shall result in the entry,
making or grant of any such order for relief declaration, finding, relief or
appointment, or such proceeding shall remain undismissed and unstayed for a
period of 30 consecutive days; or
(b) Any Person shall become insolvent; shall fail to pay, become unable
to pay, or state that it is or will be unable to pay, its debts as they become
due; shall voluntarily suspend transaction of its business; shall make a general
assignment for the benefit of creditors; shall institute (or fail to controvert
in a timely and appropriate manner) a proceeding described in (a)(i) of this
Definition, or (whether or not any such proceeding has been instituted) shall
consent to or acquiesce in any such order for relief, declaration, finding or
relief described therein; shall institute (or fail to controvert in a timely and
appropriate manner) a proceeding described in (a)(ii) of this Definition, or
(whether or not any such proceeding has been instituted) shall consent to or
acquiesce in any such appointment or to the taking of possession by any such
custodian of all or any substantial part of its property; shall dissolve,
wind-up, revoke or forfeit its charter (or other constituent documents) or
liquidate itself or any substantial part of its property; or shall take any
action in furtherance of any of the foregoing.
"Inspecting Parties" have the meaning specified in Section 15.1 of the
Lease.
"Insurance Requirements" means all terms and conditions of any
insurance policy either required by the Lease to be maintained by Lessee and all
requirements of the issuer of any such policy.
"Interest Period" means (i) the successive periods commencing on (and
including) a Payment Date (or in the case of the first Interest Period, July 24,
1996) and ending on (but excluding) the next succeeding Payment Date (if for any
Payment Date on or prior to October 24, 1996 or Lessee elects an Interest Period
of three months or the Prime Rate is applicable) or, (ii) for any Payment Date
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Definitions Appendix
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after October 24, 1996, the second succeeding Payment Date (if Lessee elects an
Interest Period of six months and the LIBO Rate is applicable), with the
Interest Period being determined by reference to clause (i) if Lessee fails to
elect an Interest Period of six months not later than three Business Days prior
to the commencement of the applicable Interest Period; provided, however, that
no Interest Period during the Basic Term may extend beyond the last Payment Date
during the Basic Term (unless the Renewal Term shall be applicable) and no
Interest Period during the Renewal Term may extend beyond the last Payment Date
of the Renewal Term; and provided, further that for the initial Advance on the
Document Closing Date, which occurs on a date other than a Monthly Anniversary
Date, the first Interest Period for such portion of the Lease Balance shall be
the period commencing on (and including) the date of such Advance and ending on
(but excluding) the next succeeding Payment Date and interest on the Notes and
Yield for such Advance for such initial period occurring prior to the first
Monthly Anniversary Date shall be determined by reference to, at Agent's option,
either (x) the Prime Rate, or (y) the LIBO Rate with one or more successive LIBO
Periods of one month each; and provided, finally, that for any Advance, other
than the initial Advance on the Document Closing Date, which occurs on a date
other than a Payment Date, the first Interest Period for such portion of the
Lease Balance shall be the period commencing on (and including) the date of such
Advance and ending on (but excluding) the next succeeding Payment Date and
interest on the Notes and Yield for such Advance for such initial period shall
be determined by reference to the Prime Rate.
"Joint Stock Collateral" has the meaning specified in the Security
Agreement.
"Land Interest" has the meaning set forth in the Recitals to the
Participation Agreement.
"Lease" means the Lease and Agreement dated as of July 24, 1996 between
Lessor and Lessee, in the form of Exhibit A to the Participation Agreement.
"Lease Balance" means, as of any date of determination, the sum of the
aggregate outstanding principal amount of the Notes plus the Equity Amount, less
any amounts applied pursuant to the Operative Documents in reduction thereof.
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Definitions Appendix
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"Lease Default" means any event, condition or failure which, with
notice or lapse of time or both, would become a Lease Event of Default.
"Lease Event of Default" means any event condition or failure
designated as a "Lease Event of Default" in Article XVII of the Lease.
"Lease Payment/Bankruptcy Default" means the occurrence of an event
specified in Section 17(a), (b), (f) or (g) of the Lease, without regard to any
grace or cure periods set forth therein.
"Lease Supplement" means each Lease Supplement and Memorandum of Lease
and Agreement, in the form of Exhibit A to the Lease, executed and delivered by
Lessee to Lessor for each Site.
"Lease Term" has the meaning set forth in Section 2.3 of the Lease.
"Lease Termination Date" means (i) the expiration of the Lease Term, or
(ii) if earlier, the termination of Lessee's right to possession pursuant to
Section 18.1 of the Lease, or (iii) with respect to all of the Sites, a
termination of the Lease pursuant to Section 6.5 of the Lease.
"Leasehold Estate" means Lessee's interest in the Sites (including the
Facilities located thereon) subject to the Lease.
"Lenders" mean the holders of the Notes.
"Lessee" means Genesis Eldercare Properties, Inc. a Pennsylvania
corporation and wholly-owned, single purpose subsidiary of Genesis.
"Lessor" means Mellon Financial Services Corporation #4, its successors
and permitted assigns.
"Lessor Liens" mean Liens on or against any Site or the Lease, or any
payment of Rent (a) which result from any act of, or any Claim against, Lessor
or any Lender in either case unrelated to the transactions contemplated by the
Operative Documents or (b) which result from any tax owed by Lessor or any
Lender, except any Tax for which Lessee is obligated to indemnify.
"Lessor's Cost" means (a) for all Sites, the aggregate amount paid or
advanced by Lessor with respect to all Sites, and (b) for any particular Site,
the aggregate amount paid or advanced by Lessor with respect to such Site
A1-19
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Definitions Appendix
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(determined by a fair allocation by Agent of amounts paid or advanced by Lessor
with respect to such Site).
"LIBO Period" means for any Interest Period either three months or six
months, as specified by Lessee by irrevocable written notice to Agent received
by Agent not later than two (2) Business Days prior to the commencement of such
Interest Period, and in the absence of such specification by Lessee, three
months; provided that if Lessee duly and timely selects a six month LIBO Period
for any Interest Period, such LIBO Period shall extend through the end of the
next succeeding Interest Period as well; and provided, further, that no LIBO
Period during the Basic Term may extend beyond the last Payment Date during the
Basic Term (unless the Renewal Term shall be applicable) and no LIBO Period
during the Renewal Term may extend beyond the last Payment Date of the Renewal
Term; and provided finally, that the LIBO Period for any Interest Period ending
on or prior to October 24, 1996 shall be a one-month period; subject to the
second proviso of the definition of "Interest Period" for Advances described in
such proviso.
"LIBO Rate" means, with respect to any Interest Period, the rate per
annum determined by Agent by dividing (the resultant quotient to be rounded
upward to the nearest 1/100 of 1%) (i) the rate of interest (which shall be the
same for each day in such Interest Period) determined in good faith by Agent in
accordance with its usual procedures (which determination shall be conclusive)
to be the average of the rates per annum for deposits in United States dollars
offered by Agent to major money center banks in the London interbank market at
approximately 11:00 a.m. (London time) two London Business Days before the first
day of the applicable Interest Period for delivery on the first day of such
Interest Period for deposits of a duration equal to the applicable LIBO Period
in an amount substantially equal to the aggregate Lease Balance (or the
applicable tranche thereof designated by Lessee) and having maturities
comparable to such Interest Period by (ii) a number equal to 1.00 minus the LIBO
Reserve Percentage.
"LIBO Rate Loans" mean Loans bearing interest by reference to a LIBO
Rate.
" LIBO Rate Reserve Percentage" shall have the meaning set forth in the
Credit Agreement for "Euro-Rate Reserve Percentage," with the reference to the
Agent therein being a reference to the Agent hereunder.
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Definitions Appendix
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"LIBOR Office" means initially, the funding office of Lessor or any
Lender designated as such in Schedule II to the Participation Agreement; and
thereafter, such other office, branch, subsidiary or affiliate of such Lender,
if any, which such Participant from time to time, prospectively or
retrospectively, without notice to the Lessor, Lessee or Agent, deems to have
made, maintained or funded all or any portion of such Participant's investment
in Notes or the Equity Amount, as applicable.
"Lien" means any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security.
"Loans" has the meaning set forth in Section 2.1 of the Loan
Agreement.
"Loan Agreement" means the Loan Agreement, dated as of July 24,, 1996,
among Lessor, Agent and the Lenders, in the form of Exhibit C to the
Participation Agreement.
"Loan Default" means any event, condition or failure which, with
notice, passage of time or a determination by the Required Participants, or any
combination of the foregoing, would become a Loan Event of Default.
"Loan Documents" mean the Loan Agreement, the Notes, the Mortgages and
all documents and instruments executed and delivered in connection with each of
the foregoing.
"Loan Event of Default" means any event, condition or failure
designated as a "Loan Event of Default" in Section 6.1 of the Loan Agreement.
"Loan Participant" has the meaning specified in Section 6.4(a) of the
Participation Agreement.
"Loan Policy" has the meaning set forth in Appendix 2 of the
Participation Agreement.
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, condition (financial or otherwise) or prospects of Genesis
or Lessee taken as a whole or Genesis and its Subsidiaries taken as a whole or
(b) an adverse effect on the legality, validity, binding effect, enforceability
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Definitions Appendix
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or admissibility into evidence of any Operative Document, or the ability of
Agent or any Participant to enforce any rights or remedies under or in
connection with the Operative Documents.
"Mellon" means Mellon Bank, N.A., a national banking association, and
any successor.
"Monthly Anniversary Date" means for each calendar month, the 24th day
of such month, provided, however, that in the event that the 24th day of such
month shall occur on a date which is not a Business Day, such Monthly
Anniversary Date shall be the next following Business Day (unless such next
following Business Day is the first Business Day of another calendar month, in
which case such Monthly Anniversary Date shall be the immediately preceding
Business Day).
"Mortgage" means each (i) Mortgage, Assignment of Rents and Leases,
Security Agreement and Fixture Filing Statement from Lessor and Lessee to Agent,
substantially in the form of Exhibit D-1 to the Participation Agreement and (ii)
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
Statement from Lessor and Lessee in favor of Agent, substantially in the form of
Exhibit D-2 to the Participation Agreement. The decision to use the "Mortgage"
form or the "Deed of Trust" form shall be made by Agent with respect to each
Site, and each such form shall be modified as necessary or desirable in Agent's
opinion to comply with all Applicable Laws and Regulations and to set forth the
provisions and remedies customarily used by secured lenders with respect to the
applicable jurisdiction in which such instrument is to be recorded.
"Mortgaged Property" has the meaning for Mortgaged Property, Collateral
or similar term set forth in the Mortgage.
"Multiemployer Plan" has the meaning specified in the Credit
Agreement.
"Net Cash Proceeds" shall have the meaning specified in the Credit
Agreement.
"Net Condemnation Proceeds" mean all payments received from any
Authority relating to an Event of Taking after deducting the costs incurred by
Lessee, Lessor, Agent or any Lender in respect of the receipt thereof.
"NHCA" means National Health Care Affiliates, Inc., a Florida
corporation.
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Definitions Appendix
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"NHCA Environmental Indemnity" means the NHCA Environmental Indemnity
Agreement dated as of July 24, 1996 by NHCA and the Property Sellers.
"Non-Acquired Land Interest" means the Land Interests relating to the
Site or Sites, if any, identified on Schedule III, for which Lessor is not
acquiring fee title to the Land Interest relating thereto, but rather is
becoming the ground lessee of such Land Interest pursuant to a Ground Lease.
"Non-Renewing Participant" has the meaning set forth in Section 2.10
of the Participation Agreement.
"Nonseverable" shall describe an Alteration or part of an Alteration
which cannot be readily removed from a Site without causing material damage to
or materially impairing the value or utility of such Site.
"Notes" mean the notes issued by the Borrower under the Loan Agreement
and denominated as such, substantially in the form of Exhibit A to the Loan
Agreement, and any and all Notes issued in replacement or exchange therefor in
accordance with the provisions thereof.
"Obligations" has the meaning set forth in Section 11 of the Lease
Supplements
"OCC" means the Office of the Comptroller of the Currency or any
successor thereto.
"Officer's Certificate" of a Person means a certificate signed by the
Chairman of the Board of Directors or the President or any Executive Vice
President or any Senior Vice President or any other Vice President of such
Person signing with the Treasurer or any Assistant Treasurer or the Controller
or any Assistant Controller, Cashier, Assistant Cashier or the Secretary or any
Assistant Secretary of such Person, or by any Vice President who is also
Controller, Treasurer or Cashier signing alone.
"Operative Documents" means the Participation Agreement, the Lease, the
Lease Supplements, the Guaranties, the Loan Agreement, the Notes, the Mortgages,
the Environmental Indemnity, the NHCA Environmental Indemnity, the Security
Agreement, the Amendment to Security Agreement, the Collateral Agency Agreement,
the Amendment to Collateral Agency Agreement, the Assignment of Licenses, the
Assignment of Lease, the Deeds and the Bills of Sale.
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Definitions Appendix
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"Overall Transaction" means all the transactions and activities
referred to in or contemplated by the Operative Documents.
"Overdue Rate" means the lesser of (a) the highest interest rate
permitted by Applicable Laws and Regulations and (b) an interest rate per annum
equal to, (i) in the case of the LIBO Rate Loans, (A) until the end of the
applicable Interest Period at a rate per annum 2.00% above the rate otherwise
applicable to such part, and (B) thereafter in accordance with the following
clause (iii); (ii) in the case of the Equity Amount, until the end of the
applicable Interest Period at a rate per annum 2.00% above the Yield; and (iii)
in the case of any other amount due from Lessee hereunder or under any of the
Operative Documents, 2.00% above the then-current Prime Rate.
"Participants" mean Lessor and the Lenders, collectively.
"Participation Agreement" means the Participation Agreement, dated as
of July 24, 1996, among Lessee, Lessor, the Lenders and Agent.
"Payment Dates" mean (i) the 24th day of any January, April, July and
October in each year, and (ii) the 24th day of August, 1996 and the 24th day of
September, 1996 commencing August 24, 1996, and shall include, in any event, the
expiration date of the Basic Term (unless the Renewal Term shall be applicable),
the expiration date of the Renewal Term, if applicable, and the Lease
Termination Date; provided, however, that in the event that any Payment Date
shall occur on a date which is not a Business Day, such Payment Date shall be
the next following Business Day (unless such next following Business Day is the
first Business Day of another calendar month, in which case such Payment Date
shall be the immediately preceding Business Day).
"PBGC" means the Pension Benefit Guaranty Corporation established under
Title IV of ERISA or any other governmental agency, department or
instrumentality succeeding to the functions of said corporation.
"Pension-Related Event" shall mean any of the following events or
conditions:
(a) Any action is taken by any Person (i) to terminate, or would result
in the termination of, a Plan, either pursuant to its terms or by operation of
law (including, without limitation, any amendment of a Plan which would result
in a termination under Section 4041(e) of ERISA), or (ii) to have a trustee
appointed for a Plan pursuant to Section 4042 of ERISA;
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<PAGE>
Definitions Appendix
--------------------
(b) PBGC notifies any Person of its determination that an event
described in Section 4042 of ERISA has occurred with respect to a Plan, that a
Plan should be terminated, or that a trustee should be appointed for a Plan;
(c) Any Reportable Event occurs with respect to a Plan;
(d) Any action occurs or is taken which could result in Lessee, Genesis
or any Subsidiary thereof or any Controlled Group Member becoming subject to
liability for a complete or partial withdrawal by any Person from a
Multiemployer Plan (including, without limitation, seller liability incurred
under Section 4204(a)(2) of ERISA), or Lessee, Genesis or any Subsidiary thereof
or any other Controlled Group Member receives from any Person a notice or demand
for payment on account of any such alleged or asserted liability; or
(e) (i) There occurs any failure to meet the minimum funding standard
under Section 302 of ERISA or Section 412 of the Code with respect to a Plan, or
any tax return is filed showing any tax payable under Section 4971(a) of the
Code with respect to any such failure, or Lessee, Genesis or any Subsidiary
thereof or any other Controlled Group Member receives a notice of deficiency
from the Internal Revenue Service with respect to any alleged or asserted such
failure, or (ii) any request is made by any Person for a variance from the
minimum funding standard, or an extension of the period for amortizing unfunded
liabilities, with respect to a Plan.
"Permits" has the meaning set forth in Section 4.1(l) of the
Participation Agreement.
"Permitted Contest" means actions taken by a Person to contest in good
faith, by appropriate proceedings initiated timely and diligently prosecuted,
the legality, validity or applicability to any Site or any interest therein of
any Person of: (a) any law, regulation, rule, judgment, order, or other legal
provision or judicial or administrative requirements; (b) any term or condition
of, or any revocation or amendment of, or other proceeding relating to, any
authorization or other consent, approval or other action by any Authority; or
(c) any Lien or Tax; provided that the initiation and prosecution of such
contest would not: (i) result in, or materially increase the risk of, the
imposition of any criminal liability on any Indemnitee; (ii) materially and
adversely affect the security interests created by the Operative Documents or
the right, title or interest of Agent or Lessor in or to any of the Sites or the
A1-25
<PAGE>
Definitions Appendix
--------------------
right of Lessor, Agent or any Lender to receive payment of the principal of or
interest on any Note, Equity Amount of or Yield on the Equity Amount, Rent or
the Lease Balance or any interest therein; or (iii) materially and adversely
affect the fair market value, utility or remaining useful life of any Site or
any interest therein or the continued economic operation thereof; and provided
further that in any event adequate reserves in accordance with GAAP are
maintained against any adverse determination of such contest (with the
determination of the adequacy of reserves taking into account the availability
of insurance from reputable insurers).
"Permitted Exceptions" mean the exceptions set forth in the Title
Policies.
"Permitted Investments" means (i) full faith and credit obligations of
the United States of America, or fully guaranteed as to interest and principal
by the full faith and credit of the United States of America, maturing in not
more than one year from the date such investment is made; (ii) certificates of
deposit having a final maturity of not more than one year after the date of
issuance thereof of a of any commercial bank incorporated under the laws of the
United States of America or any state thereof or the District of Columbia, which
bank is a member of the Federal Reserve System and has a combined capital and
surplus of not less than $500,000,000 and with a senior unsecured debt credit
rating of at least "A" by Moody's Investors Service, Inc. and "A" by Standard &
Poor's Ratings Group; (iii) commercial paper of companies, banks, trust
companies or national banking associations (in each case excluding Lessee and
its Affiliates) incorporated or doing business under the laws of the United
States or one of the States thereof, in each case having a remaining term until
maturity of not more than 180 days from the date such investment is made and
rated at least P-1 by Moody's Investors Service, Inc. or at least A-1 by
Standard & Poor's Ratings Group; and (iv) repurchase agreements maturing within
one year with any financial institution having combined capital and surplus of
not less than $500,000,000 with any of the obligations described in clauses (i)
through (iii) as collateral so long as title to the underlying obligations pass
to Lessor and such underlying securities shall be segregated in a custodial or
trust account for the benefit of Lessor.
"Permitted Liens" shall have the meaning set forth in the Credit
Agreement, but shall include (i) Lessor Liens and (ii) Permitted Exceptions.
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Definitions Appendix
--------------------
"Person" means an individual, corporation, partnership, joint venture,
association, joint-stock company, trust, limited liability company,
unincorporated organization or Authority.
"Plan" means any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (other than a Multiemployer Plan) covered by Title IV of
ERISA by reason of Section 4021 of ERISA, of which Lessee, Genesis or any
Subsidiary thereof or any other Controlled Group Member is or has been within
the preceding five years a "contributing sponsor" within the meaning of Section
4001(a)(13) of ERISA, or which is or has been within the preceding five years
maintained for employees of Lessee, Genesis or any Subsidiary thereof or any
other Controlled Group Member.
"Postretirement Benefits" has the same meaning specified in the Credit
Agreement.
"Present Value Amount" has the meaning set forth in Section 2.12 of
the Loan Agreement.
"Prime Rate" means the interest rate per annum announced from time to
time by Mellon as its prime rate. The prime rate may be greater or less than
other interest rates charged by Mellon to other borrowers and is not solely
based or dependent upon the interest rate which Mellon may charge any particular
borrower or class of borrower. If the aforesaid rate changes from time to time
after the Document Closing Date, the Prime Rate shall be automatically increased
or decreased, as the case may be, without notice to Lessee, Lessor or any
Lender, as of the effective time of each change.
"Proceeds" has the meaning specified in Section 6.4 of the Lease.
"Prohibited Transaction" means a transaction that is prohibited under
Code Section 4975 or ERISA Section 406 and not exempt under Code Section 4975 or
ERISA Section 408.
"Purchase Option" has the meaning specified in Section 6.2 of the
Lease.
"Purchase Option Exercise Amount" means, as of any date of
determination, the sum of (a) the Lease Balance as of the date of purchase, plus
(b) all accrued but unpaid Rent, plus (c) all other sums then due and payable
under the Operative Documents by Lessee and any of its Affiliates.
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Definitions Appendix
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"Redeployment Rate" has the meaning set forth in Section 2.12 of the
Loan Agreement.
"Redeployment Period" has the meaning set forth in Section 2.12 of the
Loan Agreement.
"Regulated Activity" means the use, Release, generation, treatment,
storage, recycling, transportation or disposal of Hazardous Material to the
extent such activities are regulated by any Authority.
"Regulations" mean the income tax regulations promulgated from time to
time under and pursuant to the Code.
"Release" means the release, deposit, disposal or leak of any Hazardous
Material into or upon or under any land or water or air, or otherwise into the
environment, including by means of burial, disposal, discharge, emission,
injection, spillage, leakage, seepage, leaching, dumping, pumping, pouring,
escaping, emptying, placement and the like.
"Renewal Request" has the meaning set forth in Section 2.10 of the
Participation Agreement.
"Renewal Term" has the meaning set forth in Section 2.4 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Installment Period" means (i) with respect to any Lease
Supplement, the period commencing on (and including) the date of such Lease
Supplement and ending on (but excluding) the next succeeding Payment Date, and
thereafter, successive periods commencing on (and including) a Payment Date and
ending on (but excluding) the next succeeding Payment Date, and (ii) with
respect to the Lease, the period commencing on (and including) the date of the
initial Lease Supplement and ending on (but excluding) the next succeeding
Payment Date, and thereafter, successive periods commencing on (and including) a
Payment Date and ending on (but excluding) the next succeeding Payment Date.
"Replacement Participant" has the meaning specified in Section 2.10 of
the Participation Agreement.
"Reportable Event" has the same meaning specified in the Credit
Agreement.
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<PAGE>
Definitions Appendix
--------------------
"Required Lenders" mean, as of the date of the determination, Lenders
having aggregate investments in the Overall Transaction (as measured by the
outstanding principal amount of the Loans then outstanding) equal to 51% or more
of all such investments.
"Required Participants" mean, as of the date of the determination,
Participants having aggregate investments in the Overall Transaction (as
measured by the outstanding principal amount of the Loans then outstanding and
the outstanding Equity Amount) equal to 51% or more of all such investments.
"Responsible Officer" of a Person means the President, the Chief
Executive Officer, any Vice President, the Controller, the Treasurer or the
Chief Financial Officer of such Person.
"Rolling Period" shall mean the period of twelve consecutive fiscal
months, taken as one fiscal period, which ends on the last day of March, June,
September or December (the "Rolling Period Ending Date").
"Sale Option" has the meaning specified in Section 6.3 of the Lease.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
"Security Agreement" has the meaning specified in the Credit Agreement,
and shall include, without limitation, the Amendment to Security Agreement.
"Sellers" mean the sellers of the Sites to Lessor, identified
on Schedule III.
"Senior Officer" means the Chairman or Vice Chairman of the Board of
Directors, the Chairman or Vice Chairman of the Executive Committee of the Board
of Directors, the President, any Senior Vice President, the Chief Executive
Officer, the Chief Financial Officer or the Treasurer of Lessee.
"Shortfall Amount" has the meaning set forth in Section 6.4(c)
of the Lease.
A1-29
<PAGE>
Definitions Appendix
--------------------
"Site" has the meaning set forth in the Recitals to the Participation
Agreement, and shall include, without limitation, all of the right, title and
interest of the seller of the Site (or upon the acquisition of title to the Site
by Lessor, all right, title and interest of Lessor) in and to the following:
(A) the real property described in Schedule III attached to
the Participation Agreement (the "Land"); all buildings, structures and
other improvements now or in the future located on the Land (the
"Improvements"; the Improvements and the Land are sometimes
collectively referred to herein as the "Property");
(B) all the estate, right, title, claim or demand whatsoever
of such Person, in possession or expectancy, in and to the Property or
any part thereof;
(C) all right, title and interest of such Person in and to all
of the fixtures, furnishings and fittings of every kind and nature
whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in each case,
attachments, components, parts and accessories) currently owned or
subsequently acquired by the Mortgagor and now or subsequently attached
to, or contained in or used or usable in any way in connection with any
operation or letting of the Property (all of the foregoing in this
paragraph (C) being referred to as the "Fixtures");
(D) all right, title and interest of such Person in and to all
of the fixtures, chattels, business machines, machinery, apparatus,
equipment, furnishings, fittings and articles of personal property of
every kind and nature whatsoever, and all appurtenances and additions
thereto and substitutions or replacements thereof (together with, in
each case, attachments, components, parts and accessories) currently
owned or subsequently acquired by Mortgagor and now or subsequently
attached to, or contained in or used or usable in any way in connection
with any operation or letting of the Property, including but without
limiting the generality of the foregoing, all screens, awnings, shades,
blinds, curtains, draperies, artwork, carpets, rugs, storm doors and
windows, furniture and furnishings, heating, electrical, and mechanical
equipment, lighting, switchboards, plumbing, ventilating, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, refrigerators, elevators, loading and unloading
equipment and systems, stoves, ranges, laundry equipment, cleaning
systems (including window cleaning apparatus), telephones,
A1-30
<PAGE>
Definitions Appendix
--------------------
communication systems (including satellite dishes and antennae),
televisions, computers (excluding software), sprinkler systems and
other fire prevention and extinguishing apparatus and materials,
security systems, motors, engines, machinery, pipes, pumps, tanks,
conduits, appliances, fittings and fixtures of every kind and
description (all of the foregoing in this paragraph (D) being referred
to as the "Equipment");
(E) all right, title and interest of such Person in and to all
substitutes and replacements of, and all additions and improvements to,
the Improvements and the Fixtures and Equipment, subsequently acquired
by such Person or constructed, assembled or placed by such Person on
the Land, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all
building materials whether stored at the Property or offsite, and, in
each such case, without any further mortgage, conveyance, assignment or
other act by such Person;
(F) all right, title and interest of such Person in, to and
under all books and records relating to or used in connection with the
operation of the Property or the Fixtures or any part thereof; and all
general intangibles related to the operation of the Improvements now
existing or hereafter arising;
(G) all right, title and interest of such Person in and to all
insurance policies (including title insurance policies) required to be
maintained by Lessee pursuant to Article XI of the Lease, including the
right to collect and receive such proceeds; and all awards and other
compensation, including the interest payable thereon and the right to
collect and receive the same, made to the present or any subsequent
owner of the Property for the taking by eminent domain, condemnation or
otherwise, of all or any part of the Property or any easement or other
right therein; and
(H) all right, title and interest of such Person in and to (to
the extent assignable) (i) all consents, licenses, building permits,
certificates of occupancy and other governmental approvals relating to
construction, completion, occupancy, use or operation of the Property
or any part thereof and (ii) all plans and specifications relating to
the Property.
A1-31
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Definitions Appendix
--------------------
"Standard Notice" means a notice of the Lessee for the conversion to or
renewal of any portion of the Loans or the Equity Amount to LIBO Rate Loans or
to Equity Amount which bears Yield based upon the LIBO Rate or for the making of
any Advance which shall bear interest or Yield based upon the LIBO Rate or for
the selection of an Interest Period for LIBO Rate Loans or for Equity Amount
which bears Yield based upon the LIBO Rate.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement
dated as of May 3, 1996 among Stock Sellers and Genesis, as amended.
"Stock Sellers" means those Persons described on Schedule IV attached
hereto.
"Structuring/Underwriting Fee" has the meaning specified in Section 2.6
of the Participation Agreement.
"Sublease" has the meaning specified in Section 12.1 of the Lease.
"Subsidiary" has the meaning specified in the Credit Agreement.
"Subtenant" has the meaning set forth in Section 12.1(a) of the Lease.
"Supplemental Lease Balance" means the product of the Allocated Share
of the Lease Supplement in question and the Lease Balance.
"Supplemental Rent" means any and all amounts, liabilities and
obligations other than Basic Rent which Lessee assumes or agrees or is otherwise
obligated or designated to pay under the Lease or any other Operative Document
(whether or not designated as Supplemental Rent) to Lessor, Agent, the Lenders
or any other Person, including amounts under Section 9.1 of the Lease,
Additional Costs and indemnities and damages for breach of any covenants,
representations, warranties or agreements.
"Surviving Company" has the meaning set forth in Section 5.2 of the
Participation Agreement.
"Taxes" and "Tax" mean any and all fees (including documentation,
recording, license and registration fees), taxes (including income (whether net,
gross or adjusted gross), financial institutions, franchise, gross receipts,
sales, rental, use, turnover, value-added, property, excise and stamp taxes),
A1-32
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Definitions Appendix
--------------------
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any penalties, fines or interest thereon or additions
thereto.
"Title Insurance Company" means Chicago Title Insurance Company and
its successors and assigns.
"Title Policies" have the meaning specified in Section 3.2(d) of the
Participation Agreement.
"Total Costs" means the sum of the Lessor's Costs plus Transaction
Costs funded by Lessor; provided, however, that Transaction Costs shall not
exceed $2,000,000 in the aggregate.
"Transaction Costs" shall mean all transaction costs and expenses
incurred by Mellon as Agent for the Lessor and the Lenders, Lessee and Lessor in
connection with the preparation, negotiation, execution, delivery, performance
and administration of the Operative Documents and Agent's syndication of the
Notes pursuant to Section 6.7, in each case including without limitation (a) the
reasonable legal fees and expenses of special counsel to Mellon, as Agent for
Lessor and the Lenders (including, without limitation, reasonable fees and
expenses of counsel to Mellon, as Agent, in connection with the transfer by
Lessor of its interest in the Sites or the transfer by any of the Lenders of any
Notes from time to time), special Credit Agreement counsel to Mellon and special
counsel to Lessee, (b) reasonable legal fees and expenses of local counsel to
the Lessee, (c) the reasonable expenses of Lessor (including, without
limitation, residual value insurance premiums if any), (d) all appraisal fees
and expenses, including the cost of an appraisal obtained by Lessor with respect
to the Facilities upon a Lease Default or Lease Event of Default, (e) all costs
and expenses of the preparation of the Environmental Audits, (f) the
Structuring/Underwriting Fee, and (g) all recording, filing fees and expenses,
including fees and expenses of the Title Insurance Company. Certain Transaction
Costs (not to exceed $2,000,000 in the aggregate) incurred in connection with
the closing of this lease arrangement will be paid by Lessor pursuant to Section
9.9 of the Participation Agreement.
"Treasury Rate" shall have the meaning set forth in the Credit
Agreement.
"Turnover Date" has the meaning set forth in Section 12.1(b) of the
Lease.
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Definitions Appendix
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"UCC" means the Uniform Commercial Code of New York or any other
applicable jurisdiction.
"Yield" means during the Basic Term, (a) the applicable interest rate
payable from time to time pursuant to the Loan Agreement plus 300 basis points;
provided, that the Yield Rate for the Equity Amount for the Renewal Term, if
any, shall be determined by the mutual agreement of Lessor and Lessee; and
provided, further, that during any Holdover Period, the Applicable Margin (and
thus, the Yield) shall be increased by 50 basis points. During any period that
the applicable interest rate payable with respect to the portion of any Advance
allocable to the Notes pursuant to the Loan Agreement is determined by reference
to a LIBO Rate, Yield on the portion of such Advance constituting a portion of
the Equity Amount shall be calculated on the basis of actual number of days
elapsed in a 360-day year. During any period that the applicable interest rate
payable with respect to the portion of any Advance allocable to the Notes
pursuant to the Loan Agreement is determined by reference to the Prime Rate,
Yield on the portion of such Advance constituting a portion of the Equity Amount
shall be calculated on the basis of actual number of days elapsed in a 365 or
366-day year, as applicable.
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Appendix 2 to
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Participation Agreement
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APPENDIX 2
to
Participation Agreement
CONDITIONS PRECEDENT TO DOCUMENT CLOSING DATE
(a) Authorization, Execution and Delivery of Documents; No
Default. The Operative Documents shall have been duly authorized, executed and
delivered by each of the other parties thereto, shall (to the extent the form
and substance thereof shall not be prescribed hereby) be in form and substance
satisfactory to the Agent and an executed counterpart of each thereof shall have
been delivered to the Agent. Each Lender shall have received an original, duly
executed Note registered in such Lender's name. Each of the Participation
Agreement, the Lease, the Guaranty, the Loan Agreement, the Notes, the
Assignment of Lease and the other Operative Documents shall be in full force and
effect as to all other parties and no Lease Default or Lease Event of Default
shall have occurred or be continuing.
(b) Litigation. No action or proceeding shall have been
instituted or threatened nor shall any governmental action be instituted or
threatened before any Authority, nor shall any order, judgment or decree have
been issued or proposed to be issued by any Authority, to set aside, restrain,
enjoin or prevent the performance of this Agreement or any transaction
contemplated hereby or by any other Operative Document or which is reasonably
likely, in the sole opinion of the Agent, to have a Material Adverse Effect.
(c) Legality, etc. In the opinion of such Lender or its
counsel, the transactions contemplated by the Operative Documents shall not
violate any Applicable Laws and Regulations and no change shall have occurred or
been proposed in Applicable Laws and Regulations that would make it uneconomic
or illegal for any party to any Operative Document to participate in any of the
transactions contemplated by the Operative Documents or otherwise would prohibit
the consummation of any transaction contemplated by the Operative Documents or
expand the duties, obligations and risks of such Lender.
(d) Governmental Approvals. All necessary (or, in the
reasonable opinion of Lessor, Agent or either of their respective counsel,
advisable) Governmental Actions, in each case required by any Applicable Laws
A2-1
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and Regulations, shall have been obtained or made and be in full force and
effect.
(e) Requirements of Law. In the reasonable opinion of Lessor,
Agent and their respective counsel, the transactions contemplated by the
Operative Documents do not and will not violate in any Applicable Laws and
Regulations and do not and will not subject Lessor, Agent or any Lender to any
adverse regulatory prohibitions or constraints.
(f) Opinions; Local Counsel Questionnaires. The following
opinions, each dated the Document Closing Date, substantially in the form set
forth in the Exhibit noted below, and containing such other matters as the
parties to whom they are addressed shall reasonably request, shall have been
addressed to each of Lessor, Agent and the Lenders, and delivered to Lessor and
Agent:
(i) the opinion of Ira Gubernick, Esq., in-house
counsel for Lessee (Exhibit E-1).
(ii) the opinion of Blank Rome Comisky & McCauley,
special counsel for Lessee (Exhibit E-2);
(iii) the opinion of Holland & Knight ("Special Florida
Counsel"), special Florida counsel for Genesis (Exhibit E-3);
(iv) the opinion of Ober, Kaler, Grimes & Shriver
("Special Virginia Counsel"), special Virginia counsel for Genesis
(Exhibit E-3); and
(v) the opinion of Blank, Rome, Comisky & McCauley,
special counsel for Genesis (Exhibit E-4).
In addition, not less than five (5) days prior to the Document Closing Date,
local counsel questionnaires (responding to the matters set forth in Exhibit E-5
and such other matters as Agent shall request) for Florida and Virginia,
prepared by Special Florida Counsel and Special Virginia Counsel, respectively,
and addressed to Lessor, Agent and the Lenders, shall have been delivered to
Agent and shall be in form and substance acceptable to Agent.
(g) Corporate Status and Proceedings. On or prior to the
Document Closing Date, each of the Lenders, Lessor and Agent shall have
received:
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(i) certificates of existence and good standing with
respect to Lessee from (A) the Secretaries of State of the State of its
incorporation and (B) the Secretary of State of the State of its
principal place of business, each dated no earlier than the 10th day
prior to the Document Closing Date;
(ii) copies of Lessee's certificate of incorporation,
certified by the Secretary of State of the State of its incorporation
no earlier than the 10th day prior to the Document Closing Date; and
(ii) with respect to Lessee, an Officer's Certificate
substantially in the form of Exhibit F, dated the Document Closing
Date, with respect to such Person's governing documents, resolutions
and incumbent officers, representations and warranties and absence of
defaults.
(h) Lessor Officer's Certificate. Each Lender and Agent shall
have received (x) a certificate of the Secretary or Assistant Secretary of
Lessor attaching and certifying as to (i) the corporate authority for the
execution, delivery and performance by Lessor of each Operative Document to
which it is or will be a party, (ii) its organizational documents, (iii) its
by-laws, and (iv) the incumbency and signature of persons authorized to execute
and deliver such documents on behalf of Lessor and (y) a good standing
certificate from the appropriate Authority as to Lessor's good standing.
All documents and instruments required to be delivered on the Document Closing
Date shall be delivered at the offices of Mayer, Brown & Platt in New York, New
York, or at such other location as may be determined by the Lessor, Agent and
Lessee.
(i) Filings and Recordings. All filings or recordings
enumerated and described in Schedule 4.1B hereof, as well as all other filings
and recordings necessary or advisable, including precautionary financing
statements, in the opinion of Agent or counsel to Agent, to perfect the rights,
titles and interests of Lessor, the Lenders, the Guarantors and Agent intended
to be created by the Operative Documents shall have been made, or shall have
been arranged to be made promptly thereafter, in the appropriate places or
offices, including any recordings and filings necessary to create, perfect,
preserve and protect (i) Lessor's interest in the Land Interests and the
Facilities and (ii) a first mortgage lien on all Land Interests and Facilities
included in the Collateral, subject in both cases, to Permitted Exceptions and
the rights of Lessee under the Lease. All recording and filing fees and taxes
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-----------------------
with respect to any recordings or filings made pursuant to this Agreement shall
have been paid in full, and satisfactory evidence thereof shall have been
delivered to Agent, or arrangements for such payment shall have been made to
the satisfaction of Agent.
(j) Survey. Lessee shall have delivered, or shall have caused
to be delivered, to Agent, with sufficient counterpart originals for Agent to
distribute to Lessor and each Lender, and counsel to the Lenders an ALTA survey
of the Site in a form satisfactory to the Title Insurance Company and showing no
state of facts unsatisfactory to Agent and counsel to the Lenders, which survey
shall be certified to Lessor and Agent.
(k) Title Insurance. Lessor shall have received from the Title
Insurance Company its ALTA 1992 owner's policy of title insurance, acceptable in
form and substance to Agent and counsel to the Lenders (the "Lessor's Policy")
(or a final hand-marked original thereof signed by the Title Insurance Company)
containing all of the provisions to be included in such policy by the Title
Insurance Company, in which case Lessor shall receive a clean, final original of
such policy within thirty (30) days), insuring that Lessor has good and
marketable title to the Site being purchased by Lessor on the Document Closing
Date, subject to the Lease and such other exceptions to title as are reasonably
acceptable to Agent and counsel for the Lenders, together with complete, legible
copies of all encumbrances, maps and surveys of record. Agent, for the benefit
of the Lenders shall have received from the Title Insurance Company its ALTA
1992 form of loan policy of title insurance (the "Loan Policy"; together with
the Lessor's Policy, the "Title Policies"), reasonably acceptable in form and
substance to Agent and counsel for the Lenders, insuring the creation under the
Mortgage in favor of Agent and the Lease in favor of Lessor of a valid first
priority mortgage lien against the Land Interest, subject to such exceptions to
title as are reasonably acceptable to Agent and counsel for the Lenders,
together with to the extent available complete, legible copies of all
encumbrances, maps and surveys of record. The Title Policies shall be dated as
of the Document Closing Date, shall be in an amount equal to the Fair Market
Sales Value of such Site as of such date and, to the extent permitted under
Applicable Laws and Regulations and to the extent applicable to each type of
policy, and to the extent available within the applicable jurisdiction at
reasonable prices, shall (x) contain affirmative endorsements as to mechanics'
liens, usury, doing business, zoning (with express parking coverage), easements
and rights-of-way, comprehensive coverage, encroachments, rights of access and
survey matters, (y) delete the creditors' rights exclusion and the general
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exceptions to coverage, and (z) contain such other endorsements as reasonably
requested by Agent.
(l) Environmental Audit. Not less than five (5) Business Days
prior to the Document Closing Date, Agent shall have received an Environmental
Audit for each Site, which shall be in form and substance acceptable to Agent in
its sole and absolute discretion.
(m) Zoning. In the event that, with respect to a Site, an ALTA
3.1 Zoning Endorsement (with express parking coverage) was not obtained in
connection with the Title Policies for such Site, Agent on behalf of the Lenders
shall receive a copy of the applicable zoning ordinance, special use permit or
other Governmental Action covering the Site, and such evidence as Agent may
require (including without limitation the written certification of Lessee's
certified professional engineer or registered architect or any other person
satisfactory to Agent) that the zoning of the Site is satisfactory and
compatible with the Facility located thereon.
(n) Deed and Bill of Sale; Ground Lease. As to any Site,
Agent shall have received (i) a Deed conveying to Lessor such Site, if any, or
other improvements, if any, located on such Site, and (ii) a Bill of Sale
conveying any portion of any such Facility or improvements which do not or may
not constitute real estate under Applicable Law (provided that no Bill of Sale
shall be required if the form of Deed used purports to convey title to the
items which would otherwise be conveyed in the Bill of Sale and if such Deed is
in fact sufficient under applicable law to convey title to such items);
provided, however, that for any Non-Acquired Land Interest, the Deed described
in clause (i) shall convey only the related Facility and, in addition, Agent
shall have received a Ground Lease of the Non-Acquired Land Interest from Lessee
or one of its affiliates (whichever shall acquire such Land Interest), as ground
lessor, to Lessor, as ground lessee.
(o) Lease Supplement. Agent shall have received, with
sufficient counterpart originals for Agent to distribute to Lessor and each
Lender, original counterparts of the Lease Supplement executed by Lessee and
Lessor with respect to such Site or Group; provided that only Agent shall
receive and retain the one original thereof marked as the sole original
counterpart for UCC purposes.
(p) Mortgage. Agent shall have received a Mortgage duly
executed by Lessor with respect to each Site.
A2-5
<PAGE>
Appendix 2 to
-------------
Participation Agreement
-----------------------
(q) Assignment of Lease; Consent of Lessee. Agent shall have
received an Assignment of Lease duly executed by Lessor, with the consent
thereto duly executed by Lessee, with respect to the Lease.
(r) Filings and Recordations. Agent shall have received
evidence reasonably satisfactory to it that each of the Deeds, the Florida Lease
Supplement, the Mortgages and the Assignment of Lease delivered shall have been
or are being recorded with the appropriate Authorities in the order in which
such documents are listed in this clause, and the UCC Financing Statements with
respect to the Facilities acquired shall have been or are being filed with the
appropriate Authorities.
(s) Insurance. Insurance complying with the provisions of
Article XI of the Lease shall be in full force and effect as evidenced by
certificates of insurance, broker's reports or insurance binders delivered to
Lessor in form and substance reasonably satisfactory to Agent.
(t) Appraisal. Not less than ten (10) Business Days prior to
the Document Closing Date, Agent shall have received and will deliver to Lessor
and each Lender an appraisal (the "Appraisal") which will establish (by the use
of appraisal methods satisfactory to the Lenders) that, as of the date such Site
becomes subject to the Lease, the Site will have a Fair Market Sales Value of
not less than the amount allocated to such Site on Schedule III. The Appraisal
will also establish the Fair Market Sales Value of such Site as of the end of
the Base Term and the Renewal Term. The Appraisal will be prepared in accordance
with the Financial Institutions Reform Recovery and Enforcement Act of 1989 and
will be performed by an independent appraisal company chosen by Agent.
(u) FIRPTA Affidavit. Lessee shall have caused the seller of
the Land Interest to be acquired on the Document Closing Date to deliver to
Agent either (i) a FIRPTA Affidavit in customary form or (ii) if such seller is
a "foreign person" as defined in Section 1445 of the Code, evidence that a
portion of the sales price to be paid to such seller has been withheld, if so
required, in accordance with the provisions of the Code and the Regulations.
(v) No Event of Loss. No Casualty and no Event of Loss shall
have occurred in respect of any Site to be acquired on the Document Closing
Date. No action shall be pending or threatened by an Authority to initiate a
Condemnation or an Event of Taking in respect of any Site to be acquired on such
date.
A2-6
<PAGE>
Appendix 2 to
-------------
Participation Agreement
-----------------------
(w) Appraised Value Limitation; 25% Test. The appraised value
of the Land Interest of any Site or Group shall not exceed twenty-five percent
(25%) of the forecasted Fair Market Sales Value of such Site or Group (on an
"as-built" basis).
(x) Good Standing. Lessee shall have delivered to Agent a
certificate issued by the office of the secretary of state of the jurisdiction
in which any Land Interest to be acquired or is located indicating that Lessee
is a foreign corporation in good standing under the laws of such jurisdiction.
(y) Stock Purchase Agreement; Assignment. Lessee shall have
caused Genesis to execute and deliver to Agent a certified copy of the Stock
Purchase Agreement, together with the Assignment of Rights under Stock Purchase
Agreement.
(z) Credit Agreement. Lessee shall have caused Genesis to
execute and deliver to Agent a certified copy of the Credit Agreement.
(aa) Number of Counterparts. Whenever Agent is to have
received any document, agreement or opinion pursuant to the Participation
Agreement, such condition shall require that Agent has received sufficient
counterpart originals for Agent to distribute to Lessor and each Lender unless
otherwise specifically approved by Agent.
A2-7
<PAGE>
Assignment of Lease Supplement
------------------------------
EXHIBIT H TO PARTICIPATION AGREEMENT
FORM OF ASSIGNMENT OF LEASE AND AGREEMENT AND
LEASE SUPPLEMENTS AND MEMORANDA OF LEASE AND AGREEMENT
This instrument was prepared by
and upon recordation should be
returned to:
Robert E. Gordon, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
- --------------------------------------------------------------------------------
ASSIGNMENT OF LEASE AND AGREEMENT AND
LEASE SUPPLEMENTS AND MEMORANDA OF LEASE
AND AGREEMENT
Dated as of July 24, 1996
between
MELLON FINANCIAL SERVICES
CORPORATION #4,
as Lessor
and
MELLON BANK, N.A.,
as Agent and Assignee
- --------------------------------------------------------------------------------
<PAGE>
Assignment of Lease Supplement
------------------------------
TABLE OF CONTENTS
Section 1. COLLATERAL ASSIGNMENT OF LEASE...................................1
Section 2. ASSIGNMENT AS COLLATERAL SECURITY................................3
Section 3. PAYMENTS UNDER THE LEASE.........................................4
Section 4. POWER OF ATTORNEY IN RESPECT OF THE LEASE........................4
Section 5. ASSIGNEE DESIGNATED RECIPIENT....................................5
Section 6. ALLOCATION PURSUANT TO LOAN AGREEMENT............................5
Section 7. IRREVOCABILITY; SUPPLEMENTAL INSTRUMENTS.........................5
Section 8. AMENDMENTS OR TERMINATION OF THE LEASE...........................5
Section 9. LESSEE'S CONSENT AND AGREEMENT...................................6
Section 10. REMEDIES CUMULATIVE.............................................6
Section 11. MISCELLANEOUS...................................................6
ATTACHMENTS TO ASSIGNMENT OF LEASE:
Exhibit A - Legal Description
Consent and Agreement of Lessee
A2-2
<PAGE>
THIS ASSIGNMENT OF LEASE AND AGREEMENT AND LEASE SUPPLEMENT AND
MEMORANDUM OF LEASE AND AGREEMENT dated as of July 24, 1996 (herein, as the same
may be amended or supplemented from time to time, called this "Assignment
Agreement"), is between MELLON FINANCIAL SERVICES CORPORATION #4, a Pennsylvania
corporation, as Lessor ("Lessor") and MELLON BANK, N.A., as Agent and assignee
(the "Assignee").
Capitalized terms not otherwise defined in this Assignment Agreement
shall have the respective meanings assigned thereto in the Appendix 1 to that
certain Participation Agreement, dated as of July 24, 1996 (the "Participation
Agreement"), by and among Genesis Eldercare Properties, Inc. ("Lessee"), a
Pennsylvania corporation, Lessor, Assignee and the Lenders set forth therein
(the "Lenders").
RECITALS:
WHEREAS, the Sites legally described on Exhibit A attached hereto, have
been leased by Lessor to Lessee pursuant to a Lease and Agreement, dated as of
July 24, 1996, together with, for each Site, a Lease Supplement and Memorandum
of Lease and Agreement (herein, said Lease and Agreement, together with all
Lease Supplements and Memoranda of Lease and Agreement, as the same may be
amended or supplemented from time to time as permitted thereby and by the
Operative Documents, are collectively called the "Lease");
WHEREAS, Lessor has entered into the Participation Agreement with
Assignee, Lessee and the Lenders party thereto providing, among other things,
for the commitment of the Lenders to assist in financing Lessor's acquisition of
the Sites by making Loans to be evidenced by the respective Notes. Such Loans as
evidenced by the Notes (i) mature on July 24, 2001 and (ii) bear interest on the
unpaid principal amount thereof from time to time outstanding at the interest
rate per annum determined as provided in and payable as specified in the Loan
Agreement; and
WHEREAS, Lessor is entering into this Assignment Agreement in order to
induce the Lenders to make Loans to Lessor and as additional security for the
purchase of the Notes.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Lessor hereby agrees for the benefit of Assignee as follows:
Section 1. COLLATERAL ASSIGNMENT OF LEASE. Lessor, in consideration
of the premises and for other good and valuable consideration, the receipt
whereof is hereby acknowledged, and as security for the payment of the principal
of, and all interest and all other sums payable on, the Notes and all other
H-1
<PAGE>
Assignment of Lease
-------------------
sums payable by Lessor to Assignee under the Loan Agreement or under any of the
other Operative Documents and the performance and observance by Lessor for the
benefit of Assignee or the Lenders of the provisions of each thereof, whether
contained therein or incorporated therein by reference, has assigned,
transferred, conveyed and set over, and by these presents does assign, transfer,
convey and set over, to Assignee, for the benefit of Assignee and the Lenders,
all of Lessor's interest in, to and under the Lease and all of Lessor's estate,
right, title, interest, claim and demand as Lessor under the Lease, and all
existing or future amendments, supplements or modifications of the Lease;
TOGETHER WITH all rights, powers, privileges, options and other
benefits of Lessor under the Lease, including, without limitation (a) the right
to receive and collect all Rent, income, revenues, issues, profits, Loss
Proceeds, bankruptcy claims, liquidated damages, purchase price proceeds
(pursuant to Article VI of the Lease, or otherwise), the Applicable Percentage
Amount, and other payments, tenders and security payable to or receivable by
Lessor under the Lease, to be applied in accordance with Section 3.3 of the Loan
Agreement; (b) the right, subject to the provisions of Section 9.5 of the
Participation Agreement and not to the exclusion of Lessor, to give and withhold
all waivers, consents, modifications, amendments and agreements under or with
respect to the Lease; (c) the right, not to the exclusion of Lessor, to give and
receive copies of all notices and other instruments or communications under or
pursuant to the Lease; (d) the right to take such action upon the occurrence and
during the continuance of a Lease Event of Default as shall be permitted by the
Lease or by Applicable Laws and Regulations; and (e) the right to do any and all
other things whatsoever which Lessor or any lessor under the Lease, as the case
may be, is or may be entitled to do thereunder;
TOGETHER WITH the right and power to execute and deliver as agent and
attorney-in-fact of Lessor under the Lease an appropriate deed, bill of sale or
other instruments of transfer necessary or appropriate for the conveyance and
transfer to Lessee of Lessor's interest in the Sites pursuant to Article VI of
the Lease, and all interests of Lessor therein and to perform in the name and
for and on behalf of Lessor, as such agent and attorney-in-fact, any and all
other necessary or appropriate acts with respect to any such purchase,
conveyance and transfer;
TOGETHER WITH the right, not to the exclusion of Lessor, to inspect the
Sites and all records relating thereto and to enforce performance or observance
by the Lessee of any of such rights by the exercise of the right to proceed by
H-2
<PAGE>
Assignment of Lease
-------------------
appropriate court action or actions, either at law or in equity, to enforce
performance by Lessee of the applicable covenants and terms or to recover
damages for the breach thereof;
EXCLUDING FROM all of the foregoing the Excluded Amounts.
TO HAVE AND TO HOLD the same unto Assignee and its successors and
assigns forever.
Section 2. ASSIGNMENT AS COLLATERAL SECURITY. The assignment made
hereby is executed as collateral security, and the execution and delivery hereof
shall not in any way impair or diminish any obligations of Lessor as lessor
under the Lease or of Lessor, Assignee, the Guarantor or any Lender under any of
the other Operative Documents, nor impair, affect or modify any of the terms and
conditions of the Notes or the Loan Agreement or any of the other Operative
Documents securing the Notes, nor shall any of the obligations of Lessor or of
any other Person under any of the Operative Documents (other than the express
obligations of Assignee) be imposed upon Assignee, including, but not limited
to, collecting Rent or enforcing performance by Lessee or the Guarantor.
Without limiting the generality of the foregoing, Assignee shall not be
obligated to perform or discharge, nor does Assignee hereby undertake to perform
or discharge, any obligation, duty or liability of Lessor under the Lease, or of
Lessor under any of the other Operative Documents, or under or by reason of this
Assignment Agreement and the Lessor does hereby waive any and all liability,
loss or damage which may or might be asserted against Assignee by reason of any
alleged obligations or undertakings on its or their part to perform or discharge
any of the terms, covenants or agreements contained in the Lease to be performed
or discharged by Lessor thereunder, provided, however, if Assignee does
undertake any such action pursuant to the terms, conditions and restrictions
contained in this Assignment Agreement and the other Operative Documents, Lessor
shall retain any rights it may have with respect thereto under the Operative
Documents or by law or in equity, and Assignee shall be liable for its gross
negligence or willful misconduct. It is further understood and agreed that this
Assignment Agreement shall not operate to (i) place responsibility for the
control, care, management or repair of the Sites upon Assignee, nor for the
carrying out of any of the terms and conditions of the Lease or of any of the
other Operative Documents (except to the extent expressly provided therein), in
any such case binding upon or applicable to Lessor, or (ii) make Assignee
responsible or liable for any waste with respect to the Sites by Lessee or any
Person other than by Assignee, or for any dangerous or defective condition
H-3
<PAGE>
Assignment of Lease
-------------------
of the Sites, or for any negligence of the management, upkeep, or repair or
control of the Sites resulting in loss or injury or death to Lessee, any
sublessee, sublessor, licensee, employee or stranger other than by Assignee.
Section 3. PAYMENTS UNDER THE LEASE. Lessor hereby directs Lessee to
pay to Assignee, as and when due pursuant to the Lease, the Applicable
Percentage Amount, all Basic Rent, all Supplemental Rent and all payments
pursuant to Articles IV and VI of the Lease, purchase proceeds or avails,
income, Loss Proceeds, and other sums paid or payable to Lessor pursuant to the
Lease (but excluding any indemnity payments or reimbursements to Lessor from
Lessee pursuant to the Lease or otherwise).
Assignee may, at its option, although it shall not be obligated to do
so, and without waiving or releasing any obligation or Loan Event of Default, at
any time perform any Lease covenant required to be performed by Lessor for and
on behalf of Lessor and may recover any money advanced for any such purpose from
Lessor on demand, with interest at the Overdue Rate from the date of
advancement; and (b) Assignee is authorized to endorse, in the name of Lessor,
any item, howsoever received by it, representing any payment on or other
proceeds (including Loss Proceeds) of the Lease (including, without limitation,
all Basic Rent, Supplemental Rent, payments pursuant to Articles IV and VI of
the Lease, purchase proceeds or avails, income, Loss Proceeds and other sums
paid or payable to Lessor pursuant to the Lease) and to endorse and deliver, in
the name of Lessor, any instrument or other item of the Rent held by Assignee
hereunder, in connection with the sale or collection of the Rent.
Section 4. POWER OF ATTORNEY IN RESPECT OF THE LEASE. Lessor does
hereby irrevocably constitute and appoint Assignee its true and lawful attorney
with an interest and full power of substitution, for it and in its name, place
and stead to do any or all of the following (a) ask, demand, collect, receive,
receipt for, sue for, compound and give acquittance for the Recourse Deficiency
Amount, all Basic Rent, Supplemental Rent, payments pursuant to Articles IV and
VI of the Lease, purchase proceeds or avails, income, Loss Proceeds and other
sums paid or payable to Lessor pursuant to the Lease and other sums which are
assigned under Section 1 hereof, and (b) without limiting the provisions of the
foregoing clause (a) hereof, during the continuance of any Lease Event of
Default under the Lease, sue for, compound and give acquittance for, or settle,
adjust or compromise any claim for any and all such Rent, purchase proceeds or
avails, income, Loss Proceeds and other sums which are assigned under Section 1
hereof as fully as Lessor could itself do, and in its discretion to file any
H-4
<PAGE>
Assignment of Lease
-------------------
claim or take any other action or proceedings, either in its own name or in the
name of Lessor or otherwise, which Assignee may deem necessary or appropriate to
protect and preserve the right, title and interest of Assignee in and to such
Rent and other sums and security intended to be afforded hereby.
Section 5. ASSIGNEE DESIGNATED RECIPIENT. Lessor hereby directs Lessee
to deliver or remit directly to Assignee at its address set forth in the
Participation Agreement the Applicable Percentage Amount, all Basic Rent, all
Supplemental Rent, payments pursuant to Articles IV and VI of the Lease,
purchase proceeds or avails, income, Loss Proceeds and other sums paid or
payable to Lessor pursuant to the Lease by wire transfer of Federal or other
funds current and immediately available to Assignee on the due date thereof.
Section 6. ALLOCATION PURSUANT TO LOAN AGREEMENT. Notwithstanding
anything contained herein to the contrary, the Applicable Percentage Amount, any
and all Basic Rent, Supplemental Rent, payments pursuant to Articles IV and VI
of the Lease, purchase proceeds or avails, income, Loss Proceeds and other sums
paid to or received or collected by or on behalf of Assignee shall be paid,
allocated and distributed pursuant to the terms of, and in the order of priority
provided for in, Section 3.3 of the Loan Agreement.
Section 7. IRREVOCABILITY; SUPPLEMENTAL INSTRUMENTS. Lessor agrees that
the collateral assignment made hereby and the designation and direction to
Lessee hereinabove set forth are irrevocable, and that Lessor will not, while
said collateral assignment is in effect or thereafter until Lessee has received
from Assignee written notice of the termination of said collateral assignment,
make any other assignment, designation or direction inconsistent therewith, and
that any assignment, designation or direction inconsistent therewith shall be
void. Lessor will from time to time, upon request of Assignee, execute all
instruments of further assurance and all such supplemental instruments as
Assignee may reasonably specify.
Section 8. AMENDMENTS OR TERMINATION OF THE LEASE. Except as otherwise
permitted under Section 9.5 of the Participation Agreement, Lessor agrees that
it will not enter into any agreement amending, supplementing, hypothecating,
waiving, discharging or terminating the Lease.
H-5
<PAGE>
Assignment of Lease
-------------------
Section 9. LESSEE'S CONSENT AND AGREEMENT. The consent and agreement
by Lessee to the provisions of this Assignment Agreement is attached hereto.
Section 10. REMEDIES CUMULATIVE. Each right, power and remedy of
Assignee provided for in this instrument or now or hereafter existing at law or
in equity or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power or remedy provided for in this
Assignment Agreement or in any other Operative Document or now or hereafter
existing at law or in equity or by statute or otherwise and the exercise or
beginning of the exercise by Assignee of any one or more of such rights, powers
or remedies shall not preclude the further exercise thereof or the simultaneous
or later exercise by Assignee of any or all such other rights, powers or
remedies. No failure or delay on the part of Assignee to exercise any such
right, power or remedy (including, without limitation, the granting by Assignee
of consent to any action by Lessor) shall operate as a waiver thereof. Lessor
stipulates that the remedies at law in respect of any default or threatened
default by Lessor in the performance of or compliance with any of the terms of
this Assignment Agreement are not and will not be adequate, and that any of such
terms may be specifically enforced by a decree for specific performance or by an
injunction against the violation of any terms or otherwise.
Section 11. MISCELLANEOUS.
(a) All notices, requests, offers, consents and other
instruments given pursuant to this Assignment Agreement shall be delivered in
accordance with Section 9.3 of the Participation Agreement.
(b) This Assignment Agreement shall be binding upon, inure to
the benefit of and be enforceable by, the respective successors and assigns of
the parties hereto. The headings to the various paragraphs of this Assignment
Agreement have been inserted for convenience reference only and shall not
modify, define, limit or expand the express provisions of this Assignment
Agreement. Neither this Assignment Agreement nor any provision hereof may be
amended, modified, waived, discharged or terminated orally, but only by an
instrument signed by the parties hereto. If any provision of this Assignment
Agreement or any application thereof shall be invalid or unenforceable, the
remainder of this Assignment Agreement and any other application of such
provision shall not be affected thereby.
(c) This Assignment Agreement may be executed in counterparts,
each of which shall be deemed an original, and such counterparts shall together
H-6
<PAGE>
Assignment of Lease
-------------------
constitute but one and the same Assignment Agreement. It shall not be necessary
in making proof of this Assignment Agreement to produce or account for more than
one such counterpart signed by the party against which enforcement of this
Assignment Agreement is sought.
(d) THIS ASSIGNMENT AGREEMENT HAS BEEN DELIVERED IN, AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH COMMONWEALTH, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, EXCEPT THAT, TO THE EXTENT REQUIRED BY
APPLICABLE LAW, FORECLOSURE HEREUNDER WITH RESPECT TO ANY SITE SHALL BE GOVERNED
BY THE LAWS OF THE STATE IN WHICH SUCH SITE IS LOCATED.
(e) Upon payment in full of all indebtedness secured by this
Assignment Agreement and the Loan Agreement and performance of all other
obligations secured hereby and thereby, Assignee shall, at Lessee's expense, do,
execute, acknowledge and deliver each and every deed, conveyance, transfer and
release necessary or proper to evidence the release of this Assignment Agreement
whereupon this Assignment Agreement and the Lien created hereby shall terminate
and be of no further force or effect.
(f) Notwithstanding anything to the contrary set forth herein,
in the event of any conflict between any provision of this Assignment Agreement
and the Loan Agreement, the terms and provisions of the Loan Agreement shall
control.
H-7
<PAGE>
Assignment of Lease
-------------------
IN WITNESS WHEREOF, the undersigned have caused this Assignment
Agreement to be duly executed and delivered as of the date and year first above
written.
MELLON FINANCIAL SERVICES
CORPORATION #4, a
Pennsylvania corporation, as Lessor
By:______________________________________
Name:____________________________________
Its:_____________________________________
Address: One Mellon Bank Center
Room 151-4444
Pittsburgh, PA 15258-0001
Attention: Leasing Group
Telephone: (412) 234-0934
Facsimile: (412) 234-3948
ACCEPTED:
MELLON BANK, N.A., as Agent and
Assignee
By:______________________________
Name:____________________________
Its:_____________________________
Address: Plymouth Meeting Executive Campus
610 West Germantown Parkway
Suite 200
Attention: Carol Paige
Telephone: (610) 941-8409
Facsimile: (610) 941-4136
H-8
<PAGE>
Assignment of Lease
-------------------
STATE OF _______________
COUNTY OF ______________
The foregoing instrument was acknowledged before me this ______ day of
__________________, 1996, by ____________________, the ________________________
of MELLON FINANCIAL SERVICES CORPORATION #4, a Pennsylvania corporation.
______________________________________
Signature of Notary
(Notary Seal must be affixed)
- ------------------------------ Name of Notary Printed
My Commission Expires: _________
Commission Number: _____________
<PAGE>
Assignment of Lease
-------------------
STATE OF ___________
COUNTY OF __________
The foregoing instrument was acknowledged before me this ______ day of
__________________, 1996, by _____________________, the ____________________,
of MELLON BANK, N.A., a national banking association.
______________________________________
Signature of Notary
(Notary Seal must be affixed)
- ----------------------------- Name of Notary Printed
My Commission Expires: ________
Commission Number: ____________
<PAGE>
Assignment of Lease
-------------------
Exhibit A
Legal Description of the Land
<PAGE>
Assignment of Lease
-------------------
CONSENT AND AGREEMENT
OF LESSEE
THIS CONSENT AND AGREEMENT dated as of July 24, 1996, by GENESIS
ELDERCARE PROPERTIES, INC., A Pennsylvania corporation (the "Lessee") for the
benefit of MELLON BANK, N.A., as Agent ("Assignee"), to the assignments made
under the Assignment of Lease and Rents, dated as of the date hereof (the
"Assignment Agreement"), between MELLON FINANCIAL SERVICES CORPORATION #4, a
Pennsylvania corporation as assignor ("Lessor") and Assignee. Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Assignment
Agreement.
1. Lessee hereby consents to the terms and provisions of the Assignment
Agreement and agrees it will deliver or remit, as and when payable pursuant to
the Operative Documents directly to Assignee, the Applicable Percentage Amount,
all Basic Rent, all Supplemental Rent, and all payments pursuant to Articles IV
and VI of the Lease, purchase proceeds or avails, income, Loss Proceeds and
other sums paid or payable to Lessor pursuant to the Lease (but excluding any
indemnity payments or reimbursements to Lessor from Lessee pursuant to the
Lease, any other Operative Document or otherwise), in each case, without any
offset, deduction, defense, abatement, suspension, deferment, diminution or
reduction for any reason so that said funds shall at all times be available for
payment of interest and principal due on the Notes, except in each case as
expressly provided in the Lease.
2. Notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Lessor under the Lease, (ii) any action with respect to the
Lease which may be taken by any trustee or receiver of Lessor, or by any court
in such proceeding, and (iii) the exercise by the Lender of any rights and
remedies under the Assignment Agreement, Lessee agrees that it will remain
obligated under the Lease in accordance with their respective terms and that it
will not take any action to terminate (other than pursuant to its rights under
the Lease and the Participation Agreement to do so), rescind or avoid the Lease.
3. To the extent that Lessee may acquire any indebtedness of Lessor or
any other party to the Participation Agreement, or any claim against Lessor or
any other party to the Participation Agreement, by way of subrogation or
otherwise, all such indebtedness and claims are hereby subordinated and made
fully subject in right of payment thereof to the prior payment in full of the
Notes.
<PAGE>
Assignment of Lease
-------------------
4. In addition to (and not in limitation of) all of Lessee's
reimbursement and indemnity obligations set forth in the Operative Documents,
Lessee agrees to pay promptly all reasonable and documented costs and expenses
incurred by Lessor, pursuant to the Assignment Agreement, for the release of the
Assignment Agreement.
<PAGE>
Assignment of Lease
-------------------
IN WITNESS WHEREOF, Lessee has caused this Consent and Agreement to be
duly executed and delivered as of the date and year first above written.
GENESIS ELDERCARE PROPERTIES,
INC., a Pennsylvania
corporation, as Lessee
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
Assignment of Lease
------------------
STATE OF _________
COUNTY OF ________
The foregoing instrument was acknowledged before me this ______ day of
__________________, 1996, by ____________________, the _______________________
of GENESIS ELDERCARE PROPERTIES, INC., a Pennsylvania corporation, on behalf of
the ____________________.
______________________________________
Signature of Notar
(Notary Seal must be affixed) ______________________________________
Name of Notary Printed
My Commission Expires: ________
Commission Number: ____________
<PAGE>
Participation Agreement
-----------------------
EXHIBIT K TO PARTICIPATION AGREEMENT
INTENTIONALLY OMITTED
<PAGE>
Participation Agreement
-----------------------
EXHIBIT L TO PARTICIPATION AGREEMENT
INTENTIONALLY OMITTED
<PAGE>
Participation Agreement
-----------------------
EXHIBIT M TO PARTICIPATION AGREEMENT
Form of Ground Lease
[To be agreed upon by Lessee, Lessor and Agent, if needed]
<PAGE>
Exhibit 11
GENESIS HEALTH VENTURES
COMPARATIVE EARNINGS PER SHARE CALCULATION
NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
6/30/96 6/30/95
----------------- ----------------
<S> <C> <C>
Primary Earnings Per Share:
Reported earnings before debenture conversion expense $24,544 $17,508
Debenture conversion expense, net of tax (785)
Extraordinary item, net of tax (1,923)
----------------- ----------------
Reported net income $23,759 $15,585
----------------- ----------------
Weighted average shares & CSE's: 25,438,335 22,556,985
----------------- ----------------
Primary EPS before debenture conversion expense $0.96 $0.78
Primary EPS - Debenture conversion expense ($0.03)
Primary EPS - Extraordinary item, net of tax ($0.09)
change in accounting principle ----------------- ----------------
Primary EPS - Net income $0.93 $0.69
Fully Diluted Earnings Per Share:
Reported earnings before debenture conversion expense $24,544 $17,508
Debenture conversion expense, net of tax (785)
Extraordinary item, net of tax (1,923)
----------------- ----------------
Reported net income 23,759 15,585
Adjustments to net income:
Interest expense, amortization and other costs
related to the assumed conversion of the
Convertible Debentures, net of tax 2,150 2,964
----------------- ----------------
Adjusted net income $25,910 $18,549
----------------- ----------------
Weighted average shares & CSE's:
Common shares 25,438,335 22,556,985
Additional option shares 55,000 17,400
Convertible Debenture shares 3,865,526 5,710,407
----------------- ----------------
Total 29,358,861 28,284,792
----------------- ----------------
Fully diluted EPS before debenture conversion expense $0.91 $0.72
Fully diluted EPS - Debenture conversion expense ($0.03)
Fully diluted EPS - Extraordinary item, net of tax (0.06)
================= ================
Fully diluted EPS - Net income $0.88 $0.66
================= ================
</TABLE>
<PAGE>
COMPARATIVE EARNINGS PER SHARE CALCULATION
QUARTERS ENDED JUNE 30, 1996 AND 1995
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
6/30/96 6/30/95
----------------- ----------------
<S> <C> <C>
Primary Earnings Per Share:
Reported earnings before debenture conversion expense $10,189 $6,885
and extraordinary item
Debenture conversion expense, net of tax (98)
Extraordinary item, net of tax (1,923)
----------------- ----------------
Reported net income $10,091 $4,962
----------------- ----------------
Weighted average shares & CSE's: 27,507,276 22,635,350
----------------- ----------------
Primary EPS before debenture conversion expense $0.37 $0.30
Primary EPS - Debenture conversion expense ($0.00)
Primary EPS - Extraordinary item, net of tax ($0.08)
================= ================
Primary EPS - Net income $0.37 $0.22
================= ================
Fully Diluted Earnings Per Share:
Reported earnings before debenture conversion expense $10,189 $6,885
Debenture conversion expense, net of tax ($98)
Extraordinary item, net of tax (1,923)
----------------- ----------------
Reported net income $10,091 $4,962
----------------- ----------------
Adjustments to net income:
Interest expense, amortization and other costs
related to the assumed conversion of the
Convertible Debentures, net of tax 665 997
----------------- ----------------
Adjusted net income $10,756 $5,959
----------------- ----------------
Weighted average shares & CSE's:
Common shares 27,507,276 22,635,350
Additional option shares 111,696 42,068
Convertible Debenture shares 3,489,419 5,710,407
----------------- ----------------
Total 31,108,391 28,387,825
----------------- ----------------
Fully diluted EPS before debenture conversion expense $0.35 $0.28
Fully diluted EPS - Debenture conversion expense ($0.00)
Fully diluted EPS - Extraordinary item, net of tax ($0.07)
================= ================
Fully diluted EPS - Net income $0.35 $0.21
================= ================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 70,626
<SECURITIES> 0
<RECEIVABLES> 153,710
<ALLOWANCES> (9,674)
<INVENTORY> 16,872
<CURRENT-ASSETS> 297,009
<PP&E> 375,628
<DEPRECIATION> (62,240)
<TOTAL-ASSETS> 878,348
<CURRENT-LIABILITIES> 69,410
<BONDS> 0
0
0
<COMMON> 476
<OTHER-SE> 499,762
<TOTAL-LIABILITY-AND-EQUITY> 878,348
<SALES> 460,354
<TOTAL-REVENUES> 460,354
<CGS> 0
<TOTAL-COSTS> 373,041
<OTHER-EXPENSES> 31,076
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,104
<INCOME-PRETAX> 37,133
<INCOME-TAX> 13,374
<INCOME-CONTINUING> 23,759
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,759
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.88
</TABLE>
