<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 1-11316
OMEGA HEALTHCARE
INVESTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(State of Incorporation)
38-3041398
(I.R.S. Employer Identification No.)
905 W. EISENHOWER CIRCLE, SUITE 110, ANN ARBOR, MI 48103
(Address of principal executive offices)
(313) 747-9790
(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 June 30, 1997
COMMON STOCK, $.10 PAR VALUE
(Class)
19,065,324
(Number of shares)
================================================================================
<PAGE> 2
OMEGA HEALTHCARE INVESTORS, INC
FORM 10-Q
JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
ITEM NO.
---- ----
<S> <C> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets --
June 30, 1997 (unaudited) and December 31, 1996........ 2
Statements of Operations (unaudited) --
Three-month and Six-month periods
ended June 30, 1997 and 1996............................ 3
Statement of Cash Flows (unaudited) --
Six-month periods ended
June 30, 1997 and 1996.................................. 4
Notes to Condensed Financial Statements
June 30, 1997 (unaudited)................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 6
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports........................................ 9
</TABLE>
1
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(UNAUDITED) (SEE NOTE)
<S> <C> <C>
ASSETS
Investments in real estate:
Real estate properties -- net............................. $ 415,702 $ 343,293
Mortgage notes receivable................................. 226,451 217,474
--------- ---------
642,153 560,767
Investment in and advances to Principal Healthcare Finance
Ltd....................................................... 42,665 29,970
Other investments........................................... 26,184 19,640
--------- ---------
711,002 610,377
Cash and short-term investments............................. 2,983 6,244
Goodwill and non-compete agreements -- net.................. 6,793 7,605
Other assets................................................ 10,790 10,610
--------- ---------
Total assets........................................... $ 731,568 $ 634,836
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Acquisition line of credit.................................. $ 50,865 $ 6,000
Bank term loan.............................................. 25,000 25,000
Unsecured borrowings........................................ 86,381 86,384
Secured borrowings.......................................... 22,523 24,275
Subordinated convertible debentures......................... 71,025 94,810
Accrued expenses and other liabilities...................... 16,328 15,360
--------- ---------
Total liabilities...................................... 272,122 251,829
Preferred Stock............................................. 57,500
Common stock and additional paid-in capital................. 428,583 406,127
Cumulative net earnings..................................... 112,280 91,375
Cumulative dividends paid................................... (138,438) (114,393)
Unamortized restricted stock awards......................... (479) (102)
--------- ---------
Total shareholders' equity............................. 459,446 383,007
--------- ---------
$ 731,568 $ 634,836
========= =========
</TABLE>
NOTE -- The balance sheet at December 31, 1996, has been derived from audited
consolidated financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See notes to condensed consolidated financial statements.
2
<PAGE> 4
OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Rental income......................................... $13,713 $10,541 $25,133 $21,008
Mortgage interest income.............................. 6,990 5,877 13,989 11,251
Other investment income............................... 1,647 1,176 2,980 2,304
Miscellaneous......................................... 165 82 425 286
------- ------- ------- -------
22,515 17,676 42,527 34,849
Expenses
Depreciation and amortization......................... 4,334 3,393 7,903 6,785
Interest.............................................. 6,096 4,905 11,416 9,520
General and administrative............................ 1,168 899 2,302 1,875
------- ------- ------- -------
11,598 9,197 21,621 18,180
------- ------- ------- -------
Net Earnings............................................ 10,917 8,479 20,906 16,669
Preferred stock dividends............................. (886) (886)
------- ------- ------- -------
Net Earnings Available to Common Shareholders........... $10,031 $ 8,479 $20,020 $16,669
======= ======= ======= =======
Net earnings per common share........................... $0.53 $0.49 $1.06 $0.98
======= ======= ======= =======
Dividends paid per common share......................... $0.645 $0.62 $1.29 $1.24
======= ======= ======= =======
Weighted average number of common shares outstanding.... 19,059 17,137 18,884 17,011
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1997 1996
---- ----
<S> <C> <C>
Operating Activities
Net earnings.............................................. $ 20,906 $ 16,669
Adjustment to reconcile net earnings to cash provided by
operating activities:
Depreciation and amortization.......................... 7,903 6,785
Other non-cash charges................................. 493 283
--------- --------
Funds from operations available for distribution and
investment................................................ 29,302 23,737
Net change in operating assets and liabilities.............. 588 5,058
--------- --------
Net cash provided by operating activities................... 29,890 28,795
Cash flows from financing activities
Proceeds from Preferred Stock offering.................... 57,500
Proceeds from subordinated convertible debentures......... 95,000
Proceeds (payments) on acquisition line of credit......... 44,865 (49,440)
Proceeds (payments) of long-term borrowings............... (1,754) (9,949)
Proceeds from Dividend Reinvestment Plan.................. 543 12,217
Dividends paid............................................ (24,045) (21,043)
Issue costs............................................... (2,311) (2,349)
Other..................................................... (245) (531)
--------- --------
Net cash provided by financing activities................. 74,553 23,905
Cash flow from investing activities
Acquisition of real estate................................ (79,488) (532)
Placement of mortgage loans............................... (10,990) (34,185)
Fundings of other investments............................. (5,544) (17,573)
Advances to Principal Healthcare Finance Limited.......... (12,694)
Collection of mortgage principal.......................... 1,012 231
Other..................................................... (31)
--------- --------
Net cash used in investing activities..................... (107,704) (52,090)
--------- --------
Increase (decrease) in cash and short-term investments.... $ (3,261) $ 610
========= ========
</TABLE>
NOTE -- During the six-month period ended June 30, 1997, subordinated
convertible debentures totaling $23,785,000 were converted at a price of
$28.625 per share.
See notes to condensed consolidated financial statements.
4
<PAGE> 6
OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and six-month periods ended
June 30, 1997, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1996.
NOTE B - INVESTMENT AND ADVANCES TO PRINCIPAL HEALTHCARE FINANCE LIMITED
The Company has from time to time provided temporary advances to Principal
Healthcare Finance Limited (Principal), a partially-owned affiliate which
provides financing for United Kingdom nursing home operators. Funds advanced
bear interest at 9.25%, and are typically outstanding for no more than ninety
days. At June 30, 1997 the balance of temporary advances to Principal is $12.7
million. In July, the Company made available to Principal a commitment for
additional temporary advances collateralized by a mortgage of L30 million
(approximately $49.8 million) on certain properties. As of the date of this
report, L24.3 million (approximately $40.3 million) has been drawn by Principal
under this commitment.
The Company has also provided Principal a guarantee of borrowings of up to
L46 million (approximately $76.4 million), pending its placement of permanent
financing for a purchase of a public company which operates nursing homes in the
United Kingdom, which homes have been leased to independent third party nursing
home operators. As of the date of this report, Principal has borrowed
substantially all of the funds available subject to such guarantee. The Company
will receive approximately $360,000 plus its costs incurred, as a fee for this
guarantee.
NOTE C -- SECOND QUARTER REAL ESTATE INVESTMENTS
On June 30, 1997 the Company placed a $10,250,000 convertible participating
mortgage loan on three nursing homes located in Kentucky with 283 beds.
NOTE D -- ASSET CONCENTRATIONS
As of June 30, 1997, 95.6% of the Company's real estate investments related
to long-term care facilities. The Company's facilities are located in 26 states
and are operated by 34 independent healthcare operating companies. Approximately
58% of the Company's real estate investments are operated by 8 public companies:
Advocat, Inc. (16.5%), Sun Healthcare Group, Inc. (14.0%), GranCare, Inc.
(8.6%), Unison Healthcare Corp (6.6%), Regency Health Services, Inc. (5.4%),
Res-Care, Inc. (4.2%), Integrated Health Services, Inc. (1.6%) and Horizon/CMS
Healthcare Corp. (1.4%). Of the remaining 26 independent operators, none operate
investments in facilities representing more than 7.1% of the total real estate
investments.
In the ordinary course of its business activities, the Company periodically
evaluates investment opportunities and extends credit to customers. It also is
regularly engaged in lease and loan extensions and modifications and believes
its management has the experience and expertise to deal with such issues as may
arise from time to time.
5
<PAGE> 7
OMEGA HEALTHCARE INVESTORS, INC.
NOTE E -- PREFERRED STOCK
In April, 1997 the Company issued 2.3 million shares of 9.25% Series A
Cumulative Preferred Stock ("Preferred Stock") at $25 per share. Dividends on
the Preferred Stock are cumulative from the date of original issue and are
payable quarterly, commencing on August 15, 1997, to shareholders of record on
July 31, 1997. Proceeds from the issuance of the Preferred Stock were used to
pay down a portion of the borrowings outstanding under the Company's revolving
credit agreement.
NOTE F -- CONVERSION OF SUBORDINATED DEBENTURES
During the three-month period ended June 30, 1997 approximately $2.2
million of subordinated convertible debentures were converted at a conversion
price of $28.625 per share. At June 30, 1997, 2,481,200 shares are reserved for
issuance upon conversion of the remaining debentures.
NOTE G -- NET EARNINGS PER SHARE
Net earnings per share is computed based on the weighted average number of
common shares outstanding during the respective periods. Though not yet
declared, cumulative preferred dividends are reported as a reduction of net
operating earnings available for distribution to the holders of common shares of
stock. The inclusion of options using the treasury stock method and the assumed
conversion of debentures is not dilutive.
The Financial Accounting Standards Board recently issued statement No. 128,
"Earnings per Share." This new standard is not expected to have a material
effect on reported per share amounts, primarily because the assumed conversion
of debentures as required under such standard is anti-dilutive.
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Safe Harbor" Statement Under the United States Private Securities
Litigation Reform Act of 1995. Statements contained in this document that are
not based on historical fact are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include statements regarding the Company's future development
activities, the future condition and expansion of the Company's markets, the
Company's ability to meet its liquidity requirements and the Company's growth
strategies, as well as other statements which may be identified by the use of
forward-looking terminology such as "may," "will," "expect," "estimate,"
"anticipate," "continue," or similar terms, variations of those terms or the
negative of those terms. Statements that are not historical facts contained in
Management's Discussion and Analysis are forward-looking statements that involve
risks and uncertainties that could cause actual results to differ from projected
results. Some of the factors that could cause actual results to differ
materially include: the financial strength of the operators of the Company's
facilities as it affects their continuing ability to meet their obligations to
the Company under the terms of the Company's agreements with such operators;
changes in the reimbursement levels under the Medicare and Medicaid programs;
operators' continued eligibility to participate in the Medicare and Medicaid
programs; changes in reimbursement by other third party payors; occupancy levels
at the Company's facilities; the availability and cost of capital; the strength
and financial resources of the Company's competitors; the Company's ability to
make additional real estate investments at attractive yields and changes in tax
laws and regulations affecting real estate investment trusts.
Following is a discussion of the consolidated financial condition and
results of operations of the Company which should be read in conjunction with
the consolidated financial statements and accompanying notes.
RESULTS OF OPERATIONS
Revenues for the three-month and six-month periods ending June 30, 1997
totaled $22.5 million and $42.5 million, respectively, an increase of $4.8
million and $7.7 million, respectively, over the periods ended
6
<PAGE> 8
OMEGA HEALTHCARE INVESTORS, INC.
June 30, 1996. The 1997 revenue growth stems primarily from additional real
estate investments of approximately $140 million during the twelve-month period
ended June 30, 1997. Additionally, revenue growth of approximately $1.0 million
stems from participating incremental net revenues which became effective in
1997. Gross real estate investments of $682 million as of June 30, 1997 have an
average annualized yield of 12.1%.
Expenses for the three-months ended June 30, 1997 totaled $11.6 million, an
increase of $2.4 million over expenses of $9.2 million for 1996. Expenses for
the six-month period ended June 30, 1997 totaled $21.6 million, increasing $3.4
million over the expenses of $18.2 million for the 1996 six-month period. The
provision for depreciation and amortization for the three-month and six-month
periods ending June 30, 1997 totaled $4.3 million and $7.9 million,
respectively, increasing by $0.9 million and $1.1 million, respectively, over
the same periods in 1996 as a result of additional investments.
Interest expense for the three-month and six-month periods ending June 30,
1997 was $6.1 million and $11.4 million, respectively, compared with $4.9
million and $9.5 million, respectively, for the same periods in 1996. The
increase in 1997 is primarily due to higher average outstanding borrowings
during the 1997 period, partially offset by slightly lower interest rates.
General and administrative expenses for the three-month and six-month
periods ending June 30, 1997 totaled approximately $1.2 million and $2.3 million
an increase of approximately $425,000 over the six-month period ended June 30,
1996. These expenses for the three-month and six-month periods were
approximately 5.2% and 5.4% of revenues, respectively, as compared to 5.1% and
5.4% of revenues for the 1996 three-month and six-month periods.
At all times, the Company intends to make and manage its investments
(including the sale or disposition of property or other investments) and to
operate in such a manner as to be consistent with the requirements of the
Internal Revenue Code of 1986, as amended (or regulations thereunder) to qualify
as a REIT, unless, because of changes in circumstance or changes in the Code (or
regulations thereunder), the Board of Directors determines that it is no longer
in the best interests of the Company to qualify as a REIT. As such, it generally
will not pay federal income taxes on the portion of its income which is
distributed to shareholders.
Net earnings available to common shareholders were $10,031,000 and
$20,020,000 for the three-month and six-month periods, an increase of
approximately $1.6 million and $3.4 million, respectively, over the 1996 periods
as a result of the various factors mentioned above, partially offset by the
obligation for cumulative preferred dividends in 1997. Net earnings per common
share increased $.04 (8.2%) to $.53 for the three-month period and $.08 (8.2%)
to $1.06 for the six-month period.
Cash provided by operating activities available for distribution and
investment (FAD) for the six-month period ending June 30, 1997 was $29,302,000,
an increase of $5,565,000 (23%) over the 1996 six-month period. FAD is net
earnings, excluding any gains or losses from debt restructuring and sales of
property, plus depreciation and amortization associated with real estate
investments, amortization of deferred financing cost and the net effect of all
other non-cash items included in net earnings available to common shareholders.
Funds From Operations (FFO) totaled $14.5 million and $28.3 million for the
three-month and six-month periods ending June 30, 1997, representing an increase
of $2.5 million and $4.5 million, respectively, over the same periods in 1996.
FFO is net earnings available to common shareholders, excluding any gains or
losses from debt restructuring and sales of property, plus depreciation and
amortization associated with real estate investments and charges to earnings for
non-cash common stock based compensation.
7
<PAGE> 9
OMEGA HEALTHCARE INVESTORS, INC.
LIQUIDITY AND CAPITAL RESOURCES
The Company continually seeks new investments in healthcare real estate
properties, primarily long-term care facilities, with the objective of
profitable growth and further diversification of the investment portfolio.
Permanent financing for future investments is expected to be provided through a
combination of both private placement and public offerings of debt and/or equity
securities. Management believes the Company's liquidity and various sources of
available capital are adequate to finance operations, fund future investments in
additional facilities, and meet debt service requirements.
The Company has demonstrated an ability to access the capital markets by
raising more than $950 million in capital since it was organized in 1992. The
Company has raised more than $450 million in equity, including $130 from the
initial public offering in 1992, $73 million from a follow-on common stock
offering in 1994, $165 million from the HEP acquisition in 1994 and $57 million
from a preferred stock offering completed in April 1997. Additionally, nearly
$500 million of debt capital has been raised, some of which has been used to
retire secured borrowing debt with higher interest rates. In 1996, the Company
completed a placement of $95 million of 8.5% Convertible Subordinated Debentures
due 2001, and executed an agreement to increase its revolving line of credit
facility by $50 million and to extend the term of the revolving credit agreement
to July 1999. The increase in the revolving line of credit facility allows for
an additional $25 million, plus the equivalent of $25 million in a pounds
sterling denominated term loan due in October, 2000 for a total permitted
borrowings of up to $150 million.
In February 1997, the Company filed two shelf registration statements with
the Securities and Exchange Commission permitting the issuance of up to $250
million of securities. The Company registered up to $150 million related to
common stock, unspecified debt, preferred stock, and convertible securities
which may be issued from time to time in connection with a Registration
Statement on Form S-3. After the preferred stock offering, approximately $94
million remains under this registration statement. Additionally, the Company
registered on Form S-4 common stock totaling $100 million to be issued in
connection with future property acquisitions.
As of June 30, 1997, the Company has total assets of approximately $732
million, shareholders' equity of $459 million, and long-term borrowings of $205
million, representing 28% of the total capitalization. The Company anticipates
eventually attaining and then expects to generally maintain a long-term debt-to-
capitalization ratio of approximately 40%. At June 30, 1997 the Company had
available permitted additional borrowings of $74.1 million under its revolving
line of credit arrangement, of which approximately $35 million has been
subsequently drawn to fund additional investments.
The Company distributes a large portion of the cash available from
operations. Cash dividends paid totaled $0.645 and $1.29 per share for the
three-month and six-month periods ending June 30, 1997, compared with $0.62 and
$1.24 per share for the same periods in 1996. On July 16, 1997, the Board of
Directors declared a quarterly common dividend of $.645 per share, payable on
August 15, 1997 to common shareholders of record on August 4, 1997. The current
$.645 per quarter rate represents an annualized rate of $2.58 per share.
Additionally, a regular quarterly preferred stock dividend of $.578 per share
was declared payable on August 15, 1997 to Series A (9.25%) Cumulative Preferred
shareholders of record on July 31, 1997.
8
<PAGE> 10
OMEGA HEALTHCARE INVESTORS, INC.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS -- THE FOLLOWING EXHIBITS ARE FILED HEREWITH:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
10.1 Facility Agreement between Principal Healthcare PLC and
Morgan Guaranty, with Omega Healthcare Investors, Inc. as
Guarantor
10.2 Promissory Note Secured by Deed of Legal Mortgage and Deed
of Legal Mortgage between Principal Healthcare Finance
Limited as the mortgagor and Omega Healthcare Investors,
Inc. as the mortgagee
12 Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends
27 Financial Data Schedule
</TABLE>
(b) REPORTS ON FORM 8-K.
The following report on Form 8-K was filed since March 31, 1997
Form 8-K dated April 25, 1997: Report with exhibits in connection
with issuance of Class A Cumulative Preferred Stock
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMEGA HEALTHCARE INVESTORS, INC.
Registrant
<TABLE>
<S> <C> <C>
By: /s/ ESSEL W. BAILEY, JR. President
---------------------------------------------------
ESSEL W. BAILEY, JR. } Date: July [ ], 1997
By: /s/ DAVID A. STOVER Chief Financial Officer
---------------------------------------------------
DAVID A. STOVER
</TABLE>
9
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
10.1 Facility Agreement between Principal Healthcare PLC and
Morgan Guaranty, with Omega Healthcare Investors, Inc. as
Guarantor
10.2 Promissory Note Secured by Deed of Legal Mortgage and Deed
of Legal Mortgage between Principal Healthcare Finance
Limited as the mortgagor and Omega Healthcare Investors,
Inc. as the mortgagee
12 Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
CONFORMED COPY
DATED 16TH MAY, 1997
PRINCIPAL HEALTHCARE PLC
AS BORROWER
OMEGA HEALTHCARE INVESTORS, INC.,
AS GUARANTOR
THE LENDERS LISTED IN SCHEDULE 1
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON BRANCH
AS AGENT
J.P. MORGAN SECURITIES LTD.
AS ARRANGER
------------------------------------
AGREEMENT
FOR A REVOLVING CREDIT AND GUARANTEE FACILITY OF UP TO L .46,000,000
IN AGGREGATE
------------------------------------
Slaughter and May
35 Basinghall Street
London EC2V 5DB
RMF/JEH
<PAGE> 2
CONTENTS
CLAUSE PAGE
- ------ ----
PART I: INTERPRETATION 2
1. INTERPRETATION AND CALCULATIONS 2
PART II: THE FACILITY 16
2. THE FACILITY 16
3. THE LENDERS AND THE BORROWERS 17
4. FEES AND EXPENSES 18
5. CANCELLATION 21
PART III: UTILISATION OF THE REVOLVING FACILITY 22
6. ADVANCE OF FUNDS 22
7. GUARANTEED LOAN NOTES 24
8. UNCONDITIONAL PERIOD 27
9. INTEREST 28
10. REPAYMENT 29
11. PREPAYMENT 29
PART IV: CHANGES OF CIRCUMSTANCES AND PAYMENTS 31
12. CHANGES OF CIRCUMSTANCES 31
13. PAYMENTS 36
14. LATE PAYMENT 38
<PAGE> 3
15. SHARING AMONG LENDERS 39
PART V: GUARANTEE AND INDEMNITY 41
16. GUARANTEE 41
17. GUARANTOR'S INDEMNITY 43
PART VI: REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT 45
18. REPRESENTATIONS OF THE BORROWER 45
19. REPRESENTATIONS FOLLOWING THE ACQUISITION PERIOD 48
20. REPRESENTATIONS OF THE GUARANTOR AND THE EXISTING AGREEMENT
SUBSIDIARIES 49
21. INFORMATION COVENANTS 52
22. GENERAL COVENANTS OF THE BORROWER 54
23. GENERAL COVENANTS OF THE GUARANTOR 56
24. EVENTS OF DEFAULT 57
PART VII: MISCELLANEOUS 65
25. THE AGENT AND THE ARRANGER 65
26. EVIDENCE AND CERTIFICATES 69
27. NOTICES 70
28. ASSIGNMENT AND NOVATION 71
29. WAIVERS AND AMENDMENTS 72
30. MISCELLANEOUS 73
31. LAW AND JURISDICTION 74
<PAGE> 4
SCHEDULE 1: LENDERS AND COMMITMENTS 76
SCHEDULE 2: COSTS RATE 77
SCHEDULE 3: CONDITIONS PRECEDENT 79
SCHEDULE 4: FORM OF SUBSTITUTION CERTIFICATE 81
SCHEDULE 5: FORM OF NOTICE FOR ADVANCES 83
SCHEDULE 6: FORM OF NOTICE FOR GUARANTEED LOAN NOTES 85
SCHEDULE 7: PERMITTED BORROWER'S SECURITY 87
SCHEDULE 8: PRINCIPAL PROPERTIES 88
SIGNATURES 91
<PAGE> 5
LOAN AGREEMENT
DATE: 16th May, 1997
PARTIES
1. PRINCIPAL HEALTHCARE PLC, a company incorporated in England and Wales
(number 3326678), of 145 Cannon Street, London, EC4N 5BP, as borrower
2. OMEGA HEALTHCARE INVESTORS, INC., a company incorporated in Maryland of
905 West Eisenhower Circle, Suite 110, Ann Arbor, Michigan, United States
of America 48103, as guarantor
3. THE LENDERS listed in Schedule 1, as lenders
4. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON BRANCH as agent
5. J.P. MORGAN SECURITIES LTD., as arranger
BACKGROUND
At the request of the Borrower the Lenders are willing to provide a revolving
credit and guarantee facility of up to L.46,000,000 in aggregate (which
aggregate figure includes a guarantee facility in a maximum amount of
Guaranteed Loan Notes Outstandings of L.26,000,000) subject to the guarantee of
the Guarantor, all on the terms of this Agreement.
The parties agree as follows:
<PAGE> 6
2
PART I: INTERPRETATION
1. INTERPRETATION AND CALCULATIONS
1.1 DEFINITIONS:
In this Agreement:
"ACQUISITION" means the proposed acquisition, pursuant to the terms of
the Offers, of all of the issued and to be issued share capital of
Quality Care including, without limitation, the cancellation of any share
options.
"ACQUISITION PERIOD" means the period commencing on the Offer Date and
terminating three months after the expiry of the Unconditional Period.
"ADVANCE" means an advance made, or to be made, under Clause 6.
"ADVANCE DATE" means the date, or proposed date, of an Advance.
"AFFILIATE" of any Lender means any Subsidiary or Holding Company of that
Person, or any Subsidiary of any such Holding Company, or any other
Person in which that Person or any such Holding Company or Subsidiary
owns at least 20% of the equity share capital or the like.
an "AGENCY" of a state includes any agency, authority, central bank,
department, government, legislature, minister, ministry, official or
public or statutory Person (whether autonomous or not) of, or of the
government of, that state or any political sub-division in or of that
state.
"AGENT" means Morgan Guaranty Trust Company of New York, in its capacity
as agent for the Lenders, acting through its office at 60 Victoria
Embankment, London EC4Y 0JP or any other office which it may notify to
the Borrower, the Guarantor and the Lenders provided that if the office
is situated outside the United Kingdom the consent of the Borrower shall
be required but such consent is not to be unreasonably withheld or
delayed. If there is a change of Agent in accordance with Clause 25.12,
"Agent" will instead mean the new Agent appointed under that Clause.
"ARRANGER" means J.P. Morgan Securities Ltd., in its capacity as arranger
of the Facility.
"AUTHORISED PERSON" means a person authorised to sign documents on behalf
of the Borrower or the Guarantor under this Agreement by virtue of a
resolution of the directors of that party a certified copy of which has
been delivered to the Agent. A person will cease to be an "Authorised
Person" upon notice by the appointing party to the Agent.
<PAGE> 7
3
"AVAILABLE COMMITMENT" means the amount of a Lender's Commitment which is
available to the Borrower which on any day is the Commitment of that
Lender less the Lender's participation in the Outstanding Amount.
"AVAILABLE FACILITY" means the aggregate amount which is available to the
Borrower under the Facility which on any day is the Total Commitments
less the Outstanding Amount.
"BORROWED MONIES INDEBTEDNESS" of the Borrower or any of its Subsidiaries
means:
(A) all obligations of that person for borrowed money,
(B) any indebtedness under any acceptance credits or like
transactions opened on behalf of that person,
(C) the face amount of any bills of exchange for which that
person is liable,
(D) all obligations of that person under any bond, debenture,
note or similar instrument,
(E) the net liability of that person in respect of any interest
rate or currency swap or forward currency sale or purchase or other
form of interest or currency hedging transaction (including without
limit caps, collars and floors),
(F) all payment obligations which in accordance with UK GAAP are
or should be capitalised of that person under any lease which is
entered into primarily as a means of raising finance,
(G) all obligations entered into primarily as a means of raising
finance of that person for the deferred purchase price of assets or
services other than goods and services supplied or obtained in the
ordinary course of that person's business, and
(H) all liabilities of that person (actual or contingent) under
any guarantee, bond, security, indemnity or other agreement in
respect of any of the foregoing.
"BORROWER" means Principal Healthcare PLC, the first party to this
Agreement.
"BORROWER'S GROUP" means the Borrower and its Subsidiaries.
"BUSINESS DAY" means a day other than a Saturday or a Sunday on which
banks are open for inter-bank payments in London.
<PAGE> 8
4
"CAPITALISED LEASE OBLIGATIONS" means as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under US GAAP and, for the
purposes of this Agreement, the amount of such obligations shall be the
capitalised amount thereof, determined in accordance with U.S. GAAP.
"CASH COVER" means credit balances held from time to time by the Borrower
with the Issuing Bank.
"CODE" means The City Code on Takeovers and Mergers in force from time to
time.
"COMMITMENT" means the amount which a Lender has committed to the
Facility. Each Lender's initial "Commitment' is set out next to its name
in Schedule 1. This may be reduced in accordance with this Agreement. In
addition the amount of a Lender's "Commitment" may be adjusted by
novations in accordance with Clause 28.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which together with the Guarantor, are treated as a
single employer under Section 414(b), 414(c) or 414(m) of the U.S. Code
and Section 4001(a)(2) of ERISA.
"COSTS RATE" means a rate per annum determined by the Agent and notified
to the Borrower. This rate will be applied to a Loan Amount for a
particular period. It will be calculated in accordance with Schedule 2.
"ENVIRONMENTAL LAWS AND REGULATIONS" means all applicable laws,
regulations, licences, orders and requirements relating to the protection
of, or discharge of materials into, the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
"EVENT OF DEFAULT" has the meaning described in Clause 24.1.
"EXISTING AGREEMENT" means the amended and restated loan agreement dated
6th June, 1996 and made between the Guarantor and the Existing Agreement
Subsidiaries, the Existing Agreement Banks, Fleet Bank, N.A., National
Westminster Bank plc and Harris Trust and Savings Bank and Kleinwort
Benson Limited (as amended, modified, supplemented, waived, assigned or
novated from time to time).
<PAGE> 9
5
"EXISTING AGREEMENT BANKS" means those banks that have executed the
signature pages to the Existing Agreement.
"EXISTING AGREEMENT SUBSIDIARIES" means those borrowers as set out in
Exhibit 1 to the Existing Agreement excluding the Guarantor which are for
the time being borrowers under the Existing Agreement.
"FACILITY" means the revolving credit and guarantee facility provided by
this Agreement.
"FINANCIAL STATEMENTS" means the audited consolidated balance sheets of
the Guarantor and its Subsidiaries as of 31st December, 1996 and the
related audited consolidated statements of operations, shareholders'
equity and cash flows for the fiscal year then ended, certified by Ernst
& Young.
"GUARANTEE" means the guarantee of amounts due under this Agreement
contained in Clause 16.
"GUARANTEE COMMITMENT" means in relation to a Lender the sub-limit of
that part of its commitment set out next to its name in Schedule 1 and
identified as the Guarantee Commitment. This may be reduced in
accordance with this Agreement. In addition, the amount of a Lender's
"Guarantee Commitment" may be adjusted by novation in accordance with
Clause 28.
"GUARANTEED LOAN NOTES" means the guaranteed loan notes (in or
substantially in the agreed form and, if not in or substantially in the
agreed form subject to such amendments as the Issuing Bank may approve,
such approval not to be unreasonably withheld or delayed) to be issued or
from time to time in issue by the Borrower as part of the consideration
for its purchase of Quality Care Shares pursuant to the Offer Document.
"GUARANTEED LOAN NOTES INSTRUMENT" means the instrument (in or
substantially in the agreed form and, if not in or substantially in the
agreed form subject to such amendments as the Issuing Bank may approve
such approval not to be unreasonably withheld or delayed) (made on or
before the date on which any Guaranteed Loan Notes are issued) under
which the Guaranteed Loan Notes are constituted.
"GUARANTEED LOAN NOTES OUTSTANDINGS" means, at any time, the maximum
principal amount plus interest up to maturity of all the Guaranteed Loan
Notes then in issue subject to reduction in accordance with Clauses 7 and
10.3.
"GUARANTEED LOAN NOTES REDEMPTION DATE" means the date falling on or
before the Maturity Date on which the Guaranteed Loan Notes are to be
repaid in accordance with their terms.
<PAGE> 10
6
"GUARANTOR" means Omega Healthcare Investors, Inc., the second party to
this Agreement.
"GUARANTOR'S GROUP" means the Guarantor and its Subsidiaries.
"GUARANTOR'S INDEBTEDNESS" means with respect to any Person, all: (a)
liabilities or obligations, direct and contingent, which in accordance
with U.S. GAAP would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person at the date
as of which the Guarantor's Indebtedness is to be determined, including,
without limitation, contingent liabilities that in accordance with such
principles, would be set forth in a specific dollar amount on the
liability side of such balance sheet, and Capitalised Lease Obligations
of such Person; (b) liabilities or obligations of others for which such
Person is directly or indirectly liable, by way of guaranty (whether by
direct guaranty, suretyship, discount, endorsement, take-or-pay
agreement, agreement to purchase or advance or keep in funds or other
agreement, agreement to purchase or advance or keep in funds or other
agreement having the effect of a guaranty) or otherwise; (c) liabilities
or obligations secured by Liens on any assets of such Person, whether or
not such liabilities or obligations shall have been assumed by it; and
(d) liabilities or obligations of such Person, direct or contingent, with
respect to letters of credit issued for the account of such Person and
bankers acceptances created for such Person.
"HOLDING COMPANY" has the meaning described in section 736 of the
Companies Act 1985.
"INVESTMENT FACILITY" means a health care facility offering health
care-related products, including any acute care hospital, rehabilitation
hospital, nursing home, retirement centre, long-term care facility, or
medical office building and directly related facilities.
"ISSUING BANK" means Morgan Guaranty Trust Company of New York, London
Branch as guarantor under the Guaranteed Loan Notes.
"LEASE RENTAL EXPENSE" means for any period and with respect to any
Investment Facility, the total amount payable during such period by the
lessee of such Investment Facility to the Guarantor, including, without
limitation, (a) base rent (as adjusted form time to time), plus (b) all
incremental charges to which the Investment Facility is subject under the
lease relating thereto.
"LENDER" means a lender listed in Schedule 1 acting through the office
appearing under its name on the signature pages. A lender which acquires
an interest in this Facility by way of assignment or novation will become
a "LENDER" and will act through its office notified to the Agent. The
expression
<PAGE> 11
7
also includes a successor in title to a Lender. A Lender will cease to
be a "LENDER" if it novates its entire interest in this Facility.
"LENDER GROUP COMPANY" means a Lender or any Holding Company of a Lender.
"LETTER OF CREDIT" means an evergreen letter of credit issued by a bank
(acceptable to the Agent in its absolute discretion) at the request of
the Borrower in substitution for Cash Cover in accordance with the
provisions of Clause 24.7.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, claim or charge of any kind (including any agreement
to give any of the foregoing), any conditional sale or other title
retention agreement, any lease in the nature of any of the foregoing, and
the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction.
"LIBOR" means a rate per annum calculated by the Agent and notified to
the Borrower. This rate will be applied to a Loan Amount for a
particular period. It will be determined as follows:
(A) "LIBOR" will be the rate which appears on the Screen for
deposits in sterling of that amount for that period. This rate will
be determined on or about 11.00 a.m. on the first day of the period.
(B) If the rate specified in (A) above does not appear on the
Screen, LIBOR will be the rate calculated by the Agent to be the
arithmetic mean (rounded upwards, if necessary, to four decimal
places) of the respective rates, as supplied to the Agent at its
request, quoted the Reference Banks to leading banks in the London
Interbank Market at or about 11.00 am on the first day of that
period for the offering of deposits in sterling an amount equal to a
Loan Amount and for a period equal to that period provided that if
any one of the relevant Reference Banks should be unable or
otherwise fails so to supply such offered rates, the same shall be
determined on the basis of the quotations of the remaining Reference
Banks.
"LOAN AMOUNT" means the sum total of the Advances the Borrower shall at
any moment have drawn under the Facility and which shall then be
outstanding.
"MAJORITY BANKS" means Lenders whose Commitments exceed 67% in aggregate.
If, however, a Utilisation has been made and is outstanding "Majority
Banks" means Lenders whose participations in the Outstanding Amount
exceed 67% in aggregate.
<PAGE> 12
8
"MARGIN" means, on any date, the percentage set forth in the columns
identified as Level 1, Level 2, Level 3 and Level 4 (the "RATINGS
LEVELS") in the table set out below based upon the ratings assigned to
the Guarantor by Standard & Poor's, Moody's and Duff & Phelps from time
to time for senior, unsecured, non-enhanced, long term debt. If the
ratings by any of Standard & Poor's, Moody's and Duff & Phelps fall
within different Ratings Levels the applicable Rating Level shall be
based upon the lowest rating. Any changes in the Margin will be
effective as of the first day of each Term, as the case may be, that
commences following the date on which the Agent becomes aware that
Standard & Poor's, Moody's or Duff & Phelps has announced the applicable
change in its ratings.
<TABLE>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
STANDARD & POOR'S BBB OR HIGHER BY AT LEAST TWO OF THE ANY ONE OF THE LEVELS 1-3 DID NOT
AND MOODY'S AND STANDARD & FOLLOWING: BBB - BY FOLLOWING: BBB - BY APPLY
DUFF & PHELPS POOR'S/BAA2 OR STANDARD & STANDARD &
RATING OF GUARANTOR HIGHER BY MOODY'S POOR'S/BAA3 BY POOR'S/BAA3 BY
MOODY'S/ BBB - BY MOODY'S/ BBB - BY
DUFF & PHELPS DUFF & PHELPS
- -------------------- -------------------- -------------------- -------------------- --------------------
Margin 0.875% 1.00% 1.125% 1.50%
- ------ ------ ----- ------ -----
</TABLE>
"MATURITY DATE" means the date falling 364 days after the date of this
Agreement or, if earlier, the date the Facility is cancelled in full.
"MOODY'S" means Moody's Investor Service Inc. and its successors.
"MORTGAGES" means mortgages of real property constituting an Investment
Facility for which the Guarantor is the mortgagee.
"MORTGAGE EXPENSE" means for any period and with respect to any
Investment Facility, the total amount payable during such period by the
mortgagor of such Investment Facility to the Guarantor, including,
without limitation, (a) interest and principal (as adjusted from time to
time) plus (b) all incremental charges to which the Investment Facility
is subject under the mortgage.
"OFFERS" means the offer or offers to be made on behalf of the Borrower,
substantially on the terms and conditions of the Press Release or on
amended, varied or revised terms, to acquire all of the issued share
capital of Quality Care.
"OFFER DATE" means the date on which the Offer is made.
<PAGE> 13
9
"OFFER DOCUMENT" means the document or documents to be sent to Quality
Care shareholders formally setting out the Offers.
"OPERATOR" means (a) the lessee of any Investment Facility owned or
leased by the Guarantor and (b) the mortgagor of an Investment Facility
which is subject to a Mortgage to the extent that such entity controls
the operation of the Investment Facility.
"OUTSTANDING AMOUNT" means, at any time, the aggregate of the Loan
Amount and Guaranteed Loan Notes Outstandings.
"PERMITTED BORROWER'S SECURITY" means in relation to the Borrower and its
Subsidiaries:
(a) rights of set-off or combinations of accounts over credit
balances of the Borrower or its Subsidiaries with banks or other
financial institutions; or
(b) any Security existing as at the date of this Agreement full
details of which are set out in Schedule 7; or
(c) any liens arising in the ordinary course of the business of
the Borrower or any of its Subsidiaries or solely by operation of
law; or
(d) any Security created on any asset acquired the Borrower or
any of its Subsidiaries and/or or developed by it after the date of
this Agreement for the sole purpose of financing or re-financing
that acquisition and/or development and securing a principal,
capital or nominal amount not exceeding the cost of that acquisition
and/or as the case may be development; or
(e) any Security arising, as part of the arrangements for the
supply of capital equipment, from or pursuant to the reservation,
retention or acquisition by the supplier of capital equipment to the
Borrower or any of its Subsidiaries of title thereto or to the
proceeds (whether tangible or intangible) of any such goods, or of
any other interest in such goods or proceeds to secure indebtedness
owing to that supplier; or
(f) any Security created or outstanding with the prior written
consent of the Majority Lenders; or
(g) any Security (a "SUBSTITUTE SECURITY") which replaces any
other Permitted Borrower's Security and which secures a maximum
principal, capital or nominal amount not exceeding the maximum
principal, capital or nominal amount secured by such Permitted
Borrower's Security at the time it is replaced together with any
interest accruing on
<PAGE> 14
10
such amount after the date such Substitute Security is created or
arises; or
(h) any other Security created or arising on or over assets of
the Borrower or its Subsidiaries provided that the aggregate
principal, capital or nominal amount secured by all such Security
does not exceed L.500,000 in aggregate.
"PERMITTED BORROWINGS" means during the Unconditional Period (i) any
borrowings made by the Borrower hereunder or (ii) any borrowings made by
the Borrower from the lessees of Principal Properties or any of them or
any company owning 20 per cent. or more of the issued share capital of
any such lessee, or from the Guarantor or Principal Healthcare Finance
Limited, up to an amount of L.8,000,000 in aggregate, provided that
the sum of the Loan Amount plus the Permitted Borrowing referred to in
(ii) shall not at any time during the Unconditional Period exceed
L.49,000,000.
a "PERSON" includes any individual, company, corporation, firm,
partnership, joint venture, undertaking, association, organisation,
trust, state or Agency of a state (in each case whether or not having
separate legal personality).
"PGBC" means the United State Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PLAN" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the U.S. Code and is either (i) maintained by a
member of a Controlled Group for employees or a member of the Controlled
Group or (ii) maintained pursuant to a collective bargaining agreement or
to any other arrangement under which more than one employer makes
contributions to which a member of the Controlled Group is then making or
accruing an obligation to make contributions or has within the preceding
5 years made contributions.
"POTENTIAL EVENT OF DEFAULT" means an event or state of affairs which is
mentioned in Clause 24.1 but which has not become an Event of Default
because any grace period herein has not elapsed or a notice has not been
given.
"PRESS RELEASE" means the first document to be released announcing the
Offers pursuant to Rule 2.5 of the Code, being in or substantially in the
agreed form.
"PRINCIPAL PROPERTIES" means the properties in England and Wales or
Scotland, the freehold or long leasehold of which is vested in Quality
Care or one of its Subsidiaries and details of which are set out in
Schedule 8 and "PRINCIPAL PROPERTY" shall be construed accordingly.
<PAGE> 15
11
"PROCEEDINGS" means any proceeding, suit or action arising out of or in
connection with this Agreement.
"QUALIFYING LENDER" means (i) in respect of funds at the time they are
first advanced a Section 840A Bank and (ii) in respect of interest
payable thereon any person who is within the charge to UK corporation tax
at the time it is paid and for the avoidance of doubt where a person is
within the charge to UK corporation tax in respect of such interest but
either (i) can arrange its affairs such that it is not within the charge
to UK corporation tax in respect of such interest or (ii) ceases to be
within the charge to UK corporation tax, then if that person ceases to be
within the charge to UK corporation tax in respect of such interest at
the time such interest is paid that person shall not, for as long as such
interest is so treated, be treated as a Qualifying Lender for the
purposes of this Agreement.
"QUALITY CARE" means Quality Care Homes PLC, a company incorporated in
England and Wales and registered under number 2003672.
"QUALITY CARE LEASE" means a lease in respect of any of the Principal
Properties on arm's length commercial terms (including as to rent) and
containing such material covenants as a prudent landlord would require
having regard to (a) whether the lease is an occupational lease and (b)
market practice in the healthcare industry and which require the lessee
to repair the property demised and (subject to the lessee's right to
contest the same) to comply with all applicable statutory requirements
relating to the use and operation of the property.
"QUALITY CARE SHARES" means all of the issued share capital of Quality
Care which is not beneficially owned by the Borrower on or before the
Offer Date.
"RECEIVING BANKERS" means Lloyds Bank Registrars, The Causeway, Worthing,
West Sussex BN99 6DA, in its capacity as receiving agent for acceptances
under the terms of the Offers.
"REFERENCE BANKS" means the principal London offices of Morgan Guaranty
Trust Company of New York, National Westminster Bank PLC and Lloyds Bank
Plc.
"SCREEN" means the Telerate Page 3750 (or such other page as may replace
Page 3750 on that service, or such other service as may be nominated by
the British Bankers' Association as the information vendor for the
purposes of displaying British Bankers' Association interest settlement
rates for sterling).
"SECTION 840A BANK" means a bank for the purposes of section 840A of the
Income and Corporation Taxes Act 1988.
<PAGE> 16
12
"SECURITY" means security of any type created or existing over any asset
including retention of title arrangements, rights to retain possession in
the nature of security interests and any arrangement providing a creditor
with a prior right to an asset belonging to a person, or its proceeds of
sale, over other creditors in a liquidation of that person.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services and its
successors.
"SUBSIDIARY" has the meaning described in section 736 of the Companies
Act 1985 Provided that the Borrower and the Borrower's Subsidiaries shall
not be considered as Subsidiaries of the Guarantor for the purposes of
this Agreement.
"SUBSTITUTION CERTIFICATE" means a document substantially in the form set
out in Schedule 4.
"TERM" means the period for which an Advance is to be outstanding. If
the last day of this period is not a Business Day that "Term" will
instead end on the next Business Day, unless that day is in another
calendar month. Where it is in another calendar month the last day of
that "Term" will be the previous Business Day.
"TOTAL COMMITMENTS" means at any time the aggregate of the Commitments of
all the Lenders at that time.
"TOTAL GUARANTEE COMMITMENTS" means at any time the aggregate of the
Guarantee Commitments of all the Lenders at that time.
"UK GAAP" means accounting principles generally accepted and adopted in
the United Kingdom.
"UNCONDITIONAL DATE" means the date on which the Offers are declared or
become unconditional in all respects.
"UNCONDITIONAL PERIOD" means the period beginning on the date on which
the Press Release is issued and ending on the earliest of:
(A) the date on which the Offers lapse or close under the terms
of the Offer Document (and for these purposes, the Offer will not be
deemed closed if it is extended, amended, varied or revised) or, if
later, the date on which all the Quality Care Shares which are the
subject of the procedures set out in Section 428-430F of the
Companies Act 1985 have been acquired by the Borrower; and
(B) the date on which Quality Care becomes a wholly-owned
subsidiary of the Borrower.
<PAGE> 17
13
Provided that if on such date any consideration due under the Offer has
not been settled the Unconditional Period shall be extended to end beyond
the earliest of (A) and (B) and shall instead end on the earliest of:
(i) the date that such consideration is settled;
(ii) the date falling 14 days after such date.
"U.S. CODE" means the United States Internal Revenue Code of 1986 and the
rules and regulations enacted thereunder.
"US GAAP" means accounting principles generally accepted and adopted in
the United States of America.
"UTILISATION" means a utilisation of the Facility by way of Advance or a
utilisation of the guarantee facility of the Issuing Bank for the
Guaranteed Loan Notes.
"UTILISATION DATE" means the date, or proposed date, of a Utilisation.
1.2 INTERPRETATION OF CERTAIN REFERENCES:
Unless a contrary intention is indicated:
(A) References to Clauses and Schedules are to Clauses of, and
the Schedules to, this Agreement. References to paragraphs are to
paragraphs in the same sub-clause. References to sub-paragraphs are
to sub-paragraphs in the same paragraph.
(B) References to times are to London time.
(C) References to assets are to present and future assets and
include revenues.
(D) References to "L.", to "pounds" and to "sterling" are to UK
pounds sterling.
(E) References to fees or expenses include any UK value added tax
on those fees or expenses.
(F) References to anything having a "Material Adverse Effect" are
to its having, in the opinion of the Majority Banks, a material
adverse effect on the ability of the Borrower or the Guarantor (as
the case may be) to perform its obligations under this Agreement.
<PAGE> 18
14
1.3 HEADINGS:
All headings and titles are inserted for convenience only. They are to
be ignored in the interpretation of this Agreement.
1.4 CALCULATIONS:
Interest, the commitment fee and the guarantee fee will be calculated
using the following formula:
D
I = --- X R X A
Y
where:
I = interest or commitment fee or guarantee fee accrued
D = number of days in the period for which the interest or
commitment fee is to be calculated, including the first
day but excluding the last day
R = the rate of interest or of commitment fee or of
guarantee fee expressed as a fraction of the Loan Amount
or the Available Facility or the Guaranteed Loan Notes
Outstandings (as the case may be)
A = the amount on which interest or commitment fee or
guarantee fee is being calculated
Y = 365 (or 366 in a leap year).
Interest, commitment fee and guarantee fee will be treated as accruing
uniformly over each period on a daily basis. In some cases "R" or "A"
may change during a period for which interest and commitment fee is to be
calculated. In this case the interest and commitment fee will be
calculated for successive periods and then aggregated. These successive
periods will be the periods during which "R" and "A" were constant.
1.5 REIMBURSEMENTS:
If a party wishes to claim reimbursement of any amount to which it is
entitled it will deliver a demand to the reimbursing party. This will
set out the losses, expenses or other amounts to be reimbursed. The
reimbursing party agrees to pay those amounts to the party entitled to
them no later than five Business Days after the delivery of the demand
to the reimbursing party. Where there is
<PAGE> 19
15
an outstanding Event of Default, payment will be due instead on delivery
of this demand.
<PAGE> 20
16
PART II: THE FACILITY
2. THE FACILITY
2.1 AMOUNT AND NATURE:
The Facility is a 364 days revolving credit and guarantee facility under
which:-
(A) Advances may be made by the Lenders to the Borrower up to the
maximum aggregate principal amount of L.46,000,000 ( less the amount
of the Guaranteed Loan Notes Outstandings); and
(B) the Issuing Bank may undertake the liabilities of guarantor
under each Guaranteed Loan Note in the maximum aggregate amount (in
respect of principal and interest which may accrue prior to
maturity) of Guaranteed Loan Notes Outstandings of L.26,000,000.
2.2 PURPOSE:
The Borrower agrees to use the proceeds of the Facility for the
Acquisition and the costs and expenses associated with the Acquisition.
2.3 AVAILABILITY:
The Borrower may utilise the Facility after the items listed in Schedule
3 have been complied with or satisfied in a form satisfactory to the
Agent and after the Press Release as approved in accordance with Clause
22.1(H) has been issued.
2.4 ISSUE OF PRESS RELEASE
All the items in Schedule 3 must have been complied with or satisfied
before issue of the Press Release. The Agent shall promptly notify the
Borrower and the Borrower's financial advisers in writing once it is
satisfied that such items have been complied with. This notification
will be irrevocable. Subject to compliance by the Borrower with Clause
22.1(H) in relation to the Press Release, the Borrower shall then be free
to issue the Press Release.
2.5 EXPIRY OF AVAILABILITY:
The Borrower may not utilise the Facility after the Maturity Date.
2.6 FACILITY LIMITS
<PAGE> 21
17
(A) The aggregate principal amount of the Loan Amount and
Guaranteed Loan Notes Outstandings at any one time shall not exceed
the Total Commitments at that time.
(B) The aggregate principal amount of the Guaranteed Loan Notes
Outstandings at any one time shall not exceed the Total Guarantee
Commitments at that time.
3. THE LENDERS AND THE BORROWERS
3.1 RIGHTS AND OBLIGATIONS:
The rights and obligations of each Lender under this Agreement are
separate and independent from the rights and obligations of each other
Lender. A Lender may take proceedings against the Borrower or the
Guarantor on its own without joining any other Lender to those
proceedings.
3.2 FAILURE TO PERFORM:
If a Lender fails to perform its obligations the Borrower will have
rights solely against that Lender. The obligations of the Borrower to
the Agent (unless the Agent is that Lender), the Arranger and the other
Lenders will not be affected by this failure.
3.3 PARTICIPATIONS IN ADVANCES:
The participation of a Lender in an Advance will be calculated using the
following formula:
C
P = --- X A
F
where:
P = the participation of that Lender in the Advance
C = the Available Commitment of that Lender on the
Utilisation Date
F = the Available Facility on the Utilisation Date
A = the amount of the Advance.
3.4 PARTICIPATIONS IN THE GUARANTEE FACILITY:
The participation of a Lender in a Utilisation under the guarantee
facility will be calculated using the following formula:
<PAGE> 22
18
C
P = --- X A
F
where:
P = the participation of that Lender in the Utilisation
C = the Available Commitment of that Lender on the
Utilisation Date
F = the Available Facility on the Utilisation Date
A = the amount of the Utilisation.
3.5 MATURING ADVANCES AND CASH COVER:
For the purpose of Clauses 3.3 and 3.4 any amount due to be repaid on the
Utilisation Date will be treated as having been repaid and any Cash Cover
or Letter of Credit due to be provided by the Borrower on the Utilisation
Date will be treated as having increased the Available Commitment and the
Available Facility. The Agent may round participations upwards or
downwards to the nearest penny.
4. FEES AND EXPENSES
4.1 COMMITMENT FEE:
A commitment fee will accrue on the unutilised and uncancelled amount of
the Commitment of each Lender from the date on which the Agent notifies
the Borrower and the Borrower's financial advisers pursuant to Clause
2.4. This fee will accrue from the date of this Agreement until the
Maturity Date. The rate of the fee will be the percentage set forth in
the columns identified as Level 1, Level 2, Level 3 and Level 4 in the
table set out below based upon the ratings assigned to the Guarantor by
Standard & Poor's, Moody's and Duff & Phelps from time to time for
senior, unsecured, non-enhanced, long term debt. If the assigned ratings
by any of Standard & Poor's, Moody's and Duff & Phelps fall within
different Ratings Levels the applicable Rating Level shall be based upon
the lowest rating.
Any changes in the commitment fee will be effective from the date the
applicable change in the ratings assigned to the Guarantor are announced
by Standard & Poor's, Moody's or Duff & Phelps, as the case may be.
<PAGE> 23
19
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
- ------- ------- ------- ------- -------
STANDARD & POOR'S, BBB OR HIGHER BY AT LEAST TWO OF THE ANY ONE OF THE LEVELS 1-3 DID NOT
MOODY'S AND DUFF & STANDARD & FOLLOWING: BBB - BY FOLLOWING: BBB - BY APPLY
PHELPS RATING OF POOR'S/BAA2 OR STANDARD & STANDARD &
GUARANTOR HIGHER BY MOODY'S POOR'S/BAA3 BY POOR'S/BAA3 BY
MOODY'S/BBB -BY MOODY'S/BBB - BY
DUFF & PHELPS DUFF & PHELPS
- -------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Fee 0.20% 0.25% 0.30% 0.375%
- --- ----- ----- ----- ------
</TABLE>
The Borrower agrees to pay the commitment fee to the Agent for the
account of each Lender in arrear at three-monthly intervals and on the
Maturity Date.
4.2 REIMBURSEMENT OF INITIAL EXPENSES:
The Arranger and the Agent have incurred and will incur expenses in
connection with the arrangement of the Facility. The Borrower agrees to
reimburse each of the Arranger and the Agent for the amount of these
expenses to the extent they are reasonable and properly incurred. They
include the reasonable and properly incurred legal fees of the Agent's
legal advisers incurred in the negotiation, preparation and signature of
this Agreement. The Borrower agrees to pay the guarantee fee to the Agent
for the account of each Lender in arrear at three-monthly intervals and on
the Maturity Date.
4.3 GUARANTEE FEE:
A guarantee fee will accrue on the amount of Guaranteed Loan Notes
Outstandings less the amount of any Cash Cover and less the amount of any
Letter of Credit described in Clause 24.7 for the time being outstanding
in respect of the Guaranteed Loan Notes Outstandings. This fee will
accrue from the date of this Agreement until the Maturity Date. The rate
of the fee will be the percentage set forth in the columns identified as
Level 1, Level 2, Level 3 and Level 4 in the table set out below based
upon the ratings assigned to the Guarantor by Standard & Poor's, Moody's
and Duff & Phelps from time to time for senior, unsecured, non-enhanced,
long term debt. If the assigned ratings by any of Standard & Poor's,
Moody's and Duff & Phelps fall within different Ratings Levels the
applicable Rating Level shall be based upon the lowest rating.
Any changes in the guarantee fee will be effective from the date the
applicable change in the ratings assigned to the Guarantor are announced
by Standard & Poor's, Moody's or Duff & Phelps, as the case may be.
<PAGE> 24
20
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
- ------- ------- ------- ------- -------
STANDARD & POOR'S, BBB OR HIGHER BY AT LEAST TWO OF THE ANY ONE OF THE LEVELS 1-3 DID NOT
MOODY'S AND DUFF & STANDARD & FOLLOWING: BBB - BY FOLLOWING: APPLY
PHELPS RATING OF POOR'S/BAA2 OR STANDARD & BBB - BY STANDARD &
GUARANTOR HIGHER BY MOODY'S POOR'S/BAA3 BY POOR'S/BAA3 BY
MOODY'S/BBB - BY MOODY'S/BBB - BY
DUFF & PHELPS DUFF & PHELPS
- -------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Fee 0.875% 1.00% 1.125% 1.50%
- --- ------ ----- ------ -----
</TABLE>
The Borrower agrees to pay the guarantee fee to the Agent for the account
of each Lender in arrear at three-monthly intervals and on the Maturity
Date.
4.4 DOCUMENTARY TAXES:
This sub-clause applies if any U.S. or U.K. registration fee, stamp duty
or other documentary tax is required to be paid on or in connection with
the protection, preservation or enforcement of the Arranger's, the
Agent's or the Lender's rights under this Agreement, any document
referred to in or contemplated by this Agreement or any judgment obtained
in connection with this Agreement. It also applies if a U.S. or U.K.
registration fee, duty or tax is payable in order for any of these
documents to be valid, binding and enforceable or for it to be admitted
as evidence in court. In these circumstances the Borrower agrees to pay
the U.S. or U.K. registration fee, duty or tax together with any interest
or penalty for late payment which accrues after the date on which the
Borrower is notified by the Lender or Agent that such fee, duty or tax is
payable. Alternatively, the Agent or a Lender may make the payment. If
it does so, the Borrower agrees to reimburse the Agent or that Lender for
the amount paid and the losses and expenses incurred as a result of the
payment.
4.5 PROTECTION OF RIGHTS:
The Arranger, the Agent or a Lender may incur expenses in protecting,
preserving or enforcing its rights under this Agreement. The Borrower
agrees to reimburse the Arranger, the Agent or that Lender for the amount
of these expenses to the extent they are reasonable and properly
incurred.
<PAGE> 25
21
5. CANCELLATION
5.1 AUTOMATIC CANCELLATION
The Commitment of each Lender is automatically cancelled at the close of
business on the Maturity Date.
5.2 VOLUNTARY CANCELLATION:
The Borrower may cancel the whole or part of the Total Commitments by
giving notice to the Agent. This notice will take effect 5 days after it
is received by the Agent unless a later date is specified in the notice.
In that case the notice will take effect on the specified date. The
Borrower may only cancel a part of the Total Commitments (which is
unutilised) which is a minimum amount of L.5,000,000 and an integral
multiple of L.1,000,000 or the balance of the Total Commitments then
unutilised.
5.3 EFFECT OF CANCELLATION:
The Borrower may not utilise any part of the Total Commitments which has
been cancelled or which is the subject of a notice of voluntary
cancellation. When a notice of cancellation takes effect, the
Commitments of the Lenders will be reduced by an aggregate amount equal
to the reduction of the Total Commitments. Each Lender's Commitment will
be reduced in the same proportion.
<PAGE> 26
22
PART III: UTILISATION OF THE REVOLVING FACILITY
6. ADVANCE OF FUNDS
6.1 NOTICE TO THE AGENT:
Whenever the Borrower wishes funds to be advanced under the Facility it
will deliver a notice to the Agent. This notice must be substantially in
the form set out in Schedule 6. The notice must specify the amount to be
borrowed and the date of the borrowing. This date must be no sooner than
one Business Day after the date the Agent receives the notice. For this
purpose if the Agent receives the notice on a day which is not a Business
Day or after 1.00 p.m. on a Business Day, it will be treated, if the
Agent so elects, as having received the notice on the following Business
Day.
6.2 LIMITATIONS ON ADVANCES:
The following limitations apply to Advances:
(A) No Advance may exceed the Available Facility. This
limitation will be applied as at the Advance Date. For this
purpose:
(i) any part of the Facility which is subject to a
notice of voluntary cancellation will be treated as if
already cancelled, and
(ii) any amount due to be repaid on the Advance Date
will be treated as having been repaid.
(B) The Term of the Advance must be a period of one, two, three
or six months or the period to the Maturity Date if shorter than one
month.
(C) The Advance Date must be a Business Day before the Maturity
Date and at least one Business Day after the Facility has become
available under Clause 2.
(D) The Term of each Advance must expire on or before the
Maturity Date.
6.3 NOTICE TO THE LENDERS:
The Agent agrees to provide details of the notice of borrowing to each
Lender by 3.00 p.m. on the day one Business Day before an Advance Date.
These details will also include the amount of the Lender's participation
in the Advance.
<PAGE> 27
23
6.4 CONDITIONS TO BORROWING:
Subject to Clause 8, the Lenders will only be obliged to make an Advance
to the Borrower if:
(A) the Facility is available in accordance with Clause 2;
(B) a properly completed and signed notice substantially in the
form set out in Schedule 5 has been received by the Agent;
(C) there is no outstanding Event of Default or Potential Event
of Default on the Advance Date;
(D) all representations repeated on the Advance Date pursuant to
Clauses 18.2 and 19.2 and 20.3 (subject to any exception permitted
by Clause 20.3) are correct on the proposed date of Advance by
reference to the circumstances then existing.
6.5 OBLIGATION TO ADVANCE FUNDS:
If the requirements of this Clause are satisfied each Lender agrees to
advance its participation in the Advance to the Borrower. The Advance
will be made on the date specified in the notice of borrowing.
6.6 CONSEQUENCES OF AN ADVANCE NOT BEING MADE:
If a notice of borrowing is delivered but no Advance is made the Lenders
may incur losses and expenses as a result. The losses and expenses may
include those incurred in liquidating or otherwise utilising amounts
borrowed by the Lenders to fund the Advance. They may also include the
losses and expenses incurred in terminating commitments relating to the
funding or incurred in hedging open positions resulting from the Advance
not being made. The Borrower agrees to reimburse each Lender for the
amount of these losses and expenses to the extent they are reasonable and
properly incurred. This sub-clause does not apply if the Advance is not
made by reason of a default of a Lender.
6.7 ADJUSTMENT OF THE TERM:
The Term will end on the last day of a calendar month if it is for a
number of complete months and either:
(A) it commenced on the last Business Day of a calendar month; or
(B) it commenced on a day for which there is no corresponding day
in the month in which it is due to end.
<PAGE> 28
24
7. GUARANTEED LOAN NOTES
7.1 NOTICE TO THE AGENT
Whenever the Borrower wishes that Guaranteed Loan Notes be issued, it
will deliver a notice to the Agent and the Issuing Bank. This notice
must be substantially in the form set out in Schedule 6. The notice must
specify:
(A) the principal amount of the Guaranteed Loan Notes to be
issued and interest up to the Guaranteed Loan Notes Redemption Date;
(B) that the Guaranteed Loan Notes Redemption Date is not later
than the Maturity Date; and
(C) the date on which the Guaranteed Loan Notes are to be issued
which must be no sooner than one Business Day after the date the
Agent receives the notice. For this purpose if the Agent receives
the notice on a day which is not a Business Day or after 1.00 p.m.
on a Business Day, it will be treated, if the Agent so elects, as
having received the notice on the following Business Day.
7.2 ISSUE OF THE GUARANTEED LOAN NOTES
(A) Subject to Clause 7.5, if a notice for the issue of a
Guaranteed Loan Note has been received by the Agent and the Issuing
Bank, the Issuing Bank shall on or before the date for issue of the
Guaranteed Loan Notes deliver the Guaranteed Loan Notes properly
signed to the Borrower (or directly to the Receiving Bankers if the
Borrower wishes and has given the necessary details).
(B) The Issuing Bank shall not guarantee any Guaranteed Loan
Notes under Clause 7.1 if in so doing the Guaranteed Loan Notes
Outstandings at such time would exceed L.26,000,000 or the Available
Facility would be exceeded.
7.3 BORROWER'S INDEMNITY IN RELATION TO GUARANTEED LOAN NOTES
(A) The Borrower agrees to indemnify and keep the Issuing Bank
indemnified from and against all liabilities, losses and costs which
the Issuing Bank may suffer or incur under or in connection with any
of the Guaranteed Loan Notes (excluding any liabilities, losses or
costs suffered or incurred due to the gross negligence or wilful
misconduct of the Issuing Bank) and immediately reimburse any amount
paid in accordance with the authority of the Borrower in Clause
7.3(B) by the Issuing Bank pursuant to any demand under any of the
Guaranteed Loan Notes.
<PAGE> 29
25
(B) The Borrower hereby irrevocably authorises the Issuing Bank
to pay in accordance with the instructions of the payee without
investigation or confirmation by it against (a) presentation of a
demand in the form of the notice of repayment attached to the
instrument constituting the Guaranteed Loan Notes which appears on
its face to be signed by the registered holder of the Guaranteed Loan
Note and to be made in accordance with the conditions of the
Guaranteed Loan Notes and (b) surrender of the Guaranteed Loan Note
provided that the Guaranteed Loan Note appears valid on its face and
is for an amount no less than the amount of such demand, such demand
is conclusive evidence that the demand is properly made.
(C) The Issuing Bank shall, as soon as is reasonably practicable
after receipt by it of a demand made under any Guaranteed Loan
Notes, notify the Borrower (and shall return the cancelled
Guaranteed Loan Note and forward the demand to the Borrower) and, if
the Issuing Bank is not also the Agent, the Agent (who shall notify
the Banks) of such demand.
(D) The liabilities of the Borrower under this Clause 7.3 shall
not be impaired, reduced or otherwise affected or extinguished by:
(i) any waiver, time or indulgence granted to or by
the Issuing Bank to any person; or
(ii) any release, amendment, variation or dealings
with any rights or security of the Issuing Bank and the
Guaranteed Loan Notes; or
(iii) any invalidity or unenforceability of any of
the Guaranteed Loan Notes; or
(iv) any other circumstances (other than an express
release in writing and the return by the Borrower or
beneficiary to the Issuing Bank for cancellation of the
Guaranteed Loan Note) which might impair, reduce, affect or
extinguish such liabilities.
(E) the Guaranteed Loan Notes Outstandings shall be reduced:
(i) pro tanto, on the reimbursement of any amount
to the Issuing Bank under Clause 7.3; and
(ii) on the return to the Issuing Bank of any
cancelled Guaranteed Loan Note (other than a Guaranteed Loan
Note in respect of which the Issuing Bank has made a payment
under Clause 7.3) pro tanto to the principal amount of such
Guaranteed Loan Note.
<PAGE> 30
26
(F) If the Borrower so requests the Issuing Bank will sign a
replacement Guaranteed Loan Note for the whole or any part of any
other Guaranteed Loan Note which is transferred to another holder
or which is defaced or otherwise requires replacement.
7.4 INDEMNITY BANKS
(A) Subject to Clause 7.4(E), each of the Banks other than the
Issuing Bank (each being an "INDEMNITY BANK") agrees to indemnify
the Issuing Bank promptly following its first demand against all
amounts due and payable from time to time from the Borrower to the
Issuing Bank and which are unpaid under Clause 7.3 (all such
payments to be in the currency of the payment made by the Issuing
Bank).
(B) This Clause 7.4 is a continuing security and shall remain in
full force and effect until all liabilities of the Borrower to the
Issuing Bank under Clause 7.3 have been discharged in full, and is
in addition to and not in substitution for, and shall not be
prejudiced or affected by:
(i) any other security, guarantee or indemnity held
by the Issuing Bank for the payment of such liabilities; or
(ii) by the Issuing Bank's or any other person's
failure to take, perfect or enforce any other security or
claim which it may have against any person in relation to the
Borrower's liability to the Issuing Bank under Clause 7.3.
(C) None of the Indemnity Banks shall have its liability under
this Clause 7.4 lessened, impaired or discharged by any time,
indulgence or relief given by the Issuing Bank to the Borrower or
any other person.
(D) Any settlement or discharge between the Issuing Bank and any
Indemnity Bank shall be conditional upon no security or payment to
the Issuing Bank by the Borrower or any other person being avoided
or set aside or ordered to be refunded or reduced by virtue of any
provision or enactment relating to bankruptcy, insolvency or
liquidation for the time being in force and the Issuing Bank shall
be entitled to recover from the Indemnity Banks the value which the
Issuing Bank has placed upon such security or the amount of any such
payment as if such settlement or discharge had not occurred.
(E) Each Indemnity Bank's liability under this Clause 7.4 is
several and each Indemnity Bank shall only be obliged to indemnify
the Issuing Bank in relation to any Guaranteed Loan Notes to the
extent of the liabilities of the Borrower under Clause 7.3 and in
the proportion that its Guarantee Commitment bears to the aggregate
of the Total Commitments.
<PAGE> 31
27
(F) None of the Indemnity Banks is entitled to terminate its
indemnity to the Issuing Bank under this Clause 7.4 for so long as
the Issuing Bank has any liability under any Guaranteed Loan Notes.
7.5 CONDITIONS TO GUARANTEE FACILITY
Subject to Clause 8, the Lenders will only be obliged to guarantee any
Guaranteed Loan Notes if:
(A) the Facility is available in accordance with Clause 2;
(B) a properly completed and signed notice in or substantially in
the form set out in Schedule 6 has been received by the Agent;
(C) there is no outstanding Event of Default or Potential Event
of Default on the date of issue of the Guaranteed Loan Notes; and
(D) all representations repeated on the Utilisation Date pursuant
to Clauses 18.2, 19.2 and 20.3 (subject to any exception permitted
by Clause 20.3) are correct on the proposed date of the guarantee
by reference to the circumstances then existing.
8. UNCONDITIONAL PERIOD
(A) UNCONDITIONAL PERIOD: During the Unconditional Period,
notwithstanding any Event of Default or Potential Event of Default
(other than (i) any Event of Default under Clause 24.1(K)(a) or (d)
to the extent that it relates to the Guarantor, or (ii) any Event of
Default or Potential Event of Default arising from a breach by the
Borrower of Clause 22.1(I)) and notwithstanding any other event that
would entitle the Lenders to decline to make Advances or to
undertake the liabilities of guarantor under the Guaranteed Loan
Notes pursuant hereto:
(i) the Borrower shall be permitted to request, and
the Lenders shall be obliged to make Advances for the purpose
of paying any consideration payable by the Borrower in
respect of the Acquisition and to repay maturing Advances
applied for this purpose;
(ii) the Borrower shall be permitted to request the
issue of Guaranteed Loan Notes and the Issuing Bank shall
deliver the signed Guaranteed Loan Notes to the Borrower for
the purpose of paying any consideration payable by the
Borrower in respect of the Acquisition;
<PAGE> 32
28
(iii) the Agent and the Lenders will not cancel the Facility
and/or demand immediate repayment of the Loan Amount
and/or take any other action or omit to take any action
which (in each case) has the effect of causing Advances not to
be made to the Borrower or Guaranteed Loan Notes not to be
delivered or require that Cash Cover or a Letter of Credit be
effected immediately for the Guaranteed Loan Notes
Outstandings pursuant to Clause 24; and
(iv) the Agent and the Lenders will not exercise any
rights of termination in respect of this Agreement which may
arise as a result of a breach of any representation or
warranty.
(B) NO WAIVER: Paragraph (A) is not a waiver of any Event of
Default or Potential Event of Default and, at the end of the
Unconditional Period, the Agent and the Lenders may exercise any of
their respective rights in respect thereof if such Event of Default
is then continuing.
9. INTEREST
9.1 ACCRUAL OF INTEREST:
Interest will accrue on each Advance during its Term.
9.2 RATE OF INTEREST:
The rate of interest applicable during the Term of an Advance will be a
rate per annum equal to LIBOR for the currency of that Advance for that
Term plus the Margin plus the Costs Rate.
9.3 PAYMENT OF INTEREST:
The Borrower agrees to pay interest accrued on each Advance in arrear on
the last day of its Term provided that if the Term of an Advance is for a
period in excess of three months, interest accrued on that Advance shall,
in addition to payment on the last day of its Term, be paid by the
Borrower on the last day of that three month period.
9.4 NOTIFICATION OF INTEREST RATE:
On the date of calculation of the interest rate for any period, the
Agent will notify the Borrower and the Lenders by fax of LIBOR for that
period.
<PAGE> 33
29
10. REPAYMENT
10.1 REPAYMENT OF ADVANCES:
The Borrower agrees to repay each Advance on the last day of its Term
10.2 RE-UTILISATION OF ADVANCES:
Subject to the terms of this Agreement, amounts repaid or prepaid shall
again be available for utilisation under the Facility.
10.3 RE-UTILISATION IN RESPECT OF THE GUARANTEED LOAN NOTES:
Subject to the terms of this Agreement amounts by which the Guaranteed
Loan Notes Outstandings are reduced or by which Cash Cover or a Letter of
Credit is provided in respect of Guaranteed Loan Notes Outstandings shall
again be available for utilisation under the Facility in the form of
Advances.
11. PREPAYMENT
11.1 OPTIONAL PREPAYMENT OF ADVANCES:
The Borrower may give notice that it will prepay the whole or part of any
Advance on any day prior to the last day of its Term. Clause 12.6
applies to any repayment under this sub-clause. This notice must state:
(A) the date of prepayment which will be at least 5 days after
the notice is received by the Agent; and
(B) the amount to be prepaid which will be (i) a minimum of
L.5,000,000 and an integral multiple of L.1,000,000 or (ii) the
whole of the relevant Advance.
The Borrower agrees to prepay the Loan in accordance with its notice.
11.2 NO OTHER PREPAYMENT OF ADVANCES:
The Borrower may not repay the Loan Amount early except in the manner
permitted or required by this Agreement.
11.3 OPTIONAL CASH COVER FOR GUARANTEED LOAN NOTES:
(A) The Borrower may give notice that it shall provide Cash Cover
to the Issuing Bank for the Guaranteed Loan Notes Outstandings prior
to the Guaranteed Loan Notes Redemption Date. This notice must
state the
<PAGE> 34
30
date on which the Cash Cover will be provided which will
be at least 5 days after the notice is received by the Agent.
(B) The Borrower agrees to provide Cash Cover in accordance with
its notice.
<PAGE> 35
31
PART IV: CHANGES OF CIRCUMSTANCES AND PAYMENTS
12. CHANGES OF CIRCUMSTANCES
12.1 ILLEGALITY:
(A) NOTICE: Each Lender agrees to notify the Borrower if it
believes it is or will be acting illegally in relation to the
Facility. The illegality may relate to the performance of the
Lender's obligations, the maintenance of the Facility or the
Lender's funding arrangements as contemplated by this Agreement.
(B) CANCELLATION AND PREPAYMENT: If a Lender delivers a notice of
illegality the Commitment of that Lender will be cancelled on the
date of that notice. If that Lender certifies that, because of a
legal requirement applicable to that Lender, it must be repaid
before the end of its Term, the Borrower agrees to repay the
participation on the earlier date (or dates) specified by the
Lender. Clause 12.6 applies to any cancellation or repayment under
this sub-clause.
12.2 INCREASED COSTS:
(A) TYPES OF INCREASED COSTS: This sub-clause applies where all
of (i), (ii) and (iii) are true:
(i) Either:
(a) there is a change in a legal or
other requirement applicable to a Lender Group Company
or a change in its interpretation or application; or
(b) a Lender Group Company complies
with a direction or request of an authority which has
power or influence over the activities of that Lender
Group Company.
(ii) As a result, any of the following occurs:
(a) a Lender Group Company incurs an
expense;
(b) a Lender Group Company's effective
return from the Facility or on its overall capital is
reduced;
(c) any amount payable to a Lender
Group Company is reduced; or
<PAGE> 36
32
(d) a Lender Group Company does not recover an amount
which would otherwise have been paid to it.
No account will be taken of tax on the overall net income of
a Lender, or a Lender Group Company, in the country in which
it has its principal office or the office through which it
is acting for the purposes of this Agreement. Any loss,
reduction or expense wholly reflected in the Costs Rate will
also not be taken into account.
(iii) The losses, reductions and expenses arising as
a result are wholly or partly attributable to the Facility or
the arrangements made by a Lender in connection with the
Facility.
(B) NOTICE: Each Lender agrees to notify the Borrower if it
becomes aware that this sub-clause applies.
(C) PAYMENT OF ADDITIONAL AMOUNTS: The Borrower agrees to
reimburse each Lender for the losses, reductions and expenses
described in paragraph (A).
(D) PREPAYMENT/CASH COVER: If a Lender delivers a notice of
increased costs the Borrower may deliver to that Lender a notice of
prepayment of an Advance or the provision of Cash Cover or a Letter
of Credit (as provided by Clause 24.7) in respect of Guaranteed Loan
Notes. The Borrower agrees to prepay the participation of that
Lender in each Advance or provide Cash Cover or a Letter of Credit
for the guarantee of that Lender for the Guaranteed Loan Notes five
Business Days after the Lender receives this notice. Clause 12.6
applies to any prepayment of an Advance. Clause 12.7 applies to any
provision of Cash Cover in respect of Guaranteed Loan Notes.
(E) MITIGATION: This sub-paragraph does not affect the
obligations of the Borrower under paragraph (C). If this sub-clause
applies to a Lender, that Lender will do what it considers
reasonable to try to reduce the amounts payable by the Borrower
under paragraph (C). The Lender will not however be obliged to do
anything which in its opinion would or might have an adverse effect
on it.
12.3 MARKET DISRUPTION:
(A) NATURE OF MARKET DISRUPTION: This sub-clause applies if any
of (i), (ii), (iii) or (iv) are true:
<PAGE> 37
33
(i) The Agent believes that there are no reasonable
means to ascertain LIBOR because of circumstances in the
London inter-bank market.
(ii) Lenders with Commitments exceeding 35% of the
Total Commitments, or with participations exceeding 35% of
the Outstanding Amount, notify the Agent that they believe
that LIBOR would not reflect fairly the cost to them of
funding an amount outstanding under this Agreement.
(iii) Lenders with Commitments exceeding 35% of the
Total Commitments, or with participations exceeding 35% of
the Outstanding Amount, notify the Agent that they are
unable to fund their participation in the Loan in the London
inter-bank market.
(B) NOTICE: The Agent agrees to notify the Borrower and the
Lenders if this sub-clause applies.
(C) ALTERNATIVE INTEREST RATE ARRANGEMENTS: If the Agent delivers
a notice of market disruption each of the following applies:
(i) The means of determining the rates of interest
applicable to the Facility will be suspended. Instead the
Borrower agrees to pay interest to the Lenders in the manner
requested by the Agent. A request by the Agent may specify
periods to be used for the computation of interest. It must
also specify the rate of interest to apply for a period.
This rate will be the rate determined by the Agent to reflect
the cost to each Lender of funding (not including amounts
reflected in the Costs Rate) for the period plus the Margin
plus the Costs Rate. In order to assist the Agent in this
determination each Lender agrees to provide to the Agent any
information which the Agent may request. If this information
is received by the Agent within any time period specified by
the Agent it will be taken into account by the Agent in
making its determination.
(ii) The Borrower and the Agent will negotiate the
terms of an alternative arrangement for determining a rate of
interest for the Facility. The negotiations will be carried
on in good faith. Neither party is bound to continue the
negotiations after the date 30 days after the Borrower
receives the Agent's notice. If agreement is reached and if
it is approved by all the Lenders the rate of interest will
be determined in accordance with the agreement.
Sub-paragraph (i) will not apply to the extent that it is
expressly excluded by this agreement.
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34
(iii) If the circumstances described in paragraph
(A) cease to apply the Agent will notify the Borrower and the
Lenders. The notice will specify the transitional
arrangements proposed by the Agent. The Borrower agrees to
pay interest to the Lenders in accordance with sub-paragraph
(i) in respect of the transitional period unless a different
arrangement is agreed by the Agent and the Borrower and
approved by all the Lenders. In this case the Borrower
agrees to pay interest to the Lenders in the manner agreed.
(D) PREPAYMENT/CASH COVER: If this sub-clause applies, the
Borrower may deliver a notice of prepayment to the Agent. The
Borrower agrees to prepay the Loan Amount or provide Cash Cover or a
Letter of Credit (as provided by Clause 24.7) three Business Days
after the Agent receives this notice. Clause 12.6 applies to any
prepayment of an Advance. Clause 12.7 applies to any provision of
Cash Cover for Guaranteed Loan Notes Outstandings.
12.4 WITHHOLDINGS:
(A) WITHHOLDINGS AND DEDUCTIONS: This sub-clause applies if the
Borrower or the Guarantor is required by law to make a payment under
this Agreement net of a withholding or deduction.
(B) NOTICE: The Borrower agrees to notify the Agent if it becomes
aware that this sub-clause applies.
(C) GROSSING UP: The Borrower and the Guarantor agrees to
increase the amount of any payment from which it has to withhold or
deduct any sum. This increase will ensure that the person entitled
to the payment will receive, after that sum has been deducted or
withheld, the amount it would have received had no sum had to be
withheld or deducted.
(D) PAYMENT OF TAX: The Borrower and the Guarantor will pay to
the appropriate authority all amounts withheld or deducted by it and
certify to the Agent's reasonable satisfaction that it has withheld
or deducted those sums and paid them to that authority. If a
receipt or other evidence of payment can be obtained from that
authority, the Borrower or the Guarantor agrees to deliver this to
the Agent as soon as practicable.
(E) PREPAYMENT/CASH COVER: If this clause applies, the Borrower
may deliver to the Agent a notice of prepayment of an Advance or the
provision of Cash Cover or a Letter of Credit (as provided in Clause
24.7) in respect of Guaranteed Loan Notes. This notice may relate
to any part of the Loan Amount or Guaranteed Loan Notes Outstandings
which is subject (or the interest on which it is subject) to the
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35
withholding or deduction. The Borrower agrees to prepay the Loan
Amount (or the part of it which is affected) or to provide Cash
Cover or a Letter of Credit in respect of the Guaranteed Loan Notes
Outstandings (or the part of it which is affected) five Business
Days after the Agent receives this notice. Clause 12.6 applies to
the prepayment of any Advance. Clause 12.7 applies to the provision
of Cash Cover for Guaranteed Loan Notes Outstandings.
(F) TAX CREDIT: If, following any deduction or withholding
referred to in Clause 12.4(A), any increased amount is paid by the
Borrower or the Guarantor (or by the Agent on behalf of either one)
pursuant to Clause 12.4(C) and any Lender shall subsequently receive
or be granted a credit against or remission for any tax payable by
it, that Lender shall, to the extent that it can do so without
prejudice to the retention of that credit or remission, reimburse
the Borrower or the Guarantor as appropriate with such amount as
such Lender shall certify to be the proportion of such credit or
remission as is the sole opinion of the Lender allocable to the
relevant deduction or withholding. Such reimbursement shall be
made promptly upon such Lender certifying that the amount of such
credit or remission has been received by it. Any such payment
shall be conclusive evidence of the amount due to the Borrower
hereunder. Nothing herein shall interfere with the right of any
Lender to arrange its tax affairs in whatever manner it thinks fit
and, in particular, no Lender shall be obliged to claim credit or
remission in respect of the amount of any such withholding or
deduction in priority to any other claims, reliefs, credits or
deductions available to it.
(G) CEASING TO BE QUALIFYING LENDER: Each Lender agrees promptly
to notify the Agent and the Borrower if (a) it ceases to be a
Qualifying Lender or (b) it becomes aware of any circumstances which
will entitle it (or the Agent on its behalf) to demand any payment
under Clause 12.4(C). If any Lender is not or ceases to be a
Qualifying Lender, then (save in circumstances where such Lender has
ceased to be Qualifying Lender by reason of any change in law,
regulation or Inland Revenue published practice, in each case taking
effect after the date of this Agreement), the Borrower shall not be
liable to pay such Lender under Clause 12.4(C) or Clause 12.5 any
remaining excess of the sum it would have been obliged to pay if
that Lender had been or had not ceased to be a Qualifying Lender.
(H) SECTION 840A BANK: Each Lender represents that at the time of
making each Advance it is a Section 840A Bank.
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12.5 TAXES ETC. ON A LENDER:
If any Lender or the Agent on its behalf is liable to pay any tax or
other amount on or by reference to any sum payable to it under this
Agreement which is not tax on its net income imposed by the jurisdiction
in which either its principal office is situated or in which it makes the
Facility available or the United Kingdom, the Borrower agrees to
reimburse that Lender or the Agent for that liability.
12.6 PREPAYMENT OF ADVANCE:
This sub-clause applies if the Borrower is obliged to repay the Loan
Amount or any part of it under this Clause, Clause 11.1 or Clause 24.2. In
this event the Borrower agrees to pay on the date repayment is due
interest accrued on the Loan Amount (or the amount to be repaid) up to
that date. If the date of repayment of an Advance is due is not the last
day of its Term, the Borrower will reimburse each affected Lender for the
losses and expenses that Lender has incurred, or will incur, as a result.
These losses and expenses may include those incurred in liquidating or
otherwise utilising amounts borrowed by the Lender to fund that Advance.
They may also include losses and expenses incurred in hedging open
positions resulting from the repayment.
12.7 CASH COVER FOR GUARANTEED LOAN NOTES:
This sub-clause applies if the Borrower is obliged to provide Cash Cover
for Guaranteed Loan Notes Outstandings or any part of it under this
Clause, Clause 11.3, or Clause 24.2. In this event the Borrower agrees
to pay on the Guaranteed Loan Notes Redemption Date the guarantee fee
accrued on the Guaranteed Loan Notes Outstandings (or the amount of the
Cash Cover to be provided) up to that date.
13. PAYMENTS
13.1 METHOD AND TIMING OF PAYMENTS:
All payments under this Agreement must be made in immediately available
funds and in pounds sterling. Each payment must be received by 12 p.m.
on the due date. Each payment must be for value on the due date.
13.2 PAYMENTS THROUGH THE AGENT:
(A) NORMAL ARRANGEMENTS: All payments by the Borrower, the
Guarantor or by a Lender under this Agreement will be made through
the Agent. Each payment will be made to the account of the Agent
(Sort Code 16-55-80 (Reference: Credit Operations)). The Agent will
pay on an
<PAGE> 41
37
amount received as soon as the Agent has ascertained that it has
been received.
(B) ALTERNATIVE ARRANGEMENTS: If the Agent believes that it is,
or will be, illegal or impossible for it to pay on to a Lender in
accordance with paragraph (A), it agrees to notify the Borrower, the
Guarantor and that Lender. In this case the Borrower, the Guarantor
and that Lender may agree alternative arrangements for payments to
be made to that Lender. Paragraph (A) will not apply to the extent
excluded by those alternative arrangements. That Lender agrees to
provide notice of the arrangements to the Agent and will notify the
Agent of payments in accordance with Clause 15.1.
13.3 PAYMENTS TO THE BORROWER:
Each payment by the Agent to the Borrower will be made to the account of
the Borrower as specified in the notice delivered to the Agent in
accordance with Clause 6.1.
13.4 PAYMENTS TO THE LENDERS:
Each payment by the Agent to a Lender will be made to the account of that
Lender notified to the Agent for this purpose.
13.5 CHANGE OF ACCOUNT:
The Borrower or a Lender may change its receiving account to another
account situate in the United Kingdom by not less than five Business
Days' notice to the Agent. The Agent may change its receiving account by
giving not less than five Business Days' notice to the Borrower, the
Guarantor and the Lenders.
13.6 REFUNDING OF PAYMENTS BY THE AGENT:
This sub-clause applies if the Agent makes a payment out in the mistaken
belief that it has received or will receive an incoming payment in
respect of such payment out on a particular day. In this case the person
which received the payment from the Agent agrees to return it. It will
also reimburse the Agent for all reasonable losses and expenses properly
incurred by the Agent as a result of the payment. This sub-clause does
not affect the rights of the person which received the payment against
the person which failed to make the payment to the Agent.
13.7 NON-BUSINESS DAYS:
If a payment would be due on a non-Business Day the payment obligation
will be deferred until the next Business Day, unless that day is in
another calendar
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38
month. Where it is in another calendar month the
payment obligation will be brought forward to the previous Business Day.
Interest, the commitment fee and the guarantee fee will be adjusted
accordingly.
13.8 PAYMENT IN FULL:
All payments by the Borrower and the Guarantor will be made in full and
without set-off or counterclaim. No payment will be made net of a
withholding or deduction, unless this is required by law. In this event
Clause 12.4 applies.
13.9 SET-OFF:
(A) After expiry of the Unconditional Period and following an
Event of Default and while it is continuing unremedied if the
Borrower owes money under this Agreement the person to whom it is
owed may set-off this obligation against any moneys owed by that
party to the Borrower. The moneys owed by that party may be in a
different currency, arise on a separate transaction or involve
another branch.
(B) After expiry of the Unconditional Period and following an
Event of Default and while it is continuing unremedied, if the
Guarantor owes money under this Agreement the person to whom it is
owed may set-off this obligation against any moneys owed by that
party to the Guarantor. The moneys owed by that party may be in a
different currency, arise on a separate transaction or involve
another branch.
(C) Clause 13.9 applies even where amounts are not due and
payable. Where amounts are in different currencies the person to
whom money is owed under this Agreement may convert amounts into the
same currency using the then current exchange rate.
If a Lender sets off an obligation under this Agreement, that Lender
agrees promptly to notify the Agent and the Agent shall promptly notify
the Borrower and the Guarantor. The notice will provide details of the
amount set off.
14. LATE PAYMENT
14.1 DEFAULT INTEREST:
The Borrower agrees to pay interest on all amounts unpaid under this
Agreement after their due date for payment. This interest will be
computed by reference to successive periods of one month. The first of
these periods will start on the due date for payment of the unpaid
amount. The rate of interest applicable during each of these periods
will be a rate per annum equal to 1 per cent. plus LIBOR for that period
plus the Margin plus the Costs Rate. This
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39
interest will be paid in arrear on the last day of each of these periods
and on the date of payment of the unpaid amount.
14.2 INDEMNITY:
If the Borrower fails to make a payment on the due date the Borrower
agrees to reimburse the person entitled to the payment for the losses and
expenses (including loss of profit) that person incurs, or will incur, as
a result. The computation of these losses and expenses will take into
account any amount received under Clause 14.1.
15. SHARING AMONG LENDERS
15.1 NOTICE:
If an amount due to a Lender (the "Recipient") under this Agreement is
discharged other than by payment through the Agent the Lender agrees to
notify the Agent. This may occur because of the exercise of a right of
set-off, by virtue of a combination of accounts or because of a voluntary
or involuntary payment by the Borrower or the Guarantor direct
to that Lender. The notification will provide details of the amount
discharged and will be delivered no later than ten Business Days after
the discharge.
15.2 DETERMINATION BY THE AGENT:
Where a Lender has issued a notice under Clause 15.1 the Agent will
determine what payments, if any, are due under Clause 15.4. This
determination will be made on the basis of the information contained in
all the notices delivered to the Agent under Clause 15.1. The
determination will be notified to the Borrower and the Lenders.
15.3 LITIGATION:
In determining the amount due under Clause 15.4 no account will be taken
of an amount due to a Lender which has declined to participate in legal
proceedings which resulted in the payment described in Clause 15.1. This
only applies if that Lender could have joined in the proceedings or could
have instituted its own proceedings, but failed to do so.
15.4 PAYMENT TO THE AGENT:
The Recipient agrees to pay to the Agent an amount calculated as follows:
P = D (X - Y)
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40
where
P = the amount payable to the Agent
D = the aggregate amount due to the Recipient out of which an
amount has been discharged
X = the fraction of D which has been discharged
Y = the fraction which has been discharged, if any, of the
aggregate amount due to the Lender which has the
greatest proportion of that amount still outstanding.
This amount will be paid no later than five Business Days after receipt
of a notice from the Agent under Clause 15.2.
15.5 OBLIGATIONS OF THE BORROWER AND THE GUARANTOR:
Any amount due to the Recipient which would otherwise have been discharged
as described in Clause 15.1 will be treated as not having been discharged
to the extent of an amount which is or will be payable under Clause
15.4 as a result but shall instead be treated as discharging amounts due
to the recipients of the distribution pursuant to Clause 15.6 of such
amount. Accordingly each of the Borrower and the Guarantor agrees to pay
this amount to the Recipient as if it had not been discharged. This
payment is required to be made whether or not the Agent has issued a
determination under Clause 15.2.
15.6 DISTRIBUTION:
The Agent agrees to distribute to the Lenders the amount received by it
under Clause 15.4 as if that amount had been received from the Borrower
or the Guarantor in discharge of an amount due under the Agreement.
15.7 RECOVERY:
This sub-clause applies if an amount discharged as described in Clause
15.1 is recovered from, or is required to be repaid by, the Recipient.
In this case each Lender which received the benefit of a payment made
under Clause 15.4 agrees to repay to the Recipient the amount it
received. Each of these Lenders will also reimburse the Recipient for
any losses or expenses which the Recipient has incurred in connection
with the discharged amount or its recovery or repayment. The rights and
obligations of the parties shall be restored to the position before any
payment became due under Clause 15.4.
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PART V: GUARANTEE AND INDEMNITY
16. GUARANTEE
16.1 GUARANTEE:
The Guarantor guarantees the due and punctual performance of all
obligations of the Borrower under this Agreement. This guarantee is
unconditional and irrevocable.
16.2 AGREEMENT TO PAY:
The Guarantor agrees to pay on demand each amount due by the Borrower
which is unpaid. The demand may be made at any time in business hours on
any Business Day falling after the date of demand on the Borrower.
Payment will be made in the same currency as the amount due by the
Borrower.
16.3 CONTINUING GUARANTEE:
This guarantee is a continuing guarantee. No payment or other settlement
will discharge the Guarantor's obligations until the Borrower's
obligations have been discharged in full.
16.4 OTHER GUARANTEES AND SECURITY:
This guarantee is in addition to, and independent of, any other
guarantee or security.
16.5 ENFORCEMENT:
Subject to Clause 16.2, this guarantee may be enforced before any steps
are taken against the Borrower or under any other guarantee or security.
16.6 PRESERVATION OF RIGHTS:
This guarantee will only be discharged by the receipt of payment in full.
It will not be discharged by any other action, omission or fact. The
Guarantor's obligations will, therefore, not be affected by:
(A) The obligations of the Borrower being or becoming void,
invalid, illegal or unenforceable.
(B) Any change, waiver or release of the Borrower's obligations
(other than in respect of the obligations waived or released).
(C) Any concession or time being given to the Borrower.
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42
(D) The winding-up or re-organisation of the Borrower.
(E) Any change in the condition, nature or status of the
Borrower.
(F) Any of the above events occurring in relation to another
guarantor or provider of security or its obligations.
(G) Any failure to take, retain or enforce any other guarantee or
security.
(H) Any circumstances affecting or preventing recovery of amounts
due by the Borrower.
(I) Any other matter which might discharge the Guarantor.
Any receipt from any person other than the Guarantor will reduce the
outstanding balance only to the extent of the amount received.
16.7 REPRESENTATIONS OF THE GUARANTOR:
The Guarantor confirms that it does not have the benefit of any Security
in respect of this guarantee or the indemnity in Clause 17.
16.8 COVENANTS OF THE GUARANTOR:
The Guarantor agrees as follows:
(A) SECURITY: The Guarantor will not have the benefit of any
Security in respect of this guarantee or the indemnity in Clause 17.
(B) EXERCISE OF RIGHTS: The Guarantor will not:
(i) exercise any right against the Borrower or any
other person in respect of amounts paid under this guarantee;
or
(ii) claim or exercise against the Borrower any
right to any payment (whether or not in connection with this
Agreement).
(C) COMPETING PROOF: The Majority Banks may request the Guarantor
to submit a proof for amounts due to it by the Borrower or any other
guarantor. The Guarantor agrees to submit a proof promptly in
accordance with this request and to remit any amounts received in
respect of such proof to the Agent in or towards satisfaction of the
Guarantor's liabilities hereunder.
The obligations in this sub-clause will cease to have effect when the
Facility has ceased to be available and there are no amounts outstanding
under the Facility.
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16.9 SUSPENSE ACCOUNT:
Any amount received under this guarantee or in connection with amounts
due by the Borrower may be placed on suspense account with the Agent.
While the amounts are in the suspense account the Agent or any Lender may
claim and recover amounts from the Borrower and any other guarantor as if
the amount in the suspense account had not been received. Amounts may be
taken out of a suspense account by the person holding that account at any
time and applied in satisfaction of the Borrower's liabilities hereunder.
Any such suspense account shall bear interest calculated at a commercial
rate. If at any time the balance on the suspense account exceeds the
aggregate amount due from the Borrower, the Agent shall within five
Business Days either (a) repay the whole of the balance of the suspense
account (including interest accrued) to the Guarantor or (b) apply the
balance of the suspense account in satisfaction of such amounts due by
the Borrower and repay the balance (together with interest accrued) to
the Guarantor. If the Guarantor pays any amount in respect of an amount
due by the Borrower and the Guarantor's payment is placed in a suspense
account, the Guarantor shall not be liable to make any further payment in
respect of such amount due by the Borrower.
16.10 DISCHARGE CONDITIONAL:
Any settlement with, or discharge of, the Guarantor will be subject to a
condition. This condition is that the settlement or discharge will be
set aside if any prior payment, or any other guarantee or security, is
set aside, invalidated or reduced.
16.11 PRINCIPAL DEBTOR:
The Guarantor agrees to pay any amount which is expressed to be due from
the Borrower but which is not recoverable from the Guarantor as a
guarantor. Any amount due under this sub-clause will be recoverable from
the Guarantor as though the obligation had been incurred by the Guarantor
as sole or principal debtor. This sub-clause is in addition to the
Guarantor's obligations as a guarantor.
17. GUARANTOR'S INDEMNITY
17.1 INDEMNITY:
If the Borrower fails to make a payment on the due date the Guarantor
agrees to reimburse the person entitled to the payment for the losses and
expenses (including loss of profit) that person incurs, or will incur, as
a result. The Guarantor also agrees to reimburse each Lender and the
Agent for all losses and expenses arising from any obligations of the
Borrower being or becoming void, invalid, illegal or unenforceable.
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17.2 AMOUNT OF LOSS:
For the purposes of this Clause a Lender and the Agent will be treated as
having suffered a loss equal to the amount expressed as being due to it
by the Borrower. If this treatment is incorrect the Lender or the Agent
will produce evidence of its loss.
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45
PART VI: REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
18. REPRESENTATIONS OF THE BORROWER
18.1 INITIAL REPRESENTATIONS:
The Borrower confirms that each of the following is true:
(A) NATURE OF BORROWER: The Borrower is a company duly
incorporated and validly existing under the laws of England and
Wales.
(B) POWERS OF BORROWER: The Borrower has power to:-
(i) to sign and deliver this Agreement;
(ii) to exercise its rights and perform its
obligations under this Agreement; and
(iii) to enter into and perform its obligations in
connection with the Acquisition.
(C) BORROWING POWERS: The Borrower has the power to utilise the
Facility and its borrowings under this Agreement do not contravene
or exceed any borrowing limitation on it under its Memorandum and
Articles of Association or any other document or the powers of its
directors.
(D) AUTHORISATIONS: The signature and delivery of this Agreement
on behalf of the Borrower and the exercise of the Borrower's rights
and the performance of its obligations under this Agreement have
been duly authorised.
(E) BINDING OBLIGATIONS: This Agreement has been duly signed and
delivered by the Borrower. The obligations of the Borrower
described in this Agreement are valid and binding obligations of the
Borrower in accordance with their terms except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganisation,
moratorium, or other similar laws, enforcement of creditors' rights
generally and except that the remedy of specific performance and
other equitable remedies are subject to judicial discretion.
(F) LEGALITY AND CONTRAVENTIONS: The signature and delivery of
this Agreement on behalf of the Borrower and its exercise of rights
and performance of obligations under this Agreement:
(i) are not prohibited by law, regulation or order
or by the Memorandum and Articles of Association of the
Borrower;
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46
(ii) do not require any approval, filing, registration or exemption.
(iii) do not constitute an event of default under,
and do not result in an obligation to create Security under,
any document or arrangement to which the Borrower is a party.
(G) RANKING OF OBLIGATIONS: The obligations of the Borrower under
this Agreement rank at least equally with all its other present and
future unsecured and unsubordinated obligations. Certain categories
of the Borrower's other obligations will, however, be preferred in a
liquidation of the Borrower by virtue of mandatory provisions of
statute. They will be ignored for the purposes of this paragraph.
(H) AUTHORISATIONS: All authorisations, approvals, consents,
licences, exemptions, filings, registrations, notarisations and
other requirements of any governmental, judicial and public bodies
and authorities required to be obtained by the Borrower under the
laws of England, Wales and Scotland in connection with the
execution, delivery, performance, validity and enforceability of
this Agreement and to carry out the Acquisition are and will at all
relevant times be in full force and effect.
(I) CORRECTNESS OF INFORMATION SUPPLIED IN CONNECTION WITH THIS
AGREEMENT:
(i) All information supplied and to be supplied on
behalf of the Borrower to the Arranger, the Agent or any
Lender in connection with this Agreement is true, accurate
and complete in all material respects.
(ii) The Borrower is not aware of any material facts
or circumstances which have not been disclosed to any of them
which might, if disclosed, adversely affect the decision of a
person considering whether or not to lend to the Borrower.
(J) NO EVENT OF DEFAULT: No Event of Default or Potential Event
of Default has occurred and is continuing unremedied and unwaived as
a result of the exercise of the Borrower's rights or the performance
of its obligations under this Agreement.
(K) STAMP DUTY: No stamp, registration or similar tax is payable,
and no filing or registration is required, in connection with the
execution, performance or enforcement of this Agreement in each case
in the United Kingdom or the United States of America.
(L) LITIGATION INVOLVING THE BORROWER: The Borrower is not
involved in any material court or arbitration proceedings involving
a claim in excess of
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L.500,000. The Borrower is not aware that any proceedings of
this kind are being considered by any other person.
(M) WINDING UP: No petition has been presented for the winding-up
of the Borrower which has not been dismissed within 30 days and no
order has been made nor resolution passed for the liquidation,
winding-up or dissolution of the Borrower. No analogous event has
occurred in any jurisdiction.
(N) APPOINTMENTS OF RECEIVERS AND MANAGERS: no appointment of a
receiver or administrator, liquidator or other officer, of the
Borrower or any of its assets has been made. No analogous event
has occurred in any jurisdiction.
(O) NO DEFAULT: The Borrower is not in breach of any law of the
United Kingdom or United States or regulation, agreement or
arrangement applicable to it or any of its assets the enforcement of
which would have a Material Adverse Effect.
(P) CORRECTNESS OF INFORMATION CONCERNING THE OFFER: The factual
information concerning the business of the Borrower's Group and the
Acquisition or the Guarantor's Group contained in the Press Release
(when issued) and the Offer Document (when issued) (and any other
announcement or release or document issued by or on behalf of the
Borrower in connection with the Acquisition) is or will be true and
accurate in all material respects. It contains (or will contain) no
material omission and all forecasts, estimates and projections
contained therein have been or will be prepared with reasonable care
and statements of opinion therein are or will be honestly made.
(Q) MATERIAL ADVERSE CHANGE: Other than as notified to the Agent
at any time, there has been no material adverse change in the
financial position or operations of the Borrower, or on and with
effect from the expiry of the Acquisition Period, any of its
Subsidiaries since the date of their latest accounts.
(R) PAYMENT OF TAXES: The Borrower has filed within any
applicable period all tax returns which it is required to file in
each jurisdiction in which it currently conducts any material part
of its business and has paid or made provision for the payment of
all taxes which have become due pursuant to such returns or pursuant
to any assessment received by the Borrower, except for any taxes
which are being contested in good faith and with respect to which
adequate reserves have been established.
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18.2 REPETITION:
(A) The representations in Clause 18.1 (other than in sub-clauses
(F)(iii), (J), (M), (N), (O), and (P)) will be deemed repeated by
the Borrower on the Utilisation Date. This repetition will be with
reference to the facts on that day.
(B) The representations in Clauses 18.1(A), (B), (C), (E), (F)
and (H) will be deemed repeated by the Borrower on the expiry of the
Unconditional Period. This repetition will be with reference to the
facts on that day.
18.3 SURVIVAL OF REPRESENTATIONS
Each of the representations made under this Agreement shall survive the
making of each Advance and utilisation of the guarantee facility.
19. REPRESENTATIONS FOLLOWING THE ACQUISITION PERIOD
19.1 REPRESENTATION
On and with effect from expiry of the Acquisition Period the Borrower
shall confirm that each of the following is true with reference to the
facts on that day:
(A) LITIGATION OF THE BORROWER'S SUBSIDIARIES: None of the
Borrower's Subsidiaries is involved in any material court or
arbitration proceedings involving a claim in excess of L.500,000.
The Borrower is not aware that any proceedings of this kind are
being considered by any other person.
(B) TITLE TO THE PRINCIPAL PROPERTIES: that freehold title or
long leasehold title to no less than 25 of the Principal Properties
is vested in one or more of the Borrower's Subsidiaries.
(C) QUALITY CARE LEASE: each Principal Property (the freehold or
long leasehold of which is vested in one of the Borrower's
Subsidiaries at the relevant time and, in the case of long
leaseholds, in relation to which any necessary landlord's consent to
the grant of a lease on the terms of a Quality Care Lease has been
obtained) is leased on the terms of a Quality Care Lease.
(D) ENVIRONMENTAL COMPLIANCE: all property owned by the Borrower
or any of its Subsidiaries have been operated by the Borrower or
relevant Subsidiary in compliance with Environmental Laws and
Regulations, the enforcement of which would have a Material Adverse
Effect.
<PAGE> 53
49
(E) PAYMENT OF TAXES: Each of the Borrower's Subsidiaries has filed
within any applicable period all tax returns in respect of any period
ending after the end of the Acquisition Period which it is required
to file in each jurisdiction in which it currently conducts any
material part of its business and has paid or made provision for the
payment of all taxes in respect of any period ending after the end of
the Acquisition Period which have become due pursuant to such
returns or pursuant to any assessment received by any of its
Subsidiaries, except for any taxes which are being contested in good
faith and with respect to which adequate reserves have been
established.
(F) WINDING UP: No petition which is outstanding has been
presented for the winding-up of any of the Borrower's Subsidiaries
which has not been dismissed within 30 days and no order has been
made or resolution passed for the liquidation, winding-up or
dissolution of any of the Borrower's Subsidiaries. No analogous
event has occurred in any jurisdiction.
(G) APPOINTMENTS OF RECEIVERS AND MANAGERS: no appointment of a
receiver or administrator, liquidator or other officer, of any of
the Borrower's Subsidiaries or any of its assets has been made. No
analogous event has occurred in any jurisdiction.
(H) NO DEFAULT: None of the Borrower's Subsidiaries is in breach
of any law of the United Kingdom or United States or regulation,
agreement or arrangement applicable to it or any of its assets the
enforcement of which would have a Material Adverse Effect.
19.2 REPETITION:
The representations in Clause 19.1 (other than in Clause 19.1(B), (D),
(F), (G) and (H)) will be deemed repeated by the Borrower on each
Utilisation Date falling after the expiry of the Acquisition Period.
This repetition will be with reference to the facts on that date.
19.3 SURVIVAL OF REPRESENTATIONS:
Each of the representations made under this Agreement shall survive the
making of each Advance and utilisation of the guarantee facility.
20. REPRESENTATIONS OF THE GUARANTOR AND THE EXISTING AGREEMENT SUBSIDIARIES
20.1 INITIAL REPRESENTATIONS OF THE GUARANTOR:
The Guarantor confirms that each of the following is true:
<PAGE> 54
50
(A) NATURE OF GUARANTOR: The Guarantor is a company duly
organised and validly existing under the laws of Maryland. It is in
good standing in Maryland and in each state in which it is qualified
to do business.
(B) POWERS OF GUARANTOR: The Guarantor has power to own its
assets and conduct its business as it is now being conducted.
It also has power to sign and deliver this Agreement and to exercise
its rights and perform its obligations under this Agreement.
(C) AUTHORISATIONS: The signature and delivery of this Agreement
on behalf of the Guarantor and the exercise of the Guarantor's
rights and the performance of its obligations under this Agreement
have been duly authorised.
(D) BINDING OBLIGATIONS: This Agreement has been duly signed and
delivered by the Guarantor. The obligations of the Guarantor
described in this Agreement are valid and binding obligations of the
Guarantor in accordance with their terms except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganisation,
moratorium, or other similar laws, enforcement of creditors' rights
generally and except that the remedy of specific performance and
other equitable remedies are subject to judicial discretion.
(E) LEGALITY AND CONTRAVENTIONS: The signature and delivery of
this Agreement on behalf of the Guarantor and its exercise of rights
and performance of obligations under this Agreement:
(i) are not prohibited by law, regulation or order
or by the constitutional documents of the Guarantor;
(ii) do not require any approval, filing,
registration or exemption; and
(iii) do not constitute an event of default except
for such defaults which in the aggregate could not have a
Material Adverse Effect on the Borrower and do not result in
an obligation to create Security under, any document or
arrangement to which the Guarantor is a party.
(F) AUTHORISATIONS: All authorisations, approvals, consents,
licences, exemptions, filings, registrations, notarisations and
other requirements of any governmental, judicial and public bodies
and authorities required to be obtained by the Guarantor in the
United States of America in connection with the execution, delivery,
performance, validity and enforceability of this Agreement have been
obtained or effected and are and will at all relevant times be in
full force and effect.
<PAGE> 55
51
(G) RANKING OF OBLIGATIONS: The obligations of the Guarantor
under this Agreement rank at least equally with all its other
present and future unsecured and unsubordinated obligations.
Certain categories of the Guarantor's other obligations will,
however, be preferred in a liquidation of the Guarantor by virtue of
mandatory provisions of statute. They will be ignored for the
purposes of this paragraph.
(H) MATERIAL ADVERSE CHANGE: There has been no material adverse
change in the financial position or operations of the Guarantor or
any of the Existing Subsidiaries since the date of the latest
balance sheet included in the Financial Statements (the "LATEST
BALANCE SHEET"). The Guarantor's fiscal year is the twelve-month
period ending on 31st December in each year.
20.2 REPRESENTATIONS IN RELATION TO THE GUARANTOR'S GROUP:
The Guarantor confirms that each of the representations in the terms of
Sections 3.5 to 3.17 of Article 3 of the Existing Agreement relating to
the Guarantor or the Existing Agreement Subsidiaries is true. Provided
that any waiver, grant of indulgence or time, consent or release given in
respect of Sections 3.5 to 3.17 of Article 3 of the Existing Agreement
shall also be effective as a waiver, grant of indulgence or time, consent
or release in respect of this Clause 20.2.
20.3 REPETITION:
(A) The representations in Clauses 20.1 (other than in sub-clause
20.1(E)(iii)), will be deemed repeated by the Guarantor on the
Utilisation Date and if the Outstanding Amount is increased then the
Guarantor will be deemed to repeat the confirmation in Clause 20.2
on the Utilisation Date except for changes in the ordinary course of
business which, either singly or in aggregate would have a Material
Adverse Effect. These repetitions will be with reference to the
facts on that day.
(B) The representations in Clauses 20.1(A), (B), (D), (E) and (F)
will be deemed repeated on the expiry of the Unconditional Period.
This repetition will be with reference to the facts on that day.
20.4 SURVIVAL OF REPRESENTATIONS:
Each of the representations made under this Agreement shall survive the
making of each Advance.
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52
21. INFORMATION COVENANTS
21.1 PERIODIC REPORTS OF THE BORROWER:
The Borrower agrees to deliver each of the following to the Agent as soon
as they become available and, in any event, by the latest date indicated:
<TABLE>
<CAPTION>
Document/Information Latest Date
-------------------- -----------
<S> <C>
Annual audited 100 days after the end of the financial year
consolidated profit and
loss account and balance
sheet of the Borrower and
its Subsidiaries
Quarterly consolidated 55 days after the end of each quarter of the
profit and loss account financial year
and balance sheet of the
Borrower and its
Subsidiaries
A certificate, signed by At the same time as delivery of the annual
an Authorised Signatory of accounts.
the Borrower confirming no
Event of Default or
Potential Event of Default
or default under any other
material agreement
</TABLE>
In each case the Borrower agrees to deliver sufficient copies for the
Agent and each Lender.
21.2 PERIODIC REPORTS OF THE GUARANTOR:
The Guarantor agrees to deliver each of the following to the Agent as
soon as they become available and, in any event, by the latest date
indicated:
<TABLE>
<CAPTION>
Document/Information Latest Date
-------------------- -----------
<S> <C>
Annual audited 100 days after the end of the financial year
consolidated profit and
loss account and balance
sheet of the Guarantor and
its Subsidiaries.
Quarterly consolidated 55 days after the end of each quarter of the
profit and loss account financial year
and balance sheet of the
Guarantor and its
Subsidiaries
A certificate, signed by At the same time as delivery of the annual accounts
an Authorised Signatory of
the Guarantor confirming
no Event of
</TABLE>
<PAGE> 57
53
<TABLE>
<S> <C>
Default or Potential Event of Default
or default under any other material
agreement
</TABLE>
In each case the Guarantor agrees to deliver sufficient copies for the
Agent and each Lender.
21.3 U.K. GAAP:
The Borrower confirms and agrees that all annual accounts and balance
sheets to which Clause 21.1 applies have been or will be prepared in
accordance with the applicable law and in accordance with UK GAAP
consistently applied except to the extent that the accompanying notes
provide a description of a different treatment.
21.4 US GAAP:
The Guarantor confirms and agrees that all annual accounts and balance
sheets to which Clause 21.2 applies have been or will be prepared in
accordance with the applicable law and in accordance with US GAAP
consistently applied except to the extent that the accompanying notes
provide a description of a different treatment.
21.5 REQUESTS:
(A) The Agent may request the Borrower to deliver to the Agent
information reasonably requested about the Borrower or the
Borrower's Group or their assets and their business. The Borrower
agrees to deliver promptly to the Agent the information requested as
soon as practicable.
(B) The Agent may request the Guarantor to deliver to the Agent
information reasonably requested about the Guarantor or the
Guarantor's Group or their assets and their business. The Guarantor
agrees to deliver promptly to the Agent the information requested as
soon as practicable.
21.6 EVENT OF DEFAULT:
The Borrower agrees to notify the Agent immediately it becomes aware of
the occurrence of an Event of Default or Potential Event of Default.
<PAGE> 58
54
22. GENERAL COVENANTS OF THE BORROWER
22.1 COVENANTS:
The Borrower agrees (unless the Agent acting on the instructions of the
Majority Lenders consents) as follows:
(A) RANKING OF OBLIGATIONS: The Borrower will ensure that its
obligations under this Agreement rank at least equally with all its
other present and future unsecured and unsubordinated obligations.
Certain categories of the Borrower's other obligations will,
however, be preferred in a liquidation of the Borrower by virtue of
mandatory provisions of statute. They will be ignored for the
purposes of this paragraph.
(B) COMPLIANCE: The Borrower will exercise its rights and perform
its obligations under this Agreement without contravention of
applicable laws. If approvals are required the Borrower will obtain
and maintain them and to comply with their terms. The Borrower will
also make any necessary filings.
(C) NEGATIVE PLEDGE: The Borrower will not and on and with effect
from expiry of the Acquisition Period will procure that none of its
Subsidiaries will, create or allow to exist any Security over any of
its assets other than a Permitted Borrower's Security.
(D) DISPOSAL OF ASSETS: The Borrower will not and on and with
effect from expiry of the Acquisition Period will procure that none
of its Subsidiaries will dispose of any of its assets (not including
cash or cash equivalents). This does not apply to:
(i) disposals which in the aggregate are made at a
fair value (taking into account any liabilities assumed); or
(ii) to disposals of obsolete or unused assets on an
arms' length basis or as waste; or
(iii) any disposal to another member of the
Borrower's Group; or
(iv) other arm's length disposals made with the
Agents' consent (such consent not to be unreasonably withheld
or delayed).
For these purposes, a lease (other than on arm's length terms) is
treated as a disposal but, for the avoidance of doubt, a
management agreement is not a disposal.
<PAGE> 59
55
(E) COMPLIANCE WITH LAWS: The Borrower will and on and with
effect from expiry of the Acquisition Period will procure that its
Subsidiaries will comply with all applicable United Kingdom laws
and regulations, and the terms of all permits, authorisations and
licenses the enforcement of which would have a Material Adverse
Effect on the Borrower.
(F) INSURANCE: The Borrower will maintain or will procure the
maintenance of and on and with effect from the expiry of the
Acquisition Period will procure that its Subsidiaries will maintain
or will procure the maintenance of insurance relating to its assets
and activities against those risks and at those levels which are
commercially prudent.
(G) LITIGATION: The Borrower agrees to notify the Agent as soon
as it becomes aware that any proceedings of the kind described in
Clause 18.1(L) are being considered by any other Person.
(H) DOCUMENTS FOR THE OFFERS: The Borrower will obtain the prior
approval of the Agent to the Press Release and will notify the
Arranger of the issue by or on behalf of the Borrower, and will
supply copies to the Arranger, of all other releases, announcements
and documents issued by or on behalf of the Borrower in connection
with the Offers.
(I) BORROWINGS: During the Unconditional Period, the Borrower
will not borrow any moneys other than Permitted Borrowings.
(J) MERGER AND CONSOLIDATION: The Borrower shall not merge or
consolidate with any Person (whether or not any Borrower is the
surviving entity).
(K) USE OF PROCEEDS: The Borrower shall not use the proceeds of
the Facility for any purpose other than for the Acquisition and
related costs.
(L) ACQUISITION: The Borrower will not waive or vary the terms of
the Offer as set out in the Press Release.
(M) OFFER DOCUMENT: The Borrower will provide a copy of the final
draft of the Offer Document to the Agent as soon as it is available.
(N) CASH COVER: The Borrower shall take such steps as the
Issuing Bank shall from time to time require in order to ensure that
Cash Cover held by the Borrower with the Issuing Bank from time to
time shall satisfy the Bank of England's requirements in relation to
the Issuing Bank for cash collateral for the purpose of nil
weighting.
<PAGE> 60
56
22.2 DURATION OF COVENANTS:
The obligations of the Borrower under this Clause and Clause 21.1 will
cease to have effect when the Facility has ceased to be available and
there are no amounts outstanding under the Facility.
23. GENERAL COVENANTS OF THE GUARANTOR
23.1 GENERAL COVENANTS
The Guarantor agrees as follows:
(A) RANKING OF OBLIGATIONS: The Guarantor will ensure that its
obligations under this Agreement rank at least equally with all its
other present and future unsecured and unsubordinated obligations.
Certain categories of the Guarantor's other obligations will,
however, be preferred in a liquidation of the Guarantor by virtue of
mandatory provisions of statute. They will be ignored for the
purposes of this paragraph.
(B) COMPLIANCE: The Guarantor will exercise its rights and
perform its obligations under this Agreement without contravention
of applicable U.S. laws. If approvals are required the Guarantor
will obtain and maintain them and will comply with their terms. The
Guarantor will also make any necessary filings.
(C) COMPLIANCE WITH LAWS: The Guarantor will comply with all
applicable U.S. laws and regulations, and the terms of all permits,
authorisations and licenses.
(D) RATINGS: the Guarantor shall promptly notify the Agent of any
change in the ratings assigned to the Guarantor by Standard &
Poor's, Moody's or Duff & Phelps from time to time for senior,
unsecured, non-enhanced, long term debt.
(E) EXISTING AGREEMENT: the Guarantor shall promptly notify the
Agent of any amendments, waivers and releases made in respect of the
Existing Agreement.
23.2 EXISTING AGREEMENT:
(A) Subject to Clause 23.2(C) the Guarantor agrees that it will
comply with and will procure that the Existing Agreement
Subsidiaries will comply with the terms of Sections 6.1 to 6.16 of
Article 6 of the Existing Agreement.
<PAGE> 61
57
(B) Subject to Clause 23.2(C) the Guarantor agrees that it will
not and will procure that the Existing Agreement Subsidiaries will
not, do, agree to do or permit to be done in breach of the terms of
Section 7.1 to 7.16 of Article 7 of the Existing Agreement.
(C) Any waiver, grant of indulgence or time, consent or release
given in respect of Sections 6.1 to 6.16 of Article 6 and Sections
7.1 to 7.16 of Article 7 of the Existing Agreement shall also be
effective as a waiver, grant of indulgence or time, consent or
release in respect of this Clause 23.2.
For the avoidance of doubt, the entering into and the performance
and observance of this Agreement by the parties shall not be
deemed to be a breach of this Agreement by the Guarantor
notwithstanding Section 7.3 of the Existing Agreement. The
Guarantor confirms that the waiver referred to in item 10 of
Schedule 3 has been obtained.
23.3 DURATION OF COVENANTS:
The obligations of the Guarantor under this Clause will cease to have
effect when the Facility has ceased to be available and there are no
amounts outstanding under the Facility.
24. EVENTS OF DEFAULT
24.1 EVENTS OF DEFAULT:
Each of the following is an Event of Default:
(A) NON-PAYMENT OF PRINCIPAL: The Borrower or the Guarantor fails
to pay any amount of principal due under this Agreement.
(B) NON-PAYMENT OF INTEREST: The Borrower or Guarantor fails to
pay any interest accrued and due under this Agreement on the date of
demand unless the delay was caused by a technical failure or
administrative oversight in which case on the date three Business
Days after the date of demand.
(C) OTHER COVENANTS: The Borrower or the Guarantor fails to
perform or observe any of its obligations under this Agreement
(excluding obligations undertaken by the Guarantor pursuant to
Clauses 23.2(A) and (B)) and such failure remains unremedied for a
period of thirty days after notice requiring the same to be remedied
shall have been given to the Borrower or the Guarantor as the case
may be by the Agent and provided that for this purpose anything that
should be done under this Agreement shall remain capable of remedy
notwithstanding that it
<PAGE> 62
58
should have been done on a particular date and was not done on that
date.
(D) UNTRUE REPRESENTATIONS: Any statement made, or deemed
repeated, in this Agreement (excluding statements made pursuant to
Clauses 18.1(J), (M), (N), 19.1(H) and 20.2) or deemed repeated by
the Guarantor pursuant to Clause 20.3 (subject to any exception
permitted by Clause 20.3) is untrue or misleading when that
statement is made in any material respect which in any event results
or is likely to result in a Material Adverse Effect.
(E) CROSS DEFAULT OF THE BORROWER'S GROUP: Any Borrowed Monies
Indebtedness in aggregate in excess of L.50,000 at any one time of
the Borrower or on and with effect from expiry of the Acquisition
Period any Subsidiary of the Borrower.
(i) is not paid or repaid when due or within any
applicable grace period; or
(ii) becomes capable of being declared due and
payable before its stated date of payment by reason of an
event of default howsoever called.
(F) CROSS DEFAULT OF THE GUARANTOR'S GROUP:
(i) Failure by the Guarantor or any of its Existing
Agreement Subsidiaries to perform or observe any term,
condition or covenant of any bond, note, debenture, loan
agreement, indenture, guarantee, trust agreement, mortgage or
similar instrument to which it is a party or by which it is
bound, or by which any of its properties or assets may be
affected including, without limitation, any of the
subordinated notes or other agreements or evidences of
Guarantor's Indebtedness covered by any subordination
agreement (a "Debt Instrument"), so that, as a result of any
such failure to perform, Guarantor's Indebtedness included
therein or secured or covered thereby may be declared due and
payable prior to the date on which such Guarantor's
Indebtedness would otherwise become due and payable; or
(ii) Any event or condition referred to in any Debt
Instrument shall occur or fail to occur, so that, as a result
thereof, Guarantor's Indebtedness included therein or secured
or covered thereby may be declared due and payable prior to
the date on which such Guarantor's Indebtedness would
otherwise become due and payable; or
<PAGE> 63
59
(iii) Failure to pay any Guarantor's Indebtedness
for borrowed money due at final maturity or pursuant to
demand under any Debt Instrument;
provided, however, that the provisions of this Clause 24.1(F)
shall not be applicable to any Debt Instrument that on the date
this Clause 24.1(F) would otherwise be applicable thereto, relates
to or evidences Guarantor's Indebtedness in a principal amount of
less than $5,000,000.
(G) INSOLVENCY AND REORGANISATION: Any petition is presented and
not discharged within thirty days or a resolution passed with a view
to the winding-up, re-organisation or administration of the Borrower
or on and with effect from the expiry of the Acquisition Period or
any of its Subsidiaries or with a view to the appointment of an
administrator, receiver or trustee in bankruptcy in relation to the
Borrower or on and with effect from the expiry of the Acquisition
Period any of its Subsidiaries or the whole or any substantial part
of the assets of the Borrower or on and with effect from the expiry
of the Acquisition Period the whole or any substantial part of the
assets of any of its Subsidiaries.
(H) ENFORCEMENT OF SECURITY: The holder of any Security over any
of the assets of the Borrower or on and with effect from the expiry
of the Acquisition Period any of the Borrower's Subsidiaries
commences the enforcement of that Security for an amount in excess
of L.50,000.
(I) ATTACHMENT OR DISTRESS: Any asset of the Borrower or on and
with effect from expiry of the Acquisition Period of any of its
Subsidiaries is subject to attachment, sequestration, execution or
any similar process.
(J) INABILITY TO PAY DEBTS: the Borrower or on and with effect
from expiry of the Acquisition Period any Subsidiary of the Borrower
is unable to pay its debts as they fall due or admits its inability
to pay its debts as and when they fall due or the value of its
assets is less than the amount of its liabilities discounted as
appropriate (taking into account its contingent and prospective
liabilities) or seeks a composition or arrangement with its
creditors or any class of them.
(K) INSOLVENCY OF THE GUARANTOR'S GROUP:
(a) The Guarantor or any of the Existing Agreement
Subsidiaries shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, be adjudicated
insolvent, petition or apply to any tribunal for the
appointment of a receiver, custodian, or any trustee for it
or him or a substantial part of its or his assets, or shall
commence any proceeding under any bankruptcy, reorganisation,
arrangement, readjustment of debt, dissolution or
<PAGE> 64
60
liquidation law of statute any jurisdiction, whether now
or hereafter in effect, or the Guarantor or any of the Existing
Agreement Subsidiaries shall take any corporate action to
authorise any of the foregoing actions; or there shall have been
filed any such petition or application, or any such proceeding
shall have been commenced against it or him, that remains
undismissed for a period of thirty days or more; or any order
for relief shall be entered in any such proceeding; or the
Guarantor or any of the Existing Agreement Subsidiaries by any
act or omission shall indicate its or his consent to, approval
of or acquiescence in any such petition, application or
proceeding or the appointment of a custodian, receiver or any
trustee for it or him or any substantial part of any of its or
his properties, or shall suffer any custodianship, receivership
or trusteeship to continue undischarged for a period of thirty
days or more; or
(b) The Guarantor or any of the Existing Agreement
Subsidiaries shall generally not pay its or his debts as such
debts become due; or
(c) The Guarantor or any of the Existing Agreement Subsidiaries
have concealed, removed, or permitted to be concealed or
removed, any part of its or his property, with intent to hinder,
delay or defraud its or his creditors of any of them or made or
suffered a transfer of any of its or his property that may be
fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or shall have made any transfer of its or his
property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or shall
have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its or his property through legal
proceedings or distraint that is not vacated within thirty days
from the date thereof; or
(d) the holder of any Security commences the
enforcement of that Security over the whole or any
substantial part of assets of the Guarantor or any of the
Existing Agreement Subsidiaries.
(L) JUDGEMENTS OF THE GUARANTOR'S GROUP: any judgment against the
Guarantor or any of the Existing Agreement Subsidiaries or any
attachment, levy or execution against any of its properties for any
amount in excess of $2,500,000 shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of thirty
days or more.
(M) INSOLVENCY EQUIVALENCE: Anything analogous to any of the
events described in paragraphs E to H occurs in any jurisdiction in
which the
<PAGE> 65
61
relevant person is incorporated or carries on a business
or in which the whole or any substantial part of the assets of such
person are located.
(N) ERISA:
(i) The termination of any Plan or the institution
by the PBGC of proceedings for the involuntary termination of
any Plan, in either case, by reason of, or that results or
could result in, a "material accumulated funding deficiency"
under Section 412 of the U.S. Code; or
(ii) Failure by the Guarantor to make required
contributions, in accordance with the applicable provisions
of ERISA, to each of the Plans hereafter established or
assumed by it.
(O) PERSONNEL: Essel Bailey, Jr. shall for any reason other than
death or disability cease to act as Chief Executive Officer of the
Guarantor.
(P) DEFAULT BY OPERATOR: Ninety (90) days after the occurrence
of any default by an Operator in the payment of amounts which are
due and owing under any lease, note, mortgage or deed of trust (or
related security documents) between an Operator and the Guarantor or
any other event of default by an Operator under the applicable
lease, note, mortgage or deed of trust (or related security
document) as a result of which the Guarantor accelerates the
obligations of such Operator, with respect in each case to an
Operator whose aggregate Lease Rental expense and/or Mortgage
Expense accounts for 15% or more of the aggregate amount of all
Lease Rental Expense and/or Mortgage Expense owing to the Guarantor
from all Operators.
(Q) UNLAWFULNESS OR REPUDIATION: It is unlawful for the Borrower
or the Guarantor to comply with, or it repudiates, its material
obligations under this Agreement.
(R) MERGER OR CHANGE OF CONTROL: The Borrower merges with any
other person.
(S) MATERIAL ADVERSE CHANGE: There has been a material adverse
change in the financial condition or business of the Guarantor or
the Guarantor's Group since 31st December, 1996.
(T) FAILURE OF PURPOSE: The Borrower is unable to use the
proceeds of the Facility for the purpose described in Clause 2.2.
(U) GUARANTEE: The Guarantee of the Guarantor ceases to be a
legal, valid and binding obligation of the Guarantor.
<PAGE> 66
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(V) OWNERSHIP:
(i) any person or a group of related persons shall
acquire (a) beneficial ownership in excess of 25 percent of
the issued share capital of the Guarantor or other voting
interest having ordinary voting powers to elect a majority of
the directors, managers or trustees of the Guarantor
(irrespective of whether at the time shares of any other
class or classes shall have or might have voting power by
reason of the happening of any contingency) or (b) all or
substantially all of the Investment Facilities of the
Guarantor; or
(ii) a majority of the Board of Directors of the
Guarantor, at any time, shall be composed of Persons other
than (a) Persons who were members of the board of directors
on the date of this Agreement, or (b) Persons who
subsequently become members of the board of directors on the
date of this Agreement, or (c) Persons who subsequently
become members of the board of directors and who either (x)
are appointed or recommended for election with the
affirmative vote of a majority of the directors in office as
of the date of this Agreement of (y) are appointed or
recommended for election with the affirmative vote of a
majority of the board of directors of the Guarantor then in
office.
(W) CROSS-ACCELERATION INTO EXISTING AGREEMENT: If (A) the
Guarantor fails to perform or observe any of its obligations referred
to in Clauses 23.2(A) and (B) and such failure remains unremedied for
thirty days after notice requiring the same to be remedied shall have
been given to the Guarantor by the Agent or if any statement
made pursuant to Clause 20.2 or deemed repeated pursuant to Clause
20.3 is untrue or misleading when that statement is made in any
material respect which in any event results or is likely to result in
a Material Adverse Effect or any Guarantor's Indebtedness existing
under the Existing Agreement is not paid or repaid when due or within
any applicable grace period or becomes capable of being declared due
and payable before its stated date of payment by reason of an event
of default howsoever called and (B) the agent under the Existing
Agreement gives notice to the Guarantor pursuant to Article 8 of the
Existing Agreement.
24.2 CONSEQUENCES OF AN EVENT OF DEFAULT:
(A) CONSEQUENCES: Subject to paragraph (B) if an Event of Default
occurs and is continuing unremedied and unwaived the Agent may by
notice to the Borrower:
(i) cancel the Facility; or
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63
(ii) demand immediate repayment of the Loan Amount
and require that Cash Cover or a Letter of Credit be effected
immediately for the Guaranteed Loan Notes Outstandings
whereupon the Loan Amount shall become repayable and an
amount equal to such Cash Cover shall become immediately due
and payable
or all of the above. The Agent agrees to deliver a notice under
this sub-clause if the Majority Banks instructs the Agent to do
so. In the case of cancellation the Lenders will be under no
further obligation to make an Advance and the Issuing Bank shall
be under no further obligation to guarantee any issued Guaranteed
Loan Notes. In the case of a demand for repayment the Borrower
agrees to pay the Lenders in accordance with the notice.
(B) UNCONDITIONAL PERIOD: Except in consequence of (i) an Event
of Default under Clause 24.1(K)(a) or (d) to the extent that it
relates to the Guarantor or (ii) an Event of Default arising from a
breach by the Borrower of Clause 22.1(I), the Agent may not during
the Unconditional Period, as a result of the occurrence of an Event
of Default, cancel the Facility or demand immediate repayment of
Advances made or Cash Cover for Guaranteed Loan Notes issued for the
purpose of paying any consideration payable by the Borrower in
respect of the Acquisition.
24.3 INDEMNITY:
If there is a Event of Default the Borrower agrees to reimburse the Agent
and each Lender against all losses, liabilities, claims, damages or
expenses including the reasonable fees of legal advisers and settlement
costs that the Agent or that Lender incurs, or will incur, as a result
(except as such are resulting from the Agent or any Lenders' gross
negligence or wilful misconduct). Clause 12.6 also applies.
24.4 CURRENCY INDEMNITY:
This sub-clause applies where a payment due by the Borrower or the
Guarantor under or in connection with this Agreement is made or is
required to be made in a currency other than sterling. To the extent
that the amount received, when converted into sterling, is less than the
amount due the Borrower agrees to reimburse the person entitled to the
payment for the difference. For the purposes of the computation of this
amount that person will apply to the amount received a rate of exchange
prevailing on the date of receipt. If, however, that person is unable to
use the amount received to buy sterling on the date of receipt, the rate
of exchange prevailing on the first date on which that person could buy
sterling will be used instead. The obligation in this sub-clause is a
separate and independent obligation.
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24.5 REDUCTION OF CASH COVER:
If the Guarantor provides Cash Cover in respect of the Guaranteed Loan
Notes Outstandings under any provision of this Agreement, and the amount
of the Guaranteed Loan Notes Outstandings reduces to a level below the
aggregate amount of such Cash Cover and any Letter of Credit provided
pursuant to Clause 24.7, the Agent shall immediately repay the excess
amount of such Cash Cover to the Borrower or the Guarantor (as the case
may be).
24.6 CASH COVER ACCOUNT:
Any Cash Cover provided by the Borrower or the Guarantor in respect of
the Guaranteed Loan Notes under any provision of this Agreement shall be
credited to an account with the Agent paying a commercial rate of
interest. The Agent shall not intermingle the credit balance on such
account with any other funds. The Agent shall not apply the credit
balance on such account, or set off or combine the credit balance on such
account for any purpose other than meeting the reimbursement obligation
of the Borrower under Clause 7.3(A).
24.7 LETTER OF CREDIT:
If under any provision of this Agreement, the Borrower or the Guarantor
is obliged to provide Cash Cover, the Borrower or the Guarantor may
instead provide, for the whole or any part of the relevant amount due, an
evergreen Letter of Credit. The Agent may draw upon such letter of
credit only for the purpose of meeting the Borrower's reimbursement
obligation under Clause 7.3(A).
24.8 AMENDMENT OF EVENTS OF DEFAULT IN EXISTING AGREEMENT:
If at any time any of sections 8.4 (other defaults), 8.6 (bankruptcy), 8.7
(judgments), 8.8 (ERISA), 8.10 (ownership), 8.12 (personnel) or 8.14
(default by Operator) of the Existing Agreement is waived, the subject
of a grant of indulgence or time or a consent or a release or is amended,
modified or supplemented, the Borrower and the Guarantor may request that
the Agent and the Lenders agree to an equivalent waiver, grant of
indulgence or time, consent, release, amendment, modification or
supplement to the provisions of Clauses 24.1(F), (K), (L), (N), (V), (O)
or (P) respectively and the Agent and the Lenders shall not unreasonably
withhold or delay such agreement.
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PART VII: MISCELLANEOUS
25. THE AGENT AND THE ARRANGER
25.1 APPOINTMENT:
The Agent is appointed as an agent by each Lender. The Agent is not
acting as agent of the Borrower under this Agreement except for the
limited purpose of signing Substitution Certificates in accordance with
Clause 25.2.
25.2 AUTHORITY:
The Agent is authorised to exercise the rights, powers, discretions and
duties which are specified by this Agreement. The Agent may also act in
a manner reasonably incidental to these matters.
25.3 DUTIES:
In addition to the obligations of the Agent set out elsewhere in this
Agreement the Agent agrees as follows:
(A) NOTICES: The Agent will as soon as reasonably practicable
notify each Lender of the contents of each notice received from the
Borrower or the Guarantor under the terms of this Agreement. If the
notice only affects particular Lenders the Agent may elect to notify
only those Lenders, in which case it will do so as soon as
reasonably practicable.
(B) OTHER DOCUMENTS: When the Borrower or the Guarantor delivers
to the Agent any other document required to be delivered under this
Agreement the Agent will as soon as reasonably practicable provide a
copy to each Lender. The Borrower or the Guarantor, as the case may
be, agrees to reimburse the Agent for the costs of preparing any
copies required for this purpose.
(C) EVENTS OF DEFAULT: The Agent will notify each Lender of any
Event of Default or Potential Event of Default. This obligation
will not arise, however, until there is a payment default of which
the Agent is aware or until the Agent receives express notice with
reasonable supporting evidence of the Event of Default or Potential
Event of Default. Until this time the Agent is entitled to assume
that there is no Event of Default or Potential Event of Default.
The Agent is not required to make inquiries. Information referred
to in Clause 25.11 does not have to be disclosed under this
sub-clause.
(D) INFORMATION: The Agent will request the Borrower and the
Guarantor to deliver to the Agent any information reasonably
requested by a Lender.
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25.4 POWERS:
In addition to the powers of the Agent set out elsewhere in this
Agreement the Agent has the following powers:
(A) PROFESSIONAL ADVISERS: The Agent may instruct professional
advisers to provide advice in connection with the Facility.
(B) AUTHORITY FROM MAJORITY BANKS: The Agent may take any action
which is not inconsistent with this Agreement and which is
authorised by the Majority Banks.
(C) VIEWS OF MAJORITY BANKS: In exercising any of its rights,
powers or discretions the Agent, if it seeks the views of the
Majority Banks, shall have regard thereto. If it exercises those
rights, powers or discretions in accordance with those views the
Agent will incur no liability.
(D) PROCEEDINGS: The Agent may institute legal proceedings
against the Borrower in the name of those Lenders which authorise it
to take those proceedings.
(E) COMPLIANCE WITH LAW: The Agent may take any action necessary
for it to comply with applicable laws.
The Agent is not required to exercise any of these powers and will incur
no liability if it fails to do so. In the context of legal proceedings
the Agent may decline to take any step until it has received indemnities
or security satisfactory to it.
25.5 RELIANCE:
The Agent is entitled to rely upon each of the following:
(A) Advice received from professional advisers.
(B) A certificate of fact received from the Borrower or the
Guarantor and signed by an Authorised Person.
(C) Any communication or document believed by the Agent to be
genuine.
The Agent will not be liable for any of the consequences of relying on
these items.
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25.6 EXTENT OF AGENT'S DUTIES:
(A) NO OTHER DUTIES: The Agent has no obligations or duties other
than those expressly set out in this Agreement.
(B) ILLEGALITY AND LIABILITY: The Agent is not obliged to do
anything which is illegal or which may expose it to liability to any
person.
(C) NOT TRUSTEE: The Agent is not acting as a trustee for any
purpose in connection with this Agreement.
25.7 RESPONSIBILITY OF THE LENDERS:
Each Lender is responsible for its own decision to become involved in the
Facility and its decision to take or not take action under the Facility.
It should make its own credit appraisal of the Borrower and the Guarantor
and the terms of the Facility. Neither the Agent nor the Arranger makes
any representation that any information provided to a Lender before or
after the date of this Agreement is true. Accordingly each Lender should
take whatever action it believes is necessary to verify that information.
In addition neither the Agent nor the Arranger is responsible for the
legality, validity or adequacy of this Agreement. Each Lender will
satisfy itself on these issues.
25.8 LIMITATION OF LIABILITY:
(A) AGENT AND ARRANGER: Neither the Agent nor the Arranger will
be liable for any action or non-action under or in connection with
the Facility unless caused by its gross negligence or wilful
misconduct.
(B) DIRECTORS, EMPLOYEES AND AGENTS: No director, employee or
agent of the Agent nor the Arranger will be liable to a Lender or
the Borrower or the Guarantor in relation to the Facility. Each
Lender, the Borrower and the Guarantor agrees not to seek to impose
this liability upon them.
25.9 BUSINESS OF THE AGENT:
Despite its role as agent of the Lenders the Agent may:
(A) participate as a Lender in the Facility,
(B) carry on all types of business with the Borrower,
(C) carry on all types of business with the Guarantor, and
(D) act as agent for other groups of lenders to the Borrower or
other borrowers.
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25.10 INDEMNITY:
(A) Each Lender agrees to reimburse the Agent for all losses and
expenses incurred by the Agent as a result of its appointment as
Agent or arising from its activities as Agent. These losses and
expenses will take into account amounts reimbursed to the Agent by
the Borrower and the Guarantor.
(B) Each Lender agrees to reimburse the Arranger for all losses
and expenses incurred by the Arranger as a result of its appointment
as Arranger or arising from its activities as Arranger. These
losses and expenses will take into account amounts reimbursed to the
Arranger by the Borrower and the Guarantor.
(C) The liability of each Lender under this Clause 25.10 will be
limited to the share of the total losses and expenses which
corresponds to that Lender's share of the Total Commitments or, if
an Advance has been made and is outstanding, the Loan Amount. If
the losses or expenses are attributable to an activity of the Agent
or the Arranger (as the case may be) which relates to only some of
the Lenders the Agent may instead notify the Lenders of a different
sharing arrangement. In this case the limit of liability of a
Lender under this sub-clause will be determined by the Agent or the
Arranger (as the case may be). The Lenders are not liable for
losses and expenses arising from the gross negligence or wilful
misconduct of the Agent or the Arranger (as the case may be).
25.11 CONFIDENTIAL INFORMATION:
(A) The Agent is not required to disclose to the Lenders any
information:
(i) which is not received by it in its capacity as
Agent or
(ii) which it receives, with its consent, on a
confidential basis.
(B) The Arranger is not required to disclose to the Lenders any
information:
(i) which is not received by it in its capacity as
Arranger or
(ii) which it receives, with its consent, on a
confidential basis.
25.12 RESIGNATION AND REMOVAL:
The Agent may resign by giving notice to the Borrower, the Guarantor and
the Lenders. The Agent may be removed by notice given by the Majority
Banks to the Agent and the Borrower. In either event the following
apply:
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(A) APPOINTMENT BY MAJORITY BANKS: The Majority Banks may appoint
a new Agent who is a Qualifying Lender acting through its U.K.
office.
(B) APPOINTMENT BY THE RESIGNING AGENT: If the Agent has resigned
and the Majority Banks have not appointed a new Agent within 30 days
after the resigning Agent's notice, the resigning Agent may appoint
a new Agent.
(C) MODE OF APPOINTMENT: A new Agent will be appointed by notice
to the Borrower and the Lenders. A new Agent cannot be appointed
without its consent.
(D) TIMING OF APPOINTMENT: If the Agent has resigned, the new
Agent will become Agent at a time agreed between the new Agent and
the resigning Agent. If no time is agreed the new Agent will become
Agent ten Business Days after the notice referred to in paragraph
(C). Any resignation or removal of the Agent will not be effective
until a new Agent has been appointed and accepted its appointment.
(E) EFFECT OF APPOINTMENT: Upon a new Agent becoming Agent the
resigning/removed Agent will cease to be Agent. Accordingly it will
be discharged from its obligations and duties as Agent. It will,
however, continue to be able to rely on the terms of this Clause in
respect of all matters relating to the period of its appointment.
The new Agent will assume the role of Agent. It will have all the
rights, powers, discretions and duties of the Agent provided for in
this Agreement.
(F) TRANSITION: The resigning/removed Agent and the new Agent
agree to co-operate to ensure an orderly transition. The
resigning/removed Agent agrees to deliver or make available to the
new Agent all records, files and information held by it as Agent.
This obligation will not require the resigning/removed Agent to
disclose any confidential information.
25.13 THE ARRANGER:
The Arranger has no continuing role in connection with the Facility and
is not liable in respect of any matter concerning the Facility. It is
not the agent for any Lender.
26. EVIDENCE AND CERTIFICATES
26.1 EVIDENCE OF DEBT:
The Agent will maintain in its books an account showing all liabilities
accrued and payments made in relation to the Facility. Details of
amounts outstanding
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recorded in this account will be evidence of the Borrower's obligations
unless there is shown to be an error.
26.2 CERTIFICATES:
Each certificate delivered under this Agreement must contain reasonable
detail of the matters being certified.
27. NOTICES
27.1 NATURE OF NOTICES:
No notice delivered by the Borrower or the Guarantor under this Agreement
may be withdrawn or revoked. Each notice delivered by the Borrower or
the Guarantor must be unconditional. It must also be signed by an
Authorised Person.
27.2 DELIVERY OF NOTICES:
A notice under this Agreement will only be effective if it is in writing
and is received. Telexes and faxes are permitted.
27.3 NOTICES THROUGH THE AGENT:
Each notice from the Borrower, the Guarantor or a Lender will be
delivered to the Agent. The Agent agrees to pass on the details of
notices received by it to the appropriate recipient as soon as reasonably
practicable.
27.4 COMMUNICATION IN ENGLISH:
All notices and other documents delivered under this Agreement must be in
English, or if not, accompanied by a translation into English certified
by an officer of the person serving the notice to be accurate.
Translation costs are for the account of the person serving the notice.
27.5 ADDRESS DETAILS:
Notices will be delivered to the address of the intended recipient as set
out on the signature page. The Borrower, the Guarantor or a Lender may
change its address details by notice to the Agent. The Agent may change
its address details by notice to the Borrower, the Guarantor and the
Lenders.
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28. ASSIGNMENT AND NOVATION
28.1 BORROWER:
The rights of the Borrower under this Agreement are personal to it.
Accordingly they are not capable of assignment.
28.2 ASSIGNMENT BY A LENDER:
A Lender may assign to a Qualifying Lender in whole or in part its rights
under this Agreement (any Commitment to be assigned must be in whole
multiples of L.5,000,000) if it obtains the written consent of the
Borrower in advance, except that the Borrower's consent is not needed for
an assignment to an Affiliate of a Lender which is a Qualifying Lender or
to any Qualifying Lender if there is an outstanding Event of Default.
The Borrower may not refuse or delay giving its consent unreasonably.
Neither the Agent nor any Lender will be obliged to treat any person to
whom a Lender makes an assignment as an assignee until that person:
(A) agrees that it will be under the same obligations as it would
have been if it had been a party to the Agreement; and
(B) agrees to pay to the Agent the fee mentioned in Clause
28.3(A).
28.3 NOVATION BY A LENDER:
A Lender (the "Existing Lender") may be released in whole but not in part
from its obligations and surrender its rights under this Agreement to the
extent that exactly corresponding obligations and rights are assumed by a
person who will on novation qualify as a Qualifying Lender and who has
been assigned an investment grade rating by Standard & Poor's, Moody's or
Duff & Phelps (the "New Lender") if it obtains the written consent of the
Borrower in advance (such consent not to be unreasonably withheld or
delayed), provided that the Borrower's consent is not needed for a
novation to an Affiliate of a Lender which is a Qualifying Lender or to
any Qualifying Lender if there is an Event of Default. Such novation
shall be in accordance with the following:
(A) The Existing Lender will deliver to the Agent a Substitution
Certificate. This must be signed by both the Existing Lender and
the New Lender and be properly completed. The Existing Lender will
also arrange for the payment of a processing fee to the Agent. The
amount of this fee is L.750 (plus any reasonable expenses) unless
the Agent has notified the Lenders of a different amount which has
been agreed with the Majority Banks.
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(B) The Agent will sign the Substitution Certificate no later
than 5 Business Days after its receipt and the payment of the
processing fee. This signature will be made on behalf of the other
Lenders, the Guarantor and the Borrower as well as itself. Each
Lender and the Borrower irrevocably authorises the Agent to sign in
this manner.
(C) The Substitution Certificate will take effect on the date it
specifies. On this date:
(i) The Existing Lender is released from its
obligations and surrenders its rights to the extent described
in the Certificate.
(ii) The New Lender assumes obligations and rights
exactly corresponding to those released and surrendered by
the Existing Lender.
The Commitment of the Existing Lender will be reduced accordingly
and the New Lender will assume a Commitment of the amount of the
corresponding reduction.
28.4 DISCLOSURE OF INFORMATION:
A Lender may disclose to an assignee, sub-participant, New Lender, to a
proposed assignee, sub-participant or New Lender any information received
by the Lender under or in connection with this Agreement including a copy
of this Agreement.
29. WAIVERS AND AMENDMENTS
29.1 WRITING REQUIRED:
A waiver or amendment of a term of this Agreement will only be effective
if it is in writing.
29.2 AUTHORITY OF THE AGENT:
If authorised by the Majority Banks the Agent may grant waivers and agree
amendments with the Borrower and the Guarantor. These waivers and
amendments will be granted on behalf of the Lenders and be binding on all
of them, including those which were not part of the Majority Banks. This
sub-clause does not authorise the Agent to grant any waiver or agree any
amendment affecting any of the following:
(A) The amount of the Facility.
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(B) The amount or method of calculation of interest or commitment
fee or guarantee fee
(C) The manner, currency or timing of repayment of the Loan or of
the payment of any other amount.
(D) The end of the period during which the Facility is available.
(E) The definitions of "Borrowed Monies Indebtedness" and
"Majority Banks".
(F) The obligations of the Lenders.
(G) Any requirement (including the one in this sub-clause) that
all the Lenders or a certain proportion of them consent to a matter
or deliver a notice.
(H) Clauses 3, 8, 16, or 31.1.
Waivers or amendments affecting these matters require the consent of all
Lenders.
29.3 EXPENSES:
The Borrower agrees to reimburse the Agent and each Lender for the
reasonable and proper expenses they incur as a result of any proposal
made by the Borrower to waive or amend a term of this Agreement.
30. MISCELLANEOUS
30.1 EXERCISE OF RIGHTS:
If the Agent or a Lender does not exercise a right or power when it is
able to do so this will not prevent it exercising that right or power.
When it does exercise a right or power it may do so again in the same or
a different manner. The Agent's and the Lenders' rights and remedies
under this Agreement are in addition to any other rights and remedies
they may have. Those other rights and remedies are not affected by this
Agreement.
30.2 COUNTERPARTS:
There may be several signed copies of this Agreement. There is intended
to be a single Agreement and each signed copy is a counterpart of that
Agreement.
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31. LAW AND JURISDICTION
31.1 LAW:
This Agreement is to be governed by and construed in accordance with
English law provided that the representations and covenants contained in
the Existing Agreement and referred to in Clauses 20.2 and 23.2 shall be
governed by and construed in accordance with the laws of the State of New
York.
31.2 JURISDICTION:
(A) For the exclusive benefit of the Lenders, the Arranger and
the Agent, all the parties hereto irrevocably agree that the courts
in England are to have jurisdiction to settle any disputes which may
arise out of or in connection with this Agreement and that
accordingly any Proceedings may be brought in such Court.
(B) Without prejudice to sub-clause (A), all the parties further
irrevocably agree that any Proceedings may be brought in any of the
courts of the State of New York in New York City and submit to the
non-exclusive jurisdiction of such court.
(C) Each of the parties hereto irrevocably waives, to the fullest
extent permitted by law, any objection which it may have now or
hereafter to the laying of the venue of any Proceedings in any such
court as is referred to in this Clause and any claim that any such
Proceedings have been brought in an inconvenient forum.
(D) Nothing contained in this Clause shall limit the right of any
Lender, the Agent or the Arranger to take Proceedings against any of
the Borrowers or the Guarantor in any court of competent
jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude to the extent otherwise permitted by law the
taking of Proceedings in any other jurisdiction, whether
concurrently or not.
(E) The Guarantor agrees that any writ, judgment or other notice
of process shall be sufficiently and effectively served on it in
connection with Proceedings in New York if (i) such writ, judgment
or other notice of process is delivered to the address for the time
being for the service of notices on the Guarantor under Clause 27 or
(ii) if served in any other manner permitted by law.
31.3 AGENT FOR THE SERVICE OF PROCESS:
The Guarantor irrevocably appoints Omega (U.K.) Limited to be its agent
for the service of process in England. Any documentation in connection
with
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proceedings in the courts of England may be delivered to this agent
and in that case will be treated as delivered to the Guarantor.
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SCHEDULE 1: LENDERS AND COMMITMENTS
Lender Commitment Guarantee Commitment
(which forms part of and is not
additional to the Commitment)
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, LONDON BRANCH L.46,000,000 L.26,000,000
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SCHEDULE 2: COSTS RATE
1. DEFINITIONS
In this Schedule:
"COSTS PERIOD" means a period for which interest is being computed under
this Agreement. If this period is longer than 3 months it will be divided
by the Agent into successive Costs Periods of no longer than 3 months.
"DETERMINATION DAY" means the first day of a Costs Period.
"ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings given to
them for Bank of England purposes.
2. CALCULATION OF THE COSTS RATE
On each Determination Day the Agent will calculate the Costs Rate for the
Costs Period starting on that day as follows:
CL + D(L - B)_ + S(L - I)
R = -------------------------
100 - (C + S)
where:
R is the Costs Rate, expressed as a rate per annum, for that Costs
Period.
C is the percentage of the Agent's Eligible Liabilities which
the Agent is required to maintain as non-interest bearing cash
deposits with the Bank of England.
L is the percentage rate per annum at which sterling deposits
are offered to the Agent by prime banks in the London inter-bank
market at or about 11.00 a.m. on the Determination Day.
D is the percentage of the Agent's Eligible Liabilities which
the Agent is required to maintain as secured deposits with certain
financial institutions.
B is the lower of L and the best percentage rate per annum
offered to the Agent in the London Discount Market for callable
deposits in sterling for the Costs Period at or about 11.00 a.m. on
the Determination Date.
S is the percentage of the Agent's Eligible Liabilities which
the Agent is required to maintain as Special Deposits with the Bank
of England.
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I is the lower of L and the rate of interest, expressed as a
percentage rate per annum, paid by the Bank of England on Special
Deposits.
Percentages will be entered in the formula as absolute numbers. The
result of the application of the formula will be rounded upwards to four
decimal places. If the formula produces a negative additional
percentage, the additional percentage will be taken as zero. The
calculations made by the Agent will be conclusive and binding in the
absence of obvious error.
3. CHANGE OF REQUIREMENTS
The Agent may amend or replace the formula if it ceases to reflect the
requirements of the Bank of England. An amended or replacement formula
reflecting such amendments will take effect in accordance with the terms
of a notice given by the Agent to the Borrower.
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SCHEDULE 3: CONDITIONS PRECEDENT
1. A copy of the Certificate of Incorporation and the Memorandum and
Articles of Association of the Borrower. This copy must be certified by a
director of the Borrower to be complete, up-to-date and in full force and
effect.
2. A copy of a resolution of the board of directors of the Borrower
approving the Facility, authorising the signature and delivery of this
Agreement, approving the borrowing of the Total Commitments and approving
the Acquisition and the Press Release. The resolution must also appoint
persons to sign notices on behalf of the Borrower under this Agreement.
The copy must be certified by a director or the secretary of the Borrower
to be a true copy of duly passed resolutions each of which is in full
force and effect.
3. A certificate of a director of the Borrower to the effect that
immediately following the making of the Advance the Borrower will not be
in default of any limit on its borrowings.
4. Specimen signatures of all persons authorised by the resolutions referred
to in paragraph 2 above. These signatures must be certified by a director
or the secretary of the Borrower to be genuine.
5. A copy of the Articles of Incorporation and Amended and Restated Bylaws
of the Guarantor. This copy must be certified by the corporate secretary
of the Guarantor to be complete, up-to-date and in full force and effect.
6. A copy of a resolution of the directors of the Guarantor approving the
Guarantee and authorising the signature and delivery of this Agreement .
The copy must be certified by a director of the Guarantor to be a true
copy of a duly passed resolution which is in full force and effect.
7. Legal opinions from:-
(a) Slaughter and May, English legal advisers to the Agent; and
(b) Dykema Gossett, U.S. legal advisers to the Guarantor.
8. A copy of a letter from Omega (U.K.) Limited accepting its appointment as
agent for receipt of process in accordance with Clause 31.3.
9. A copy of the final draft Press Release and a copy of the latest draft of
the Offer Document (if available).
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10. A waiver has been obtained from the Banks under the Existing Agreement of
the guarantee given by the Guarantor in respect of the Borrower's
obligations under this Agreement. The amount of guaranteed obligations
covered by the waiver is L.46,000,000.
11. The agreed form of the Guaranteed Loan Notes Instrument.
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SCHEDULE 4: FORM OF SUBSTITUTION CERTIFICATE
PRINCIPAL HEALTHCARE PLC
L.46,000,000 REVOLVING CREDIT FACILITY
DATED [ 19 ]
SUBSTITUTION CERTIFICATE
To: (Name and address of the Agent]
This certificate is delivered to you for the purposes of Clause 28 of the
Loan Agreement under which you are currently Agent.
Name of Existing Lender:
-------------------------------
Name of New Lender:
-------------------------------
Details of substitution:
[Insert details distinguishing between utilised Commitment and
participation in the Loan and other amounts due under the Facility]
Date of effect of substitution:
-------------------------
The substitution described above will take effect in accordance with
Clause 28.3 of the Loan Agreement.
The Existing Lender and the New Lender agree as follows:
1. The New Lender is responsible for its own decision to become
involved in the Facility. It should make its own credit appraisal
of the Borrower and the Guarantor and the terms of the Facility.
Neither the Existing Lender nor the Agent makes any representation
that any information provided to the New Lender before or after the
date of this certificate is true. Accordingly the New Lender should
take whatever action it believes is necessary to verify that
information. In addition neither the Existing Lender nor the Agent
is responsible for the legality, validity or adequacy of the Loan
Agreement. The New Lender will satisfy itself on these issues.
2. There is no obligation on the Existing Lender to accept any
novation or assignment back of the rights and obligations referred
to in this certificate. The Existing Lender accepts no obligation
to indemnify the
<PAGE> 86
82
New Lender for any losses incurred as a result of a failure by
the Borrower or the Guarantor to perform its obligations or for any
other losses. The New Lender acknowledges this is the case.
This certificate is to be governed by and construed in accordance with
English law.
<TABLE>
<CAPTION>
Existing Lender New Lender
- --------------- ----------
<S> <C>
[Name of Existing Lender] [Name of New Lender]
By: By:
</TABLE>
Agent (on behalf of the other Lenders, the Borrower and itself)
[Name of Agent]
By:
Date:
Notice details for New Lender
(if it is not already a Lender):
Address:
Fax Number:
Telex Number:
Attention:
<PAGE> 87
83
SCHEDULE 5: FORM OF NOTICE FOR ADVANCES
To: Morgan Guaranty Trust Company of New York, London Branch
Attention: [ ]
From: Principal Healthcare PLC Date: [ ]
Dear Sirs
L.46,000,000 REVOLVING CREDIT FACILITY
DATED [ ] 1997
1. We refer to the above agreement between yourselves as Agent, us as
Borrower and various other parties (the "Agreement"). Terms defined in
the Agreement have the same meaning in this notice.
2. We would like to draw an Advance under the Agreement as follows:-
(a) Amount L.[ ]
(b) Advance Date [ ]
(c) Term [ ]
3. Please pay the above Advance to account number [ ] with
[ ] in favour of ourselves.
4. (1)We confirm that, today and on the Utilisatione Date there is and will be
no outstanding Event of Default under Clause 24.1(K)(a) or (d) to the
extent that it relates to the Guarantor or any Event of Default or
outstanding Potential Event of Default arising from a breach by the
Borrower of Clause 22.1(I).
- --------------
(1) Use if the Advance requested is during the Unconditional Period.
<PAGE> 88
84
OR
(2)We confirm that, today and on the Utilisation Date:-
(a) the representations in Clause 18.1 (other than Clauses
18.1(F)(iii), (J), (M), (N), (O) and (P)), (3)[Clause 19.1 (other
than Clauses 19.1(B), (D), (F), (G) and (H))] and Clause 20.1
(other than Clause 20.1(E)(iii)) of the Agreement are and will be
true, and
(b) there is and will be no outstanding Event of Default or
Potential Event of Default.
OR
(4)We confirm that, today and on the Utilisation Date:-
(a) the representations in Clauses 18.1 (other than Clauses
18.1(F)(iii), (J), (M), (N), (O) and (P)) (3)[Clause 19.1 (other than
Clauses 19.1(B), (D), (F), (G) and (H))], Clause 20.1 (other than
Clause 20.1(E)(iii)) and 20.2 of the Agreement are and will be true,
and
(b) there is and will be no outstanding Event of Default or
Potential Event of Default.
Yours faithfully,
for and on behalf of
PRINCIPAL HEALTHCARE PLC
- --------------
(2)Use if the Advance requested is after the expiry of the Unconditional Period.
(3)Use references to Clause 19 only after expiry of the Acquisition Period.
(4)Use if the Advance requested is after the expiry of the Unconditional Period
and for new monies.
<PAGE> 89
85
SCHEDULE 6: FORM OF NOTICE FOR GUARANTEED LOAN NOTES
To: Morgan Guaranty Trust Company of New York, London Branch
Attention: [ ]
From: Principal Healthcare PLC Date: [ ]
Dear Sirs,
L.46,000,000 REVOLVING CREDIT AND GUARANTEE FACILITY
DATED [ ] 1997
1. We refer to the above agreement between yourselves as Agent, us as
Borrower and various other parties (the "Agreement"). Terms defined in
the Agreement have the same meaning in this notice.
2. We enclose Guaranteed Loan Notes to be executed by the Issuing Bank as
the guarantor and we hereby request that you arrange for the Issuing Bank
to execute the enclosed Guaranteed Loan Notes as guarantor under Clause 7.
3. Please insert the following details in the Guaranteed Loan Note in the
spaces provided:-
(a) the principal amount of the Guaranteed Loan Note;
(b) the latest date on which the principal amount of the
Guaranteed Loan Note is repayable;
(c) the date on which the Guaranteed Loan Note is to be issued.
4. Please arrange for the Issuing Bank to deliver the Guaranteed Loan Notes
requested under this notice to the Receiving Bankers at [ ] by no
later than one Business Day after the date of your receipt of this notice.
5. (1)We confirm that, today and on the Utilisation Date there is and will be
no outstanding Event of Default under Clause 24.1(K)(a) or (d) to the
extent that
- ---------------
(1)Use if the Advance requested is during the Unconditional Period.
(2)Use if the Advance requested is after the expiry of the Unconditional
Period.
(3)Use references to Clause 19 only after expiry of the Acquisition Period.
(4)Use if the Advance requested is after the expiry of the Unconditional
Period and for new monies.
<PAGE> 90
86
it relates to the Guarantor or any Event of Default or outstanding
Potential Event of Default arising from a breach by the Borrower of
Clause 22.1(I).
OR
(2)We confirm that, today and on the Utilisation Date:-
(a) the representations in Clause 18.1 (other than Clauses
18.1(F)(iii), (J), (M), (N), (O) and (P)), (3)[Clause 19.1 (other
than Clauses 19.1(B), (D), (F), (G) and (H))] and Clause 20.1 (other
than Clause 20.1(E)(iii)) of the Agreement are and will be true, and
(b) there is and will be no outstanding Event of Default or
Potential Event of Default.
OR
(4)We confirm that, today and on the Utilisation Date:-
(a) the representations in Clauses 18.1 (other than Clauses
18.1(F)(iii), (J), (M), (N), (O) and (P)) (3)[Clause 19.1 (other than
Clauses 19.1(B), (D), (F), (G) and (H))], Clause 20.1 (other than
Clause 20.1(E)(iii)) and 20.2 of the Agreement are and will be true,
and
(b) there is and will be no outstanding Event of Default or
Potential Event of Default.
Yours faithfully,
for and on behalf of
PRINCIPAL HEALTHCARE PLC
- --------------------
<PAGE> 91
87
SCHEDULE 7: PERMITTED BORROWER'S SECURITY
<PAGE> 92
88
SCHEDULE 8: PRINCIPAL PROPERTIES
<TABLE>
<CAPTION>
No. Property Title No. Freehold/Leasehold (L)
<S> <C> <C>
1. Eastbourne, 7 Cobden Street, Darlington DU123525/DU210214(L)
2. Burlam Road - 111 and 113 Burlam Road, TES20264/CE138599(L)
Middlesborough
3. The Laurels and Regents view, Edward TY273629/TY325860(L)
Street, Hetton-Le-Hole, Co. Durham
4. Marton Road, 313 Marton Road, TES21908/CE138600(L)
Middlesbrough, TS4 2HG
5. Peterlee and Westcott, Westcott Road, DU152026/DU210217(L)
Peterless, Co Durham (excluding land to
be sold pursuant to the Sale Agreement)
6. Warrior Park, Endeavour Close, Seaton CE112822/CE138601(L)
Carew, Hartlepool
7. Herrington Grange and Herrington Mews, TY268474/TY325862(L)
Travers Street, Sunderland, Tyne & Wear
8. Roseworth, Redhill Road, Roseworth, CE122955/CE138602(L)
Stockton on Tees
9. Byker Hall and Lawrence Court, Allendale TY227567/TY325863(L)
Road, Walker, Newcastle upon Tyne
10. Bannatyne Lodge, Manor Way, Peterlee, DU183247/DU210220(L)
Co. Durham
11. Elswick Hall, Wentworth Road, Elswick, TY174014/TY325864(L)
Newcastle upon Tyne (excluding land to
be sold pursuant to Sale Agreement)
</TABLE>
<PAGE> 93
89
<TABLE>
<S> <C> <C>
12. Swan Lodge and Hunter Hall, Kent Avenue, TY284479/TY325865(L)
Howdon, Newcastle upon Tyne
13. Chasedale, Tynedale Drive, Blyth, ND82103/ND98662(L)
Northumberland
14. Rydal, Rydal Road (site of former DU187932/DU210223(L)
Dodmire Junior School), Darlington
15. Brandon Lodge, Commercial Street, Durham DU157212/DU210224(L)
DU179196/DU210225(L)
DU209021
16. Victoria Lodge and Barton Lodge, TY303598/TY325866(L)
Leechmere Road, Sunderland
17. Maple Lodge, (site of former Witherwack TY292126/TY325867/(L)
House), Woolwich Road, Sunderland
(excluding, if so required by the
Borrower, development land)
18. Harrogate Court (Lodge), Harrogate Road, WYK557562/WYK598093(L)
Leeds LS7 3TD WYK545388
19. Barrington Lodge, St. Andrews Road, DU193177/DU210226(L)
Bishop Auckland, Co Durham
20. Abigail Lodge, Gloucester Road, Delves DU197266/DU210227(L)
Lane, Consett, Co. Durham
21. Castleton, Green Lane, Wortley, Leeds WYK547677/WYK598095(L)
LS12 1JZ
22. Brydan Court, Galsworthy Road, South TY305501/TY325868(L)
Shields, Tyne and Wear
23. Lea Green Court, Kenton Road, Gosforth, TY297755/TY325869(L)
Newcastle upon Tyne
24. Hollie Hill, Durham Road, DU188105/DU210229(L)
</TABLE>
<PAGE> 94
90
<TABLE>
<S> <C> <C>
Stanley, Co. Durham
25. Beauley Lodge, Lumley Road, New Road, DU123990/DU210230(L)
Fencehouses, Co. Durham
26. Earls Lodge, Queen Elizabeth Road, WYK574636/WYK598097(L)
Wakefield, West Yorkshire
27. Springfields, Wylam Avenue, Darlington DU129292
28. Norton Glades and Norton Court and The CE99116
Willows 1, 2 and 3 Norton Court,
Stockton on Tees
29. Highstone Road, Barnsley SYK335828
30. Brampton and Walker, Wharrier Street, TY295771(L)
Walker, Newcastle
31. Riverside Court, Salmoor Way, Mayport, CU108906/CU53782(L)
Cumbria
32. Park Farm Lodge, Park Farm Road, Tamworth SF299072
</TABLE>
<PAGE> 95
91
SIGNATURES
BORROWER
- --------
PRINCIPAL HEALTHCARE PLC
Address: 145 Cannon Street, London, EC4N 5BP.
Fax Number: 0171 925 3555
Attention: James Flaherty
By: Jimmy West
GUARANTOR
- ---------
OMEGA HEALTHCARE INVESTORS, INC.
Address: 905 West Eisenhower Circle, Suite 10, Ann Arbor, Michigan
Fax Number: 001 313 996 0020
Attention: Essel Bailey/David Stover
By: James P. Flaherty
AGENT
- -----
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON BRANCH
Address: 60 Victoria Embankment,
London EC4Y OJP
Fax Number: 0171 325 8190
Telex Number: 896631 MGT G
Attention: Credit Operations
By: Charlotte Seagrave
<PAGE> 96
92
LENDERS
- -------
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Address: 60 Victoria Embankment, London EC4Y OJP
Fax Number: 0171 325 8190
Telex Number: 896631 MGT G
Attention: Credit Operations
By: Charlotte Seagrave
ARRANGER
- --------
J.P. MORGAN SECURITIES LTD.
Address: 60 Victoria Embankment, London, EC4Y OJP
By: Charlotte Seagrave
<PAGE> 1
EXHIBIT 10.2
Amount: L.30,000,000.00
PROMISSORY NOTE
SECURED BY DEED OF LEGAL MORTGAGE
Date: July 1, 1997 Due: December 31, 1997
Ann Arbor, Michigan
1. Promise to Pay. The undersigned, Principal Healthcare Finance Limited,
a company incorporated with limited liability under the laws of Jersey, having
its principal office at Cater Allen House, Commercial Street, St. Helier,
Jersey JE2 3RU, Channel Islands (hereinafter, "Borrower"), promises to pay to
Omega Healthcare Investors, Inc., a Maryland corporation, at its principal
office at 905 W. Eisenhower Circle, Suite 110, Ann Arbor, Michigan
48103 (hereinafter "Lender"), or at such other place as the Lender may designate
in writing, or to order, in lawful money of the United Kingdom, the principal
sum equal to the aggregate unpaid principal amount of loans outstanding up to a
total of loans outstanding of Thirty Million Pounds (L.30,000,000) at any time,
which amounts may be prepaid pursuant to Section 7, and if so repaid,
reborrowed, with interest thereon as provided in Section 3 hereof and all other
amounts which may become owing hereunder.
2. Definitions. For all purposes of this Promissory Note Secured by Deed
of Legal Mortgage ("Note") except as otherwise expressly provided or unless the
context otherwise requires: (i) the terms defined in this Section have the
meanings assigned to them in this Section and include the plural as well as the
singular; (ii) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with United Kingdom generally accepted
accounting principles as at the time applicable; (iii) all capitalized terms
used herein and not defined in this Note shall have the meaning for such terms
set forth in the Loan Agreement dated as of July 21, 1995 between the Lender
and the Borrower ("Loan Agreement"); and (iv) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Note as a whole and
not to any particular Section or other subdivision:
Default Interest Rate: Subject to the limitations set forth in Section 5
of this Note, the Interest Rate plus three percent (3%).
Due Date: December 31, 1997.
Event of Default: As defined in Section 9 below.
Interest Rate: As defined in Section 3.2.
<PAGE> 2
3. Payments and Interest Rates.
3.1 Interest at the Interest Rate shall be due and payable by the Borrower
to the Lender on the first day of each month at a rate of 9.25% per anum.
3.2 The entire sum of principal sum outstanding on this Note, as
determined under Section 1 of this Note, together with accrued and unpaid
interest, shall be due and payable on the Due Date.
4. Method of Payment. Except as set forth below, all payments to be paid
by the Borrower to the Lender under this Note shall be made in lawful money of
the United Kingdom which shall be legal tender for the payment of public and
private debts at the address set forth in this Note or at such other place or
to such other person, firm, or corporation as the Lender may designate in a
subsequent notice. The Borrower shall pay all payments of principal and
interest by electronic funds transfer debit transactions through wire transfer
of immediately available funds, initiated by the Borrower for payment on or
before the first day of each calendar month; provided, however, if such day is
not a Business Day, then payment shall be made on the next succeeding day which
is a Business Day. The Lender shall provide the Borrower in writing with
appropriate wire transfer information. Once given, such information shall
remain in effect until changed by subsequent written instructions. The
Borrower shall inform the Lender of payment by sending a facsimile transmission
of the Borrower's wire transfer confirmation not later than noon, eastern
daylight time on each Payment Date.
5. Payment on Due Date. The entire sum of principal, together with all
accrued and unpaid interest under Section 3 hereof, and any other amounts owing
to the Lender under this Note or any other Loan Documents, shall be due and
payable on the Due Date.
6. Payments to be Made Without Regard to Setoffs and Counterclaims. All
payments by the Borrower shall be paid in full without setoff or counterclaim
and without reduction for and free from any and all taxes, levies, imposts,
duties, fees, charges, deductions or withholdings of any type or nature imposed
by any government or any political subdivision or taxing authority thereof.
7. Prepayment Permitted. Following notice provided 30 days in advance,
borrowings outstanding on this Note may be prepaid in whole or in part by the
Borrower.
Promissory Note Secured by Deed of Legal Mortgage - Page 2
<PAGE> 3
8. Security. This Note is secured by that Deed of Legal Mortgage dated 01
July 1997 between Principal Healthcare Finance Limited, as the Mortgagor and
Omega Healthcare Investors, Inc., as the Mortgagee.
9. Events of Default. Upon the occurrence of any of the following ("each
an Event of Default"), Omega may elect to declare the entire balance of
principal, interest and other sums outstanding under this Note immediately due
and payable, without demand, presentment, protest or notice of any kind:
(i) If the Borrower shall fail to make payment of interest or principal
payable by the Borrower under this Note when the same becomes due and payable
and such failure is not cured by the Borrower within a period of three (3)
Business Days after Notice thereof from Omega; or
(ii) An Event of Default shall occur under the Loan Agreement ("Loan
Agreement Default"), and Omega elects to treat such Loan Agreement Default as a
default hereunder.
10. Acceleration Upon Event of Default. Upon the occurrence of any Event
of Default, the entire sum of principal owing under this Note together with all
accrued and unpaid interest, and any other amounts owing under this Note and
any other Loan Documents, at the Lender's option, will become immediately due
and payable, all without formal demand, presentment or notice of any kind, all
of which are expressly waived.
Acceptance by the Lender of any payment in an amount less than the amount
then due shall be deemed an acceptance on account only, and the Lender's
acceptance of any such partial payment shall not constitute a waiver of the
Lender's right to receive the entire amount due. Upon any Event of Default,
neither the failure of the Lender to promptly exercise its right to declare the
entire sum of principal and accrued unpaid interest hereunder to be immediately
due and payable, nor the failure of the Lender to demand strict performance of
any other obligation of the Borrower or any other person who may be liable
hereunder, shall constitute a waiver of any such rights, nor a waiver of such
rights in connection with any future default on the part of the Borrower or any
other person who may be liable hereunder.
11. Transaction Costs. The Borrower shall pay all costs and expenses
incurred by the Lender in connection with the negotiation, preparation and
execution of this Note and all other Loan Documents, as provided in Section
11.3 of the Loan Agreement.
Promissory Note Secured by Deed of Legal Mortgage - Page 3
<PAGE> 4
12. Application of Payments. Unless an Event of Default has occurred and
not been fully cured, all payments received by the Lender hereunder shall be
applied first against interest which has accrued and not been paid under
Section 3, with the balance applied against any other amounts which may be
owing to the Lender hereunder. Following the occurrence of an Event of
Default, and until such Event of Default is fully cured, the Lender may apply
any payment which it receives, whether directly from the Borrower or as a
consequence of realizing upon any security which it holds, in its sole and
absolute discretion, to any amount owing to it under this Note or any other
Loan Documents.
13. CHOICE OF LAW; VENUE; JURISDICTION. THIS NOTE SHALL BE GOVERNED AND
CONTROLLED AS TO VALIDITY, ENFORCEMENT, INTERPRETATIONS, CONSTRUCTION, EFFECT
AND IN ALL OTHER RESPECTS, INCLUDING, BUT NOT LIMITED TO, THE LEGALITY OF THE
INTEREST CHARGED HEREUNDER, BY THE STATUTES, LAWS AND DECISIONS OF THE STATE OF
MICHIGAN. THE BORROWER CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE
AND FEDERAL COURTS IN THE STATE OF MICHIGAN AND AGREES THAT ALL DISPUTES
CONCERNING THIS NOTE MAY BE LITIGATED, IN THE LENDER'S SOLE DISCRETION AND AT
THE LENDER'S SOLE ELECTION, ONLY IN COURTS LOCATED IN THE STATE OF MICHIGAN.
THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED UPON IT UNDER ANY
METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE OF MICHIGAN AND IRREVOCABLY
WAIVES ANY OBJECTION TO VENUE IN STATE OR FEDERAL COURTS OF THE STATE OF
MICHIGAN.
14. Miscellaneous Provisions.
14.1 This Note may not be amended or modified, and revision hereto shall
not be effective, except by an instrument in writing executed by the Borrower
and approved by the Lender.
14.2 Any notice to be given hereunder shall be given in the manner
provided in the Loan Agreement.
14.3 The Borrower shall pay to the Lender, immediately upon demand, any
and all taxes assessed against the Lender by reason of its holding of this Note
and the receipt by it of interest payments hereunder (other than income and
other similar taxes assessed by the United States Government or any political
subdivision thereof, or by any foreign government or political subdivision
thereof having jurisdiction over the Lender, on such interest
Promissory Note Secured by Deed of Legal Mortgage - Page 4
<PAGE> 5
payments), and any and all other sums and charges that may at any time become
due and payable hereunder.
14.4 Nothing contained in this Note shall be deemed or construed as
creating a partnership or joint venture between the Borrower and the Lender or
any other person, or cause the holder hereof to be responsible in any way for
the debts or obligations of the Borrower or any other person.
14.5 Except as set forth elsewhere herein, the Borrower hereby waives
diligence, presentment, protest and demand, notice of protest, dishonor and
nonpayment of this Note, and expressly agrees that, without in any way
affecting the liability of the Borrower hereunder, the Lender may extend the
time for payment of any amount due hereunder, accept additional security,
release any party liable hereunder and release any security securing this Note
without in any other way affecting the liability and obligation of the
Borrower.
14.6 Every provision of this Note is intended to be severable. In the
event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the balance of the terms and
provision hereof, which terms and provisions shall remain binding and
enforceable.
14.7 Headings at the beginning of each numbered Section of this Note are
intended solely for convenience of reference and are not to be deemed or
construed to be a part of this Note.
14.8 The Borrower and any other person who may be liable hereunder in any
capacity, agree(s) to pay all costs of collection and any litigation, including
attorneys' fees (including any appeals relating to such enforcement or
collection proceedings), in case the principal of the Note or any payment of
interest thereon is not paid as it becomes due, or in case it becomes necessary
to protect any security for this Note, whether suit is brought or not.
14.9 IT IS SPECIFICALLY AGREED THAT TIME IS OF THE ESSENCE OF THIS NOTE.
15. WAIVER OF TRIAL BY JURY. THE LENDER, BY ITS ACCEPTANCE HEREOF, AND
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY OTHER
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY
Promissory Note Secured by Deed of Legal Mortgage - Page 5
<PAGE> 6
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDER MAKING THE LOAN TO THE BORROWER.
PRINCIPAL HEALTHCARE FINANCE
LIMITED, a company incorporated with
limited liability in Jersey
By: s/ Essel W. Bailey, Jr.
---------------------------------
Name: Essel W. Bailey, Jr.
Title: Managing Director
Promissory Note Secured by Deed of Legal Mortgage - Page 6
<PAGE> 7
FINAL: 01 July 1997
DEED OF LEGAL
MORTGAGE
between
PRINCIPAL HEALTHCARE FINANCE
LIMITED
as the Mortgagor
and
OMEGA HEALTHCARE INVESTORS, INC.
as the Mortgagee
SIMMONS & SIMMONS
21 Wilson Street London EC2M 2TX
Tel: 0171-628 2020 / 528 9292 Fax: 0171-628 2070 DX Box No 12
<PAGE> 8
CONTENTS
i
<PAGE> 9
THIS DEED OF LEGAL MORTGAGE is dated 01 July 1997 and made
BETWEEN:
(1) PRINCIPAL HEALTHCARE FINANCE LIMITED (registered in Jersey, Channel
Islands under company number 62304) the registered office of which is
at Cater Allen House, Commercial Street, St Helier, Jersey JE2 3RU,
Channel Islands (the "Mortgagor"); and
(2) OMEGA HEALTHCARE INVESTORS, INC., a company incorporated in Maryland of
905 West Eisenhower Circle, Suite 110, Ann Arbor, Michigan, United
States of America 48103 (the "Mortgagee")
1. DEFINITIONS
In this Legal Mortgage the following expressions have the following meanings,
unless the context otherwise requires:
"Excluded Liabilities" means all monies, debts, liabilities and obligations
whether present or future, actual or contingent and whether incurred as
principal or surety due, owing or incurred by the Mortgagor to the Mortgagee
under a loan agreement dated 21 July 1995 between (1) the Mortgagee and (2) the
Mortgagor including under all promissory notes from time to time evidencing
such monies, debts, liabilities and obligations;
"Existing Security" means a debenture containing fixed and floating charges
over all of the present and future assets and undertaking of the Mortgagor
between (1) the Mortgagor and (2) The Governor and Company of the Bank of
Scotland and dated 25 August 1995;
"Mortgaged Property" shall have the meaning ascribed thereto in Clause 3;
"Operating Leases" means the operating leases dated 19 July 1996 and the date
of this Legal Mortgage and each between (1) the Mortgagor and (2) Exceler
Healthcare Services Limited (together with its successors and assigns the
"Lessee") in respect of the Mortgaged Property and includes (without prejudice
to the generality of clause 21) any lease or underlease whether or not in
relation to the Mortgaged Property which in any such case is supplemental to,
or entered into pursuant to, any such operating lease including, without
limitation, any lease entered into supplemental thereto or any guarantee
entered into by the Lessee in relation to any assignment of any such operating
lease;
"Secured Liabilities" means all monies, debts, liabilities and obligations from
time to time due, owing or incurred by the Mortgagor to the Mortgagee in any
manner whatsoever, in each case:-
(i) whether present or future;
1
<PAGE> 10
(ii) whether alone or jointly with any other persons;
(iii) whether actual or contingent;
(iv) whether as principal or surety; and
(v) in whatsoever currency denominated
other than the Excluded Liabilities.
2. COVENANT TO PAY
The Mortgagor will pay or discharge the Secured Liabilities as the same shall
fall due and this Legal Mortgage shall be a continuing security to the
Mortgagee for the payment or discharge by the Mortgagor of the Secured
Liabilities.
3. CHARGES
The Mortgagor as a continuing security for the payment and discharge of the
Secured Liabilities hereby charges in favour of the Mortgagee by way of legal
mortgage the property specified in the Schedule hereto (hereinafter called the
"Mortgaged Property" which expression shall where the context admits or
requires include either the whole or any part thereof) with the benefit of the
Operating Leases and all other existing and future leases, underleases,
tenancies, agreements for lease, rights, covenants, undertakings, warranties,
guarantees, indemnities and conditions from time to time affecting the same
(subject to the provisions hereof) but otherwise free from encumbrances and
charges (other than the Existing Security) in favour of the Mortgagee, by way
of fixed charge all its rights, title and interest in and to, and in the
proceeds of, all present and future insurances in respect of the Mortgaged
Property (including, without limitation, any rights of subrogation arising
therefrom) and all the benefit of, and rights under, or in respect of, all
contracts, agreements, deeds, undertakings, guarantees, warranties,
indemnities, other documents, compositions, accommodations and other
transactions or arrangements now or hereafter entered into by or granted to, or
vested in, or novated or assigned to, the Mortgagor in relation to or in
respect of or in connection with any present or future insurance in respect of
the Mortgaged Property (including, without prejudice to the generality of the
foregoing, all the benefit, and rights in respect of, any ex gratia payment)
and all other present or future rights and claims in relation to the Mortgaged
Property and by way of floating charge all assets now or hereafter situate at
or leased by the Mortgagor or otherwise used in connection with the Mortgaged
Property.
The Mortgaged Property and all the other property, assets, rights and claims of
the Mortgagor charged by or pursuant to any provision of this Legal Mortgage
are hereinafter referred to as the "Secured Property" which expression shall
where the context admits or requires include either the whole or any part
thereof.
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4. COVENANTS
The Mortgagor hereby covenants with and represents, warrants and undertakes to
the Mortgagee as follows:-
(i) Disposals - not without the prior consent in writing of the
Mortgagee to convey, assign, transfer or otherwise dispose
of or agree to convey, assign, transfer or otherwise dispose
of the Secured Property or any interest therein or to
exercise or agree to exercise any of the powers of leasing
or of accepting surrenders of leases conferred by sections
99 and 100 of the Law of Property Act, 1925 or by common law
or otherwise to grant any lease, tenancy or licence for
occupation or other right or interest to occupy the
Mortgaged Property;
(ii) Security - not without the prior consent in writing of the
Mortgagee create, purport to create, or allow to subsist any
mortgage, charge, pledge, lien, encumbrance, or any
arrangement which has substantially the same commercial or
substantive effect as the creation of security, over the
Secured Property other than the Existing Security and any
security from time to time granted in favour of the
Mortgagee or agree to do any such thing;
(iii) Information - to give to the Mortgagee, any receiver
appointed by the Mortgagee or to such person as the
Mortgagee or any such receiver shall from time to time in
writing appoint for that purpose such information as the
Mortgagee or receiver or such person shall require as to
all matters relating to the Secured Property;
(iv) Operating Leases - to use its best endeavours to procure
that the Lessee complies with its obligations under the
Operating Leases and not to waive or release any material
breach of any material obligation, nor to vary any material
obligation, of the Lessee under the Operating Leases;
(v) Indemnity to the Mortgagee in Possession - in the event of
the Mortgagee entering into possession of the Mortgaged
Property, to indemnify and keep indemnified the Mortgagee
against all actions, proceedings, damages, costs, claims and
demands which may be incurred by or made against the
Mortgagee under any of the undertakings, covenants,
agreements or obligations contained in or imposed by any
conveyance, transfer, lease, licence or agreement for
tenancy or building agreement or other deed or document
affecting the Mortgaged Property and against all actions,
proceedings, damages, costs, claims and demands whatsoever
in consequence of any claim by any tenant or occupier of the
Mortgaged Property or any other person arising out of any
defect in or want of repair to the Mortgaged Property or out
of any failure to perform any such undertaking, covenant,
agreement or obligation or out of any harm to
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persons or property or nuisance or impairment of the
environment resulting from (or allegedly resulting from) any
activities on, or the state and condition of, the Mortgaged
Property and in the event of the Mortgagor failing upon the
request in writing of the Mortgagee to keep it so
indemnified as aforesaid the Mortgagee shall be entitled to
settle, liquidate or compound or to contest any such claim
(as it may, in its absolute discretion, think fit) and
expend such moneys and incur such costs as it may deem
necessary for that purpose and any such expenditure and
costs shall become part of the liabilities of the Mortgagor
hereby secured.
5. CONSOLIDATION
Section 93 of the Law of Property Act, 1925 (restricting the Mortgagee's right
of consolidation) shall not apply to this Legal Mortgage.
6. POWER OF SALE
Section 103 of the Law of Property Act, 1925 (regulating the exercise of the
Mortgagee's power of sale) shall not apply to this Legal Mortgage and all of
the Secured Liabilities shall be immediately due on demand at any time and
failing payment immediately of any moneys so demanded (or if so requested by
the Mortgagor) this security shall become immediately enforceable and the power
of sale and the other powers conferred upon mortgagees by the Law of Property
Act, 1925 and by this Legal Mortgage shall become immediately exercisable
without the restrictions contained in that Act with respect to the whole or any
part of the Secured Property as to the giving of notice or otherwise. All such
moneys shall also become immediately payable without any demand and this
security shall also become immediately enforceable and such powers exercisable
without such restrictions, if any steps shall be taken for the presentation of
a petition for the making of an administration order in relation to the
Mortgagor notwithstanding the terms of any other agreement, express or implied,
between the Mortgagor and the Mortgagee or if such moneys shall be due under
the terms of any other agreement, express or implied, between the Mortgagor and
the Mortgagee.
7. REMOVAL OF FURNITURE ETC
In the event of the Mortgagee taking possession of the Mortgaged Property the
Mortgagee is hereby authorised as agent for the Mortgagor to remove, store,
sell or otherwise deal with any furniture or goods which the Mortgagor shall
fail or refuse to remove from the Mortgaged Property within seven days of being
requested so to do by notice from the Mortgagee and the Mortgagee shall not
be liable for any loss or damage occasioned to the Mortgagor. The Mortgagor
shall indemnify the Mortgagee against all expenses incurred by the Mortgagee
in relation to such furniture or goods and the Mortgagee shall account to the
Mortgagor for the proceeds of any such sale after deducting any such expenses.
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8. NEW ACCOUNTS
If the Mortgagee receives notice of any subsequent mortgage, pledge, charge,
lien, encumbrance or other security or other interest affecting the Secured
Property, the Mortgagee may open a new account or accounts in the name of the
Mortgagor; if the Mortgagee does not open a new account it shall nevertheless
be treated as if it had done so at the time when it received notice and as from
that time all payments made by or on behalf of the Mortgagor to the Mortgagee
shall be credited or be treated as having been credited to the new account or
such of the new accounts as the Mortgagee may determine and shall not operate
to reduce the amount(s) due from the Mortgagor to the Mortgagee at the time
when it received such notice.
9. RECEIVERS
(A) At any time after this security shall have become enforceable or at the
request of the Mortgagor the Mortgagee may by writing under the hand
of any officer of the Mortgagee appoint any person or persons to be
receiver or receivers of the Secured Property and, in the case of an
appointment of more than one person, to perform and carry out any act
required or authorised under any enactment together or independently of
the other or others upon such terms as the Mortgagee may think fit and
none of the restrictions imposed by the Law of Property Act, 1925 in
relation to the appointment of receivers or to the giving of notice or
otherwise shall apply. The Mortgagee may at any time and from time to
time in like manner and in accordance with applicable law remove any
receiver so appointed and appoint another in his place or appoint an
additional person as receiver and may either at the time of appointment
or at any time thereafter and from time to time fix the remuneration of
any receiver so appointed. Any receiver so appointed shall be the agent
of the Mortgagor for all purposes and the Mortgagor shall be solely
responsible for his acts or defaults and for his remuneration. Any
receiver so appointed shall have the following powers, whether
immediately or at any later time (and before as well as after the
winding up or liquidation of the Mortgagor) in addition and without
limitation to any powers conferred upon a receiver by statute or common
law:-
(i) to grant any lease or tenancy or right or easement of,
relating to or affecting the Secured Property for such term
or terms of years at any or no rent and with or without any
fine or premium and generally on such terms as he shall in
his absolute discretion think fit and accept the surrender
of any lease or tenancy or right or easement on such terms
as he shall in his absolute discretion think fit and give an
effectual and valid receipt for any fine or premium payable
on any such grant or surrender as aforesaid and to amend or
vary on such terms as he shall in his absolute discretion
think fit any lease, licence, agreement or other arrangement
in any way relating to or affecting the Secured Property;
(ii) to sell (whether by public auction or private contract or
otherwise) or
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otherwise convey the Secured Property on such terms as he
shall in his absolute discretion think fit;
(iii) to grant options to purchase, lease, license or dispose of
the Secured Property on such terms as he shall in his
absolute discretion think fit and whether such option shall
be contained in any lease or tenancy the receiver shall
grant or otherwise;
(iv) to enter upon or otherwise take possession of the Secured
Property, to repair, decorate, alter, improve, add to or
develop the same, to complete any development or building
thereon which may be unfinished and to settle, compound,
compromise or submit to arbitration any accounts or claims
arising out of the commencement, carrying on, completion or
determination of any such development or building;
(v) to redeem any mortgage, charge or other encumbrance on, over
or affecting the Secured Property or any part thereof on
such terms as he may think fit;
(vi) to effect, renew and maintain all such insurances in
relation to the Secured Property or in respect of any other
matter or thing in relation to his powers as he shall in his
absolute discretion think fit;
(vii) to take possession of, collect and get in the Secured
Property and, for these purposes, to take such proceedings
as he may, in his absolute discretion, think fit;
(viii) to raise or borrow money from any person (including the
Mortgagee) and to secure payment of money (whether or not
in priority to the moneys hereby secured) for any of the
purposes set out in this Clause in such manner as he shall
in his absolute discretion think fit;
(ix) generally to use the Mortgagor's seal and the name of the
Mortgagor in the exercise of all or any of the powers
conferred hereby or by statute or common law and to execute
in the name of the Mortgagor and on its behalf any deed,
receipt or other document and to do all such other acts and
things as he may consider necessary or desirable in his
absolute discretion for the protection, improvement or
realisation of the Secured Property;
(x) to make or exercise an election pursuant to paragraph 2 of
Schedule 10 to the Value Added Tax Act 1994 in relation to
the Secured Property or any option or right of election
available to the Mortgagor or the Mortgagee or the receiver
that the supplies made in respect of any lease or tenancy of
any part of the Secured Property shall be supplies
chargeable or taxable for value added tax purposes at the
standard or other applicable rate provided
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always that neither the Mortgagee nor the receiver shall be
liable for any loss suffered by the Mortgagor as a result
thereof and to execute and do all documents, acts and things
as may be necessary to permit any disposal of the Secured
Property to be zero-rated for the purposes of value added
tax;
(xi) to exercise all such powers as may be expressed to be
conferred upon any receiver by the terms of any mortgage,
charge or other security at any time held by the Mortgagee
in respect of or in connection with all or any part of the
Secured Liabilities;
(xii) to employ for the purposes aforesaid such persons as he
shall in his absolute discretion think fit and to apply for
and obtain such approvals, permissions, consents and
licences to enter into and perform such contracts and
arrangements, to purchase such materials and to incur such
obligations as he shall in his absolute discretion think
fit; and
(xiii) to do all other things incidental to the exercise of all or
any of the powers conferred hereby or by statute or common
law.
Notwithstanding the granting of any petition or the passing of any
resolution for the winding up or liquidation of the Mortgagor, or any
other event, no such receiver shall act as agent of the Mortgagee
(unless the Mortgagee shall expressly appoint the receiver in writing
as its agent).
In this Legal Mortgage, any reference to a receiver shall be deemed to
include a reference to all or any one or more of any person or persons
appointed (and any additional person or persons appointed or
substituted) as receiver or administrative receiver or other receiver
or receiver and manager or manager.
(B) All moneys expended by the receiver shall be expenses of the
receivership and shall on demand be repaid by the Mortgagor with
interest thereon computed and compounded according to the usual
practice of the Mortgagee (so that interest shall be payable at such
rate as well after as before any judgment) and the Secured Property
shall in all respects stand as security for such sums and interest.
(C) The Mortgagor shall indemnify and keep indemnified the Mortgagee and
every receiver, attorney, manager, agent and other person appointed by
the Mortgagee pursuant to this Legal Mortgage and the Mortgagee , and
every such receiver, attorney, manager, agent and other person, shall
be entitled to be indemnified out of the Secured Property in respect of
all liabilities and expenses incurred directly or indirectly by any of
them in the execution or purported execution of any of the powers,
authorities or discretions vested in them or him hereunder and against
all actions, proceedings, claims, demands, damages, charges, costs,
expenses, losses and liabilities in respect of any matter or thing done
or omitted in the exercise or purported exercise of the powers
contained herein or in any relevant statute,
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including the enforcement of this security, or occasioned by any breach
(whether before or after the enforcement of this security) by the
Mortgagor of any of its covenants or other obligations to the Mortgagee
under this Legal Mortgage and the Mortgagee and any such receiver,
attorney, manager, agent or other person may retain and pay all sums in
respect of the same out of any moneys received under the powers hereby
conferred save where such liabilities, expenses, actions, proceedings,
costs, claims and demands arise as a result of the negligence of or
wilful default by the person claiming to be so indemnified.
(D) All the powers, authorities and discretions conferred on a receiver
(whether or not an administrative receiver) appointed hereunder by the
provisions of, or pursuant to, this Legal Mortgage, shall (in addition)
be conferred on, and may be exercised by, the Mortgagee as mortgagee,
at any time after the security hereby created shall have become
enforceable (in whole or in part), free from all restrictions excluded
by this Legal Mortgage (including, without limitation, those
restrictions imposed on mortgagees by the Law of Property Act, 1925).
10. SALE OF FIXTURES
In the exercise of the powers hereby conferred the Mortgagee or any receiver
appointed by the Mortgagee may sever and sell plant and machinery and other
fixtures separately from the property to which they may be annexed without the
consent of the Mortgagor being obtained thereto.
11. APPLICATION OF MONEYS
All moneys received by any receiver appointed hereunder shall be applied by him
in the following order:-
(i) in payment of the costs, charges and expenses of and
incidental to the appointment of the receiver and the
exercise of all or any of his powers and of all outgoings
paid by him (including, where so required by statute, the
payment of preferential debts and all liabilities having
priority to this security);
(ii) in payment to the receiver of such remuneration as may be
agreed between him and the Mortgagee at or at any time and
from time to time after his appointment or such other
remuneration as is determined by the court;
(iii) in or towards satisfaction of the amount owing on this
security in such order as the Mortgagee in its absolute
discretion may from time to time determine (which
determination shall be conclusive) save that if so required
by the Mortgagee the same shall be credited to a suspense
account for so long and in such manner as the Mortgagee may
from time to time determine and the receiver may retain the
same for such period as the Mortgagee considers expedient
without any obligation to apply the
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same or any part thereof in or towards the discharge of any
of the Secured Liabilities;
and the surplus (if any) shall be paid to the Mortgagor or other
persons entitled to it.
12. INCORPORATION OF POWERS
The powers conferred on mortgagees or receivers by the Law of Property Act,
1925, the Insolvency Act 1986, the Insolvency Rules 1986 (as amended) or by any
other statute (or orders, regulations, instruments or other subordinate
legislation made thereunder) now or hereafter in force shall apply to the
Mortgagee and any receiver appointed hereunder as if such powers were
incorporated herein except in so far as they are expressly or impliedly
excluded and where there is any ambiguity or conflict between the powers
contained in either such Act or such other statute or subordinate legislation
and those contained in this security, the terms of this security shall prevail.
13. COVENANT FOR FURTHER ASSURANCE AND POWER OF ATTORNEY
(A) The Mortgagor will upon notice in writing by the Mortgagee and at the
cost of the Mortgagor execute such documents and such further or other
mortgages, charges, assignments or assurances in such form and on such
terms as the Mortgagee may reasonably require in respect of the
Secured Property, and deliver all conveyances, deeds, certificates and
documents and do such acts, matters or things as the Mortgagee may
reasonably require to perfect or protect the security hereby created or
any of it and after the moneys hereby secured shall have become payable
for facilitating the realisation of the Secured Property and for
exercising all powers, authorities and discretions hereby conferred
upon the Mortgagee or any receiver appointed by it.
(B) The Mortgagor hereby irrevocably and by way of security appoints the
Mortgagee and any person nominated in writing under the hand of any
officer of the Mortgagee including every receiver appointed hereunder
as joint and several attorney of the Mortgagor for the Mortgagor and in
its name and on its behalf and as its act and deed and with full power
of substitution and delegation (before as well as after the winding up,
liquidation, dissolution, receivership, administration, insolvency or
bankruptcy of the Mortgagor) to execute, seal and deliver or perfect
and do or make any deed, assurance, agreement, instrument, act or thing
which the Mortgagor ought to execute and do under the covenants,
undertakings and provisions herein contained or which may be required
or deemed proper by the Mortgagee , in its absolute discretion, for any
of the proper purposes of this security including (without
limitation):-
(i) instituting, prosecuting, defending or contesting in the
name of the Mortgagor and on its behalf any litigation,
arbitration, or proceedings (by whomsoever and wheresoever
commenced) relating to the whole or any
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part or parts of the Secured Property and/or taking any
other step in the name of the Mortgagor and on its behalf in
relation thereto; and/or
(ii) in the name of the Mortgagor and on its behalf, applying for
relief (or contesting or defending any application for
relief) against forfeiture of any lease or underlease under
which the Mortgagor holds the Secured Property (or to which
the Mortgagor's right, title or interest in such property
is, at any time, subject), registering a pending land action
and/or caution (as appropriate) in relation to such
application and/or taking such other steps and doing such
other acts or things or executing such deeds or other
documents in relation to such application as the Mortgagee
may in its absolute discretion think fit.
The Mortgagor hereby ratifies and confirms, and agrees to ratify and
confirm, whatsoever its attorneys appointed hereunder (and any of them)
shall do, or purport to do, in the exercise, or purported exercise, of
all or any of the rights or powers vested in them hereunder.
14. NO LIABILITY
Neither the Mortgagee nor any receiver, attorney, manager, agent or other
person appointed hereunder shall be liable to account as mortgagee in
possession in respect of the Secured Property or be liable for any loss upon
realisation or for any neglect or default of any nature whatsoever in
connection with the Secured Property for which a mortgagee in possession might
as such be liable or be under any duty of care or other obligations of
whatsoever description to the Mortgagor in relation to or in connection with
the exercise of any power, authority or discretion conferred upon the Mortgagee
or any receiver, attorney, manager, agent or other person as aforesaid and any
liability on the part of the Mortgagee or any such receiver, attorney,
manager, agent or other person to the Mortgagor arising as the result of or in
consequence of any breach of any duty or obligation that may arise
notwithstanding the provisions hereof is hereby excluded (save in the case of
negligence or wilful default and save insofar as and to the extent that any
such exclusion shall be prohibited or rendered invalid by law).
15. NOTICES
(A) Any notice, demand or other communication to be served under this Legal
Mortgage will be in writing and will be served only by posting by
airmail or by personally delivering the same or sending the same by
facsimile to the address of the relevant party appearing on the
signature page below or at such other address as shall ne notified from
time to time in writing to the other party.
(B) A notice or demand shall be deemed duly served only on receipt unless
received on a non-business day or after 5.00pm in the place of receipt
in which case it will be deemed served at 9.00am on the following
business day in the place of receipt.
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(C) Any notice to be served by the Mortgagor on the Mortgagee shall be
deemed duly served if served, in all other respects in accordance with
this Clause 20, on a member of the Mortgagor's board of directors who
has been appointed to the board by the Mortgagee.
16. NO WAIVER
No delay or omission of the Mortgagee in exercising any right, power,
privilege or remedy hereunder shall impair such right, power, privilege or
remedy or be construed as a waiver of such right, power, privilege or remedy
nor shall any single or partial exercise of any right, power, privilege or
remedy preclude any further exercise thereof or the exercise of any other
right, power, privilege or remedy. The rights and remedies of the Mortgagee
herein provided are cumulative and not exclusive of any rights, powers,
privileges or remedies provided by law. Any waiver by the Mortgagee of any
term of this Legal Mortgage, and any consent or approval given by the Mortgagee
under or in relation to it, shall only be effective if given in writing and
then only for the purpose for which, and upon the terms and conditions (if any)
on which, it is given.
17. CONTINUING SECURITY
This security shall be a continuing security notwithstanding the death,
bankruptcy, winding-up, dissolution or incapacity of the Mortgagor or any
settlement of account or other matter whatsoever and is in addition to and
shall not merge with or otherwise release, prejudice or affect any contractual
or other right or remedy or any other security now or hereafter held by or
available to the Mortgagee and shall not be in any way released, prejudiced or
affected thereby or by the invalidity thereof or by the Mortgagee now or
hereafter dealing with, exchanging, releasing, varying or abstaining from
perfecting or enforcing any of the same or any rights which it may now or
hereafter have or giving time for payment or indulgence or compounding with the
Mortgagor or any other person or making or abstaining from making any demand
for payment on the Mortgagor or any other person.
18. NO DUTY TO ENQUIRE
No purchaser, receiver, mortgagor or other person or company shall be concerned
to inquire whether any power exercised or purported to be exercised by the
Mortgagee or any receiver appointed by it or any of the Mortgagee 's or such
receiver's officers, agents or attorneys has arisen or become exercisable or
whether any money is due on the security hereof or whether any demand has been
made hereunder or as to the propriety or regularity of any demand, notice, sale
or other dealing or action by the Mortgagee or any receiver appointed by it or
any of the Mortgagee 's or such receiver's officers, agents or attorneys but
shall be entitled to rely for all purposes on a certificate of the Mortgagee as
to the validity, propriety and regularity thereof.
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19. THE MORTGAGEE'S CERTIFICATE
The certificate of the Mortgagee as to the amount at any time secured hereby
shall save in the case of manifest error to be conclusive as against the
Mortgagor.
20. SEVERABILITY OF PROVISIONS
The illegality, invalidity, unenforceability or lack of binding effect of any
provision of this Legal Mortgage under the law of any jurisdiction shall not
affect its legality, validity, enforceability or binding effect under the law
of any other jurisdiction or the legality, validity, enforceability or binding
effect of any other provision of this Legal Mortgage.
21. INTERPRETATION
(A) In this Legal Mortgage, unless the context otherwise requires:-
(i) any reference to a "person" shall include any person, firm,
body corporate or unincorporated body of persons;
(ii) any reference to the masculine gender shall include the
feminine gender and the neuter gender and vice versa;
(iii) any reference to the singular shall include the plural and
vice versa;
(iv) any reference to a statutory or other legislative provision
shall be construed as a reference thereto as amended,
varied, re-enacted or substituted (whether before or after
the date hereof) and shall include any provision of which it
is a re-enactment or substitute;
(v) any reference to winding up, liquidation, dissolution,
receivership, administration, insolvency or bankruptcy or
any other insolvency or bankruptcy event shall be deemed to
constitute a reference also to any event which, in the
opinion of the Mortgagee , appears to correspond thereto or
appears to be similar thereto in any country or territory in
which the Mortgagor is incorporated or carries on business
or to the jurisdiction of whose courts the Mortgagor or any
part of the assets of the Mortgagor is subject; and
(vi) any reference to this Legal Mortgage or to any other
agreement, deed or document shall be to the same as it may
have been or may be amended, varied, modified, supplemented,
assigned or novated.
(B) Clause headings and sub-headings in this Legal Mortgage are for
convenience only and shall not affect its interpretation.
(C) Each term in any document relating to the Secured Liabilities is, to
the extent not
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set out in or otherwise incorporated into this Legal Mortgage,
incorporated into this Legal Mortgage insofar as is necessary to comply
with Section 2 of the Law of Property (Miscellaneous Provisions) Act
1989.
22. GOVERNING LAW AND SUBMISSION TO JURISDICTION
(A) This Legal Mortgage shall be governed by and construed in accordance
with English law.
(B) The Mortgagor hereby irrevocably agrees for the sole benefit of the
Mortgagee that the English courts are to have jurisdiction to settle
any suit, action or proceedings which may arise out of or in connection
with this Legal Mortgage and, accordingly, any suit, action or
proceedings so arising (in this Clause referred to as "Proceedings")
may be brought in such courts and the Mortgagor hereby submits to the
jurisdiction of such courts. Without limitation, the parties further
irrevocably agree that any Proceedings may be brought in the courts of
such other jurisdiction or jurisdictions as the Mortgagee may from time
to time select and the Mortgagor hereby waives absolutely any immunity
to which it or its assets may be entitled in any jurisdiction and any
objection which it may have now or in the future to the English or any
such other courts being nominated for the purpose of this Clause on the
ground of venue or otherwise and agrees not to claim that any such
court is not a convenient or appropriate forum. The Mortgagor hereby
appoints Omega (UK) Limited of 145 Cannon Street, London EC4N 5BP as
its agent for the service of process in the United Kingdom in
connection with this Legal Mortgage.
IN WITNESS WHEREOF the Mortgagor and the Mortgagee have executed this Legal
Mortgage as a deed on the day and year first before written.
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THE SCHEDULE
MORTGAGED PROPERTY
1. HEATH HOUSE NURSING HOME
The freehold land known as 81 Walkers Heath Road, Kings Norton
registered under title number WM462217.
2. WOODBURY HOUSE NURSING AND RESIDENTIAL CARE HOME
The freehold land lying to the east of Jouldings Lane, Swallowfield
registered under title number BK305851 and that part of the land on the
east side of the said Jouldings Lane registered under title number
BK255956 as is more particularly described in the Operating Lease dated
the date of this Legal Mortgage.
3. MILLWATER NURSING HOME
The freehold land being 164, 166 and 168 Waterloo Road, Haymills
registered under title number WM381069 and WM371223.
4. WYNCROFT HOUSE NURSING AND RESIDENTIAL CARE HOME
The freehold land being land lying to the west of Penzer Street,
Kingswinford registered under title number WM455533; 16 Moss Grove,
Kingswinford registered under title number WM229662; land at the rear
21 Penzer Street, Kingswinford registered under title number WM455056;
land lying to the east side of Moss Grove, Kingswinford registered
under title number WM455534; and land lying to the west of Penzer
Street Kingsford registered under title number WM455536
5. MURDOCH HOUSE RESIDENTIAL CARE HOME
The freehold land being 1 Murdoch Road, Wokingham registered under
title number BK121361.
6. RUGBY NURSING AND RESIDENTIAL CARE HOME
The freehold land being 53 Clifton Road, Rugby registered under title
number WK295672.
7. OAKLANDS NURSING HOME
The freehold land being 4 Oakland Road, Moseley, Birmingham registered
under title numbers WM384485 and WM76247, the land lying to the north
west of
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Anderton Park Road, Moseley, Birmingham registered under title numbers
WM427547, WM448608 and 6a, 6b and 6c Oakland Road, Moseley, Birmingham
registered respectively under title numbers WK94998, WM400896 and
WK49890
8. RUSHALL NURSING HOME
The freehold land being 204 Lichfield Road, Rushall, Walsall WS4 1SA
registered under title number WM422598.
9. SELLY PARK NURSING HOME
The freehold land being 133 and 157 Selly Park Road, Selly Park,
Birmingham registered under title number WM389154 and land at the back
of 133 and 157 Selly Park Road, Selly Park, Birmingham registered under
title number WM389152.
10. TUDOR HILL NURSING HOME
The freehold land being 11 Tudor Hill, Sutton, Coldfield registered
under title number WM159338.
11. TUDOR GRANGE RESIDENTIAL CARE HOME
The freehold land being Tudor Grange, Main Road, Radcliffe-on-Trent,
Nottingham registered under title number NT155409.
12. WOOD VIEW NURSING AND RESIDENTIAL CARE HOME
The freehold land being Wood View, 127 Lincoln Road, Branston,
Lincolnshire registered under title numbers LT93202 and LL91827.
13. CRANMER HOUSE NURSING HOME
The freehold land being Cranmer House, 50-55 Beeton Road, Winson Green,
Birmingham registered under title number WM205354.
14. THE ROYD NURSING HOME
The freehold land being 23, Selborne Road, Handsworth Wood, Birmingham
registered under title number WM111056; 23 and 25 Selborne Road,
Handsworth Wood, Birmingham registered under title number WM85461; 27
Selborne Road, Handsworth Wood, Birmingham registered under title
number WK91695.
15
<PAGE> 24
15. PORTLAND HOUSE RESIDENTIAL CARE HOME
The freehold land being Portland House, 113 & 146 Portland Road,
Nottingham registered under title numbers NT231614 and NT95784.
16. BARLEYCOMBE RESIDENTIAL CARE HOME
The freehold land being Barleycombe Residential Home, Sudbury Road,
Long Melford, Suffolk registered under title number SK117879.
17. FRIDAY HOUSE RESIDENTIAL CARE HOME
The freehold land being Friday House, Cambridgeshire registered under
title number CB197176.
18. ST. GERMANS HALL RESIDENTIAL CARE HOME
The freehold land being St. Germans Hall, Wiggenhall St Germans, Kings
Lynn registered under title number NK192942; Abbotsford, Wiggenhall St
Germans, Kings Lynn registered under title NK112337 and land at
Whitehall, Wiggenhall St Germans, Kings Lynn registered under title
number NK148826.
19. SUNBRIDGE NURSING HOME
The freehold land on the south side of Hickory Close, Edmonton
registered under title number EGL346949.
20. HOPES GREEN CARE CENTRE
The freehold land being 10 Brook Road, South Benfleet, Castlepoint,
Essex registered under title number EX85951.
21. DURBAN HOUSE NURSING HOME
The freehold land being Durban House Nursing Home, Hodgson's Road,
Blyth, Northumberland registered under title number ND24096.
22. PARKLANDS NURSING HOME
The freehold land being Parklands Nursing Home, Broom Lane, Salford,
Greater Manchester registered under title number GM420140.
16
<PAGE> 25
SIGNED by )
acting under the authority )
of PRINCIPAL HEALTHCARE )
FINANCE LIMITED )
and thereby EXECUTED )
by PRINCIPAL HEALTHCARE )
FINANCE LIMITED as a DEED )
[SIG]
.............................. Director in the presence of Isabella Roberts
and also thereby SIGNED by such person on behalf of PRINCIPAL HEALTHCARE
FINANCE LIMITED.
SIGNED by )
acting under the authority of )
OMEGA HEALTHCARE )
INVESTORS, INC. )
and thereby EXECUTED by )
OMEGA HEALTHCARE )
INVESTORS, INC. as a DEED )
.............................. Director
and also thereby SIGNED by such person on behalf of OMEGA HEALTHCARE INVESTORS,
INC.
17
<PAGE> 1
EXHIBIT 12
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS (1)
The ratios of earnings to combined fixed charges and preferred stock dividends
are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30 YEAR ENDED DECEMBER 31
------------------ ---------------------------------- AUGUST 14, 1992
(INCEPTION) TO
1997 1996 1996 1995 1994 1993 DECEMBER 31, 1992(2)
------ ------ ------ ------ ------ ------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends(3)............................ 2.63X 2.75X 2.66X 2.92X 2.69X 3.51X 15.45x
</TABLE>
________________
(1) At June 30, 1997 the only series of preferred stock outstanding is
2,300,000 shares of 9.25% Series A Cumulative Preferred Stock. Dividends
on the Series A Preferred Stock, par value $1 per share, are cumulative
from the date of original issue and are payable quarterly, commencing on
August 15, 1997, to shareholders of record on July 31, 1997, at the rate
of 9.25% per annum of the $25 per share liquidation preference.
The Series A Preferred Stock has no stated maturity and will not be
subject to any sinking fund or mandatory redemption. Except in certain
circumstances related to the preservation of the Companys qualifications
as a REIT, the Series A Preferred Stock is not redeemable prior to July
1, 2002. On or after such date, the stock may be redeemed for cash at
the option of the Company, in whole or in part, at a redemption price of
$25 per share, plus accrued and unpaid dividends thereon, if any, up to
the redemption date. In order to insure that the Company continues to
meet the requirements for qualification as a REIT under the Code, shares
of Series A Preferred Stock shall be deemed excess shares if the holder
owns more than 9.9% in value of the Companys outstanding capital stock,
and the Company will have the right to purchase excess shares from the
holder.
Upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, the holders of Series A Preferred Stock
are entitled to be paid out of the assets of the Company legally
available for distribution to its shareholders a liquidation
preference of $25 per share, plus an amount equal to any accrued and
unpaid dividends to the date of the payment. The Series A Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company rank (i) senior to all classes
or series of Common Stock to the Company and to all equity securities
ranking junior to the Series A Preferred Stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of the
Company; (ii) on a parity with all equity securities issued by the
Company, the terms of which specifically provide that such equity
securities rank on a parity of a Series A Preferred Stock; and (iii)
junior to all existing or future indebtedness of the Company. For this
purpose, the term equity securities does not include convertible debt
securities which will rank senior to the Series A Preferred Stock prior
to conversion.
(2) Operations of the Company commenced on August 14, 1992.
(3) For purposes of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends, net earnings (before extraordinary
charge from prepayment of debt in 1995) has been added to fixed charges
and that sum has been divided by such fixed charges. Fixed charges
consist of interest expense, amortization of deferred financing costs and,
starting with the period ended June 30, 1997, preferred stock dividends
for the Series A Cumulative Preferred Stock.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS FILED AS PART OF THE
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH (B) QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,983
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 731,568
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 731,568
<SALES> 0
<TOTAL-REVENUES> 22,515
<CGS> 0
<TOTAL-COSTS> 10,430
<OTHER-EXPENSES> 1,168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,096
<INCOME-PRETAX> 10,917
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,917
<EPS-PRIMARY> .53
<EPS-DILUTED> .53<F1>
<FN>
<F1>EPS-Diluted not separately reported because inclusion of options using treasury
stock method and the assumed conversion of debentures outstanding not
materially dilutive
</FN>
</TABLE>
