UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: December 26, 1996
THE MULTICARE COMPANIES, INC.
(Exact name of Registrant as specified in its Charter)
Commission File No. 34-22090
Delaware 22-3152527
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
411 Hackensack Avenue
Hackensack, New Jersey 07601
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (201) 488-8818
ITEM 2. Acquisition or Disposition of Assets.
On December 12, 1996, the Registrant announced in a press release that it
had completed the acquisition of The ADS Group. Under the terms of the
agreement, Multicare paid approximately $60.1 million and assumed or repaid
approximately $24.6 million in debt and issued 554,973 shares of its common
stock for ADS. Alan D. Solomont, founder and chairman of ADS is a member of
Multicare's Board of Directors.
ADS owns, operates or manages 23 long-term care facilities with 3,072 beds,
20 hospital based subacute units with 514 beds and eight assisted living
facilities, totaling 820 beds, almost all of which are located in Massachusetts.
ADS also provides consulting services to an additional 14 facilities with 1,668
beds, operates several ancillary businesses including home health, both Medicare
certified and private, and provides out-patient rehabilitation services at
numerous locations.
A copy of the press release is attached hereto as Exhibit 99.8 and is
incorporated herein by reference.
On December 18, 1996, the Registrant completed the previously announced
acquisition of three facilities in Rhode Island for approximately $19.75
million.
ITEM 5. Other Events.
The Registrant has amended and restated its $350 million credit facility
and in connection therewith has entered into a new lease facility in the amount
of approximately $55 million. The Agent for these facilities is Nationsbank,
N.A.
ITEM 7. Financial Statements, and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit No.
10.37 Amendment No. 2, dated as of September 25, 1996 to
the ADS Acquisition Agreement.
10.38 Amendment No. 3, dated as of October 29, 1996 to
the ADS Acquisition Agreement.
10.39 Amendment No. 4, dated as of December 11, 1996 to
the ADS Acquisition Agreement.
10.40 Third Amended and Restated Credit Agreement dated
as of December 11, 1996 among The Multicare
Companies, Inc. and certain of its Subsidiaries,
and Nationsbank, N.A. as Administrative Agent.
10.41 Master Lease, Open End Mortgage and Purchase Option
dated as of December 11, 1996 among Academy
Nursing Home, Inc., Nursing and Retirement
Center of the Andovers, Inc., Prescott Nursing
Home, Inc., Willow Manor Nursing Home, Inc., and
ADS/Multicare, Inc.
10.42 Appendix A to Participation Agreement, Master
Lease, Supplements, Loan Agreement, and Lease
Facility Mortgages.
10.43 Participation Agreement, dated as of December 11,
1996 among The Multicare Companies, Inc., as
Guarantor, Various Subsidiaries of The Multicare
Companies, Inc. as Lessees, Selco Service
Corporation, as Lessor, Various Financial
Institutions as Tranche A Lenders, Various
Financial Institutions as Tranche B Lenders,
Nationsbank, N.A., as Lease Agent for the
Lenders, and Nationbank, N.A., as Collateral
Agent for the Secured Parties.
99.8 Press Release dated December 12, 1996.
Signature
Pursuant to the requirements of the Securities Exchange of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE MULTICARE COMPANIES, INC.
STEPHEN R. BAKER
_______________________________
Stephen R. Baker
Executive Vice President, Chief Financial Officer
December 26, 1996
Amendment No. 2 to Acquisition Agreement
Amendment No. 2 dated as of September 25, 1996 ("Amendment No. 2"), to the
Acquisition Agreement, dated as of June 17, 1996, as amended August 12, 1996 by
and among ADS/Multicare, Inc. and Alan D. Solomont, David Solomont, Ahron M.
Solomont, Jay H. Solomont, Meyer Solomont (who has become a party to such
Agreement in lieu of David Solomont (of Lowell)), Susan S. Bailis and the Seller
Entities signatory thereto (the "Acquisition Agreement").
The parties to the Acquisition Agreement hereby agree as follows:
1. Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings ascribed thereto in the Acquisition
Agreement.
2. Reference is made to Amendment No. 1, dated as of August 12, 1996
("Amendment No. 1), to the Acquisition Agreement.
3. All occurrences of the phrase "August 30, 1996" in Amendment No. 1 are
hereby deleted and the phrase "October 14, 1996" is substituted
therefor.
4. All occurrences of the phrase "September 30, 1996" in Amendment No. 1
are hereby deleted and the phrase "October 31, 1996" is substituted
therefor.
5. Except as specifically set forth in this Amendment No. 2, the
Acquisition Agreement and Amendment No. 1 shall remain unmodified and
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment No. 2 as of the day and year first above written.
ADS/MULTICARE, INC.
BRADFORD C. BURKETT
By: _____________________________
Name: Bradford C. Burkett
Title: Vice President
ALAN D. SOLOMONT
__________________________
Alan D. Solomont, as Sellers'
Representative
Amendment No. 3 to Acquisition Agreement
Amendment No. 3 dated as of October 29, 1996 ("Amendment No. 3"), to the
Acquisition Agreement, dated as of June 17, 1996, as amended by Amendment No. 1
dated August 12, 1996 and Amendment No. 2 dated as of September 25, 1996, by and
among ADS/Multicare, Inc. and Alan D. Solomont, David Solomont, Ahron M.
Solomont, Jay H. Solomont, Meyer Solomont (who has become a party to such
Agreement in lieu of David Solomont (of Lowell)), Susan S. Bailis and the Seller
Entities signatory thereto (the "Acquisition Agreement").
The parties to the Acquisition Agreement hereby agree as follows:
1. Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings ascribed thereto in the Acquisition
Agreement.
2. Reference is made to Amendment No. 2, dated as of September 25, 1996
("Amendment No. 2), to the Acquisition Agreement.
3. All occurrences of the phrase "October 14, 1996" in Amendment No. 2 are
hereby deleted and the phrase "November 14, 1996" is substituted
therefor.
4. All occurrences of the phrase "October 31, 1996" in Amendment No. 2 are
hereby deleted and the phrase "November 30, 1996" is substituted
therefor.
5. Except as specifically set forth in this Amendment No. 3, the
Acquisition Agreement, Amendment No. 1 and Amendment No. 2 shall remain
unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment No. 3 as of the day and year first above written.
ADS/MULTICARE, INC.
BRADFORD C. BURKETT
By: _____________________________
Name: Bradford C. Burkett
Title: Vice President
ALAN D. SOLOMONT
__________________________
Alan D. Solomont, as Sellers'
Representative
Amendment No. 4 to Acquisition Agreement
Amendment No. 4, dated as of December 11, 1996 ("Amendment
No. 4"), to the Acquisition Agreement, dated as of June 17, 1996, as
amended by Amendment No. 1 dated as of August 12, 1996, Amendment No. 2
dated as of September 25, 1996 and Amendment No. 3 dated as of October 29,
1996, by and among ADS/Multicare, Inc. and Alan D. Solomont, David
Solomont, Ahron M. Solomont, Jay H. Solomont, Meyer Solomont (who has
become a party to such Agreement in lieu of David Solomont (of Lowell)),
Susan S. Bailis and the Seller Entities signatory thereto (the "Acquisition
Agreement").
The parties to the Acquisition Agreement hereby agree as
follows:
1. Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed thereto in the
Acquisition Agreement.
2. The second sentence of the first paragraph of the
Acquisition Agreement is hereby deleted in its entirety and replaced with
the following:
"The Owner Parties and the selling stockholders and
partners listed on Schedule A who are not Owner Parties are
collectively referred to as the 'Owners.'"
3. Exhibit A to the Acquisition Agreement is hereby deleted
in its entirety and replaced by the Exhibit A attached hereto. At the
Closing, Buyer shall assume all of the liabilities of Solomont Brookline
Limited Partnership other than any liabilities as to which Buyer is
indemnified under the Acquisition Agreement.
4. In the first sentence of Section 2.1 of the Acquisition
Agreement, the sum of "$69,751,000" is hereby deleted and replaced with
"$67,159,000." In the second sentence of Section 2.1 of the Acquisition
Agreement, the sum of "$59,187,300" is hereby deleted and replaced with
"$56,128,900" and the number "531,507," referring to the number of Parent
Shares, is hereby deleted and replaced with the number "554,973." The
amount of the Indemnification Holdback Amount is increased to $1,500,000 by
reason of the provisions of paragraph 20 below.
5. A new paragraph is hereby added at the end of Section 2.1
of the Acquisition Agreement as follows:
"In order to induce Susan S. Bailis and Thomas H. Grape
to sell their interests in the Seller Entities, Buyer shall pay at
the Closing in cash $2,400,000 to Susan S. Bailis and $100,000 to
Thomas H. Grape."
6. Clause (b) in the first paragraph of Section 2.3.1 is
hereby deleted and clause (c) thereof is relettered as clause (b). Academy
shall not be considered a Seller Entity for purposes of preparing the
Closing Balance Sheet under Section 2.3.1. The parties acknowledge that no
post closing adjustment will be made respecting Heritage and that mutually
agreeable adjustments will be made to recognize that such Facility is not
being purchased at the Closing and post-closing adjustments respecting
Heritage will be made as of the closing, if any, of the purchase of such
Facility under procedures as similar as practicable to those set forth in
the Acquisition Agreement. Unless and until Heritage is purchased,
Heritage shall not be considered a Facility and neither ASL, Inc. nor
Arcadia Associates shall be considered a Seller Entity for purposes of the
covenants, warranties or indemnification provisions of the Acquisition
Agreement.
7. Section 2.3.5 is hereby deleted and the following new
Section 2.3.5 is substituted in its entirety therefor:
"2.3.5 Academy.
(a) Within 60 days following the Closing Date, KPMG
Peat Marwick LLP shall deliver or cause to be delivered to Buyer and
the Sellers' Representative an audited balance sheet of Academy as at
the Closing Date, prepared in accordance with generally accepted
accounting principles consistent with the balance sheet as at
December 31, 1995 of Academy heretofore delivered to Buyer (the
"Academy Closing Balance Sheet"), except that all expenses of Academy
in connection with the preparation, execution and performance of this
Agreement and the transactions contemplated hereby that have not been
expended since December 31, 1995, shall be deducted from Shareholders
Equity. The methods and time periods applicable to finalizing the
Closing Balance Sheet in accordance with Section 2.3.1 shall also
apply to finalizing the Academy Closing Balance Sheet.
(b) (1) If the amount of the shareholders equity
reflected on the Academy Closing Balance Sheet ("Academy Closing
Equity") is less than $1,034,393 ("December 31 Academy Equity"), then
the aggregate Purchase Price shall be reduced by an amount equal to
the amount by which Academy Closing Equity is less than December 31
Academy Equity. If the amount of Academy Closing Equity is greater
than December 31 Academy Equity, then the Purchase Price shall be
increased by such excess.
(2) If the amount of Net Academy Liabilities
(as defined below) on the Academy Closing Balance Sheet is greater
than $4,149,536, then the aggregate Purchase Price shall be reduced
by the amount of such excess. Net Academy Liabilities means with
respect to Academy (i) accounts payable plus accrued expenses plus
short term debt plus long term debt (including current maturities of
long term debt) less (ii) cash and cash equivalents.
(c) The Buyer shall pay to the Sellers'
Representative for payment to the relevant Owners, or the Sellers'
Representative shall pay or cause to be paid to the Buyer the amount
of the adjustment required under this Section 2.3.5. Such adjustment
shall be made in cash not later than on the third business day
following final determination of the Academy Closing Balance Sheet."
8. The first sentence of Section 3.2 is hereby amended by
inserting "the day next following" immediately preceding "the Closing
Date."
9. By executing and delivering this instrument (a) Encare of
Massachusetts, Inc. ("Encare"), hereby joins in and becomes a party to the
Acquisition Agreement as a Seller Entity with the intention and effect that
Encare shall be deemed for all purposes to have executed and delivered the
Acquisition Agreement and shall have all of the rights and benefits,
subject to all of the obligations, of a Seller Entity thereunder and (b)
the Owner Parties who are stockholders of Encare (each, an "Encare Owner
Party") agree that each representation, warranty, covenant or agreement in
the Acquisition Agreement made by an Encare Owner Party with respect to the
Seller Entities shall be deemed to have been made with respect to Encare,
except that (i) the representations and warranties made with respect to
Encare shall be limited to the matters set forth in Sections 6.1.2, 6.1.3
and 6.2 (second and third sentences only) (it being understood that Encare
will not be deemed a Seller Entity in making such representations but that
the relevant Sellers will be transferring good and marketable title to
their shares of Encare, free and clear of all Liens) and (ii) Encare shall
be deemed a Seller Entity only for purposes of Sections 2.2, 3.3.1 (l) and
(m), 8.7 (but only as to the obligations of Owner Parties respecting their
shares of Encare and not any action by Encare), 8.13 and 10.8.
10. All references to Section 5.9 in Section 5.4 are hereby
deleted.
11. Buyer shall be entitled to indemnification under
Section 12.2(c) of the Acquisition Agreement only to the extent that the
amount of such indemnification exceeds the amount reserved for such items
by the Seller Entity as of the Closing Date (as reflected in the Closing
Balance Sheet and/or the Academy Closing Balance Sheet), as such reserve
may be increased in accordance with the following: The amount reserved for
such items shall be increased on a dollar for dollar basis by the amount by
which any refund or other positive adjustment by reason of any audit by any
Governmental Authority concerning the operation of any Facility prior to
the Closing exceeds the amount booked as revenue for the period covered by
such audit. Any payment required hereunder shall be made first from the
$1MM Indemnification Deposit or the Academy Indemnification Deposit (as the
case may be) pursuant to the Escrow Agreement and then, when claims of any
type against such funds exceed $1,000,000 (in the case of the $1MM
Indemnification Deposit) or $300,000 (in the case of the Academy
Indemnification Deposit), from the appropriate Owner Parties as
contemplated by Article 12. Not less frequently than once per calendar
year, Buyer shall deliver a statement to the Sellers' Representative
setting forth in reasonable detail information reasonably necessary to
determine the size of any payments due under this Paragraph and the size of
the reserve for such items. In no event shall Buyer be obligated to pay
(but the reserve shall be credited as aforesaid) to any Owner or Seller
Entity any amount by reason of receipt of refunds or other positive
adjustments.
12. Section 6.9 is hereby amended by adding the following
prefatory language before the subsections thereof:
"The representations and warranties in Section 6.9.1 and
Section 6.9.3 are qualified in their entirety by the disclosure set
forth on Schedule 6.9.1."
13. Paragraphs (c), (h), (k), (l) and (p) of Section 6.17
are hereby deleted and are replaced in their entirety by the following:
"(c) Subject to Schedule 6.17(c), each Benefit
Plan conforms to, and its administration is in compliance with, all
applicable laws and regulations.
(h) No Benefit Plan is a multiemployer plan as
defined in Code section 414(f) or ERISA sections 3(37) or 4001(a)(3).
Except as set forth in Schedule 6.17 (h), no Benefit Plan is a
multiple employer plan within the meaning of Code section 413(c) or
ERISA sections 4063, 4064 or 4066.
(k) Except as set forth in Schedule 6.17(k), each
Benefit Plan which is intended to qualify under Code section 401(a)
or 403(a) so qualifies and its related trust is exempt from taxation
under Code section 501(a).
(l) Each Benefit Plan that is a "group health
plan" (as defined in ERISA section 607(1) or Code section 5000(b)(1))
has been operated at all times in compliance with the provisions of
COBRA and any applicable, similar state law.
(p) As of the Closing, none of the Seller Entities
Commonly Controlled Entity has incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act, as it
may be amended from time to time or any similar state law
(collectively, "WARN") and within the six-month period immediately
following the Closing, will not incur any such liability or
obligation if, during such six-month period, only terminations of
employment in the normal course of operations occur."
14. A new Section 8.18 is hereby added to the Acquisition
Agreement as follows:
8.18 Individual Account Plan. The ADS Group 401(k) Plan
sponsored by The ADS Group, Inc. and the Academy Manor Retirement &
Savings Plan (each a "Plan," together, the "Plans") as in effect on
the Closing Date shall remain in effect after the Closing Date, until
such time as Buyer decides to terminate either or both of said Plans,
for the benefit of the employees of the Business participating or
eligible to participate in each such Plan as of the Closing Date or
who will thereafter become eligible to participate upon satisfaction
of the applicable eligibility requirements. If Buyer decides to
terminate the ADS Group 401(k) Plan after the Closing Date, at a time
when any entity outside of Buyer's ERISA controlled group is a
participating employer therein, Buyer shall cooperate in the transfer
of sponsorship of the ADS Group 401(k) Plan to any such entity
outside of its ERISA controlled group desiring to continue such Plan.
The Buyer, the Owner Parties and the Seller Entities shall cooperate
and take any and all action, and cause each of their respective
Affiliates to take any and all action, as may be necessary or
appropriate to accomplish the purposes of the foregoing, including,
but not by way of limitation, the adoption of each such Plan as a
participating employer or plan sponsor effective as of the Closing
Date.
15. A new Section 8.19 is hereby added to the Acquisition
Agreement as follows:
8.19 Post-Closing Environmental Actions.
(a) As soon as is reasonably practicable after the
Closing Date, Buyer shall remove the underground storage tanks
located at Academy Manor Nursing Home and Prescott House Nursing Home
(the "USTs"), and shall undertake all actions, including, without
limitation, investigation and remediation of any Hazardous Substances
in the environment associated with the removal of the USTs,
reasonably necessary to obtain a written statement from either
(i) any Governmental Authority which has exercised jurisdiction over
the removal of the USTs or (ii) from a "Licensed Site Professional"
(as defined in 310 CMR 40.0006) to the effect that no further action
is required under applicable Environmental Laws with respect to the
USTs and any associated Hazardous Substances.
(b) As soon as is reasonably practicable after the
Closing Date, the Buyer shall undertake all actions, if any,
necessary to cause the disposal of the wastewater generated in
connection with floor cleaning and boiler blowdown at Palm Manor
Nursing Home and Westford Nursing and Rehabilitation Center to comply
with all applicable Environmental Laws.
(c) Buyer shall have the exclusive right to manage
and control all action undertaken pursuant to Sections 8.19(a) and
8.19(b); provided, however, that all such actions shall be reasonably
cost effective to accomplish the aims set forth by such Sections.
(d) Subject to the limitations set forth in
Sections 12.4 and 12.6, the Owner Parties shall indemnify and hold
harmless Buyer and its agents, representatives, employees, officers,
directors, stockholders, controlling persons and Affiliates
(collectively, the "Buyer Indemnities"), and shall reimburse the
Buyer Indemnities for any loss, liability, claim, damage, expense
(including, but not limited to, reasonable costs of investigation and
defense and reasonable attorneys' fees), whether or not involving a
third party claim (collectively, "Damages"), arising from or in
connection with (a) the actions undertaken pursuant to Sections
8.19(a) and 8.19(b) (provided, however, that the Owner Parties shall
not be obligated to indemnify the Buyers Indemnities to the extent
that such actions are not conducted in accordance with reasonable and
customary practices in order to accomplish the aims set forth by such
Sections), (b) the USTs and the presence of any "reportable
concentrations" (as defined in 310 CMR 40.0006) of Hazardous
Substances in the environment resulting from the presence, use or
operation of the USTs, (c) the presence of any "reportable
concentrations" (as defined in 310 CMR 40.0006) of Hazardous
Substances resulting from the discharge of any Hazardous Substances
to the septic systems at the Palm Manor Nursing Home or the Westford
Nursing and Rehabilitation Center, or (d) any environmental
conditions, noncompliance with environmental laws, or other events,
acts or conditions identified in (i) the Level I environmental site
assessments of the Operated Facilities prepared by Rizzo Associates,
Inc. and provided to Sellers on or before the Closing Date or (ii)
any environmental assessments, reports or other documents concerning
the Facilities provided by Sellers to Buyer where, in the case of
either (i) or (ii), Buyer refrained from any further investigation,
it being understood that all such matters where Buyer refrained from
further investigation are listed in a letter between counsel to the
respective parties, dated the date hereof. Third party claims
subject to indemnification pursuant to this Section 8.19(d) shall be
subject to the procedures set forth in Section 12.5. Owner Parties'
obligation to indemnify Buyer pursuant to this Section 8.19(d) shall
not be limited or otherwise affected by Sellers' disclosure on
Schedule 6.9.1 to this Acquisition Agreement. Claims for
indemnification hereunder shall be effected under Article 12, it
being understood that claims with respect to Academy being made
solely against Meyer Solomont as well as the related $300,000
Indemnification Holdback Amount.
(e) The Owner Parties shall have no obligation to
indemnify Buyer pursuant to Section 8.19(d) with respect to any claim
unless, on or before the fifth anniversary of the Closing Date, the
Sellers' Representative is given notice asserting such claim and
specifying its factual basis in reasonable detail to the extent then
known by Buyer.
(f) Buyer shall promptly provide to the Sellers'
Representative copies of all final scopes of work, sampling data,
notices to or from a Governmental Authority or third party, test
results and reports concerning the actions undertaken pursuant to
Section 8.19(a) and 8.19(b).
(g) To the extent that any rights of recovery,
contribution, reimbursement or indemnification exist against the
owner of the Palm Manor Nursing Home ("Recovery"), including, without
limitation, by reason of Section 12.4(b) below, pursuant to the lease
of said Facility or otherwise, Buyer and Sellers agree to use
reasonable efforts to cooperate to obtain such Recovery and any such
Recovery obtained will be paid to Buyer and applied against Owner
Parties' obligation to indemnify Buyer for the Damages to which the
Recovery relates or, to the extent Owner Parties have already made
cash payment to Buyer Indemnities pursuant to their indemnification
obligation with respect to the subject matter of the Recovery, the
Recovery will be paid to Owner Parties.
(h) To the extent that any of the Buyer Indemnities
obtain any recovery pursuant to an insurance policy with respect to
Damages for which such Buyer Indemnities have received
indemnification payments from any Owner Parties, such Buyer
Indemnities shall thereupon reimburse such Owner Parties on a dollar
for dollar basis. If this provision would have the effect of causing
any Buyer Indemnitee to lose any benefits under any such policy, this
Section 15(h) will to the extent necessary to prevent such loss be
deemed null and void. In no event shall any Buyer Indemnitee suffer
any net reduction in recovery by reason of this Section 15(h).
16. A new Section 8.20 is hereby added to the Acquisition
Agreement as follows:
"Subject to any required approval of the Lessor under the
Operating Lease, dated June 30, 1995, between Health Care Property
Investors and ADS Palm Chelmsford, Inc. (the "Palm and Reservoir
Lease"), Buyer shall have the right (the "Palm Option") to purchase
all shares of stock of ADS Reservoir Waltham, Inc. and ADS Palm
Chelmsford, Inc. for an aggregate purchase price of $100 for each
such corporation five days following delivery of written notice of
exercise of such right to the Sellers' Representative at any time
prior to January 1, 2016 (or one year after such later date to which
the Palm and Reservoir Lease may be extended). No person other than
Buyer who owns any stock of either such corporation may sell, dispose
of, transfer, pledge or encumber any of such stock, and neither such
corporation shall sell, transfer or encumber, or enter into any
agreement to sell, transfer or encumber, all or substantially all of
its assets, or enter into any agreement respecting, or effect, any
merger or consolidation, in each case at any time until the
expiration of the Palm Option. Until the expiration of the Palm
Option, neither corporation shall pay any dividend (other than
dividends payable solely in shares of stock, pro rata, to all
shareholders) or make any distribution. ADS Palm Chelmsford, Inc.
hereby agrees to assign to Buyer upon request all of ADS Palm
Chelmsford, Inc.'s rights under the Palm and Reservoir Lease, without
any recourse to, or representation or warranty from, ADS Palm
Chelmsford, Inc., whether or not such assignment breaches the Palm
and Reservoir Lease, provided that Buyer shall indemnify the
officers, directors and shareholders of ADS Palm Chelmsford, Inc. and
ADS Reservoir Waltham, Inc. in connection with such assignment."
17. The final sentence of Section 9 is hereby amended by
deleting the same in its entirety and substituting the following therefor:
"Buyer agrees to cause Parent to permit any Seller
receiving Parent Shares pursuant to this Agreement to include the
sale of Parent Shares acquired by them pursuant to this Agreement in
any registration statement effected by the Parent under the
Securities Act of 1933 later than one year following the Closing Date
on the same basis that the co-chief executive officers may include
shares of common stock of the Parent therein, unless the Parent shall
have received an opinion of counsel that such Seller may sell such
shares without registration under such Act."
18. A new Section 10.11 is hereby added to the Acquisition
Agreement as follows:
10.11 Post-Closing Option to Purchase Heritage.
(a) Buyer and Sellers acknowledge that the
Heritage Nursing Care Center ("Heritage") has been removed from the
Operated Facilities the ownership of which will be transferred
pursuant to this Agreement. Sellers who hold ownership interests in
Heritage ("Heritage Sellers") hereby grant and convey to Buyer an
option to either (i) purchase Heritage, pursuant to the terms of this
Agreement, including the application of all representations,
warranties and covenants contained in this Agreement to Heritage but
the liability of the Owner Parties for matters relating to Hazardous
Substance and all environmental issues associated with Heritage under
or with respect to this Agreement shall be limited to 10% of the
equity price for Heritage, and at a price and in the manner set forth
on Exhibit A to this Agreement or (ii) propose alternative terms for
the purchase or lease by Buyer of Heritage (the "Option").
(b) The Option may be exercised at any time
during the period which shall commence on the Closing Date and shall
expire 180 days thereafter (the "Option Period").
(c) Buyer shall exercise the Option at any
time during the Option Period by giving notice, pursuant to Section
15.7 hereof, of such exercise to Sellers' Representative.
(d) If Buyer exercises the Option in the
manner specified in Section 10.11(a)(ii), Buyer shall include with
its notice of the exercise of the Option a purchase or lease
agreement reflecting Buyer's alternative terms (the "Alternative
Purchase Agreement"), and within 30 days of receipt of Buyer's
notice, Sellers' Representative shall notify Buyer as to whether the
Heritage Sellers accept the sale or lease of Heritage on the terms
proposed by Buyer. If Sellers' Representative notifies Buyer that
the Heritage Sellers accept the sale or lease of Heritage on Buyer's
terms, Sellers and Buyer shall execute the Alternative Purchase
Agreement. If Sellers' Representative notifies Buyer that the
Heritage Sellers are not accepting the sale or lease of Heritage on
Buyer's terms (or if Sellers' Representative fails to so notify the
Buyer within such 30 day period ), the Option shall expire (except
that Buyer shall retain the Option under Section 10.11(a)(i) for an
additional 60 days) and Buyer shall have the right to terminate at
any time on 60 days notice the supply arrangement referred to in
Section 10.11(h).
(e) The Heritage Sellers shall not
voluntarily convey, sell, transfer, mortgage or encumber (except for
current mortgage lien and liens for real estate taxes, properly
assessed) Heritage, or any part thereof or interest therein, during
the Option Period without the prior consent of Buyer.
(f) If Buyer fails to exercise the Option in
the manner provided for herein during the Option Period, the Option
shall automatically terminate.
(g) The purchase or lease of Heritage shall
be effected not later than the thirtieth day (subject to extension
for health regulatory requirements) following (i) the exercise of the
Option in the manner set forth in Section 10.11(a)(i) or (ii) the
acceptance of the Alternative Purchase Agreement in accordance with
Section 10.11(d).
(h) Effective upon the Closing, the
management agreement between Heritage and ADS Management, Inc. shall
be terminated and all amounts owed thereunder shall be promptly
settled. Following the Closing, ADS Management, Inc. shall supply
Heritage with accounting, reimbursement, consulting, payroll and
other services (to be agreed upon) on an annual basis, for which
Heritage shall pay at prices to be agreed upon, but in no event shall
the amounts paid pursuant to such service arrangements, regardless of
the level used by Heritage, be less than 5% of revenues of Heritage.
Such arrangement shall be renewed on a mutually agreeable basis.
19. The following sentences are hereby added at the end of
Section 12.4(b) of the Acquisition Agreement:
"Any Damages incurred or suffered by Buyer in connection with
the presence, abatement, removal, disposal or replacement of
asbestos-containing building material shall not be subject to
indemnification pursuant to this Agreement, but such Damages shall
reduce the amount of the Sellers' Basket as if such Damages were
subject to indemnification under Section 12.2 of this Agreement."
20. The parties hereto acknowledge that Meyer Solomont
heretofore was substituted for David Solomont of Lowell under, among other
things, Section 12.7. Section 12.7 is amended by deleting therefrom the
final sentence and substituting therefor the following:
"Buyer shall deposit $500,000 of the Purchase Price relating to
Academy on the Closing Date, of which $300,000 shall secure the
indemnification obligations under the Agreement respecting Academy
and $200,000 shall secure potential liabilities arising from two
severance agreements referred to on Schedule 6.17(a), all as more
fully set forth in the Escrow Agreement. Buyer shall be entitled to
be indemnified dollar for dollar without regard to any basket for any
payments that are required to be made pursuant to such severance
agreements"
21. In view of the fact that the schedules to the Acquisition
Agreement were completed at the Closing, no person shall have any liability
by reason of the fact that any representation or warranty was untrue as of
anytime prior to the Closing, so long as the same shall be true and correct
as of the Closing.
22. The description of Alan Solomont's interest in certain
assisted living ventures and other matters annexed hereto as Exhibit B is
true and correct in all material respects and does not omit any fact
necessary to make the statements therein truthful and accurate as of the
date hereof. ADS and SSB and certain other Owner Parties have interests in
three assisted living development projects known as Dartmouth, Danvers and
Hingham. At Closing, all rights and interests of such Persons in such
projects, as well as all other nursing facilities or projects and assisted
living projects other than those listed on Schedule 6.23 of the Acquisition
Agreement, are being assigned to Buyer (or its affiliated designee),
subject to third party consents and Buyer shall become responsible for all
development costs and capital contributions. In addition, at or after the
Closing (upon receipt and verification of backup), Buyer shall reimburse
each such Person for any unreimbursed expenditures by such Persons on all
such projects, by paying to Sellers' Representative for their accounts the
amounts set forth on Exhibit C. The Sellers represent that none of such
expenses has been paid by any entity being acquired pursuant to the
Acquisition Agreement. ADS and SSB agree to use their best efforts to
obtain any necessary third-party consents to such transfer within 90 days
following the Closing, ADS and SSB acknowledge and agree that such
interests will be permitted under Section 10.9 of the Acquisition Agreement
only until the 90th day following the Closing.
23. The Sellers' Representative has heretofore provided to
Buyer a copy of an agreement respecting the termination of employment of
Thomas Grape. The Buyer confirms that the severance of Mr. Grape under the
terms set forth in such agreement will not constitute a breach of the
Acquisition Agreement. Sellers' Representative agrees that it is the
intention of the parties that, except for the obligation of the Buyer to
pay $95,000 to Mr. Grape, the financial terms of such letter agreement
shall not adversely affect Buyer and that any payments to Mr. Grape,
regardless of whether made prior or after the Closing, will be deemed to be
made prior to the Closing for purposes of preparation of the Closing
Balance Sheet and any other appropriate adjustment shall be made such that
any and all costs relating to such severance or arising out of such
agreement will not be borne directly or indirectly by the Buyer.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Amendment No. 4 as of the day and year first above
written.
ADS/MULTICARE, INC.
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
ENCARE OF MASSACHUSETTS, INC.
By: DANIEL E. STRAUS
Name: Daniel E. Straus
Title:
By: ALAN D. SOLOMONT
Name: Alan D. Solomont
Title:
Exhibit A
Arcadia Associates (General Partnership)
ASL, Inc. d/b/a Heritage Nursing Care Center (S Corporation)
A. Each partner of Arcadia Associates (i.e., Alan Solomont
(12.5%), David Solomont (12.5%), Jay Solomont (12.5%), Ahron
Solomont (12.5%), Leon Landa (25%), E. Casso (6.25%), G. Jasne
(6.25%), P. Altsher (6.25%) and B. Petty (6.25%)) shall
transfer their partnership interests in Arcadia Associates to
SELCO.
B. SELCO shall pay cash consideration to each partner of Arcadia
Associates, as follows:
<TABLE>
<S> <C>
Alan Solomont $ 136,500
David Solomont $ 136,500
Jay Solomont $ 136,500
Ahron Solomont $ 136,500
Leon Landa $ 273,000
E. Casso $ 68,250
G. Jasne $ 68,250
P. Altsher $ 68,250
B. Petty $ 68,250
TOTAL $ 1,092,000
</TABLE>
C. The trustee of Arcadia Realty Trust will be changed to a person
designated by SELCO.
D. SELCO shall strip the real estate assets out of Arcadia Realty
Trust/Arcadia Associates.
E. SELCO shall lease the real estate assets to ASL, Inc.
F. Each stockholder of ASL, Inc., (i.e., Alan Solomont (12.5%),
David Solomont (12.5%), Jay Solomont (12.5%), Ahron Solomont
(12.5%), Leon Landa (25%), E. Casso (6.25%), G. Jasne (6.25%),
P. Altsher (6.25%) and B. Petty (6.25%)) shall sell their stock
to Buyer.
G. Buyer shall pay cash consideration to each stockholder of ASL,
Inc. as follows:
<TABLE>
<S> <C>
Alan Solomont $ 125,000
David Solomont $ 125,000
Jay Solomont $ 125,000
Ahron Solomont $ 125,000
Leon Landa $ 250,000
E. Casso $ 62,500
G. Jasne $ 62,500
P. Altsher $ 62,500
B. Petty $ 62,500
TOTAL $ 1,000,000
</TABLE>
H. Management Agreement will remain between ADS Management, Inc.
and ASL, Inc. License is held by ASL, Inc.
I. Consents required:
(i) The consent of each of Leon B. Landa, Elizabeth Casso,
Gail Jasne, Philip M. Altsher and Barbara Petty is
required for the transfer of each of the partnership
interests of all of the other partners in Arcadia
Associates pursuant to the Arcadia Associates partnership
agreement.
(ii) The board of directors of ASL, Inc. must waive
restrictions on stock transfer pursuant to the articles
of incorporation of ASL, Inc.
(iii) Loan Agreement dated 11/30/93 between ASL, Inc. and Fleet
Bank to be repaid. Release liens and guaranties made by
Ahron Solomont, Alan Solomont, Leon Landa, Jay Solomont
and David Solomont.
Exhibit B
Operating Assisted Living Facilities.
ADS Senior Housing, Inc. (a company being acquired by
Multicare) currently manages eight assisted living facilities. Alan
Solomont has ownership interests in five of the eight: (i) Heritage at
North Andover; (ii) Cabot Park Village; (iii) Heritage at the Falls; (iv)
Heritage at Cleveland Circle; and (v) Heritage at Vernon Court. Four of
the five facilities (all except North Andover) are essentially joint
ventures between an entity owned in substantially equivalent portions by
Alan, Susan Bailis and three of Alan's brothers on one side and National
Development of New England ("NDNE"), an independent developer, on the other
side. The ADS entity and NDNE have substantially equivalent general
partner and limited partner interests in each facility. Three of the four
facilities (all except Cabot) also include third party investors known as
"investor limited partners," who acquired their interests in equity
syndications. These investor limited partners own limited partnership
interests ranging generally from 45%-55% of each entity. Alan serves as
president of each ADS entity. In each instance, the ADS entity manages the
facility and earns development and management fees, while NDNE develops and
constructs the property, earning development and construction fees.
The fifth facility, North Andover, is owned in five tranches of
20% each by Alan, Susan and each of Alan's three brothers.
Information setting forth more precisely the investment
interests is attached.
Assisted Living Development Projects.
Alan Solomont, Susan Bailis and three of Alan's brothers have
ownership interests in three assisted living development projects known as
Dartmouth, Danvers and Hingham. These are covered by Amendment No. 4.
Exhibit C
Schedule of amounts to be paid at or after Closing re Assisted Living (upon
receipt and verification of back-up)
<TABLE>
ADS Senior Housing
<S> <C>
Danvers Assisted Living $ 219,507
Hingham Assisted Living $ 154,176
Worcester Assisted Living $ 105,302
Southington Assisted Living $ 11,574
Dartmouth Assisted Living $ 211,624
TOTAL ADS SENIOR HOUSING $ 702,183
</TABLE>
<TABLE>
ADS Management
<S> <C>
Southeast Nursing Home $ 550,000
TOTAL ADS MANAGEMENT $ 550,000
</TABLE>
<TABLE>
Total ADS Group
<S> <C>
Total ADS Senior Housing $ 702,183
Total ADS Management $ 550,000
TOTAL ADS GROUP $ 1,252,183
</TABLE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
dated as of December 11, 1996
among
THE MULTICARE COMPANIES, INC.
AND CERTAIN OF ITS SUBSIDIARIES
THE BANKS SIGNATORY HERETO
and
NATIONSBANK, N.A.
as Administrative Agent
Table of Contents
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS. . . . . . . . . . .2
Section 1.01. Definitions. . . . . . . . . . . . . . . .2
Section 1.02. Accounting Terms . . . . . . . . . . . . 25
ARTICLE 2. THE CREDIT . . . . . . . . . . . . . . . . . . . 25
Section 2.01. Loans. . . . . . . . . . . . . . . . . . 25
Section 2.02. The Notes. . . . . . . . . . . . . . . . 26
Section 2.03. Purpose. . . . . . . . . . . . . . . . . 26
Section 2.04. Borrowing Procedures . . . . . . . . . . 26
Section 2.05. Prepayments and Conversions. . . . . . . 27
Section 2.06. Interest Periods; Renewals . . . . . . . 27
Section 2.07. Changes of Commitments . . . . . . . . . 27
Section 2.08. Certain Notices. . . . . . . . . . . . . 27
Section 2.09. Minimum Amounts. . . . . . . . . . . . . 28
Section 2.10. Interest . . . . . . . . . . . . . . . . 28
Section 2.11. Fees . . . . . . . . . . . . . . . . . . 29
Section 2.12. Payments Generally . . . . . . . . . . . 29
Section 2.13. Restatement. . . . . . . . . . . . . . . 30
Section 2.14. Optional Conversion of Revolving Credit
Commitments to Synthetic Lease
Commitments . . . . . . . . . . . . . . 30
ARTICLE 3. THE LETTERS OF CREDIT. . . . . . . . . . . . . . 31
Section 3.01. Letters of Credit. . . . . . . . . . . . 31
Section 3.02. Purposes . . . . . . . . . . . . . . . . 31
Section 3.03. Procedures for Issuance of
Letters of Credit . . . . . . . . . . . 31
Section 3.04. Participating Interests. . . . . . . . . 32
Section 3.05. Payments . . . . . . . . . . . . . . . . 32
Section 3.06. Further Assurances . . . . . . . . . . . 33
Section 3.07. Obligations Absolute . . . . . . . . . . 33
Section 3.08. Cash Collateral Account. . . . . . . . . 34
Section 3.09. Letter of Credit Fees. . . . . . . . . . 34
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC. . . . . . . . 35
Section 4.01. Additional Costs . . . . . . . . . . . . 35
Section 4.02. Limitation on Types of Loans . . . . . . 36
Section 4.03. Illegality . . . . . . . . . . . . . . . 37
Section 4.04. Certain Conversions pursuant to
Sections 4.01 and 4.03 . . . . . . . . . 37
Section 4.05. Certain Compensation . . . . . . . . . . 38
ARTICLE 5. CONDITIONS PRECEDENT.. . . . . . . . . . . . . . 39
Section 5.01. Documentary Conditions Precedent . . . . 39
Section 5.02. Additional Conditions Precedent. . . . . 42
Section 5.03. Deemed Representations . . . . . . . . . 42
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . 43
Section 6.01. Organization, Good Standing and
Due Qualification . . . . . . . . . . . 43
Section 6.02. Power and Authority; No Conflicts. . . . 43
Section 6.03. Legally Enforceable Agreements . . . . . 44
Section 6.04. Litigation . . . . . . . . . . . . . . . 44
Section 6.05. Financial Statements . . . . . . . . . . 44
Section 6.06. Ownership and Liens. . . . . . . . . . . 45
Section 6.07. Taxes. . . . . . . . . . . . . . . . . . 46
Section 6.08. ERISA. . . . . . . . . . . . . . . . . . 46
Section 6.09. Subsidiaries and Ownership of Stock. . . 46
Section 6.10. Credit Arrangements. . . . . . . . . . . 46
Section 6.11. Operation of Business. . . . . . . . . . 47
Section 6.12. Operating Agreements and Leases. . . . . 48
Section 6.13. Health Care Facilities . . . . . . . . . 48
Section 6.14. Hazardous Materials. . . . . . . . . . . 48
Section 6.15. No Default on Outstanding Judgments
or Orders . . . . . . . . . . . . . . . 48
Section 6.16. No Defaults on Other Agreements. . . . . 48
Section 6.17. Labor Disputes and Acts of God . . . . . 49
Section 6.18. Governmental Regulation. . . . . . . . . 49
Section 6.19. No Forfeiture. . . . . . . . . . . . . . 49
Section 6.20. Solvency . . . . . . . . . . . . . . . . 49
Section 6.21. Security Documents . . . . . . . . . . . 49
Section 6.22. Senior Indebtedness. . . . . . . . . . . 50
Section 6.23. Representations and Warranties in the
ADS Acquisition Documents. . . . . . . . 50
Section 6.24. Representations and Warranties in the
ADS Synthetic Lease Documents. . . . . . 50
ARTICLE 7. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . 51
Section 7.01. Maintenance of Existence . . . . . . . . 51
Section 7.02. Conduct of Business. . . . . . . . . . . 51
Section 7.03. Maintenance of Properties. . . . . . . . 51
Section 7.04. Maintenance of Records . . . . . . . . . 52
Section 7.05. Maintenance of Insurance . . . . . . . . 52
Section 7.06. Compliance with Laws . . . . . . . . . . 52
Section 7.07. Right of Inspection. . . . . . . . . . . 52
Section 7.08. Reporting Requirements . . . . . . . . . 52
Section 7.09. Additional Subsidiary Guarantors . . . . 56
ARTICLE 8. NEGATIVE COVENANTS.. . . . . . . . . . . . . . . 56
Section 8.01. Debt . . . . . . . . . . . . . . . . . . 56
Section 8.02. Guaranties, Etc. . . . . . . . . . . . . 58
Section 8.03. Liens. . . . . . . . . . . . . . . . . . 58
Section 8.04. Leases . . . . . . . . . . . . . . . . . 60
Section 8.05. Investments. . . . . . . . . . . . . . . 60
Section 8.06. Dividends. . . . . . . . . . . . . . . . 61
Section 8.07. Sale of Assets . . . . . . . . . . . . . 62
Section 8.08. Stock of Subsidiaries, Etc . . . . . . . 63
Section 8.09. Transactions with Affiliates . . . . . . 63
Section 8.10. Mergers, Etc . . . . . . . . . . . . . . 63
Section 8.11. Acquisitions . . . . . . . . . . . . . . 63
Section 8.12. No Activities Leading to Forfeiture. . . 63
Section 8.13. Capital Expenditures . . . . . . . . . . 63
Section 8.14. Amendments or Waivers of Certain
Documents . . . . . . . . . . . . . . .. 64
Section 8.15. Rights under Other Agreements. . . . . . 64
Section 8.16. Restrictions . . . . . . . . . . . . . . 64
ARTICLE 9. FINANCIAL COVENANTS. . . . . . . . . . . . . . . 65
Section 9.01. Fixed Charge Coverage Ratio. . . . . . . 65
Section 9.02. Modified Senior Leverage Ratio . . . . . 65
Section 9.03. Modified Leverage Ratio. . . . . . . . . 65
Section 9.04. Interest Coverage Ratio. . . . . . . . . 65
Section 9.05. Minimum Net Worth. . . . . . . . . . . . 65
ARTICLE 10. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . 65
Section 10.01. Events of Default . . . . . . . . . . . 65
ARTICLE 11. THE ADMINISTRATIVE AGENT. . . . . . . . . . . . 69
Section 11.01. Appointment, Powers and Immunities of
Administrative Agent . . . . . . . . . 69
Section 11.02. Reliance by Administrative Agent. . . . 69
Section 11.03. Defaults. . . . . . . . . . . . . . . . 70
Section 11.04. Rights of Administrative Agent as a Bank70
Section 11.05. Indemnification of Administrative Agent 71
Section 11.06. Documents . . . . . . . . . . . . . . . 71
Section 11.07. Non-Reliance on Administrative Agent
and Other Banks. . . . . . . . . . . . .71
Section 11.08. Failure of Administrative Agent to Act. 72
Section 11.09. Resignation or Removal of
Administrative Agent . . . . . . . . . 72
Section 11.10. Amendments Concerning Agency Function . 72
Section 11.11. Liability of Administrative Agent . . . 73
Section 11.12. Transfer of Agency Function . . . . . . 73
Section 11.13. Non-Receipt of Funds by the
Administrative Agent . . . . . . . . . 73
Section 11.14. Withholding Taxes . . . . . . . . . . . 73
Section 11.15. Several Obligations and Rights of Banks 74
Section 11.16. Pro Rata Treatment of Loans, Etc. . . . 74
Section 11.17. Sharing of Payments Among Banks . . . . 74
Section 11.18. Co-Agents . . . . . . . . . . . . . . . 75
ARTICLE 12. MISCELLANEOUS.. . . . . . . . . . . . . . . . . 75
Section 12.01. Amendments and Waivers. . . . . . . . . 75
Section 12.02. Usury . . . . . . . . . . . . . . . . . 76
Section 12.03. Expenses. . . . . . . . . . . . . . . . 76
Section 12.04. Survival. . . . . . . . . . . . . . . . 77
Section 12.05. Assignment; Participations. . . . . . . 77
Section 12.06. Notices . . . . . . . . . . . . . . . . 78
Section 12.07. Setoff. . . . . . . . . . . . . . . . . 78
Section 12.08. JURISDICTION; IMMUNITIES. . . . . . . . 78
Section 12.09. Table of Contents; Headings . . . . . . 79
Section 12.10. Severability. . . . . . . . . . . . . . 79
Section 12.11. Counterparts. . . . . . . . . . . . . . 79
Section 12.12. Integration . . . . . . . . . . . . . . 80
Section 12.13. GOVERNING LAW . . . . . . . . . . . . . 80
Section 12.14. Confidentiality . . . . . . . . . . . . 80
Section 12.15. Treatment of Certain Information. . . . 80
Section 12.16. Certain Subsidiary Co-Borrower Waivers
and Releases . . . . . . . . . .. . . 80
EXHIBITS
Exhibit A Revolving Credit Note
Exhibit B Term Note
Exhibit C Multicare Guaranty
Exhibit D Compliance Certificate
Exhibit E Opinion of Outside Counsel to the
Consolidated Entities
Exhibit F Opinion of Local Counsel to the
Consolidated Entities
Exhibit G Intercreditor and Collateral Agency Agreement
Exhibit H Second Amended and Restated Security Agreement
Exhibit I Second Amended and Restated Pledge Agreement
Exhibit J Form of Second Amended and Restated Mortgage
Exhibit K Form of Assumption Agreement
SCHEDULES
Schedule I Commitments
Schedule II Litigation
Schedule III Subsidiaries and Affiliates
Schedule IV Credit Arrangements
Schedule V Licenses
Schedule VI Operating Agreements and Leases
Schedule VII Facilities
Schedule VIII Affiliate Transactions
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 11,
1996 among THE MULTICARE COMPANIES, INC., a corporation organized under the
laws of Delaware (the "Borrower"); BREYUT CONVALESCENT CENTER, INC., a
corporation organized under the laws of New Jersey, ENCARE OF MENDHAM, INC.,
a corporation organized under the laws of New Jersey, HEALTH RESOURCES OF
CEDAR GROVE, INC., a corporation organized under the laws of New Jersey,
HEALTH RESOURCES OF CINNAMINSON, INC., a corporation organized under the laws
of New Jersey, HEALTH RESOURCES OF EMERY, INC., a corporation organized under
the laws of Delaware, HEALTH RESOURCES OF EWING, INC., a corporation
organized under the laws of New Jersey, HEALTH RESOURCES OF FAIR LAWN, INC.,
a corporation organized under the laws of Delaware, HEALTH RESOURCES OF
MORRISTOWN, INC., a corporation organized under the laws of New Jersey,
HEALTH RESOURCES OF RIDGEWOOD, INC., a corporation organized under the laws
of New Jersey, HEALTH RESOURCES OF WEST ORANGE, INC., a corporation organized
under the laws of Delaware, HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P., a
limited partnership organized under the laws of Delaware, MERCERVILLE
ASSOCIATES OF NEW JERSEY, L.P., a limited partnership organized under the
laws of Delaware, POMPTON ASSOCIATES L.P., a limited partnership organized
under the laws of New Jersey, POMPTON CARE, INC., a corporation organized
under the laws of New Jersey, ROEPHEL CONVALESCENT CENTER, INC., a
corporation organized under the laws of New Jersey, THE STRAUS GROUP-OLD
BRIDGE, L.P., a limited partnership organized under the laws of New Jersey,
and THE STRAUS GROUP-RIDGEWOOD, L.P., a limited partnership organized under
the laws of New Jersey (individually a "Subsidiary Co-Borrower" and
collectively the "Subsidiary Co-Borrowers" and, together with the Borrower,
the "Primary Obligors"); each of the banks which is a signatory hereto or
which shall become a party hereto from time to time (individually a "Bank"
and collectively the "Banks"); and NATIONSBANK, N.A., a national banking
association organized under the laws of the United States of America, as
Administrative Agent for the Banks (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
WHEREAS, the Borrower, the Subsidiary Co-Borrowers, certain of the
Subsidiary Guarantors, certain of the Banks and The Chase Manhattan Bank,
N.A., as Agent have entered into that certain Second Amended and Restated
Credit Agreement dated as of May 22, 1996 (the "Existing Credit Agreement")
pursuant to which the Banks have extended credit to the Obligors evidenced by
certain Promissory Notes (the "Existing Notes") issued by the Borrower and
the respective Subsidiary Co-Borrowers and guarantied by the Subsidiary
Guarantors; and
WHEREAS, the Primary Obligors, the Banks and the Administrative Agent
are entering into this Agreement to provide for, among other things, the
entering into of the ADS Synthetic Lease, the issuance of Letters of Credit
and modifications of certain covenants and definitions contained in the
Existing Credit Agreement.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Acceleration Event" means, at any time, the occurrence of (a) an
acceleration of all amounts due in respect of the Notes or (b) the exercise
of remedies under Section 16.2 of the ADS Synthetic Lease.
"Acceptable Acquisition" means any Acquisition which meets all of the
following conditions: (a) (i) the aggregate consideration paid for such
Acquisition does not exceed $30,000,000 (excluding consideration consisting
of (x) capital stock of the Borrower and (y) contingent payments based on
future operating performances so long as the aggregate of all such contingent
payments does not exceed $2,500,000) or (ii) the purchase by any ADS Lessee
of any ADS Mortgaged Property pursuant to Section 15.1,18.1(a) or 18.1(b) of
the ADS Synthetic Lease; (b) such Acquisition has been approved in good faith
by the Board of Directors of the Person making the Acquisition on an
individual basis or in accordance with a master Acquisition plan; (c) no
Default or Event of Default exists or would exist after giving effect to such
Acquisition; and (d) after reviewing historical financial statements of the
business being acquired and considering the pro forma position of the
Consolidated Entities subsequent to such Acquisition, the Borrower believes
in good faith that the Consolidated Entities will continue to be in
compliance with the financial covenants contained in Article 9 on a pro forma
basis.
"Acquisition" means any transaction (excluding any transaction in which
any Consolidated Entity acquires an interest in undeveloped realty or a
project under construction, and in related regulatory approvals, so long as
such transaction is reflected in Consolidated Capital Expenditures) pursuant
to which any Consolidated Entity (a) acquires equity securities (or warrants,
options or other rights to acquire such securities) of any Person or debt
securities or instruments of any Person where such Consolidated Entity
believes that it is likely to acquire a controlling interest in such Person
or such Health Care Facility, (b) causes or permits any Person to be merged
into any Consolidated Entity, in any case pursuant to a merger, purchase of
assets or any reorganization providing for the delivery or issuance to the
holders of such Person's then outstanding securities, in exchange for such
securities, of cash or securities of any Consolidated Entity, or a
combination thereof, or (c) purchases all or substantially all of the
business or assets of any Person or any Health Care Facility.
"Additional Costs" shall have the meaning assigned to such term in
Section 4.01(a).
"Administrative Agent" shall have the meaning assigned to such term in
the introductory paragraph.
"ADS Acquisition" means the Acquisition by the ADS Buyers of the Health
Care Facilities owned or managed by the ADS Seller Entities, or of the equity
interests in the owners or managers thereof, pursuant to the terms of the ADS
Acquisition Agreement.
"ADS Acquisition Agreement" means that certain Acquisition Agreement
dated as of June 17, 1996 among ADS/Multicare, the ADS Owner Parties and the
ADS Seller Entities (including all exhibits, schedules and disclosure letters
referred to therein or delivered pursuant thereto), as amended by that
certain Amendment No. 1 to Acquisition Agreement dated as of August 12, 1996,
as further amended by that certain Amendment No. 2 to Acquisition Agreement
dated as of September 25, 1996, as further amended by that certain Amendment
No. 3 to Acquisition Agreement dated as of October 29, 1996 and as further
amended by that certain Amendment No. 4 to Acquisition Agreement dated as of
December 11, 1996.
"ADS Acquisition Documents" means (a) the ADS Acquisition Agreement,
(b) the Guaranty dated June 17, 1996 of the Borrower, (c) the Escrow
Agreement dated as of December 11, 1996 among ADS/Multicare, Alan D.
Solomont, as "Seller Representative" for the ADS Owner Parties and the ADS
Seller Entities, and the "Escrow Agent" named therein, (d) the Employment
Agreements dated as of December 11, 1996 between the Borrower and Alan D.
Solomont and Susan M. Bailis, respectively, and (e) each of the other
agreements and instruments to be executed pursuant to the terms of each such
ADS Acquisition Document, as each may be amended or modified from time to
time.
"ADS Assignment of Lease" means the Assignment of Lease and Rents dated
as of December 11, 1996 by the Lessor in favor of the Collateral Agent.
"ADS Buyers" means, collectively, ADS/Multicare, ADS Consulting
Acquisition Corp., a Massachusetts corporation, ADS Senior Housing
Acquisition Corp., a Massachusetts corporation, Senior Source Acquisition
Corp., a Massachusetts corporation, and ADS Group Acquisition Corp., a
Massachusetts corporation, each of which is a wholly-owned Subsidiary of the
Borrower.
"ADS Lease Agent" means NationsBank, N.A., as agent for the ADS Lease
Banks and the ADS Lessor.
"ADS Lease Banks" means each of the financial institutions a party to
the ADS Lessor Loan Agreement.
"ADS Lessees" means, collectively, Academy Nursing Home, Inc., a
Massachusetts corporation, Nursing and Retirement Center of the Andovers,
Inc., a Massachusetts corporation, Prescott Nursing Home, Inc., a
Massachusetts corporation, Willow Manor Nursing Home, Inc., a Massachusetts
corporation, and ADS/Multicare, each of which is a wholly-owned Subsidiary of
the Borrower.
"ADS Lessor" means SELCO Service Corporation, an Ohio corporation.
"ADS Lessor Loan Agreement" means that certain Loan Agreement dated as
of December 11, 1996 among the ADS Lessor, the ADS Lease Banks and the ADS
Lease Agent.
"ADS Lessor Notes" means the promissory notes dated December 11, 1996
in the aggregate principal amount of $58,200,000 issued by the ADS Lessor in
favor of the ADS Lease Banks.
"ADS Mortgaged Properties" means, collectively, each of the Health Care
Facilities leased under the ADS Synthetic Lease, the real Property on which
each such Health Care Facility is located and all other interests in real
Property related thereto.
"ADS Mortgages" means, collectively, (a) the Open-End Mortgages dated
as of December 11, 1996 delivered by the ADS Lessees and the ADS Lessor in
favor of the Collateral Agent and (b) the other mortgages that may from time
to time be delivered to the Collateral Agent under the Participation
Agreement.
"ADS/Multicare" means ADS/Multicare, Inc., a Delaware corporation and
a wholly-owned Subsidiary of the Borrower.
"ADS Owner Parties" means, collectively, Alan D. Solomont, David
Solomont of Brookline, Ahron M. Solomont, Jay H. Solomont, David Solomont of
Lowell, Meyer Solomont and Susan S. Bailis.
"ADS Participation Agreement" means that certain Participation
Agreement dated as of December 11, 1996 among the Borrower, the ADS Lessees,
the ADS Lessor, the ADS Lease Banks, the ADS Lease Agent and the Collateral
Agent.
"ADS Seller Entities" means, collectively, Academy Nursing Home, Inc.,
Academy Realty Associates, ADS Apple Valley, Inc., ADS Apple Valley Limited
Partnership, ADS Consulting, Inc., ADS Hingham Limited Partnership, ADS
Hingham Nursing Facility, Inc., ADS Management, Inc., ADS Palm Chelmsford,
Inc., ADS Recuperative Center, Inc., ADS Recuperative Center Limited
Partnership, ADS Reservoir Waltham, Inc., ADS Senior Housing, Inc., Arcadia
Associates (but only if and when the Heritage Health Care Facility is
purchased or leased by ADS/Multicare), ASL, Inc. (but only if and when the
Heritage Health Care Facility is purchased or leased by ADS/Multicare),
Encare of Massachusetts, Inc., North Andover Associates, Nursing and
Retirement Center of the Andovers, Inc., Prescott Nursing Home Associates,
Prescott Nursing Home, Inc., Senior Source, Inc., Solomont Brookline Limited
Partnership, Solomont Family Brookline Venture, Inc., Solomont Family
Brookline Venture Limited Partnership, Solomont Family Fall River Venture,
Inc., Solomont Family Medford Venture, Inc., The ADS Group, Inc., Westford
Nursing and Retirement Center, Inc., Westford Nursing and Retirement Center
Limited Partnership and Willow Manor Nursing Home, Inc.
"ADS Synthetic Lease" means the Master Lease dated as of December 11,
1996 among the ADS Lessor and the ADS Lessees, pursuant to which certain
Health Care Facilities previously owned by certain of the ADS Seller Entities
are being leased under a Synthetic Lease.
"ADS Synthetic Lease Documents" means (a) the ADS Synthetic Lease,
(b) the ADS Participation Agreement, (c) the ADS Lessor Loan Agreement, (d)
the ADS Lessor Notes, (e) the ADS Mortgages, (f) the ADS Assignment of Lease
and (g) each of the other agreements and instruments to be executed pursuant
to the terms of each such ADS Synthetic Lease Document.
"Affected Loans" shall have the meaning assigned to such term in
Section 4.04.
"Affected Type" shall have the meaning assigned to such term in Section
4.04.
"Affiliate" means any Person (other than an Obligor): (a) which
directly or indirectly controls, or is controlled by, or is under common
control with, any Consolidated Entity; (b) which directly or indirectly
beneficially owns or holds 10% or more of any class of voting stock of any
Consolidated Entity; (c) 10% or more of the voting stock of which is directly
or indirectly beneficially owned or held by any Consolidated Entity; or (d)
which is a partnership in which any Consolidated Entity is a general partner.
The term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Third Amended and Restated Credit Agreement, as
amended or supplemented from time to time. References to Articles, Sections,
Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise indicated.
"Applicable Margin" means, with respect to each type of Loan, the
commitment fee under Section 2.11 and the Letter of Credit fee under Section
3.09, the applicable percentage for such Senior Obligation set forth opposite
the range for the applicable Pricing Level then in effect as determined as of
the last day of each fiscal quarter of the Consolidated Entities:
<TABLE>
Mixed Margin Margin Margin
Fixed Rate Variable Rate Commitment Letter of
Loans Loans Fee Credit Fee
<S> <C> <C> <C> <C>
Pricing Level I 0.75% 0.00% .200% 0.75%
Pricing Level II 1.00% 0.00% .250% 1.00%
Pricing Level III 1.25% 0.00% .250% 1.25%
Pricing Level IV 1.50% 0.00% .375% 1.50%
</TABLE>
The initial Applicable Margin shall be determined by reference to
Pricing Level II. The Applicable Margin shall be adjusted on and effective
from and after the date that is three Banking Days after the receipt by the
Administrative Agent of the most recent financial statements required to be
furnished under Section 7.08(a) or Section 7.08(b). No adjustments to the
Applicable Margin shall be made prior to the date that is three Banking Days
after the receipt of the Administrative Agent of the financial statements for
the fiscal period ending on December 31, 1996. If the Borrower fails to
deliver the financial statements required to be furnished under Section
7.08(a) or Section 7.08(b) within the due date thereof, the Applicable Margin
shall be determined by reference to Pricing Level IV until three Banking Days
after delivery of the same.
For the purposes of the definition of Applicable Margin, the following
terms have the following meanings:
"Pricing Level" means Pricing Level I, Pricing Level II,
Pricing Level III or Pricing Level IV.
"Pricing Level I" means the Interest Coverage Ratio is
greater than 4.00 to 1.00 and the Senior Leverage Ratio is less
than 2.50 to 1.00.
"Pricing Level II" means (a) the Interest Coverage Ratio is
greater than 3.25 to 1.00 and the Senior Leverage Ratio is less
than 3.25 to 1.00 and (b) no better Pricing Level applies.
"Pricing Level III" means (a) the Interest Coverage Ratio
is greater than 2.50 to 1.00 and the Senior Leverage Ratio is
less than 3.75 to 1.00 and (b) no better Pricing Level applies.
"Pricing Level IV" means no other Pricing Level applies.
Notwithstanding the foregoing, the Pricing Level determined as of
December 31, 1996 shall be determined solely in reference to the
Interest Coverage Ratio and without regard to the Senior Leverage
Ratio.
"Assumption Agreements" means, collectively, the Assumption Agreements
in the form of Exhibit K to be delivered in accordance with Section 7.09.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York, New York or Charlotte, North
Carolina and whenever such day relates to a Fixed Rate Loan or notice with
respect to any Fixed Rate Loan, a day on which dealings in Dollar deposits
are also carried out in the London interbank market.
"Banks" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"Borrower" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"Capital Expenditures" means, with respect to any Person, any
expenditure of such Person to acquire or construct fixed assets, plant and
equipment (including renewals, improvements, replacements and incurrence of
obligations under Capital Leases but excluding repairs and Acquisitions)
which has been or should be capitalized on the books of such Person in
accordance with GAAP.
"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.
"Cash Equivalents" means: (a) direct obligations of, or obligations
fully guarantied or insured by, the United States of America or any agency or
instrumentality thereof with maturities of one year or less from the date of
acquisition; (b) commercial paper of a domestic issuer rated at least "A-1"
by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.;
(c) time deposits or certificates of deposit with maturities of one year or
less from the date of acquisition issued by any commercial bank operating
within the United States of America having capital and surplus in excess of
$500,000,000; and (d) money market or mutual funds whose sole investments are
comprised of investments permitted under the foregoing clauses (a) through
(c).
"Class of Loans" shall have the meaning assigned to such term in
Section 2.01(c).
"Closing Date" means the date upon which the initial borrowing or the
initial issuance of a Letter of Credit under this Third Amended and Restated
Credit Agreement occurs.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all of each Obligation Party's right, title and
interest in and to Property in which such Obligation Party has granted a Lien
to the Collateral Agent under any Senior Obligation Document.
"Collateral Agent" means NationsBank, N.A., in its capacity as
Collateral Agent under the terms of the Intercreditor Agreement, together
with its successors in such capacity.
"Commitment" means any Revolving Credit Commitment or Term Loan
Commitment.
"Compliance Certificate" means the compliance certificate in the form
of Exhibit D to be delivered by the Borrower under the terms of this
Agreement.
"Consolidated Capital Expenditures" means, with respect to any fiscal
period, the aggregate amount of Capital Expenditures made by the Consolidated
Entities for such period, as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Debt" means, at any date of determination thereof, the
aggregate amount of Debt of the Consolidated Entities (but in any event
excluding the obligations of ADS Apple Valley, Inc., Solomont Family Fall
River Venture, Inc., Solomont Family Medford Venture, Inc., ADS Hingham
Nursing Facility, Inc. and ADS Recuperative Center, Inc. described in
Schedule IV in which such Person is solely liable on account of its status as
a general partner of The Apple Valley Limited Partnership, Charlton Nursing
Care Center, Courtyard Nursing Care Center Partnership, Hingham Healthcare
Limited Partnership and Recuperative Center Limited Partnership,
respectively), as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBIT" means, with respect to any fiscal period, the sum
of (a) Consolidated Net Income From Continuing Operations Before
Extraordinary Items for such period, plus (b) the aggregate amount of (i)
income taxes and (ii) Consolidated Interest Expense, to the extent that such
aggregate amount was deducted in the computation of Consolidated Net Income
From Continuing Operations Before Extraordinary Items for such period.
"Consolidated EBITDA" means, with respect to any fiscal period, the sum
of (a) Consolidated EBIT for such period, plus (b) the aggregate amount of
depreciation, amortization and other non-cash charges, to the extent that
such amount was deducted in the computation of Consolidated EBIT for such
period.
"Consolidated EBITDAR" means, with respect to any fiscal period, the
sum of (a) Consolidated EBITDA for such period, plus (b) the aggregate amount
of Consolidated Rental Expense, to the extent that such amount was deducted
in the computation of Consolidated EBITDA for such period.
"Consolidated Entity" means the Borrower or any Subsidiary of the
Borrower whose accounts are or are required to be consolidated or included
with the accounts of the Borrower in accordance with GAAP.
"Consolidated Fixed Charges" means, with respect to any fiscal period,
the sum of (a) Consolidated Interest Expense during such period, plus (b)
Consolidated Principal Payments due during such period, plus (c) Consolidated
Rental Expense during such period.
"Consolidated Funded Debt" means, at any date of determination thereof,
the aggregate amount of Funded Debt of the Consolidated Entities (but in any
event excluding the obligations of ADS Apple Valley, Inc., Solomont Family
Fall River Venture, Inc., Solomont Family Medford Venture, Inc., ADS Hingham
Nursing Facility, Inc. and ADS Recuperative Center, Inc. described in
Schedule IV in which such Person is solely liable on account of its status as
a general partner of The Apple Valley Limited Partnership, Charlton Nursing
Care Center, Courtyard Nursing Care Center Partnership, Hingham Healthcare
Limited Partnership and Recuperative Center Limited Partnership,
respectively), as determined on a consolidated basis in accordance with
GAAP;.
"Consolidated Interest Expense" means, with respect to any fiscal
period, the amount of interest accrued on, and with respect to, Consolidated
Debt (including, without limitation, amortization of debt discount and
imputed interest on Capital Leases but excluding rent under Synthetic Leases)
during such period, as determined on a consolidated basis in accordance with
GAAP (it being understood that for the purposes of all calculations and
definitions hereunder rent under Synthetic Leases shall in all events be
excluded from the definition of "Consolidated Interest Expense" regardless of
GAAP).
"Consolidated Net Income" means, with respect to any fiscal period, net
income for the Consolidated Entities for such fiscal period, as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Net Income From Continuing Operations Before
Extraordinary Items" means, with respect to any fiscal period, net income
from continuing operations before extraordinary items for the Consolidated
Entities for such fiscal period, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Worth" means, at any date of determination thereof,
all amounts which would be included under stockholders' equity on a
consolidated balance sheet of the Consolidated Entities, as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Principal Payments" means, with respect to any fiscal
period, all scheduled principal payments made or required to be made on
Consolidated Debt during such period (including, without limitation, imputed
principal on Capital Leases but excluding rent under Synthetic Leases), as
determined on a consolidated basis in accordance with GAAP (it being
understood that for the purposes of all calculations and definitions
hereunder rent under Synthetic Leases shall in all events be excluded from
the definition of "Consolidated Principal Payments" regardless of GAAP).
"Consolidated Rental Expense" means, with respect to any fiscal period,
the aggregate amount of rental expense of the Consolidated Entities incurred
during such period (including, without limitation, all rental expense
incurred under Synthetic Leases), as determined on a consolidated basis in
accordance with GAAP (it being understood that for the purposes of all
calculations and definitions hereunder rent under Synthetic Leases shall in
all events be included in the definition of "Consolidated Rentals" regardless
of GAAP).
"Consolidated Senior Funded Debt" means, at any date of determination
thereof, the result of (a) Consolidated Funded Debt minus (b) Consolidated
Subordinated Debt.
"Consolidated Subordinated Debt" means, at any date of determination
thereof, the Multicare Subordinated Notes, the Multicare Subordinated
Debentures and any other Debt of the Borrower which is subordinated to all
obligations owed to the Banks on terms and conditions respecting
subordination and events of default substantially similar to the Multicare
Subordinated Debentures.
"Converted Synthetic Lease Commitments" means, with respect to each
Bank, the obligation of such Bank to make capital contributions, loans or
other advances to a lessor for the purpose of acquiring Properties or
constructing improvements on Properties to be leased to a Consolidated Entity
under the Converted Synthetic Lease upon the optional election by such Bank
to convert all or a portion of its Revolving Credit Commitment in accordance
with Section 2.14.
"Converted Synthetic Leases" means the Synthetic Leases funded in
accordance with the Converted Synthetic Lease Commitments (which may include
the ADS Synthetic Lease to the extent so funded).
"Credit Arrangements" shall have the meaning assigned to such term in
Section 6.10.
"Debt" means, with respect to any Person: (a) indebtedness of such
Person for borrowed money; (b) indebtedness for the deferred purchase price
of Property or services (except trade payables and accrued expenses in the
ordinary course of business); (c) the face amount of any outstanding letters
of credit issued for the account of such Person; (d) obligations arising
under acceptance facilities; (e) Guaranties of such Person; (f) obligations
secured by any Lien on Property of such Person other than obligations secured
by Liens permitted under clauses (b) through (h) of Section 8.03, inclusive;
(g) obligations of such Person as lessee under Capital Leases; and (h) all
amounts funded under Synthetic Leases as to which such Person is lessee.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and, to
the extent permitted by law, any other amount payable by any Obligor under
this Agreement or any other Facility Document, or any Note that is not paid
when due (whether at stated maturity, by acceleration or otherwise), a rate
per annum during the period from and including the due date, to, but
excluding the date on which such amount is paid in full equal to one percent
(1%) above the Variable Rate as in effect from time to time plus the
Applicable Margin (if any); provided that, if the amount so in default is
principal of a Fixed Rate Loan and the due date thereof is a day other than
the last day of the Interest Period therefor, the "Default Rate" for such
principal shall be, for the period from and including the due date and to but
excluding the last day of the Interest Period therefor, two percent (2%)
above the interest rate for such Loan as provided in Section 2.10 hereof and,
thereafter, the rate provided for above in this definition.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, licenses, agreements with Governmental Authorities or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
industrial, toxic or hazardous substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which any Consolidated Entity is a member, or (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which any Consolidated Entity is a member.
"Event of Default" shall have the meaning assigned to such term in
Section 10.01.
"Existing Credit Agreement" shall have the meaning assigned to such
term in the recitals hereof.
"Existing Notes" shall have the meaning assigned to such term in the
recitals hereof.
"Facility Documents" means, collectively, this Agreement, the Notes,
the Letters of Credit, the Intercreditor Agreement, the Assumption
Agreements, the Interest Rate Protection Agreements and the Security
Documents, as each may be amended from time to time.
"Federal Funds Rate" means, for any day, the rate per annum (expressed
on a 360 day basis of calculation, if the rate on Variable Rate Loans is so
calculated) equal to the weighted average of the rates on overnight federal
funds transactions as published by the Federal Reserve Bank of New York for
such day (or for any day that is not a Banking Day, for the immediately
preceding Banking Day).
"Fee Owner" means any Consolidated Entity which holds legal title to
any Health Care Facility which is operated and managed by another
Consolidated Entity.
"Fiscal Quarter Net Worth Increase Amounts" means, with respect to each
fiscal quarter of the Consolidated Entities, the sum of (a) the greater of
(i) Zero Dollars ($0) and (ii) 50% of Consolidated Net Income for such fiscal
quarter plus (b) 75% of the cash and noncash proceeds (net of underwriting
commissions and discounts and reasonable fees and expenses) from the issuance
of capital stock of the Borrower (including, without limitation, capital
stock issued upon the conversion of Consolidated Subordinated Debt and in
connection with Acceptable Acquisitions).
"Fixed Base Rate" means with respect to any Interest Period for a Fixed
Rate Loan: the rate per annum (rounded upwards, if necessary, to the nearest
1/16 of one percent (1%)) quoted at approximately 11:00 a.m. London time by
the principal London branch of the Reference Bank two Banking Days prior to
the first day of such Interest Period for the offering to leading banks in
the London interbank market of Dollar deposits in immediately available
funds, for a period, and in an amount, comparable to the Interest Period and
principal amount of the Fixed Rate Loan which shall be made.
"Fixed Charge Coverage Ratio" means, at any date of determination
thereof, the ratio of (a) Consolidated EBITDAR for the most recently ended
four (4) fiscal quarters to (b) Consolidated Fixed Charges for such most
recently ended four (4) fiscal quarters.
"Fixed Rate" means, for any Fixed Rate Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/16 of one percent (1%)) determined by the Administrative Agent to be equal
to the quotient of (i) the Fixed Base Rate for such Loan for such Interest
Period, divided by (ii) one minus the Reserve Requirement for such Loan for
such Interest Period.
"Fixed Rate Loan" means any Loan when and to the extent the interest
rate therefor is determined on the basis of the definition "Fixed Rate."
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting any Consolidated Entity or any of its Affiliates before any
Governmental Authority, or the receipt of notice by any such party that any
of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the
seizure or forfeiture of any of their respective Properties.
"Funded Debt" means, with respect to any Person, at any date of
determination thereof, (a) indebtedness of such Person for borrowed money,
other than indebtedness payable on demand or within one year from such date
unless the repayment of such indebtedness shall have been accelerated other
than at the option of such Person; provided that, in any event, Funded Debt
shall include all principal outstanding under the Notes, (b) indebtedness for
the deferred purchase price of Property or services (except trade payables
and accrued expenses in the ordinary course of business), other than
indebtedness payable on demand or within one year from such date, (c)
liabilities under Guaranties of Funded Debt of any other Person, (d)
obligations secured by any Lien on the Property of such Person, other than
obligations payable on demand or within one year from such date and other
than obligations secured by Liens permitted under clauses (b) through (h) of
Section 8.03, inclusive, (e) obligations of such Person as lessee under
Capital Leases, other than obligations payable on demand or within one year
from such date, (f) all amounts funded under Synthetic Leases as to which
such Person is lessee (other than amounts funded under the Synthetic Lease
contemplated in Item 8 of Schedule IV on the terms and conditions set forth
therein) and (g) any other obligations that are required by GAAP to be shown
as long term liabilities on its balance sheet.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 6.05 (except for immaterial changes determined
preferable by the Consolidated Entities' independent public accountants).
"Glenmark Partnerships" shall have the meaning assigned to such term in
Section 7.09.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty" means, with respect to any Person, guaranties, endorsements
(other than for collection in the ordinary course of business) and other
contingent obligations of such Person with respect to the obligations of any
other Person (including, but not limited to, an agreement to purchase any
obligation, stock, assets, goods or services or to supply or advance any
funds, assets, goods or services, or an agreement to maintain or cause such
Person to maintain a minimum working capital or net worth or otherwise to
assure the creditors of any such other Person against loss).
"Hazardous Materials" means any and all pollutants, contaminants, toxic
or hazardous wastes or any other substances, the removal of which is required
or the generation, manufacture, refining, production, processing, treatment,
storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is restricted,
prohibited or penalized by any applicable Environmental Law.
"Health Care Facility" means a long term or specialized health care
facility owned or leased by any Consolidated Entity or any Managed Company.
"Initial Closing Date" means April 1, 1994.
"Initial Revolving Credit Commitment" means, with respect to each Bank,
the obligation of such Bank as of the date hereof to make its Revolving
Credit Loans to the Borrower under this Agreement in the aggregate principal
amount set forth in Schedule I.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency
Agreement in the form of Exhibit G among the Borrower, the Subsidiary
Guarantors, the Banks, the Administrative Agent, the ADS Lease Banks, the ADS
Lease Agent, the ADS Lessor and the Collateral Agent, as amended or
supplemented from time to time.
"Interest Coverage Ratio" means, at any date of determination thereof,
the ratio of (a) Consolidated EBITDA for the most recently ended four (4)
fiscal quarters to (b) Consolidated Interest Expense for such most recently
ended four (4) fiscal quarters.
"Interest Period" means, with respect to any Fixed Rate Loan, the
period commencing on the date such Loan is made, converted from another type
of Loan or renewed, as the case may be, and ending, as the Borrower may
select pursuant to Section 2.06: on the numerically corresponding day in the
first, second, third, or sixth calendar month thereafter, provided that each
such Interest Period which commences on the last Banking Day of a calendar
month (or on any day for which there is no numerically corresponding day in
the appropriate subsequent calendar month) shall end on the last Banking Day
of the appropriate calendar month.
"Interest Rate Protection Agreement" means, with respect to any Person,
an interest rate swap, cap or collar agreement or similar arrangement between
one or more Banks and a Consolidated Entity providing for the transfer or
mitigation of interest risks either generally or under specific
contingencies.
"Issuing Bank" means NationsBank, N.A., a national banking association
organized under the laws of the United States of America, acting in its
capacity as a Bank hereunder.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affiliate of such Bank) designated as
such for such type of Loan on its signature page hereof or such other office
of such Bank (or of an affiliate of such Bank) as such Bank may from time to
time specify to the Administrative Agent and the Borrower as the office by
which its Loans of such type are to be made and maintained.
"Lessor Amount" shall have the meaning assigned to such term in the ADS
Participation Agreement.
"Letter of Credit Availability" means, at any date of determination
thereof, the amount by which (a) the lesser of (i) the result of (A) the
aggregate amount of the Revolving Credit Commitments as of such date, minus
(B) the unpaid aggregate principal amount of the Revolving Credit Loans then
outstanding and (ii) $15,000,000 exceeds (b) the aggregate amount of the
Letter of Credit Obligations at such date.
"Letter of Credit Funding" shall have the meaning assigned to such term
in Section 3.05(b) hereof.
"Letter of Credit Obligations" means, at any date of determination
thereof, all liabilities of the Borrower with respect to Letters of Credit,
whether or not any liability is contingent, including (without limitation)
the sum (without duplication) of (a) the aggregate amount available to be
drawn under the Letters of Credit then outstanding plus (b) the aggregate
amount of all unpaid Reimbursement Obligations.
"Letters of Credit" shall have the meaning assigned to such term in
Section 3.01(a) hereof.
"Licenses" means any and all licenses, certificate of need, operating
permits, franchises, and other licenses, authorizations, certifications,
permits, or approvals issued by, or on behalf of, any Governmental Authority,
now existing or at any time hereafter issued, with respect to the
acquisition, construction, renovation, expansion, leasing, ownership or
operation of any Health Care Facility or related facilities or the
participation or eligibility for participation in any third party payment or
reimbursement programs, including, without limitation, any and all operating
licenses issued by any state Governmental Authority, any and all
pharmaceutical licenses and other licenses related to the purchase,
dispensing, storage, prescription or use of drugs, medications, and other
"controlled substances", any and all licenses relating to the operation of
food or beverage facilities or amenities, if any, and any and all
certifications and eligibility for participation in Medicare, Medicaid,
CHAMPUS, Blue Cross or Blue Shield, or any of the Managed Care Plans, as the
same may from time to time be amended, renewed, restated, reissued,
restricted, supplemented or otherwise modified.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other similar encumbrance or right of
others, or any agreement to give any of the foregoing.
"Loan" means any loan made by a Bank pursuant to Section 2.01.
"Managed Care Plans" means any health maintenance organization,
preferred provider organization, individual practice association, competitive
medical plan, or similar arrangement, entity, organization, or Person.
"Managed Company" means any Person not a Consolidated Entity receiving
management services under Operating Agreements from time to time.
"Management Fees" means, with respect to any fiscal period, all fees
and other amounts payable to the Consolidated Entities under Operating
Agreements with Managed Companies during such period.
"Material Adverse Effect" means any material adverse effect on (a) the
business, profits, properties or condition of the Consolidated Entities,
taken as a whole, (b) the ability of the Borrower to perform its obligations
under each of the Facility Documents to which it is a party or (c) the
ability of the Secured Parties to collect the aggregate amount of the Senior
Obligations.
"Modified Leverage Ratio" means, at any date of determination thereof,
the ratio of (a) the sum of (i) Consolidated Funded Debt at such date, plus
(ii) the product of (A) Consolidated Rental Expense for the most recently
ended four (4) fiscal quarters (exclusive of rental expense incurred under
the ADS Synthetic Lease and under the Converted Synthetic Leases) times (B)
eight (8), to (b) Consolidated EBITDAR for such most recently ended four (4)
fiscal quarters. For the purposes of determining Consolidated EBITDAR in the
Modified Leverage Ratio, (a) there shall be included in Consolidated Net
Income From Continuing Operations Before Extraordinary Items net income of
any Person accrued from the beginning of the period in which Consolidated Net
Income From Continuing Operations Before Extraordinary Items is being
measured to the date it became a Consolidated Entity, or to the date it
merged into or consolidated with any Consolidated Entity, or to the date
substantially all of its assets were acquired by any Consolidated Entity and
(b) there shall be excluded from Consolidated Net Income From Continuing
Operations Before Extraordinary Items net income of any Consolidated Entity,
accrued from the beginning of such period to the date it ceases to be a
Consolidated Entity, or to the date it merged into or consolidated with any
other Person other than another Consolidated Entity, or to the date
substantially all of its assets were sold to any Person other than another
Consolidated Entity. For the purposes of determining Consolidated Rental
Expense in the Modified Leverage Ratio, (a) there shall be included in
Consolidated Rental Expense rental expense of any Person accrued from the
beginning of the period in which Consolidated Rental Expense is being
measured to the date it became a Consolidated Entity, or to the date it
merged into or consolidated with any Consolidated Entity, or to the date
substantially all of its assets were acquired by any Consolidated Entity and
(b) there shall be excluded from Consolidated Rental Expense rental expense
of any Consolidated Entity, accrued from the beginning of such period to the
date it ceases to be a Consolidated Entity, or to the date it merged into or
consolidated with any other Person other than another Consolidated Entity, or
to the date substantially all of its assets were sold to any Person other
than another Consolidated Entity.
"Modified Senior Leverage Ratio" means, at any date of determination
thereof, the ratio of (a) the sum of (i) Consolidated Senior Funded Debt at
such date, plus (ii) the product of (A) Consolidated Rental Expense
(exclusive of rental expense incurred under the ADS Synthetic Lease and under
the Converted Synthetic Leases) for the most recently ended four (4) fiscal
quarters times (B) eight (8), to (b) Consolidated EBITDAR for such most
recently ended four (4) fiscal quarters. For the purposes of determining
Consolidated EBITDAR in the Modified Senior Leverage Ratio, (a) there shall
be included in Consolidated Net Income From Continuing Operations Before
Extraordinary Items net income of any Person accrued from the beginning of
the period in which Consolidated Net Income From Continuing Operations Before
Extraordinary Items is being measured to the date it became a Consolidated
Entity, or to the date it merged into or consolidated with any Consolidated
Entity, or to the date substantially all of its assets were acquired by any
Consolidated Entity and (b) there shall be excluded from Consolidated Net
Income From Continuing Operations Before Extraordinary Items net income of
any Consolidated Entity, accrued from the beginning of such period to the
date it ceases to be a Consolidated Entity, or to the date it merged into or
consolidated with any other Person other than another Consolidated Entity, or
to the date substantially all of its assets were sold to any Person other
than another Consolidated Entity. For the purposes of determining
Consolidated Rental Expense in the Modified Senior Leverage Ratio, (a) there
shall be included in Consolidated Rental Expense rental expense of any Person
accrued from the beginning of the period in which Consolidated Rental Expense
is being measured to the date it became a Consolidated Entity, or to the date
it merged into or consolidated with any Consolidated Entity, or to the date
substantially all of its assets were acquired by any Consolidated Entity and
(b) there shall be excluded from Consolidated Rental Expense rental expense
of any Consolidated Entity, accrued from the beginning of such period to the
date it ceases to be a Consolidated Entity, or to the date it merged into or
consolidated with any other Person other than another Consolidated Entity, or
to the date substantially all of its assets were sold to any Person other
than another Consolidated Entity.
"Mortgages" means the Second Amended and Restated Open-End Mortgages in
the form of Exhibit J hereto to be delivered by PHC Operating Corp. and
Providence Health Care, Inc. in accordance with the terms hereof, as amended
or supplemented from time to time.
"Multicare Fiscal Agency Agreement" means the Fiscal Agency Agreement
dated as of March 16, 1995 between the Borrower and The Chase Manhattan Bank,
N.A., as Fiscal Agent, as in effect on the Closing Date.
"Multicare Guaranty" means the Unconditional Guaranty in the form of
Exhibit C to be delivered by each of the Obligors in accordance with the
terms hereof, as amended or supplemented from time to time.
"Multicare Indenture" means the Indenture dated as of November 18, 1992
between the Borrower and United Jersey Bank, as Trustee, as in effect on the
Closing Date.
"Multicare Subordinated Debentures" means the $86,250,000 7%
Convertible Subordinated Debentures due 2003 issued pursuant to the Multicare
Fiscal Agency Agreement.
"Multicare Subordinated Notes" means the $100,000,000 12.5% Senior
Subordinated Notes due 2002 issued pursuant to the Multicare Indenture.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Consolidated Entities or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"Notes" means the Revolving Credit Notes and the Term Notes.
"Obligation Party" means the Borrower, each ADS Lessee, each Subsidiary
Co-Borrower, each Subsidiary Guarantor and the ADS Lessor (in its capacity as
issuer of the ADS Lessor Notes under the ADS Lessor Loan Agreement, mortgagor
under the ADS Mortgages and assignor under the ADS Assignment of Lease), as
the case may be.
"Obligor" means, collectively, the Borrower and the Subsidiary
Guarantors.
"Operating Agreements" shall have the meaning assigned to such term in
Section 6.12.
"Participating Interest" means, with respect to each Letter of Credit,
(a) in the case of the Issuing Bank, its interest in such Letter of Credit
after giving effect to the granting of any participating interest therein
pursuant hereto and (b) in the case of each Participating Bank, its undivided
participating interest in such Letter of Credit.
"Participating Bank" means, with respect to any Letter of Credit, any
Bank (other than the Issuing Bank) with respect to its Participating Interest
in each Letter of Credit.
"Participation Agreements" means any and all third party payor
participation or reimbursement agreements now or at any time hereafter
existing for the benefit of any Consolidated Entity relating to rights to
payments or reimbursement from, and claims against, private insurers, Managed
Care Plans, employee assistance programs, Blue Cross or Blue Shield, federal,
state and local Governmental Authorities, or other public or quasi-public
insurers and third party payors, as the same may from time to time be
amended, restated, extended, supplemented or modified.
"Payor" shall have the meaning assigned to such term in Section 11.13.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition Debt" means Debt of any Person, and any
renewals, extensions or refinancings thereof, secured by Purchase Money Liens
permitted under Section 8.01(g) (other than Debt secured by Purchase Money
Liens incurred in connection with any conditional sale or other title
retention agreement or a Capital Lease) that is secured by all or
substantially all of the Property of such Person.
"Permitted Adjustment Amount" means, with respect to each Bank, the sum
of the principal amounts of each Term Loan made by such Bank to the Borrower
and the respective Subsidiary Co-Borrower that has been prepaid in full in
connection with the sale of the Health Care Facility owned by such Subsidiary
Co-Borrower to a Person other than an Affiliate.
"Permitted Mortgage Debt" means Debt of any Person (other than Debt
secured by Purchase Money Liens), and any renewals, extensions or
refinancings thereof, permitted under Section 8.01(f) (a) the net proceeds of
which are used to prepay Senior Obligations, (b) that is secured by all or
substantially all of the Property of such Person, (c) that has a scheduled
final maturity that is at least six months subsequent to the maturity of the
Notes and (d) that requires no more than 20% of the principal of such Debt to
be paid prior to the maturity of the Notes.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Consolidated
Entities or any ERISA Affiliate and which is covered by Title IV of ERISA,
other than a Multiemployer Plan.
"Pledge Agreement" means the Second Amended and Restated Pledge
Agreement in the form of Exhibit I to be delivered by each of the Obligors in
accordance with the terms hereof, as amended or supplemented from time to
time.
"Primary Obligor" shall have the meaning assigned to such term in the
introductory paragraph.
"Prime Rate" means that rate of interest from time to time announced by
the Reference Bank at its principal office as its prime commercial lending
rate.
"Principal Office" means the principal office of the Administrative
Agent, presently located at 100 North Tryon Street, Charlotte, North Carolina
28255.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Purchase Money Lien" means a Lien on any Property acquired by any
Consolidated Entity or placed on any Property in order to finance the
acquisition or construction of such Property or the construction of
improvements located on such Property, or the assumption of any Lien on
Property existing at the time of the acquisition of such Property or of the
Person holding such Property or a Lien incurred in connection with any
conditional sale or other title retention agreement or a Capital Lease.
"Reference Bank" means NationsBank, N.A. (or if NationsBank, N.A. no
longer quotes on the London interbank market, such successor leading bank in
the London interbank market which shall be reasonably appointed by the
Administrative Agent).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time
to time.
"Regulatory Change" means any change after the date of this Agreement
in United States federal, state, municipal or foreign laws or regulations
(including without limitation Regulation D) or the adoption or making after
such date of any interpretations, directives or requests applying to a class
of banks of which such bank is a member, of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reimbursement Obligation" means the obligation of the Borrower to
reimburse the Issuing Bank in accordance with the terms of this Agreement for
the payment made by the Issuing Bank under any Letter of Credit.
"Rent" shall have the meaning assigned to such term in Appendix A to
the Participation Agreement.
"Required Banks" means, at any time while any Loans or Letters of
Credit are outstanding, Banks holding at least 51% of the aggregate principal
amount of the Loans and the Letter of Credit Obligations and, at any time
while no Loan or Letter of Credit is outstanding, Banks holding at least 51%
of the Commitments.
"Required Secured Parties" means (a) at any time prior to the
occurrence of an Acceleration Event, Secured Parties holding at least 51% of
the Secured Party Commitments and (b) at any time after the occurrence of an
Acceleration Event, Secured Parties holding at least 51% of the aggregate
outstanding principal amount of the Senior Principal Obligations.
"Required Payment" shall have the meaning assigned to such term in
Section 11.13.
"Reserve Requirement" means, for any Fixed Rate Loan for any Interest
Period therefor, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000
against in the case of Fixed Rate Loans, "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks by reason of any Regulatory Change against
(i) any category of liabilities which includes deposits by reference to which
the Fixed Base Rate for Fixed Rate Loans is to be determined as provided in
the definition of "Fixed Base Rate" in this Section 1.01 or (ii) any category
of extensions of credit or other assets which include Fixed Rate Loans.
"Revolving Credit Commitment" means, with respect to each Bank, the
obligation of such Bank to make its Revolving Credit Loans to the Borrower
under this Agreement in the aggregate principal amount equal to the sum of
(a) the amount of the Initial Revolving Credit Commitment of such Bank plus
(b) the Permitted Adjustment Amount of such Bank, as such amount may be
reduced or otherwise modified from time to time.
"Revolving Credit Commitment Percentage" means, as to any Bank at any
date of determination thereof, the percentage of the aggregate Revolving
Credit Commitments constituted by such Bank's Revolving Credit Commitment at
such date.
"Revolving Credit Loans" shall have the meaning assigned to such term
in Section 2.01(a).
"Revolving Credit Notes" means the promissory notes of the Borrower in
the form of Exhibit A hereto evidencing the Revolving Credit Loans made by a
Bank hereunder and all promissory notes delivered in substitution or exchange
therefor, as amended or supplemented from time to time.
"Revolving Credit Termination Date" means February 28, 2000.
"Secured Party" means the Collateral Agent, the Administrative Agent,
the ADS Lease Agent, each Bank, each ADS Lease Bank and the ADS Lessor (in
its capacity as lessor under the ADS Lease), as the case may be.
"Secured Party Commitment" means (a) any Commitment, (b) any Converted
Synthetic Lease Commitment, (c) any "Loan Commitment" or "Lessor Commitment"
(each as defined in Appendix A to the Participation Agreement) or (d) any
other commitment by any Secured Party to extend credit through any Senior
Obligation to any Obligation Party.
"Security Agreement" means the Second Amended and Restated Security
Agreement in the form of Exhibit H to be delivered by each of the Obligors in
accordance with the terms hereof, as amended or supplemented from time to
time.
"Security Documents" means the Multicare Guaranty, the Security
Agreement, the Pledge Agreement, the Mortgages, the ADS Mortgages, the ADS
Assignment of Lease and each other security document that may from time to
time be delivered to the Collateral Agent in connection herewith or therewith
(including all financing statements, fixture filings, mortgages, assignments
and stock certificates delivered to the Collateral Agent).
"Senior Leverage Ratio" means, at any date of determination thereof,
the ratio of (a) Consolidated Senior Funded Debt at such date, to (b) the sum
of (i) Consolidated EBITDA for the most recently ended four (4) fiscal
quarters, plus (ii) rental expense incurred under Synthetic Leases for such
most recently ended four (4) fiscal quarters to the extent that such amount
was deducted in the computation of Consolidated EBITDA for such period. For
the purposes of determining Consolidated EBITDA in the Senior Leverage Ratio,
(a) there shall be included in Consolidated Net Income From Continuing
Operations Before Extraordinary Items net income of any Person accrued from
the beginning of the period in which Consolidated Net Income From Continuing
Operations Before Extraordinary Items is being measured to the date it became
a Consolidated Entity, or to the date it merged into or consolidated with any
Consolidated Entity, or to the date substantially all of its assets were
acquired by any Consolidated Entity and (b) there shall be excluded from
Consolidated Net Income From Continuing Operations Before Extraordinary Items
net income of any Consolidated Entity, accrued from the beginning of such
period to the date it ceases to be a Consolidated Entity, or to the date it
merged into or consolidated with any other Person other than another
Consolidated Entity, or to the date substantially all of its assets were sold
to any Person other than another Consolidated Entity. For the purposes of
determining Consolidated Rental Expense in the Senior Leverage Ratio, (a)
there shall be included in Consolidated Rental Expense rental expense of any
Person accrued from the beginning of the period in which Consolidated Rental
Expense is being measured to the date it became a Consolidated Entity, or to
the date it merged into or consolidated with any Consolidated Entity, or to
the date substantially all of its assets were acquired by any Consolidated
Entity and (b) there shall be excluded from Consolidated Rental Expense
rental expense of any Consolidated Entity, accrued from the beginning of such
period to the date it ceases to be a Consolidated Entity, or to the date it
merged into or consolidated with any other Person other than another
Consolidated Entity, or to the date substantially all of its assets were sold
to any Person other than another Consolidated Entity.
"Senior Obligation Documents" means, collectively, the Facility
Documents, the ADS Lessor Loan Agreement, the ADS Participation Agreement,
the ADS Synthetic Lease, the ADS Lessor Notes, the Converted Synthetic Leases
and each other document made, delivered or given in connection therewith or
herewith and each other document that replaces, renews, extends, refinances
or refunds indebtedness under any of the foregoing.
"Senior Obligations" means the unpaid principal of, interest on and
Yield on (including interest and Yield accruing on or after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Notes, the ADS Lessor Notes, the
Lessor Amount, the Letter of Credit Obligations, the obligations under the
Interest Rate Protection Agreements, the obligations under the Converted
Synthetic Leases and all other obligations and liabilities of any Obligation
Party to any Secured Party, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, this Agreement, the ADS
Lessor Loan Agreement, the ADS Participation Agreement, the ADS Synthetic
Lease, the Notes, the ADS Lessor Notes, the Letters of Credit, the Interest
Rate Protection Agreements, the Multicare Guaranty, the Converted Synthetic
Leases and the other Senior Obligation Documents, whether on account of
principal, interest, Yield, rentals (including Rent), guaranties,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to any Secured
Party) or otherwise.
"Senior Principal Obligations" means, collectively, the aggregate of
(a) the outstanding principal amounts of the Notes, (b) the outstanding
"Lessor Amounts" (as defined in Appendix A to the ADS Participation
Agreement) and the outstanding principal amounts of the ADS Lessor Notes, (c)
all outstanding amounts funded under the Converted Synthetic Leases, (d) all
Reimbursement Obligations and (e) all net amounts due under Interest Rate
Protection Agreements.
"Significant Recent Acquisitions" shall have the meaning assigned to
such term in Section 6.05(c).
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the securities or other
ownership interest having ordinary voting power for the election of directors
or other persons performing similar functions are at the time owned directly
or indirectly by such Person.
"Subsidiary Co-Borrowers" shall have the meaning assigned to such term
in the introductory paragraph hereof.
"Subsidiary Guarantor" means, collectively, the Subsidiaries of the
Borrower that are parties to the Multicare Guaranty (including, without
limitation, the Subsidiary Co-Borrowers).
"Synthetic Lease" means any lease which is intended to be treated as an
operating lease under GAAP but which under tax law or commercial law may be
treated as secured Debt of such Person and not as a true lease.
"Term Loan Commitments" means, with respect to each Bank, the
obligation of such Bank to make its Term Loans under this Agreement to the
Borrower and the respective Subsidiary Co-Borrowers set forth on Schedule I
in the aggregate principal amount set forth in Schedule I, as such amount may
be reduced or otherwise modified from time to time.
"Term Loan Termination Date" means February 28, 2000.
"Term Loans" shall have the meaning assigned to such term in Section
2.01(b).
"Term Notes" means the promissory notes of the Borrower and the
respective Subsidiary Co-Borrower in the form of Exhibit B hereto evidencing
the Term Loans made by a Bank hereunder and all promissory notes delivered in
substitution or exchange therefor, as amended or supplemented from time to
time.
"Termination Date" means, with respect to any Revolving Credit Loan,
the Revolving Credit Termination Date and, with respect to any Term Loan, the
Term Loan Termination Date.
" type' of Loans" shall have the meaning assigned to such term in
Section 2.01(c).
"UCP" means the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce, Publication No. 500.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance
with the provisions of ERISA for calculating the potential liability of any
Consolidated Entity or any ERISA Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day plus 1/4 of one percent and (b) the Prime Rate for such
day.
"Variable Rate Loan" means any Loan when and to the extent the interest
rate for such Loan is determined in relation to the Variable Rate.
"Yield" shall have the meaning assigned to such term in Appendix A to
the ADS Participation Agreement.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
ARTICLE 2. THE CREDIT.
Section 2.01. Loans. (a) Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make revolving credit loans
(the "Revolving Credit Loans") to the Borrower from time to time from and
including the date hereof to and including the Revolving Credit Termination
Date, in such amounts that the sum of (i) the aggregate principal amount of
such Bank's Revolving Credit Loans at any one time outstanding plus (ii) such
Bank's pro rata share of the Letter of Credit Obligations then outstanding,
does not exceed the amount of its Revolving Credit Commitment. The Revolving
Credit Loans shall be due and payable on the Revolving Credit Termination
Date.
(b) Subject to the terms and conditions of this Agreement,
each of the Banks severally agrees to make term loans (the "Term Loans") to
the Borrower and the respective Subsidiary Co-Borrower on the Closing Date,
up to but not exceeding in the aggregate principal amount, the amount of its
respective Term Loan Commitments. The Term Loans shall be due and payable on
the Term Loan Termination Date.
(c) The Loans may be outstanding as Variable Rate Loans or
Fixed Rate Loans (each a "type" of Loans) and as Revolving Credit Loans or
Term Loans (each a "class" of Loans). Each type of Loans of each Bank shall
be made and maintained at such Bank's Lending Office for such type of Loans.
Section 2.02. The Notes. The Revolving Credit Loans of each Bank
shall be evidenced by a single promissory note in favor of such Bank in the
form of Exhibit A, dated the Closing Date, duly completed and executed by the
Borrower. The Term Loans of each Bank shall each be evidenced by a
promissory note in favor of such Bank in the form of Exhibit B, dated the
Closing Date, duly completed and executed by the Borrower and the respective
Subsidiary Co-Borrower.
Section 2.03. Purpose. The Borrower and the Subsidiary Co-Borrowers
shall use the proceeds of the Loans for general corporate purposes
(including, without limitation, working capital and to finance Acceptable
Acquisitions). Such proceeds shall not be used for the purpose, whether
immediate, incidental or ultimate, of buying or carrying "margin stock" in
violation of Regulation U.
Section 2.04. Borrowing Procedures. The Borrower shall give the
Administrative Agent notice of each borrowing to be made hereunder as
provided in Section 2.08, not later than 12:00 noon New York, New York time
on the date of such borrowing in the case of a Variable Rate Loan or 12:00
noon New York, New York time on the Banking Day three Banking Days prior to
the date of such borrowing in the case of a Fixed Rate Loan. Each Bank
shall, through its Lending Office and subject to the conditions of this
Agreement, make the amount of the Loan to be made by it on such day available
to the Administrative Agent at the Principal Office and in immediately
available funds for the account of the Administrative Agent. The amount so
received by the Administrative Agent shall, subject to the conditions of this
Agreement, be made available to the Borrower, in immediately available funds,
by the Administrative Agent crediting an account of the Borrower designated
by the Borrower and maintained with the Administrative Agent at the Principal
Office.
Section 2.05. Prepayments and Conversions. The Borrower shall have
the right to make prepayments of principal, or to convert one type of Loans
into another type of Loans, at any time or from time to time; provided that:
(a) the Borrower shall give the Administrative Agent notice of each such
prepayment or conversion as provided in Section 2.08; and (b) Fixed Rate
Loans may be prepaid or converted only on the last day of an Interest Period
for such Loans unless the Borrower agrees to provide to the Administrative
Agent for the account of each Bank compensation in accordance with Section
4.05.
Section 2.06. Interest Periods; Renewals. (a) In the case of each
Fixed Rate Loan, the Borrower shall select an Interest Period of any duration
in accordance with the definition of Interest Period in Section 1.01, subject
to the following limitations: (i) no Interest Period may extend beyond the
respective Termination Dates for such class of Loans; (ii) notwithstanding
clause (i) above, no Interest Period shall have a duration less than one
month, and if any such proposed Interest Period would otherwise be for a
shorter period, such Interest Period shall not be available; (iii) if an
Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day
would fall in the next calendar month in which event such Interest Period
shall end on the immediately preceding Banking Day; and (iv) no more than
fifteen Interest Periods may be outstanding at any one time.
(b) Upon notice to the Administrative Agent as provided in
Section 2.08, the Borrower may renew any Fixed Rate Loan on the last day of
the Interest Period therefor as the same type of Loan with an Interest Period
of the same or different duration in accordance with the limitations provided
above. If the Borrower shall fail to give notice to the Administrative Agent
of such a renewal, such Fixed Rate Loan shall automatically become a Variable
Rate Loan on the last day of the current Interest Period.
Section 2.07. Changes of Commitments. (a) The Borrower shall have the
right to reduce or terminate the amount of unused Revolving Credit
Commitments at any time or from time to time, provided that: (i) the Borrower
shall give notice of each such reduction or termination to the Administrative
Agent as provided in Section 2.08; and (ii) each partial reduction shall be
in an aggregate amount at least equal to $1,000,000. The Revolving Credit
Commitments once reduced or terminated may not be reinstated.
(b) The Term Loan Commitments shall be terminated on the
Closing Date and shall not be reinstated.
Section 2.08. Certain Notices. Notices by the Borrower to the
Administrative Agent of each borrowing pursuant to Section 2.04, and each
prepayment or conversion pursuant to Section 2.05 and each renewal pursuant
to Section 2.06(b), and each reduction or termination of the Revolving Credit
Commitments pursuant to Section 2.07(a) shall be irrevocable and shall be
effective only if received by the Administrative Agent not later than 12:00
noon New York, New York time, and (a) in the case of borrowings and
prepayments of, conversions into and (in the case of Fixed Rate Loans)
renewals of (i) Variable Rate Loans, given the same Banking Day; and (ii)
Fixed Rate Loans, given three Banking Days prior thereto; and (b) in the case
of reductions or termination of the Revolving Credit Commitments, given the
same Banking Day. Each such notice shall specify the Loans to be borrowed,
prepaid, converted or renewed and the amount (subject to Section 2.09) and
type and class of the Loans to be borrowed, or converted, or prepaid or
renewed (and, in the case of a conversion, the type of Loans to result from
such conversion and, in the case of a Fixed Rate Loan, the Interest Period
therefor) and the date of the borrowing or prepayment, or conversion or
renewal (which shall be a Banking Day). Each such notice of reduction or
termination shall specify the amount of the Revolving Credit Commitments to
be reduced or terminated. The Administrative Agent shall promptly notify the
Banks of the contents of each such notice.
Section 2.09. Minimum Amounts. Except for borrowings which exhaust
the full remaining amount of the Commitments, prepayments or conversions
which result in the prepayment or conversion of all Loans of a particular
type or conversions made pursuant to Section 3.04, each borrowing,
prepayment, conversion and renewal of principal of Loans of a particular type
shall be in an amount not less than (i) $100,000 in the aggregate for all
Banks in the case of Variable Rate Loans and (ii) $1,000,000 in the aggregate
and in increments of $100,000 in the case of Fixed Rate Loans unless such
minimum amount is waived by the Required Banks (borrowings, prepayments,
conversions or renewals of or into Loans of different types or, in the case
of Fixed Rate Loans, having different Interest Periods at the same time
hereunder to be deemed separate borrowings, prepayments, conversions and
renewals for the purposes of the foregoing, one for each type of Interest
Period). Anything in this Agreement to the contrary notwithstanding, the
aggregate principal amount of Fixed Rate Loans of each type having concurrent
Interest Periods shall be at least equal to $1,000,000.
Section 2.10. Interest. (a) Interest shall accrue on the outstanding
and unpaid principal amount of each Loan for the period from and including
the date of such Loan to but excluding the date such Loan is due at the
following rates per annum: (i) for a Variable Rate Loan, at a variable rate
per annum equal to the Variable Rate plus the Applicable Margin and (ii) for
a Fixed Rate Loan, at a fixed rate equal to the Fixed Rate plus the
Applicable Margin. If the principal amount of any Loan and any other amount
payable by any Obligor hereunder, under the Notes or under the other Facility
Documents shall not be paid when due (at stated maturity, by acceleration or
otherwise), interest shall accrue on such amount to the fullest extent
permitted by law from and including such due date to but excluding the date
such amount is paid in full at the Default Rate.
(b) The interest rate on each Variable Rate Loan shall change
when the Variable Rate changes and interest on each such Loan shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed. Interest on each Fixed Rate Loan shall be calculated on the basis
of a year of 360 days for the actual number of days elapsed. Promptly after
the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall notify the Borrower and the Banks.
(c) Accrued interest shall be due and payable in arrears upon
any full payment of principal or conversion and (i) for each Variable Rate
Loan, on the 1st day of each month commencing the first such date after the
making of such Loan; and (ii) for each Fixed Rate Loan, on the last day of
the Interest Period with respect thereto and, in the case of an Interest
Period greater than three months or 90 days, at three-month intervals after
the first day of such Interest Period; provided that interest accruing at the
Default Rate shall be due and payable from time to time on demand of the
Administrative Agent.
Section 2.11. Fees. (a) The Borrower shall pay to the Administrative
Agent for the account of each Bank a commitment fee on the daily average of
the result of the unused Revolving Credit Commitments of such Bank minus such
Bank's pro rata share of the Letter of Credit Obligations, for the period
from and including the date hereof to the earlier of the date the Revolving
Credit Commitments are terminated or the Revolving Credit Termination Date at
a rate per annum equal to the Applicable Margin calculated in each case on
the basis of a year of 360 days for the actual number of days elapsed. The
accrued commitment fee shall be due and payable in arrears upon any reduction
or termination of the Revolving Credit Commitments and on the 1st day of each
March, June, September and December, commencing on the first such date after
the Closing Date.
(b) The Borrower shall pay to the Administrative Agent for its
own account the fees set forth in the fee letter dated November 7, 1996
between the Borrower and the Administrative Agent.
Section 2.12. Payments Generally. All payments under this Agreement,
the Notes and the other Facility Documents shall be made in Dollars in
immediately available funds not later than 12:00 noon New York, New York time
on the relevant dates specified above or in such Facility Document (each such
payment made after such time on such due date to be deemed to have been made
on the next succeeding Banking Day) to the Administrative Agent's account
number 136621-22506 maintained at the Principal Office for the account of the
applicable Lending Office of each Bank. The Administrative Agent, or any
Bank for whose account any such payment is to be made, may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Borrower with the Administrative
Agent or such Bank, as the case may be, and any Bank so doing shall promptly
notify the Administrative Agent. The Borrower shall, at the time of making
each payment under this Agreement, any Note or any other Facility Document,
specify to the Administrative Agent the principal or other amount payable by
the Borrower under this Agreement, such Note or such other Facility Document
to which such payment is to be applied (and in the event that it fails to so
specify, or if a Default or Event of Default has occurred and is continuing,
the Administrative Agent may apply such payment as it may elect in its sole
discretion (subject to Section 11.16)). If the due date of any payment under
this Agreement, any Note or any other Facility Document would otherwise fall
on a day which is not a Banking Day, such date shall be extended to the next
succeeding Banking Day (unless such succeeding Banking Day falls in a
subsequent calendar month, in which case such payment shall be due on the
preceding Banking Day) and interest shall be payable for any principal so
extended for the period of such extension. Each payment received by the
Administrative Agent under this Agreement, any Note or any other Facility
Document for the account of a Bank shall be paid promptly to such Bank, in
immediately available funds, for the account of such Bank's Lending Office.
Section 2.13. Restatement. The terms and conditions of, and the
agreements, representations and warranties set forth in the Existing Credit
Agreement are hereby replaced and superseded in their entirety by the terms,
conditions, agreements, representations and warranties set forth in this
Agreement and the other Facility Documents and the Existing Credit Agreement
shall be of no further force and effect. Nothing contained herein or in any
of the other Facility Documents shall impair, limit or affect the
continuation of the liability of each Obligor for the Senior Obligations
heretofore incurred and the security interests, Liens and other collateral
interests heretofore granted, pledged and assigned to the Administrative
Agent by such Obligor. All loans, advances and other financial
accommodations under the Existing Credit Agreement and all other Senior
Obligations of the Obligors to the Banks outstanding and unpaid as of the
date hereof pursuant to the Existing Credit Agreement shall be deemed to be
Senior Obligations pursuant to the terms hereof and shall constitute and be
deemed a Loan by the Banks to the Borrower and the Subsidiary Co-Borrowers
and shall be repayable in accordance with the terms of this Agreement.
Section 2.14. Optional Conversion of Revolving Credit Commitments to
Synthetic Lease Commitments. The Borrower shall have the right to offer to
the Banks the right to convert up to $30,000,000 of Revolving Credit
Commitments to Converted Synthetic Lease Commitments. Each Bank shall have
the right to convert a portion of its Revolving Credit Commitment to a
Converted Synthetic Lease Commitment, such portion to be equal to the amount
requested to be converted multiplied by such Bank's Revolving Credit
Commitment Percentage. The Banks shall have a right of oversubscription such
that, if any Bank fails to accept the offer as to its pro rata share of the
Converted Synthetic Lease Commitments, the remaining Banks shall among them
have the right to convert their Revolving Credit Commitments up to the
balance of Converted Synthetic Lease Commitments requested to be converted.
If, as a result thereof, such oversubscriptions exceed the maximum amount of
Converted Synthetic Lease Commitments, the oversubscriptions shall be cut
back on a pro rata basis in accordance with the respective Revolving Credit
Commitment Percentages of the Banks participating in such oversubscription.
Upon any conversion of Revolving Credit Commitments of any Bank to Converted
Synthetic Lease Commitments pursuant to this Section 2.14, the Revolving
Credit Commitment of such Bank shall be permanently reduced in an amount
equal to the amount so converted.
ARTICLE 3. THE LETTERS OF CREDIT.
Section 3.01. Letters of Credit. (a) Subject to the terms and
conditions of this Agreement, the Issuing Bank, on behalf of the Banks, and
in reliance on the agreement of the Banks set forth in Section 3.04, agrees
to issue on any Banking Day prior to the Revolving Credit Termination Date,
for the account of the Borrower, irrevocable standby letters of credit in
such form as may from time to time be approved by the Issuing Bank acting
reasonably (together with the applications therefor, the "Letters of
Credit"); provided that on the date of the issuance of any Letter of Credit,
and after giving effect to such issuance, the Letter of Credit Obligations
shall not exceed the Letter of Credit Availability.
(b) Each Letter of Credit shall (i) have an expiry date no
later than the earlier of (A) one year from the date of issuance provided
that such Letter of Credit may automatically renew for subsequent one year
terms upon the failure of the Issuing Bank to provide sixty days' prior
written notice of termination to the Borrower and (B) the Revolving Credit
Termination Date, (ii) be denominated in Dollars, (iii) be in a minimum face
amount of $100,000 and (iv) provide for the payment of sight drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein or when such documents are
presented, as the case may be.
Section 3.02. Purposes. The Borrower shall use the Letters of Credit
for the purpose of securing obligations incurred in the ordinary course of
business.
Section 3.03. Procedures for Issuance of Letters of Credit. The
Borrower may from time to time request that the Issuing Bank issue a Letter
of Credit by delivering to the Issuing Bank at its address for notices
specified herein an application therefor in such form as may from time to
time be approved by the Issuing Bank acting reasonably, completed to the
reasonable satisfaction of the Issuing Bank, and such other certificates,
documents and other papers and information as the Issuing Bank may reasonably
request. Upon receipt of any application, the Issuing Bank will process such
application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the requested Letter of Credit in such
customized form as may reasonably be requested by the Borrower (but in no
event shall the Issuing Bank issue any Letter of Credit later than five
Banking Days after receipt of the application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Issuing Bank and the Borrower. The Issuing
Bank shall furnish a copy of such Letter of Credit to the Borrower promptly
following the issuance thereof.
Section 3.04. Participating Interests. In the case of each Letter of
Credit, effective as of the date of the issuance thereof, the Issuing Bank
agrees to allot and does allot to each other Bank, and each such Bank
severally and irrevocably agrees to take and does take a Participating
Interest in such Letter of Credit in a percentage equal to such Bank's pro
rata share of the Letter of Credit Obligations (calculated based on its
Revolving Credit Commitment Percentage). On the date that any Bank becomes
a party to this Agreement in accordance with Section 12.05, Participating
Interests in any outstanding Letter of Credit held by the transferor Bank
from which such transferee Bank acquired its interest hereunder shall be
proportionately reallotted between such transferee Bank and such transferor
Bank. Each Participating Bank hereby agrees that its obligation to
participate in each Letter of Credit, and to pay or to reimburse the Issuing
Bank for its participating share of the drafts drawn thereunder, is absolute,
irrevocable and unconditional and shall not be affected by any circumstances
whatsoever, including, without limitation, the occurrence and continuance of
any Default or Event of Default, and that each such payment shall be made
without any offset, abatement, withholding or other reduction whatsoever.
Upon request of any Participating Bank, the Issuing Bank shall provide to
such Participating Bank a monthly statement of all Letters of Credit and all
Letter of Credit Obligations outstanding as of such time.
Section 3.05. Payments. (a) In order to induce the Issuing Bank to
issue the Letters of Credit, the Borrower hereby agrees to reimburse the
Issuing Bank, unless such Reimbursement Obligation has been accelerated
pursuant to Section 10.02, by not later than 12:00 noon, New York City time,
on each date that the Borrower has been notified by the Issuing Bank that any
draft presented under any Letter of Credit is paid by the Issuing Bank, for
(i) the amount of the draft paid by the Issuing Bank and (ii) the amount of
any taxes, fees, charges or other reasonable costs or expenses whatsoever
incurred by the Issuing Bank in connection with any payment made by the
Issuing Bank under, or with respect to, such Letter of Credit. Each such
payment shall, subject to the next sentence hereof, be made to the Issuing
Bank at its office specified in Section 12.06, in lawful money of the United
States and in immediately available funds by not later than 12:00 noon, New
York City time, on the day that payment is made by the Issuing Bank (or, if
such drawing occurs after 12:00 noon New York City time, on the next
succeeding Banking Day). If such payment is not made in full, all amounts
remaining unpaid by the Borrower under this Section 3.05 shall, to the extent
otherwise permitted hereunder, automatically be deemed to be a borrowing as
Revolving Credit Loans bearing interest at the Variable Rate plus the
Applicable Margin. Except as otherwise permitted by the preceding sentence,
interest on any and all amounts remaining unpaid by the Borrower under this
Section 3.05 at any time from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full shall
be payable to the Issuing Bank on demand at a fluctuating rate per annum
equal to the Default Rate.
(b) In the event that the Issuing Bank makes a payment (a
"Letter of Credit Funding") under any Letter of Credit and is not reimbursed
in full therefor on the date of such Letter of Credit Funding, in accordance
with the terms hereof, the Issuing Bank will promptly through the
Administrative Agent notify each Participating Bank that acquired its
Participating Interest in such Letter of Credit from the Issuing Bank. No
later than the close of business on the date such notice is given if such
notice is given prior to 12:00 noon New York City time (or, if such notice is
sent after 12:00 noon New York City time, on the next succeeding Banking
Day), each such Participating Bank will transfer to the Administrative Agent,
for the account of the Issuing Bank, in immediately available funds, an
amount equal to such Participating Bank's pro rata share of the unreimbursed
portion of such Letter of Credit Funding (calculated based on its Revolving
Credit Commitment Percentage), together with interest, if any, accrued
thereon from and including the date of such Letter of Credit Funding at a
rate per annum equal to the Federal Funds Rate and, if such date of transfer
is more than three Banking Days subsequent to such notice, plus two percent
(2%).
(c) Whenever, at any time after the Issuing Bank has made a
Letter of Credit Funding and has received from any Participating Bank such
Participating Bank's pro rata share of the unreimbursed portion of such
Letter of Credit Funding, the Issuing Bank receives any reimbursement on
account of such unreimbursed portion or any payment of interest on account
thereof, the Issuing Bank will distribute to the Administrative Agent, for
the account of such Participating Bank, its pro rata share thereof; provided,
however, that in the event that the receipt by the Issuing Bank of such
reimbursement or such payment of interest (as the case may be) is required to
be returned, such Participating Bank will promptly return to the
Administrative Agent, for the account of the Issuing Bank, any portion
thereof previously distributed by the Issuing Bank to it.
Section 3.06. Further Assurances. The Borrower hereby agrees to do
and perform any and all acts and to execute any and all further instruments
from time to time reasonably requested by the Issuing Bank more fully to
effect the purposes of this Agreement and the issuance of the Letters of
Credit hereunder.
Section 3.07. Obligations Absolute. The payment obligations of the
Borrower under Section 3.05 shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against any beneficiary, or any
transferee, of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
Participating Bank, or any other Person, whether in connection with this
Agreement, any other Facility Document, the transactions contemplated herein,
or any unrelated transaction;
(b) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(c) payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit; or
(d) any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing.
Section 3.08. Cash Collateral Account. If the Commitments are duly
terminated and all amounts owing under this Agreement, the Notes and the
Reimbursement Obligations become due and payable pursuant to Section 10, the
Borrower shall deposit with the Administrative Agent, on the date such
obligations become due and payable, an amount in cash equal to the Letter of
Credit Obligations as of such date and the Letter of Credit fees in
accordance with Section 3.09. Such amount shall be deposited in a cash
collateral account to be established by the Administrative Agent, for the
benefit of the Issuing Bank and the Participating Banks, and shall constitute
collateral security for the Letter of Credit Obligations and other amounts
owing hereunder. All amounts in such cash collateral account shall be
maintained pursuant to a cash collateral account agreement which shall grant
to the Administrative Agent a security interest in all such funds and in any
investments made therewith or proceeds thereof to secure payment to the
Administrative Agent of Reimbursement Obligations with respect to outstanding
Letters of Credit. In the event that the Administrative Agent makes any
Letter of Credit Funding, the Administrative Agent may withdraw funds on
deposit to make reimbursement of such Letter of Credit Funding, in an amount
equal to such Letter of Credit Funding. Upon payment by the Borrower of all
Reimbursement Obligations with respect to Letters of Credit or the
termination or other expiration of all Letters of Credit, remaining funds on
deposit in the cash collateral account shall be returned promptly to the
Borrower.
Section 3.09. Letter of Credit Fees. (a) The Borrower agrees to pay
the Administrative Agent, for the account of the Issuing Bank and the
Participating Banks, a non-refundable letter of credit fee computed at a rate
per annum equal to the Applicable Margin of the aggregate undrawn amount
under each standby Letter of Credit, calculated on the basis of a year of 360
days for the actual number of days elapsed, payable in arrears on the 1st day
of each March, June, September and December, commencing on the first such
date after the Closing Date.
(b) The Borrower agrees to pay the Issuing Bank, for its own account,
its normal and customary administration, amendment, transfer, payment and
negotiation fees charged in connection with its issuance and administration
of letters of credit.
ARTICLE 4. YIELD PROTECTION; ILLEGALITY; ETC.
Section 4.01. Additional Costs. (a) The Borrower and each respective
Subsidiary Co-Borrower (as applicable) shall pay directly to each Bank from
time to time on demand such amounts as such Bank may determine to be
necessary to compensate it for any costs which such Bank determines are
attributable to its making or maintaining any Fixed Rate Loans to the
Borrower and/or such Subsidiary Co-Borrower under this Agreement or its Notes
of the Borrower and/or such Subsidiary Co-Borrower or its obligation to make
any such Loans hereunder, or any reduction in any amount receivable by such
Bank hereunder in respect of any such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i) changes
the basis of taxation of any amounts payable to such Bank under this
Agreement or its Notes in respect of any of such Loans (other than taxes
imposed on the overall net income or profits of such Bank or of its Lending
Office for any of such Loans by the jurisdiction in which such Bank has its
principal office or such Lending Office, or any branch or franchise tax
applicable thereto); or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets of,
or any deposits with or other liabilities of, such Bank (including any of
such Loans or any deposits referred to in the definition of "Fixed Base Rate"
in Section 1.01); or (iii) imposes any other condition affecting this
Agreement or its Notes (or any of such extensions of credit or liabilities).
Each Bank will notify the Borrower of any event occurring after the date of
this Agreement which will entitle such Bank to compensation pursuant to this
Section 4.01(a) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation. If any Bank requests
compensation from the Borrower or any Subsidiary Co-Borrower under this
Section 4.01(a), or under Section 4.01(c), the Borrower may, by notice to
such Bank (with a copy to the Administrative Agent), require that such Bank's
Loans of the type with respect to which such compensation is requested be
converted in accordance with Section 4.04.
(b) Without limiting the effect of the foregoing provisions
of this Section 4.01, in the event that, by reason of any Regulatory Change,
any Bank either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or
other liabilities of such Bank which includes deposits by reference to which
the interest rate on Fixed Rate Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Bank
which includes Fixed Rate Loans or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets which it may hold,
then, if such Bank so elects by notice to the Borrower (with a copy to the
Administrative Agent), the obligation of such Bank to make or renew, and to
convert Loans of any other type into, Loans of such type hereunder shall be
suspended until the date such Regulatory Change ceases to be in effect (and
all Loans of such type held by such Bank then outstanding shall be converted
in accordance with Section 4.04).
(c) Without limiting the effect of the foregoing provisions
of this Section 4.01 (but without duplication), the Borrower and each
respective Subsidiary Co-Borrower (as applicable) shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to
be necessary to compensate such Bank for any costs which it determines are
attributable to the maintenance by it or any of its affiliates pursuant to
any law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any court or governmental or
monetary authority of capital in respect of its Loans to the Borrower and/or
such Subsidiary Co-Borrower hereunder or its obligation to make Loans
hereunder or its obligation to issue, or participate in, any Letters of
Credit (such compensation to include, without limitation, an amount equal to
any reduction in return on assets or equity of such Bank to a level below
that which it could have achieved but for such law, regulation,
interpretation, directive or request). Each Bank will notify the Borrower if
it is entitled to compensation pursuant to this Section 4.01(c) as promptly
as practicable after it determines to request such compensation.
(d) Determinations and allocations by a Bank for purposes of
this Section 4.01 of the effect of any Regulatory Change pursuant to
subsections (a) or (b), or of the effect of capital maintained pursuant to
subsection (c), on its costs of making or maintaining Loans or its obligation
to make Loans, or on amounts receivable by, or the rate of return to, it in
respect of Loans or such obligation, and of the additional amounts required
to compensate such Bank under this Section 4.01, shall be conclusive absent
manifest error, provided that such determinations and allocations are made on
a reasonable basis.
Section 4.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if:
(a) the Administrative Agent determines (which determination
shall be conclusive) that quotations of interest rates for the relevant
deposits referred to in the definition of "Fixed Base Rate" in Section 1.01
are not being provided in the relevant amounts or for the relevant maturities
for purposes of determining the rate of interest for any type of Fixed Rate
Loans as provided in this Agreement; or
(b) the Required Banks determine (which determination shall
be conclusive) and notify the Administrative Agent that the relevant rates of
interest referred to in the definition of "Fixed Base Rate" in Section 1.01
upon the basis of which the rate of interest for any type of Fixed Rate Loans
is to be determined do not adequately cover the cost to the Banks of making
or maintaining such Loans;
then the Administrative Agent shall give the Borrower and each Bank prompt
notice thereof, and so long as such condition remains in effect, the Banks
shall be under no obligation to make or renew Loans of such type or to
convert Loans of any other type into Loans of such type and the Borrower and
each respective Subsidiary Co-Borrower (as applicable) shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of
the affected type, either prepay such Loans or convert such Loans into
another type of Loans in accordance with Section 2.05.
Section 4.03. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to (a) honor its obligation to make or renew Fixed Rate Loans
hereunder or convert Loans of any type into Loans of such type, or (b)
maintain Fixed Rate Loans hereunder, then such Bank shall promptly notify the
Borrower thereof (with a copy to the Administrative Agent) and such Bank's
obligation to make or renew Fixed Rate Loans and to convert other types of
Loans into Loans of such type hereunder shall be suspended until such time as
such Bank may again make, renew, or convert and maintain such affected Loans
and such Bank's outstanding Fixed Rate Loans, as the case may be, shall be
converted in accordance with Section 4.04.
Section 4.04. Certain Conversions pursuant to Sections 4.01 and 4.03.
If the Loans of any Bank of a particular type (Loans of such type being
herein called "Affected Loans" and such type being herein called the
"Affected Type") are to be converted pursuant to Section 4.01 or 4.03, such
Bank's Affected Loans shall be automatically converted into Variable Rate
Loans on the last day(s) of the then current Interest Period(s) for the
Affected Loans (or, in the case of a conversion required by Section 4.01(b)
or 4.03, on such earlier date as such Bank may specify to the Borrower with
a copy to the Administrative Agent) and, unless and until such Bank gives
notice as provided below that the circumstances specified in Section 4.01 or
4.03 which gave rise to such conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been
so converted, all payments and prepayments of principal which would otherwise
be applied to such Bank's Affected Loans shall be applied instead to its
Variable Rate Loans;
(b) all Loans which would otherwise be made or renewed by such
Bank as Loans of the Affected Type shall be made instead as Variable Rate
Loans and all Loans of such Bank which would otherwise be converted into
Loans of the Affected Type shall be converted instead into (or shall remain
as) Variable Rate Loans; and
(c) if Loans of other Banks of the Affected Type are
subsequently converted into Loans of another type (other than Variable Rate
Loans), such Bank's Variable Rate Loans shall be automatically converted on
the conversion date into Loans of such other type to the extent necessary so
that, after giving effect thereto, all Loans held by such Bank and the Banks
whose Loans are so converted are held pro rata (as to principal amounts,
types and Interest Periods) in accordance with their respective Commitments.
If such Bank gives notice to the Borrower (with a copy to the
Administrative Agent) that the circumstances specified in Section 4.01 or
4.03 which gave rise to the conversion of such Bank's Affected Loans pursuant
to this Section 4.04 no longer exist (which such Bank agrees to do promptly
upon such circumstances ceasing to exist) at a time when Loans of the
Affected Type are outstanding, such Bank's Variable Rate Loans shall be
automatically converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Loans of the Affected Type to the extent
necessary so that, after giving effect thereto, all Loans held by the Banks
holding Loans of the Affected Type and by such Bank are held pro rata (as to
principal amounts, types and Interest Periods) in accordance with their
respective Commitments.
Section 4.05. Certain Compensation. The Borrower and each respective
Subsidiary Co-Borrower (as applicable) shall pay to the Administrative Agent
for the account of each Bank, upon the request of such Bank through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Bank) to compensate it for any loss, cost or
expense which such Bank determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a Fixed
Rate Loan to the Borrower and/or such Subsidiary Co-Borrower made by such
Bank on a date other than the last day of an Interest Period for such Loan
(whether by reason of acceleration or otherwise); or
(b) any failure by the Borrower and/or such Subsidiary Co-Borrower to
borrow, convert into, prepay or renew a Fixed Rate Loan to be
made, converted into, prepaid or renewed by such Bank on the date specified
therefor in the relevant notice under Sections 2.04, 2.05 or 2.06, as the
case may be.
Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (i) the amount of interest which
otherwise would have accrued on the principal amount so paid, prepaid,
converted or renewed or not borrowed, converted, prepaid or renewed for the
period from and including the date of such payment, prepayment or conversion
or failure to borrow, convert, prepay or renew to but excluding the last day
of the then current Interest Period for such Loan (or, in the case of a
failure to borrow, convert, prepay or renew, to but excluding the last day of
the Interest Period for such Loan which would have commenced on the date
specified therefor in the relevant notice) at the applicable rate of interest
for such Loan provided for herein; over (ii) the amount of interest (as
reasonably determined by such Bank) such Bank would have bid in the London
interbank market (if such Loan is a Fixed Rate Loan) for Dollar deposits for
amounts comparable to such principal amount and maturities comparable to such
period. A determination of any Bank as to the amounts payable pursuant to
this Section 4.05 shall be conclusive absent manifest error; provided that
such determination is made on a reasonable basis.
ARTICLE 5. CONDITIONS PRECEDENT.
Section 5.01. Documentary Conditions Precedent. The obligations of
the Banks to make the Loans constituting the initial borrowing and of the
Issuing Bank to issue the initial Letter of Credit are subject to the
condition precedent that the Administrative Agent shall have received on or
before the Closing Date each of the following, in form and substance
satisfactory to the Administrative Agent and its counsel:
(a) counterparts of this Agreement duly executed by each of
the Borrower, the Subsidiary Co-Borrowers, the Banks and the Administrative
Agent;
(b) the Revolving Credit Notes duly executed by the Borrower;
(c) the Term Notes duly executed by the Borrower and the
respective Subsidiary Co-Borrower;
(d) the Multicare Guaranty duly executed by each of the
Obligors;
(e) the Intercreditor Agreement duly executed by each of the
Borrower, the Subsidiary Guarantors, the Banks, the Administrative Agent, the
ADS Lease Banks, the ADS Lease Agent, the ADS Lessor and the Collateral
Agent;
(f) the Mortgages duly executed by PHC Operating Corp. or
Providence Health Care, Inc., respectively;
(g) the Security Agreement and the Pledge Agreement duly
executed by each of the Obligors and the Collateral Agent;
(h) [Intentionally Omitted];
(i) commitments to issue endorsements to each policy of
mortgagee title insurance with respect to each of the Health Care Facilities
owned by PHC Operating Corp. or Providence Health Care, Inc. insuring the
fully perfected and first priority Lien of the Collateral Agent in such
Health Care Facility;
(j) (i) executed copies of the financing statements (UCC-1)
duly filed or to be filed under the Uniform Commercial Code of all
jurisdictions necessary or, in the opinion of the Secured Parties, desirable
to perfect the security interests created by the Security Agreement and the
Pledge Agreement; (ii) executed copies of the assignment statements (UCC-3)
to be filed under the Uniform Commercial Code of all jurisdictions necessary
to assign the security interest of The Chase Manhattan Bank, N.A., as Agent,
in and to the Collateral to the Collateral Agent; (iii) executed copies of
the termination statements (UCC-3) to be filed under the Uniform Commercial
Code of all jurisdictions necessary to terminate the security interests of
all other Persons in and to the Collateral; and (iv) copies of searches
identifying all of the financing statements on file with respect to each of
the Obligors in all jurisdictions referred to under (i) of this Section
5.01(j);
(k) (i) stock certificates representing all of the outstanding
capital stock held by each Obligor in each other Person in which such Obligor
holds an interest together with undated stock powers executed in blank; (ii)
evidence of the registration of the pledge of all partnership interests and
limited liability company interests held by each Obligor in each other Person
in which such Obligor holds an interest (to the extent that such interest is
pledged under the Pledge Agreement); and (iii) promissory notes or other
instruments held by each Obligor in suitable form for transfer by endorsement
and delivery;
(l) certificates or other evidence of casualty insurance
policies with appropriate loss payable endorsements indicating assignment of
proceeds thereunder to the Collateral Agent for the ratable benefit of the
Secured Parties and certificates or other evidence of liability insurance
with appropriate endorsements indicating the coverage of the Collateral Agent
for the ratable benefit of the Secured Parties as an additional insured;
(m) (i) the ADS Mortgages duly executed by each of the ADS
Lessees and the ADS Lessor and the ADS Assignment of Lease duly executed by
the ADS Lessor; (ii) commitments to issue policies of mortgagee title
insurance with respect to each ADS Mortgaged Property insuring the fully
perfected and first priority Lien of the Collateral Agent in such ADS
Mortgaged Property; (iii) a survey of each ADS Mortgaged Property certified
to the Secured Parties by a surveyor reasonably satisfactory to the Secured
Parties containing the Minimum Standard Detail Requirements for ALTA/ASCM
Land Title Surveys; (iv) an independent appraisal from a state certified
appraiser engaged by the Secured Parties indicating the fair market value of
each ADS Mortgaged Property; and (v) an environmental site assessment report
certified to the Secured Parties by a consultant reasonably satisfactory to
the Secured Parties with respect to each ADS Mortgaged Property;
(n) certificates of the Secretary or Assistant Secretary of
each of the Consolidated Entities, dated the Closing Date, (i) attesting to
all corporate, partnership or limited liability company action taken by such
Consolidated Entity, including resolutions of its Board of Directors, the
Board of Directors of its general partner or its Board of Managers
authorizing the execution, delivery and performance of each of the Facility
Documents to which it is a party and each other document to be delivered
pursuant to this Agreement, (ii) certifying the names and true signatures of
the officers of such Consolidated Entity authorized to sign the Facility
Documents to which it is a party and the other documents to be delivered by
such Consolidated Entity under this Agreement and (iii) verifying that the
charter and by-laws or partnership or operating agreement of such
Consolidated Entity attached thereto are true, correct and complete as of the
date thereof;
(o) a certificate of a duly authorized officer of each of the
Obligors, dated the Closing Date, stating that the representations and
warranties in Article 6 are true and correct in all material respects on such
date as though made on and as of such date and that no event has occurred and
is continuing which constitutes a Default or Event of Default;
(p) a certificate of a duly authorized officer of the
Borrower, dated the Closing Date, attaching true and complete copies of all
material consents, authorizations and filings made under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
or any indenture, agreement, lease or instrument relating to the ADS
Acquisition or the ADS Synthetic Lease, as reasonably requested by the
Administrative Agent;
(q) good standing certificates with respect to each
Consolidated Entity issued by the Secretary of State of its jurisdiction of
organization and evidence that each of the Consolidated Entities is qualified
as a foreign corporation, partnership or limited liability company in every
other jurisdiction in which it does business;
(r) a favorable opinion of Paul, Weiss, Rifkind, Wharton &
Garrison, outside counsel to each of the Consolidated Entities, dated the
Closing Date, in substantially the form of Exhibit E and as to such other
matters as the Administrative Agent or any Bank may reasonably request;
(s) favorable opinions of (i) Benesch, Friedlander, Coplan &
Aronoff, (ii) Duane, Morris & Heckscher, (iii) Katten, Muchin & Zavis, (iv)
Miller, Eggleston & Cramer, Ltd., (v) Murphy & Desmond, S.C., (vi) Ropes &
Gray, (vii) Steptoe & Johnson, (viii) Susman, Duffy & Segaloff and (ix) Wolff
& Samson, local counsel to each of the Consolidated Entities, dated the
Closing Date, in substantially the form of Exhibit F and as to such other
matters as the Secured Parties may request;
(t) certified complete and correct copies of each of the
financial statements referred to in Section 6.05;
(u) evidence that all actions to consummate, complete and
effectuate the ADS Acquisition and the ADS Synthetic Lease shall have been
taken to be accompanied by favorable opinions of Goulston & Storrs, counsel
to the ADS Seller Entities and the ADS Owner Parties;
(v) evidence of the repayment of all Debt outstanding to any
ADS Seller Entity (other than the Debt described in Schedule IV) and the
release of all collateral granted in connection therewith including, without
limitation, all amounts owed to (i) BayBank Boston, N.A., (ii) Fleet Bank of
Massachusetts, N.A. (now known as Fleet National Bank), (iii) Northmark Bank
and (iv) Enterprise Bank and Trust Company;
(w) certified complete and correct copies of the ADS
Acquisition Documents, the ADS Synthetic Lease Documents and all Credit
Arrangements, Operating Agreements, Participation Agreements and Licenses of
the ADS Seller Entities; and
(x) a borrowing notice of the Borrower relating to the Loans
to be made and the Letters of Credit to be issued on the Closing Date
together with a letter from the Borrower containing wire transfer
instructions and account information relating to the funds to be made
available by the Banks to the Borrower on the Closing Date.
On the Closing Date, the Banks party to the Existing Credit Agreement
shall surrender to the Borrower the Existing Notes held by them under the
Existing Credit Agreement, in each case marked "Replaced".
Section 5.02. Additional Conditions Precedent. The obligations of the
Banks to make any Loans pursuant to a borrowing which increases the amount
outstanding hereunder (including the initial borrowing) or of the Issuing
Bank to issue any Letters of Credit shall be subject to the further
conditions precedent that on the date of such Loans or the issuance of such
Letters of Credit, the following statements shall be true: (i) in the case of
the initial borrowing or the initial issuance of a Letter of Credit, the
representations and warranties contained in Article 6, in Article 2 of the
Multicare Guaranty, in Article 3 of the Security Agreement and in Article 3
of the Pledge Agreement are true and correct as of the Closing Date, (ii) in
the case of subsequent borrowings and issuances of Letters of Credit, such
representations and warranties are true and correct as of the date of such
Loans or the issuance of such Letter of Credit as though made on and as of
such date unless the failure of such representations and warranties to be
true and correct could not reasonably be expected to have a Material Adverse
Effect; provided that if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date; and
(iii) no Default or Event of Default has occurred and is continuing, or would
result from such Loans or the issuance of Letters of Credit.
Section 5.03. Deemed Representations. Each notice of borrowing or
request for the issuance of a Letter of Credit hereunder and acceptance by
the Borrower of the proceeds of such borrowing or the benefit of such Letter
of Credit shall constitute a representation and warranty that the statements
contained in Section 5.02 are true and correct both on the date of such
notice or request and, unless the Borrower otherwise notifies the
Administrative Agent prior to such borrowing or such issuance (in which case
the Banks shall be under no obligation to make available the proceeds of such
borrowing and the Issuing Bank shall be under no obligation to issue such
Letter of Credit), as of the date of such borrowing or such issuance.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
Each of the Borrower and the Subsidiary Co-Borrowers (as to itself and
its Subsidiaries) hereby represents and warrants that (after giving effect to
the ADS Acquisition):
Section 6.01. Organization, Good Standing and Due Qualification. Each
of the Consolidated Entities is a corporation, partnership or limited
liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has the corporate,
partnership or limited liability company power and authority to own its
assets and to transact the business in which it is now engaged or proposed to
be engaged, and is duly qualified as a foreign corporation, partnership or
limited liability company and in good standing under the laws of each other
jurisdiction in which such qualification is required and where such failure
to qualify could reasonably be expected to have a Material Adverse Effect.
Section 6.02. Power and Authority; No Conflicts. The execution,
delivery and performance by each of the Obligors of the Facility Documents to
which it is a party have been duly authorized by all necessary corporate,
partnership or limited liability company action and do not and will not: (a)
require any consent or approval of its stockholders, partners or members; (b)
contravene its charter or by-laws or partnership or operating agreement; (c)
violate any provision of, or require any filing (other than the filings
required under the Security Documents), registration, consent or approval
under, any law, rule, regulation (including, without limitation, Regulation
U), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to any Consolidated Entity; (d)
result in a breach of or constitute a default or require any consent under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Consolidated Entity is a party or by which it or its
properties may be bound or affected if such breach, default or failure to
obtain consent could reasonably be expected to have a Material Adverse
Effect; (e) result in, or require, the creation or imposition of any Lien
(other than as created under the Security Documents), upon or with respect to
any of the properties now owned or hereafter acquired by any Consolidated
Entity; or (f) cause any Consolidated Entity to be in default under any such
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or, if such default could reasonably be expected to
have a Material Adverse Effect, any such indenture, agreement, lease or
instrument.
Section 6.03. Legally Enforceable Agreements. Each Facility Document
to which any Obligor is a party is, or when delivered under this Agreement
will be, a legal, valid and binding obligation of such Obligor enforceable
against such Obligor in accordance with its terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally.
Section 6.04. Litigation. Except as set forth on Schedule II hereto,
there are no actions, suits or proceedings pending or, to the knowledge of
any Obligor, threatened, against or affecting any Consolidated Entity before
any court, Governmental Authority or arbitrator which could reasonably be
expected to have a Material Adverse Effect.
Section 6.05. Financial Statements. (a) The consolidated balance
sheets of the Consolidated Entities as at December 31, 1995, 1994, 1993, 1992
and 1991 and the consolidating balance sheets of each of the Subsidiary
Co-Borrowers as at December 31, 1995, and the related consolidated income
statements and statements of cash flows and changes in stockholders' equity
of the Consolidated Entities and consolidating income statements of each of
the Subsidiary Co-Borrowers, for the fiscal years then ended, and the
accompanying footnotes, together with the opinion on the consolidated
statements of KPMG Peat Marwick LLP, independent certified public
accountants, and the interim consolidated balance sheet of the Consolidated
Entities as at September 30, 1996, and the related consolidated income
statement and statements of cash flows and changes in stockholders' equity of
the Consolidated Entities, for the nine month period then ended, copies of
which have been furnished to each of the Banks, are complete and correct and
fairly present the financial condition of the Consolidated Entities at such
dates and the results of the operations of the Consolidated Entities for the
periods covered by such statements, all in accordance with GAAP consistently
applied (subject to year-end adjustments).
(b) To the best knowledge of the Borrower, the combined
balance sheet of the ADS Seller Entities at December 31, 1995 and the related
combined income statements and statements of cash flows and changes in
stockholders' equity of the ADS Seller Entities, for the fiscal year then
ended, and the accompanying footnotes, together with the opinion thereon of
Landa & Altsher, P.C., independent certified public accountants, and the
interim consolidated balance sheet of the Consolidated Entities as at
September 30, 1996, and the related consolidated income statement and
statements of cash flows and changes in stockholders' equity of the
Consolidated Entities, for the nine month period then ended, copies of which
have been furnished to each of the Banks, are complete and correct and fairly
present the financial condition of the ADS Seller Entities at such dates and
the results of the operations of the ADS Seller Entities for periods covered
by such statements, all in accordance with GAAP consistently applied (subject
to year-end adjustments).
(c) After giving effect to (i) the ADS Acquisition, (ii) the
Acquisition of Concord Health Group, Inc. and its Subsidiaries, and (iii) the
Acquisition of Glenmark Associates, Inc. and its Subsidiaries (the
"Significant Recent Acquisitions"), the pro forma condensed consolidated
balance sheet of the Consolidated Entities as at September 30, 1996 and as at
December 31, 1995 and the related pro forma condensed consolidated income
statements of the Consolidated Entities for the fiscal periods then ended,
copies of which have been furnished to each of the Banks, are complete and
correct and fairly present the financial condition of the Consolidated
Entities at such dates and the results of the operations of the Consolidated
Entities for periods covered by such statements, all in accordance with GAAP
consistently applied.
(d) As of the date thereof, the projections and pro forma
financial information provided by the Borrower giving effect to the
Significant Recent Acquisitions are based on good faith estimates and
assumptions by the management of the Borrower, it being recognized by the
Banks, however, that projections as to future events are not to be viewed as
fact and that actual results during the period or periods covered by any such
projections may differ from the projected results and that the differences
may be material. After reviewing historical financial statements of the ADS
Sellers, Concord Health Group, Inc. and its Subsidiaries and Glenmark
Associates, Inc. and its Subsidiaries and considering the pro forma position
of the Consolidated Entities subsequent to the Significant Recent
Acquisitions, the Borrower believes in good faith that the Consolidated
Entities will continue to be in compliance with the financial covenants
contained in Article 9.
(e) Except as set forth on the pro forma condensed
consolidated balance sheet of the Consolidated Entities as at September 30,
1996, there are no liabilities of any Consolidated Entity, fixed or
contingent, which are material but are not reflected in the consolidated
financial statements or in the notes thereto and which would be required to
be recorded in such financial statements or notes in accordance with GAAP.
No written information, exhibit or report furnished by any Consolidated
Entity to the Banks in connection with the negotiation of this Agreement
(after giving effect to information so furnished that corrects, supplements
or supersedes information previously furnished) contained any material
misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading
in each case as determined as of the date of the provision of such
information, exhibit or report. Since September 30, 1996, there has been no
change which could reasonably be expected to have a Material Adverse Effect.
Section 6.06. Ownership and Liens. Each of the Consolidated Entities
has title to, or valid leasehold interests in, all of its Property, including
the Property reflected in the financial statements referred to in Section
6.05 (other than any Property disposed of in the ordinary course of
business), and none of the Property owned by any Consolidated Entity and none
of its leasehold interests is subject to any Lien, except as may be permitted
hereunder and except for the Liens created by the Security Documents;
provided that no Obligor is making any representation or warranty with
respect to Liens affecting the fee interest in real Property leased to any
Consolidated Entity and not owned by another Consolidated Entity.
Section 6.07. Taxes. Each of the Consolidated Entities has filed (or
obtained extensions for) all tax returns (federal, state and local) required
to be filed and has paid all taxes, assessments and governmental charges and
levies shown thereon to be due, including interest and penalties.
Section 6.08. ERISA. Each Plan and, to the best knowledge of each
Obligor, Multiemployer Plan, is in compliance in all material respects with,
and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable Federal or
state law, and no event or condition is occurring or exists concerning which
any Consolidated Entity would be under an obligation to furnish a report to
the Bank in accordance with Section 7.08(g) hereof. As of the most recent
valuation date for each Plan, each Plan other than The Breyut Convalescent
Center, Inc. Pension Fund was "fully funded", which for purposes of this
Section 6.08 shall mean that the fair market value of the assets of the Plan
is not less than the present value of the accrued benefits of all
participants in the Plan, computed on a Plan termination basis. To the best
knowledge of each Obligor, no such Plan has ceased being fully funded as of
the date these representations are made with respect to any Loan under this
Agreement. With respect to The Breyut Convalescent Center, Inc. Pension
Fund, benefit accruals were frozen as of December 31, 1990 and the Unfunded
Benefit Liabilities as projected by such Plan's enrolled actuary as of August
1, 1993 were $1,139,854.
Section 6.09. Subsidiaries and Ownership of Stock. As of the date
hereof and as of the Closing Date, Schedule III sets forth the name of (a)
each Subsidiary of the Borrower and (b) each Affiliate that is owned by a
Consolidated Entity, that has an ownership interest in a Consolidated Entity
or that has entered into a transaction with any Consolidated Entity, in each
case showing the jurisdiction of its incorporation or organization and
showing the percentage of each Person's ownership of the outstanding stock or
partnership interests of such Subsidiary or Affiliate. All of the
outstanding shares of capital stock and all of the partnership and limited
liability company interests of each Subsidiary owned by the Borrower, either
directly or indirectly, are validly issued, fully paid and nonassessable, and
all such shares or interests are owned free and clear of all Liens (other
than as created under the Security Documents). As of the date hereof and as
of the Closing Date, except as set forth in Schedule III, no Consolidated
Entity owns or holds the right to acquire any shares of stock or any other
security or interest in any other Person.
Section 6.10. Credit Arrangements. As of the date hereof and as of
the Closing Date, Schedule IV is a complete and correct list of all credit
agreements, indentures, note purchase agreements, guaranties, Capital Leases
and other investments, agreements and arrangements constituting Debt (the
"Credit Arrangements") providing for or relating to extensions of credit
(including agreements and arrangements for the issuance of letters of credit
or for acceptance financing) in respect of which any Consolidated Entity is
in any manner directly or contingently obligated; and the maximum principal
or face amounts of the credit in question, outstanding and which can be
outstanding, are correctly stated, and all Liens of any nature given or
agreed to be given as security therefor are correctly described or indicated
in such Schedule.
Section 6.11. Operation of Business.
(a) Each of the Consolidated Entities possesses all
certificates of need and licenses necessary to operate the Health Care
Facilities as long term or specialized health care facilities and all
Medicare and Medicaid provider agreements relating to the operation of such
Health Care Facilities and all other Licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct its
business substantially as now conducted and as presently proposed to be
conducted and where the failure to possess such other Licenses, permits,
franchises, patents, copyrights, trademarks and trade names could have a
Material Adverse Effect, and no Consolidated Entity is in material violation
of any valid rights of others with respect to any of the foregoing where such
violation could have a Material Adverse Effect. As of the date hereof and as
of the Closing Date, Schedule V is a complete and correct list of all
certificates of need and licenses necessary to operate the Health Care
Facilities owned or leased by any Consolidated Entity as long term or
specialized health care facilities and all Medicare and Medicaid provider
agreements relating to the operation of such Health Care Facilities.
(b) Except for revocations, suspensions, terminations,
probations, restrictions, limitations or non-renewals which, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, there is no threatened or pending revocation, suspension,
termination, probation, restriction, limitation, or non-renewal of any
material License, Participation Agreement (including, Medicare, Medicaid,
CHAMPUS, Blue Cross and Blue Shield, and all current private commercial
insurance and employee assistance programs in which any Consolidated Entity
presently participates) or accreditation or certification by any
accreditation or approval organization or Governmental Authority for health
care providers, including, without limitation, of any provisional License or
other License with a term of less than twelve (12) months with respect to any
Consolidated Entity.
(c) Each of the Consolidated Entities has caused there to be
prepared and filed (or obtained extensions for) all applicable cost reports
to Medicare, Medicaid, CHAMPUS, Blue Cross, Blue Shield and such other third
party payors that are material to conduct its business substantially as now
conducted.
Section 6.12. Operating Agreements and Leases. As of the date hereof
and as of the Closing Date, Schedule VI is a complete and correct list of all
management agreements and leases (collectively, the "Operating Agreements")
relating to the operation and management of each Health Care Facility and to
the operation or management of each Health Care Facility owned by a Person
other than a Consolidated Entity.
Section 6.13. Health Care Facilities. As of the date hereof and as of
the Closing Date, Schedule VII is a complete and correct list of all Health
Care Facilities and the locations thereof.
Section 6.14. Hazardous Materials. Each of the Consolidated Entities
is in compliance in all material respects with all Environmental Laws in
effect in each jurisdiction where it is presently doing business. No
Consolidated Entity is subject to any material liability under any
Environmental Law.
In addition, no Consolidated Entity has received any (i) notice from
any Governmental Authority by which any of its present or previously-owned or
leased real Properties has been designated, listed, or identified in any
manner by any Governmental Authority charged with administering or enforcing
any Environmental Law as a Hazardous Material disposal or removal site,
"Super Fund" clean-up site, or candidate for removal of Hazardous Materials
or closure of a Hazardous Material disposal site pursuant to any
Environmental Law, (ii) notice of any Lien arising under or in connection
with any Environmental Law that has attached to any revenues of, or to, any
of its owned or leased real Properties, or (iii) summons, citation, notice,
directive, letter, or other written communication from any Governmental
Authority concerning any intentional or unintentional action or omission by
such Consolidated Entity in connection with its ownership or leasing of any
real Property resulting in the releasing, spilling, leaking, pumping,
pouring, emitting, emptying, dumping, or otherwise disposing of any Hazardous
Material into the environment resulting in any violation of any Environmental
Law.
Section 6.15. No Default on Outstanding Judgments or Orders. Each of
the Consolidated Entities has satisfied all judgments and no Consolidated
Entity is in default with respect to any final judgment (except such as have
been appropriately stayed), writ, injunction or decree of any Governmental
Authority.
Section 6.16. No Defaults on Other Agreements. No Consolidated Entity
is a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate restriction
which could have a Material Adverse Effect. No Consolidated Entity is in
default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement
or instrument material to its business to which it is a party.
Section 6.17. Labor Disputes and Acts of God. Neither the business
nor the properties of any Consolidated Entity are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could have a Material
Adverse Effect.
Section 6.18. Governmental Regulation. No Consolidated Entity is
subject to regulation under the Public Utility Holding Company Act of 1935,
the Investment Company Act of 1940, the Interstate Commerce Act, the Federal
Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
Section 6.19. No Forfeiture. Neither any Consolidated Entity nor any
of its Affiliates is engaged in or proposes to be engaged in the conduct of
any business or activity which could result in a Forfeiture Proceeding which
could reasonably be expected to have a Material Adverse Effect and no
Forfeiture Proceeding against any of them is pending or threatened.
Section 6.20. Solvency. The present fair saleable value of the assets
of each Obligor after giving effect to all the transactions contemplated by
the Facility Documents and the funding of the Commitments and the issuance of
Letters of Credit hereunder exceeds the amount that will be required to be
paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of such Obligor as they mature. The Property of each
Obligor does not constitute unreasonably small capital for such Obligor to
carry out its business as now conducted and as proposed to be conducted
including the capital needs of such Obligor. Each Obligor does not intend
to, nor does such Obligor believe that it will, incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be received by such Obligor, and of amounts to be payable
on or in respect of debt of such Obligor). The cash available to such
Obligor after taking into account all other anticipated uses of the cash of
such Obligor, is anticipated to be sufficient to pay all such amounts on or
in respect of debt of such Obligor when such amounts are required to be paid.
Each Obligor does not believe that final judgments against it in actions for
money damages will be rendered at a time when, or in an amount such that,
such Obligor will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable
amount of such judgments in any such actions and the earliest reasonable time
at which such judgments might be rendered). The cash available to such
Obligor after taking into account all other anticipated uses of the cash of
such Obligor (including the payments on or in respect of debt referred to in
this Section 6.20), is anticipated to be sufficient to pay all such judgments
promptly in accordance with their terms.
Section 6.21. Security Documents. The Security Documents are
effective to create in favor of the Collateral Agent for the ratable benefit
of the Secured Parties a legal, valid and enforceable Lien on and security
interest in all right, title and interest of each Obligor in the Collateral
securing the Senior Obligations. Except for Liens permitted under Section
8.03 entitled to priority by law, the Collateral Agent has a fully perfected
and continuing first priority Lien on and security interest in the
Collateral, free from all Liens other than Liens permitted under Section
8.03.
Section 6.22. Senior Indebtedness. The obligations of the Borrower
hereunder and under the other Facility Documents constitute "Senior
Indebtedness" under and as defined in (a) the Multicare Indenture with
respect to the Multicare Subordinated Notes and (b) the Multicare Fiscal
Agency Agreement with respect to the Multicare Subordinated Debentures.
Section 6.23. Representations and Warranties in the ADS Acquisition
Documents. The Administrative Agent has received a complete and correct copy
of the ADS Acquisition Documents and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof.
The ADS Acquisition Agreement has been duly executed and delivered by
ADS/Multicare, and to the best knowledge of the Borrower, each of the ADS
Owner Parties and the ADS Seller Entities. Each of the ADS Acquisition
Documents is in full force and effect. Each of the representations and
warranties of ADS/Multicare and, to the best knowledge of the Borrower, of
each of the ADS Owner Parties and the ADS Seller Entities set forth in the
ADS Acquisition Agreement is true and correct in all material respects.
Except as otherwise disclosed in Schedule 6.1.3 to the ADS Acquisition
Agreement, the execution, delivery and performance of the ADS Acquisition
Agreement by ADS/Multicare, and to the best knowledge of the Borrower, each
of the ADS Owner Parties and the ADS Seller Entities do not and will not
violate any provision of, or require any filing, registration, consent or
approval under any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any indenture, agreement, lease or
instrument to which such Person is a party or by which they or their
Properties may be bound or affected. All transactions contemplated by the
ADS Acquisition Documents consummated on or prior to the Closing Date have
been consummated without any material amendment, waiver or modification of
the terms thereof.
Section 6.24. Representations and Warranties in the ADS Synthetic Lease
Documents. The Administrative Agent has received a complete and correct copy
of the ADS Synthetic Lease Documents and all amendments thereto, waivers
relating thereto and other side letters or agreements affecting the terms
thereof. The ADS Participation Agreement has been duly executed and
delivered by each of the Borrower and the ADS Lessees. Until such time as
the ADS Lessees shall have exercised their "Purchase Option" or "Remarketing
Option" (as each such term is defined in Appendix A to the ADS Participation
Agreement) as to the ADS Mortgaged Properties under the ADS Synthetic Lease,
each of the ADS Synthetic Lease Documents is in full force and effect. Each
of the representations and warranties of each of the Borrower and the ADS
Lessees set forth in the ADS Participation Agreement is true and correct in
all material respects. The execution, delivery and performance of the ADS
Participation Agreement by each of the Borrower and the ADS Lessees do not
and will not violate any provision of, or require any filing (other than the
filings required under the Security Documents), registration, consent or
approval under any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any indenture, agreement, lease or
instrument to which such Person is a party or by which they or their
Properties may be bound or affected. All transactions contemplated by the
ADS Participation Agreement consummated on or prior to the Closing Date have
been consummated without amendment, waiver or modification of the terms
thereof.
ARTICLE 7. AFFIRMATIVE COVENANTS.
So long as any Note shall remain unpaid, any Letter of Credit shall
remain outstanding or any Bank shall have any Commitment under this
Agreement, the Borrower shall:
Section 7.01. Maintenance of Existence. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate,
partnership or limited liability company existence and good standing in the
jurisdiction of its incorporation, and qualify and remain qualified as a
foreign corporation or partnership in each jurisdiction in which such
qualification is required except with respect to sales or other dispositions
by the Borrower or such Subsidiary permitted under Section 8.07.
Section 7.02. Conduct of Business. Continue, and cause each of its
Subsidiaries to continue, to engage in the business of the same general type
as conducted by it on the date of this Agreement; except where such failure
to so participate could not reasonably be expected to have a Material Adverse
Effect, continue, and cause each of its Subsidiaries to continue, its
participation in any and all plans and programs for third party payment and
reimbursement from, and claims against, private insurers and employee
assistance programs, and plans or programs for payment and reimbursement from
federal, state or local governmental agencies, or private or quasi-public
insurers, including, without limitation, Managed Care Plans, Medicaid,
Medicare, CHAMPUS, Blue Cross and Blue Shield; except where such failure to
so comply could not reasonably be expected to have a Material Adverse Effect,
comply, and cause each of its Subsidiaries to comply, with any and all rules,
regulations, standards, procedures and decrees necessary to maintain its or
any of its participation in any such third party payment or reimbursement
programs or plans; and prepare and file, and cause each of its Subsidiaries
to prepare and file, all applicable cost reports to all third party payors to
the extent required by third party payors.
Section 7.03. Maintenance of Properties. Maintain, keep and preserve,
and cause each of its Subsidiaries to maintain, keep and preserve, all of its
Property (including, without limitation, all Licenses, accreditations,
rights, privileges and franchises) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted and except for sales, leases, assignments, transfers or other
dispositions of Property permitted under Section 8.07.
Section 7.04. Maintenance of Records. Keep, and cause each of its
Subsidiaries to keep, adequate records and books of account, in which
complete entries will be made in accordance with GAAP, reflecting all
financial transactions of the Consolidated Entities.
Section 7.05. Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks
as are usually carried by companies engaged in the same or a similar business
and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof; provided that the Borrower or such
Subsidiary may maintain a system of self-insurance with respect to health
insurance for its employees so long as such system is in accord with sound
financial practices of similar businesses maintaining similar systems and so
long as the Borrower or such Subsidiary shall maintain adequate insurance
reserves in accordance with GAAP and in accordance with sound actuarial and
insurance principles.
Section 7.06. Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (including, without limitation, any
Environmental Law), such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its Property; provided that items of the
foregoing description need not be paid while being contested in good faith
and by appropriate proceedings diligently pursued as long as adequate book
reserves have been established with respect thereto.
Section 7.07. Right of Inspection. At any reasonable time and from
time to time, and upon reasonable advance notice but no advance notice shall
be required if a Default or an Event of Default then exists, permit the
Administrative Agent or any Bank or any agent or representative thereof, to
examine and make copies and abstracts from the records and books of account
of, and visit the properties of, any Consolidated Entity, and to discuss the
affairs, finances and accounts of such Consolidated Entity with any of their
respective officers and directors and independent accountants.
Section 7.08. Reporting Requirements. Furnish directly to each of the
Banks:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Consolidated Entities, a consolidated
balance sheet of the Consolidated Entities and consolidating balance sheets
of each of the Subsidiary Co-Borrowers as of the end of such fiscal year and
a consolidated income statement and statement of cash flows and changes in
stockholders' equity of the Consolidated Entities and consolidating income
statements of each of the Subsidiary Co-Borrowers for such fiscal year, all
in reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the prior
fiscal year and all prepared in accordance with GAAP and as to the
consolidated statements accompanied by an opinion thereon acceptable to the
Administrative Agent and each of the Banks by KPMG Peat Marwick or other
independent accountants of national standing selected by the Consolidated
Entities; provided that delivery within the period specified above of copies
of the Annual Report on Form 10-K of the Borrower filed with the Securities
and Exchange Commission, together with the adjustments to such consolidated
statements necessary to provide consolidating information for each of the
Subsidiary Co-Borrowers, shall be deemed to satisfy the requirements of this
Section 7.08(a) so long as such Form 10-K as so adjusted shall contain the
information referred to in this Section 7.08(a);
(b) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Consolidated Entities, a consolidated balance sheet of the Consolidated
Entities as of the end of such quarter and a consolidated income statement
and statement of cash flows and changes in stockholders' equity of the
Consolidated Entities for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, all in reasonable detail
and stating in comparative form the respective consolidated figures for the
corresponding date and period in the previous fiscal year and all prepared in
accordance with GAAP and certified by a senior officer of the Consolidated
Entities (subject to year-end adjustments); provided that delivery within the
period specified above of copies of the Quarterly Report on Form 10-Q of the
Borrower filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this Section 7.08(b) so long as such Form 10-Q
shall contain the information referred to in this Section 7.08(b);
(c) simultaneously with the delivery of the financial
statements referred to above, a Compliance Certificate of a senior officer of
the Borrower (i) certifying that to the best of his knowledge no Default or
Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof
and the action which is proposed to be taken with respect thereto, and (ii)
with computations demonstrating compliance with the covenants contained in
Article 9;
(d) simultaneously with the delivery of the annual financial
statements referred to in Section 7.08(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making
the examination necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which constitutes a Default
or Event of Default, or if such accountants shall have obtained knowledge of
any such condition or event, specifying in such certificate each such
condition or event of which they have knowledge and the nature and status
thereof;
(e) promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting any Consolidated Entity which, if determined adversely to such
Consolidated Entity, could have a Material Adverse Effect;
(f) as soon as possible and in any event within 10 days after
becoming aware of or having reason to become aware of the occurrence of each
Default or Event of Default a written notice setting forth the details of
such Default or Event of Default and the action which is proposed to be taken
by the Consolidated Entities with respect thereto;
(g) as soon as possible, and in any event within ten days
after any Consolidated Entity knows or has reason to know that any of the
events or conditions specified below with respect to any Plan or
Multiemployer Plan have occurred or exist, a statement signed by a senior
officer of such Consolidated Entity setting forth details respecting such
event or condition and the action, if any, which such Consolidated Entity or
an ERISA Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by such
Consolidated Entity or an ERISA Affiliate with respect to such event or
condition): (i) any reportable event, as defined in Section 4043(b) of ERISA,
with respect to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA
including, without limitation, the failure to make on or before its due date
a required installment under Section 412(m) of the Code or Section 302(e) of
ERISA, shall be a reportable event regardless of the issuance of any waivers
in accordance with Section 412(d) of the Code) and any request for a waiver
under Section 412(d) of the Code for any Plan; (ii) the distribution under
Section 4041 of ERISA of a notice of intent to terminate any Plan or any
action taken by such Consolidated Entity or an ERISA Affiliate to terminate
any Plan; (iii) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by such Consolidated Entity or any ERISA Affiliate
of a notice from a Multiemployer Plan that such action has been taken by PBGC
with respect to such Multiemployer Plan; (iv) the complete or partial
withdrawal from a Multiemployer Plan by such Consolidated Entity or any ERISA
Affiliate that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt of such Consolidated Entity or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA; (v) the institution
of a proceeding by a fiduciary or any Multiemployer Plan against such
Consolidated Entity or any ERISA Affiliate to enforce Section 515 of ERISA,
which proceeding is not dismissed within 30 days; (vi) the adoption of an
amendment to any Plan that pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA would result in the loss of tax-exempt status of the
trust of which such Plan is a part if such Consolidated Entity or an ERISA
Affiliate fails to timely provide security to the Plan in accordance with the
provisions of said Sections; (vii) any event or circumstance exists which may
reasonably be expected to constitute grounds for such Consolidated Entity or
any ERISA Affiliate to incur liability under Title IV of ERISA or under
Sections 412(c)(11) or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans increase after
the date of this Agreement in an amount which is material in relation to the
financial condition of the Consolidated Entities; provided, however, that
such increase shall not be deemed to be material so long as it does not
exceed during any consecutive 3 year period $500,000;
(h) promptly after the request of any Bank, copies of each
annual report filed pursuant to Section 104 of ERISA with respect to each
Plan (including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information referred to in Section
103) and each annual report filed with respect to each Plan under Section
4065 of ERISA; provided, however, that in the case of a Multiemployer Plan,
such annual reports shall be furnished only if they are available to such
Consolidated Entity or an ERISA Affiliate;
(i) promptly after the sending or filing thereof, copies of
all proxy statements, financial statements and reports which any Consolidated
Entity sends to its stockholders, and copies of all regular, periodic and
special reports, and all registration statements which such Consolidated
Entity files with the Securities and Exchange Commission or any Governmental
Authority which may be substituted therefor, or with any national securities
exchange;
(j) promptly after becoming aware of the existence of any
violation or alleged violation in any material respect of any law, rule,
regulation or order (including, without limitation, any Environmental Law) by
any Consolidated Entity and with respect to any Health Care Facility, prompt
written notice of and a description of the nature of such violation or
alleged violation, what action such Consolidated Entity is taking or proposes
to take with respect thereto and, when known, any action taken, or proposed
to be taken, by any Governmental Authority with respect thereto;
(k) promptly after the commencement thereof or promptly after
any Consolidated Entity knows of the commencement or threat thereof, notice
of any Forfeiture Proceeding; and
(l) such other information respecting the condition or
operations, financial or otherwise, of any Consolidated Entity as the
Administrative Agent or any Bank may from time to time reasonably request.
Section 7.09. Additional Subsidiary Guarantors. Cause each of its
Subsidiaries acquired or formed after the date hereof to become a "Subsidiary
Guarantor" under the Multicare Guaranty and thereby an "Obligor" hereunder
pursuant to an Assumption Agreement, and shall deliver such proof of
corporate action, incumbency of officers, opinions of counsel and other
documents as is consistent with those delivered by the Obligors pursuant to
Article 5 hereof upon the Closing Date or as the Administrative Agent shall
have reasonably requested; provided that (a) each of Berkeley Haven Limited
Partnership, Canterbury of Shepherdstown Limited Partnership, Care Haven
Associates Limited Partnership, Glenmark Properties I, Limited Partnership
and Marlinton Associates Limited Partnership (collectively, the "Glenmark
Partnerships") shall not be required to become a "Subsidiary Guarantor"
hereunder until such time as such Glenmark Partnership shall become a
wholly-owned Subsidiary of any Obligor and (b) any Subsidiary acquired or
formed after the date hereof shall not be required to become a "Subsidiary
Guarantor" under the Multicare Guaranty and an "Obligor" hereunder if such
Subsidiary shall be liable with respect to Permitted Acquisition Debt
provided that (i) the original principal amount of such Permitted Acquisition
Debt shall not be less than 66 2/3% of the value of all Property held by such
Subsidiary (such value to be reasonably determined by the Administrative
Agent and, unless such valuation shall be unreasonable, such value shall be
deemed to be the acquisition price), (ii) the aggregate value of all Property
held by such Subsidiary and all other Consolidated Entities who are liable
for Permitted Acquisition Debt (such value to be reasonably determined by the
Administrative Agent and, unless such valuation shall be unreasonable, such
value shall be deemed to be the respective acquisition prices) shall not
exceed the result of (A) $30,000,000 minus (B) the product of (x) 1.50 times
(y) the value of all Property subject to any conditional sale or other title
retention agreement or a Capital Lease entered into after the Initial Closing
Date (such value to be reasonably determined by the Administrative Agent and,
unless such valuation shall be unreasonable, such valuation shall be deemed
to be the acquisition price), (iii) no Default or Event of Default exists or
would exist after giving effect to such Acquisition and (iv) if such
Subsidiary shall cease to be liable for such Permitted Acquisition Debt, it
shall then become a "Subsidiary Guarantor" and an "Obligor" hereunder.
ARTICLE 8. NEGATIVE COVENANTS.
So long as any Note shall remain unpaid, any Letter of Credit shall
remain outstanding or any Bank shall have any Commitment under this
Agreement, the Borrower shall not:
Section 8.01. Debt. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt, except:
(a) Debt of the Obligors under this Agreement, the Notes, the
Letters of Credit, the Interest Rate Protection Agreements and the other
Facility Documents;
(b) Debt described in Schedule IV and, to the extent indicated
on Schedule IV, any renewals, extensions or refinancings thereof, provided
that the principal amount thereof does not increase;
(c) Debt consisting of Guaranties permitted pursuant to
Section 8.02;
(d) Debt of any Obligor to any other Obligor so long as (i)
if such Debt is secured, such Debt is evidenced by a promissory note and such
note together with such security is pledged as collateral for the Loans and
the other obligations under the Facility Documents and (ii) if such Debt is
evidenced by a promissory note or other instrument, such note or other
instrument is pledged to the Administrative Agent as collateral for the Loans
and the other obligations under the Facility Documents;
(e) accounts payable to trade creditors for goods or services
and current operating liabilities (other than for borrowed money), in each
case incurred in the ordinary course of business and paid within prescribed
time limits that are in the ordinary course of business, unless contested in
good faith and by appropriate proceedings;
(f) Permitted Mortgage Debt of any Consolidated Entity other
than a Subsidiary Co-Borrower incurred pursuant to this Section 8.01(f)
provided that the aggregate principal amount of such Debt for all
Consolidated Entities does not exceed at any time $26,000,000;
(g) Debt of any Consolidated Entity other than a Subsidiary
Co-Borrower incurred pursuant to this Section 8.01(g) secured by Purchase
Money Liens permitted by Section 8.03(k) provided that the aggregate
principal amount of such Debt for all Consolidated Entities does not exceed
at any time $20,000,000;
(h) Debt under the ADS Synthetic Lease Documents so long as
the aggregate principal amount of such Debt does not exceed $60,000,000;
(i) Debt under the Converted Synthetic Lease so long as the
aggregate principal amount of such Debt does not exceed $30,000,000;
(j) Debt of the Borrower under documentary and standby letters
of credit so long as the aggregate reimbursement obligations under such
letters of credit does not exceed at any time $15,000,000;
(k) Consolidated Subordinated Debt; and
(l) Debt of each of the Glenmark Partnerships in favor of
Century Care Management, Inc. so long as (i) the aggregate amount of such
Debt of each such Glenmark Partnership does not exceed $2,500,000 and (ii)
such Debt is evidenced by a promissory note on terms reasonably acceptable to
the Administrative Agent which shall be secured by a first priority Lien on
all of the personal Property of such Glenmark Partnership and pledged to the
Administrative Agent as collateral for the Senior Obligations.
Section 8.02. Guaranties, Etc. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Guaranty, except:
(a) the Multicare Guaranty;
(b) Guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business;
(c) Guaranties by the Borrower of Debt permitted under Section
8.01 and leases permitted under Section 8.04; and
(d) Guaranties constituting Debt so long as such Debt is
permitted under Section 8.01.
Section 8.03. Liens. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Lien upon or with respect to any of its Property, now owned or hereafter
acquired, except:
(a) Liens in favor of the Collateral Agent on behalf of the
Secured Parties securing the Senior Obligations;
(b) Liens for taxes or assessments or other government charges
or levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than 90 days, or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(d) Liens under workmen's compensation, unemployment
insurance, social security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of
business;
(f) judgment and other similar Liens arising in connection
with court proceedings; provided that the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by any Consolidated Entity of the Property
encumbered thereby in the normal course of its business or materially impair
the value of the Property subject thereto;
(h) Liens securing obligations of any Obligor to any other
Obligor;
(i) Liens described on Schedule IV and, to the extent such
Lien secures Debt permitted under Section 8.01(b), Liens that secure any
renewals, extensions or refinancings of such Debt, but not the extension of
such Lien to other Property; and
(j) Liens securing Permitted Mortgage Debt; provided that the
obligations secured by each such Lien are permitted by the provisions of
Section 8.01(f);
(k) Purchase Money Liens; provided that: (i) the Person owning
any Property subject to such Lien is acquired or any Property subject to such
Lien is acquired or constructed by any Consolidated Entity and the Lien on
any such Property is created within 180 days of such acquisition or
construction; (ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed 100% of the lesser of cost or fair market value as
of the time of acquisition or construction of the Property covered thereby to
such Consolidated Entity acquiring or constructing the same; (iii) each such
Lien shall attach, in the case of an acquisition, only to the Property so
acquired, personal Property associated with such Property and fixed
improvements thereon and, in the case of construction, only to the Property
so constructed, personal Property associated with such Property, the land
thereunder and the fixed improvements attached thereto; and (iv) the
obligations secured by such Lien are permitted by the provisions of Section
8.01(g) and the related expenditure is permitted under Section 8.13; and
(l) Liens in any Health Care Facility, including, without
limitation, in all real Property or personal Property used or to be used in
connection with such Health Care Facility (other than any "accounts" as such
term is defined in the Uniform Commercial Code as in effect in the
jurisdiction in which such security interest is to be perfected), all
equipment and fixtures therein and thereon and all general intangibles,
including, without limitation, all Operating Agreements and Licenses related
thereto, granted in connection with the sale and simultaneous leaseback of
such Health Care Facility otherwise permitted hereunder by any Subsidiary of
the Borrower to any Person other than an Affiliate, which Liens secure the
obligations of such Subsidiary under such lease.
Section 8.04. Leases. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any obligation as lessee for the rental or hire of any Property, except:
(a) leases (other than Capital Leases and Synthetic Leases)
which do not in the aggregate require the Consolidated Entities on a
consolidated basis to make payments (excluding taxes, insurance, maintenance
and similar expense which any Consolidated Entity is required to pay under
the terms of any lease) in any fiscal year of the Consolidated Entities in
excess of $25,000,000;
(b) leases between any Obligor and any other Obligor so long
as such lease is subordinated to the Liens of the Collateral Agent under the
Security Documents; and
(c) Capital Leases and Synthetic Leases permitted by Section
8.01, Section 8.03 and Section 8.13.
Section 8.05. Investments. Make, or permit any of its Subsidiaries to
make, any loan or advance to any Person or purchase or otherwise acquire, or
permit any of its Subsidiaries to purchase or otherwise acquire, any capital
stock, assets, obligations or other securities of, make any capital
contribution to, or otherwise invest in, or acquire any interest in, any
Person, except:
(a) cash or Cash Equivalents;
(b) Property to be used or useful in the ordinary course of
business of the Consolidated Entities;
(c) for stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to any
Consolidated Entity and stock, obligations or securities received in
connection with sales and leases of Property to the extent permitted under
Section 8.07(d);
(d) to or in any Obligor or in any corporation that
concurrently with such investment becomes an Obligor;
(e) in connection with an Acceptable Acquisition;
(f) Guaranties permitted by Section 8.02;
(g) Capital Expenditures permitted by Section 8.13;
(h) in connection with acquisition of the ownership interests
in ADS Palm Chelmsford, Inc., ADS Reservoir Waltham, Inc., Hingham Healthcare
Limited Partnership, The Apple Valley Limited Partnership, The Recuperative
Center Limited Partnership, Courtyard Nursing Care Center Partnership and
Charlton Nursing Care Center pursuant to the terms to the ADS Acquisition
Documents; and
(i) for other investments not listed in clauses (a) through
(h), inclusive, provided that the aggregate amount of such investments for
all Consolidated Entities does not exceed at any time $10,000,000.
Section 8.06. Dividends. Declare or pay any dividends, purchase,
redeem, retire or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or make any distribution of assets to its stockholders
as such whether in cash, assets or in obligations of the Borrower, or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares
of its capital stock, or make any other distribution by reduction of capital
or otherwise in respect of any shares of its capital stock, or make, or
permit any of its Subsidiaries to make, payments of interest on, or payments
or prepayments of principal of, or payments (or setting apart of money for a
sinking or other analogous fund) for the purchase, redemption, retirement or
other acquisition of principal or interest, on Consolidated Subordinated
Debt, except that so long as no Default or Event of Default exists or would
exist after giving effect to such payment:
(a) the Borrower may declare and deliver dividends and make
distributions payable solely in its common stock;
(b) the Borrower may purchase or otherwise acquire shares of
its capital stock by exchange for or out of the proceeds received from a
substantially concurrent issue of new shares of its capital stock;
(c) the Borrower may prepay, redeem, retire or otherwise
acquire Multicare Subordinated Notes and Multicare Subordinated Debentures by
exchange for or out of the proceeds received from a substantially concurrent
issue of new shares of its capital stock or from a substantially concurrent
incurrence of new Consolidated Subordinated Debt;
(d) the Borrower may prepay, redeem, retire or otherwise
acquire Multicare Subordinated Notes so long as for each fiscal year of the
Consolidated Entities, the aggregate face amount of Multicare Subordinated
Notes subject to acquisition for such fiscal year does not exceed (i) with
respect to the fiscal year ending on December 31, 1996, $7,500,000 and (ii)
with respect to each fiscal year ending thereafter, 25% of Consolidated Net
Income for the immediately preceding fiscal year;
(e) the Borrower may make payments of interest on the
Multicare Subordinated Notes in accordance with the terms of the Multicare
Indenture; and
(f) the Borrower may make payments of interest on the
Multicare Subordinated Debentures in accordance with the terms of the
Multicare Fiscal Agency Agreement.
Section 8.07. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, lease,
assign, transfer or otherwise dispose of, any of its now owned or hereafter
acquired Property (including, without limitation, shares of stock and
indebtedness, receivables and leasehold interests); except:
(a) for inventory disposed of in the ordinary course of
business;
(b) the sale or other disposition of Property no longer used
or useful in the conduct of its business;
(c) any Obligor other than a Subsidiary Co-Borrower may sell,
lease, assign, or otherwise transfer its Property to any other Obligor;
(d) any Consolidated Entity (including, without limitation,
any Subsidiary Co-Borrower so long as the Term Note to which it is a party is
paid off in connection with any such sale or lease) may sell or lease any
Property to a Person other than an Affiliate for consideration consisting of
not less then 80% cash provided that (i) the fair market value of such
Property together with the fair market value of all other Property sold or
leased during the same fiscal year of the Consolidated Entities does not
exceed $40,000,000, (ii) such sale or lease has been approved in good faith
by the Board of Directors of such Consolidated Entity, (iii) no Default or
Event of Default exists or would exist after giving effect to such
disposition and (iv) the Borrower believes in good faith that the
Consolidated Entities will continue to be in compliance with the financial
covenants contained in Article 9 on a pro forma basis;
(e) leases of portions of the Health Care Facilities to
tenants which use such leased premises for specialty use or uses incidental
to the operation of a Health Care Facility (including, without limitation, a
pharmacy, gift shop, or physical or occupational therapy and rehabilitation);
and
(f) transfer of Property in connection with an investment
permitted under Section 8.05.
Section 8.08. Stock of Subsidiaries, Etc. Except as permitted by
Section 8.07 or Section 8.10, sell or otherwise dispose of any shares of
capital stock of any of its Subsidiaries, or permit any such Subsidiary to
issue any additional shares of its capital stock, except directors'
qualifying shares.
Section 8.09. Transactions with Affiliates. Enter, or permit any
Subsidiary to enter, into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary than would obtain in a comparable arm's length transaction with a
Person not an Affiliate. Without limiting the generality of the foregoing,
this Section 8.09 shall not prohibit any transaction described on Schedule
VIII.
Section 8.10. Mergers, Etc. Except as permitted under Section 8.07,
merge or consolidate with, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to,
any Person, or acquire all or substantially all of the assets or the business
of any Person (or enter into any agreement to do any of the foregoing), or
permit any of its Subsidiaries to do so, except that:
(a) any Obligor other than a Subsidiary Co-Borrower may merge
into or consolidate with or transfer assets to any other Obligor; and
(b) any Consolidated Entity may effect any Acquisition not
prohibited by Section 8.11.
Section 8.11. Acquisitions. Make, or permit any of its Subsidiaries
to make, any Acquisition other than an Acceptable Acquisition.
Section 8.12. No Activities Leading to Forfeiture. Engage in or
propose to be engaged in, or permit any of its Subsidiaries to engage in or
propose to be engaged in, the conduct of any business or activity which could
result in a Forfeiture Proceeding which could have a Material Adverse Effect.
Section 8.13. Capital Expenditures. Make or commit to make, or permit
any of its Subsidiaries to make or commit to make, any Capital Expenditure if
the aggregate amount of Consolidated Capital Expenditures incurred during any
fiscal year of the Consolidated Entities would exceed (a) during the fiscal
year ending on December 31, 1997, $70,000,000, (b) during the fiscal year
ending on December 31, 1998, $75,000,000, (c) during the fiscal year ending
on December 31, 1999, $80,000,000 or (d) during the fiscal year ending on
December 31, 2000, $85,000,000.
Section 8.14. Amendments or Waivers of Certain Documents. (a) Defease
or make, or permit any of its Subsidiaries to defease or make, any payments
the effect of which is to defease, or make any voluntary or optional payment
or prepayment on, or redemption of, any Permitted Mortgage Debt (except in
connection with dispositions of any Health Care Facility permitted under
Section 8.07 or refinancings of Permitted Mortgage Debt permitted hereunder)
or Consolidated Subordinated Debt (except as permitted under Section 8.06) in
whole or in part or (b) amend, supplement or otherwise change (or agree to
any amendment or other change of), or permit any of its Subsidiaries to
amend, supplement or otherwise change (or agree to any amendment or other
change of), the terms of any Permitted Mortgage Debt or Consolidated
Subordinated Debt, if the effect of such amendment, supplement or change is
to increase the interest rate on such Consolidated Subordinated Debt, advance
the dates upon which payments of principal or interest are due on such
Permitted Mortgage Debt or such Consolidated Subordinated Debt (including any
change that adds or modifies mandatory prepayments), change, in a manner
materially adverse to the Consolidated Entities or which confers additional
rights on the holders thereof, any event of default or covenant (or any
definition relating thereto) with respect to such Consolidated Subordinated
Debt, change the redemption or repurchase provisions with respect to such
Permitted Mortgage Debt or Consolidated Subordinated Debt in a manner
materially adverse to the Consolidated Entities or which confers additional
rights on the holders thereof, change the subordination provisions of such
Consolidated Subordinated Debt or otherwise increase the obligations of the
obligor or confer additional rights on the holders of any Permitted Mortgage
Debt or Consolidated Subordinated Debt without, in each case, obtaining the
prior written consent of the Required Banks to such amendment or change.
Section 8.15. Rights under Other Agreements. Amend, waive or
otherwise relinquish, or permit any of its Subsidiaries to amend, waive or
otherwise relinquish, any of its rights or causes of action under or arising
out of, any material provisions, if such amendment, waiver or relinquishment
could reasonably be expected to have a Material Adverse Effect, of any
Operating Agreement.
Section 8.16. Restrictions. Enter into, or suffer to exist, or permit
any of its Subsidiaries to enter into, or suffer to exist, any agreement with
any Person other than the Banks that (a) prohibits, requires the consent of
such Person for or limits the ability of (i) any Obligor to pay dividends or
make other distributions or pay Debt owed to any other Obligor, make loans or
advances to any other Obligor or transfer any of its Property which
constitute Collateral under the Security Documents to any other Obligor, (ii)
any Obligor to create, incur, assume or suffer to exist any Lien upon any of
its Property or revenues which constitute Collateral under the Security
Documents, whether now owned or hereafter acquired, or (iii) any Obligor to
enter into any modification or supplement of the Facility Documents; or (b)
contains financial covenants which, taken as a whole, are more restrictive on
the Consolidated Entities than the financial covenants contained in Article
9. Notwithstanding Section 8.16(a)(ii) and (a)(iii), the Subsidiaries of the
Borrower may enter into or suffer to exist (w) encumbrances permitted under
Section 8.03 or restrictions binding upon any Person at the time such Person
becomes a Subsidiary so long as such encumbrances or restrictions were not
incurred or assumed in contemplation of such Person becoming a Subsidiary,
(x) restrictions contained in security agreements or mortgages permitted
under this Agreement, (y) customary anti-assignment and encumbrance clauses
in contracts or leases prohibiting the assignment of such leases or contracts
or (z) encumbrances or restrictions in effect on the date of this Agreement
and renewals thereof.
ARTICLE 9. FINANCIAL COVENANTS.
So long as any Note shall remain unpaid, any Letter of Credit shall
remain outstanding or any Bank shall have any Commitment under this Agreement
and as determined as of the end of each fiscal quarter of the Consolidated
Entities:
Section 9.01. Fixed Charge Coverage Ratio. The Borrower shall
maintain at all times a Fixed Charge Coverage Ratio of not less than 2.00 to
1.00.
Section 9.02. Modified Senior Leverage Ratio. The Borrower shall
maintain at all times a Modified Senior Leverage Ratio of not greater than
(a) if such time is before December 31, 1997, 4.00 to 1.00, (b) if such time
is on or after December 31, 1997 and before December 31, 1998, 3.75 to 1.00
or (c) if such time is on or after December 31, 1998, 3.50 to 1.00.
Section 9.03. Modified Leverage Ratio. The Borrower shall maintain at
all times a Modified Leverage Ratio of not greater than (a) if such time is
before December 31, 1997, 5.00 to 1.00, (b) if such time is on or after
December 31, 1997 and before December 31,1998, 4.75 to 1.00 or (c) if such
time is on or after December 31, 1998, 4.50 to 1.00.
Section 9.04. Interest Coverage Ratio. The Borrower shall maintain at
all times an Interest Coverage Ratio of not less than 3.00 to 1.00.
Section 9.05. Minimum Net Worth. The Borrower shall maintain at all
times Consolidated Net Worth of not less than the sum of (a) $185,000,000
plus (b) the aggregate sum of the Fiscal Quarter Net Worth Increase Amounts
calculated for each fiscal quarter of the Consolidated Entities ending after
December 31, 1996.
ARTICLE 10. EVENTS OF DEFAULT.
Section 10.01. Events of Default. Any of the following events shall
be an "Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any
Note or any Reimbursement Obligation on or before the date when due and
payable; or (ii) fail to pay interest on any Note or any fee or other amount
due hereunder on or before five (5) days after the date when due and payable;
(b) any representation or warranty made or deemed made by any
Consolidated Entity in this Agreement or in any other Facility Document or
which is contained in any certificate, document, opinion, financial or other
statement furnished at any time under or in connection with any Facility
Document shall prove to have been incorrect in any material respect on or as
of the date made;
(c) (i) the Borrower shall fail to perform or observe any
term, covenant or agreement contained in Section 2.03 or 3.02 or Articles 8
or 9; or (ii) any Obligor shall fail to perform or observe any term, covenant
or agreement on its part to be performed or observed (other than the
obligations specifically referred to elsewhere in this Section 10.01) in any
Facility Document to which it is a party and such failure shall continue for
30 consecutive days;
(d) any Consolidated Entity shall: (i) fail to pay any Debt
and/or obligations under any lease aggregating in excess of 5% of
Consolidated Net Worth (other than the payment obligations described in (a)
above), or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); (ii) fail
to perform or observe any term, covenant or condition on its part to be
performed or observed under any agreement or instrument relating to any such
Debt or any such lease, when required to be performed or observed, if the
effect of such failure to perform or observe is to accelerate, or to permit
the acceleration of, after the giving of notice or passage of time, or both,
the maturity of such Debt or of the obligations under such lease; or any such
Debt or any such obligations shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or (iii) a "Default" or
"Event of Default" shall have occurred under and as defined in the ADS
Synthetic Lease Documents;
(e) any Consolidated Entity: (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; or (ii) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (iv) shall have
had any such petition or application filed or any such proceeding shall have
been commenced, against it, in which an adjudication or appointment is made
or order for relief is entered, or which petition, application or proceeding
remains undismissed for a period of 30 days or more; or shall be the subject
of any proceeding under which its assets may be subject to seizure,
forfeiture or divestiture (other than a proceeding in respect of a Lien
permitted under Section 8.03(b)); or (v) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its
Property; or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of 30 days or more;
(f) one or more judgments, decrees or orders for the payment
of money in excess of 5% of Consolidated Net Worth in the aggregate shall be
rendered against any Consolidated Entity and such judgments, decrees or
orders shall continue unsatisfied and in effect for a period of 60
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal;
(g) any event or condition shall occur or exist with respect
to any Plan or Multiemployer Plan concerning which any Consolidated Entity is
under an obligation to furnish a report to the Bank in accordance with
Section 7.08(g) hereof and as a result of such event or condition, together
with all other such events or conditions, such Consolidated Entity or any
ERISA Affiliate has incurred or in the opinion of the Banks is reasonably
likely to incur a liability to a Plan, a Multiemployer Plan, the PBGC, or a
Section 4042 Trustee (or any combination of the foregoing) which is material
in relation to the financial position of the Consolidated Entities; provided,
however, that any such amount shall not be deemed to be material so long as
all such amounts do not exceed $500,000 in the aggregate during the term of
this Agreement;
(h) the Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material (as
specified in Section 7.08(g)(viii) hereof);
(i) (i) any Person (other than Daniel Straus or Moshael
Straus) or two or more Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rules 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 25% or more
of the outstanding shares of voting stock of the Borrower; (ii) Daniel Straus
or Moshael Straus shall have ceased to continue to serve as an executive
officer and director of the Borrower and shall have ceased to continue in the
operational and managerial capacities in which he now serves or in enhanced
operational or managerial capacities with the Borrower; provided the Borrower
shall have 180 days to replace Daniel Straus or Moshael Straus with an
appropriate executive officer and director who shall be satisfactory in all
respects to the Required Banks or otherwise satisfy the Required Banks with
respect to the continuity of management; or (iii) during any period of 12
consecutive months, commencing before or after the date of this Agreement,
individuals who at the beginning of such 12-month period were directors (or
persons nominated by such individuals) of the Borrower cease for any reason
to constitute a majority of the board of directors of the Borrower;
(j) any Forfeiture Proceeding shall have been commenced or any
Consolidated Entity shall have given any Bank written notice of the
commencement of any Forfeiture Proceeding as provided in Section 7.08(k)
which, in either case, could reasonably be expected to have a Material
Adverse Effect;
(k) (i) any of the Security Documents shall at any time after
its execution and delivery and for any reason cease to create a valid and
perfected first priority security interest in and to the Property purported
to be subject to such Agreement; or (ii) any Facility Document shall cease to
be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Obligor or any
Obligor shall deny it has any further liability or obligation under the
Security Documents or any Obligor shall fail to perform any of its
obligations thereunder;
(l) any of the Fee Owners shall at any time (i) own any asset
except for a Health Care Facility; (ii) create, incur, assume or have
outstanding any Debt or other liabilities or obligations except for (A) Debt
permitted by Section 8.01, (B) liabilities as lessor arising under leases of
such Health Care Facility to another Obligor plus related liabilities that
arise solely from the interest of such Fee Owner in real Property and (C)
Permitted Mortgage Debt; (iii) enter into any transaction of merger,
consolidation or amalgamation other than with or into another Obligor, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution) except as otherwise permitted under this Agreement; or (iv)
engage in any other business other than the holding of title to the Health
Care Facilities; or
(m) Management Fees during any fiscal year of the Consolidated
Entities shall exceed 40% of Consolidated EBITDA for such year.
Section 10.02. Remedies. If any Event of Default shall occur and be
continuing, the Administrative Agent shall, upon request of the Required
Banks, by notice to the Borrower (a) declare the Commitments to be
terminated, whereupon the same shall forthwith terminate and so shall the
obligations of the Issuing Bank to issue any Letters of Credit, (b) declare
the outstanding principal of the Notes, all interest thereon and all other
amounts payable under this Agreement and the Notes to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by
the Borrower and the Subsidiary Co-Borrowers and (c) direct the Borrower to
pay to the Administrative Agent an amount, to be held as cash security in the
cash collateral account held by the Administrative Agent under Section 3.08
equal to the Letter of Credit Obligations then outstanding; provided that, in
the case of an Event of Default referred to in Section 10.01(e) or Section
10.01(i)(i) above, the Commitments shall be immediately terminated, and the
Notes, all interest thereon and all other amounts payable under this
Agreement shall be immediately due and payable without notice, presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower and the Subsidiary Co-Borrowers. If an
Event of Default shall occur and be continuing, the Administrative Agent and
each Bank may exercise all of the rights and remedies conferred in this
Agreement and in each of the other Facility Documents; it being expressly
understood that no such remedy is intended to be exclusive of any other
remedy or remedies; but each and every remedy shall be cumulative and shall
be in addition to every other remedy given in this Agreement or the other
Facility Documents or now or hereafter existing at law or in equity or by
statute, and may be exercised from time to time as often as may be deemed
expedient by the Administrative Agent and such Bank.
ARTICLE 11. THE ADMINISTRATIVE AGENT.
Section 11.01. Appointment, Powers and Immunities of Administrative
Agent. Each Bank hereby irrevocably (but subject to removal by the Required
Banks pursuant to Section 11.09) appoints and authorizes the Administrative
Agent to act as its Administrative Agent hereunder and under any other
Facility Document with such powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement and any other Facility
Document, together with such other powers as are reasonably incidental
thereto. The Administrative Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and any other Facility
Document, and shall not by reason of this Agreement be a trustee for any
Bank. The Administrative Agent shall not be responsible to the Banks for any
recitals, statements, representations or warranties made by any Consolidated
Entity or any officer or official of such Consolidated Entity or any other
Person contained in this Agreement or any other Facility Document, or in any
certificate or other document or instrument referred to or provided for in,
or received by any of them under, this Agreement or any other Facility
Document, or for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Facility
Document or any other document or instrument referred to or provided for
herein or therein, for the perfection or priority of any collateral security
for the Senior Obligations or for any failure by any Obligor to perform any
of its obligations hereunder or thereunder. The Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible, except as
to money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for
any action taken or omitted to be taken by it or them hereunder or under any
other Facility Document or in connection herewith or therewith, except for
its or their own gross negligence or willful misconduct.
Section 11.02. Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by
or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat each Bank
as the holder of the Senior Obligations attributable to it for all purposes
hereof unless and until a notice of the assignment or transfer thereof
satisfactory to the Administrative Agent signed by such Bank shall have been
furnished to the Administrative Agent but the Administrative Agent shall not
be required to deal with any Person who has acquired a participation in any
Senior Obligation from a Bank. As to any matters not expressly provided for
by this Agreement or any other Facility Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks and any
other holder of all or any portion of any Senior Obligation.
Section 11.03. Defaults. The Administrative Agent shall not be deemed
to have knowledge of the occurrence of a Default or Event of Default (other
than the non-payment of principal of or interest on the Loans to the extent
the same is required to be paid to the Administrative Agent for the account
of the Banks) unless the Administrative Agent has received notice from a Bank
or any Obligor specifying such Default or Event of Default and stating that
such notice is a "Notice of Default." In the event that the Administrative
Agent receives such a notice of the occurrence of a Default or Event of
Default, the Administrative Agent shall give prompt notice thereof to the
Banks (and shall give each Bank prompt notice of each such non-payment). The
Administrative Agent shall (subject to Section 11.08) take such action with
respect to such Default or Event of Default which is continuing as shall be
directed by the Required Banks; provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of the Banks; and provided further that the Administrative Agent
shall not be required to take any such action which it determines to be
contrary to law.
Section 11.04. Rights of Administrative Agent as a Bank. With respect
to its Commitment and the Senior Obligations held by it, NationsBank, N.A. in
its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include NationsBank, N.A. in its
capacity as a Bank. NationsBank, N.A. and its affiliates may (without having
to account therefor to any Bank) accept deposits from, lend money to (on a
secured or unsecured basis), and generally engage in any kind of banking,
trust or other business with, any Consolidated Entity (and any of its
affiliates) as if it were not acting as the Administrative Agent, and
NationsBank, N.A. may accept fees and other consideration from any
Consolidated Entity for services in connection with this Agreement or
otherwise without having to account for the same to the Banks. Although
NationsBank, N.A. and its affiliates may in the course of such relationships
and relationships with other Persons acquire information about any
Consolidated Entity, its Affiliates and such other Persons, the
Administrative Agent shall have no duty to disclose such information to the
Banks.
Section 11.05. Indemnification of Administrative Agent. The Banks
agree to indemnify the Administrative Agent (to the extent not reimbursed
under Section 12.03 or under the applicable provisions of any other Facility
Document, but without limiting the obligations of the Primary Obligors under
Section 12.03 or such provisions), ratably in accordance with the aggregate
unpaid amount of the Senior Obligations held by the Banks (without giving
effect to any participations, in all or any portion of such Senior
Obligations, sold by them to any other Person) (or, if no Senior Obligations
are at the time outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of
this Agreement, any other Facility Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby
or thereby (including, without limitation, the costs and expenses which the
Primary Obligors are obligated to pay under Section 12.03 or under the
applicable provisions of any other Facility Document but excluding, unless a
Default or Event of Default has occurred, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents or instruments; provided that no Bank shall be liable for any of
the foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
Section 11.06. Documents. The Administrative Agent will forward to
each Bank, promptly after the Administrative Agent's receipt thereof, a copy
of each report, notice or other document required by this Agreement or any
other Facility Document to be delivered to the Administrative Agent for such
Bank.
Section 11.07. Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Consolidated Entities and decision to enter into this Agreement and that it
will, independently and without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any other Facility
Document. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by the Consolidated Entities of
this Agreement or any other Facility Document or any other document referred
to or provided for herein or therein or to inspect the properties or books of
any Consolidated Entity. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of any
Consolidated Entity (or any of their Affiliates) which may come into the
possession of the Administrative Agent or any of its affiliates. The
Administrative Agent shall not be required to file this Agreement, any other
Facility Document or any document or instrument referred to herein or
therein, for record or give notice of this Agreement, any other Facility
Document or any document or instrument referred to herein or therein, to
anyone.
Section 11.08. Failure of Administrative Agent to Act. Except for
action expressly required of the Administrative Agent hereunder, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall have received further assurances
(which may include cash collateral) of the indemnification obligations of the
Banks under Section 11.05 in respect of any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action.
Section 11.09. Resignation or Removal of Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent
as provided below, the Administrative Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Required Banks;
provided that the Borrower and the other Banks shall be promptly notified
thereof. Upon any such resignation or removal, the Required Banks shall have
the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Required Banks'
removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a bank which has an office in the State
of New Jersey or the State of New York. The Required Banks or the retiring
Administrative Agent, as the case may be, shall upon the appointment of a
successor Administrative Agent promptly so notify the Borrower and the other
Banks. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Article
11 shall continue in effect for its benefit in respect of any actions taken
or omitted to be taken by it while it was acting as the Administrative Agent.
Section 11.10. Amendments Concerning Agency Function. The
Administrative Agent shall not be bound by any waiver, amendment, supplement
or modification of this Agreement or any other Facility Document which
affects its duties hereunder or thereunder unless it shall have given its
prior consent thereto.
Section 11.11. Liability of Administrative Agent. The Administrative
Agent shall not have any liabilities or responsibilities to any Obligor on
account of the failure of any Bank to perform its obligations hereunder or to
any Bank on account of the failure of any Obligor to perform its obligations
hereunder or under any other Facility Document.
Section 11.12. Transfer of Agency Function. Without the consent of
the Obligor or any Bank, the Administrative Agent may at any time or from
time to time transfer its functions as Administrative Agent hereunder to any
of its offices in the United States wherever located, provided that the
Administrative Agent shall promptly notify the Borrower and the Banks
thereof.
Section 11.13. Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Bank, the
Borrower or any Subsidiary Co-Borrower (any as appropriate being the "Payor")
prior to (or, if the Payor is a Bank making a Variable Rate Loan, on) the
date on which such Bank is to make payment hereunder to the Administrative
Agent of the proceeds of a Loan or the Borrower or any Subsidiary Borrower is
to make payment to the Administrative Agent, as the case may be (either such
payment being a "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall
not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Administrative Agent, the recipient of such payment (and, if
such recipient is the Borrower or any Subsidiary Co-Borrower and the Payor
Bank fails to pay the amount thereof to the Administrative Agent forthwith
upon demand, the Borrower or such Subsidiary Co-Borrower) shall, on demand,
repay to the Administrative Agent the amount made available to it together
with interest thereon for the period from the date such amount was so made
available by the Administrative Agent until the date the Administrative Agent
recovers such amount at a rate per annum equal to the average daily Federal
Funds Rate for such period.
Section 11.14. Withholding Taxes. Each Bank represents that as of the
Closing Date it is entitled to receive any payments to be made to it
hereunder without the withholding of any tax and will furnish to the
Administrative Agent such forms, certifications, statements and other
documents as the Administrative Agent may request from time to time to
evidence such Bank's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Administrative Agent to comply with any
applicable laws or regulations relating thereto. Without limiting the effect
of the foregoing, if any Bank is not created or organized under the laws of
the United States of America or any state thereof, in the event that the
payment of interest by the Borrower is treated for U.S. income tax purposes
as derived in whole or in part from sources from within the U.S., such Bank
will furnish to the Administrative Agent Form 4224 or Form 1001 of the
Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such
Bank's exemption from the withholding of U.S. tax with respect thereto. The
Administrative Agent shall not be obligated to make any payments hereunder to
such Bank in respect of any Senior Obligation or such Bank's Commitment until
such Bank shall have furnished to the Administrative Agent the requested
form, certification, statement or document. Each Primary Obligor agrees to
pay to any such Bank such additional amounts as are necessary in order that
the net payment of any amount due to such Bank in respect of any U.S. tax
imposed with respect to such payment will not be less than the amount stated
herein to be then due and payable.
Section 11.15. Several Obligations and Rights of Banks. The failure
of any Bank to make any Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to
make a Loan to be made by such other Bank. The amounts payable at any time
hereunder to each Bank shall be a separate and independent debt, and each
Bank shall be entitled to protect and enforce its rights arising out of this
Agreement, and it shall not be necessary for any other Bank to be joined as
an additional party in any proceeding for such purpose.
Section 11.16. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided: (a) each borrowing under Section 2.04 shall be made from
the Banks, each reduction or termination of the amount of the Commitments
under Section 2.07 shall be applied to the Commitments of the Banks (except
as otherwise provided under Section 2.14), and each payment of commitment fee
accruing under Section 2.11 shall be made for the account of the Banks, pro
rata according to the amounts of their respective unused Commitments; (b)
each conversion under Section 2.05 of Loans of a particular type (but not
conversions provided for by Section 4.04), shall be made pro rata among the
Banks holding Loans of such type according to the respective principal
amounts of such Loans by such Banks; (c) each prepayment and payment of
principal of or interest on Loans of a particular type, particular class and
a particular Interest Period shall be made to the Administrative Agent for
the account of the Banks holding Loans of such type and Interest Period pro
rata in accordance with the respective unpaid principal amounts of such Loans
of such Interest Period held by such Banks; and (d) each prepayment and
payment of fees under Section 3.09(a) and Letter of Credit Obligations shall
be made pro rata in accordance with the pro rata share of the Banks in the
Letter of Credit Obligations held by each of them.
Section 11.17. Sharing of Payments Among Banks. If a Bank shall
obtain payment of any principal of or interest on any Senior Obligation made
by it through the exercise of any right of setoff, banker's lien,
counterclaim, or by any other means, it shall promptly purchase from the
other Banks participations in (or, if and to the extent specified by such
Bank, direct interests in) the Senior Obligations made by the other Banks in
such amounts, and make such other adjustments from time to time as shall be
equitable to the end that all the Banks shall share the benefit of such
payment (net of any expenses which may be incurred by such Bank in obtaining
or preserving such benefit) pro rata in accordance with the unpaid amount of
the Senior Obligations held by each of them. To such end the Banks shall
make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Primary Obligors agree that any Bank so
purchasing a participation (or direct interest) in the Senior Obligations
held by other Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation (or direct
interest). Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness
of any Obligor.
Section 11.18. Co-Agents. Each of the Borrower, the Administrative
Agent and the Banks agree that each of Summit Bank, The Bank of Montreal,
Credit Lyonnais New York Branch, CoreStates Bank, N.A. and PNC Bank, National
Association are appointed as "co-agents" hereunder. None of Summit Bank, The
Bank of Montreal, Credit Lyonnais New York Branch, CoreStates Bank, N.A. and
PNC Bank, National Association, as a "co-agent", shall have any right, power,
obligation, liability, responsibility or duty hereunder or under any other
Facility Document other than those applicable to all Banks. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks
so identified as co-agents in taking or not taking action hereunder or under
the other Facility Documents.
ARTICLE 12. MISCELLANEOUS.
Section 12.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower (and if such
amendment or waiver affects the Term Note to which it is a party, the
affected Subsidiary Co-Borrowers), the Administrative Agent and the Required
Secured Parties, or by the Borrower (and if such amendment or waiver affects
the Term Note to which it is a party, the affected Subsidiary Co-Borrowers)
and the Administrative Agent acting with the consent of the Required Secured
Parties and any provision of this Agreement may be waived by the Required
Secured Parties or by the Administrative Agent acting with the consent of the
Required Secured Parties; provided that no amendment, modification or waiver
shall, unless by an instrument signed by all of the Banks or by the
Administrative Agent acting with the consent of all of the Banks:
(a) increase or extend the term, or extend the time or waive any requirement
for the reduction or termination, of the Commitments (provided that the Banks
acknowledge that Revolving Credit Commitments may be converted into Converted
Synthetic Lease Commitments in accordance with Section 2.14), (b) extend the
date fixed for the payment of principal of or interest on any Loan, any
Letter of Credit Obligation or any fee payable hereunder, (c) reduce the
amount of any payment of principal thereof or the rate at which interest is
payable thereon or any fee payable hereunder, (d) reduce, modify, amend or
waive fees or indemnities, including amounts payable pursuant to Section
2.11, Section 3.09, Article 4 or Section 12.03, (e) alter the terms of this
Section 12.01, (f) amend the definition of the term "Required Banks", the
term "Required Secured Parties" or the term "Senior Obligations" or amend,
waive or modify any provision of any Senior Obligation Document requiring
action by the "Required Banks" or the "Required Secured Parties", (g) waive
any of the conditions precedent set forth in Section 5.01 or, only with
respect to Defaults or Events of Default arising under Section 10.01(a) or
Section 10.01(e), Section 5.02, (h) discharge any Subsidiary Guarantor from
the Multicare Guaranty or release any Primary Obligor from its obligations
hereunder (except for releases otherwise required under the Intercreditor
Agreement), (i) consent to the assignment or transfer by any Obligation Party
of its rights or obligations hereunder or under any Facility Document or
(j) release all or any part of the "Collateral" under and as defined in each
of the Security Documents (except for releases otherwise required under the
Intercreditor Agreement) and provided, further, that any amendment of Article
11 hereof or any amendment which increases the obligations of the
Administrative Agent hereunder shall require the consent of the
Administrative Agent. No failure on the part of the Administrative Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof or preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 12.02. Usury. Anything herein to the contrary
notwithstanding, the obligations of the Borrower and the Subsidiary Co-Borrowers
under this Agreement, the Notes and the other Facility Documents
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions
of law applicable to a Bank limiting rates of interest which may be charged
or collected by such Bank.
Section 12.03. Expenses. The Borrower (and, insofar it is responsible
for such expenses, each Subsidiary Co-Borrower) shall reimburse the
Administrative Agent and the Banks on demand for all reasonable costs,
expenses, and charges (including, without limitation, fees and charges of
external legal counsel) incurred by the Administrative Agent in connection
with the preparation and the performance, or by the Administrative Agent or
any Bank in connection with the enforcement of this Agreement or the other
Facility Documents. The Borrower (and, insofar it is responsible for such
expense, each Subsidiary Co-Borrower) agrees to indemnify the Administrative
Agent and each Bank and their respective directors, officers, employees,
affiliates and agents from, and hold each of them harmless against, any and
all losses, liabilities, claims, damages or expenses incurred by any of them
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to or arising out of this Agreement or the other
Facility Documents or to any actual or proposed use by the Borrower and the
Subsidiary Co-Borrowers of the proceeds of the Loans or the Letters of
Credit, including without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation or litigation
or other proceedings (but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or wilful
misconduct of the Person to be indemnified).
Section 12.04. Survival. The obligations of the Primary Obligors
under Sections 4.01, 4.05 and 12.03 shall survive the repayment of the Senior
Obligations and the termination of the Commitments and the Letters of Credit.
Section 12.05. Assignment; Participations.
(a) This Agreement shall be binding upon, and shall inure to
the benefit of, the Borrower, the Subsidiary Co-Borrowers, the Administrative
Agent, the Banks and their respective successors and assigns, except that the
Primary Obligors may not assign or transfer their rights or obligations
hereunder. Each Bank may assign, or sell participations in, all or any part
of any Senior Obligation to another bank or other entity provided that any
assignment or participation by any Bank of its rights and obligations in
respect of the Letters of Credit shall require the prior consent of the
Issuing Bank, such consent not to be unreasonably withheld, in which event
(i) in the case of an assignment, upon notice thereof by the Bank to the
Borrower with a copy to the Administrative Agent, the assignee shall have, to
the extent of such assignment (unless otherwise provided therein), the same
rights, benefits and obligations as it would have if it were a Bank
hereunder; and (ii) in the case of a participation, the participant shall
have no rights under the Facility Documents and all amounts payable by the
Borrower and the Subsidiary Co-Borrowers under Article 4 shall be determined
as if such Bank had not sold such participation. The agreement executed by
such Bank in favor of the participant shall not give the participant the
right to require such Bank to take or omit to take any action hereunder
except action directly relating to (i) the extension of a payment date with
respect to any portion of the principal of or interest on any amount
outstanding hereunder allocated to such participant, (ii) the reduction of
the principal amount outstanding hereunder or (iii) the reduction of the rate
of interest payable on such amount or any amount of fees payable hereunder to
a rate or amount, as the case may be, below that which the participant is
entitled to receive under its agreement with such Bank. Such Bank may
furnish any information concerning the Consolidated Entities in the
possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants); provided that such Bank
shall require any such prospective assignee or such participant (prospective
or otherwise) to agree in writing to maintain the confidentiality of such
information. In connection with any assignment pursuant to this paragraph
(a), the assigning Bank shall pay the Administrative Agent an administrative
fee for processing such assignment in the amount of $3,500.
(b) In addition to the assignments and participations
permitted under paragraph (a) above, any Bank may assign and pledge all or
any portion of the Senior Obligations held by it to (i) any affiliate of such
Bank or (ii) any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank. No such assignment
shall release the assigning Bank from its obligations hereunder.
Section 12.06. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except
as otherwise provided in this Agreement, notices shall be given to the
Administrative Agent by telephone, confirmed by telex, telecopy or other
writing, and to the Banks and to the Primary Obligor by ordinary mail or
telecopier addressed to such party at its address on the signature page of
this Agreement. Notices shall be effective: (a) if given by mail, 72 hours
after deposit in the mails with first class postage prepaid, addressed as
aforesaid; and (b) if given by telecopier, when the telecopy is transmitted
to the telecopier number as aforesaid; provided that notices to the
Administrative Agent and the Banks shall be effective upon receipt.
Section 12.07. Setoff. Each Primary Obligor agrees that, in addition
to (and without limitation of) any right of setoff, banker's lien or
counterclaim a Bank may otherwise have, each Bank shall be entitled, at its
option, to offset balances (general or special, time or demand, provisional
or final) held by it for the account of such Primary Obligor at any of such
Bank's offices, in Dollars or in any other currency, against any amount
payable by such Primary Obligor to such Bank under this Agreement, such
Bank's Note, any Letter of Credit or any other Facility Document which is not
paid when due (regardless of whether such balances are then due to such
Primary Obligor), in which case it shall promptly notify such Primary Obligor
and the Administrative Agent thereof; provided that such Bank's failure to
give such notice shall not affect the validity thereof. Payments by the
Primary Obligors hereunder shall be made without setoff or counterclaim.
Section 12.08. JURISDICTION; IMMUNITIES. (a) EACH OF THE PRIMARY
OBLIGORS, THE ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT
SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT ANY NOTE, ANY LETTER OF CREDIT OR ANY OTHER
FACILITY DOCUMENT, AND EACH OF THE PRIMARY OBLIGORS, THE ADMINISTRATIVE AGENT
AND THE BANKS HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR
FEDERAL COURT. EACH OF THE PRIMARY OBLIGORS, THE ADMINISTRATIVE AGENT AND
THE BANKS IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
PERSON AT ITS ADDRESS SPECIFIED IN SECTION 12.06. EACH OF THE PRIMARY
OBLIGORS, THE ADMINISTRATIVE AGENT AND THE BANKS AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW. EACH OF THE PRIMARY OBLIGORS FURTHER AGREES THAT TO THE EXTENT AN
ACTION OR PROCEEDING BROUGHT AGAINST THE ADMINISTRATIVE AGENT OR ANY BANK MAY
BE BROUGHT IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW
YORK COUNTY, THEN SUCH ACTION OR PROCEEDING SHALL BE BROUGHT ONLY IN NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. EACH OF THE
PRIMARY OBLIGORS, THE ADMINISTRATIVE AGENT AND THE BANKS FURTHER WAIVES ANY
OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING
IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. EACH OF THE PRIMARY
OBLIGORS, THE ADMINISTRATIVE AGENT AND THE BANKS WAIVES ANY RIGHT IT MAY HAVE
TO JURY TRIAL.
(b) Nothing in this Section 12.08 shall affect the right of
the Administrative Agent, any Bank or any Primary Obligor to serve legal
process in any other manner permitted by law or affect the right of the
Administrative Agent or any Bank to bring any action or proceeding against
any Primary Obligor or its Property in the courts of any other jurisdictions.
(c) To the extent that the Administrative Agent, any Bank or
any Primary Obligor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether from service or
notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its Property, the
Administrative Agent, such Bank or such Primary Obligor hereby irrevocably
waives such immunity in respect of its obligations under this Agreement, the
Notes and the other Facility Documents.
Section 12.09. Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 12.10. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.
Section 12.11. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by
signing any such counterpart.
Section 12.12. Integration. The Facility Documents set forth the
entire agreement among the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
Section 12.13. GOVERNING LAW. EACH OF THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS. EACH
LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH
LAWS OR RULES ARE DESIGNATED, THE UCP AND AS TO MATTERS NOT GOVERNED BY THE
UCP, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS.
Section 12.14. Confidentiality. Each Bank and the Administrative
Agent agrees (on behalf of itself and each of its affiliates, directors,
officers, employees and representatives) to use reasonable precautions to
keep confidential, in accordance with safe and sound banking practices, any
non-public information supplied to it by the Consolidated Entities pursuant
to this Agreement which is identified by the Consolidated Entities as being
confidential at the time the same is delivered to the Banks or the
Administrative Agent, provided that nothing herein shall limit the disclosure
of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for any of the Banks or the
Administrative Agent, (iii) to bank examiners, auditors or accountants, (iv)
in connection with any litigation to which any one or more of the Banks is a
party or (v) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee
or participant) agrees to use reasonable precautions to keep such information
confidential; and provided finally that in no event shall any Bank or the
Administrative Agent be obligated or required to return any materials
furnished by the Consolidated Entities.
Section 12.15. Treatment of Certain Information. The Primary Obligors
(a) acknowledge that services may be offered or provided to it (in connection
with this Agreement or otherwise) by each Bank or by one or more of their
respective subsidiaries or affiliates and (b) acknowledge that information
delivered to each Bank by the Consolidated Entities may be provided to each
such subsidiary and affiliate.
Section 12.16. Certain Subsidiary Co-Borrower Waivers and Releases.
To the fullest extent permitted by law, each Subsidiary Co-Borrower does
hereby waive: notice of any borrowings under this Agreement; notice of
adverse change in the financial condition of any Obligation Party or any
other fact that might increase such Subsidiary Co-Borrower's risk hereunder;
notice of presentment for payment, demand, protest, and notice thereof as to
the Notes or any other instrument; notice of any Default or Event of Default;
all other notices and demands to which such Subsidiary Co-Borrower might
otherwise be entitled (except if such notice or demand is specifically
otherwise required to be given to such Subsidiary Co-Borrower hereunder or
under the other Facility Documents); the right by statute or otherwise to
require any Secured Party to institute suit against any Obligation Party or
to exhaust the rights and remedies of any Secured Party or any Obligation
Party; any defense arising by reason of any disability or other defense
(other than the defense that the Senior Obligations shall have been fully and
finally performed and indefeasibly paid) of any Obligation Party or by reason
of the cessation from any cause whatsoever of the liability of any Obligation
Party in respect thereof; and any stay (except in connection with a pending
appeal), valuation, appraisal, redemption or extension law now or at any time
hereafter in force which, but for this waiver, might be applicable to any
sale of Property of such Subsidiary Co-Borrower made under any judgment,
order or decree based on this Agreement, and such Subsidiary Co-Borrower
covenants that it will not at any time insist upon or plead, or in any manner
claim or take the benefit or advantage of such law. Until all of the Senior
Obligations shall have been paid in full, none of the Subsidiary Co-Borrowers
shall have any right of subrogation, reimbursement, or indemnity whatsoever
in respect thereof and no right of recourse to or with respect to any assets
or Property of any Obligation Party. Each Subsidiary Co-Borrower consents
and agrees that, without notice to or by such Subsidiary Co-Borrower and
without affecting or impairing the obligations of such Subsidiary Co-Borrower
hereunder, each Secured Party, in the manner provided herein, by action or
inaction, may: compromise or settle, extend the period of duration or the
time for the payment, or discharge the performance of, or may refuse to, or
otherwise not, enforce, or may, by action or inaction, release all or any one
or more parties to, any one or more of the Notes or the other Facility
Documents; grant other indulgences to any Obligation Party in respect
thereof; amend or modify in any manner and at any time (or from time to time)
any one or more of the Notes, the Letters of Credit and the other Facility
Documents in accordance with Section 12.01 or otherwise; release or
substitute any one or more of the endorsers or guarantors of the Senior
Obligations whether parties hereto or not; and exchange, enforce, waive, or
release, by action or inaction, any security for the Senior Obligations
(including, without limitation, any of the collateral therefor) or any other
guaranty of any of the Senior Obligations. IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the day and year
first above written.
BORROWER:
THE MULTICARE COMPANIES, INC.,
a Delaware corporation
By BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
SUBSIDIARY CO-BORROWERS:
BREYUT CONVALESCENT CENTER, INC.,
a New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
ENCARE OF MENDHAM, INC., a New
Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF CEDAR GROVE,
INC., a New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF CINNAMINSON,
INC., a New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF EMERY, INC., a
Delaware corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF EWING, INC., a
New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF FAIR LAWN,
INC., a Delaware corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF MORRISTOWN,
INC., a New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF RIDGEWOOD,
INC., a New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HEALTH RESOURCES OF WEST ORANGE, INC., a Delaware corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
HOLLY MANOR ASSOCIATES OF NEW
JERSEY, L.P., a Delaware limited
partnership
By Encare of Mendham, Inc., its
General Partner
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
MERCERVILLE ASSOCIATES OF NEW
JERSEY, L.P., a Delaware limited
partnership
By Breyut Convalescent Center,
Inc., its General Partner
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
POMPTON ASSOCIATES L.P., a New
Jersey limited partnership
By Pompton Care, Inc.,
its General Partner
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
POMPTON CARE, INC., a New Jersey
corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
ROEPHEL CONVALESCENT CENTER, INC.,
a New Jersey corporation
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
THE STRAUS GROUP-OLD BRIDGE,
L.P., a New Jersey limited
partnership
By Health Resources of Emery, Inc.,
its General Partner
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
THE STRAUS GROUP-RIDGEWOOD L.P.,
a New Jersey limited partnership
By Health Resources of Ridgewood,
Inc., its General Partner
By: BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A.
By_____________________________________
Name:
Title:
Address for Notices:
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: Agency Services
Telecopier No.: (704) 386-9923
with a copy to:
767 Fifth Avenue
New York, NY 10153
Attention: Karim T. Assef
Telecopier No.: (212) 751-6909
BANKS:
NATIONSBANK, N.A.
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
767 Fifth Avenue
New York, NY 10153
Attention: Karim T. Assef
Telecopier No.: (212) 751-6909
BANKS:
SUMMIT BANK
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
214 Main Street, 2nd Floor
Hackensack, NJ 07602
Attn: James Andersen
Telecopier No.: (201) 646-9497
BANKS:
FLEET BANK, N.A.
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
1133 Sixth Avenue, 40th Floor
New York, NY 10036
Attn: Pauline McHugh
Telecopier No.: (212) 703-1744<PAGE>
BANKS:
THE BANK OF MONTREAL
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
115 S. Lasalle Street
12 West
Chicago, IL 60603
Attention: Daniel Brown
Telecopier No.: (312) 750-3783<PAGE>
BANKS:
CREDIT LYONNAIS NEW YORK BRANCH
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
Credit Lyonnais Building
1301 Avenue of the Americas
New York, NY 10019-6022
Attention: Marty Golden
Telecopier No.: (212) 261-3440<PAGE>
BANKS:
MELLON BANK, N.A.
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
610 West Germantown Pike
Room 19E-0246, Suite 200
Plymouth Meeting, PA 19462
Attention: Colleen Cunniffe
Telecopier No.: (610) 941-4136
BANKS:
KEY BANK
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
127 Public Square
Cleveland, OH 44114
Attention: Angela Mago
Telecopier No.: (216) 689-5970
BANKS:
THE FIRST NATIONAL BANK OF
CHICAGO
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
Public Banking Department
One First National Plaza
Mail Suite 0091
Chicago, IL 60670-0091
Attention: Patricia Schneeberger
Telecopier No.: (312) 732-2016
BANKS:
THE BANK OF NOVA SCOTIA
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
Suite 2700
600 Peachtree Street, N.E.
Atlanta, GA 30308
Attention: Carolyn Lopez
Telecopier No.: (404) 888-8998
BANKS:
CORESTATES BANK, N.A.
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
1339 Chestnut Street
P.O. Box 7618, FC 1-8-3-22
Philadelphia, PA 19107-7618
Attention: Geoffrey Smith
Telecopier No.: (215) 973-8448
BANKS:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
Capital Markets Group
301 South College Street
Charlotte, North Carolina 28288-0735
Attention: Sharon Mack
Telecopier No.: (704) 383-9144
BANKS:
TORONTO DOMINION (NEW YORK), INC.
By_____________________________________
Name:
Title:
Lending Office:
The Toronto Dominion Bank
Houston Agency
909 Fannin Street, 17th Floor
Houston, Texas 77010
Attention: Debbie Greene
Telecopier: (713) 951-9921
Address for Notices:
Health Care Finance, U.S.A. Division
31 West 52nd Street
New York, NY 10019-6101
Attention: Sara Tirner
Telecopier No.: (212) 974-0396
with a copy to:
The Toronto Dominion Bank
Houston Agency
909 Fannin Street, 17th Floor
Houston, Texas 77010
Attention: Debbie Greene
Telecopier: (713) 951-9921
BANKS:
PNC BANK, NATIONAL ASSOCIATION
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
MS: J2-JTTC-16-1
2 Tower Center
East Brunswick, NJ 08816
Attention: Karen Voight
Telecopier No.: (908) 220-3233
BANKS:
LTCB TRUST COMPANY
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
165 Broadway
New York, NY 10006
Attention: Yoshihide Nakagawa
Telecopier No.: (212) 608-2371
BANKS:
THE SANWA BANK, LIMITED
(NEW YORK BRANCH)
By_____________________________________
Name:
Title:
Lending Office and Address for
Notices:
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Attention: Paul Judicke
Telecopier No.: (212) 754-1304
MASTER LEASE, OPEN END MORTGAGE AND PURCHASE OPTION
THIS DOCUMENT SECURES FUTURE ADVANCES
dated as of December 11, 1996
among
ACADEMY NURSING HOME, INC.
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC.
PRESCOTT NURSING HOME, INC.
WILLOW MANOR NURSING HOME, INC.
ADS/MULTICARE, INC.
AND EACH OTHER PERSON AS A LESSEE IDENTIFIED HEREIN
each as a Lessee
and
SELCO SERVICE CORPORATION,
as the Lessor.
This Master Lease, Open End Mortgage and Purchase Option is subject to a lien in
favor of the Collateral Agent for the benefit of each of the Secured Parties.
This Master Lease, Open End Mortgage and Purchase Option has been executed in
several counterparts. To the extent, if any, that this Master Lease, Open
End Mortgage and Purchase Option constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no lien on this Master Lease, Open End Mortgage and Purchase
Option may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed
by NATIONSBANK, N.A., as the Collateral Agent for the Secured Parties, on or
following the signature page hereof.
This counterpart is [not] the original counterpart.
MASTER LEASE, OPEN END MORTGAGE AND PURCHASE OPTION
THIS DOCUMENT SECURES FUTURE ADVANCES
THIS MASTER LEASE, OPEN END MORTGAGE AND PURCHASE OPTION (this "Master
Lease"), dated as of December 11, 1996, between SELCO SERVICE CORPORATION, an
Ohio corporation, as the Lessor, and ACADEMY NURSING HOME, INC., a
Massachusetts corporation, NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC.,
a Massachusetts corporation, PRESCOTT NURSING HOME, INC., a Massachusetts
corporation, WILLOW MANOR NURSING HOME, INC., a Massachusetts corporation,
ADS/MULTICARE, INC., a Delaware corporation, and each other Subsidiary of the
Company that may from time to time become a Lessee under this Master Lease and
the other Operative Documents pursuant to the terms of Section 14.2 of the
Participation Agreement (each as a "Lessee"; and collectively, the
"Lessees").
W I T N E S S E T H:
WHEREAS, pursuant to a Participation Agreement dated as of the date hereof
(as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"), among The MultiCare Companies, Inc., a Delaware
corporation, as the Company, the Lessees, the Lessor, the various financial
institutions (the "Lenders") as are or may from time to time become Lenders
under the Loan Agreement, and NationsBank, N.A. as the Collateral Agent, the
Lessor and the Lenders have agreed to finance the Lessor's acquisition of each
Property and each Equity Interest;
WHEREAS, on each Acquisition Date, the Lessor will purchase a Property or
Properties or the Equity Interest or Equity Interests related thereto, as
described in the relevant Lease Supplement from one or more third parties
designated by the Company as agent for the Lessees;
WHEREAS, the Lessor desires to lease to each Lessee, and each Lessee
desires to lease from the Lessor, the Property described in the Lease Supplement
executed by such Lessee; and
WHEREAS, each Property will be subject to the terms of this Master Lease;
WHEREAS, additional Properties, Equity Interests and Improvements may be
financed from time to time up to the respective Commitments of the Participants;
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Master Lease have the respective meanings specified in
Appendix A to this Master Lease; and the rules of interpretation set forth in
Appendix A to this Master Lease shall apply to this Master Lease.
ARTICLE II
MASTER LEASE
2.1. Acceptance and Lease of Property. Subject to the conditions set
forth in the Participation Agreement, including without limitation the
satisfaction or waiver of the conditions set forth in Article VI thereof, the
Lessor hereby agrees to accept pursuant to the terms of the Participation
Agreement delivery on each Acquisition Date of the Property or Equity
Interest to be delivered by the seller thereof on such Acquisition Date and
simultaneously to demise and lease to the applicable Lessee hereunder and under
the Lease Supplement for the Term, the Lessor's interest in such Property, and
the Lessees hereby agree, expressly for the direct benefit of the Lessor, to
lease from the Lessor for the Term, the Lessor's interest in each Property.
2.2. Acceptance Procedure. Each Lessee hereby agrees that the execution
and delivery by any Lessee on each Acquisition Date of an appropriately
completed Lease Supplement in the form of Exhibit A hereto covering the Property
to be acquired by the Lessor on such Acquisition Date, shall, without further
act, constitute the irrevocable acceptance by such Lessee and all other Lessees
of all of the Property which is the subject of such Lease Supplement for all
purposes of this Master Lease and the other Operative Documents on the terms set
forth therein and herein, and that such Property shall be deemed to be included
in the leasehold estate of this Master Lease and shall be subject to the terms
and conditions of this Master Lease as of such Acquisition Date.
2.3. Term. The Term (the "Term") of this Master Lease with respect to any
Property shall begin on the Acquisition Date therefor and shall end on the fifth
anniversary of the Initial Acquisition Date, unless earlier terminated in
accordance with the provisions of this Master Lease or the Operative Documents.
2.4. Title. Each Property is leased to the respective Lessee without any
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, all Liens other than Lessor Liens) and all applicable Requirements
of Law and Property Legal Requirements. No Lessee shall in any event have any
recourse against the Lessor for any defect in or exception to title to any
Property other than resulting from Lessor Liens.
ARTICLE III
PAYMENT OF RENT
3.1. Rent.
(a) During the Term, the Lessees shall pay in arrears Basic Rent
(Interest/Yield on each Basic Rent Payment Date and on any date on which this
Master Lease shall terminate with respect to a Property leased by it or all
Properties. On each date that Basic Rent (Interest/Yield) is due hereunder,
each Lessee shall pay a portion of the Basic Rent (Interest/Yield) then due
equal to such Lessee's Allocation Percentage multiplied by the amount of Basic
Rent (Interest/Yield) due and owing on such date.
(b) Neither a Lessee's inability or failure to take possession of all or
any portion of a Property when timely delivered by the Lessor, whether or not
attributable to any act or omission of a Lessee or any act or omission of the
Lessor, or for any other reason whatsoever, shall delay or otherwise affect such
Lessee's obligation to pay Rent for such Property in accordance with the terms
of this Master Lease.
3.2. Payment of Rent. Rent shall be paid absolutely net to the Lessor, so
that this Master Lease shall yield to the Lessor the full amount thereof,
without setoff, deduction or reduction; provided, however, that this Section 3.2
shall not affect the Lessees' right to initiate independent legal action, in
equity or at law, to enforce the obligations of the Lessor under this Master
Lease.
3.3. Supplemental Rent. Each Lessee shall pay any and all Supplemental
Rent to (i) the Collateral Agent or the Lease Agent (as specified in Section
3.6), for the benefit of the Person entitled thereto (if the Person entitled to
such Supplemental Rent is a Secured Party) or (ii) directly to the Person
entitled thereto (if such Person is not a Secured Party), promptly as the
same shall become due and payable, and if such Lessee fails to pay any
Supplemental Rent, the Lessor shall have all rights, powers and remedies
provided for herein or by law or equity or otherwise in the case of nonpayment
of Basic Rent (Interest/Yield). Receipt of such amount by the Collateral Agent
or the Lease Agent, as applicable, shall be deemed to be receipt by the
Person entitled thereto, whereupon the Lessees shall be relieved of their
obligation to make any further payments to such Person with respect to such
amount of Supplemental Rent. Each Lessee shall pay to the Collateral Agent (or
the Lease Agent, if applicable), as Supplemental Rent, among other things, on
demand, to the extent permitted by applicable Requirements of Law, interest at
the applicable Overdue Rate on any installment of Basic Rent (Interest/Yield)
not paid when due for the period for which the same shall be overdue and on any
payment of Supplemental Rent not paid when due (other than Supplemental Rent
payments due with respect to Sections 13.7, 13.8, 13.9 and 13.10 of the
Participation Agreement which are due within five (5) days of demand by the
Collateral Agent or the Lease Agent, as applicable), for the period from
the due date until the same shall be paid. The expiration or other termination
of such Lessee's obligations to pay Basic Rent (Interest/Yield) hereunder shall
not limit or modify the obligations of such Lessee with respect to indemnity
obligations payable as Supplemental Rent. Unless expressly provided otherwise
in this Master Lease, in the event of any failure on the part of such Lessee to
pay and discharge any Supplemental Rent as and when due, such Lessee shall also
promptly pay and discharge any fine, penalty, interest or cost which may be
assessed or added under any agreement with a third party for nonpayment or late
payment of such Supplemental Rent, all of which shall also constitute
Supplemental Rent.
3.4. Method of Payment. Each payment of Rent shall be made by the Lessee
to the Collateral Agent, as assignee of the Lessor under the Assignment of Lease
and Rent, until such time as all obligations of the Company and the Subsidiary
Co-Borrowers owing to the Credit Facility Banks under the Credit Facility
Documents have been paid in full and all commitments of the Credit Facility
Banks thereunder have been permanently terminated (at which time such payments
shall be made to the Lease Agent in accordance with Section 3.6), prior to 11:00
a.m., New York City time to the Collateral Agent's (or the Lease Agent's, as the
case may be) account specified on Schedule I to the Participation Agreement in
funds consisting of lawful currency of the United States of America which shall
be immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day. Payments received
after 12:00 p.m., New York City time on the date due shall for the purpose of
Section 16.1 hereof be deemed received on such day; provided, however, that for
the purposes of the second sentence of Section 3.3 hereof, such payments shall
be deemed received on the next succeeding Business Day and, unless the
Collateral Agent (or the Lease Agent, as applicable) is otherwise able to invest
or employ such funds on the date received, subject to interest at the Overdue
Rate as provided in such Section 3.3.
3.5. Payments of Rent Constitute Senior Debt. Each party hereto
acknowledges that each payment of Rent (including without limitation Purchase
Option Rent) hereunder shall constitute "Senior Debt", as such term is used in
the Multicare Subordinated Debentures (as defined in the Credit Agreement).
3.6. Payments After Termination of Credit Agreement, etc. Each of the
parties hereto acknowledges and agrees that, after payment in full of all
obligations of the Company and the Subsidiary Co-Borrowers owing to the Credit
Facility Banks under the Credit Facility Documents and the permanent termination
of all commitments of the Credit Facility Banks thereunder, the assignment of
payments and rights made under the Assignment of Lease and Rent shall inure to
the benefit of the Lease Agent on behalf of the Lenders and, in furtherance of
the foregoing, all payments to be made under this Master Lease or any other
Operative Document to the Collateral Agent shall instead be made to the Lease
Agent.
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1. Quiet Enjoyment. Subject to Sections 2.4, 4.2 and 17.1 and subject
to the rights of the Lessor contained in Articles XV and XVI, each Lessee shall
peaceably and quietly have, hold and enjoy the Property leased by it for the
Term, free of any claim or other action by the Lessor or anyone claiming by,
through or under the Lessor (other than a Lessee). Such right of quiet
enjoyment is independent of, and shall not affect the Lessor's rights otherwise
to initiate legal action to enforce, the obligations of a Lessee under this
Master Lease.
4.2. Right to Inspect. During the Term, but not more than once each
calendar month and upon at least 30 days prior written notice from the Lessor
(except that no notice shall be required, and no limitations as to the frequency
of inspections shall apply, if a Lease Event of Default has occurred and is
continuing), each Lessee shall permit the Lessor, the Lenders and their
respective authorized representatives to inspect the Property leased to such
Lessee and subject to this Master Lease during normal business hours, provided
that such inspections shall not unreasonably interfere with such Lessee's
business operations at such Property.
ARTICLE V
NET LEASE, ETC.
5.1. Net Lease. This Master Lease shall constitute a net lease. Any
present or future law to the contrary notwithstanding, this Master Lease shall
not terminate, nor shall the Lessee be entitled to any abatement, suspension,
deferment, reduction, setoff, counterclaim, or defense with respect to the Rent,
nor shall the obligations of a Lessee hereunder be affected (except as expressly
herein permitted and by performance of the obligations in connection therewith)
by reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of any Property or any part thereof,
or the failure of any Property to comply with all Requirements of Law and
Property Legal Requirements, including any inability to occupy or use any such
Property by reason of such non-compliance; (ii) any damage to, removal,
abandonment, salvage, loss, contamination of or Release from, scrapping or
destruction of or any requisition or taking of any Property or any part thereof;
(iii) any restriction, prevention or curtailment of or interference with any use
of any Property or any part thereof; (iv) any defect in title to or rights to
any Property or any Lien on such title or rights or on any Property (other than
Lessor Liens); (v) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by the
Lessor, any Participant, the Lease Agent or the Collateral Agent; (vi) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to a Lessee, the Lessor, any
Participant, the Lease Agent, the Collateral Agent or any other Person, or any
action taken with respect to this Master Lease by any trustee or receiver
of a Lessee, the Lessor, any Participant, the Lease Agent, the Collateral Agent
or any other Person, or by any court, in any such proceeding; (vii) any claim
that a Lessee has or might have against any Person, including without limitation
the Lessor, any Participant, the Lease Agent, the Collateral Agent or any
vendor, manufacturer, contractor of or for any Property; (viii) any failure on
the part of the Lessor to perform or comply with any of the terms of this Master
Lease (other than performance by Lessor of its obligations set forth in Section
2.1 hereof), of any other Operative Document or of any other agreement; (ix) any
invalidity or unenforceability or illegality or disaffirmance of this Master
Lease against or by a Lessee or any provision hereof or any of the other
Operative Documents or any provision of any thereof; (x) the impossibility or
illegality of performance by a Lessee, the Lessor or both; (xi) any action by
any court, administrative agency or other Governmental Authority; (xii) any
restriction, prevention or curtailment of or interference with the construction
on or any use of any Property or any part thereof; or (xiii) any other cause or
circumstances whether similar or dissimilar to the foregoing and whether or not
a Lessee shall have notice or knowledge of any of the foregoing. Each Lessee's
agreement in the preceding sentence shall not affect any claim, action
or right such Lessee may have against the Lessor, any Participant, the Lease
Agent or theCollateral Agent. The parties intend that the obligations of each
Lessee hereunder shall be covenants and agreements that are separate and
independent from any obligations of the Lessor hereunder or under any other
Operative Documents and the obligations of each Lessee shall continue unaffected
unless such obligations shall have been modified or terminated in accordance
with an express provision of this Master Lease.
5.2. No Termination or Abatement. Each Lessee shall remain obligated
under this Master Lease in accordance with its terms and shall not take any
action to terminate, rescind or avoid this Master Lease (except as provided
herein), notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting the Lessor or any
Participant, or any action with respect to this Master Lease which may be taken
by any trustee, receiver or liquidator of the Lessor or any Participant or by
any court with respect to the Lessor or any Participant. Each Lessee hereby
waives all right (i) to terminate or surrender this Master Lease (except as
provided herein) or (ii) to avail itself of any abatement, suspension,
deferment, reduction, setoff, counterclaim (other than compulsory counterclaims)
or defense with respect to any Rent. Each Lessee shall remain obligated under
this Master Lease in accordance with its terms and such Lessee hereby waives any
and all rights now or hereafter conferred by statute or otherwise to modify or
to avoid strict compliance with its obligations under this Master Lease.
Notwithstanding any such statute or otherwise, each Lessee shall be bound by all
of the terms and conditions contained in this Master Lease.
5.3. No Bar. The provisions of this Article V shall not affect the
Lessees' right to initiate independent legal action, in equity or at law, to
enforce the obligations of the Lessor under this Master Lease.
ARTICLE VI
SUBLEASES
6.1. Subletting. Each Lessee may sublease any Property leased to it or
any portion thereof to any Person; provided, however, that no sublease or other
relinquishment of possession of any Property shall in any way discharge or
diminish any of such Lessee's obligations to the Lessor hereunder and such
Lessee shall remain directly and primarily liable under this Master Lease as to
the Property, or portion thereof, so sublet. Each sublease of any Property
shall expressly be made subject to and subordinated to this Master Lease and to
the rights of the Lessor hereunder.
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1. Condition of the Properties. EACH LESSEE ACKNOWLEDGES AND AGREES
THAT IT IS LEASING THE PROPERTY DESCRIBED IN THE LEASE SUPPLEMENT EXECUTED BY IT
"AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE
LESSOR, ANY LENDER, THE LEASE AGENT OR THE COLLATERAL AGENT AND IN EACH CASE
SUBJECT TO (A) THE EXISTING STATE OF TITLE (EXCLUDING LESSOR LIENS), (B) THE
RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN
ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND (D) VIOLATIONS OF
REQUIREMENTS OF LAW AND PROPERTY LEGAL REQUIREMENTS WHICH MAY EXIST ON THE DATE
HEREOF OR ON THE ACQUISITION DATE FOR SUCH PROPERTY. NONE OF THE LESSOR, ANY
LENDER, THE LEASE AGENT OR THE COLLATERAL AGENT HAS MADE OR SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) OR
SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR
LESSOR LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND NONE OF THE LESSOR OR THE
LENDERS SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER
THAN FOR LESSOR LIENS) OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO
COMPLY WITH ANY REQUIREMENT OF LAW OR PROPERTY LEGAL REQUIREMENT.
7.2. Risk of Loss. During the Term the risk of loss of or decrease in the
enjoyment and beneficial use of the Properties as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the respective Lessee, and the Lessor shall in no event
be answerable or accountable therefor.
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
8.1. Utility Charges. Each Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and other utilities used in or on the Property leased by it during the
Term. Such Lessee shall be entitled to receive any credit or refund with
respect to any utility charge paid by such Lessee. Any Lessee may, prior to the
payment of any such charges, contest the imposition of such charges if, in its
good faith determination, it has concluded that the payment thereof in the
amounts charged is not required, provided, that such nonpayment shall not
jeopardize such Lessee's ability to use and maintain such Property in accordance
with this Master Lease or impair the value of such Property.
8.2. Possession and Use of the Property. Each Property shall be used as a
long-term or specialized health care facility in a manner not less than the
standards applied by a Lessee and the Company for other comparable properties
owned or leased by such Lessee and the Company. Each Lessee shall pay, or cause
to be paid, all charges and costs required in connection with the use of the
Property leased by it as and to the extent required by this Master Lease. Each
Lessee shall not commit or permit any waste or abandonment of the Property
leased by it or any part thereof.
8.3. Compliance with Requirements of Law, Property Legal Requirements and
Insurance Requirements. Subject to the terms of Article XII relating to
permitted contests, each Lessee, at its sole cost and expense, shall (a) comply
in all material respects with all Requirements of Law (including all
Environmental Laws), Property Legal Requirements and Insurance Requirements
relating to the Property leased by it, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XX, whether or not compliance therewith shall
require structural or extraordinary changes in the Improvements or interfere
with the use and enjoyment of the Properties, and (b) procure, maintain and
comply in all material respects with all licenses, permits, orders, approvals,
consents and other authorizations required for the construction, use,
maintenance and operation of such Property and for the use, operation,
maintenance, repair and restoration of the Improvements. Notwithstanding the
preceding sentence, each Lessee shall be deemed to be in compliance with all
Environmental Laws for purposes of this Master Lease notwithstanding any
Environmental Violation if the severity of such Environmental Violation is less
than Federal, state or local standards requiring remediation or removal or, if
such standards are exceeded, remediation or removal is proceeding in accordance
with all applicable Environmental Laws.
8.4. Assignment by Lessee. No Lessee may assign this Master Lease or any
of its rights or obligations hereunder in whole or in part to any Person, except
that (i) a Lessee may assign its interest hereunder to any of its Affiliates so
long as the Company executes and delivers a confirmation of the Guaranty in form
and substance reasonably satisfactory to the Participants of all of such
Affiliates' obligations hereunder, and (ii) a Lessee may Sublease its Property
or portion thereof as permitted under Section 6.1.
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1. Maintenance and Repair; Return.
(a) Each Lessee, at its sole cost and expense, shall maintain its
Property in good condition (ordinary wear and tear excepted) and make all
necessary repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural or foreseen
or unforeseen, in each case in all material respects as required by all
Requirements of Law, Property Legal Requirements and Insurance Requirements and
on a basis and in no event less than the standards applied by such Lessee and
its Affiliates in the operation and maintenance of other comparable properties
owned or leased by such Lessee or its Affiliates.
(b) The Lessor shall under no circumstances be required to build any
improvements on any Property, make any repairs, replacements, alterations or
renewals of any nature or description to any Property, make any expenditure
whatsoever in connection with this Master Lease (other than for Advances made in
accordance with and pursuant to the terms of the Participation Agreement) or
maintain any Property in any way. Each Lessee waives any right to (i) require
the Lessor to maintain, repair, or rebuild all or any part of any Property or
(ii) make repairs at the expense of the Lessor pursuant to any Requirement of
Law, Property Legal Requirement, Insurance Requirement, contract, agreement, or
covenant, condition or restriction in effect at any time during the Term.
(c) Each Lessee shall, upon the expiration or earlier termination of
this Master Lease with respect to any Property (other than as a result of such
Lessee's purchase of such Property from the Lessor as provided herein), vacate
and surrender such Property to the Lessor in its then-current, "AS IS"
condition, subject to such Lessee's obligations under Sections 8.3, 9.1(a),
10.1, 11.1, 14.1(d), 14.2 and 20.1.
ARTICLE X
MODIFICATIONS, ETC.
10.1. Modifications, Substitutions and Replacements. During the Term,
each Lessee, at its sole cost and expense, may at any time and from time to time
make alterations, renovations, improvements and additions to the Property leased
by it or any part thereof and substitutions and replacements therefor
(collectively, "Modifications"); provided, however, that:
(i) except for any Modification required to be made pursuant to a
Requirement of Law or Property Legal Requirement (a "Required Modification"), no
Modification shall materially adversely affect the value or useful life of such
Property or any part thereof from that which existed immediately prior to such
Modification;
(ii) the Modification shall be done in a good and workmanlike manner;
(iii) such Lessee shall comply in all material respects with all
Requirements of Law (including all Environmental Laws), Property Legal
Requirements and Insurance Requirements applicable to the Modification,
including the obtaining of all permits and certificates of occupancy; and
(iv) subject to the terms of Article XII relating to permitted contests,
such Lessee shall pay all costs and expenses and shall discharge (or cause to be
insured or bonded over) within sixty (60) days after receiving notice thereof
any Liens arising with respect to the Modification.
All Modifications shall remain part of the realty and shall be subject to this
Master Lease and title thereto shall immediately vest in the Lessor; provided,
however, that Modifications that (x) are not Required Modifications, (y)
were not financed by the Lessor and (z) are readily removable without impairing
the value, utility or remaining useful life of the applicable Property, shall be
the property of the respective Lessee and shall not be subject to this Master
Lease. So long as no Lease Event of Default has occurred and is continuing,
each Lessee may place upon its Property any trade fixtures, machinery,
equipment, inventory or other property belonging to such Lessee or third parties
and may remove the same at any time during the Term, subject, however, to the
terms of Section 9.1(a); provided, however, that such trade fixtures, machinery,
equipment, inventory or other property do not impair the value or useful life of
the applicable Property.
10.2. Notice to the Lessor. If any Lessee reasonably expects the cost of
any Modification to its Property to exceed $1,000,000, such Lessee shall deliver
to the Lessor a brief written narrative of the work to be performed in
connection with such Modification prior to making such Modification.
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
11.1. Warrant of Title.
(a) Each Lessee agrees that except as otherwise provided herein and
subject to the terms of Article XII relating to permitted contests, such Lessee
shall not directly or indirectly create or allow to remain, and shall, within
sixty (60) days of receiving notice of same, discharge at its sole cost and
expense, any Lien (other than any Lessor Lien or Agent Lien), defect,
attachment, levy, title retention agreement or claim upon its Property or any
Lien, attachment, levy or claim not created by the Lessor with respect to the
Rent or with respect to any Lien or Agent Lien), defect, attachment, levy, title
retention agreement or claim upon its Property or any Lien, attachment, levy or
claim not created by the Lessor with respect to the Rent or with respect to any
or with respect to any amounts held by the Lessor, any other Participant, the
Lease Agent or the Collateral Agent pursuant to the Loan Agreement or the other
Operative Documents, other than Permitted Property Liens.
(b) Nothing contained in this Master Lease shall be construed as
constituting the consent or request of the Lessor, expressed or implied, to or
for the performance by any contractor, mechanic, laborer, materialman, supplier
or vendor of any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or to any
Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NONE OF THE LESSOR OR
THE LENDERS IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING A PROPERTY OR ANY PART
THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR
ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
THE LESSOR OR ANY LENDER IN AND TO ANY PROPERTY.
11.2. Grants and Releases of Easements; Lessor's Waivers. Provided that
no Lease Event of Default shall have occurred and be continuing and subject to
the provisions of Articles VII, IX and X and Section 8.3, the Lessor hereby
consents in each instance to the following actions by each Lessee, in the name
and stead of the Lessor, but at such Lessee's sole cost and expense: (a) the
granting of easements, licenses, rights-of-way and other rights and privileges
in the nature of easements reasonably necessary or desirable for the use,
repair, or maintenance of its Property as herein provided; (b) the release of
existing easements or other rights in the nature of easements which are for the
benefit of its Property; (c) if required by applicable Governmental Authority,
the dedication or transfer of unimproved portions of its Property for road,
highway or other public purposes; (d) the execution of amendments to any
covenants and restrictions affecting its Property; (e) such Lessee's obtaining
all necessary Governmental Actions or third party agreements necessary for the
performance and completion of any Modifications; and (f) such Lessee's taking
any other action or entering into any other agreement with respect to its
Property that such Lessee deems necessary or desirable; provided, however, that
in each case (i) such grant, release, dedication, transfer or amendment does not
materially impair the value or remaining useful life of the applicable Property,
(ii) such grant, release, dedication, transfer or amendment in such Lessee's
judgment is reasonably necessary or desirable in connection with the use,
maintenance, alteration or improvement of the applicable Property, (iii) such
grant, release, dedication, transfer or amendment will not cause the applicable
Property or any portion thereof to fail to comply in any material respect with
the provisions of this Master Lease or any other Operative Documents and all
Property Legal Requirements (including, without limitation, all applicable
zoning, planning, building and subdivision ordinances, all applicable
restrictive covenants and all applicable architectural approval requirements),
(iv) all governmental consents or approvals required prior to such grant,
release, dedication, transfer, annexation or amendment have been obtained, and
all filings required prior to such action have been made, (v) such Lessee shall
remain obligated under this Master Lease and under any instrument executed by
such Lessee consenting to the assignment of the Lessor's interest in this Master
Lease as security for indebtedness, in each such case in accordance with their
terms, as though such grant, release, dedication, transfer or amendment had not
been effected except to the extent that such Lessee's obligations hereunder
are obviated with respect to such grant, release, dedication, transfer or
amendment and (vi) such Lessee shall pay and perform any obligations of the
Lessor under such grant, release, dedication, transfer or amendment. The Lessor
acknowledges each Lessee's right to finance and to secure under the Uniform
Commercial Code, inventory, furnishings, furniture, equipment, machinery,
leasehold improvements and other personal property located at the Property
leased by it, and the Lessor agrees to execute Lessor waiver forms and release
of Lessor's Liens in favor of any purchase money seller, lessor or lender which
has financed or may finance in the future such items. Without limiting the
effectiveness of the foregoing, provided that no Lease Event of Default shall
have occurred and be continuing, the Lessor shall, upon the request of such
Lessee, and at such Lessee's sole cost and expense, execute and deliver any
instruments, and shall take such other action reasonably requested by such
Lessee as may be necessary or appropriate to confirm or effect any such grant,
release, dedication, transfer, annexation or amendment to any Person or other
action permitted under this Section 11.2 including landlord waivers with respect
to any of the foregoing.
ARTICLE XII
PERMITTED CONTESTS
12.1. Permitted Contests in Respect of Applicable Law; Liens; Property
Taxes. If, to the extent and for so long as (a) a test, challenge, appeal or
proceeding for review of any Applicable Law, Lien or any Imposition described in
clauses (i) and (vi) of the first paragraph of the definition thereof (a
"Property Tax") relating to any Property shall be prosecuted diligently and in
good faith in appropriate proceedings by a Lessee or (b) compliance with such
Applicable Law or payment of such Property Tax shall have been excused or
exempted by a valid nonconforming use, variance permit, waiver, extension or
forbearance, the Lessee shall not be required to comply with such Applicable
Law, promptly discharge such Lien or pay such Property Tax, but only if and so
long as any such test, challenge, appeal, proceeding, waiver, extension,
forbearance, noncompliance, non-payment or non-discharge shall not reasonably
involve (A) any risk of criminal liability being imposed on the Lessor or any
Lender or (B) any risk of (1) imminent foreclosure, forfeiture or loss of such
Property, or any material part thereof, or (2) the nonpayment of Rent or (C)
any substantial risk of (1) the imminent sale of, or the creation of any Lien
(other than a Permitted Property Lien) on, any part of such Property,
(2) civil liability being imposed on the Lessor, any Lender or such Property, or
(3) enjoinment of, or interference with, the use, possession or disposition of
such Property in any material respect.
The Lessor will not be required to join in any proceedings pursuant to this
Section 12.1 unless a provision of any Applicable Law requires that such
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) the Lessee has not elected the
Remarketing Option and (ii) the Lessee pays all related expenses and indemnifies
the Lessor, the Participants and the other Indemnitees with respect to such
proceedings.
ARTICLE XIII
INSURANCE
13.1. Public Liability and Workers' Compensation Insurance.
(a) During the Term, each Lessee shall procure and carry, or cause to be
procured and carried, at such Lessee's sole cost and expense, commercial general
liability insurance for claims for injuries or death sustained by persons or
damage to property while on its Property and such other public liability
coverages as are ordinarily procured by such Lessee or its Affiliates who own or
operate similar properties, but in any case shall provide liability coverage of
at least $1,000,000 per occurrence and $2,000,000 in aggregate. Such insurance
shall be on terms and in amounts that are no less favorable than insurance
maintained by such Lessee or such Affiliates with respect to similar properties
that they own and that are in accordance with normal industry practice. The
policy shall be endorsed to name the Lessor, each Participant, the Lease Agent
and the Collateral Agent as additional insureds. The policy shall also
specifically provide that the policy shall be considered primary insurance which
shall apply to any loss or claim before any contribution by any insurance which
the Lessor or any Participant may have in force.
(b) Each Lessee shall, in the construction of any Improvements on any
Property (including in connection with any Modifications thereof) and the
operation of the Properties, comply with the applicable workers' compensation
laws.
13.2. Hazard and Other Insurance. During the Term, each Lessee shall
keep, or cause to be kept, its Property insured against loss or damage by fire,
earthquake, flood and other risks on terms and in amounts that are no less
favorable than insurance covering other similar properties owned by such Lessee
or its Affiliates and that are in accordance with normal industry practices.
All insurance proceeds in respect of any loss or occurrence for which the
proceeds related thereto, in the absence of the occurrence and continuance of an
Event of Default and (if applicable) upon certification by such Lessee that the
applicable Property can be restored in accordance with the terms and conditions
of this Lease, are payable to a Lessee shall be adjusted by and paid to such
Lessee for application toward the reconstruction, repair or refurbishment of the
applicable Property, and if an Event of Default has occurred and is continuing
or (if applicable) such Lessee has not timely made such certification, such
proceeds shall be adjusted solely by the Collateral Agent and held by the
Collateral Agent for application in accordance with Article XIV (or, if all
obligations owing to the Credit Facility Banks under the Credit Facility
Documents have been paid in full and all commitments of the Credit Facility
Banks thereunder have been permanently terminated, such proceeds shall be
adjusted solely by the Lease Agent and held by the Lease Agent for application
in accordance with Article XIV). In addition, each Lessee shall at all times
during the Term maintain business interruption insurance covering, for a period
of no less than thirty (30) days, actual losses for any period during which the
earnings of such Lessee are impaired as a result of any property damage or other
casualty.
13.3. Insurance Coverage.
(a) Each Lessee shall furnish or cause to be furnished to the Lessor and
the Lenders certificates showing the insurance required under Sections 13.1 and
13.2 to be in effect and naming the Lessor, the Lenders, the Lease Agent and the
Collateral Agent as additional insureds with respect to liability coverage
(excluding worker's compensation insurance), naming the Collateral Agent and
such Lessee as their interests may appear with respect to casualty coverage, and
naming the Collateral Agent as loss payee with respect to casualty coverage, and
showing the mortgagee endorsement required by Section 13.3(c) with respect to
such coverage. All such insurance shall be at the cost and expense of such
Lessee. Such certificates shall include a provision for no less than thirty
(30) days' advance written notice by the insurer to the Collateral Agent in the
event of cancellation or reduction of such insurance.
(b) Each Lessee agrees that the insurance policy or policies required by
Section 13.2 shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should such Lessee waive, in
writing, prior to a loss, any or all rights of recovery against any party for
losses covered by such policy, and that the insurance in favor of the Lessor and
the Collateral Agent and their respective rights under and interests in said
policies shall not be invalidated or reduced by any act or omission (including
breach of warranty) or negligence of such Lessee or any other Person having any
interest in its Property other than the Lessor and the Collateral Agent. The
Lessee hereby waives any and all such rights against the Lessor and the
Collateral Agent to the extent of payments made under such policies.
(c) All such insurance shall be written by reputable insurance companies
that are financially sound and solvent and otherwise reasonably appropriate
considering the amount and type of insurance being provided by such companies.
Any insurance company selected by a Lessee which is rated in Best's Insurance
Guide or any successor thereto (or if there be none, an organization having a
similar national reputation) shall have a general policyholder rating of "A" and
a financial rating of at least "12" or be otherwise acceptable to the Lenders.
All insurance policies required by Section 13.2 shall include a standard form
mortgagee endorsement in favor of the Collateral Agent.
(d) The Lessor shall not carry separate insurance concurrent in kind or
form or contributing in the event of loss with any insurance required under this
Article XIII except that the Lessor may, at the Lessor's expense, carry separate
liability insurance so long as (i) a Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance the Lessor may have in
force which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause such Lessee's insurance required under
this Article XIII to be subject to a coinsurance exception of any kind.
(e) Each Lessee shall pay as they become due all premiums for the
insurance required by Section 13.1 and Section 13.2, and shall renew or replace
each policy prior to the expiration date thereof. Throughout the Term, at the
time each of such Lessee's insurance policies is renewed (but in no event less
frequently than once each year), such Lessee shall deliver to the Lessor and the
Collateral Agent certificates of insurance evidencing that all insurance
required by this Article XIII is being maintained by the Lessee and is in
effect.
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
14.1. Casualty and Condemnation.
(a) Subject to the provisions of this Article XIV, if all or a
portion of a Property is damaged or destroyed in whole or in part by a Casualty
or if the use, access, occupancy, easement rights or title to a Property or any
part thereof, is the subject of a Condemnation, then in either case (i) if the
cost of restoration of such Property is, in the reasonable judgment of the
Lessor, less than or equal to $3,000,000, all awards, compensation or insurance
proceeds in respect of such Casualty or Condemnation, in the absence of the
occurrence and continuance of an Event of Default, shall be paid over to the
Lessee of the affected Property for application toward the reconstruction,
repair or refurbishment of such Property, and (ii) if the cost of restoration of
such Property is, in the reasonable judgment of the Collateral Agent (or, if all
obligations owing to the Credit Facility Banks under the Credit Facility
Documents have been paid in full and all commitments of the Credit Facility
Banks thereunder have been permanently terminated, the Lease Agent), more than
$3,000,000, then all awards, compensation or insurance proceeds in respect of
such Casualty or Condemnation, in the absence of the occurrence and continuance
of an Event of Default, shall be held by the Collateral Agent (or the Lease
Agent, as applicable) in trust for the Lessee of the affected Property and, only
upon certification by such Lessee that the applicable Property can be restored
in accordance with the terms and conditions of this Lease, shall be adjusted by
and paid in a lump sum to such Lessee for application toward the reconstruction,
repair or refurbishment of the applicable Property, and if such Lessee has not
timely made such certification, such proceeds shall be adjusted solely by the
Collateral Agent (or the Lease Agent, as applicable) and held by the Collateral
Agent (or the Lease Agent, as applicable) for application in the reasonable
discretion of the Lenders and the Lessor to the restoration of such Property or
toward the payment of the Lease Balance; provided, however, that, in any case,
if a Lease Event of Default shall have occurred and be continuing, such award,
compensation or insurance proceeds shall be paid directly to the Collateral
Agent (or the Lease Agent, as applicable) for the benefit of the Secured Parties
or, if received by such Lessee, shall be held in trust for the Secured Parties,
and shall be paid over by such Lessee to the Collateral Agent (or the Lease
Agent, as applicable) to be distributed by the Collateral Agent (or the Lease
Agent) in accordance with Section 7.7 of the Participation Agreement. All
amounts held by the Collateral Agent or the Lease Agent during the continuation
of a Lease Event of Default on account of any award, compensation or insurance
proceeds either paid directly to the Collateral Agent or the Lease Agent or
turned over to the Collateral Agent or the Lease Agent shall be applied in
accordance with Section 7.7 of the Participation Agreement and at the option of
the Lessor either be (i) paid to the Lessee of the affected Property for the
repair of damage caused by such Casualty or Condemnation in accordance with
clause (d) of this Section 14.1, or (ii) applied to the purchase price of the
related Property on the Termination Date with respect to such Property in
accordance with Article XV, with any Excess Casualty/Condemnation Proceeds being
payable to such Lessee.
(b) Each Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof. At such Lessee's reasonable request, and at each Lessee's
sole cost and expense, the Lessor and the Lenders shall participate in any such
proceeding, action, negotiation, prosecution or adjustment. The Lessor and each
Lessee agree that this Master Lease shall control the rights of the Lessor and
such Lessee in and to any such award, compensation or insurance payment.
(c) If the Lessor or any Lessee shall receive notice of a Casualty for
which the reasonable anticipated cost of restoration equals or exceeds $500,000
or of an actual, pending or threatened Condemnation of any Property or any
interest therein, the Lessor or such Lessee, as the case may be, shall give
notice thereof to the other and to the Lenders promptly after the receipt of
such notice.
(d) If pursuant to this Section 14.1 and Section 15.1 this Master Lease
shall continue in full force and effect following a Casualty or Condemnation
with respect to any Property, the Lessee thereof shall, at its sole cost and
expense (and, if any award, compensation or insurance payment is not sufficient
to restore such Property in accordance with this clause (d), such Lessee shall
pay the shortfall), promptly and diligently repair any damage to such Property
caused by such Casualty or Condemnation in conformity with the requirements of
Sections 9.1 and 10.1 so as to restore such Property as close as is reasonably
practicable to its condition, operation, function and value as existed
immediately prior to such Casualty or Condemnation with such Modifications as
such Lessee may elect in accordance with Section 10.1 and such change in
operation and function as is not prohibited under this Master Lease. In such
event, title to such Property shall remain with the Lessor subject to the terms
of this Master Lease. Upon completion of such restoration, such Lessee shall
furnish the Lessor an architect's certificate of substantial completion and a
Responsible Officer's Certificate confirming that such restoration has been
completed pursuant to this Master Lease.
(e) In no event shall a Casualty or Condemnation affect the Lessee's
obligations to pay Rent pursuant to Section 3.1 or to perform its obligations
and pay any amounts due on the Expiration Date or pursuant to Articles XVIII and
XXI.
(f) Any Excess Casualty/Condemnation Proceeds received by the Lessor, the
Lenders, the Collateral Agent or Lease Agent in respect of a Casualty or
Condemnation shall be turned over to the Lessee of the affected Property.
14.2. Environmental Matters. Promptly upon each Lessee's acquiring actual
knowledge of the existence of a material Environmental Violation with respect to
its Property, such Lesseeshall notify the Lessor in writing of such
Environmental Violation. If the Lessor elects not to terminate this Master
Lease with respect to such Property pursuant to Section 15.1, at such
Lessee's sole cost and expense, such Lessee shall promptly and diligently
commence any response, clean up, remedial or other action necessary to remove,
clean up or remediate the Environmental Violation in accordance with the terms
of Section 8.3 (including the last sentence thereof). Such Lessee shall provide
to the Lessor all material and relevant reports, assessments, sampling
results and correspondence with Governmental Authorities concerning the
Environmental Violation and shall, upon completion of remedial action by such
Lessee, cause to be prepared by an environmental consultant reasonably
acceptable to the Lessor a statement by the consultant that the Environmental
Violation has been remedied in compliance in all material respects with
applicable Environmental Laws. Each such Environmental Violation shall be
remedied prior to the Expiration Date unless each Property with respect to which
an Environmental Violation has occurred but has not been remedied has been
purchased by the Lessee in accordance with Section 18.1 or 18.2. Nothing in
this Article XIV shall reduce or limit such Lessee's obligations under Sections
13.1, 13.2 or 13.3 of the Participation Agreement.
14.3. Notice of Environmental Matters. Promptly, but in any event within
sixty (60) Business Days from the date a Lessee has actual knowledge thereof,
such Lessee shall provide to the Lessor written notice of any pending or
threatened claim of which such Lessee has received written notice, action or
proceeding involving any Environmental Laws or any Release on or in connection
with the Property leased by it which, if determined adversely to the Lessee,
could (i) have a Material Adverse Effect or (ii) result in an obligation to
remediate the cost of which would exceed $1,000,000. All such notices shall
describe in reasonable detail the nature of the claim, action or proceeding and
such Lessee's proposed response thereto. In addition, such Lessee shall provide
to the Lessor, within sixty (60) Business Days of receipt, copies of all written
communications with any Governmental Authority relating to any Environmental
Violation in connection with such Property. Such Lessee shall also promptly
provide such detailed reports of any Material environmental claims as may
reasonably be requested by the Lessor or the Lenders.
ARTICLE XV
TERMINATION OF LEASE
15.1. Partial Termination upon Certain Events. If any of the following
occurs with respect to any Property:
(i) a Significant Condemnation occurs; or
(ii) a Significant Casualty occurs; or
(iii) an Environmental Violation occurs or is discovered the cost
of remediation of which would exceed $5,000,000,
and the Lessor shall have given written notice (a "Termination Notice") to the
applicable Lessee that, as a consequence of such event, (x) the Lease Supplement
relating to such Property is to be terminated and (y) this Master Lease is to be
terminated with respect to such Property, then such Lessee shall be obligated to
purchase the Lessor's interest in such affected Property on or prior to the next
Basic Rent Payment Date occurring not less than twenty (20) days after the
giving of such Termination Notice, by paying the Lessor an amount equal to the
Property Balance for such affected Property.
15.2. Termination Procedures. On the date of the payment by a Lessee of
the Property Balance with respect to the Property leased by it in accordance
with Section 15.1 (such date, the "Termination Date"), the Lease Supplement
relating to each affected Property shall terminate and this Master Lease shall
terminate with respect to each such Property and, concurrent with the Lessor's
receipt of such payment,
(a) the Lessor shall take the actions described in Section 21.1(a)
hereof; and
(b) in the case of a termination pursuant to clause (i) or (ii) of Section
15.1, the Lessor shall convey, or direct the Lease Agent or Collateral Agent to
convey, to such Lessee any Net Proceeds with respect to the Casualty or
Condemnation giving rise to the termination of this Master Lease with respect to
such Property theretofore received by the Lessor, Lease Agent or Collateral
Agent or at the request of such Lessee, such amounts shall be applied against
sums due hereunder.
ARTICLE XVI
EVENTS OF DEFAULT
16.1. Lease Events of Default. The occurrence and continuance of any one
or more of the following events shall constitute a "Lease Event of Default":
(a) (i) any Lessee shall fail to make payment of (X) any Basic Rent
(Interest/Yield) within five (5) Business Days after the same has become due
and payable, or (Y) any Property Balance, Purchase Option Rent, Loan Balance,
Lease Recourse Amount or Lease Balance, including, without limitation, amounts
due pursuant to Section 15.1, 18.1, 18.2, or 20.1, on the date due therefor
under the Master Lease, or (ii) the Company or any Subsidiary Guarantor shall
have failed to make any payment due under the Multicare Guaranty after the same
has become due and payable; or
(b) any Lessee shall fail to make payment of any Supplemental Rent due
with respect to Sections 13.7, 13.8, 13.9 and 13.10 of the Participation
Agreement within five (5) Business Days after receipt of notice thereof or any
Lessee shall fail to make payment of any other Supplemental Rent within five (5)
Business Days after the expiration of thirty (30) days from the date of receipt
of notice by the Lessees or the Company that such Supplemental Rent is due and
payable; or
(c) any Event of Default (as defined in the Credit Agreement) shall have
occurred and be continuing; or
(d) any Lessee shall fail to maintain insurance as required by Article
XIII of this Master Lease and such failure shall continue for ten (10) days; or
(e) any Lessee or the Company, as the case may be, shall fail to observe
or perform any term, covenant or condition of such Lessee or the Company, as the
case may be, under this Master Lease or the Operative Documents to which it is
party other than those described in Section 16.1(a), (b), or (d) hereof, and, in
each such case, such failure shall have continued for thirty (30) days after the
earlier of (i) delivery to such Lessee or the Company, as applicable, of written
notice thereof from the Lessor or (ii) a Responsible Officer of such Lessee or
the Company, as the case may be, shall have actual knowledge of such failure;
provided, however, that if such failure is capable of cure but cannot be cured
by the payment of money or cannot be cured by diligent efforts within such
thirty (30) day period but such diligent efforts shall be properly commenced
within the cure period and the applicable Lessee or the Company is diligently
pursuing, and shall continue to pursue diligently, remedy of such failure, the
cure period shall be extended for an additional period of time as may be
necessary to cure, not to exceed an additional ninety (90) days and not to
extend beyond the Expiration Date; provided further, that failure by the
applicable Lessee to fully comply with the requirements of Section 20.1 hereof
shall not be subject to any cure period; or
(f) any representation or warranty made by any Lessee or the Company, as
the case may be, in any of the Operative Documents to which it is a party shall
prove to have been inaccurate at the time made, and if such inaccuracy can be
cured, it shall not have been cured within forty-five (45) days after the
earlier of (i) delivery to such Lessee or the Company, as the case may be, of
written notice thereof from the Lessor or (ii) a Responsible Officer of such
Lessee or the Company, as the case may be, shall have actualknowledge of such
inaccuracy; or
(g) any Lessee or Consolidated Entity (i) shall be unable to, or shall
admit in writing its inability to, pay its debts as such debts become due; or
(ii) shall make an assignment for the benefit of creditors, petition or apply to
any tribunal for the appointment of a custodian, receiver or trustee for it or a
substantial part of its assets; or (iii) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (iv) shall have had any such petition or application filed or any
such proceeding shall have been commenced, against it, in which an adjudication
or appointment is made or order for relief is entered, or which petition,
application or proceeding remains undismissed for a period of 60 days or more;
or shall be the subject of any proceeding under which its assets may be subject
to seizure, forfeiture or divestiture (other than a proceeding in respect of a
Lien permitted under Section 8.3(b) of the Credit Agreement); or (v) by any act
or omission shall indicate its consent to, approval of or acquiescence in any
such petition, application or proceeding or order for relief or the appointment
of a custodian, receiver or trustee for all or any substantial part of its
Property; or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of 30 days or more; or
(h) any Lien granted by any Obligor to the Lessor, the Collateral Agent or
the Lease Agent under any Operative Document shall, in whole or in part,
terminate, cease to be effective against, or cease to be the legal, valid,
binding and enforceable obligation of, such Obligor; or
(i) any Obligor shall directly or indirectly contest the validity (as
opposed to the interpretation of the terms) of any Operative Document in any
manner in any court of competent jurisdiction or any lien granted by any
Operative Document; or
(j) any Lessee shall cease to be 100% owned (directly or indirectly)
Subsidiary of the Company; or
(k) there shall be a breach of the STATUTORY CONDITION.
16.2. Remedies. During the continuance of any Lease Event of Default, the
Lessor may do one or more of the following as the Lessor in its sole discretion
shall determine, without limiting any other right or remedy the Lessor may have
on account of such Lease Event of Default:
(a) The Lessor may, by notice to the Lessees, rescind or terminate this
Master Lease as to any Property or all of the Properties as of the date
specified in such notice; however, (i) no reletting, reentry or taking of
possession of any Property (or any portion thereof) by the Lessor will be
construed as an election on the Lessor's part to terminate this Master Lease
unless a written notice of such intention is given to the applicable Lessee,
(ii) notwithstanding any reletting, reentry or taking of possession, the Lessor
may at any time thereafter elect to terminate this Master Lease for a continuing
Lease Event of Default and (iii) no act or thing done by the Lessor or any of
its agents, representatives or employees and no agreement accepting a surrender
of the Properties shall be valid unless the same be made in writing and executed
by the Lessor;
(b) The Lessor may (i) demand that any Lessee, and each Lessee shall upon
the written demand of the Lessor, return any Property promptly to the Lessor in
the manner and condition required by, and otherwise in accordance with all of
the provisions of, Articles VII and IX and Section 8.3 hereof as if such
Property were being returned at the end of the Term, and the Lessor shall not be
liable for the reimbursement of any Lessee for any costs and expenses incurred
by such Lessee in connection therewith and (ii) without prejudice to any other
remedy which the Lessor may have for possession of any Property, and to the
extent and in the manner permitted by Applicable Law, enter upon such Property
and take immediate possession of (to the exclusion of such Lessee) such Property
or any part thereof and expel or remove such Lessee and any other Person who may
be occupying such Property, by summary proceedings or otherwise, all without
liability to such Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking or
otherwise and, in addition to the Lessor's other damages, such Lessee shall be
responsible for all costs and expenses incurred by the Lessor and/or the Lenders
in connection with any reletting, including, reasonable brokers' fees and all
costs of any alterations or repairs reasonably made by the Lessor;
(c) The Lessor may (i) sell all or any part of any one or more Properties
at public or private sale, as the Lessor may determine, free and clear of any
rights of any Lessee (except that Excess Sales Proceeds are payable to and shall
be paid to the Company as agent for the Lessees) with respect thereto (except to
the extent required by clause (ii) below if the Lessor shall elect to exercise
its rights thereunder) in which event the applicable Lessee's obligation to pay
Basic Rent (Interest/Yield) hereunder for periods commencing after the date of
such sale shall be terminated or proportionately reduced, as the case may be;
and (ii) if the Lessor shall so elect, demand that such Lessee pay to the
Lessor, and such Lessee shall pay to the Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (the parties
agreeing that the Lessor's actual damages would be difficult to predict, but the
aforementioned liquidated damages represent a reasonable approximation of such
amount) (in lieu of Basic Rent (Interest/Yield) due for periods commencing on or
after the Basic Rent Payment Date coinciding with such date of sale (or, if the
sale date is not a Basic Rent Payment Date, the Basic Rent Payment Date next
preceding the date of such sale)), an amount equal to (A) the excess, if any, of
(1) the Lease Balance calculated as of such Basic Rent Payment Date (including
all Rent due and unpaid to and including such Basic Rent Payment Date), over (2)
the net proceeds of such sale (that is, after deducting all reasonable costs and
expenses incurred by the Lessor or any Lender incident to such conveyance,
including, without limitation, repossession costs, brokerage commissions,
prorations, transfer taxes, fees and expenses for counsel, title insurance fees,
survey costs, recording fees, and any repair costs); plus (B) interest at the
Overdue Rate on the foregoing amount from such Basic Rent Payment Date until the
date of payment;
(d) The Lessor may, at its option, elect not to terminate this Master
Lease with respect to any Property or all of the Properties and continue to
collect all Basic Rent (Interest/Yield), Supplemental Rent, and all other
amounts due the Lessor (together with all costs of collection) and enforce a
Lessee's obligations under this Master Lease as and when the same become due,
or are to be performed, and at the option of the Lessor, upon any abandonment of
any Property by a Lessee or re-entry of same by the Lessor, the Lessor may, in
its sole and absolute discretion, elect not to terminate this Master Lease and
may make the necessary repairs in order to relet such Property, and relet such
Property or any part thereof for such term or terms (which may be for a long
term extending beyond the Term of this Master Lease) and at such rental or
rentals and upon such other terms and conditions as the Lessor in its reasonable
discretion may deem advisable; and upon each such reletting all rentals actually
received by the Lessor from such reletting shall be applied to such Lessee's
obligations hereunder and the other Operative Documents in such order,
proportion and priority as the Lessor may elect in the Lessor's sole and
absolute discretion. If such rentals received from such reletting during any
period are less than the Rent with respect to such Property to be paid during
that period by the applicable Lessee hereunder, such Lessee shall pay such
deficiency, to the Lessor on the next Basic Rent Payment Date;
(e) Unless all of the Properties have been sold in their entirety, the
Lessor may, whether or not the Lessor shall have exercised or shall thereafter
at any time exercise any of its rights under clause (b), (c) or (d) of this
Section 16.2 with respect to any Properties or any portions thereof, demand, by
written notice to each Lessee specifying a date (a "Termination Date") not
earlier than twenty (20) days after the date of such notice, that the Lessees
purchase, on such Termination Date, all unsold Properties and all unsold
portions of Properties in accordance with the provisions of Section 18.2;
(f) The Lessor may exercise any other right or remedy that may be
available to it under Applicable Law, or proceed by appropriate court action
(legal or equitable) to enforce the terms hereof or to recover damages for the
breach hereof. Separate suits may be brought to collect any such damages for
any period(s), and such suits shall not in any manner prejudice the Lessor's
right to collect any such damages for any subsequent period(s), or the Lessor
may defer any such suit until after the expiration of the Term, in which event
such suit shall be deemed not to have accrued until the expiration of the Term;
(g) The Lessor may retain and apply against the Lease Balance all sums
which the Lessor would, absent such Lease Event of Default, be required to pay
to, or turn over to, any Lessee pursuant to the terms of this Master Lease;
(h) The Lessor shall have the STATUTORY POWER OF SALE;
(i) The Lessor, to the extent permitted by Applicable Law, as a matter of
right and with notice to the Lessee, shall have the right to apply to any court
having jurisdiction to appoint a receiver or receivers of any Property, and
each Lessee hereby irrevocably consents to any such appointment. Any such
receiver(s) shall have all of the usual powers and duties of receivers in like
or similar cases and all of the powers and duties of the Lessor in case of
entry, and shall continue as such and exercise such powers until the date of
confirmation of the sale of such Property unless such receivership is sooner
terminated;
(j) To the maximum extent permitted by law, each Lessee hereby waives the
benefit of any appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of marshalling in the
event of any sale of any Property or any interest therein; or
(k) The Lessor shall be entitled to enforce payment and performance of the
obligations secured hereby and to exercise all rights and powers under this
instrument or under any of the other Operative Documents or other agreement or
any laws now or hereafter in force, notwithstanding some or all of the
obligations secured hereby may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise. Neither
the acceptance of this instrument nor its enforcement, shall prejudice or in any
manner affect the Lessor's right to realize upon or enforce any other security
now or hereafter held by the Lessor, it being agreed that the Lessor shall
be entitled to enforce this instrument and any other security now or hereafter
held by the Lessor in such order and manner as the Lessor may determine in its
absolute discretion. No remedy herein conferred upon or reserved to the Lessor
is intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Operative Documents to the
Lessor or to which it may otherwise be entitled, may be exercised, concurrently
or independently, from time to time and as often as may be deemed expedient by
the Lessor. In no event shall the Lessor, in the exercise of the remedies
provided in this instrument (including, without limitation, in connection with
the assignment of rents to Lessor, or the appointment of a receiver and the
entry of such receiver onto all or any part of the Properties), be deemed a
"mortgagee in possession", as to a specific Property unless the Lessor shall
have taken possession of such Property, or any substantial portion thereof, and
the Lessor shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies so long
as the Lessor shall have acted in good faith and without gross negligence or
willful misconduct.
If, pursuant to the exercise by the Lessor of its remedies pursuant to this
Section 16.2, the Lease Balance and all other amounts due and owing from the
Lessees under this Master Lease and the other Operative Documents have been paid
in full, then the Lessor, the Collateral Agent or the Lease Agent, as the case
may be, shall remit to the Company, as agent for the Lessees, any excess amounts
received by the Lessor.
16.3. Waiver of Certain Rights. If this Master Lease shall be terminated
pursuant to Section 16.2, each Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XVI.
ARTICLE XVII
LESSOR'S RIGHT TO CURE
17.1. The Lessor's Right to Cure a Lessee's Lease Defaults. The Lessor,
without waiving or releasing any obligation or Lease Event of Default, may (but
shall be under no obligation to) remedy any Lease Event of Default for the
account and at the sole cost and expense of the applicable Lessee, including the
failure by such Lessee to maintain the insurance required by Article XIII, and
may, to the fullest extent permitted by law, and notwithstanding any right of
quiet enjoyment in favor of such Lessee, enter upon any Property for such
purpose and take all such action thereon as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of such Lessee. All
reasonable out-of-pocket costs and expenses so incurred (including reasonable
fees and expenses of counsel), together with interest thereon at the Overdue
Rate from the date on which such sums or expenses are paid by the Lessor, shall
be paid by such Lessee to the Lessor as Supplemental Rent.
ARTICLE XVIII
PURCHASE PROVISIONS
18.1. Optional Purchase of the Properties.
(a) Purchase of All of the Properties. Subject to the conditions
contained herein, and without limitation of the Lessees' purchase obligation
pursuant to Section 18.2, the Lessees, jointly and not severally, shall have the
irrevocable option on any Business Day to purchase all, but not less than all,
of the Properties subject to this Master Lease at a price equal to the Lease
Balance on the date of such purchase. The exercise by the Lessees of their
option pursuant to this Section 18.1(a) shall be subject to the following
conditions:
(i) no Lease Event of Default shall have occurred and be continuing;
(ii) the Lessees (or the Company acting as agent for all of the Lessees)
shall have delivered a Purchase Notice to the Lessor not less than
thirty (30) days prior to such purchase, specifying the date of such
purchase; and
(iii) no Lessee (or the Company acting as their agent) shall have given
notice of its intention to exercise the Remarketing Option.
(b) Purchase of Individual Properties. Subject to the conditions
contained herein, and without limitation of the Lessees' purchase obligation
pursuant to Section 18.2, each Lessee shall have the irrevocable option on any
Business Day to purchase the particular Property that is leased to it hereunder
at a price equal to the Property Balance for such Property on the date of such
purchase. The exercise by any Lessee of its option pursuant to this Section
18.1(b) shall be subject to the following conditions:
(i) No Lease Event of Default shall have occurred and be continuing;
(ii) the applicable Lessee shall have delivered a Purchase Notice to the
Lessor not less than thirty (30) days prior to such purchase,
specifying the date of such purchase and certifying that either (v)
such Property or all of the capital stock or other equity interests of
the Lessee leasing such Property is to be transferred on the date of
such purchase to a third party that is not an Affiliate of any Lessee
or the Company and, at all times after such transfer, neither the
applicable Lessee, the Company nor any Affiliate of such Lessee or the
Company will manage or maintain any other involvement with such
Property, (w) such Property is to cease operation as a long-term or
specialized health care facility within one hundred and eighty (180)
days of such purchase, (x) failure to purchase such Property would
cause a violation of a Requirement of Law related to operation of the
Property as a long-term or specialized healthcare facility, (y)
Lessor's continued ownership of the Property and the lease thereof to
the applicable Lessee would cause a Rate Setting Commission Trigger
Event to occur or (z) an Environmental Violation, the cost of which
would exceed $1,000,000, has occurred with respect to such Property,
and in each case a Responsible Officer of the Company shall have
certified to the Lessor that the foregoing conditions have been
satisfied;
(iii) after giving effect to any such purchase, no less than three
Propertie shall remain subject to this Master Lease; and
(iv) no Lessee (or the Company acting as their agent) shall have given
notice of its intention to exercise the Remarketing Option.
(c) Transfer Procedures. If the Lessees exercise their Purchase Option
pursuant to Section 18.1(a) or if any Lessee exercises its Purchase Option
pursuant to Section 18.1(b) then, upon the Lessor's receipt of all amounts due
in connection therewith, the Lessor shall transfer to the Lessees or such
Lessee, as applicable, or their/its designee(s) or any other Person which, with
the consent of the Lessor, has been assigned the right to purchase the
Properties, all of the Lessor's right, title and interest in and to all of the
Properties in accordance with the procedures set forth in Section 21.1(a),
such transfer to be effective as of the date specified in the Purchase Notice.
The Lessees or such Lessee, as applicable, may designate, in a notice given to
the Lessor not less than ten (10) Business Days prior to the closing of such
purchase (time being of the essence), the transferee or transferees to whom the
conveyance shall be made (if other than to the Lessees of the respective
Properties), in which case such conveyance shall (subject to the terms and
conditions set forth herein) be made to such designee or designees); provided,
however, that such designation of a transferee or transferees shall not cause
any Lessee to be released, fully or partially, from any of its obligations under
this Master Lease, including the obligation to pay the Lessor the Lease Balance
on such date.
18.2. Expiration Date Purchase Obligation. Unless (a) the Lessees shall
have properly exercised their Purchase Option pursuant to Section 18.1(a) and
purchased all of the Properties pursuant thereto, or (b) the Lessees shall have
properly exercised the Remarketing Option and shall have fulfilled all of the
conditions of clauses (a) through (l) of Section 20.1 hereof and the Lessor
shall have sold its interest in all of the Properties pursuant thereto, then,
subject to the terms, conditions and provisions set forth in this Article, and
in accordance with the terms of Section 21.1(a), each Lessee shall purchase from
the Lessor, and the Lessor shall convey to the applicable Lessee, on the
Expiration Date all of the Lessor's interest in the Property (including all of
the Lessor's interest in this Master Lease to the extent relating to such
Property) leased by such Lessee for an amount equal to the Lease Balance with
respect to such Property. The applicable Lessee may designate, in a notice
given to the Lessor not less than ten (10) Business Days prior to the closing of
such purchase (time being of the essence), the transferee or transferees to whom
the conveyance shall be made (if other than to the Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; provided, however, that such designation of a transferee or
transferees shall not cause the applicable Lessee to be released, fully or
partially, from any of its obligations under this Master Lease, including,
without limitation, the obligation to pay the Lessor the Lease Balance relating
to such Property on such Expiration Date.
ARTICLE XIX
INTENTIONALLY OMITTED
ARTICLE XX
REMARKETING OPTION
20.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 20.1, each Lessee shall have the option
(the "Remarketing Option") to market and complete the sale of all of the
Properties for the Lessor.
The effective exercise and consummation of the Remarketing Option shall be
subject to the due and timely fulfillment of each of the following provisions as
to each of the Properties as of the dates set forth below.
(a) Not later than one year prior to the Expiration Date, the Lessees
shall give to the Lessor written notice of the exercise of the Remarketing
Option, which exercise shall be irrevocable. Failure by a Lessee to give timely
notice shall be deemed to be an election without further act thereby, of the
Purchase Option.
(b) Not later than one hundred and twenty (120) days prior to the
Expiration Date, the Lessees shall deliver to the Lessor an Environmental Audit
for each of the Properties. Such Environmental Audit shall be prepared by an
environmental consultant selected by the Lessor in the Lessor's reasonable
discretion and shall contain conclusions reasonably satisfactory to the Lessor
as to the environmental status of the Properties. If any such Environmental
Audit indicates any exceptions, the applicable Lessee shall have also delivered
prior to the Expiration Date a Phase Two environmental assessment by such
environmental consultant and a written statement by such environmental
consultant indicating that all such exceptions have been remedied in compliance
with Applicable Law.
(c) On the date of the notice to the Lessor of the exercise of the
Remarketing Option, no Lease Event of Default or Lease Default shall exist.
(d) The Lessees shall have completed in all material respects all
Modification (other than Modifications first required by a Governmental
Authority after the date that s one year prior to the Expiration Date, which
Modifications shall be completed not later than 180 days after the Expiration
Date), restoration and rebuilding of the affected Properties pursuant to
Sections 10.1 and 14.1 (as the case may be) and shall have fulfilled in all
material respects all of the conditions and requirements in connection
therewith pursuant to said Sections, in each case prior to the date on which the
Lessor receives notice of the Lessee's intention to exercise the Remarketing
Option (time being of the essence), regardless of whether the same shall be
within the Lessee's control. The Lessee shall have also paid the cost of or
completed all Modifications commenced prior to the Expiration Date. The Lessee
shall not have been excused pursuant to Section 12.1 from complying with any
Applicable Law, discharge of Lien (other than Lessor Liens and Agent Liens) or
payment of Property Tax that involved the extension of the ultimate imposition
of such Applicable Law, discharge of Lien or payment of Property Tax beyond the
Expiration of the Term. Any Permitted Property Liens (other than Lessor Liens
and other Liens attributable to the other parties to the Operative Documents)
on any Property that were contested by the Lessee shall have been removed prior
to the Expiration Date.
(e) During the Marketing Period, the Lessees shall, as nonexclusive agents
for the Lessor, use commercially reasonable best efforts to sell the Lessor's
interest in the Properties and will attempt to obtain the highest purchase price
therefor and for not less than the Fair Market Sales Value. The Lessees will be
responsible for hiring brokers and making the Properties available for
inspection by prospective purchasers. During the Marketing Period the Lessees
shall promptly upon reasonable notice and during regular business hours permit
inspection of any Property and any maintenance records relating to any Property
by the Lessor to the extent such inspection does not cause material interruption
of the Lessees' business activities, the Lenders and any potential purchasers,
and shall otherwise do all things necessary to sell and deliver possession of
the Properties to any purchaser. All such marketing of the Properties shall be
at the Lessees' sole expense. During the Marketing Period the Lessees shall
allow the Lessor and any potential qualified purchaser reasonable access to the
Properties for the purpose of inspecting the same.
(f) No such purchaser shall be a Lessee or any Subsidiary or Affiliate of
a Lessee.
(g) All bids shall be submitted to the Lessor and the Lenders, and the
Lessor will have the right to submit any one or more bids. Any sale shall be
for the highest cash bid submitted to the Lessor. The determination of the
highest bid shall be made by the Lessor and the Tranche B Lenders prior to the
end of the Marketing Period, but in any event, the Lessor shall have no
obligation to approve any bid for any Property unless each highest bid for each
of the respective Properties, in the aggregate, equal or exceed the Lease
Balance. All bids shall be on an all-cash basis unless the Lessor and the
Tranche B Lenders shall otherwise agree in their sole discretion.
(h) In connection with any such sale of any Property, the applicable
Lessee will provide to the purchaser all customary "seller's" indemnities,
representations and warranties regarding title, absence of Liens (except Lessor
Liens and Agent Liens) and the condition of such Property, including an
environmental indemnity, in each case to the extent the same are reasonably
required by the purchaser. The applicable Lessee shall have obtained, at its
cost and expense, all required governmental and regulatory consents and
approvals and shall have made all filings as required by Applicable Law in order
to carry out and complete the transfer of each of the Properties but shall grant
or assign all assignable licenses necessary for the operation and maintenance of
such Property and cooperate reasonably in seeking or obtaining all necessary
Governmental Action to enable the purchaser to operate the Property to the
extent any such cooperation is required to lawfully effect a transfer of
operating rights. As to the Lessor, any such sale shall be made on an "as is,
with all faults" basis without representation or warranty by the Lessor other
than as to the absence of Lessor Liens. Any agreement as to such sale shall be
made subject to the Lessor's rights hereunder.
(i) The Lessees shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of the sale of the Properties, whether
incurred by the Lessor or the Lessees, including, without limitation, the cost
of all title insurance, surveys, environmental reports, appraisals, transfer
taxes, the Lessor's reasonable attorneys' fees, the Lessees' attorneys' fees,
commissions, escrow fees, recording fees, and all applicable documentary and
other transfer taxes.
(j) The Lessees shall pay to the Lessor on or prior to the Expiration Date
(or in the case of Supplemental Rent, to the Person entitled thereto) an amount
equal to the Lease Recourse Amount plus all accrued and unpaid Rent (including
accrued and unpaid Supplemental Rent, if any) and all other amounts hereunder
which have accrued or will accrue prior to or as of the Expiration Date, in the
type of funds specified in Section 3.1(b) hereof.
(k) The Lessees shall pay to the Lessor on or prior to the Expiration Date
the amounts, if any, required to be paid pursuant to Section 13.2 of the
Participation Agreement.
(l) The gross proceeds of the sale of the Properties (less any marketing,
closing or other costs, prorations or commissions incurred by the Collateral
Agent, the Lease Agent or the Lessor in connection therewith) (the "Gross
Remarketing Proceeds") shall be paid directly to the Lessor; provided, however,
that if the sum of (x) the Gross Remarketing Proceeds from such sale plus (y)
the Lease Recourse Amount and other amounts received by the Collateral Agent or
the Lease Agent, as applicable, pursuant to this Section 20.1 exceeds the Lease
Balance as of such date, then the excess shall be paid to the Company as agent
for the Lessees on the Expiration Date.
If one or more of the foregoing provisions shall not be fulfilled as of the
applicable date set forth above with respect to any Property, then the Lessor
shall declare by written notice to the Lessees the Remarketing Option to be null
and void (whether or not it has been theretofore exercised by any Lessee) as to
all of the Properties, in which event all of each Lessee's rights under this
Section 20.1 shall immediately terminate and the Lessees shall be obligated to
purchase all of the Properties pursuant to Section 18.2 on the Expiration Date.
In the event that the sale of all of the Properties is not consummated on
the Expiration Date, but such sale is consummated any time thereafter, the
Lessor shall remit to the Company, as agent for the Lessees, promptly after the
consummation of the sale of the last Property, any excess remaining after
deducting the then outstanding Lease Balance plus the Imputed Equity Return
thereon plus an amount equivalent to the Overdue Rate thereon accruing from and
after the Expiration Date from the Gross Remarketing Proceeds.
If the Lessee effectively elects the Remarketing Option and no sale of any
Property is consummated prior to the end of the Marketing Period, each Lessee
shall, in addition to making the payment required pursuant to Section 20.1(j)
above, do each of the following:
(i) execute and deliver to Lessor and the Lessor's title insurance company
at its own cost and expense an affidavit as to the absence of any
Liens (other than Permitted Property Liens of the type described in
clause (i), (viii) or (x) of the definition thereof), and shall
execute and deliver to the Lessor a statement of termination of this
Master Lease to the extent relating to such Property; and
(ii) for a period of up to one year after the Expiration Date (the
"Extended Marketing Period"), cooperate reasonably with the Lessor
and/or any Person designated by the Lessor to receive such Property,
which cooperation shall include reasonable efforts with respect to the
following, all of which the Lessees shall do at their own cost and
expense on or before the Expiration Date for such Property or as soon
thereafter as is reasonably practicable: providing copies of all
books and records regarding the maintenance and ownership of such
Property and all know-how, data and technical information relating
thereto; granting or assigning all assignable licenses necessary for
the operation and maintenance of such Property; and cooperating
reasonably, at the Lessee's or a purchaser's expense, in the Lessor's
or a purchaser's efforts to obtain the necessary Governmental Action
to operate the Property. The obligations of the Lessees under this
paragraph shall survive the expiration or termination of this Master
Lease.
Except as expressly set forth herein, the Lessees shall have no right,
power or authority to bind the Lessor in connection with any proposed sale of
any Property.
20.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessees to pay Rent with respect to each Property (including
the installment of Rent due on the Expiration Date) shall continue undiminished
until payment in full of the Lease Recourse Amount and all other amounts due to
the Lessor with respect to the Properties under the Operative Documents to which
each Lessee is a party. The Lessor and the Tranche B Lenders shall have the
right, but shall be under no duty, to solicit bids, to inquire into the efforts
of the Lessees to obtain bids or otherwise to take action in connection with any
such sale, other than as expressly provided in this Article XX.
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
21.1. Provisions Relating to the Exercise of Purchase Option or Obligation
and Conveyance Upon Remarketing and Conveyance Upon Certain Other Events.
(a) In connection with any termination of this Master Lease with respect
to any Property pursuant to the terms of Article XV, in connection with any
purchase or in connection with the purchase of any Property in accordance with
Section 18.1 or in connection with the Expiration Date Purchase Obligation or
obligations under Section 16.2(e), then, upon the date on which this Master
Lease is to terminate with respect to the applicable Property and upon tender of
the amounts set forth in Article XV, Section 16.2(e), 18.1 or 18.2, as
applicable:
(i) the Lessor shall execute and deliver to the applicable Lessee
(or to the Lessee's designee) at such Lessee's cost and expense a
quitclaim deed with respect to such Property or Properties containing
representations and warranties of grantor to such Lessee regarding
Lessor Liens and an assignment of the Lessor's entire interest in such
Property or Properties (which shall include an assignment of all of
the Lessor's right, title and interest in and to any Net Proceeds with
respect to such Property or Properties not previously received by the
Lessor and an assignment of leases of the Properties), in each case in
recordable form and otherwise in conformity with local custom and free
and clear of the Lien of the applicable Lease Facility Mortgage and
any Lessor Liens and any Liens created by the Operative Documents
attributable to it;
(ii) such Property or Properties shall be conveyed to such Lessee (or its
designee) "AS IS" and in its then present physical condition; and
(iii) the Lessor shall execute and deliver to such Lessee and such Lessee's
title insurance company (or to the designee of the Lessee and its
title insurance company) an affidavit in customary form as to the
Lessor's title and Lessor Liens and a FIRPTA affidavit and shall
execute and deliver to Lessee a statement of termination of this
Master Lease and a termination of the Assignment of Lease and
Rent, in each case to the extent such Operative Documents relate to
such Property or Properties.
(b) If the Lessees properly exercises the Remarketing Option, then the
Lessees shall, on the Expiration Date, and at their own cost, surrender
possession of all of the Properties to the Lessor or the independent purchaser
(s) thereof, in each case by surrendering the same into the possession of the
Lessor or such purchaser(s), as the case may be, free and clear of all Liens
other than Lessor Liens and the lien of the applicable Lease Facility Mortgage,
in the condition required under this Master Lease (as modified by Modifications
permitted by this Master Lease), ordinary wear and tear excepted, and in
compliance with Applicable Law.
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1. Estoppel Certificates. At any time and from time to time upon not
less than ten (10) Business Days' prior request by the Lessor or any Lessee
(the "Requesting Party"), the other party (whichever party shall have received
such request, the "Certifying Party") shall furnish to the Requesting Party a
certificate signed by an individual having the office of vice president or
higher in the Certifying Party certifying that this Master Lease is in full
force and effect (or that this Master Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
(Interest/Yield) and Supplemental Rent have been paid; to the best knowledge of
the signer of such certificate, whether or not the Requesting Party is in
default under any of its obligations hereunder (and, if so, the nature of such
alleged default); and such other matters under this Master Lease as the
Requesting Party may reasonably request. Any such certificate furnished
pursuant to this Article XXII may be relied upon by the Requesting Party, and
any existing or prospective mortgagee, purchaser or lender, and any accountant
or auditor, of, from or to the Requesting Party (or any Affiliate thereof).
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
23.1. Acceptance of Surrender. No surrender to the Lessor of this Master
Lease or of all or any of the Properties or of any part of any thereof or of any
interest therein shall be valid or effective unless agreed to and accepted in
writing by the Lessor and, prior to the payment or performance of all
obligations under the Loan Agreement and termination of the Commitments, the
Lenders, and no act by the Lessor or any Lender or any representative or agent
of the Lessor or any Lender, other than a written acceptance, shall constitute
an acceptance of any such surrender.
ARTICLE XXIV
NO MERGER OF TITLE
24.1. No Merger of Title. There shall be no merger of this Master Lease
or of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Master Lease or the leasehold estate created hereby or any interest in
this Master Lease or such leasehold estate, (b) the fee or ground leasehold
estate in any Property, except as may expressly be stated in a written
instrument duly executed and delivered by the appropriate Person and/or (c) a
beneficial interest in the Lessor.
ARTICLE XXV
INTENT OF THE PARTIES
25.1. Nature of Transaction.
(a) It is the intent of the parties that: (a) the Lease constitutes an
operating lease from Lessor to the Lessees for purposes of the Lessees'
financial reporting, (b) the Lease and other transactions contemplated hereby
preserve ownership in the Properties in the Lessees for Federal and state income
tax and bankruptcy purposes, (c) each Lease Supplement grants to the Collateral
Agent, for the benefit of the Participants and the other Secured Parties, a Lien
on the Property covered thereby, and (d) the obligations of the Lessees to pay
Basic Rent (Interest/Yield) and any part of the Property Balance (other than
accrued and unpaid interest and Yield related thereto) shall be treated as
payments of interest and principal, respectively, for Federal and state income
tax and bankruptcy purposes. The Collateral Agent shall be deemed to have a
valid and binding security interest in and Lien on the Properties, free and
clear of all Liens other than Permitted Property Liens, as security for the
obligations of the Lessees under the Operative Documents (it being understood
and agreed that the Lessees do hereby grant a Lien, and convey, transfer,
assign, mortgage and warrant, WITH MORTGAGE COVENANTS, to the Collateral Agent
and its successors, transferees and assigns, for the benefit of the Participants
and the other Secured Parties and its successors, transferees and assigns, the
Properties and any proceeds or products thereof, to have and hold the same as
collateral security for the payment and performance of the obligations of the
Lessees under the Operative Documents), and each of the parties hereto agrees
that it will not, nor will it permit any Affiliate to at any time, take any
action or fail to take any action with respect to the preparation or filing of
any income tax return, including an amended income tax return, to the extent
that such action or such failure to take action would be inconsistent with the
intention of the parties expressed in this Section 25.1. This mortgage is
granted upon the STATUTORY CONDITION, for any breach of which Lessor shall have
the STATUTORY POWER OF SALE.
(b) Specifically, without limiting the generality of clause (a) of this
Section 25.1, the parties hereto intend and agree that in the event of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting a Lessee, the
Company, the Lessor, any Participant or any collection actions, the transactions
evidenced by the Operative Documents shall be regarded as loans made by the
Participants to the Lessees.
ARTICLE XXVI
MISCELLANEOUS
26.1. Survival; Severability; Etc. Anything contained in this Master
Lease to the contrary notwithstanding, all claims against and liabilities of the
Lessees or the Lessor arising from events commencing prior to the expiration or
earlier termination of this Master Lease shall survive such expiration or
earlier termination for a period of one year except as to indemnification which
shall continue to survive. If any term or provision of this Master Lease or any
application thereof shall be declared invalid or unenforceable, the remainder of
this Master Lease and any other application of such term or provision shall, to
the full extent permitted law, not be affected thereby. If any right or option
of the Lessees provided in this Master Lease, including any right or option
described in Article XIV, XV, XVIII or XX, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the descendants of Franklin D. Roosevelt, the former
President of the United States, Henry Ford, the deceased automobile
manufacturer, and John D. Rockefeller, the founder of the Standard Oil Company,
known to be alive on the date of the execution, acknowledgement and delivery of
this Master Lease.
26.2. Amendments and Modifications. Subject to the requirements,
restrictions and conditions set forth herein and in the Participation Agreement,
neither this Master Lease nor any provision hereof may be amended, waived,
discharged or terminated except by an instrument in writing in recordable form
signed by the Lessor and the Lessees.
26.3. No Waiver. No failure by the Lessor or the Lessees to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law,
no waiver of any default shall affect or alter this Master Lease, and this
Master Lease shall continue in full force and effect with respect to any other
then existing or subsequent default.
26.4. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and directed to the address
described in, and deemed received in accordance with the provisions of, Section
14.3 of the Participation Agreement.
26.5. Successors and Assigns. All the terms and provisions of this Master
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
26.6. Headings and Table of Contents. The headings and table of contents
in this Master Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
26.7. Counterparts. This Master Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
26.8. GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO
THE CREATION AND PERFECTION OF THE LEASEHOLD ESTATES HEREUNDER AND THE EXERCISE
OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH ESTATES ARE
LOCATED. WITHOUT LIMITING THE FOREGOING, IN THE EVENT THAT THIS MASTER LEASE IS
DEEMED TO CONSTITUTE A FINANCING, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL GOVERN THE CREATION, TERMS AND
PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY, BUT THE LIEN CREATED HEREBY AND
THE CREATION, PERFECTION AND THE ENFORCEMENT OF SAID LIEN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH
ESTATES ARE LOCATED.
26.9. Limitations on Recourse. The parties hereto agree that except as
specifically set forth in the Lease or in any other Operative Document, the
Lessor shall have no personal liability whatsoever to the Lessees or their
respective successors and assigns for any claim based on or in respect of this
Master Lease or any of the other Operative Documents or arising in any way from
the transactions contemplated hereby or thereby and the recourse shall be solely
had against the Lessor's interest in the Properties or Equity Interests and any
and all proceeds thereof; provided, however, that the Lessor shall be liable in
its individual capacity (a) for its own willful misconduct or gross negligence
(or negligence in the handling of funds), (b) breach of any of its
representations, warranties or covenants under the Operative Documents, or (c)
for any Tax based on or measured by any fees, commission or compensation
received by it for acting as the Lessor as contemplated by the Operative
Documents. It is understood and agreed
that, except as provided in the preceding sentence: (i) the Lessor shall have
no personal liability under any of the Operative Documents as a result of acting
pursuant to and consistent with any of the Operative Documents; (ii) all
obligations of the Lessor to the Lessees are solely nonrecourse obligations
except to the extent that it has received payment from others; and (iii) all
such personal liability of the Lessor is expressly waived and released as a
condition of, and as consideration for, the execution and delivery of the
Operative Documents by the Lessor.
26.10. Original Lease. The single executed original of this Master Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt thereof of NationsBank, N.A., as
Collateral Agent for the Secured Parties therefor on or following the signature
page thereof shall be the Original Executed Counterpart of this Master Lease
(the "Original Executed Counterpart"). To the extent that this Master Lease
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Master Lease may be created through the transfer or possession of any
counterpart other than the Original Executed Counterpart.
IN WITNESS WHEREOF, the parties have caused this Master Lease be duly executed
and delivered as of the date first above written.
ACADEMY NURSING HOME, INC.,
as Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC., as
Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
PRESCOTT NURSING HOME, INC., as Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
WILLOW MANOR NURSING HOME, INC., as Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
ADS/MULTICARE, INC., as Lessee
By BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
SELCO SERVICE CORPORATION, as Lessor
By
Name:
Title:
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of thebdate hereof.
NATIONSBANK, N.A., as Collateral Agent for the Secured
Parties
By
Name:
Title:
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.1. Definitions; Interpretation . . . . . . . . . . . . . . . 2
ARTICLE II
MASTER LEASE
2.1. Acceptance and Lease of Property. . . . . . . . . . . . 2
2.2. Acceptance Procedure. . . . . . . . . . . . . . . . . . 2
2.3. Term. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Title . . . .. . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
PAYMENT OF RENT
3.1. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. Payment of Rent . . . . . . . . . . . . . . . . . . . . 3
3.3. Supplemental Rent . . . . . . . . . . . . . . . . . . . 4
3.4. Method of Payment . . . . . . . . . . . . . . . . . . . 4
3.5. Payments of Rent Constitute Senior Debt .. . . . . . . . 5
3.6. Payments After Termination of Credit Agreement, etc . . 5
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . 5
4.2. Right to Inspect. . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
NET LEASE, ETC.
5.1. Net Lease . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. No Termination or Abatement . . . . . . . . . . . . . . 7
5.3. No Bar. . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
SUBLEASES
6.1. Subletting. . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1. Condition of the Properties . . . .. . . . . . . . . . . . . . 8
7.2. Risk of Loss. . . . . . . . . . . .. . . . . . . . . . . . . . 9
ARTICLE VIII
POSSESSION AND USE OF THE PROPERTIES, ETC.
8.1. Utility Charges . . . . . . . . . . . . . . . . . . . . . . . 9
8.2. Possession and Use of the Property.. . . . . . . . . . . . . . 9
8.3. Compliance with Requirements of Law, Property Legal
Requirements an Insurance Requirements . .. . . . . . . . . . 10
8.4. Assignment by Lessee. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1. Maintenance and Repair; Return. . . . . . . . . . . . . . . . 10
ARTICLE X
MODIFICATIONS, ETC.
10.1. Modifications, Substitutions and Replacements. . .. . . . . . 11
10.2. Notice to the Lessor . . . . . . . . . . . . . . .. . . . . . 12
ARTICLE XI
WARRANT OF TITLE; EASEMENTS
11.1. Warrant of Title . . . . . . . . . . . . . . . . .. . . . . . 12
11.2. Grants and Releases of Easements; Lessor's Waivers. . . . . . 13
ARTICLE XII
PERMITTED CONTESTS
12.1. Permitted Contests in Respect of Applicable Law; Liens;
Property Taxes 14
ARTICLE XIII
INSURANCE
13.1. Public Liability and Workers' Compensation Insurance . . . . 15
13.2. Hazard and Other Insurance . . . . . . . . . . . . . . . . . 16
13.3. Insurance Coverage . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
14.1. Casualty and Condemnation. . . . . . . .. . . . . . . . . . . 18
14.2. Environmental Matters. . . . . . . . . .. . . . . . . . . . . 20
14.3. Notice of Environmental Matters. . . . .. . . . . . . . . . . 21
ARTICLE XV
TERMINATION OF LEASE
15.1. Partial Termination upon Certain Events. . .. . . . . . . . . 21
15.2. Termination Procedures . . . . . . . . . . .. . . . . . . . . 22
ARTICLE XVI
EVENTS OF DEFAULT
16.1. Lease Events of Default. . . . . . . . . . . . . . . . . . . 22
16.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16.3. Waiver of Certain Rights . . . . . . . . . . . . . . . . . . 29
ARTICLE XVII
LESSOR'S RIGHT TO CURE
17.1. The Lessor's Right to Cure a Lessee's Lease Defaults . .. . . 29
ARTICLE XVIII
PURCHASE PROVISIONS
18.1. Optional Purchase of the Properties. . . .. . . . . . . . . . 30
(a) Purchase of All of the Properties. . . . . .. . . . . . . . . . 30
(b) Purchase of Individual Properties.. 30
(c) Transfer Procedures. . . . . . . .. 31
18.2. Expiration Date Purchase Obligation. . . . . . . . . . . . . 32
ARTICLE XIX
INTENTIONALLY OMITTED
ARTICLE XX
REMARKETING OPTION
20.1. Option to Remarket . . . . . . .. . . . . . . . . . . . . . . 32
20.2. Certain Obligations Continue . .. . . . . . . . . . . . . . . 37
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
21.1. Provisions Relating to the Exercise of Purchase Option or
Obligation and Conveyance Upon Remarketing and Conveyance
Upon Certain Other Events 37
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1. Estoppel Certificates. . . . . . . . . . . . . . . . . . . . 39
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
23.1. Acceptance of Surrender. . . . . . . . . . . . . . . . . . . 39
ARTICLE XXIV
NO MERGER OF TITLE
24.1. No Merger of Title . . .. . . . . . . . . . . . . . . . . . . 39
ARTICLE XXV
INTENT OF THE PARTIES
25.1. Nature of Transaction. . . . . . . . . . . . . . . . . . . . 40
ARTICLE XXVI
MISCELLANEOUS
26.1. Survival; Severability; Etc. . . . . . . . . . . . . . . . . 41
26.2. Amendments and Modifications . . . . . . . . . . . . . . . . 41
26.3. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 42
26.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
26.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . 42
26.6. Headings and Table of Contents . . . . . . . . . . . . . . . 42
26.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 42
26.8. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . 42
26.9. Limitations on Recourse. . . . . . . . . . . . . . . . . . . 43
26.10. Original Lease. . . . . . . . . . . . . . . . . . . . . . . 43
EXHIBIT A Form of Lease Supplement
APPENDIX A
to
Participation Agreement,
Master Lease,
Lease Supplements
Loan Agreement, and
Lease Facility Mortgages
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns
are permitted by the Operative Documents, and reference to a
Person in a particular capacity excludes such Person in any
other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to
time in accordance with the terms thereof and, if applicable,
the terms of the other Operative Documents and reference to any
promissory note includes any promissory note which is an
extension or renewal thereof or a substitute or replacement
therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and
regulations promulgated thereunder and reference to any
section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect
and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or
other provision;
(vi) reference in any Operative Document to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section
thereof or Appendix, Schedule or Exhibit thereto;
(vii) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to an Operative Document as a
whole and not to any particular Article, Section
or other provision thereof;
(viii)"including" (and with correlative meaning "include") means
including without limiting the generality of any description
preceding such term; and
(ix) relative to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding".
B. Accounting Terms. In each Operative Document, unless expressly
otherwise provided, accounting terms shall be construed and
interpreted, and accounting determinations and computations shall
be made, in accordance with GAAP.
C. Conflict in Operative Documents. If there is any conflict between
any Operative Documents, such Operative Document shall be
interpreted and construed, if possible, so as to avoid or minimize
such conflict but, to the extent (and only to the extent) of such
conflict, the Participation Agreement shall prevail and control.
D. Legal Representation of the Parties. The Operative Documents were
negotiated by the parties with the benefit of legal representation
and any rule of construction or interpretation otherwise requiring
the Operative Document to be construed or interpreted against any
party shall not apply to any construction or interpretation hereof
or thereof.
E. Defined Terms. Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in
each Operative Document.
"ABR Amount" means any Loan or Lessor Amount which accrues interest or
Yield, as the case may be, by reference to the Alternate Base Rate.
"Acquisition Date" means any Business Day on which the Lessor acquires any
Property (whether by acquiring the fee interest in such Property or by
acquiring all of the outstanding capital stock (in the case of a
corporation) or all of the partnership interests (in the case of a
partnership) in any Person that owns directly the fee interest in such
Property) pursuant to the provisions of the Participation Agreement and
the other Operative Documents.
"Advance" is defined in Section 3.1(a) of the Participation Agreement.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with
such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed
to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 30% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"After Tax Basis" means, with respect to any payment to be received, the
amount of such payment increased so that, after deduction of the amount
of all taxes required to be paid by the recipient (less any tax savings
realized and the present value of any tax savings projected to be
realized by the recipient as a result of the payment of the indemnified
amount or the occurrence of the event giving rise to such
indemnification) with respect to the receipt by the recipient of such
amounts, such increased payment (as so reduced) is equal to the payment
otherwise required to be made.
"Agent Lien" means any Lien created by, or arising out of any claim
against, the Collateral Agent or the Lease Agent, as the case may be,
imposed on or with respect to any Property or the Lessor's interest
therein, that is not expressly permitted under the terms of the
Operative Documents.
"Aggregate Commitment Amount" means $54,416,988, as such amount may be
increased from time to time pursuant to a written agreement signed by
the Lessor, each Lender and the Company.
"Allocation Percentage" means, with respect to any Lessee as of any date
of determination, the quotient (expressed as a percentage) of (a) the
aggregate outstanding principal amount of the Loans and the portion of
the Lessor Amount advanced with respect to the Property leased by
such Lessee pursuant to the Master Lease divided by (b) the sum of the
Loan Balance plus the Lessor Balance.
"Alternate Base Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of
(a) the rate of interest most recently announced by the Lease Agent
in the United States as its prime rate for Dollar loans which
rate is not necessarily intended to be the lowest rate of
interest determined by the Lease Agent in connection with
extensions of credit (the "Prime Rate"); or
(b) the Federal Funds Rate most recently determined by the Lease
Agent.
Each change in any interest rate provided for herein based upon the
Alternate Base Rate resulting from a change in the Alternate Base Rate
shall take effect at the time of such change in the Alternate Base Rate.
The Lease Agent shall give prompt notice to the Company, the
Lessees, and each Participant of changes in the Alternate Base Rate.
"Applicable Law" means all existing and future applicable laws, rules,
regulations including Environmental Laws), statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and
interpretations by, any Governmental Authority, and applicable
judgments, decrees, injunctions, writs, orders or like action of any
court, arbitrator or other administrative, judicial or quasi-judicial
tribunal or agency of competent jurisdiction (including those pertaining to
health, safety or the environment (including wetlands) and those
pertaining to the construction, use or occupancy of any Property) and any
restrictive covenant or deed restriction or easement of record, in each
case directly affecting the Lessees, any Property or any material
interests in any other kind of property or asset, whether real,
personal or mixed, or tangible or intangible, of the Lessees.
"Applicable Lease Margin" means on any date, the percentage set forth below
opposite the applicable Pricing Level on such date:
<TABLE>
Applicable
Pricing Level Lease Margin
<S> <C>
I 0.75%
II 1.00%
III 1.25%
IV 1.50%
</TABLE>
"Applicable Loan Margin" means on any date, with respect to the Tranche A
Loans and Tranche B Loans, respectively, the percentage set forth below
opposite the applicable Pricing Level on such date:
<TABLE>
Tranche A Tranche B
Applicable Applicable
Pricing Level Loan Margin Loan Margin
<S> <C> <C>
I 0.75% 0.875%
II 1.00% 1.125%
III 1.25% 1.375%
IV 1.50% 1.625%
</TABLE>
"Applicable Rate" means as of any date of determination:
(a) in the case of Loans and Lessor Amounts that are LIBO Rate
Amounts, during each interest Period applicable thereto, a rate
per annum equal to the LIBO Rate (Reserve Adjusted) determined
by the Lease Agent for such Interest Period plus the Applicable
Lease Margin determined for such date plus 1/8 of 1%; and
(b) in the case of Loans and Lessor Amounts that are ABR Amounts, a
rate per annum equal to the Alternate Base Rate for such date plus
1/8 of 1%.
"Appraisal" means, with respect to each Property, an appraisal, prepared by
a reputable appraiser selected by the Lessor, of such Property, which
Appraisal, in the reasonable opinion of counsel to the Lessor and the
Lenders, complies in all material respects with all of the provisions of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as
amended, the rules and regulations adopted pursuant thereto, and all other
applicable Requirements of Law addressed to the Lessor and the Lenders, and
will appraise the Fair Market Sales Value of such Property as of the
Acquisition Date and as of the Expiration Date.
"Appurtenant Rights" means, with respect to any Land, (i) all agreements,
easements, rights of way or use, rights of ingress or egress,
privileges, appurtenances, tenements, hereditaments and other rights and
benefits at any time belonging or pertaining to such Land or the
Improvements thereon, including, without limitation, the use of any
streets, ways, alleys, vaults or strips of land adjoining, abutting,
adjacent or contiguous to such Land and (ii) all permits, licenses and
rights, whether or not of record, appurtenant to such Land.
"Assignment Agreement" is defined in Section 12.1 of the Participation
Agreement.
"Assignment of Lease and Rent" means the Assignment of Lease and Rent dated
as of December 11, 1996, from the Lessor, as assignor, to the Collateral
Agent for the benefit of each of the Secured Parties, as assignee.
"Assumption Agreements" means, collectively, the Assumption Agreements
in the form of Exhibit K to the Credit Agreement to be delivered in
accordance with Section 7.09 of the Credit Agreement.
"Bankruptcy Code" is defined in Section 6.1(e) of the Loan Agreement.
"Basic Rent" means the sum of Basic Rent (Interest/Yield) plus all Loans
due on the Maturity Date plus the Lessor Amount due on the Expiration Date.
"Basic Rent (Interest/Yield)" means, as determined as of any Basic Rent
Payment Date, the amounts payable on the outstanding Loans and
outstanding Lessor Amount pursuant to Section 4.1 of the Participation
Agreement.
"Basic Rent Payment Date" means:
(a) as to any LIBO Rate Amount, the last day of each applicable Interest
Period (and, if any such Interest Period shall exceed three (3)
months, on each date occurring every three (3) months after the
first day of such Interest Period) and the Maturity Date; and
(b) as to any ABR Amount, each Monthly Payment Date, any date on which such
ABR Amount is converted into a LIBO Rate Amount and the Maturity Date.
"Bill of Sale" is defined in Section 6.2(c) of the Participation Agreement.
"Break Costs" means an amount equal to the amount, if any, required to
compensate any Participant for any losses (including any loss, cost or
expense incurred by reason of the liquidation or reemployment of
deposits or funds acquired by such Participant to fund its obligations
under the Operative Documents) it may reasonably incur as a result of
(v) the payment of Rent other than on a Basic Rent Payment Date, (x) any
Advance not being made on the date specified therefor in the applicable
Funding Request (other than as a result of a breach by such Participant
of its obligation under Section 3.1, 3.2 or 3.3, as the case may be, of the
Participation Agreement to make Advances or make the Lessor Amount or Loans
available to the Lessor), (y) the payment of the Lease Balance on any
date other than a Basic Rent Payment Date, or (z) as a result of any
conversion of the LIBO Rate in accordance with Section 13.7 or 13.8 of
the Participation Agreement. A statement as to the amount of such loss,
cost or expense, prepared in good faith and in reasonable detail and
submitted by such Participant to the Lessee, shall be presumed correct.
"Business Day" means each day which is not a day on which banks in New
York, New York, are generally authorized or obligated, by law or executive
order, to close and which is also a day on which dealings in Dollars are
carried on in the London interbank eurodollar market.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the Guarantor in accordance with GAAP.
"Casualty" means any damage or destruction of all or any portion of a
Property as a result of a fire or other casualty.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. SS 9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.
"Certifying Party" is defined in Section 22.1 of the Master Lease.
"Claims" means any and all obligations, liabilities, losses, actions,
suits, judgments, penalties, fines, claims, demands, settlements, costs
and out-of-pocket expenses (including, without limitation, reasonable
legal fees and expenses) of any nature whatsoever.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute thereto.
"Collateral" means the "Collateral", as defined in the Intercreditor
Agreement.
"Collateral Agent" means Nationsbank, N.A., in its capacity as
Collateral Agent for the Secured Parties.
"Commitment" means (i) as to any Lender, its Loan Commitment, and (ii) as
to the Lessor, the Lessor Commitment.
"Commitment Termination Date" means the earliest of (i) the date occurring
one hundred eighty (180) days after the Initial Acquisition Date, (ii)
the date specified in a written notice from the Company to the Lessor
and each Lender as the Commitment Termination Date and (iii) such
earlier date on which the Commitments shall terminate as provided in the
Operative Documents.
"Company" means The Multicare Companies, Inc., a Delaware corporation.
"Compliance Certificate" means a certificate of a financial Responsible
Officer of the Company substantially in the form of Exhibit D to the Credit
Agreement.
"Condemnation" means, with respect to any Property, any condemnation,
requisition, confiscation, seizure or other taking or sale of the use,
access, occupancy, easement rights or title to such Property or any part
thereof, wholly or partially (temporarily or permanently), by
or on account of any eminent domain proceeding or other taking of action by
any Person having the power of eminent domain, including an action by a
Governmental Authority to change the grade of, or widen the streets
adjacent to, such Property or alter the pedestrian or vehicular traffic
flow to such Property so as to result in change in access to such Property,
or by or on account of an eviction by paramount title or any transfer
made in lieu of any such proceeding or action. A "Condemnation" shall be
deemed to have occurred on the earliest of the dates that use, occupancy
or title vests in the condemning authority.
"Consolidated Entity" has the meaning assigned to such term in the Credit
Agreement.
"Continuation/Conversion Notice" means a notice of continuation or
conversion substantially in the form of Exhibit B to the Participation
Agreement.
"Credit Agreement" means the Third Amended and Restated Credit Agreement
dated as of December 11, 1996, among the Company, the Subsidiary
Co-Borrowers, the Credit Facility Banks and the Credit Facility Agent, as
such Credit Agreement may be amended, supplemented, modified, replaced,
renewed, extended, refinanced or refunded from time to time in accordance
with the provisions of Section 3.01 of the Intercreditor Agreement.
"Credit Facility Agent" means NationsBank, N.A., in its capacity as
administrative agent under the Credit Agreement.
"Credit Facility Banks" means, collectively, the various financial
institutions party from time to time to the Credit Agreement as lenders
thereunder.
"Credit Facility Documents" means, collectively, the Credit Agreement, the
Credit Facility Notes, the Letters of Credit, the Intercreditor
Agreement, the Assumption Agreements, the Interest Rate Protection
Agreements and the Security Documents, as each may be amended from time
to time in accordance with the provisions of Section 3.01 of the
Intercreditor Agreement.
"Credit Facility Notes" means, collectively, the revolving credit and term
notes issued by the Company and the Subsidiary Co-Borrowers under the
Credit Agreement, as such notes may be amended, supplemented, modified,
replaced, renewed, extended, refinanced or refunded from time to time in
accordance with the provisions of Section 3.01 of the Intercreditor
Agreement.
"Deed" means a deed with respect to the real property comprising the
applicable Property, in the form set forth in the purchase agreement
applicable to such Property and in conformity with local custom and
Applicable Law and appropriate for recording with the applicable
Governmental Authorities, conveying fee simple title to such real
property to the Lessor, subject only to Permitted Property Liens.
"Default" means any condition, occurrence or event which, after notice or
lapse of time or both, would constitute an Event of Default.
"Documentation Date" is defined in Section 6.1 of the Participation
Agreement.
"Dollars" and "$" mean dollars in lawful currency of the United States of
America.
"End of the Term Report" is defined in Section 13.2(a) of the Participation
Agreement.
"Environmental Audit" means, with respect to each Property, a Phase One
environmental site assessment (the scope and performance of which meets or
exceeds the then most current ASTM Standard Practice E1527 for
Environmental Site Assessments: Phase One Environmental Site Assessment
Process) of such Property.
"Environmental Law(s)" means all federal, state, regional, county or local
laws, statutes, rules, regulations or ordinances concerning the
generation, recycling, use, reuse, sale, storage, handling, transport,
treatment, Release or disposal of Hazardous Materials, including
CERCLA, RCRA, the Clean Air Act, 42 U.S.C. S 7401, et seq. ("CAA"), the
Toxic Substances Control Act, 15 U.S.C. S 2601 et seq. ("TSCA") and any
rules and regulations promulgated or published thereunder.
"Environmental Violation" means any activity, occurrence or condition that
violates or results in non-compliance with any Environmental Laws.
"Equity Interest" means, with respect to any Property, all of the equity
interest in any Person that owns directly the fee simple interest in
such Property, including (if applicable):
(a) all of the partnership interests in Academy Manor, Andover,
Massachusetts,
(b) all of the beneficial interest of the Academy Realty Trust in
Heritage Nursing Care Center, Lowell, Massachusetts,
(c) all of the partnership interests in Prescott House Nursing Home,
North Andover, Massachusetts,
(d) all of the partnership interests in Sutton Hill, North Andover,
Massachusetts,
(e) all of the partnership interests in Westford Nursing and Retirement
Center, Westford, Massachusetts and
(f) all of the outstanding capital stock in Willow Manor Nursing Home
Inc., Lowell, Massachusetts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or
(c) of the Code of which any Consolidated Entity is a member, or (ii)
solely for purposes of potential liability under Section 302(c)(i 1) of
ERISA and Section 41 2(c)(11) of the Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Code, described in
Section 414(m) or (o) of the Code of which any Consolidated Entity is a
member.
"Event of Default" means a Lease Event of Default or a Loan Agreement
Event of Default.
"Excess Sales Proceeds" means, as of any date, the proceeds of the sale of
the Properties minus any marketing, closing or other costs, prorations or
commissions incurred by the Collateral Agent or any other Secured Party
in connection therewith minus the Lease Balance and all other Secured
Obligations.
"Expiration Date" means, with respect to the Lease, unless the Lease shall
have been earlier terminated in accordance with the provisions of the
Intercreditor Agreement, the Lease or the other Operative Documents, the
fifth anniversary of the Initial Acquisition Date.
"Expiration Date Purchase Obligation" means the obligation of each Lessee,
pursuant to Section 18.2 of the Master Lease, to purchase on the
Expiration Date all (but not less than all) of the Property leased to
such Lessee under the Master Lease and applicable Lease Supplement.
"Extended Marketing Period" is defined in Section 20.1 of the Master Lease.
"Facility Fees" is defined in Section 4.5 of the Participation Agreement.
"Fair Market Sales Value" means, with respect to any Property, the amount,
which in any event shall not be less than zero, that would be paid in
cash in an arm's-length transaction between an informed and willing
purchaser and an informed and willing seller, neither of whom is under
any compulsion to purchase or sell, respectively, for the ownership of such
Property. The Fair Market Sales Value of any Property shall be
determined based on the assumption that, except for purposes of Article
XVI of the Master Lease and Section 13.2 of the Participation Agreement,
such Property is in the condition and state of repair required under
Section 9.1 of the Master Lease, title is in the condition required or
permitted under the Master Lease and the Lessee is in compliance with the
other requirements of the Operative Documents relating to the condition of
the Property.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight federal funds
transactions as published by the Federal Reserve Bank of New York for
such day (or, if such day is not a Business Day, for the immediately
preceding Business Day), plus 0.25%.
"Fee Letter" means the letter agreement dated as of November 18, 1996 with
respect to fees between the Company and Key Global Finance Ltd.,
as Structuring/Placement Agent.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"Funding Office" means the office of each Participant identified on
Schedule I to the Participation Agreement as its Funding Office.
"Funding Percentage" means, as to any Participant, the percentage set forth
opposite such Participant's name under the heading "Funding Percentage" on
Annex A to the Participation Agreement, as such Annex may be amended from
time to time.
"Funding Request" is defined in Section 3.4(a) of the Participation
Agreement.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred
to in Section 8.2(e) of the Participation Agreement (except for
immaterial changes determined preferable by the Consolidated Entities'
independent public accountants).
"Governmental Action" means all Licenses, permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances,
orders, judgments, written interpretations, decrees, licenses,
exemptions, publications, filings, notices to and declarations of or with,
or required by, any Governmental Authority, or required by any Applicable
Law, and shall include all environmental and operating permits and licenses
that are required for the full use, occupancy, zoning and operation of
any Property.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Remarketing Proceeds" is defined in Section 20.1(l) of the Master
Lease.
"Guarantor" means, collectively, The MultiCare Companies, Inc., a Delaware
corporation, and each Subsidiary Guarantor.
"Hazardous Activity" means any activity, process or procedure that directly
or indirectly (i) produces, generates or creates any Hazardous Material;
(ii) causes or results in the Release of any Hazardous Material into the
environment (including air, water vapor, surface water, groundwater,
drinking water, land (including surface or subsurface), plant, aquatic and
animal life); (iii) involves the containment or storage of any Hazardous
Material; or (iv) would be regulated as hazardous waste treatment, storage
or disposal within the meaning of any Environmental Laws.
"Hazardous Materials" means any of the following: (i) any pollutant,
contaminant, chemical, waste and any toxic, infectious, carcinogenic,
reactive, corrosive, ignitible or flammable chemical or chemical
compound or hazardous substance, material or waste whether solid, liquid
or gas that is subject to regulation control or remediation under any
Environmental Laws; (ii) any asbestos, polychlorinated biphenyls,
petroleum, petroleum derivatives or by-products, or urea formaldehyde.
"Impositions" means any and all taxes or levies, imposts, duties, charges,
assessments or withholdings of a similar nature ("Taxes") (including (i)
real and personal property taxes, including personal property taxes on
any property covered by any Lease that is classified by Governmental
Authorities as personal property, and real estate or ad valorem taxes in
the nature of property taxes; (ii) sales taxes, use taxes and other similar
taxes (including rent taxes and intangibles taxes); (iii) any excise
taxes; (iv) real estate transfer taxes, conveyance taxes, mortgage
taxes, intangible taxes, stamp taxes and documentary recording taxes and
fees; (v) taxes that are or are in the nature of franchise, income,
value added, gross receipts, privilege and doing business taxes, license
and registration fees; and (vi) assessments on any Property, including
all assessments for public improvements or benefits, whether or not such
improvements are commenced or completed within the Lease Term), and in
each case all interest, additions to tax and penalties thereon, which
at any time may be levied, assessed or imposed by any Federal, state or
local authority upon or with respect to (a) any Tax Indemnitee with respect
to any Property or any part thereof or interest therein, or any Lessee or
any sublessee or user of any Property; (b) the financing, refinancing,
demolition, construction, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership,
possession, purchase, rental, lease, activity conducted on, delivery,
insuring, use, operation, improvement, transfer, return or other
disposition of such Property or any part thereof or interest therein;
(c) the Loans, Lessor Amount or other indebtedness with respect to any
Property or any part thereof or interest therein; (d) the rentals, receipts
or earnings arising from any Property or any part thereof or interest
therein; (e) the Operative Documents or any payment made or accrued
pursuant thereto; (f) the income or other proceeds received with respect
to any Property or any part thereof or interest therein upon the sale or
disposition thereof; (g) any contract relating to the construction,
acquisition or delivery of the Improvements or any part thereof or
interest therein; (h) the issuance of the Notes; or (i) otherwise in
connection with the transactions contemplated by the Operative Documents.
Notwithstanding anything in the first paragraph of this definition
(except as provided in the final paragraph of this definition) the term
"Imposition" shall not mean or include:
(i) Taxes and impositions that are imposed by any Governmental
Authority and that are based upon or measured by or with respect
to the gross or net income, receipts, profits, gains, capital
or net worth (including, without limitation, any minimum or
alternative minimum Taxes, income or capital gains Taxes,
excess profits Taxes, items of Tax preference, or capital
stock, franchise, business privilege or doing business Taxes),
or accumulated earnings Taxes or personal holding company
Taxes, including Taxes collected by withholding, but Taxes
described in this clause (i) shall not include Taxes that are,
or are in the nature of, sales, use, rental, transfer or
property Taxes) and any interest, additions to tax, penalties
or other charges in respect thereof; provided that this clause
(i) shall not be interpreted to prevent a payment from being made
on an After Tax Basis if such payment is otherwise required to be
so made;
(ii) any Tax or imposition to the extent, but only to such extent, it
relates to any act, event or omission that occurs, or relates
to a period, prior to the commencement of the Master Lease
(other than with respect to Taxes described in clause (iii)
of the definition of Permitted Property Liens) or after the
termination of the Lease (but not any Tax or imposition that
relates to any period during the Term of the Master Lease but
prior to the termination of the Master Lease with respect to
the Property to which such Imposition relates);
(iii) any Tax or imposition for so long as, but only for so long as, it
is being contested in accordance with the provisions of Section
13.5(b) of the Participation Agreement or Section 12.1 of the
Master Lease, provided that the foregoing shall not limit any
obligation under Section 13.5(b) of the Participation
Agreement or Section 12.1 of the Master Lease to advance to
such Tax Indemnitee amounts with respect to Taxes that are
being contested in accordance with Section 13.5(b) of the
Participation Agreement or Section 12.1 of the Master Lease,
as applicable, or any expenses incurred by such Tax Indemnitee
in connection with such contest;
(iv) any interest, additions to tax or penalties imposed as a result
of a breach by a Tax Indemnitee of its obligations under
Section 13.5(e) of the Participation Agreement or as a result
of a Tax Indemnitee's failure to file any return or other
documents timely and as prescribed by applicable law; provided
that this clause (iv) shall not apply if such failure is
attributable to a failure by any Lessee to fulfill its
obligations under the Lease with respect to any such return;
(v) any Taxes or impositions imposed with respect to any voluntary
transfer, sale, financing or other voluntary disposition of
any interest in any Property or any part thereof, or any
interest therein or any interest or obligation under the
Operative Documents or from any sale, assignment, transfer or
other disposition of any interest in a Tax Indemnitee or any
Affiliate thereof, (other than any transfer in connection with
(1) the exercise by a Lessee of its Purchase Option or any
termination option or other purchase of any Property by any
Lessee (2) the occurrence of an Event of Default, (3) a
Casualty or Condemnation affecting any Property, or (4) any
sublease, modification or addition to any Property by any
Lessee);
(vi) any Taxes or impositions imposed on a Tax Indemnitee, to the
extent such Tax Indemnitee actually receives a credit,
deduction, allowance or arbitration (or otherwise has a
reduction in a liability for Taxes) in respect thereof against
Taxes (but only to the extent such credit is not taken into
account in calculating the indemnity payment on an After Tax
Basis);
(vii) Taxes imposed on or with respect to, based on, or measured by
any fees received by any Tax Indemnitee;
(viii) Taxes resulting from, or that would not have been imposed but
for, the gross negligence or willful misconduct of such Tax
Indemnitee or Affiliate thereof;
(ix) Taxes resulting from, or that would not have been imposed but
for, a breach by the Tax Indemnitee or any Affiliate thereof
of any representations, warranties or covenants set forth in
the Operative Documents (unless such breach is caused by any
Lessee's breach of its representations, warranties or
covenants set forth in the Operative
Documents);
(x) Taxes arising out of or resulting from a Tax Indemnitee's failure
to comply with the provisions of Section 13.5(b) of the
Participation Agreement or Section 12.1 of the Master Lease,
which failure precludes or materially adversely affects the
ability to conduct a contest pursuant to Section 13.5(b) of
the Participation Agreement or Section 12.1 of the Master
Lease, as applicable (unless such failure is caused by any
Lessee's breach of its obligations);
(xi) with respect to each Property, Taxes which are included in
applicable Property acquisition cost if and to the extent
actually paid;
(xii) Taxes that would have been imposed in the absence of the
transactions contemplated by the Operative Documents, and
Taxes arising out of, or imposed as a result of, activities of
a Tax Indemnitee or Affiliate thereof unrelated to the
transactions contemplated by the Operative Documents;
(xiii) Taxes arising out of or resulting from, or that would not have
been imposed but for the existence of, any Lessor Lien.
(xiv) Any Tax imposed against or payable by a Tax Indemnitee to the
extent that the amount of such Tax exceeds the amount of such
Tax that would have been imposed against or payable by such
Tax Indemnitee (or, if less, that would have been subject to
indemnification under Section 13.5 of the Participation
Agreement) if such Tax Indemnitee were not a direct or
indirect successor, transferee or assign of one of the
original Tax Indemnitees; provided, however, that this
exclusion (xiv) shall not apply if such direct or indirect
successor, transferee or assign acquired its interest as a
result of transfer while an Event of Default shall have
occurred and is continuing;
(xv) Taxes that would not have been imposed but for an amendment,
supplement, modification, consent or waiver to any Operative
Document not initiated, requested or consented to by any
Lessee unless such amendment, supplement, modification,
consent or waiver (A) arises due to, or in connection with
there having occurred, an Event of Default or (B) is required
by the terms of the Operative Documents or is executed in
connection with any amendment to the Operative Documents required
by law;
(xvi) Taxes in the nature of intangibles, stamp, documentary or similar
Taxes;
(xvii) Taxes imposed because any Tax Indemnitee or any Affiliate
thereof is not a United States person within the meaning of
Section 7701(a)(30) of the Code (whether paid by a Tax
Indemnitee or an Affiliate or collected by withholding or
otherwise); and
(xviii) Any tax imposed in lieu of or in substitution for a Tax not
subject to indemnity pursuant to the provisions of Section
13.5 of the Participation Agreement.
Notwithstanding the foregoing, the exclusions from the definition of
Impositions set forth in clauses (i), (ii), (v), (xvi) and (xviii) (to the
extent that any such tax is imposed in lieu of or in substitution for a Tax
set forth in clauses (i), (ii), (v) and (xvi)) above shall not apply (but
the other exclusions shall apply) to any Taxes or any increase in Taxes
imposed on a Tax Indemnitee net of any decrease in taxes realized by
such Tax Indemnitee, to the extent that such tax increase or decrease would
not have occurred if on each Funding Date the Lessor had advanced funds
to any Lessee in the form of a loan secured by the applicable Property
in an amount equal to the applicable Property Improvement Cost funded on
such Funding Date, with debt service for such loan equal to the Basic
Rent payable on each Payment Date and a principal balance at the
maturity of such loan in an amount equal to the then outstanding amount
of the Advances at the end of the term of the Master Lease.
"Improvements" means all buildings, structures and other improvements of
every kind existing at any time and from time to time on or under any
Land, or any parcel of Land to be acquired pursuant to the terms of the
Operative Documents, together with any and all appurtenances to such
buildings, structures or improvements, including sidewalks, utility pipes,
conduits and lines, parking areas and roadways, all licenses, if any,
acquired or assigned to Lessor in respect of the Properties and the
transactions contemplated by the Operative Documents, and including all
Modifications and other additions to or changes in the Improvements
at any time.
"Imputed Equity Return" means (a) with respect to the Lessor, the amount of
Yield the Lessor would have earned on its outstanding Lessor Balance had
the Lease not terminated on the Expiation Date and (b) with respect to
any Tranche B Lender, the amount of interest under the Loan Agreement
such Tranche B Lender would have earned on its outstanding Tranche B Loans
had the Lease not terminated on the Expiration Date, in each case,
computed as provided in the Operative Documents, measured from such
Expiration Date until the Lessor Balance or such Tranche B Loans, as
applicable, shall have been paid in full.
"Indemnitee" means each Lender, the Lessor, the Lease Agent, the Collateral
Agent, their respective Affiliates and their respective successors,
assigns, directors, shareholders, partners, officers, employees and
agents.
"Initial Acquisition Date" is defined in Section 6.2 of the Participation
Agreement.
"Insurance Requirements" means all terms and conditions of any insurance
policy required by the Master Lease to be maintained by the Lessee and all
requirements of the issuer of any such policy.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency
Agreement dated as of December 11, 1996, among the Company, the
Subsidiary Guarantors, the Lenders, the Lessor, the Credit Facility
Banks, the Credit Facility Agent and the Collateral Agent.
"Interest Coverage Ratio" means, at any date of determination thereof, the
"Interest Coverage Ratio" as defined in the Credit Agreement.
"Interest Period" means, (a) initially, the period commencing on the
Acquisition Date and ending one, two, three or six months thereafter, as
specified by the Guarantor (as agent for the Lessees) pursuant to an
Interest Period Selection Continuation/Conversion Notice; and (b)
thereafter, each period commencing on such Basic Rent Payment Date or the
last day of the preceding Interest Period applicable to such Loan or
Lessor Amount, as the case may be, and ending on the last day of the
Interest Period selected pursuant to the next sentence; provided,
however, that the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the
immediately preceding Business Day; and
(ii) any Interest Period that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date.
"Interest Rate Protection Agreement" means, with respect to any Person, an
interest rate swap, cap or collar agreement or similar arrangement between
one or more Credit Facility Banks and a Consolidated Entity (as defined
in the Credit Agreement) providing for the transfer or mitigation of
interest risks either generally or under specific contingencies.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Land" means each parcel of real property described on Schedule I to any
Lease Supplement, and includes all Appurtenant Rights attached thereto.
"Lease" means, collectively, the Master Lease and each Lease Supplement.
"Lease Agent" means NationsBank, N.A., in its capacity as Lease Agent for
the Lenders, or such successor Lease Agent as may be appointed by the
Lenders pursuant to Section 8.9 of the Loan Agreement.
"Lease and Credit Parties" means, collectively, the Lenders, the Lessor and
the Credit Facility Banks.
"Lease Balance" means, as of any date of determination, an amount equal to
the sum of the Loan Balance and the Lessor Balance and all other amounts
owing by the Lessees under the Operative Documents (including accrued
and unpaid Rent and Supplemental Rent, if any).
"Lease Default" means any event or condition which, with the lapse of time
or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" is defined in Section 16.1 of the Master Lease.
"Lease Facility Financing Statements" means UCC financing statements
appropriately completed and executed for filing in the applicable
jurisdiction in order to protect the security interest granted by the
Lessees under the Lease Facility Mortgages to the Collateral Agent for
the benefit of each of the Secured Parties.
"Lease Facility Mortgage" means, with respect to any Property, a Mortgage
of such Property, executed by the Lessee of such Property in favor of the
Collateral Agent, and any and all other security instruments in
appropriate recordable form in each relevant jurisdiction sufficient to
grant to the Collateral Agent a first priority Lien on such Property.
"Lease Facility Notes" is defined in Section 2.2 of the Loan Agreement, and
includes the Tranche A Notes and the Tranche B Notes.
"Lease Recourse Amount" means, with respect to each Lease Supplement, the
amount designated as the "Lease Recourse Amount" in such Lease Supplement.
"Lease Supplement" means each Lease Supplement and Memorandum of Lease,
Mortgage and Purchase Option, substantially in the form of Exhibit A to the
Master Lease, executed by the applicable Lessee, dated as of the
Acquisition Date and covering the applicable Property located on the
Land identified on Schedule I thereto.
"Lenders" means, collectively, the Tranche A Lenders and the Tranche B
Lenders.
"Lessee" means any of (i) Academy Nursing Home, Inc., (ii) Nursing and
Retirement Center of the Andovers, Inc., (iii) Prescott Nursing Home, Inc.,
(iv) Willow Manor Nursing Home, Inc., (v) ADS/Multicare, Inc. and (vi)
each other Person as may from time to time become a Lessee under the
Operative Documents in accordance with the provisions thereof, each as
lessee under the Lease, and their respective successors and assigns
expressly permitted under the Operative Documents.
"Lessor" means SELCO Service Corporation, an Ohio corporation.
"Lessor Amount" is defined at Section 3.2 of the Participation Agreement.
"Lessor Balance" means as of any date of determination an amount equal to
the sum of the outstanding Lessor Amounts together with all accrued and
unpaid Yield thereon.
"Lessor Commitment" means the Commitment of the Lessor in the amount set
forth on Annex A of the Participation Agreement, as such Annex may be
amended from time to time.
"Lessor Lien" means any Lien, true lease or sublease, encumbrance or
disposition of title affecting any one or more of the Properties, or
any portion thereof, arising as a result of (a) any claim against any
Participant not resulting from the transactions contemplated by the
Operative Documents, (b) any act or omission of any Participant which is
not required or permitted by the Operative Documents or is in violation
of any of the terms of the Operative Documents, (c) any claim against any
Participant with respect to Taxes or Transaction Expenses against which
the Lessees are not required to indemnify any Participant, in its
individual capacity, pursuant to Article XIII of the Participation
Agreement or (d) any claim against the Lessor arising out of any
transfer, encumbrance by the Lessor of all or any portion of the
interest of the Lessor in the Properties or the Operative Documents
other than the transfer of title to or possession of the Properties by
the Lessor pursuant to and in accordance with the Master Lease, the Loan
Agreement or the Participation Agreement or pursuant to the exercise of
the remedies set forth in Section 16.2 of the Master Lease.
"Letters of Credit" means the letters of credit issued by NationsBank, N.A.
for the account of the Company pursuant to the Credit Agreement, as such
letters of credit may be amended, supplemented, modified, replaced,
renewed, extended, refinanced or refunded from time to time.
"LIBO Rate" means, relative to any Loan or Lessor Amount for any Interest
Period, the rate per annum (rounded upward, if necessary to the nearest
multiple of one sixteenth of one percent) quoted at approximately 11:00
a.m. London time by the principal London branch of the Lease Agent two
Business Days prior to the first day of such Interest Period for the
offering to leading banks in the London interbank market of Dollar deposits
in immediately available funds, for a period, and in an amount,
comparable to the Interest Period and principal amount of the Loan or
Lessor Amount which shall be made.
"LIBO Rate Amount" means any Loan or Lessor Amount which accrues interest
or Yield, as the case may be, by reference to the LIBO Rate
(Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan or Lessor
Amount for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined pursuant to the
following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period will be determined
by the Lease Agent, on the basis of the LIBOR Reserve Percentage in effect
on, and the applicable LIBO Rate obtained by the Lease Agent, two
Business Days before the first day of such Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period, the
average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during
such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000
against in the case of LIBO Rate Amounts, "Eurocurrency liabilities"
(as such term is used in Regulation D). Without limiting the effect of
the foregoing, the LIBOR Reserve Percentage shall reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against (i) any category of liabilities which includes
deposits by reference to which the LIBO Rate for LIBO Rate Amounts is to
be determined as provided in the definition of "LIBO Rate" in this
Appendix A or (ii) any category of extensions of credit or other assets
which include LIBO Rate Amounts.
"Licenses" means any and all licenses, certificates of need, operating
permits, franchises, and other licenses, authorizations, certifications,
permits, or approvals issued by, or on behalf of, any Governmental
Authority, now existing or at any time hereafter issued, with
respect to the acquisition, construction, renovation, expansion, leasing,
ownership or operation of any Property or related facilities or the
participation or eligibility for participation in any third party
payment or reimbursement programs, including, without limitation, any
and all operating licenses issued by any state Governmental Authority,
any and all pharmaceutical licenses and other licenses related to the
purchase, dispensing, storage, prescription or use of drugs,
medications, and other "controlled substances", any and all licenses
relating to the operation of food or beverage facilities or amenities,
if any, and any and all certifications and eligibility for participation
in Medicare, Medicaid, CHAMPUS, Blue Cross or Blue Shield, or any of the
Managed Care Plans, as the same may from time to time be amended,
renewed, restated, reissued, restricted, supplemented or otherwise
modified.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other similar encumbrance or
right of others, or any agreement to give any of the foregoing.
"Loan Agreement" means the Loan Agreement, dated as of December 11, 1996,
among the Lesser, as borrower thereunder, and the Lenders.
"Loan Agreement Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute a Loan Agreement Event
of Default.
"Loan Agreement Event of Default" is defined in Section 6.1 of the Loan
Agreement.
"Loan Balance" means as of any date of determination an amount equal to the
sum of the outstanding Loans together with all accrued and unpaid interest
thereon.
"Loan Commitment" means the Commitment of each Lender in the amount set
forth on Annex A to the Participation Agreement, as such Annex may be
amended from time to time.
"Loan Documents" means the Loan Agreement and the Notes.
"Loans" is defined in Section 2.2 of the Loan Agreement.
"Managed Care Plans" means any health maintenance organization, preferred
provider organization, individual practice association, competitive medical
plan, or similar arrangement, entity, organization, or Person.
"Marketing Period" means the period commencing on the date one year prior
to the Expiration Date and ending on the Expiration Date.
"Master Lease" means the Master Lease, Open End Mortgage and Purchase
Option, dated as of December 11, 1996, among the Lessor and the Lessees, as
it may be supplemented from time to time.
"Material" and "Materially" mean material to (i) the ability of any Lessee
to perform its obligations under the Operative Documents to which it is
a party, or (ii) the value or condition of any Property.
"Material Adverse Effect" means any material adverse effect on (a) the
business, profits, properties or condition of the Guarantor and its
subsidiaries, taken as a whole, or a Lessee, as applicable, or (b) the
ability of a Lessee or the Guarantor to perform its obligations under
each of the Operative Documents to which it is a party.
"Maturity Date" means with respect to the Loans and the Lessor Amount, the
fifth anniversary of the Initial Acquisition Date.
"Modifications" is defined in Section 10.1 of the Master Lease.
"Monthly Payment Date" means the first Business Day of each calendar month.
"Multicare Guaranty" means the Unconditional Guaranty dated as of December
11, 1996, made by the Company and each Subsidiary of the Guarantor party
thereto in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by the Consolidated Entities or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Proceeds" means all amounts received by the Lessor in connection with
any Casualty or Condemnation or any sale of the Property pursuant to the
Lessor's exercise of remedies under Section 16.2 of the Master Lease or
the exercise of the Remarketing Option under Article XX of the Master
Lease, and all interest earned thereon, less the expense of claiming
and collecting such amounts, including all costs and expenses in
connection therewith for which the Lessor or any Participant is
entitled to be reimbursed pursuant to the Lease to the extent such costs
and expenses have not been reimbursed previously by a Lessee or the
Guarantor.
"Obligations" means, at any time, all then applicable obligations (monetary
or otherwise) of any Lessee arising through or under the Lease.
"Obligors" means, collectively, the Company, each Lessee, each Subsidiary
Co-Borrower and each Subsidiary Guarantor.
"Operative Documents" means the following:
(a) the Participation Agreement;
(b) the Master Lease;
(c) each Lease Supplement;
(d) the Loan Agreement;
(e) the Notes;
(f) the Assignment of Lease and Rent;
(g) each Supplement to the Assignment of Lease and Rent;
(h) each Deed;
(i) each instrument of transfer conveying any Equity Interest to the
Lessor pursuant to Section 6.3(b) of the Participation Agreement;
(j) each Lease Facility Mortgage;
(k) each Lease Facility Financing Statement;
(l) each other Security Document; and
(m) the Intercreditor Agreement.
"Overdue Rate" means, with respect to any Loan or Lessor Amount or any
other amount payable under any Operative Document, the Applicable Rate for
ABR Amounts plus one percent (1%); provided, that if the amount so in
default is a LIBO Rate Amount and the due date thereof is a day other
than the last day of the Interest Period therefor, the "Overdue Rate" for
such LIBO Rate Amount shall be the Applicable Rate for LIBO Rate Amounts
plus two percent (2%) and, thereafter, the rate provided for above in
this definition.
"Participant Balance" means, with respect to any Participant as of any date
of determination (i) with respect to any Lender, an amount equal to the
aggregate outstanding Loans of such Lender, together with all accrued
and unpaid interest thereon or (ii) with respect to the Lessor, an
amount equal to the outstanding Lessor Amount, together with all amounts of
accrued and unpaid Yield thereon.
"Participants" means, collectively, each Lender and the Lessor.
"Participation Agreement" means the Participation Agreement dated as of
December 11, 1996 among the Guarantor, the Lessees, the Lessor, the Lenders
and the Collateral Agent.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Property Liens" means, with respect to any Property, any of the
following:
(i) the respective rights and interests of the parties to the
Operative Documents as provided in the Operative Documents;
(ii) the rights of any sublessee under a sublease permitted by the
terms of the Master Lease;
(iii) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 12.1 of
the Master Lease;
(iv) Liens arising by operation of law, materialmen's, mechanics',
workers', repairmen's, employees', carriers', warehousemen's
and other like Liens relating to or in connection with any
Modifications or arising in the ordinary course of business for
amounts that either are not more than 60 days past due or are
being diligently contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the
conditions for the continuation of proceedings to contest
Taxes set forth in Section 12.1 of the Master Lease;
(v) Liens of any of the types referred to in clause (iv) above that
have been bonded for not less than the full amount in dispute
(or as to which other security arrangements reasonably
satisfactory to the Lessor have been made), which bonding (or
arrangements) shall comply with applicable Requirements of
Law, and has effectively stayed any execution or enforcement
of such Liens;
(vi) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in
good faith and for the payment of which adequate reserves have
been provided as required by GAAP or other appropriate
provisions have been made, so long as such proceedings have
the effect of staying the execution of such judgments or
awards and satisfy the conditions for the continuation of
proceedings to contest set forth in Section 12.1 of the Master
Lease;
(vii) easements, rights of way and other encumbrances on title to
real property permitted pursuant to Section 11.2 of the Master
Lease;
(viii) Lessor Liens;
(ix) Liens created by a Lessee with the consent of the Lessor; and
(x) Liens described on the title insurance policy delivered with
respect to such Property pursuant to Section 6.3(m) of the
Participation Agreement.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
Governmental Authority or any other entity.
"PHC/Providence Mortgages" means the Second Amended and Restated Open-End
Mortgages dated as of December 11, 1996, made by PHC Operating Corp. and
Providence Health Care, Inc. in accordance with the terms of the Credit
Agreement, as amended or supplemented from time to time in accordance
with the provisions of Section 3.01 of the Intercreditor Agreement.
"Plan" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by the Consolidated Entities
or any ERISA Affiliate and which is covered by Title IV of ERISA, other
than a Multiemployer Plan.
"Pledge Agreement" means the Second Amended and Restated Pledge Agreement
dated as of December 11, 1996, by the Company and the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the
Secured Parties.
"Pricing Level" refers to the determination of which of the Pricing Level
I, Pricing Level II, Pricing Level III or Pricing Level IV applies at
any date (with adjustments to take effect three (3) Business Days after
receipt by the Lease Agent of the financial statements referred to
below); for purposes of determining which Pricing Level exists at any date,
the Interest Coverage Ratio and Senior Leverage Ratio shall be deemed to
be the Interest Coverage Ratio and Senior Leverage Ratio, respectively,
as at the last day of the period covered by the most recent financial
statements delivered pursuant to clauses (a) and (b) of Section 7.08 of the
Credit Agreement (or, if the Credit Agreement has ceased to be in
effect, the analogous clauses of Section 10.1 of the Participation
Agreement); provided, however, that (a) if on any date the Company has
not delivered all financial statements and Compliance Certificates required
to be delivered on or before such date pursuant to clauses (a) and (b)
of Section 7.08 of the Credit Agreement (or, if applicable, the
analogous clauses of Section 8.1 of the Participation Agreement), the
Pricing Level on such date shall be Pricing Level IV until three Business
Days after delivery of such financial statements and Compliance
Certificates and (b) subject to the preceding clause (a), for any date
occurring on or prior to the date that is three Business Days after the
receipt by the Lease Agent of the financial statements for the fiscal
period ending on December 31, 1996, the Pricing Level on such date
shall be Pricing Level II.
"Pricing Level I" means any date on which the Interest Coverage Ratio is
greater than 4.00 to 1.0 and the Senior Leverage Ratio is less than 2.50 to
1.0.
"Pricing Level II" means any date on which (a) the Interest Coverage Ratio
is greater than 3.25 to 1.0 and the Senior Leverage Ratio is less than 3.25
to 1.0 and (b) no better Pricing Level applies.
"Pricing Level III" means any date on which (a) the Interest Coverage Ratio
is greater than 2.50 to 1.0 and the Senior Leverage Ratio is less than 3.75
to 1.0 and (b) no better Pricing Level applies.
"Pricing Level IV" means any date on which no other Pricing Level applies.
"Property" means the Lessor's interest in (i) any Land, either as owner in
fee simple or as owner of the Equity Interest in the Person that is the fee
simple owner of such Land and (ii) all of the Improvements at any time
located on or under such Land.
"Property Balance" means, with respect to any Property, an amount equal to
the outstanding principal amount of the Loans and the Lessor Amount related
to such Property, and all accrued and unpaid interest and Yield thereon,
and any Supplemental Rent related thereto payable to any Secured Party.
"Property Cost" means, with respect to any Property, the amount of the
Advance funded for the purpose of acquiring the Property or the Equity
Interest related to such Property, as such amount is set forth in the
Funding Request.
"Property Legal Requirements" means all Federal, state, county, municipal
and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting any Property,
the Improvements or the demolition, construction, use or alteration
thereof, whether now or hereafter enacted and in force, including any that
require repairs, modifications or alterations in or to any Property or
in any way limit the use and enjoyment thereof (including all building,
zoning and fire codes and the Americans with Disabilities Act of 1990,
42 U.S.C. S 1201 et. seq. and any other similar Federal, state or local
laws or ordinances and the regulations promulgated thereunder) and any that
may relate to environmental requirements (including all Environmental
Laws), and all permits, certificates of occupancy, licenses,
authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments
which are either of record or known to the Lessee affecting any
Property, the Appurtenant Rights and any easements, licenses or other
agreements entered into pursuant to Section 11.2 of the Master Lease.
"Purchase Notice" means an irrevocable written notice delivered to the
Lessor by all of the Lessees (or the Company acting as agent for all of
the Lessees) pursuant to Section 18.1(a) of the Master Lease or by one
Lessee (or the Guarantor acting as agent for such Lessee) pursuant to
Section 18.1(b) of the Master Lease, notifying the Lessor of the
intention to exercise the Purchase Option under Section 18.1(a) or
18.1(b) of the Master Lease, as the case may be, and identifying the
Property or Properties to be purchased in accordance therewith and the
proposed purchase date therefor.
"Purchase Option" means the option of the Lessees to purchase all of the
Properties in accordance with the provisions of Section 18.1(a) of the
Master Lease or purchase any Property in accordance with the provisions
of Section 18.1(b) of the Master Lease.
"Purchase Option Rent" means, with respect to any exercise by any Lessee of
a Purchase Option, (a) in the case of an exercise of the Purchase Option
pursuant to Section 18.1(a) of the Master Lease or purchase obligation
pursuant to Section 16.2(e) or 18.2 of the Master Lease, the Lease
Balance and (b) in the case of an exercise of the Purchase Option with
respect to any individual Property pursuant to Section 18.1(b) of the
Master Lease, the Property Balance for such Property.
"Rate Setting Commission Trigger Event" shall occur if the Company has
reasonable cause to believe the Lessor and the Lessee are or are likely
to be determined to be "related parties" by the Commonwealth of
Massachusetts Office of Health and Human Services, Division of Health Care
Finance and Policy, acting through the Rate Setting Commission or any
successor regulatory entity, and the result is that the rate of
reimbursement obtainable by the Lessee for capital costs or rental or
leasehold expenses is less than the rate that would otherwise have been
payable if the Lessee and or the Lessor were not "related parties".
"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended
by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. S6901 et
seq.
"Regulatory Change" means any change after the Documentation Date in United
States federal, state, municipal or foreign laws or regulations (including
without limitation Regulation D) or the adoption or making after such
date of any interpretations, directives or requests applying to a class
of banks of which such bank is a member, of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Release" means any pumping, pouring, emptying, injecting, escaping,
leaching, dumping, spilling, leaking, discharging, disposing or emitting
into the environment of a Hazardous Material.
"Remarketing Option" is defined in Section 20.1 of the Master Lease.
"Rent" means, collectively, the Basic Rent and the Supplemental Rent, in
each case payable under the Master Lease.
"Requesting Party" is defined in Section 27.1 of the Master Lease.
"Required Lenders" means, at any time, (i) Lenders holding at least 51% of
the aggregate outstanding principal amount of Loans or, if no such
principal amount is then outstanding, Lenders having at least 51% of
the aggregate Loan Commitments.
"Required Modification" is defined in clause (i) of Section 10.1 of the
Master Lease.
"Required Participants" means, at any time, (i) Tranche A Lenders holding
at least 51% of the aggregate outstanding principal amount of Tranche A
Loans, together with (ii) all Tranche B Lenders and the Lessor.
"Requirement of Law" means, as to any Person, (a) the partnership
agreement, certificate of incorporation, bylaws or other organizational
or governing documents of such Person, (b) any federal, state or local
law, treaty, ordinance, rule or regulation and (c) any order, decree or
determination of a court, arbitrator or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer" means any president, vice president or secretary of
Lessee, and any executive vice president or senior vice president of the
Company, as applicable.
"Responsible Officer's Certificate" means a certificate signed by any
Responsible Officer, which certificate shall certify as true and correct
the subject matter being certified to in such certificate.
"Secured Parties" means, collectively, the Collateral Agent, the Credit
Facility Agent, each Credit Facility Bank, each Lender and the Lessor.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"Security Agreement" means the Second Amended and Restated Security
Agreement dated as of December 11, 1996, by the Company and the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of each of the
Secured Parties.
"Security Documents" means, collectively, the following:
(a) the Multicare Guaranty;
(b) the Security Agreement;
(c) the Pledge Agreement;
(d) the PHC/Providence Mortgages;
(e) the Lease Facility Mortgages; and
(f) each other security document that may from time to time be
delivered to the Collateral Agent in connection with the
foregoing (including all financing statements, fixture
filings, mortgages, assignments and stock certificates delivered
to the Collateral Agent).
"Senior Leverage Ratio" means, at any date of determination thereof, the
"Senior Leverage Ratio" as defined in the Credit Agreement.
"Senior Obligation Documents" means, collectively:
(a) the Credit Facility Documents;
(b) the Operative Documents; and
(c) each other document made, delivered or given in connection with
the foregoing and each other document that replaces, renews,
extends, refinances or refunds indebtedness under any of the
foregoing.
"Senior Obligations" means the unpaid principal of, interest on and Yield
on (including interest and Yield accruing on or after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the
Credit Facility Notes, the Lease Facility Notes, the Lessor Amount, the
obligations under the Letters of Credit, the obligations under the
Interest Rate Protection Agreements and all other obligations and
liabilities of the Lessor or any Obligor to any Secured Party, whether
direct or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out of, or
in connection with, the Credit Agreement, the Loan Agreement, the
Participation Agreement, the Master Lease, the Credit Facility Notes,
the Lease Facility Notes, the Letters of Credit, the Interest Rate
Protection Agreements, the Multicare Guaranty or any other Senior
Obligation Document, whether on account of principal, interest, Yield,
rentals (including Rent), guaranties, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees
and disbursements of counsel to any Secured Party) or otherwise.
"Shortfall Amount" means, as of the Expiration Date, an amount equal to (i)
the Lease Balance, minus (ii) the Lease Recourse Amount received by the
Collateral Agent pursuant to Section 20.1(j) of the Master Lease, minus
(iii) the aggregate amount of the highest, binding, written,
unconditional, irrevocable offer to purchase each Property obtained by each
Lessee pursuant to Section 20.1(e) of the Master Lease; provided,
however, that if the sale of the Properties to the Person submitting
such offer is not consummated on or prior to the Expiration Date, then
the term "Shortfall Amount" shall mean an amount equal to (i) the Lease
Balance, minus (ii) the Lease Recourse Amount received by the Collateral
Agent pursuant to Section 20.1(j) of the Master Lease.
"Significant Casualty" means a Casualty that in the reasonable, good faith
judgment of the Lessor is so substantial in nature that restoration of the
related Property to substantially its condition as existed immediately
prior to such Casualty (or such a condition that such Property, as so
restored and with such Modifications as the applicable Lessee may elect in
accordance with Section 10.1 of the Master Lease, would have a use,
value and utility substantially the same as that which existed
immediately prior to such Casualty) would be impracticable or impossible.
"Significant Condemnation" means (a) a Condemnation that involves a taking
of the Lessor's entire title to the related Land, or (b) a Condemnation
that in the reasonable, good faith judgment of the Lessor is such that
restoration of the related Property to substantially its condition as
existed immediately prior to such Condemnation (or such a condition that
such Property, as so restored and with such Modifications as the
applicable Lessee may elect in accordance with Section 10.1 of the
Master Lease, would have a use, value and utility substantially the
same as that which existed immediately prior to such Condemnation) would be
impracticable or impossible.
"Statutory Condition" means Mass. Gen. Laws Ann. Ch. 183 S20.
"Structuring Agent" means Key Global Finance Ltd.
"Sub-Participant" is defined in Section 12.2 of the Participation
Agreement.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power for the election of directors or
other persons performing similar functions are at the time owned
directly or indirectly by such Person.
"Subsidiary Co-Borrowers" means, collectively, the Subsidiary Co-Borrowers
under, and as defined in, the Credit Agreement.
"Subsidiary Guarantors" means, collectively, each of the Subsidiaries of
the Company party to the Multicare Guaranty.
"Supplemental Rent" means all amounts, liabilities and obligations (other
than Basic Rent (Interest/Yield)) which each Lessee assumes or agrees to
pay to Lessor or any other Person under the Master Lease, or under any
of the other Operative Documents, including, without limitation, fees
due under the Fee Letter, Break Costs, the Loan Balance (except where
the payment thereof has been accelerated as a result of a default by the
Lessor under the Loan Agreement in the absence of Lease Event of
Default), the Lease Recourse Amount, amounts due pursuant to Section
13.2 of the Participation Agreement and payments pursuant to Sections 15.2
of the Master Lease and Articles XVIII and XX of the Master Lease.
"Tax Indemnitee" means each Lender, the Lessor, the Collateral Agent, the
Lease Agent and their respective Affiliates.
"Taxes" is defined in the definition of Impositions.
"Term" is defined in Section 2.3 of the Master Lease.
"Termination Date" is defined in Section 15.2 and Section 16.2(e) of the
Master Lease.
"Termination Notice" is defined in Section 15.1 of the Master Lease.
"Tranche A Lenders" means, collectively, the various financial institutions
as are or may from time to time become Tranche A Lenders under the Loan
Agreement.
"Tranche A Loan" is defined in Section 2.1(a) of the Loan Agreement.
"Tranche A Notes" is defined in Section 2.2 of the Loan Agreement.
"Tranche B Lenders" means, collectively, the various financial institutions
as are or may from time to time become Tranche B Lenders under the Loan
Agreement.
"Tranche B Loan" is defined in Section 2.1(b) of the Loan Agreement.
"Tranche B Notes" is defined in Section 2.2 of the Loan Agreement.
"Transaction Expenses" means all costs and expenses incurred by the Lessor,
the Company, the Lessees, the Lease Agent and the Collateral Agent in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents
including:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
Mayer, Brown & Platt, special counsel for the Lessor and the
Lenders, and such other fees, expenses and disbursements of
counsel for the Company and the Lessees in negotiating the
terms of the Operative Documents and the other transaction
documents, preparing for the closing under, and rendering
opinions in connection with, such transactions and in
rendering other services customary for counsel representing
parties to transactions of the types involved in the
transactions contemplated by the Operative Documents;
(b) the reasonable fees, out-of-pocket expenses and disbursements of
one special counsel and one special Massachusetts counsel, if
any, for the Lessor, the Lenders and the Lease Agent in
connection with (1) any amendment, supplement, waiver or
consent with respect to any Operative Documents requested or
approved by the Company as agent for the Lessees and (2)
any successful enforcement of any rights or remedies against
the Lessees in respect of the Operative Documents;
(c) any and all Taxes and fees incurred in recording, registering or
filing any Operative Document or any other transaction
document, any deed, declaration, mortgage, security agreement,
notice or financing statement with any public office, registry or
governmental agency in connection with the transactions
contemplated by the Operative Documents;
(d) any title fees, premiums and escrow costs and other expenses
relating to title insurance and the closings contemplated by
the Operative Documents;
(e) all expenses relating to all Environmental Audits;
(f) fees and other expenses relating to Appraisals; and
(g) the fees referred to in the Fee Letter.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001 (a)(1 6) of ERISA) under the Plan exceeds
the fair market value of all Plan assets allocable to such benefit
liabilities, as determined on the most recent valuation date of the Plan
and in accordance with the provisions of ERISA for calculating the
potential liability of any Consolidated Entity or any ERISA Affiliate
under Title IV of ERISA.
"Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
effect in any applicable jurisdiction.
"Yield" is defined in Section 4.3 of the Participation Agreement.
PARTICIPATION AGREEMENT
dated as of December 11, 1996
among
THE MULTICARE COMPANIES, INC.,
as Guarantor,
VARIOUS SUBSIDIARIES OF THE MULTICARE COMPANIES, INC.
IDENTIFIED HEREIN,
as Lessees,
SELCO SERVICE CORPORATION,
as Lessor,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Tranche A Lenders,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Tranche B Lenders,
NATIONSBANK, N.A.,
as Lease Agent for the Lenders,
and
NATIONSBANK, N.A.,
as Collateral Agent for the Secured Parties.
____________________________________
Lease Financing of
Long-Term Care Facilities
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Participation Agreement"), dated
as of December 11, 1996, is entered into by and among THE MULTICARE
COMPANIES, INC., a Delaware corporation, as Guarantor (together with its
permitted successors and assigns, the "Company" or the "Guarantor");
ACADEMY NURSING HOME, INC., a Massachusetts corporation, NURSING AND
RETIREMENT CENTER OF THE ANDOVERS, INC., a Massachusetts corporation,
PRESCOTT NURSING HOME, INC., a Massachusetts corporation, WILLOW MANOR
NURSING HOME, INC., a Massachusetts corporation, ADS/MULTICARE, INC., a
Delaware corporation, and each other Subsidiary of the Company that may
from time to time become a Lessee under the Master Lease and the other
Operative Documents pursuant to the terms of Section 14.2, each as a Lessee
(together with its permitted successors and assigns, each a "Lessee" and
collectively, the "Lessees"); SELCO SERVICE CORPORATION, an Ohio
corporation, as Lessor (together with its successors and assigns, the
"Lessor"); TORONTO-DOMINION (NEW YORK), INC., BANQUE PARIBAS, CREDITANSTALT
CORPORATE FINANCE, INC., MELLON BANK, N.A., and the other various financial
institutions as are or may from time to time become Tranche A Lenders
(collectively, the "Tranche A Lenders") under the Loan Agreement; FBTC
LEASING CORP. and the other various financial institutions as are or may
from time to time become Tranche B Lenders (collectively, the "Tranche B
Lenders" and, together with the Tranche A Lenders, the "Lenders") under the
Loan Agreement; and NATIONSBANK, N.A., as Lease Agent for the Lenders (in
such capacity, the "Lease Agent") and as Collateral Agent for the Secured
Parties (as defined below) (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, on each Acquisition Date, the Lessor will purchase a
Property or Properties or the Equity Interest or Equity Interests related
thereto from one or more third parties designated by the Company as agent
for the Lessees;
WHEREAS, on or after each Acquisition Date on which the Lessor
acquires an Equity Interest, the Lessor will dissolve the entity related to
such Equity Interest and, thereafter, directly own fee title to the
applicable Property;
WHEREAS, the Lessees have appointed the Company to act as their agent
with respect to certain matters set forth in this Participation Agreement
and the Company has accepted such appointment;
WHEREAS, the Lessor desires to lease to the Lessees, and the Lessees
desire to lease from the Lessor, the Properties;
WHEREAS, the Lessor is willing to provide from time to time on each
Acquisition Date a portion of the funding of the costs of the acquisition
directly or indirectly of the Property (or Equity Interest related thereto)
to be acquired on such Acquisition Date;
WHEREAS, the Lessor wishes to obtain, and the Lenders are willing to
provide from time to time on each Acquisition Date, financing of the
remaining portion of the costs of the acquisition of the Property (or
Equity Interest related thereto) to be acquired on such Acquisition Date;
WHEREAS, pursuant to the Credit Agreement, the Credit Facility Banks
have extended commitments to make loans and issue letters of credit from
time to time to the Company and the Subsidiary Co-Borrowers from time to
time pursuant to the terms thereof;
WHEREAS, pursuant to the Intercreditor Agreement, the Lenders, the
Lessor, the Credit Facility Banks and the other Secured Parties have agreed
to share ratably in the Collateral;
WHEREAS, to secure the financing transactions contemplated by this
Participation Agreement and the other Operative Documents (the "Lease
Financing"), (a) the Lenders and the Lessor will, together with the Credit
Facility Banks, have the benefit of a Lien on the right, title and interest
of the Company and the Lessees in the Collateral (including the
Properties), subject to the rights and priorities as set forth in the
Intercreditor Agreement, (b) the Lenders will have the benefit of an
assignment of certain of the Lessor's rights against the Lessees under the
Master Lease and (c) the Company and the Subsidiary Guarantors will
guarantee to the Lenders and the Lessor the payment and performance of all
the obligations of the Lessees under the Operative Documents.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used
and not defined herein shall have the meanings assigned thereto in
Appendix A hereto for all purposes hereof; and the rules of interpretation
set forth in Appendix A hereto shall apply to this Participation Agreement.
ARTICLE II
INTENTIONALLY OMITTED
ARTICLE III
FUNDING OF ADVANCES
SECTION 3.1. Lessor Acquisition. Subject to the conditions and
terms hereof, the Lessor shall take the following actions at the written
request of the Company, as agent for the Lessees, from time to time on each
Acquisition Date prior to the Commitment Termination Date:
(a) the Lessor shall apply the proceeds of the Loans made by
the Lenders on such Acquisition Date and advance its own funds (not
to exceed the Lessor's Funding Percentage of the Advance to be made
on such Acquisition Date) for the purpose of financing the
acquisition of each Property and/or each Equity Interest to be
acquired on such Acquisition Date, and such proceeds shall be made to
the payees designated in writing by the Company as agent for the
Lessees (each such application of proceeds and funds, an "Advance");
(b) the Lessor shall acquire each Property and/or each Equity
Interest to be acquired on such Acquisition Date (using the Advance);
and
(c) the Lessor shall lease the Properties acquired on such
Acquisition Date to the Lessees under the Master Lease and the
respective Lease Supplements.
Notwithstanding any other provision hereof, the Lessor shall not be
obligated to make any Advance if, after giving effect thereto, the
aggregate outstanding amounts of the Loans and the Lessor Amounts would
exceed the Aggregate Commitment Amount.
SECTION 3.2. Lessor's Commitment. Subject to the conditions and
terms hereof, the Lessor shall make the Lessor Commitment available to the
Lessees by making available at the request of the Company, as agent for the
Lessees, from time to time on each Acquisition Date prior to the Commitment
Termination Date an amount (each, a "Lessor Amount") in immediately
available funds equal to the Lessor's Funding Percentage of the Advance
being made on such Acquisition Date. Notwithstanding any other provision
hereof, the Lessor shall not be obligated to make available any Lessor
Amount if, after giving effect to the proposed Lessor Amount, the aggregate
outstanding amount of the Lessor Amounts would exceed the Lessor's
Commitment. No amounts paid or prepaid with respect to the Lessor Amount
may be readvanced.
SECTION 3.3. Lenders' Commitments. Subject to the conditions and
terms hereof, each Lender shall make its Loan Commitment available to the
Lessees by making Loans to the Lessor at the request of the Company, as
agent for Lessees, from time to time on each Acquisition Date prior to the
Commitment Termination Date in an amount in immediately available funds
equal to such Lender's Funding Percentage of the Advance being made on such
Acquisition Date. Notwithstanding any other provision hereof, no Lender
shall be obligated to make any Loan if, after giving effect to the proposed
Loan, the aggregate outstanding amount of such Lender's Loans would exceed
such Lender's Commitment. No amounts paid or prepaid with respect to the
Loans may be readvanced.
SECTION 3.4. Procedures for Advances.
(a) With respect to the funding of each Advance, the Company,
as agent for the Lessees, shall give the Lease Agent prior written
notice pursuant to a Funding Request substantially in the form of
Exhibit A (a "Funding Request"), which Funding Request shall be
delivered not later than 12:00 noon (New York City time), three (3)
Business Days prior to the proposed Acquisition Date specifying:
(i) the proposed Acquisition Date, (ii) the amount of Advance
requested, (iii) the Properties and Equity Interests to be acquired
on the proposed Acquisition Date, (iv) the amount of the Advance
allocated to each Property or Equity Interest, as the case may be,
and (v) whether the Loans and Lessor Amounts comprising such Advance
shall be made as ABR Amounts or LIBO Rate Amounts (and, if LIBO Rate
Amounts are selected by the Company, specifying the duration of the
initial Interest Period with respect thereto). The Lease Agent shall
calculate the amounts of the Lessor Amount and the Loans required to
fund each requested Advance as it relates to each Property based on
the respective Funding Percentages of the Participants.
(b) The proceeds of each Advance shall be used to pay the
Property Cost of the Property being acquired on the applicable
Acquisition Date.
(c) All remittances made by the Lessor and the Lenders for the
funding of any Advance shall be made on the applicable Acquisition
Date in immediately available funds by wire transfer to the account
of the Lease Agent, which shall disburse such proceeds as provided in
Section 3.1(a).
SECTION 3.5. Interest Period Selection/Continuation/ Conversion
Elections. By delivering an Interest Period
Selection/Continuation/Conversion Notice in the form of Exhibit B hereto to
the Lease Agent, the Company, as agent for the Lessees, may from time to
time irrevocably (as to the next succeeding Interest Period) elect, on not
less than three (3) nor more than five (5) Business Days' notice, that the
Applicable Rate for all Loans and the Lessor Amount be determined by
reference to either the LIBO Rate (Reserve Adjusted) or the Alternate Base
Rate and, in the case of an election of the LIBO Rate (Reserve Adjusted),
select the duration for the next succeeding Interest Period; provided,
however, that (a) in the absence of delivery of an Interest Period
Selection/Continuation/Conversion Notice with respect to any LIBO Rate
Amount at least three (3) Business Days before the last day of the then
current Interest Period with respect thereto, such LIBO Rate Amount shall,
on such last day, automatically continue as a LIBO Rate Amount with an
Interest Period of one month's duration, (b) the outstanding Loans and
Lessor Amount may not be continued as, or converted into, LIBO Rate Amounts
when any Lease Default has occurred and is continuing. Each Interest
Period Selection/Continuation/ Conversion Notice so delivered by the
Company, as agent for the Lessees, shall be deemed an effective election by
the Lessor of the method for computing interest on the Loans under the Loan
Agreement, and (c) LIBO Rate Amounts may be converted only on the last day
of an Interest Period for such LIBO Rate Amounts unless the Company, as
agent for the Lessees, agrees to provide to the Lease Agent for the account
of each Participant compensation in accordance with Section 13.10.
SECTION 3.6. Funding of Certain Modifications; Construction
Financings. The parties hereto contemplate that the Company, as agent on
behalf of the Lessees, may from time to time request that the Participants
make available Lessor Amounts or Loans, as applicable, in an aggregate
amount of not less than $1,000,000 to finance the cost of certain
modifications to the Properties. In such events, the parties anticipate
negotiating amendments to the Operative Documents as necessary to
accommodate such additional Advances. In addition, the Company, as agent
for the Lessees, may request that the Participants finance the acquisition
of certain parcels of land and the construction of improvements on such
parcels and, if the Lessor and the Lenders agree, in their sole discretion,
to finance such construction, the parties contemplate negotiating
amendments to the Operative Documents as necessary to accommodate such
construction financing.
ARTICLE IV
COMPUTATION OF BASIC RENT; INTEREST ON LOANS; FEES
SECTION 4.1. Computation of Basic Rent (Interest/Yield).
(a) Basic Rent (Interest/Yield) shall be payable with respect
to the sum of (i) the amount of the Loans outstanding from time to
time and (ii) the amount of the Lessor Amount outstanding from time
to time in an amount equal to the Applicable Rate on such sum,
calculated using the actual number of days elapsed and, subject to
Section 3.5 hereof, when the Applicable Rate is based on the LIBO
Rate (Reserve Adjusted), a 360-day year basis and, if calculated at
the Alternate Base Rate, a 360-day year basis if the Alternate Base
Rate is calculated at the Federal Funds Rate, and a 365-, or, if
applicable, 366-, day year basis if the Alternate Base Rate is
calculated at the Prime Rate. If all or any portion of any Loan, the
Lessor Amount, any Basic Rent (Interest/Yield) payable on any Loan or
the Lessor Amount, or any other amount payable hereunder shall not be
paid when due (whether at stated maturity, acceleration thereof or
otherwise), such overdue amount shall bear interest at a rate per
annum which is equal to the Overdue Rate.
(b) During the Term, Basic Rent (Interest/Yield) shall be
payable in arrears with respect to all of the outstanding Loans and
the outstanding Lessor Amount on each Basic Rent Payment Date.
SECTION 4.2. Interest on Loans.
(a) Each Loan shall accrue interest computed and payable in
accordance with the terms of Section 3.5 hereof and the Loan
Agreement.
(b) The Collateral Agent (or, after payment in full of all
obligations of the Company and the Subsidiary Co-Borrowers owing to
the Credit Facility Banks under the Credit Facility Documents and the
permanent termination of all commitments of the Credit Facility Banks
thereunder, the Lease Agent) shall distribute to the Lenders, in
accordance with the terms hereof and the terms of the Loan Agreement,
the interest due on the Loans and all other amounts due with respect
to the Loans, in each case, to the extent received by the Collateral
Agent (or the Lease Agent, as applicable) from the Lessees from time
to time under the Lease as Basic Rent (Interest/Yield).
SECTION 4.3. Yield on Lessor Amount.
(a) The Lessor Amount outstanding from time to time shall
accrue yield ("Yield") equal to the excess of (i) the Basic Rent
(Interest/Yield) payable by the Lessees from time to time under the
Lease minus (ii) the interest due on the Loans from time to time
pursuant to Section 2.4 of the Loan Agreement.
(b) The Lessor shall be entitled to receive, as payment of
Yield, all amounts described in clause (a).
SECTION 4.4. Prepayments of Loans and Lessor Amount. In the event
that a Lessee pays any amount equal to the subject Property Balance or the
Lease Balance to the Lessor in connection with the purchase or sale of a
Property in accordance with Section 15.1, 18.1(a) or 18.1(b) of the Master
Lease, such Property Balance or Lease Balance, as the case may be, will be
used to prepay on a pro rata basis the outstanding principal amount of the
Loans and Lessor Amount related to the Property or Properties purchased or
sold. In addition, in the event that the aggregate Commitments are reduced
to an amount that is less than the aggregate outstanding Loans and Lessor
Amounts as of such date of reduction, then the Company, as agent for the
Lessees, shall prepay the outstanding Loans and Lessor Amounts in an
aggregate amount equal to such excess, with such prepayment to be applied
ratably among all outstanding Loans and Lessor Amounts. Each Lender and
the Lessor hereby acknowledges that its Loans or Lessor Amount, as the case
may be, may be prepaid as set forth inbut may not be readvanced.
SECTION 4.5. Fees. The Company agree to pay the fees referred to in
this Section 4.5.
(a) Facility Fees. The Company agrees to pay to each
Participant for its own account, a non-refundable facility fee
(collectively, the "Facility Fees") equal to 0.125% of such
Participant's Commitment, payable in full on the Initial Acquisition
Date.
(b) Structuring Agent's Fees. The Company agrees to pay the
fees referred to in the Fee Letter.
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1. Nature of the Transaction. It is the intent of the
parties that: (a) the Lease constitutes an operating lease from the Lessor
to the Lessees for purposes of the Lessees' financial reporting, (b) the
Lease and other transactions contemplated hereby preserve ownership in the
Properties in the Lessees for Federal and state income tax and bankruptcy
purposes, (c) each Lease Supplement grants to Lessor a Lien on the Property
covered thereby, and (d) the obligations of the Lessees to pay Basic Rent
(Interest/Yield) and any part of any Property Balance (other than Basic
Rent (Interest/Yield)) shall be treated as payments of interest and
principal, respectively, for Federal and state income tax and bankruptcy
purposes. The Lessor shall be deemed to have a valid and binding security
interest in and Lien on the Properties, free and clear of all Liens other
than Permitted Property Liens, as security for the obligations of the
Lessees under the Operative Documents, (it being understood and agreed that
the Lessees do hereby grant a Lien, and convey, transfer, assign, mortgage
and warrant to Lessor and its successors, transferees and assigns, for the
benefit of the Lessor and its successors, transferees and assigns, the
Properties and any proceeds or products thereof, to have and hold the same
as collateral security for the payment and performance of the obligations
of the Lessees under the Operative Documents). Each of the parties hereto
agrees that it will not, nor will it permit any Affiliate to at any time,
take any action or fail to take any action with respect to the preparation
or filing of any income tax return, including an amended income tax return,
to the extent that such action or such failure to take action would be
inconsistent with the intention of the parties expressed in this
Section 5.1.
Specifically, without limiting the generality of the foregoing, the
parties hereto intend and agree that in the event of any insolvency or
receivership proceedings or a petition under the United States bankruptcy
laws or any other applicable insolvency laws or statute of the United
States of America or any State or Commonwealth thereof affecting a Lessee,
the Company, Lessor, any Participant or any collection actions, the
transactions evidenced by the Operative Documents shall be regarded as
loans made by the Participants to the Lessees.
SECTION 5.2. Amounts Due Under Lease. Anything else herein or
elsewhere to the contrary notwithstanding, it is the intention of the
Lessees, the Company, the Lessor and the Lenders that: (i) the amount and
timing of installments of Basic Rent due and payable from time to time from
the Lessees under the Lease shall be equal to the aggregate payments due
and payable as interest on the Loans plus a yield on the Lessor Amount on
each Basic Rent Payment Date; (ii) if a Lessee elects the Purchase Option
or becomes obligated to purchase any of the Properties under the Lease, the
Loans, the Lessor Amount, all interest, Yield and fees thereon and all
other obligations of the Lessees with respect to such Property owing to the
Lessor and the Lenders shall be paid in full by the Lessee; (iii) if any
Lessee elects the Remarketing Option, the Lessee shall only be required to
pay to the Lessor the amounts required pursuant to Article XX of the Master
Lease and any amounts due pursuant to Article XIII hereof; and (iv) upon an
Event of Default resulting in an acceleration of any Lessee's obligation to
purchase the Properties under the Lease, the amounts then due and payable
by the Lessee under the Lease shall include all amounts necessary to pay in
full the Lease Balance, plus all other amounts then due from the Lessee to
the Participants under the Operative Documents.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Documentation Date. The Documentation Date (the
"Documentation Date") shall occur on the earliest date on which the
following conditions precedent shall have been satisfied or waived, in the
reasonable discretion of the Participants:
(a) Participation Agreement. This Participation Agreement
shall have been duly authorized, executed and delivered by the
parties hereto.
(b) Master Lease. The Master Lease shall have been duly
authorized, executed and delivered by the parties thereto.
(c) Loan Agreement. The Loan Agreement shall have been duly
authorized, executed and delivered by the parties thereto.
(d) Assignment of Lease and Rent. The Assignment of Lease and
Rent shall have been duly authorized, executed and delivered by the
Lessor, as assignor, to the Collateral Agent for the benefit of each
of the Secured Parties, as assignee, and the Assignment of Lease and
Rent shall have been consented to and acknowledged by the Company and
each Lessee party to the Operative Documents on the Documentation
Date.
(e) Intercreditor Agreement. The Intercreditor Agreement
shall have been duly authorized, executed and delivered by the
parties thereto.
(f) Security Documents. Each of the Multicare Guaranty, the
Pledge Agreement, the Security Agreement and the PHC/Providence
Mortgages shall have been duly authorized, executed and delivered by
the parties thereto, and the Lessor shall have received an executed
counterpart of each of the foregoing.
(g) [Intentionally Omitted].
(h) Certain Transaction Expenses. Counsel for the Lessor and
the Lenders shall have received, to the extent then invoiced, payment
in full in cash of all Transaction Expenses payable to such counsel
pursuant to Section 9.1.
All documents and instruments required to be delivered pursuant to this
Section 6.1 shall be delivered at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York, or at
such other location as may be determined by the Lessor, the Lenders and the
Lessee.
SECTION 6.2. Initial Acquisition Date. The occurrence of the
initial Acquisition Date hereunder (the "Initial Acquisition Date") shall
be subject to the prior satisfaction of all of the conditions precedent
thereto set forth in this Section 6.2 (or waiver thereof by the applicable
parties as set forth herein). The parties hereto agree that the Lessor's
obligations to acquire any Property or Equity Interest shall not be subject
to any conditions precedent set forth in this Section 6.2 to the extent
such conditions are actions required of the Lessor. The obligation of the
Lessor to acquire any Property or Equity Interest on the Initial
Acquisition Date and to make the Advance in respect of the Property Costs
on the Initial Acquisition Date, the obligation of the Lessor to fund any
related Lessor Amount on the Initial Acquisition Date and the obligation of
each Lender to make any related Loan on the Initial Acquisition Date, are
subject to satisfaction or waiver of the following conditions precedent:
(a) Lessees' Resolutions and Incumbency Certificate, etc.
Each Lessee shall have delivered to the Lessor and the Lenders a
certificate of its Secretary or an Assistant Secretary attaching and
certifying as to (A) the resolutions of the Board of Directors or
committee thereof duly authorizing the execution, delivery and
performance by it of each Operative Document to which it is or will
be a party, (B) its certificate of incorporation and by-laws, and
(C) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party
and (ii) a certificate of good standing with respect to it issued by
the Secretary of State of the jurisdiction of its incorporation no
earlier than thirty (30) days prior to the Initial Acquisition Date
or such earlier date as is acceptable to the Lessor.
(b) Company's Resolutions and Incumbency Certificate, etc.
The Company shall have delivered to the Lessor and the Lenders a
certificate of its Secretary or an Assistant Secretary attaching and
certifying as to (A) the resolutions of the Board of Directors or
committee thereof duly authorizing the execution, delivery and
performance by it of each Operative Document to which it is or will
be a party, (B) its certificate of incorporation and by-laws, and
(C) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party
and (ii) a certificate of good standing with respect to it issued by
the Secretary of State of the State of Delaware no earlier than
thirty (30) days prior to the Initial Acquisition Date or such
earlier date as is acceptable to the Lessor.
(c) Opinion of Counsel to the Company and the Lessees. The
Participants shall have received an opinion of Paul, Weiss, Rifkind,
Wharton & Garrison, special counsel to the Company and the Lessees,
which is reasonably acceptable in form and substance to the
Participants.
(d) Fees. The Company, as agent for the Lessees, shall have
paid in full all Facility Fees and the Structuring Agent's fee then
due and payable pursuant to the Participation Agreement and the Fee
Letter.
SECTION 6.3. Conditions Precedent to Each Acquisition Date. Each
Acquisition Date shall occur on the date on which all the conditions
precedent thereto set forth in this Section 6.3 with respect to such
acquisition shall have been satisfied or waived by the applicable parties
as set forth herein. The parties hereto agree that the Lessor's
obligations to acquire any Property or Equity Interest shall not be subject
to any conditions precedent set forth in this Section 6.3 to the extent
such conditions are actions required of the Lessor. The obligation of the
Lessor to acquire any Property or Equity Interest on any Acquisition Date
and to make the Advance in respect of the Property Costs for such Property
or Equity Interest on the applicable Acquisition Date, the obligation of
the Lessor to fund any related Lessor Amount on the applicable Acquisition
Date and the obligation of each Lender to make any related Loan on the
applicable Acquisition Date, are subject to satisfaction or waiver of the
following conditions precedent:
(a) Funding Request. The Lessor and the Lease Agent shall
have received a fully executed counterpart of the applicable Funding
Request in accordance with Section 3.4. The delivery of a Funding
Request shall constitute a representation and warranty by all of the
Lessees and the Company that on such Acquisition Date (both
immediately before and after giving effect to the making of such
Advance and the application of the proceeds thereof), the statements
made in Section 8.2 are true and correct in all material respects.
(b) Transfer Documents. In the case of the acquisition of an
Equity Interest, on or prior to such Acquisition Date, each of the
Equity Interests to be acquired on such Acquisition Date shall have
been transferred to the Lessor pursuant to appropriate instruments of
transfer in form and substance reasonably satisfactory to the Lessor.
(c) Deed; Bill of Sale for Certain Properties. In the case of
the acquisition of a direct fee ownership interest in any Property,
on or prior to such Acquisition Date, the Lessor shall have received
(i) a Deed with respect to such Property in form and substance
reasonably satisfactory to it and (ii) if such Property includes
personal property, a warranty bill of sale (a "Bill of Sale"),
conveying title to the Lessor in any Improvements and other personal
property (other than inventory) comprising part of such Property (and
the parties hereto acknowledge that the Properties to be acquired on
the Initial Acquisition Date do not include any personal property).
(d) Supplement to Assignment of Lease and Rent. On or prior
to such Acquisition Date, the Lessor shall have delivered to the
Collateral Agent one or more Supplements to the Assignment of Lease
and Rent substantially in the form of Exhibit A thereto covering each
Property to be acquired on such Acquisition Date (or, in the case of
an acquisition of an Equity Interest, covering the Property relating
to such Equity Interest), together with a consent to and
acknowledgement of such Supplement duly executed by the applicable
Lessee.
(e) Lease Supplement/Memorandum of Lease. On or prior to such
Acquisition Date, for each Property the applicable Lessee and the
Lessor shall have delivered the original counterpart of the Lease
Supplement, in recordable form, executed by the Lessee and the Lessor
with respect to such Property to the Lenders.
(f) Responsible Officer's Certificate. On or prior to such
Acquisition Date, the Lessor and the Lenders shall each have received
(x) a Responsible Officer's Certificate of the Company and (y) a
Responsible Officer's Certificate of each Lessee of a Property being
acquired on such Acquisition Date (or, in the case of an acquisition
of an Equity Interest, the Lessee of the Property relating to such
Equity Interest), each in substantially the form of Exhibit C
attached hereto, dated as of the applicable Acquisition Date, stating
that (i) to such Responsible Officer's actual knowledge, without
investigation, each and every representation and warranty of each of
the Company or the applicable Lessee, as applicable, contained in
each Operative Document to which it is a party is true and correct in
all material respects on and as of the applicable Acquisition Date,
(ii) to such Responsible Officer's actual knowledge, without
investigation, no Default or Event of Default has occurred and is
continuing under any Operative Document to which either of the
Company or the applicable Lessee, as applicable, is a party, (iii) to
such Responsible Officer's actual knowledge, without investigation,
each Operative Document to which either the Company or the applicable
Lessee, as applicable, is a party is in full force and effect with
respect to it, and (iv) to such Responsible Officer's actual
knowledge, each of the Company or the applicable Lessee, as
applicable, has duly performed and complied with all conditions
contained herein or in any other Operative Document required to be
performed or complied with by it on or prior to the Acquisition Date.
(g) Lease Facility Mortgage. On or prior to such Acquisition
Date, the applicable Lessee shall have delivered to the Collateral
Agent (with a copy thereof delivered to the Lessor) a Lease Facility
Mortgage covering the Property to be leased by such Lessee under the
Master Lease and applicable Lease Supplement, in form and substance
reasonably satisfactory to the Participants.
(h) Lease Facility Financing Statements. On or prior to such
Acquisition Date, for each Property the applicable Lessee shall have
delivered to the Lessor all Lease Facility Financing Statements
relating to such Property as the Lessor or any Participant reasonably
may request in order to protect the security interest of the
Collateral Agent for the benefit of the Secured Parties.
(i) Recordation of Mortgages and Filing of Lease Facility
Financing Statements. Each of the Lessor and the Participants shall
have received evidence reasonably satisfactory to it that each of
(i) the Lease Facility Mortgages, (ii) the Assignment of Lease and
Rent and (iii) the Lease Facility Financing Statements, in each case
relating to the applicable Property, has been, or will be promptly,
recorded or filed, as applicable, in a manner sufficient to properly
secure each of their interests therein.
(j) Evidence of Property Insurance. The Lessor shall have
received evidence that the insurance obtained by the Lessees with
respect to the applicable Property satisfies the requirements set
forth in Article XIII of the Master Lease, setting forth the
respective coverage, limits of liability, carrier, policy number and
period of coverage.
(k) Environmental Audit. The Lessor and the Lease Agent shall
have received an Environmental Audit with respect to the applicable
Property in form and substance reasonably satisfactory to the Lessor
and the Lease Agent.
(l) Property Survey. On or prior to such Acquisition Date,
each Lessee or the Company shall have delivered to the Lessor, on
behalf of the Lenders, an American Land Title Association ("ALTA")/1992
(Urban) Survey of the applicable Property certified to the
title company and otherwise in form reasonably acceptable to the
Participants.
(m) Title Insurance. On or prior to such Acquisition Date,
the Lessor and the Lease Agent shall have received from a title
company satisfactory to them a commitment to deliver an ALTA extended
owners and lenders title insurance policy covering the applicable
Property in favor of the Lessor and the Lenders, respectively, such
policy in an amount not less than the related Property Cost and to be
reasonably satisfactory to the Lessor and the Lease Agent with such
customary endorsements issued by the title company as a routine
matter, if reasonably requested by the Lessor.
(n) Appraisal. On or prior to such Acquisition Date, the
Lessor and the Lenders shall have received an Appraisal of the
applicable Property, in form and substance reasonably satisfactory to
the Lessor and the Lenders, which Appraisal shall show that, as of
such Acquisition Date and the Expiration Date, the Fair Market Sales
Value of each Property being acquired on such Acquisition Date (or,
in the case of an acquisition of an Equity Interest, the Property
relating to such Equity Interest) shall not be less than 100% of the
Property Cost for such Property.
(o) Opinion of Local Counsel. If the Property being acquired
on the applicable Acquisition Date (or, in the case of an acquisition
of an Equity Interest, the Property relating to such Equity Interest)
is located in a state in which there exists no other Property already
covered by any Lease Supplement, then on or prior to such Acquisition
Date, the Lessor and each Lender shall have received an opinion, in
form and substance satisfactory to them, of counsel qualified with
respect to the laws of the jurisdiction in which the applicable
Property is located.
(p) Fees. All Facility Fees then due and payable pursuant to
this Participation Agreement and all fees due and payable pursuant to
the Fee Letter shall have been paid.
(q) Representations and Warranties. On the applicable
Acquisition Date, the representations and warranties of each Lessee
and the Company contained in Section 8.2 and in each of the other
Operative Documents shall be true and correct in all material
respects as though made on and as of such date, except to the extent
such representations or warranties relate solely to an earlier date,
in which case such representations and warranties shall have been
true and correct in all material respects on and as of such earlier
date.
(r) Taxes. All taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of
the Operative Documents shall have been paid or provisions for such
payment shall have been made by the applicable Lessee to the
reasonable satisfaction of the Lessor and the Lenders.
(s) Governmental Approvals. All necessary Governmental
Actions required by any Requirement of Law or any Property Legal
Requirements for the purpose of authorizing the Lessor to acquire the
applicable Property (and, if applicable, the Equity Interest related
thereto) shall have been obtained or made and be in full force and
effect.
(t) Litigation. No action or proceeding shall have been
instituted, nor, to the actual knowledge (without investigation) of
any Lessee or the Company, shall any action or proceeding be
threatened, before any Governmental Authority, nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority either (i) to set aside, restrain, enjoin or
prevent the full performance of this Participation Agreement, any
other Operative Document or any transaction contemplated hereby or
thereby, (ii) which is reasonably likely to Materially adversely
affect any Lessee, the Company or the Property, or (iii) that
question the validity in a material sense of the Operative Documents
or the rights or remedies of the Lessor or the Lenders with respect
to any Lessee, the Company or any Property under the Operative
Documents.
(u) Requirements of Law. In the reasonable opinion of the
Lessor and the Lenders and their respective counsel, the transactions
contemplated by the Operative Documents do not and will not violate
in any material respect any Requirement of Law and do not and will
not subject the Lessor or the Lenders to any adverse regulatory
prohibitions or constraints.
(v) No Default. There shall not have occurred and be
continuing any Default or Event of Default under any of the Operative
Documents, and no Default or Event of Default under any of the
Operative Documents will have occurred after giving effect to the
acquisition of the Properties.
All documents and instruments required to be delivered pursuant to this
Section 6.2 shall be delivered at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York, or at
such other location as may be determined by the Lessor, the Lenders, the
Company and the Lessee.
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1. Basic Rent (Interest/Yield). The Collateral Agent or
the Lease Agent (as specified in Section 10.4) shall distribute to the
Lenders, from each payment of Basic Rent (Interest/Yield) received by the
Collateral Agent or the Lease Agent, as applicable (and from any payment of
interest on overdue installments of Basic Rent (Interest/Yield) received by
the Lessor), an amount equal to the interest due on the Loans in accordance
with Section 2.4 of the Loan Agreement as well as any overdue interest due
to the Lenders (to the extent permitted by applicable law). The Collateral
Agent or the Lease Agent, as applicable shall distribute to the Lessor, as
payment of Yield on the Lessor Amount (as well as payment of any overdue
Yield due to the Lessor, to the extent permitted by applicable law), all
payments of Basic Rent (Interest/Yield) received by the Collateral Agent or
the Lease Agent, as applicable (and all payments of interest on overdue
installments of Basic Rent (Interest/Yield) received by the Collateral
Agent or the Lease Agent, as applicable), to the extent such payments
exceed amounts then due and payable by the Lessor with respect to interest
on the Loans.
SECTION 7.2. Purchase Payments by the Lessees.
(a) Any payment received by the Collateral Agent or the Lease
Agent, as applicable, as a result of:
(i) the purchase of all of the Properties in connection
with the exercise of the Purchase Option under Section 18.1(a)
of the Master Lease, or
(ii) compliance with the obligation to purchase (or
cause its designee to purchase) all of the Properties in
accordance with Section 18.2 of the Master Lease, or
(iii) compliance with the obligation to purchase all
unsold Properties in accordance with Section 16.2(e) of the
Master Lease, or
(iv) failure to fulfill one or more of the conditions to
exercise of the Remarketing Option with respect to any Property
pursuant to Section 20.1 of the Master Lease and the Lessor's
receipt of the Lease Balance pursuant to the provisions of
Section 20.1 of the Master Lease,
shall be distributed by the Collateral Agent or the Lease Agent, as
applicable, to pay in full the Participant Balance of each Lender and
the Lessor.
(b) Any payment received by the Collateral Agent or the Lease
Agent, as applicable, as a result of the payment of the Property
Balance with respect to any Property in accordance with Section 15.1
or 18.1(b) of the Master Lease shall be distributed by the Collateral
Agent or the Lease Agent, as applicable, among the Lenders and the
Lessor pro rata without priority of one over the other, in the
proportion that the Participant Balance of each of the Lenders and
the Lessor bears to the aggregate of all of the Participant Balances.
SECTION 7.3. Payment of Lease Recourse Amount. The payment of the
Lease Recourse Amount to the Collateral Agent or the Lease Agent, as
applicable, in accordance with Section 20.1(j) of the Master Lease upon the
exercise of the Remarketing Option shall be distributed to the Tranche A
Lenders for application to pay in full the Participant Balance of each
Tranche A Lender.
SECTION 7.4. Sales Proceeds of Remarketing of Properties. Any
payments received by the Collateral Agent or the Lease Agent, as
applicable, as proceeds from the sale of the Properties sold pursuant to
the exercise of the Remarketing Option pursuant to Article XX of the Master
Lease, together with any payment made as a result of an appraisal pursuant
to Section 13.2, shall be distributed in the funds so received in the
following order of priority:
first, among the Tranche B Lenders and the Lessor pro rata
without priority of one over the other, in the proportion that the
Participant Balance of each of the Tranche B Lenders and the Lessor
bears to the aggregate of all of the Participant Balances of the
Tranche B Lenders and the Lessor, and
second, the balance, if any, after payment in full of the
Participant Balances of the Tranche B Lenders and the Lessor shall be
promptly distributed to the Company as agent for the Lessees.
SECTION 7.5. Supplemental Rent. All payments of Supplemental Rent
received by the Collateral Agent or the Lease Agent, as applicable
(excluding any amounts payable pursuant to the preceding provisions of this
Article VII) shall be promptly distributed upon receipt thereof to the
Persons entitled thereto pursuant to the Operative Documents.
SECTION 7.6. Reserved.
SECTION 7.7. Distribution of Payments after Lease Event of Default.
(a) Prior to the payment in full of all obligations of the Company and the
Subsidiary Co-Borrowers owing to the Credit Facility Banks under the Credit
Facility Documents and the permanent termination of all commitments of the
Credit Facility Banks thereunder, all amounts received by the Collateral
Agent during the continuance of a Lease Event of Default (including without
limitation all amounts received from any sale of any Property and all
amounts realized in connection with any Casualty or Condemnation affecting
any Property) shall be distributed in accordance with the provisions of
Section 2.14 of the Intercreditor Agreement (and each party hereto hereby
acknowledges and agrees that all such payments shall be distributed as
aforesaid).
(b) After payment in full of all obligations of the Company and the
Subsidiary Co-Borrowers owing to the Credit Facility Banks under the Credit
Facility Documents and the permanent termination of all commitments of the
Credit Facility Banks thereunder, all payments received and amounts
realized by the Collateral Agent or the Lease Agent during the continuance
of a Lease Event of Default shall be turned over to the Lease Agent (if
received by the Collateral Agent) and distributed by the Lease Agent as
follows:
(x) All payments received and amounts realized in connection
with any Casualty or Condemnation shall be distributed as follows:
(i) in the event that the Lease Agent, at the direction
of the Required Participants, elects to pay all or a portion of
such amounts to the applicable Lessee for the repair of damage
caused by such Casualty or Condemnation in accordance with
Section 14.1(a) of the Master Lease, then such amounts shall be
distributed to the applicable Lessee, and
(ii) in the event that the Lease Agent, at the direction
of the Required Participants, elects to apply all or a portion
of such amounts to the purchase price of the related Property
in accordance with Section 14.1(a) of the Master Lease, then
such amounts shall be distributed in accordance with clause
(y).
(y) All other payments received and amounts realized shall be
distributed in the following order of priority:
first, so much of such payment or amount as shall be
required to reimburse the Lease Agent for any tax, expense or
other loss incurred by the Lease Agent (to the extent not
previously reimbursed and to the extent incurred in connection
with any duties as the Lease Agent) and any unpaid ongoing fees
of the Lease Agent shall be distributed to the Lease Agent for
its own account;
second, so much of such payments or amounts as shall be
required to pay the then existing or prior Lenders and the
Lessor the amounts payable to them pursuant to any expense
reimbursement or indemnification provisions of the Operative
Documents shall be distributed to each such Participant without
priority of one over the other in accordance with the amount of
such payment or payments payable to each such Person;
third, to the Lenders and the Lessor pro rata in
accordance with, and for application to, the Participant
Balance of each Lender and the Lessor; and
fourth, after payment in full of the Participant Balance
of each Lender and the Lessor and all other amounts due and
owing to any Lender or the Lessor, the balance, if any, of such
payment or amounts remaining thereafter shall be promptly
distributed to, or as directed by, the Company as agent for the
Lessees.
(c) All amounts received or realized by the Collateral Agent or the
Lease Agent and otherwise distributable pursuant to Sections 7.1 and 7.2
shall be distributed by the Collateral Agent or the Lease Agent, as
applicable, in accordance with this Section 7.7.
SECTION 7.8. Other Payments.
(a) Except as otherwise provided in Sections 7.1, 7.2, 7.7 and
clause (b) below, any payment received by the Collateral Agent or the Lease
Agent for which no provision as to the application thereof is made in the
Operative Documents or elsewhere in this Article VII shall be distributed
pro rata among the Lenders and the Lessor without priority of one over the
other, in the proportion that the Participant Balance of each bears to the
aggregate of all the Participant Balances, to be applied to the outstanding
Loans and Lessor Amounts, with any balance payable in accordance with the
Operative Documents.
(b) Except as otherwise provided in Sections 7.1, 7.2 and 7.7, all
payments received and amounts realized by the Collateral Agent or the Lease
Agent under the Master Lease or otherwise with respect to the Properties to
the extent received or realized at any time after indefeasible payment in
full of the Participant Balances of all of the Lenders and the Lessor and
any other amounts due and owing to the Lenders or the Lessor, shall be
distributed in accordance with the provision of Section 2.14 of the
Intercreditor Agreement.
(c) Except as otherwise provided in Sections 7.1 and 7.2, any
payment received by the Collateral Agent or the Lease Agent for which
provision as to the application thereof is made in an Operative Document
but not elsewhere in this Article VII shall be distributed forthwith to the
Person and for the purpose for which such payment was made in accordance
with the terms of such Operative Document.
SECTION 7.9. Casualty and Condemnation Amounts. Subject to Sections
7.7 and 7.8(b), any amounts payable to the Collateral Agent or the Lease
Agent, as applicable, as a result of a Casualty or Condemnation pursuant to
Section 14.1 of the Master Lease and the Assignment of Lease and Rent shall
be distributed as follows:
(a) all amounts payable to a Lessee for the repair of damage
caused by such Casualty or Condemnation in accordance with Section
14.1(a) of the Master Lease shall be distributed to such Lessee, and
(b) all amounts that are to be applied to the purchase price
of the related Property in accordance with Section 14.1(a) and
Article XV of the Master Lease shall be distributed to the Lenders
and the Lessor pro rata without priority of one over the other, in
the proportion that the Participant Balance of each bears to the
aggregate of all of the Participant Balances. Section 13.10 shall
not apply to any distribution or prepayment made pursuant to this
Section 7.9(b).
SECTION 7.10. Order of Application. To the extent any payment made
to any Lender or the Lessor pursuant to Section 7.2, 7.3, 7.4 or 7.7 is
insufficient to pay in full the Participant Balance of such Lender or the
Lessor, then each such payment shall first be applied to accrued interest
or Yield and then to the principal of the Loans or the Lessor Amount, as
applicable.
SECTION 7.11. Deemed Receipt. Receipt by the Collateral Agent or
the Lease Agent, as applicable, of any amount paid by the Lessees
distributable to the Lenders or other Persons pursuant to this Article VII
shall be deemed to be receipt by each such party to the extent allocable to
such party and upon payment of any such amount by the Lessees to the
Collateral Agent or the Lease Agent, as the case may be, the Lessees shall
have no further obligations to make such payment.
SECTION 7.12. Agreement of Collateral Agent and Participants.
Pursuant to the Assignment of Lease and Rent, all of the payments (other
than amounts expressly excluded from the assignment contained therein) have
been assigned to the Collateral Agent for the benefit of each of the
Secured Parties. The Collateral Agent hereby agrees that it shall
distribute all such payments pursuant to the requirements of this Article
VII and the Intercreditor Agreement to each Participant or other Person
entitled thereto as promptly as possible (it being understood that any such
payment received on a timely basis in accordance with the provisions of the
Master Lease, this Participation Agreement and the other Operative
Documents shall be distributed by the Collateral Agent on the same Business
Day as received to the extent practicable).
ARTICLE VIII
REPRESENTATIONS
SECTION 8.1. Representations of the Participants. Each Participant
represents and warrants to each other Participant, the Company and the
Lessees that:
(a) ERISA. Such Participant is purchasing its interest in its
Lease Facility Note or funding its Lessor Amount, as the case may be,
with assets that are not assets of any Employee Benefit Plan (or its
related trust) which is subject to Title I of ERISA or Section 4975
of the Code; and it is not a "Benefit Plan Investor" as defined in 29
C.F.R. S 2510.3-101, and is not purchasing its interest in its
Lease Facility Note or funding its Lessor Amount, as the case may be,
with any assets of any Benefit Plan Investor.
(b) Status. Such Participant is a commercial bank, savings
and loan association, savings bank, depository institution, insurance
company, branch or agency of a foreign bank or other similar
financial institution, or an Affiliate thereof.
(c) Organization, Good Standing and Due Qualification. Such
Participant is duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation or organization, has the corporate power and authority
to own its assets and to transact the business in which it is now
engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required for the
consummation of the transactions contemplated hereby.
(d) Power and Authority, No Conflicts. The execution,
delivery and performance by such Participant of the Operative
Documents to which it is a party have been duly authorized by all
necessary corporate action and do not and will not: (i) require any
consent or approval of its stockholders, partners or members that has
not been obtained; (ii) contravene its charter or by-laws or
partnership or operating agreement; (iii) violate in any material
respect any provision of, or require any filing, registration,
consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction,
decree, determination or award presently in effect having
applicability to it; (iv) result in a breach of or constitute a
default or require any consent under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which it is
a party or by which it or its properties may be bound or affected if
such breach, default or failure to obtain consent could reasonably be
expected to adversely effect the transactions contemplated hereby;
(v) result in, or require, the creation or imposition of any Lien,
upon or with respect to any of the properties now owned or hereafter
acquired by it; or (vi) cause it to be in default under any such law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award or, if such default could reasonably be
expected to adversely effect the transactions contemplated hereby.
(e) No Affiliation With Lessor. It is not an Affiliate of the
Lessor (or if it is the Lessor it is not an Affiliate of any Lender)
and will not in the future become such an Affiliate unless it has
provided the Company, as agent for the Lessees, sixty (60) days'
prior written notice and upon the determination of the Company, as
agent for the Lessees, that such affiliation will cause a Rate
Setting Commission Trigger Event to occur, it will, upon payment in
full of all amounts owed to such Participant, assign its interests
hereunder to a third party designated by the Company, as agent of the
Lessees.
(f) Legally Enforceable Agreements. Each Operative Document
to which such Participant is a party is, or when delivered under this
Agreement will be, a legal, valid and binding obligation of such
Person enforceable against such Person in accordance with its terms,
except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
The making of any Loan or the advancing of any Lessor Amount on any
Acquisition Date shall constitute an affirmation by the subject Participant
of the preceding representations and warranties.
SECTION 8.2. Representations of the Company and the Lessees. The
Company and each Lessee hereby represent and warrant to each Participant
that:
(a) Organization, Good Standing and Due Qualification. It is
duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or
organization, has the corporate, partnership or limited liability
company power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged, and is
duly qualified as a foreign corporation, partnership or limited
liability company and in good standing under the laws of each other
jurisdiction in which such qualification is required and where such
failure to qualify could reasonably be expected to have a Material
Adverse Effect.
(b) Power and Authority, No Conflicts. The execution,
delivery and performance of the Operative Documents to which it is a
party have been duly authorized by all necessary corporate,
partnership or limited liability company action and do not and will
not: (i) require any consent or approval of its stockholders,
partners or members that has not been obtained; (ii) contravene its
charter or by-laws or partnership or operating agreement;
(iii) violate any provision of, or require any filing (other than the
recordation of the Lease Facility Mortgages, the Lease Facility
Financing Statements, the Lease Supplements, the Assignment of Lease
and Rent and the Supplements to the Assignment of Lease and Rent),
registration, consent or approval under, any law, rule, regulation
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it; (iv) result in a breach of or constitute a
default or require any consent under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which it is
a party or by which it or its properties may be bound or affected if
such breach, default or failure to obtain consent could reasonably be
expected to have a Material Adverse Effect; (v) result in, or
require, the creation or imposition of any Lien (other than Permitted
Property Liens and as created under the Security Documents), upon or
with respect to any of the properties now owned or hereafter acquired
by it; or (vi) cause it to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award or, if such default could reasonably be expected to have a
Material Adverse Effect, any such indenture, agreement, lease or
instrument.
(c) Legally Enforceable Agreements. Each Operative Document
to which it is a party is, or when delivered under this Agreement
will be, a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its terms, except
to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors'
rights generally.
(d) Litigation. Except as disclosed in Item 8.2(d) of
Schedule II hereto, there are no actions, suits or proceedings
pending or, to its actual knowledge without investigation,
threatened, against or affecting it before any court, Governmental
Authority or arbitrator which could reasonably be expected to have a
Material Adverse Effect.
(e) Financial Statements. The consolidated balance sheets of
the Consolidated Entities as at December 31, 1995, 1994, 1993, 1992
and 1991, and the related consolidated income statements and
statements of cash flows and changes in stockholders' equity of the
Consolidated Entities, for the fiscal years then ended, and the
accompanying footnotes, together with the opinion on the consolidated
statements of KPMG Peat Marwick L.L.P., independent certified public
accountants, and the interim unaudited consolidated balance sheet of
the Consolidated Entities as at September 30, 1996, and the related
consolidated income statement and statements of cash flows and
changes in stockholders' equity of the Consolidated Entities, for the
three month period then ended, copies of which have been furnished to
each of the Participants, are complete and correct and fairly present
the financial condition of the Consolidated Entities at such dates
and the results of the operations of the Consolidated Entities for
the periods covered by such statements, all in accordance with GAAP
consistently applied. Except as set forth on the consolidated
balance sheet of the Consolidated Entities as at September 30, 1996,
there are no liabilities of any Consolidated Entity, fixed or
contingent, which are material but are not reflected in the financial
statements or in the notes thereto and which would be required to be
recorded in such financial statements or notes in accordance with
GAAP. No written information, exhibit or report furnished by the
Company or any Lessee to the Participants in connection with the
negotiation of this Agreement (after giving effect to information so
furnished that corrects, supplements or supersedes information
previously furnished) contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the
statements contained therein not materially misleading in each case
as determined as of the date of the provision of such information,
exhibit or report. Since September 30, 1996, there has been no
change which could reasonably be expected to have a Material Adverse
Effect.
(f) ERISA. Each Plan and, to the best knowledge of the
Company and each Lessee, Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material
respects in compliance with, the applicable provisions of ERISA, the
Code and any other applicable Federal or state law, and no event or
condition is occurring or exists concerning which the Company or any
Lessee would be under an obligation to furnish a report to the Credit
Facility Banks in accordance with Section 7.08(g) of the Credit
Agreement. As of the most recent valuation date for each Plan, each
Plan other than The Breyut Convalescent Center, Inc. Pension Fund was
"fully funded", which for purposes of this Section 8.2(f) shall mean
that the fair market value of the assets of the Plan is not less than
the present value of the accrued benefits of all participants in the
Plan, computed on a Plan termination basis. To the best knowledge of
the Company and each Lessee, no such Plan has ceased being fully
funded as of the date these representations are made with respect to
any Loan under this Agreement. With respect to The Breyut
Convalescent Center, Inc. Pension Fund, benefit accruals were frozen
as of December 31, 1990 and the Unfunded Benefit Liabilities as
projected by such Plan's enrolled actuary as of August 1, 1993 were
$1,139,854.
(g) Hazardous Materials. To its actual knowledge, each Lessee
is in compliance in all material respects with all Environmental
Laws. No Lessee has received any (i) notice, demand letters,
inquiry, or requests for information from any Governmental Authority
or any third party alleging any actual or threatened injury or damage
to any person or property or the environment arising from any Release
or threatened Release of Hazardous Materials at or from such Lessee's
present or previously-owned or leased real properties or (ii) notice
of any Lien held by any Governmental Authority under any
Environmental Law that has attached to any revenues of, or to, any
real properties owned or leased by such Lessee.
(h) Governmental Regulation. Neither the Company nor any
Lessee is subject to regulation under the Public Utility Holding
Company Act of 1935, the Investment Company Act of 1940, the
Interstate Commerce Act, the Federal Power Act or any statute or
regulation limiting its ability to incur indebtedness for money
borrowed as contemplated hereby.
(i) Solvency.
(i) The present fair saleable value of the assets of the
Company and each Lessee after giving effect to all the
transactions contemplated by the Operative Documents and the
funding of the Commitments hereunder exceeds the amount that
will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities)
of such Person as they mature.
(ii) The Property of the Company and each Lessee does
not constitute unreasonably small capital for such Person to
carry out its business as now conducted and as proposed to be
conducted including the capital needs of such Person.
(iii) The Company and each Lessee does not intend to,
nor does such Person believe that it will, incur debts beyond
its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be received by such
Person, and of amounts to be payable on or in respect of
indebtedness of such Person). The cash available to such
Person after taking into account all other anticipated uses of
the cash of such Person, is anticipated to be sufficient to pay
all such amounts on or in respect of debt of such Person when
such amounts are required to be paid.
(iv) The Company and each Lessee does not believe that
final judgments against it in actions for money damages will be
rendered at a time when, or in an amount such that, such Person
will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum
reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be
rendered). The cash available to such Person after taking into
account all other anticipated uses of the cash of such Person
(including the payments on or in respect of debt referred to in
paragraph (iii) of this Section 8.2(i)), is anticipated to be
sufficient to pay all such judgments promptly in accordance
with their terms.
(j) Lessees. Each Lessee is an indirect wholly-owned
Subsidiary of the Company.
(k) Property. Each Property, and the contemplated use thereof
by each Lessee and its agents, assignees, employees, lessees,
licensees and tenants, will comply with all Material Requirements of
Law (including, without limitation, all zoning and land use laws and
Environmental Laws) and Material Insurance Requirements, except for
such Requirements of Law as such Lessee shall be contesting in good
faith by appropriate proceedings. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent
domain or under any Environmental Law) pending or, to the best of the
Company's and the applicable Lessee's actual knowledge, threatened
with respect to the Company, such Lessee or any Property which
Materially adversely affects the title to, or the use, operation or
value of, any Property.
(l) Condition of Property. All water, sewer, electric, gas,
telephone and drainage facilities and all other utilities required to
adequately service the applicable Improvements for each Property's
intended use are available pursuant to adequate permits (including
any that may be required under applicable Environmental Laws). No
fire or other casualty with respect to any Property has occurred
which fire or other casualty has had a Material adverse effect on any
such Property. All Material services of public facilities and other
utilities necessary for use and operation of each Property and the
other Improvements for their primary intended purposes are available,
including, without limitation, adequate water, gas and electrical
supply, storm and sanitary sewerage facilities, telephone, other
required public utilities and means of access between such
Improvements and public highways for pedestrians and motor vehicles.
All utilities serving each Property are located in either public
rights-of-way abutting each Property or Appurtenant Rights. All
Material licenses, approvals, authorizations, consents, permits
(including building, demolition and environmental permits, licenses,
approvals, authorizations and consents), easements and rights-of-way,
including proof and dedication, required for the use, treatment,
storage, transport, disposal or disposition of any Hazardous
Substance on, at, under or from each Property have either been
obtained from the appropriate Governmental Authorities having
jurisdiction or from private parties, as the case may be.
(m) [Intentionally Omitted].
(n) Insurance. Each Lessee has obtained, or will timely
obtain, insurance coverage covering the applicable Property which
meets the requirements of the Master Lease, and such coverage is in
full force and effect.
(o) Flood Hazard Areas. If any Property is located in an area
identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance
has been obtained for such Property in accordance with Article XIII
of the Lease and in accordance with the National Flood Insurance Act
of 1968, as amended.
SECTION 8.3. Representation of Lessor. In addition to its
representations and warranties set forth in Section 8.1 hereof, the Lessor
represents and warrants to the Company and the Lessees that as of the
Initial Acquisition Date it is a wholly-owned subsidiary of Key Bank, N.A.,
and that it is not financing its acquisition of the Equity Interests or any
Property with non-recourse debt representing more than 97% of the
acquisition cost of such Equity Interests or Property. The Lessor further
represents and warrants that it will use reasonable commercial efforts with
respect to itself to accommodate accounting pronouncements issued from time
to time by the Financial Accounting Standards Board and reasonable
interpretations thereof so that the Lessees may continue to treat the Lease
as an operating lease under GAAP from the Lessor to the Lessees for
purposes of the Lessees' financial reporting.
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
The Lessees agree, for the benefit of the Lessor and the Lenders,
that:
SECTION 9.1. Transaction Expenses.
(a) The Lessees shall pay, or cause to be paid, from time to
time, all Transaction Expenses on the Documentation Date, or, to the
extent not due and payable on the Documentation Date, on each
Acquisition Date; provided, however, that, if the Lessees have not
received written invoices therefor prior to such date, such
Transaction Expenses shall be paid within thirty (30) days after the
Lessees have received written invoices therefor.
(b) The Lessees shall pay or cause to be paid (i) the fees set
forth in the Fee Letter as provided therein, (ii) all Transaction
Expenses incurred by the Lessor or any Lender in entering into any
future amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are
ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto, in each case which have been requested by
or approved by the Lessees, (iii) all Transaction Expenses incurred
by the Lessor, the Lessees or the Lenders in connection with any
purchase of the Property by any Lessee or other Person pursuant to
Articles XVIII and XXI of the Master Lease and (iv) all Transaction
Expenses incurred by any of the other parties hereto in respect of
the successful enforcement of any of their rights or remedies against
any Lessee in respect of the Operative Documents.
SECTION 9.2. Brokers' Fees and Stamp Taxes. The Lessees shall pay
or cause to be paid any brokers' fees and any and all stamp, transfer and
other similar taxes, fees and excises, if any, including any interest and
penalties, which are payable in connection with the transactions
contemplated by this Participation Agreement and the other Operative
Documents.
ARTICLE X
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. Covenants of the Company and each Lessee. The Company
and each Lessee hereby agree, for the benefit of the Lenders and the
Lessor, to comply in full with all of their respective obligations under
Articles 7, 8 and 9 (and successor provisions thereto) of the Credit
Agreement, as such Credit Agreement may be amended from time to time in
accordance with Section 3.01 of the Intercreditor Agreement, and to deliver
(a) to each Participant a copy of each notice required to be delivered to
any Credit Facility Bank pursuant to the provisions of such Articles of the
Credit Agreement and (b) to the Lessor and the Lease Agent a copy of each
notice required to be delivered to the Credit Facility Agent pursuant to
the provisions of such Articles of the Credit Agreement, in each case
within the time period specified in the Credit Agreement for delivery to
the Credit Facility Banks or Credit Facility Agent, as applicable. If on
any date (x) the Credit Agreement shall cease to be in effect or (y) all
obligations of the Company and the Subsidiary Co-Borrowers shall have been
paid in full and the commitments of the Credit Facility Banks thereunder
shall be terminated in their entirety, then the provisions of Articles 7, 8
and 9 (and successor provisions thereto) of the Credit Agreement (as in
effect immediately prior to such date) and all ancillary definitions
related thereto shall automatically and without further action be
incorporated by reference herein and made a part hereof as if originally
set forth herein in full.
SECTION 10.2. Right of Inspection. At any reasonable time and from
time to time, but not more often than once per calendar year, and upon
reasonable advance written notice but no advance notice shall be required
if a Lease Default or a Lease Event of Default then exists, permit the
Lessor or any Lender or any agent or representative thereof, to examine its
records and books of account, and to discuss the affairs, finances and
accounts of each Lessee, as applicable, with any of their respective
officers and directors and independent accountants. Information not
otherwise publicly available obtained in any such examination and
identified as confidential shall be maintained in confidence by the Lessor
or such Lender, as the case may be, and utilized only in connection with
the transactions contemplated hereby.
SECTION 10.3. Further Assurances. The Lessees and the Company
hereby agree that so long as this Participation Agreement is in effect the
Lessees and the Company shall take or cause to be taken from time to time
all action reasonably necessary to assure that the intent of the parties
pursuant to the Operative Documents is given effect as contemplated by this
Participation Agreement and that the Collateral Agent holds a perfected
Lien on each Property securing the obligations of the Company, the Lessees
and the Lessor owing to the Secured Parties. The Lessees shall execute and
deliver, or cause to be executed and delivered, to the Lessor from time to
time, promptly upon request therefor, any and all other and further
instruments (including correction instruments and supplemental mortgages,
deeds of trust and security agreements) that may be reasonably requested by
the Lessor to cure any deficiency in the execution and delivery of the
Master Lease or any Operative Document to which it is a party.
SECTION 10.4. Agreement of Parties With Respect to Assignment of
Payments. Each of the parties hereto acknowledges and agrees that, after
payment in full of all obligations of the Company and the Subsidiary Co-
Borrowers owing to the Credit Facility Banks under the Credit Facility
Documents and the permanent termination of all commitments of the Credit
Facility Banks thereunder, the assignment of payments and rights made under
the Assignment of Lease and Rent shall inure to the benefit of the Lease
Agent on behalf of the Lenders and, in furtherance of the foregoing, all
payments to be made under the Master Lease or any other Operative Document
to the Collateral Agent shall instead be made to the Lease Agent for
distribution by the Lease Agent in accordance with Article VII.
SECTION 10.5. Removal of Liens. (a) The Lessor hereby agrees that
so long as this Participation Agreement is in effect, (i) it will not
create, incur, assume or suffer to exist any Lessor Lien upon the Master
Lease, the Lease Supplements or any of the Properties and (ii) it will, at
its own cost and expense, promptly take such action as may be necessary
duly to discharge, or to cause to be discharged, all Lessor Liens on the
Properties (and its rights under the Operative Documents) attributable to
it.
(b) Each of the Lease Agent and the Collateral Agent hereby
severally agrees that so long as this Participation Agreement is in effect,
(i) it will not create, incur, assume or suffer to exist any Agent Lien
attributable to it upon the Master Lease, the Lease Supplements or any of
the Properties and (ii) it will, at its own cost and expense, promptly take
such action as may be necessary duly to discharge, or to cause to be
discharged, all Agent Liens on the Properties (and its rights under the
Operative Documents) attributable to it.
SECTION 10.6. Massachusetts Circular Letter. Each of the Lessees
intends to fully comply with the requirements of Circular Letter DHCQ 4-95-351
of the Department of Public Health of the Commonwealth of Massachusetts.
Each of the Lenders and the Lessor hereby acknowledges that the Lessees shall
be deemed to be owners of the long-term care facility business for the purpose
of Circular Letter DHCQ 4-95-351.
SECTION 10.7. Cure Rights of Lessees. So long as no Lease Event of
Default shall have occurred and be continuing, upon the occurrence of any
Loan Agreement Event of Default, the Lessees shall have the right, but not
the obligation, to take any such action in order to cure such Loan
Agreement Event of Default upon written notice to the Lessor or to
terminate the Loan Agreement and the Lease and purchase the Properties.
SECTION 10.8. Non-Disturbance of Lessees. Notwithstanding any other
provision herein or in any other Operative Document to the contrary, so
long as no Event of Default (as defined in the Intercreditor Agreement)
shall have occurred and be continuing, the Lenders shall not terminate the
Master Lease (except pursuant to the terms thereof), accelerate any Rent or
other amounts payable by any Lessee thereunder, demand the purchase of any
or all of the Properties by any Lessee (whether pursuant to Section 16.2(e)
of the Master Lease or otherwise), foreclose on any or all of the
Properties (except as to the Lessor's interest therein), or disturb any
Lessee's use, enjoyment and possession of the Properties, or take any
action in violation of or inconsistent with the "non-disturbance"
provisions of any Lease Facility Mortgage; provided, however, that nothing
contained in this Section 10.8 shall in any way limit, restrict or impair
any of the rights or remedies of the Lenders and the Lease Agent with
respect to the Lessor under the Loan Agreement (except to the extent the
exercise of such rights and remedies would be inconsistent with any of the
foregoing provisions of this Section 10.8) and the Assignment of Lease and
Rent.
ARTICLE XI
LESSEE DIRECTIONS
SECTION 11.1. Lessee Directions. The Lessor, the Lenders, and the
Lessees hereby agree that, so long as no Lease Event of Default exists, the
Company, as agent for the Lessees, shall have the exclusive right to
exercise any right of the Lessor under the Loan Agreement at any time, and
the Lessor shall not exercise any right under the Loan Agreement without
giving notice to the Company, as agent for the Lessees, at least two (2)
Business Days' prior written notice, and following such notice, shall take
such action or forebear from taking such action, as the Company, as agent
for the Lessees, shall direct. The Lessor and the Lenders hereby
acknowledge that Conversion/Continuation Notices given by the Company, as
agent for the Lessees, to the Lessor shall be deemed, and considered as,
notices given by the Lessor under the Loan Agreement.
ARTICLE XII
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1. Assignments. All or any part of the interest of any
Participant in, to or under this Participation Agreement, the other
Operative Documents, the Properties or the Lease Facility Notes may be
assigned or transferred by such Participant at any time; provided, however,
that (a) each assignment or transfer shall comply with all applicable
securities laws, (b) any assignment or transfer to a Person that is not an
Affiliate of the transferor thereof shall, so long as no Lease Event of
Default has occurred and is continuing, be subject to the prior written
consent of the Company acting on behalf of the Lessees and the Lessor
(which consent shall not be unreasonably withheld), and (c) any assignee or
transferee acknowledges that the obligations to be performed from and after
the date of such transfer or assignment under this Participation Agreement
and all other Operative Documents are its obligations, including the
obligations imposed by this Section 12.1 (and the transferor and transferee
Participant shall deliver to the Lessees and the Lessor an Assignment
Agreement, in substantially the form of Exhibit D (an "Assignment
Agreement"), executed by the assignee or transferee; and provided, further,
that (i) the Lessor may assign all or part of its interest in any of the
foregoing without the prior written consent of the Company, as agent for
the Lessees, if the retention of such interest constitutes a violation of
Applicable Law or is contrary to the policy of SELCO Service Corporation,
and the Lessor causes to be delivered to the Company, at the time of such
assignment, a certificate of an officer of SELCO Service Corporation to
such effect,) and (ii) any assignee or transferee further represents and
warrants to the Lessor, each Participant and the Lessees that:
(A) it is a commercial bank, savings and loan association,
savings bank, depository institution, insurance company, branch or
agency of a foreign bank or other similar financial institution, in
each case, having a minimum capital and surplus of $50,000,000;
(B) it has the requisite power and authority to accept such
assignment or transfer;
(C) it will not take any action with respect to such Lease
Facility Note or the Properties, as the case may be, that would
violate any applicable securities laws;
(D) it will not assign or transfer any interest in such Lease
Facility Note or its interest in the Properties, as the case may be,
except in compliance with this Section 12.1;
(E) it is purchasing its interest in its Lease Facility Note
or funding its Lessor Amount, as the case may be, with assets that
are not assets of any Employee Benefit Plan (or its related trust)
which is subject to Title I of ERISA or Section 4975 of the Code; and
it is not a "Benefit Plan Investor" as defined in 29 C.F.R. S 2510.3-101,
and is not purchasing its interest in its Lease Facility Note or
funding its Lessor Amount, as the case may be, with any assets of any
Benefit Plan Investor;
(F) it is not an Affiliate of the Lessor (or if it is the
Lessor it is not an Affiliate of any Lender) and will not in the
future become such an Affiliate unless it has provided the Company,
as agent for the Lessees, sixty (60) days' prior written notice and
upon the determination of the Company, as agent for the Lessees, that
such affiliation will cause a Rate Setting Commission Trigger Event
to occur, it will, upon payment in full of all amounts owed to such
Participant, assign its interests hereunder to a third party
designated by the Company, as agent of the Lessees; and
(G) it will not transfer such Lease Facility Note or its
interest in the Properties, as the case may be, unless the proposed
transferee makes the foregoing representations and covenants.
No assignment or transfer by a Participant prior to the Initial
Acquisition Date will relieve such Participation from its obligation to
fund an Advance hereunder if such Participant's assignee or transferee
wrongfully fails to fund such Advance. Each assigning or transferring
Participant shall remain liable under the Operative Documents, to the
extent provided therein, for its acts and omissions occurring prior to any
such assignment or transfer.
SECTION 12.2. Participations. Any Participant may at any time sell
to one or more commercial banks or other Persons (each of such commercial
banks and other Persons being herein called a "Sub-Participant"),
participating interests in all or a portion of its rights and obligations
under this Participation Agreement, the other Operative Documents, the
Properties or its Lease Facility Notes (including, without limitation, all
or portion of the Rent owing to it); provided, however, that
(a) no participation contemplated in this Section 12.2 shall
relieve such Participant from its obligations hereunder or under any
other Operative Document;
(b) such Participant shall remain solely responsible for the
performance of its Commitment and such other obligations;
(c) the Lessees shall continue to deal solely and directly
with such Participant in connection with such Participant's rights
and obligations under this Participation Agreement and each of the
other Operative documents;
(d) no Sub-Participant shall be entitled to require such
Participant to take or refrain from taking any action hereunder or
under any other Operative Document except with respect to any change
in the amount or timing of the payment of any interest, principal or
other amounts payable under the Loan Agreement or this Agreement; and
(e) no Sub-Participant shall be an Affiliate of the Lessor (or
if it is a Sub-Participant of the Lessor it is not an Affiliate of
any Lender) and will not in the future become such an Affiliate
unless it has provided the Company, as agent for the Lessees, sixty
(60) days' prior written notice and upon the determination of the
Company, as agent for the Lessees, that such affiliation will cause a
Rate Setting Commission Trigger Event to occur, it will, upon payment
in full of all amounts owed to such Sub-Participant, sell its
interests hereunder to a third party designated by the Company, as
agent of the Lessees.
Each Participant agrees that it will notify the Lessees promptly of the
identity of each Sub-Participant to which it sells a participating interest
hereunder and the amount of such participating interest. Each Lessee
acknowledges and agrees that each Sub-Participant, for purposes of Article
XIII, shall be considered a Participant. Notwithstanding anything to the
contrary herein, no Sub-Participant shall be entitled to receive any
greater amount than the transferor Participant would have been entitled to
receive in respect of the amount of the participation transferred by such
Participant had no such transfer occurred.
SECTION 12.3. Withholding Taxes; Disclosure of Information; Pledge
Under Regulation A. (a) If any Participant (or the assignee of or
Sub-Participant in any Lease Facility Note of a Participant, each a
"Transferee") is organized under the laws of any jurisdiction other than
the United States or any State thereof, then such Participant or the
Transferee of such Participant, as applicable, shall (as a condition
precedent to acquiring or participating in such Loan and as a continuing
obligation to the Lessor and the Lessee) (i) furnish to the Lessor and the
Lessees in duplicate, for each taxable year of such Participant or
Transferee during the term of the Lease, a properly completed and executed
copy of either Internal Revenue Service Form 4224 or Internal Revenue
Service Form 1001 and Internal Revenue Service Form W-8 or Internal Revenue
Service Form W-9 and any additional form (or such other form) as is
necessary to claim complete exemption from United States withholding taxes
(wherein such Transferee claims entitlement to complete exemption from
United States withholding taxes on all payments hereunder), and
(ii) provide to the Lessor and the Lessees a new Internal Revenue Service
Form 4224 or Internal Revenue Service Form 1001 and Internal Revenue
Service Form W-8 or Internal Revenue Service Form W-9 and any such
additional form (or any successor form or forms) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and
amendments duly executed and completed by such Participant or Transferee,
and to comply from time to time with all applicable United States laws and
regulations with regard to such withholding tax exemption. By its
acceptance of a participation or assignment of a Participant's Lease
Facility Note or interest in the Properties, as the case may be, each
Transferee shall be deemed bound by the provisions set forth in this
Article XII.
(b) Any Participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Article XII, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the applicable Lessee, subject
to any confidentiality requirements relating to such information.
(c) Anything in this Article XII to the contrary notwithstanding,
any Participant may without the consent of the Lessees assign and pledge
all or any portion of the Lease Facility Notes held by it to any Federal
Reserve Bank, the United States Treasury or to any other financial
institution as collateral security pursuant to Regulation A of the F.R.S.
Board and any operating circular issued by the Federal Reserve System
and/or the Federal Reserve Bank or otherwise; provided, any payment by any
Lessee for the benefit of the assigning or pledging Participant shall be
deemed to satisfy such Lessee's obligations with respect thereto.
(d) Anything in this Article XII to the contrary notwithstanding,
each participation described herein shall be at the sole expense of the
Participant engaging in such participation and shall not be subject to
reimbursement by any Lessee or the Company.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.1. General Indemnification. The Lessees, jointly and
severally, agree to assume liability for, and to indemnify, protect,
defend, save and keep harmless each Indemnitee, on an After Tax Basis, from
and against, any and all Claims that may be imposed on, incurred by or
asserted against such Indemnitee, whether or not such Indemnitee shall also
be indemnified as to any such Claim by any other Person, in any way
relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in
respect thereof;
(b) the Properties or any part thereof or interest therein or
any transfer of the Equity Interests to the Lessor or the dissolution
of the Equity Interests by the Lessor (as is contemplated by the
parties hereto);
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance,
rejection, ownership, management, possession, operation, rental,
lease, sublease, repossession, maintenance, repair, alteration,
modification, addition or substitution, storage, transfer of title,
redelivery, use, financing, refinancing, disposition, operation,
condition, sale (including, without limitation, any sale pursuant to
Section 16.2(c), 16.2(e) or 18.2 of the Master Lease or any sale
pursuant to Article XV, XVIII or XX of the Master Lease), return or
other disposition of all or any part or any interest in the
Properties or the imposition of any Lien other than Lessor Liens or
Agent Liens (or incurring of any liability to refund or pay over any
amount as a result of any Lien) thereon, including, without
limitation: (1) Claims or penalties arising from any violation of
law or in tort (strict liability or otherwise), (2) latent or other
defects, whether or not discoverable, (3) any Claim based upon a
violation or alleged violation of the terms of any restriction,
easement, condition or covenant or other matter affecting title to
the Properties, (4) the making of any Modifications in violation of
any standards imposed by any insurance policies required to be
maintained by the applicable Lessee pursuant to the Lease which are
in effect at any time with respect to the Properties or any part
thereof, (5) any Claim for patent, trademark or copyright
infringement arising from the Lessor's ownership of the Properties or
the Equity Interests, and (6) Claims arising from any public
improvements with respect to the Properties resulting in any change
or special assessments being levied against the Property or any plans
to widen, modify or realign any street or highway adjacent to any of
the Properties, or any Claim for utility "tap-in" fees;
(d) the breach by the Company or any Lessee of any covenant,
representation or warranty made by it or deemed made by it in any
Operative Document or any certificate required to be delivered by any
Operative Document;
(e) the retaining or employment of any broker, finder or
financial advisor by the Company or any Lessee to act on its behalf
in connection with this Participation Agreement;
(f) the existence of any Lien on or with respect to the
Properties, the Improvements, any Basic Rent or Supplemental Rent,
title thereto, or any interest therein including any Liens which
arise out of the possession, use, occupancy, construction, repair or
rebuilding of the Property or by reason of labor or materials
furnished or claimed to have been furnished to any Lessee, or any of
its contractors or agents or by reason of the financing of any
personalty or equipment purchased or leased by any Lessee or
Modifications constructed by any Lessee, except Lessor Liens, Agent
Liens and Liens in favor of the Collateral Agent, the Lease Agent,
the Lenders or the Lessor; or
(g) subject to the accuracy of any Participant's
representation set forth in Section 8.1(a), as to such Participant,
the transactions contemplated by the Lease or by any other Operative
Document, in respect of the application of Parts 4 and 5 of Subtitle
B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code;
provided, however, that the Lessees shall not be required to indemnify any
Indemnitee under this Section 13.1 for any of the following: (1) any Claim
to the extent resulting from the willful misconduct or gross negligence of
such Indemnitee or any member of its Indemnitee Group (it being understood
that the Lessees shall be required to indemnify an Indemnitee even if the
ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any
Claim resulting from Lessor Liens which the Lessor or the Lenders is
responsible for discharging under the Operative Documents, (3) any Claim to
the extent attributable to acts or events occurring after the expiration of
the Term or the return or remarketing of the Property so long as the Lessor
and the Lenders are not exercising remedies against the Lessees or any of
them in respect of the Operative Documents, (4) any Claim arising from a
breach or alleged breach by the Lenders or the Lessor of any agreement
entered into in connection with the assignment or participation of any Loan
or Lessor Amount, and (5) any Claim indemnified against in Section 13.2,
13.3 or 13.5. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of and
shall be separate and independent from any remedy under the Lease or any
other Operative Document. Without limiting the express rights of any
Indemnitee under this Section 13.1, this Section 13.1 shall be construed as
an indemnity only and not a guaranty of residual value of the Properties or
as a guaranty of the Lease Facility Notes.
SECTION 13.2. End of Term Indemnity. (a) If the Lessees elect the
Remarketing Option and there would, after giving effect to the proposed
remarketing transactions, be a Shortfall Amount, then prior to the
Expiration Date and as a condition to the Lessees' right to complete the
remarketing of the Properties pursuant to Section 20.1 of the Lease, the
Lessees shall cause to be delivered to the Lessor at least one hundred
twenty (120) days prior to the Expiration Date, at the Lessees' sole cost
and expense, a report from the Person that delivered the Appraisal in form
and substance satisfactory to the Participants (the "End of the Term
Report") which shall state the appraiser's conclusions as to the reason for
any decline in the Fair Market Sales Value of any of the Property from that
anticipated for such date in the Appraisal delivered on the applicable
Acquisition Date.
(b) If the Lessees exercise the Remarketing Option, then on or prior
to the Expiration Date the Lessees shall pay to the Lessor an amount (not
to exceed the Shortfall Amount) equal to the portion of the Shortfall
Amount that the End of the Term Report demonstrates was the result of a
decline in the Fair Market Sales Value of the applicable Property due to
(i) failure to maintain, to repair, to restore, to rebuild or
to replace, failure to comply with all applicable laws, failure to
use, workmanship, method of installation or removal or maintenance,
repair, rebuilding or replacement, (excepting in each case ordinary
wear and tear), in each case as required under the Lease, or
(ii) any Modification made to, or any rebuilding of, the
applicable Properties or any part thereof by the applicable Lessee
not meeting the criteria required under the Lease, or
(iii) the existence of any Hazardous Activity, Hazardous
Materials or Environmental Violations as prohibited under the Lease,
the indemnity for which shall not exceed the cost of the remediation
thereof, or
(iv) any use of any of the applicable Properties or any part
thereof by the applicable Lessee or any sublessee other than as a
long-term care or similar or related facility, or
(v) any grant, release, dedication, transfer, annexation or
amendment of the type referred to in Section 11.2 of the Master Lease
other than those permitted under Section 11.2 of the Master Lease, or
(vi) the failure of the Lessor to have good and marketable
title to any of the applicable Properties free and clear of all Liens
(excluding Permitted Property Liens), or
(vii) the existence of any sublease relating to any of the
applicable Properties that shall survive the Expiration Date.
SECTION 13.3. Environmental Indemnity. Without limitation of the
other provisions of this Article XIII, each Lessee hereby agrees to
indemnify, defend and hold each Indemnitee harmless from and against any
and all claims (including without limitation third party claims for
personal injury or real or personal property damage), losses, damages,
liabilities, fines, penalties, administrative and judicial proceedings
(including informal proceedings) and orders, judgments and enforcement
actions of any kind, and all reasonable and documented costs and expenses
incurred in connection therewith (including reasonable and documented
attorneys' and/or paralegals' fees and expenses), including all costs
incurred in connection with any investigation or monitoring of
environmental conditions or any clean-up, remedial, removal or restoration
work by any federal, state or local government agency, arising in whole or
in part, out of
(a) the presence on or under any of the Properties of any
Hazardous Materials, or any Release of any Hazardous Materials on,
under, from or onto any of the Properties, or
(b) any violation of or non-compliance with any Environmental
Laws by any Lessee or any of its agents, or contractors;
provided, however, no Lessee shall be required to indemnify any Indemnitee
under this Section 13.3 for (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee or (2) any Claim
to the extent attributable to acts or events occurring after the expiration
of the Term or the return or remarketing of any such Property so long as
the Lessor and the Lenders are not exercising remedies against the
applicable Lessee in respect of the Operative Documents. It is expressly
understood and agreed that the indemnity provided for herein shall survive
the expiration or termination of and shall be separate and independent from
any remedy under the Lease or any other Operative Document.
SECTION 13.4. Proceedings in Respect of Claims. With respect to any
amount that a Lessee is requested by an Indemnitee to pay by reason of
Section 13.1 or 13.3, such Indemnitee shall, if so requested by the Lessee
and prior to any payment, submit such additional information to the Lessee
as the Lessee may reasonably request and which is in the possession of such
Indemnitee to substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, or if any Indemnitee becomes aware of a Claim or potential
Claim, such Indemnitee promptly shall notify the applicable Lessee in
writing of the commencement or existence thereof. If the Indemnitee fails
to notify the applicable Lessee promptly, the applicable Lessee's
obligation to indemnify such Indemnitee shall be relieved to the extent
such failure limits the ability of the Lessee to contest such Claim. The
applicable Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the
defense of any such Claim; provided, however, that such Lessee shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee
in respect of such action, suit or proceeding, and the Lessee shall keep
such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with
respect to such action, suit or proceeding as such Indemnitee shall
reasonably request, and provided, further, that the applicable Lessee shall
not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of
such Indemnitee, (x) such action, suit or proceeding involves any risk of
imposition of criminal liability or will involve a risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted
Property Lien) on the Property or any part thereof unless, in the case of
civil liability, the applicable Lessee shall have posted a bond or other
security satisfactory to the relevant Indemnitees in respect to such risk
or (y) the control of such action, suit or proceeding would involve an
actual or potential conflict of interest between such Indemnitee and the
applicable Lessee, (B) such proceeding involves Claims not fully
indemnified by the applicable Lessee which the applicable Lessee and the
Indemnitee have been unable to sever from the indemnified claim(s), or
(C) an Event of Default under the Lease has occurred and is continuing.
The Indemnitee will join in the applicable Lessee's efforts to sever such
action. The Indemnitee may participate in a reasonable manner at its own
expense and with its own counsel in any proceeding conducted by the
applicable Lessee in accordance with the foregoing. The applicable Lessee
shall not enter into any settlement or other compromise with respect to any
Claim which is entitled to be indemnified under Section 13.1 or 13.3
without the prior written consent of the Indemnitee, which consent shall
not be unreasonably withheld or delayed in the case of a money settlement
not involving an admission of liability of such Indemnitee; provided,
however, that in the event that such Indemnitee withholds consent to any
settlement or other compromise, the applicable Lessee shall not be required
to indemnify such Indemnitee to the extent that the applicable Claim (x) is
for legal fees and expenses incurred after the date of the proposed
settlement or (y) results in a judgment in excess of such offered money
settlement.
Each Indemnitee shall at the expense of the applicable Lessee supply
the applicable Lessee with such information and documents reasonably
requested by the applicable Lessee as are necessary or advisable for such
Lessee to participate in any action, suit or proceeding to the extent
permitted by Section 13.1 or 13.3. Unless an Event of Default under the
Lease shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 13.1 or 13.3 without the prior
written consent of the applicable Lessee, which consent shall not be
unreasonably withheld, unless such Indemnitee waives its right to be
indemnified under Section 13.1 or 13.3 with respect to such Claim.
Upon payment in full of any Claim by the applicable Lessee pursuant
to Section 13.1 or 13.3 to or on behalf of an Indemnitee, the applicable
Lessee, without any further action, shall be subrogated to any and all
claims that such Indemnitee may have relating thereto (other than claims in
respect of insurance policies maintained by such Indemnitee at its own
expense), and such Indemnitee shall execute such instruments of assignment
and conveyance, evidence of claims and payment and such other documents,
instruments and agreements as may be necessary to preserve any such claims
and otherwise cooperate with the applicable Lessee and give such further
assurances as are necessary or advisable to enable the applicable Lessee
vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable and, if requested by the applicable
Lessee, such determination shall be verified by a nationally recognized
independent accounting firm mutually acceptable to the Lessee and the
Indemnitee at the expense of the applicable Lessee; provided, however, that
if the applicable Lessee has assumed the defense of the related Claim or is
paying the costs of the Indemnitee's defense of the related Claim on an
ongoing basis, the Lessee shall not be required to pay such amount to the
applicable Indemnitee until such time as a judgment is entered with respect
to such Claim, the enforcement of which is not stayed or which judgment is
not bonded over, or the Claim is otherwise settled or lost.
SECTION 13.5. General Tax Indemnity.
(a) Indemnification. The Lessees, jointly and severally, shall pay
and assume liability for, and do hereby agree to indemnify, protect and
defend the applicable Property and all Tax Indemnitees, and hold them
harmless against, all Impositions on an After Tax Basis.
(b) Contests. Except as otherwise provided in Section 12.1 of the
Master Lease with respect to Property Taxes, if any claim shall be made
against any Tax Indemnitee or if any proceeding shall be commenced against
any Tax Indemnitee (including a written notice of such proceeding) for any
Imposition as to which the Lessees may have an indemnity obligation
pursuant to this Section 13.5, or if any Tax Indemnitee shall receive
notice that any Imposition to which the Lessees may have an indemnity
obligation pursuant to this Section 13.5 may be payable, such Tax
Indemnitee shall promptly (and, in any event, within 30 days) notify the
Company, as agent for the Lessees, in writing (provided that failure to so
promptly notify the Company within 30 days shall not alter such Tax
Indemnitee's rights under this Section 13.5 except to the extent such
failure precludes or materially adversely affects the ability to conduct a
contest of any indemnified Taxes) and shall not take any action with
respect to such claim, proceeding or Imposition without the written consent
of the Company, as agent for the Lessees, (such consent not to be
unreasonably withheld or unreasonably delayed) for 30 days after the
receipt of such notice by the Company or thereafter if the applicable
Lessee has commenced to take appropriate action; provided, however, that in
the case of any such claim or proceeding, if such Tax Indemnitee shall be
required by law or regulation to take action prior to the end of such 30-day
period, such Tax Indemnitee shall in such notice to the applicable
Lessee, so inform the Company, as agent for the Lessees, and such Tax
Indemnitee shall not take any action with respect to such claim, proceeding
or Imposition without the consent of the Company, as agent for the Lessees,
(such consent not to be unreasonably withheld or unreasonably delayed) for
10 days after the receipt of such notice by the Company or thereafter if
the applicable Lessee has commenced to take appropriate action, unless such
Tax Indemnitee shall be required by law or regulation to take action prior
to the end of such 10-day period.
The Company shall be entitled for a period of 30 days from receipt of
such notice from such Tax Indemnitee (or such shorter period as such Tax
Indemnitee has notified the Lessees is required by law or regulation for
such Tax Indemnitee to commence such contest), to request in writing that
such Tax Indemnitee contest the imposition of such Tax, at the expense of
the applicable Lessee. If (x) such contest can be pursued in the name of
the applicable Lessee and independently from any other proceeding involving
a Tax liability of such Tax Indemnitee for which the applicable Lessee has
not agreed to indemnify such Tax Indemnitee, (y) such contest must be
pursued in the name of such Tax Indemnitee, but can be pursued
independently from any other proceeding involving a Tax liability of such
Tax Indemnitee for which the applicable Lessee has not agreed to indemnify
such Tax Indemnitee or (z) such Tax Indemnitee so requests, then the
applicable Lessee shall be permitted to control the contest of such claim,
provided that in the case of a contest described in clause (y), if such Tax
Indemnitee determines reasonably and in good faith that such contest by the
applicable Lessee could have a material adverse impact on the business or
operations of such Tax Indemnitee and provides a written explanation to
such Lessee of such determination, such Tax Indemnitee may elect to control
or reassert control of the contest, and provided, that by taking control of
the contest, the applicable Lessee acknowledges that it is responsible for
the Imposition ultimately determined to be due by reason of such claim, and
provided, further, that in determining the application of clauses (x) and
(y) above, each Tax Indemnitee shall take any and all reasonable steps to
segregate claims for any Taxes for which the applicable Lessee indemnifies
hereunder from Taxes for which the applicable Lessee is not obligated to
indemnify hereunder, so that the applicable Lessee can control the contest
of the former. In all other claims requested to be contested by the
Company, as agent for the Lessees, such Tax Indemnitee shall control the
contest of such claim, acting through counsel reasonably acceptable to the
Company, as agent for the Lessees. In no event shall the applicable Lessee
be permitted to contest (or such Tax Indemnitee required to contest) any
claim, (A) if such Tax Indemnitee provides the applicable Lessee with a
legal opinion of counsel reasonably acceptable to the applicable Lessee
that such action, suit or proceeding involves a material risk of imposition
of criminal liability or will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted
Lien) on any Property or any part of any thereof unless the applicable
Lessee shall have posted and maintained a bond or other security
satisfactory to the relevant Tax Indemnitee in respect to such risk, (B) if
an Event of Default has occurred and is continuing unless the applicable
Lessee shall have posted and maintained a bond or other security
satisfactory to the relevant Tax Indemnitee in respect of the Taxes subject
to such claim and any and all expenses for which the applicable Lessee is
responsible hereunder reasonably foreseeable in connection with the contest
of such claim, (C) unless the applicable Lessee shall have agreed to pay
and shall pay, to such Tax Indemnitee on demand all reasonable out-of-pocket
costs, losses and expenses that such Tax Indemnitee may incur in
connection with contesting such Imposition including all reasonable legal,
accounting and investigatory fees and disbursements, or (D) if such contest
shall involve the payment of the Tax prior to the contest, unless the
applicable Lessee shall provide to such Tax Indemnitee an interest-free
advance in an amount equal to the Imposition that the Indemnitee is
required to pay (with no additional net after-tax costs to such Tax
Indemnitee). In addition for Tax Indemnitee controlled contests and claims
contested in the name of such Tax Indemnitee in a public forum, no contest
shall be required: (A) unless the amount of the potential indemnity
(taking into account all similar or logically related claims that have been
or could be raised in any audit involving such Tax Indemnitee with respect
to any period for which the applicable Lessee may be liable to pay an
indemnity under this Section 13.5(b)) exceeds $25,000 and (B) unless, if
requested by such Tax Indemnitee, the applicable Lessee shall have provided
to such Tax Indemnitee an opinion of counsel selected by the Company (which
may be in-house counsel) (except, in the case of income taxes indemnified
hereunder which shall be an opinion of independent tax counsel selected by
such Tax Indemnitee and reasonably acceptable to the applicable Lessee)
that a reasonable basis exists to contest such claim. In no event shall a
Tax Indemnitee be required to appeal an adverse judicial determination to
the United States Supreme Court.
The party conducting the contest shall consult in good faith with the
other party and its counsel with respect to the contest of such claim for
Taxes (or claim for refund) but the decisions regarding what actions to be
taken shall be made by the controlling party in its sole judgement,
provided, however, that if such Tax Indemnitee is the controlling party and
the applicable Lessee recommends the acceptance of a settlement offer made
by the relevant Governmental Authority and such Tax Indemnitee rejects such
settlement offer then the amount for which the applicable Lessee will be
required to indemnify such Tax Indemnitee with respect to the Taxes subject
to such offer shall not exceed the amount which it would have owed if such
settlement offer had been accepted. In addition, the controlling party
shall keep the noncontrolling party reasonably informed as to the progress
of the contest, and shall provide the noncontrolling party with a copy of
(or appropriate excerpts from) any reports or claims issued by the relevant
auditing agents or taxing authority to the controlling party thereof, in
connection with such claim or the contest thereof.
Each Tax Indemnitee shall at the applicable Lessee's expense supply
the applicable Lessee with such information and documents reasonably
requested by the Company as are necessary or advisable for the applicable
Lessee to participate in any action, suit or proceeding to the extent
permitted by this Section 13.5(b). Notwithstanding anything in this
Section 13.5(b) to the contrary, no Tax Indemnitee shall enter into any
settlement or other compromise or fail to appeal an adverse ruling (which
appeal has been requested in writing by the applicable Lessee) with respect
to any claim which may be entitled to be indemnified under this Section
13.5 without the prior written consent of the applicable Lessee, such
entering into of a settlement or compromise, or such failure to appeal,
without such consent, shall constitute a waiver of all rights to
indemnification under this Section 13.5 with respect to such claim.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest (and the applicable Lessee shall
not be permitted to contest) a claim with respect to the imposition of any
Tax if such Tax Indemnitee shall waive in writing, in a form acceptable to
the Lessees, its right to indemnification under this Section 13.5 with
respect to such claim (and any claim with respect to such year or any other
taxable year the contest of which is materially adversely affected as a
result of such waiver).
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee or any
Affiliate thereof realizes a deduction, offset, credit or refund of any
Taxes or any other savings or benefit (by way of allowance, allocation or
otherwise) as a result of any indemnity paid by the applicable Lessee
pursuant to this Section 13.5 or (y) by reason of the incurrence or
imposition of any Tax (or the circumstances or event giving rise thereto)
for which a Tax Indemnitee is indemnified hereunder or any payment made to
or for the account of such Tax Indemnitee by the applicable Lessee pursuant
to this Section 13.5 or any payment made by a Tax Indemnitee to the
applicable Lessee by reason of this Section 13.5(c), such Tax Indemnitee at
any time actually realizes a reduction in any Taxes, which reduction in
Taxes was not taken into account in computing such payment by the
applicable Lessee to or for the account of such Tax Indemnitee or by such
Tax Indemnitee to the applicable Lessee, then such Tax Indemnitee shall
promptly pay to the applicable Lessee (xx) amount of such deduction,
offset, credit, refund, or other savings or benefit together with the
amount of any interest received by such Tax Indemnitee on account of such
deduction, offset, credit, refund or other savings or benefit or (yy) an
amount equal to such reduction in Taxes, as the case may be, in either case
together with an amount equal to any reduction in Taxes payable by such Tax
Indemnitee as a result of such payment; provided that no such payment shall
be made so long as a Default or Event of Default shall have occurred and be
continuing but shall be paid promptly after cure of such Default or Event
of Default. Each Tax Indemnitee agrees to take such actions as the
applicable Lessee may reasonably request (provided in the good faith
judgment of such Tax Indemnitee, such actions would not result in a
material adverse effect on such Tax Indemnitee for which such Tax
Indemnitee is not entitled to indemnification from the Lessee) and to
otherwise act in good faith to claim such refunds and other available Tax
benefits, and take such other actions as may be reasonable to minimize any
payment due from the applicable Lessee pursuant to this Section 13.5 and to
maximize the amount of any Tax savings available to it. The disallowance
or reduction of any credit, refund or other savings with respect to which a
Tax Indemnitee has made a payment to the applicable Lessee under this
Section 13.5(e) shall be treated as a Tax for which the applicable Lessee
is obligated to indemnify such Tax Indemnitee hereunder.
(d) Payments. Any Imposition indemnifiable under this Section 13.5
shall be paid within thirty (30) days after receipt of a written demand
therefor from the relevant Tax Indemnitee accompanied by a written
statement describing in reasonable detail the amount so payable, but not
before two Business Days prior to the date that the relevant Taxes are due;
such amount shall be paid directly (but not until such Taxes are due) to
the applicable taxing authority if direct payment is practicable and
permitted or, if not practical or permitted, to such Indemnitee. Any
payments made to a Tax Indemnitee or to any Lessee pursuant to this Section
13.5 shall be made directly to such Tax Indemnitee entitled thereto or the
applicable Lessee, as the case may be, in immediately available funds at
such bank or to such account as specified by the payee in written
directions to the payor, or, if no such direction shall have been given, by
check of the payor payable to the order of the payee by certified mail,
postage prepaid at its address as set forth in Schedule I hereto. Upon the
request of any Tax Indemnitee with respect to a Tax that any Lessee is
required to pay, such Lessee shall furnish to such Tax Indemnitee the
original or a certified copy of a receipt for such Lessee's payment of such
Tax or such other evidence of payment as is reasonably acceptable to such
Tax Indemnitee.
(e) Reports. In the case of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 13.5 and of which the applicable Lessee
has knowledge, the applicable Lessee shall promptly notify such Tax
Indemnitee of such requirement and, at the applicable Lessee's expense (i)
if the applicable Lessee is permitted (unless otherwise requested by such
Tax Indemnitee) by Applicable Law, timely file such report, return or
statement in its own name or (ii) if such report, return or statement is
required to be in the name of or filed by such Tax Indemnitee or such Tax
Indemnitee otherwise requests that such report, return or statement be
prepared for filing by such Tax Indemnitee, the applicable Lessee shall
prepare such report, return or statement in such manner as shall be
reasonably satisfactory to such Tax Indemnitee and send the same to such
Tax Indemnitee for filing no later than 15 days prior to the due date
therefor. In any case in which such Tax Indemnitee will file any such
report, return or statement, the applicable Lessee shall, upon written
request of such Tax Indemnitee, provide such Tax Indemnitee with such
information as is reasonably necessary to allow such Tax Indemnitee to file
such report, return or statement.
(f) Verification. At the applicable Lessee's request, the amount of
any indemnity payment by the applicable Lessee or any payment by a Tax
Indemnitee to the applicable Lessee pursuant to this Section 13.5 shall be
verified and certified by an independent public accounting firm mutually
acceptable to such Lessee and such Tax Indemnitee. The costs of such
verification shall be borne by the applicable Lessee unless such
verification shall result in an adjustment in the applicable Lessee's favor
of the lesser of (i) $10,000, and (ii) 5 percent of the payment as computed
by such Tax Indemnitee, in which case such fee shall be paid by such Tax
Indemnitee. In no event shall the applicable Lessee have the right to
review such Tax Indemnitee's tax returns or receive any other confidential
information from such Tax Indemnitee in connection with such verification;
provided that all information reasonably necessary to perform such
verification shall be made available to such accounting firm. Any
information provided to such accountants by any Person shall be and remain
the exclusive property of such Person and shall be deemed by the parties to
be (and the accountants will confirm in writing that they will treat such
information as) the private, proprietary and confidential property of such
Person, and no Person other than such Person and the accountants shall be
entitled thereto and all such materials shall be returned to such Person.
Such accounting firm shall be requested to make its determination within 30
days of the applicable Lessee's request for verifications and the
computations of the accounting firm shall be final, binding and conclusive
upon the applicable Lessee and such Tax Indemnitee. The parties agree that
the sole responsibility of the independent public accounting firm shall be
to verify the amount of a payment pursuant to this Agreement and that
matters of interpretation of this Agreement are not within the scope of the
independent accounting firm's responsibilities.
(g) Tax Ownership. Each Tax Indemnitee represents and warrants that
it will not, prior to the termination of the Master Lease, claim ownership
of (or any tax benefits, including depreciation, with respect to) any
Property for any income tax purposes, it being understood that each Lessee
is and will remain the owner of the applicable Property for such income tax
purposes at least until the termination of the Master Lease. If,
notwithstanding the income tax intentions of the parties as set forth
herein, any Tax Indemnitee actually receives any income tax deductions,
reductions in income tax or other income tax benefit as a result of any
claim for, or recharacterization or other event or circumstance requiring
such party to take, any tax benefits attributable to ownership of any
Property for income tax purposes, such Tax Indemnitee shall pay to the
applicable Lessee, together with an amount equal to any reduced Taxes
payable by such Tax Indemnitee as a result of such payment, the amount of
such income tax savings realized by such Tax Indemnitee (less the amount of
any anticipated increase in income tax which such Tax Indemnitee determines
is currently payable as a result of such claim or recharacterization),
provided that each Lessee shall agree to reimburse such Tax Indemnitee for
any subsequent increase in such Tax Indemnitee's income taxes resulting
from such claim or recharacterization not taken into account in the payment
made to such Lessee, up to the net amount paid to such Lessee by each Tax
Indemnitee. The parties agree that this Section 13.5(g) is intended to
require a payment to a Lessee if and only if a Tax Indemnitee shall have
received tax savings with respect to any Property that would not have been
received if such Tax Indemnitee had advanced funds to such Lessee in the
form of a loan secured by such Property in an amount equal to the
applicable Property Cost. Each Tax Indemnitee shall be required in good
faith to take any affirmative action to realize any such tax savings except
if in its reasonable judgment such action will have a material adverse
affect on such Tax Indemnitee.
SECTION 13.6. Indemnity Payments in Addition to Lease Obligations.
The Lessees acknowledge and agree that the obligation to make indemnity
payments under this Article XIII are separate from, in addition to, and do
not reduce, the Lessees' obligations to pay under the Lease that portion of
the Lease Balance constituting the Lease Recourse Amount.
SECTION 13.7. LIBO Rate Lending Unlawful. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Participant (or its Funding Office) with any request or directive
(whether or not having the force of law) of any such authority, central
bank or comparable agency shall make it unlawful or impossible for the
Lessor or any Lender, as the case may be (or its Funding Office) to make,
maintain or fund Loans or Lessor Amount, as applicable, at the LIBO Rate
(Reserve Adjusted) and such Participant shall promptly so notify the
Company, as agent for the Lessees, whereupon until such Participant
notifies the Company that the circumstances giving rise to such suspension
no longer exist, the obligation to continue LIBO Rate Amounts or convert
ABR Amounts into LIBO Rate Amounts shall be suspended. Such Participant,
with the consent of the Company, as agent for the Lessees, (which consent
shall not unreasonably be withheld), will designate a different Funding
Office if such designation will avoid the need for giving such notice and
will not, in the judgment of such Participant, be otherwise disadvantageous
to such Participant. If such notice is given, then (i) the Company, as
agent for the Lessees, shall be entitled upon its request to a reasonable
explanation of the factors underlying such notice and (ii) each LIBO Rate
Amount of such Participant then outstanding shall automatically convert
into an ABR Amount either (a) on the last day of the then current Interest
Period applicable thereto, if such Participant may lawfully continue to
maintain and fund such LIBO Rate Amount to such day or (b) immediately, if
such Participant shall determine that it may not lawfully continue to
maintain and fund such LIBO Rate Amount to such day.
SECTION 13.8. Deposits Unavailable. If any of the Participants
shall have determined that
(i) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Participant in its
relevant market; or
(ii) by reason of circumstances affecting the Participant's
relevant market, adequate means do not exist for ascertaining the
Applicable Rate applicable to such Participant's LIBO Rate Amounts,
then such Participant shall promptly notify the Company, as agent for the
Lessees, of same and, upon notice from such Participant to the Company, as
agent for the Lessees, and the other Participants, (i) the obligations of
the Participants to continue LIBO Rate Amounts or convert ABR Amounts into
LIBO Rate Amounts shall be suspended as of the last day of the then current
Interest Period applicable thereto and (ii) each outstanding LIBO Rate
Amount shall automatically convert into an ABR Amount on the last day of
the then current Interest Period applicable thereto.
SECTION 13.9. Increased Costs, etc. (a) In the event that the
adoption of any applicable law, rule or regulation, or any change therein
or in the interpretation or application thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Participant
with any request or directive after the date hereof (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) does or shall subject any Participant to any additional
tax of any kind whatsoever with respect to the Operative Documents or
any Loan or Lessor Amount, as applicable, made by it, or change the
basis or the applicable rate of taxation of payments to such
Participant of principal, interest or any other amount payable
hereunder (except for the imposition of or change in any tax on or
measured by or with respect to the overall gross or net income, or
gross or net receipts (including, without limitation, any minimum
taxes, income or capital gains taxes, or taxes on, or measured by or
with respect to or in the nature of capital, net worth, excess
profits, items of tax preference, capital stock, business privilege
or doing business or any other similar taxes) of such Participant
(other than any such tax imposed by means of withholding and
specifically excluding income taxes merely collected by means of
withholding) or any tax imposed in lieu thereof);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, insurance assessment, compulsory loan or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office
of such Participant which are applicable to banks generally and not
otherwise included in determination of the rate of interest on Loan
or Lessor Amount, as applicable, hereunder; or
(iii) does or shall impose on such Participant any other
condition applicable to banks generally;
and the result of any of the foregoing is to increase the cost to such
Participant of making or maintaining any LIBO Rate Amount, or to reduce any
amount receivable hereunder, then in any such case, such Participant shall
promptly notify the Company, as agent for the Lessees, and the Lessees
shall promptly pay to such Participant, upon demand, any additional amounts
necessary to compensate such Participant for such increased cost or reduced
amount receivable which such Participant deems to be material as determined
by such Participant with respect to any LIBO Rate Amount, and the Lessees
may act to minimize such increased cost or the reduction in the amount
receivable, so long as such action does not adversely affect such
Participant.
(b) If any Participant shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Participant (or any entity directly
or indirectly controlling such Participant) as a consequence of such
Participant's obligations under the Operative Documents to a level below
that which such Participant (or any entity directly or indirectly
controlling such Participant) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Participant to be
material, then such Participant shall promptly notify the Company, as agent
for the Lessees, of same and, from time to time, within fifteen (15) days
after demand by such Participant, the Lessees shall pay to such Participant
such additional amount or amounts as will compensate such Participant (or
its Parent) for such reduction, and the Lessees may act to minimize such
increased cost or the reduction in the amount receivable, so long as such
action does not adversely affect such Participant.
(c) Each Participant will promptly notify the Company, as agent for
the Lessees, of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Participant to compensation pursuant
to this Section and will, if practicable, with the consent of the Company,
as agent for the Lessees (which consent shall not unreasonably be
withheld), designate a different Funding Office or take any other
reasonable action if such designation or action will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Participant, be otherwise disadvantageous to such Participant. A
certificate of such Participant claiming compensation under this Section
and setting forth in reasonable detail its computation of the additional
amount or amounts to be paid to it hereunder shall be presumed correct in
the absence of demonstrable error. In determining such amount, such
Participant may use any reasonable averaging and attribution methods.
(d) Notwithstanding the foregoing clauses (a) and (b) of this
Section 13.9, the Lessees shall only be obligated to compensate such
Participant for any amount arising or accruing both:
(i) during (A) any time or period commencing (x) in the case
of subsection (a), not earlier than the first day of any Interest
Period in effect on the date which, and (y) in the case of subsection
(b), not earlier than the date on which, such Participant notifies
the Company, as agent for the Lessees, that it proposes to demand
such compensation and identifies to the Company in such notice the
statute, regulation or other basis upon which the claimed
compensation is or will be based and how amounts owing thereunder are
to be allocated to the Lessees and (B) any time or period during
which, because of the retroactive application of such statute,
regulation or other basis, such Participant did not know that such
amount would arise or accrue; and
(ii) within six months prior to any demand therefor,
accompanied by a certificate of such Participant claiming
compensation and setting forth in reasonable detail its computation
of the additional amount or amounts to be paid to it hereunder.
SECTION 13.10. Funding Losses. The Lessees shall pay to the Lease
Agent for the account of each Participant, upon the request of such
Participant through the Lease Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Participant) to compensate it
for any loss, cost or expense which such Participant determines is
attributable to:
(a) any payment, prepayment, conversion or renewal of a LIBO
Rate Amount made by such Participant on a date other than the last
day of an Interest Period for such LIBO Rate Amount (whether pursuant
to an assignment under Section 14.15 or by reason of acceleration or
otherwise); or
(b) any Loans or Lessor Amounts not being made as LIBO Rate
Amounts in accordance with the Funding Request therefor, or any Loans
or Lessor Amounts not being continued as, or converted into, LIBO
Rate Loans in accordance with the Interest Period
Selection/Continuation/Conversion Notice therefor.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of (i) the amount of interest or Yield which
otherwise would have accrued on the principal amount so paid, prepaid,
converted or renewed or not made, converted, prepaid or renewed for the
period from and including the date of such payment, prepayment or
conversion or failure to be made, converted, prepaid or renewed to but
excluding the last day of the then current Interest Period for such LIBO
Rate Amount (or, in the case of a failure to make, convert, prepay or renew
LIBO Rate Amounts, to but excluding the last day of the Interest Period for
such LIBO Rate Amount which would have commenced on the date specified
therefor in the relevant notice) at the Applicable Rate for such LIBO Rate
Amount provided for in Section 4.1(a), over (ii) the amount of interest or
Yield (as reasonably determined by such Participant) such Participant would
have bid in the London interbank market for Dollar deposits for amounts
comparable to such principal amount of Loans or Lessor Amounts, as the case
may be, and maturities comparable to such period. A determination of any
Participant as to the amounts payable pursuant to this Section 13.10 shall
be conclusive absent manifest error; provided that such determination is
made on a reasonable basis.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Survival of Agreements. The representations,
warranties, covenants, indemnities and agreements of the parties provided
for in the Operative Documents, and the parties' obligations under any and
all thereof, shall survive the execution and delivery of this Participation
Agreement, the transfer of the Equity Interests and Properties to the
Lessor, any disposition of any interest of the Lessor in the Properties or
any Improvements or any interest of the Lessor in the Properties and the
payment of the Lease Facility Notes and any disposition thereof and shall
be and continue in effect notwithstanding any investigation made by any
party and the fact that any party may waive compliance with any of the
other terms, provisions or conditions of any of the Operative Documents.
SECTION 14.2. New Lessees. Any wholly-owned Subsidiary of the
Company may become a "Lessee" for all purposes of the Master Lease and the
other Operative Documents by executing and delivering an Adoption
Agreement, substantially in the form of Exhibit E hereto (an "Adoption
Agreement"), to the Lessor and each Lender. Upon receipt by the Lessor and
each Lender of an Adoption Agreement duly executed by any such Subsidiary,
and upon satisfaction of all conditions to effectiveness thereof set forth
in such Adoption Agreement, such Subsidiary shall be deemed to be a party
to this Participation Agreement and the Master Lease as a "Lessee"
hereunder and thereunder as if such Subsidiary was originally a party
hereto and thereto.
SECTION 14.3. Notices. Unless otherwise specifically provided
herein, all notices, consents, directions, approvals, instructions,
requests and other communications required or permitted by the terms hereof
to be given to any Person shall be given in writing by United States mail,
by nationally recognized courier service or by hand and any such notice
shall become effective five Business Days after being deposited in the
mails, certified or registered with appropriate postage prepaid or one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery or, if delivered by hand, when received, and
shall be directed to the address of such Person as indicated on Schedule I.
From time to time any party may designate a new address for purposes of
notice hereunder by written notice to each of the other parties hereto in
accordance with this Section.
SECTION 14.4. Counterparts. This Participation Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 14.5. Amendments. (a) Prior to the termination of the
Intercreditor Agreement, neither this Participation Agreement, any other
Operative Document nor any of the terms hereof or thereof may be amended,
supplemented, replaced, renewed, extended, refinanced, waived or modified
except in accordance with the provisions of Section 3.01 of the
Intercreditor Agreement.
(b) At all times after the earlier of (x) the termination of the
Intercreditor Agreement and (y) the payment in full of all obligations of
the Company and the Subsidiary Co-Borrowers owing to the Credit Facility
Banks under the Credit Facility Documents and the termination of all
commitments of the Credit Facility Banks thereunder:
(i) the provisions of this Participation Agreement may from
time to time be amended, modified or waived by an instrument in
writing signed by the Company, each Lessee, and the Required
Participants; provided, however, that no amendment or waiver of any
provision relating to payment to any Participant shall be effective
against such Participant unless it has been consented to in writing
by such Participant;
(ii) neither any Operative Document nor any of the terms
thereof may be terminated (except upon payment in full of the Lease
Balance or effective exercise and consummation of the Remarketing
Option in accordance with Article XX of the Master Lease and payment
in full of all amounts due in accordance therewith), amended,
supplemented, waived or modified without the written agreement or
consent of each party thereto and, regardless of whether the Lenders
and the Lessor are parties thereto, the Required Participants;
provided, however, that:
(x) no such termination, amendment, supplement, waiver
or modification shall without written agreement or consent of
each Participant:
(i) modify any of the provisions of this Section
14.5, change the definition of "Required Participants" or
modify or waive any provision of an Operative Agreement
requiring action by the foregoing;
(ii) amend, modify, waive or supplement any of the
provisions of Article VII or Section 2.5, 2.6, 2.7, or
2.8 of the Loan Agreement;
(iii) reduce, modify, amend or waive any fees or
indemnities in favor of any Participant, including
amounts payable pursuant to Article XIII (except that any
Person may consent to any reduction, modification,
amendment or waiver of any indemnity payable to it);
(iv) modify, postpone, reduce or forgive, in whole
or in part, any payment of Rent (other than pursuant to
the terms of any Operative Document), any Loan or Lessor
Amount, the Lease Balance, the Loan Balance, the Lease
Recourse Amount, fees due pursuant to the Fee Letter,
amounts due pursuant to Section 20.2 of the Lease,
interest or Yield (except that any Person may consent to
any modification, postponement, reduction or forgiveness
of any payment of any fee payable to it) or, subject to
clause (iii) above, any other amount payable under the
Lease or this Participation Agreement, or modify the
definition or method of calculation of Rent (other than
pursuant to the terms of any Operative Document),
Applicable Rate, Applicable Lease Margin, Applicable Loan
Margin, Loans or Lessor Amount, Lease Balance, Loan
Balance, Lease Recourse Amount, fees due pursuant to the
Fee Letter, Shortfall Amount, Property Improvement Costs,
Estimated Improvement Costs, Participant Balance, or any
other definition which would affect the amounts to be
advanced or which are payable under the Operative
Documents; or
(v) consent to any assignment of any Lease by a
Lessee other than to an Affiliate of a Lessee, releasing
such Lessee from its obligations in respect of the
payments of Rent, Loan Balance, Lease Recourse Amount or
Lease Balance or changing the absolute and unconditional
character of such obligations;
(y) no other termination, amendment, supplement, waiver
or modification shall, without the written agreement or consent
of the Required Participants, be made to any Lease or Article
VI of this Participation Agreement or the definition of "Loan
Agreement Default"; and
(z) no such termination, amendment, supplement, waiver
or modification that would increase the obligations of any
Lessee thereunder or deprive such Lessee of any of its rights
thereunder shall be effective against such Lessee without the
written agreement or consent of such Lessee; and
(iii) neither the Agent, the Lenders nor the Lessor shall
amend, supplement or otherwise modify any provision of the Operative
Documents in a manner which adversely affects the rights of the
Lessees without the prior written consent of the Lessees.
(c) It is the intent of the parties hereto that the percentages per
annum contained in the definition of "Applicable Lease Margin" and
"Applicable Loan Margin" (with respect to the Tranche A Loans) shall at all
times, for each Pricing Level, be equal to the percentage per annum set
forth in the definition of "Applicable Margin" in the Credit Agreement
under the caption "Applicable Margin Fixed Rate Loans" for such Pricing
Level and, further, that the definitions of "Pricing Level I", "Pricing
Level II", "Pricing Level III" and "Pricing Level IV" conform to the
definitions thereof contained in the Credit Agreement, in each case as the
Credit Agreement may be amended from time to time in accordance with
Section 3.01 of the Intercreditor Agreement (but subject to the provisions
of Section 3.01(c) of the Intercreditor Agreement). Accordingly,
notwithstanding the provisions of clauses (a) and (b) above, the
definitions of "Applicable Lease Rate", "Applicable Loan Rate" (with
respect to Tranche A Loans) and "Pricing Level" (and all ancillary
definitions related thereto) shall, without any further act on the part of
any party hereto, automatically be deemed to be amended by, and to the
extent set forth in, any amendment to the analogous definitions contained
in the Credit Agreement effected in accordance with the provisions of
Section 3.01 of the Intercreditor Agreement (but subject to the provisions
of Section 3.01(c) of the Intercreditor Agreement), so that at all times
the Applicable Lease Margin and the Applicable Loan Margin with respect to
the Tranche A Loans shall, for each Pricing Level, be equal to the
"Applicable Margin" (as defined in the Credit Agreement) for such Pricing
Level. In addition, if at any time the "Applicable Margin" under the
Credit Agreement for Variable Rate Loans (as defined in the Credit
Agreement) shall be more than 0.00% for any Pricing Level, then the
definition of "Alternate Base Rate" contained in Appendix A hereto shall,
without any further act on the part of any party hereto, automatically be
deemed to be amended to include a margin for such Pricing Level equal to
the "Applicable Margin" for Variable Rate Loans for such Pricing Level set
forth in the Credit Agreement.
SECTION 14.6. Headings, etc. The Table of Contents and headings of
the various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit
any of the terms or provisions hereof.
SECTION 14.7. Parties in Interest. Except as expressly provided
herein, none of the provisions of this Participation Agreement is intended
for the benefit of any Person except the parties hereto and their permitted
assigns and successors. Neither the Company nor any Lessee shall assign or
transfer any of its rights or obligations under the Operative Documents
except in accordance with the terms and conditions thereof.
SECTION 14.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION
OF THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 14.9. Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, to
the full extent permitted by law, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 14.10. Liability Limited. (a) The parties hereto agree
that except as specifically set forth herein or in any other Operative
Document, the Lessor shall have no personal liability whatsoever to the
Company, any Lessee, any Lender or any other Secured Party or their
respective successors and assigns for any claim based on or in respect
hereof or any of the other Operative Documents or arising in any way from
the transactions contemplated hereby or thereby and the recourse shall be
solely had against the Lessor's interest in the Property; provided,
however, that the Lessor shall be liable in its individual capacity (a) for
its own willful misconduct or gross negligence (or negligence in the
handling of funds), (b) breach of any of its representations, warranties,
obligations or covenants under the Operative Documents (including its
obligation under Section 10.5), or (c) for any Tax based on or measured by
any fees, commission or compensation received by it for acting as the
Lessor as contemplated by the Operative Documents. It is understood and
agreed that, except as provided in the preceding sentence: (i) Lessor
shall have no personal liability under any of the Operative Documents as a
result of acting pursuant to and consistent with any of the Operative
Documents; (ii) all obligations of the Lessor to any Lessee, any Lender or
any other Secured Party are, in each case, solely nonrecourse obligations
except to the extent that it has received payment from others; and
(iii) all such personal liability of the Lessor is expressly waived and
released as a condition of, and as consideration for, the execution and
delivery of the Operative Documents by the Lessor.
(b) No Participant shall have any obligation to any other
Participant or to any Lessee with respect to transactions contemplated by
the Operative Documents, except those obligations of such Participant
expressly set forth in the Operative Documents or except as set forth in
the instruments delivered in connection therewith, and no Participant shall
be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
SECTION 14.11. Further Assurances. The parties hereto shall
promptly cause to be taken, executed, acknowledged or delivered, at the
sole expense of the Lessees, all such further acts, conveyances, documents
and assurances as the other parties may from time to time reasonably
request in order to carry out and preserve the security interests and Liens
(and the priority thereof) intended to be created pursuant to this
Participation Agreement, the other Operative Documents, and the
transactions thereunder (including the preparation, execution and filing of
any and all Uniform Commercial Code financing and termination statements
and other filings or registrations which the parties hereto may from time
to time request to be filed or effected or terminated); provided, however,
that the Lessees shall not be required to pay expenses pursuant to this
Section or elsewhere to the extent arising from the assignment or
participation of any Loan or Lessor Amount. Each Lessee, at its own
expense and without need of any prior request from any other party, shall
take such action as may be reasonably necessary (including any action
specified in the preceding sentence), or (if the Lessor shall so request)
as so reasonably requested, in order to maintain and protect all security
interests provided for hereunder or under any other Operative Document.
SECTION 14.12. Submission to Jurisdiction. The Company and each
Lessee hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York for purposes of all
legal proceedings arising out of or relating to the Operative Documents or
the transactions contemplated hereby. The Company and each Lessee
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
SECTION 14.13. Setoff. The Lessor and the Lenders shall, upon the
occurrence of any Lease Event of Default, have the right to appropriate and
apply to the payment of the obligations under the Lease as security for the
payment of such obligations, any and all balances, credits, deposits,
accounts or moneys of each Lessee then or thereafter maintained with the
Lessor or any Lender. The rights of the Lessor and the Lenders under this
Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Person may
have.
SECTION 14.14. Replacement of Lender. If a Lender fails to fund its
share of the Loans, then, in addition to any other right or remedies that
Lessees may have at law or in equity, the Company, as agent for the
Lessees, shall have the right (but not the obligation) to require such
Lender, upon receipt by such Lender of all its Participant Balance plus all
other amounts owing to such Lender under the Operative Documents
(including, without limitation, amounts payable to such Lender under
Section 13.10 as a result of such payment of its Participant Balance) to
assign and delegate in accordance with Section 12.1 all of such Lender's
total Loans and Commitment to any of the Lenders or to any other financial
institution selected by Company, as agent for the Lessees, that, in each
case, is willing to accept such assignment and delegation.
SECTION 14.15. Assignment of Tranche A Loans in Connection with an
Increase in Commitments. In the event that the aggregate Loan Commitments
of the Tranche A Lenders is increased after the Documentation Date (whether
through an increase in any Tranche A Lender's Loan Commitment or through
additional Commitments from new Tranche A Lenders) then each Tranche A
Lender agrees that, on and as of the Acquisition Date immediately following
such Commitment increase, (i) the Tranche A Lenders that have increased
their Loan Commitments or are new Tranche A Lenders shall purchase
outstanding Tranche A Loans from the other Tranche A Lenders and (ii) the
other Tranche A Lenders shall sell and assign a portion of their
outstanding Tranche A Loans to the Tranche A Lenders that have increased
their Loan Commitments and the new Tranche A Lenders.
SECTION 14.16. WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS PARTICIPATION AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY OF THE PARTIES HERETO. THE PARTIES HERETO
HEREBY AGREE THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION
WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE
WAIVED. THE PROVISIONS OF THIS SECTION 14.15 HAVE BEEN FULLY NEGOTIATED BY
THE PARTIES HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS. THE COMPANY AND
EACH LESSEE ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER
OPERATIVE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTICIPANTS ENTERING INTO THIS PARTICIPATION
AGREEMENT AND EACH SUCH OTHER OPERATIVE DOCUMENT.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT
INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
THE MULTICARE COMPANIES, INC.,
as the Company
By BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice-President
ACADEMY NURSING HOME, INC., as a Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
NURSING AND RETIREMENT CENTER OF THE
ANDOVERS, INC., as a Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
PRESCOTT NURSING HOME, INC., as a
Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
WILLOW MANOR NURSING HOME, INC.,, as a
Lessee
By ALAN D. SOLOMONT
Name: Alan D. Solomont
Title: President
ADS/MULTICARE, INC., as a Lessee
By BRADFORD C. BURKETT
Name: Bradford C. Burkett
Title: Vice President
SELCO SERVICE CORPORATION,
as Lessor
By
Name:
Title:
NATIONSBANK, N.A.,
as Lease Agent and as Collateral Agent
By
Name:
Title:
TORONTO-DOMINION (NEW YORK), INC.,
as a Tranche A Lender
By
Name:
Title:
BANQUE PARIBAS,
as a Tranche A Lender
By
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC.,
as a Tranche A Lender
By
Name:
Title:
MELLON BANK, N.A.,
as a Tranche A Lender
By
Name:
Title:
FBTC LEASING CORP.,
as a Tranche B Lender
By
Name:
Title:
ANNEX A
<TABLE>
COMMITMENTS
PARTICIPANT COMMITMENT FUNDING
PERCENTAGE
<S> <C> <C>
Toronto-Dominion
(New York) Inc. $10,000,000 18.73445%
Tranche A
Banque Paribas, New
York Branch $15,000,000 28.10167%
Tranche A
Creditanstalt
Corporate Finance,
Inc. $10,000,000 18.73445%
Tranche A
Mellon Bank, N.A. $10,000,000 18.73445%
Tranche A
FBTC Leasing Corp. $7,616,988 12.69498%
Tranche B
SELCO Service $1,800,000 3.00000%
Corporation
Lessor
TOTAL: $54,416,988 100.00%
</TABLE>
The foregoing Funding Percentages are based on a Lease Recourse Amount of
84.30502% of the sum of the outstanding Loans and Lessor Amounts. In the
event the Lease Recourse Amount with respect to any Property financed after
the Initial Acquisition Date differs from 84.30502%, the parties hereto
agree to reallocate the Funding Percentages to take account of such
different Lease Recourse Amount so that the aggregate Funding Percentages
of all Tranche A Lenders equals the Lease Recourse Amount.
SCHEDULE I
Notice Information, Wire Instructions,
Funding Offices and LIBOR Office
SCHEDULE II
Item 8.2(d): Litigation
Each of the Company and the Lessees is party to claims and legal actions
arising in the ordinary course of its business. Management of the Company
or any Lessee does not believe that any litigation to which the Company or
any Lessee is currently a party will have a Material Adverse Effect.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; INTERPRETATION
ARTICLE II
INTENTIONALLY OMITTED
ARTICLE III
FUNDING OF ADVANCES
SECTION 3.1. Lessor Acquisition. . . . . . . . . . . . . . . . . 3
SECTION 3.2. Lessor's Commitment . . . . . . . . . . . . . . . . 4
SECTION 3.3. Lenders' Commitments. . . . . . . . . . . . . . . . 4
SECTION 3.4. Procedures for Advances . . . . . . . . . . . . . . 4
SECTION 3.5. Interest Period Selection/Continuation/ Conversion
Elections . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.6. Funding of Certain Modifications; Construction
Financings. . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV
COMPUTATION OF BASIC RENT; INTEREST ON LOANS; FEES
SECTION 4.1. Computation of Basic Rent (Interest/Yield). . . . . 6
SECTION 4.2. Interest on Loans . . . . . . . . . . . . . . . . . 6
SECTION 4.3. Yield on Lessor Amount. . . . . . . . . . . . . . . 7
SECTION 4.4. Prepayments of Loans and Lessor Amount. . . . . . . 7
SECTION 4.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Facility Fees . . . . . . . . . . . . . . . . . 7
(b) Structuring Agent's Fees. . . . . . . . . . . . 7
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1. Nature of the Transaction . . . . . . . . . . . . . 8
SECTION 5.2. Amounts Due Under Lease . . . . . . . . . . . . . . 8
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Documentation Date. . . . . . . . . . . . . . . . . 9
(a) Participation Agreement. . . . . . . . . . . . 9
(b) Master Lease . . . . . . . . . . . . . . . . . 9
(c) Loan Agreement . . . . . . . . . . . . . . . . 9
(d) Assignment of Lease and Rent . . . . . . . . . 9
(e) Intercreditor Agreement . . . . . . . . . . . 10
(f) Security Documents.. . . . . . . . . . . . . . 10
(g) [Intentionally Omitted]. . . . . . . . . . . . 10
(h) Certain Transaction Expenses . . . . . . . . . 10
SECTION 6.2. Initial Acquisition Date. . . . . . . . . . . . . . 10
(a) Lessees' Resolutions and Incumbency Certificate,
etc. . . . . . . . . . . . . . . . . . . . . . 10
(b) Company's Resolutions and Incumbency Certificate,
etc. . . . . . . . . . . . . . . . . . . . . . 11
(c) Opinion of Counsel to the Company and the
Lessees. . . . . . . . . . . . . . . . . . . . 11
(d) Fees . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.3. Conditions Precedent to Each Acquisition Date 11
(a) Funding Request . . . . . . . . . . . . . . . . 12
(b) Transfer Documents. . . . . . . . . . . . . . . 12
(c) Deed; Bill of Sale for Certain Properties . . . 12
(d) Supplement to Assignment of Lease and Rent. . . 12
(e) Lease Supplement/Memorandum of Lease. . . . . . 13
(f) Responsible Officer's Certificate . . . . . . . 13
(g) Lease Facility Mortgage . . . . . . . . . . . . 13
(h) Lease Facility Financing Statements . . . . . . 14
(i) Recordation of Mortgages and Filing of Lease
Facility Financing Statements . . . . . . . . . 14
(j) Evidence of Property Insurance. . . . . . . . . 14
(k) Environmental Audit . . . . . . . . . . . . . . 14
(l) Property Survey . . . . . . . . . . . . . . . . 14
(m) Title Insurance . . . . . . . . . . . . . . . . 14
(n) Appraisal . . . . . . . . . . . . . . . . . . . 15
(o) Opinion of Local Counsel. . . . . . . . . . . . 15
(p) Fees . . . . . . . . . . . . . . . . . . . 15
(q) Representations and Warranties. . . . . . . . . 15
(r) Taxes . . . . . . . . . . . . . . . . . . . . 15
(s) Governmental Approvals. . . . . . . . . . . . . 15
(t) Litigation . . . . . . . . . . . . . . . . . . 16
(u) Requirements of Law . . . . . . . . . . . . . . 16
(v) No Default . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1. Basic Rent (Interest/Yield) . . . . . . . . . . . . . 16
SECTION 7.2. Purchase Payments by the Lessees. . . . . . . . . . . 17
SECTION 7.3. Payment of Lease Recourse Amount. . . . . . . . . . . 18
SECTION 7.4. Sales Proceeds of Remarketing of Properties . . . . . 18
SECTION 7.5. Supplemental Rent . . . . . . . . . . . . . . . . . . 18
SECTION 7.6. Reserved . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.8. Other Payments. . . . . . . . . . . . . . . . . . . . 20
SECTION 7.9. Casualty and Condemnation Amounts . . . . . . . . . . 21
SECTION 7.10. Order of Application. . . . . . . . . . . . . . . . . 21
SECTION 7.11. Deemed Receipt. . . . . . . . . . . . . . . . . . . . 21
SECTION 7.12. Agreement of Collateral Agent and Participants. . . . 22
ARTICLE VIII
REPRESENTATIONS
SECTION 8.1. Representations of the Participant. . . . . . . . . . 22
(a) ERISA . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Status . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Organization, Good Standing and Due Qualification . . 22
(d) Power and Authority, No Conflicts . . . . . . . . . . 23
(e) No Affiliation With Lessor. . . . . . . . . . . . . . 23
(f) Legally Enforceable Agreements. . . . . . . . . . . . 23
SECTION 8.2. Representations of the Company and the Lessees. . . . 24
(a) Organization, Good Standing and Due Qualification . . 24
(b) Power and Authority, No Conflicts . . . . . . . . . . 24
(c) Legally Enforceable Agreements . . . . . . . . . . . 25
(d) Litigation . . . . . . . . . . . . . . . . . . . . . 25
(e) Financial Statements. . . . . . . . . . . . . . . . . 25
(f) ERISA . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) Hazardous Materials . . . . . . . . . . . . . . . . . 26
(h) Governmental Regulation . . . . . . . . . . . . . . . 27
(i) Solvency. . . . . . . . . . . . . . . . . . . . . . . 27
(j) Lessees . . . . . . . . . . . . . . . . . . . . . . . 28
(k) Property. . . . . . . . . . . . . . . . . . . . . . . 28
(l) Condition of Property . . . . . . . . . . . . . . . . 28
(m) [Intentionally Omitted] . . . . . . . . . . . . . . . 29
(n) Insurance . . . . . . . . . . . . . . . . . . . . . . 29
(o) Flood Hazard Areas . . . . . . . . . . . . . . . . . 29
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
SECTION 9.1. Transaction Expenses. . . . . . . . . . . . . . . . . 30
SECTION 9.2. Brokers' Fees and Stamp Taxes . . . . . . . . . . . . 30
ARTICLE X
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. Covenants of the Company and each Lessee . . . . . . 30
SECTION 10.2. Right of Inspection . . . . . . . . . . . . . . . . 31
SECTION 10.3. Further Assurances . . . . . . . . . . . . . . . . 31
SECTION 10.4. Agreement of Parties . . . . . . . . . . . . . . . . 32
SECTION 10.5. Removal of Liens . . . . . . . . . . . . . . . . . . 32
SECTION 10.6. Massachusetts Circular Letter. . . . . . . . . . . . 32
ARTICLE XI
LESSEE DIRECTIONS
SECTION 11.1. Lessee Directions. . . . . . . . . . . . . . . . . . 33
ARTICLE XII
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1. Assignments . . . . . . . . . . . . . . . . . . . . 34
SECTION 12.2. Participations . . . . . . . . . . . . . . . . . . . 35
SECTION 12.3. Withholding Taxes; Disclosure of Information; Pledge
Under Regulation A . . . . . . . . . . . . . . . . . 36
ARTICLE XIII
INDEMNIFICATION
SECTION 13.1. General Indemnification. . . . . . . . . . . . . . . 38
SECTION 13.2. End of Term Indemnity . . . . . . . . . . . . . . . 40
SECTION 13.3. Environmental Indemnity. . . . . . . . . . . . . . . 41
SECTION 13.4. Proceedings in Respect of Claims . . . . . . . . . . 42
SECTION 13.5. General Tax Indemnity . . . . . . . . . . . . . . . 44
SECTION 13.6. Indemnity Payments in Addition to Lease Obligations 51
SECTION 13.7. LIBO Rate Lending Unlawful . . . . . . . . . . . . . 51
SECTION 13.8. Deposits Unavailable . . . . . . . . . . . . . . . 52
SECTION 13.9. Increased Costs, etc. . . . . . . . . . . . . . . . 52
SECTION 13.10. Funding Losses . . . . . . . . . . . . . . . . . . 55
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Survival of Agreements . . . . . . . . . . . . . . . 55
SECTION 14.2. New Lessees . . . . . . . . . . . . . . . . . . . . 55
SECTION 14.3. Notices . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.4. Counterparts . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.5. Amendments . . . . . . . . . . . . . . . . . . . . . 56
SECTION 14.6. Headings, etc. . . . . . . . . . . . . . . . . . . . 59
SECTION 14.7. Parties in Interest. . . . . . . . . . . . . . . . . 59
SECTION 14.8. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 59
SECTION 14.9. Severability . . . . . . . . . . . . . . . . . . . 59
SECTION 14.10. Liability Limited . . . . . . . . . . . . . . . . . 60
SECTION 14.11. Further Assurances . . . . . . . . . . . . . . . . 60
SECTION 14.12. Submission to Jurisdiction . . . . . . . . . . . . . 61
SECTION 14.13. Setoff . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 14.14. Replacement of Lender . . . . . . . . . . . . . . . 61
SECTION 14.15. Assignment of Tranche A Loans in Connection with an
Increase in Commitments . . . . . . . . . . . . . . 62
SECTION 14.16. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 62
ANNEXES
ANNEX A Participants' Commitments
SCHEDULES
SCHEDULE I Notice Information, Wire Instructions, Funding Offices,
and LIBOR Office
SCHEDULE II Item 8.2(d): Litigation
EXHIBITS
EXHIBIT A Form of Funding Request
EXHIBIT B Form of Interest Period
Selection/Continuation/Conversion Notice
EXHIBIT C Form of Responsible Officer's Certificate
EXHIBIT D Form of Assignment Agreement
EXHIBIT E Form of Adoption Agreement
FOR IMMEDIATE RELEASE
December 12, 1996; 7:00 am EST
Contact: Stephen R. Baker
Executive Vice President, Chief Operating Officer
(201) 488-8818
Melody A. Carey
Director, Investor Relations
(201) 525-5985
MULTICARE COMPLETES ADS ACQUISITION
-Company is the Largest Provider of Long-Term Care in Massachusetts-
HACKENSACK, NJ, December 12, 1996 -- The Multicare Companies, Inc. (NYSE:
MUL) announced today that it has completed the previously announced acquisition
of The ADS Group, a privately-held long-term care company headquartered in
Newton, Massachusetts. Alan D. Solomont, founder and chairman of ADS (and a
member of Multicare's board of directors) has joined Multicare as its vice
chairman and Susan S. Bailis, formerly president, chief operating officer and a
principal of ADS, has joined Multicare as a senior vice president as well as
president of the new ADS/Multicare subsidiary.
Multicare also announced that it has amended and restated its $350 million
credit facility and in connection therewith has entered into a new lease
facility in the amount of approximately $55 million. The Agent for these
facilities is NationsBank, N.A.
ADS owns, operates or manages 23 long-term care facilities with 3,072 beds,
20 hospital- based subacute units with 514 beds and eight assisted living
facilities, totaling 820 beds, almost all of which are located in Massachusetts.
ADS also provides consulting services to an additional 14 facilities with 1,668
beds, operates several ancillary businesses including home health, both Medicare
certified and private, and provides out-patient rehabilitation services at
numerous locations. Under the terms of the agreement, Multicare paid
approximately $60.1 million and assumed or repaid approximately $24.6 million in
debt and issued 554,973 shares of its common stock for ADS.
"This acquisition is a strategic fit for Multicare and is consistent with
the Company's clustering and geographic approach," said Daniel E. Straus,
president and co-chief executive officer of Multicare. "The Company has not
only strengthened its New England presence, but has enhanced its capability in
the assisted living and subacute areas."
Multicare, founded in 1984, is a leading provider of high quality long-term
care and specialty medical services. Multicare owns, leases or manages over 150
long-term care facilities with more than 16,000 beds in 11 states. Multicare
also owns and operates a number of ancillary health care businesses, including a
significant institutional pharmacy business. The Company's long-term care
services include skilled nursing care, subacute care, assisted living, home
health care and related support activities traditionally provided in long-term
care facilities.
Certain of the matters discussed in this press release contain forward-
looking statements that involve risk and uncertainties. Although Multicare
believes that the assumptions accompanying such forward-looking statements are
reasonable, it cannot give any assurance that expected results will occur. A
significant variation between actual results and any of such assumptions may
cause actual results to differ materially from expectations. Reference should
be made to Multicare's Form 10-K for the year ended December 31, 1995 for more
specific information concerning such risks and assumptions.
