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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 28, 1997
G & L REALTY CORP.
(Exact name of Registrant as specified in its charter)
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MARYLAND 1-12566 95-4449388
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
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439 N. BEDFORD DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 273-9930
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 15, 1997, G & L Realty Corp. (the "Company") and G&L Realty
Partnership, L.P. (the "Operating Partnership") created two new entities for the
purpose of acquiring three nursing homes in Massachusetts (the "Hampden
Properties.") The Company has formed G&L Hampden, Inc., a Delaware corporation
and wholly owned subsidiary of the Company. The Operating Partnership and G&L
Hampden, Inc. have entered into an operating agreement and have formed G&L
Hampden, LLC ("G&L Hampden"), a Delaware limited liability company which is 99%
owned by the Operating Partnership and 1% owned by G&L Hampden, Inc. its sole
managing member. On October 28, 1997, G&L Hampden acquired the Hampden
Properties from Hampden Nursing Homes, Inc. ("Hampden Nursing") for a total
aggregate consideration of approximately $20.4 million. Of this amount, G&L
Hampden will borrow $6.0 million from Nomura Asset Capital Corporation
("Nomura") at an interest rate of 8.62% per annum. The Hampden Properties will
secure repayment of this loan. Under this loan, the Company may, at any time
during the next two years, make up to two additional draws of not less than $2.0
million each, up to an aggregate loan amount of 14.0 million (including the
initial draw under the loan). In the event the Company makes an additional loan
draw, the interest rate on such draw will be 2.5%; per annum above the
prevailing market rate on U.S. Treasury Securities of equivalent maturity. The
loan agreement with Nomura provides for a term of 12 years and requires monthly
interest and principal payments based upon a 27-year amortization schedule. At
the end of 12 years, all unpaid principal and interest will be due in full. The
Company has the option to prepay this loan at any time upon the payment of a
premium that, when added to the remaining principal amount of the note, will be
sufficient to purchase non-callable obligations of the U.S. Government
sufficient to provide for the schedule payments remaining under the note. As a
condition of the loan, Nomura has required G&L Hampden to place $400,000 into a
reserve account which may be used to fund unspecified maintenance capital
reserves.
In conjunction with the acquisition of the Hampden Properties, the
Company entered into a 15-year net operating lease with Iatros Health
Network, Inc. ("Iatros"). Although Iatros is the current operator of the
Hampden Properties, the licenses necessary to operate the Hampden Properties are
currently held by Hampden Nursing. Iatros has applied for state authorization
to operate the Hampden Properties without the participation of Hampden Nursing.
Although this transfer will be handled in the normal course of business, the
parties anticipate that it will take approximately 90 days to transfer the
licenses. Until the licenses are transferred, the Company has leased the
facilities to Hampden Nursing which has engaged Iatros to manage the facilities
until the licenses are transferred. The lease between the Company and Hampden
Nursing requires monthly lease payments of $225,000 and expires upon transfer
of the operating licenses from Hampden Nursing to Iatros. The Company's lease
with Iatros for the Hampden Properties provides for the monthly lease payments
of $225,000 and fixed annual increases of 2.0% per year during the first seven
years. Thereafter, the annual increase will be based upon the greater of 2.0%
of the previous year's rent or 2.5% of the increase in gross receipts derived
from the operation of the Hampden Properties in excess of $17,750,000. Although
management believes that Iatros will receive approval for the transfer of the
operating license from Hampden Nursing in a timely manner, there can be no
assurance that the license will be transferred or, if it is, that the transfer
will occur within the expected 90-day time period.
The Hampden Properties are Riverdale Gardens Nursing Home, located in
West Springfield, Massachusetts, Chestnut Hill Nursing Home, located in East
Longmeadow, Massachusetts and Mary Lyon Nursing Home, located in Hampden,
Massachusetts.
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Riverdale Gardens Nursing Home is a 168-bed nursing facility currently
licensed for 84 skilled care and 84 intermediate care beds with 16 private and
76 double occupancy rooms. Constructed in various stages between 1957 and 1975,
the property consists of a single story 54,451 square foot building on
approximately 3.85 acres as well as a 3,366 square foot family residence on an
adjacent 30,000 square foot lot.
Chestnut Hill Nursing Home is a 123-bed nursing home consisting of 82
skilled nursing and 41 intermediate care beds with 15 private and 54 double
occupancy rooms. The facility is a 49,198 square foot single story building
constructed in 1984 on approximately 11.9 acres of land.
Mary Lyon Nursing Home occupies a 28,940 square foot building situated
on 3.7 acres and was originally constructed in 1959 and renovated in 1986. The
facility is licensed for 100 beds of which 40 are skilled nursing and 60 are
intermediate care beds with ten private rooms, 39 double occupancy and three
quadruple occupancy rooms.
The following table sets forth certain information regarding the
Hampden Properties as of October 28, 1997.
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Year
Constructed Total Average
or Number Purchase Annualized Annual Rent
Property Rehabilitated of Beds Price Rent Per Bed
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Riverdale Gardens Nursing
Home........................ 1957-1975 168 $ 5,760,000 $ 762,000 $ 4,538
Chestnut Hill Nursing Home.. 1984 123 10,825,000 1,432,800 11,649
Mary Lyon Nursing Home....... 1986 100 3,815,000 504,780 5,048
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Total $20,400,000 $2,700,000
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The total annualized rent expected to be derived from the Hampden
Properties is approximately $2.7 million, or approximately 11.5% of the
Company's total annualized rental income, based on current rental rates. This
rental income will be derived from Hampden Nursing until the transfer of the
licenses to Iatros, at which time Iatros will be responsible for the rent on the
Hampden Properties. Iatros has recently experienced problems in operating
certain senior care facilities and has reported financial difficulties which
could materially and adversely affect the Company's results of operations and
its ability to make expected distributions to stockholders. In light of such
difficulties, Iatros has recently hired a new management team to improve its
senior care facility operating capabilities. Although the Company believes that
this new management team will be able to operate senior care facilities
profitably, there can be no assurance that Iatros' facility operations will
improve under this new management team.
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Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not Applicable.
(b) Pro forma financial information.
It is impracticable to file at this time the pro forma financial
information required by Item 7 of Form 8-K. Such pro forma financial
information will be filed when available, but in any event no later than sixty
days from the date hereof.
(c) Exhibits.
10.53 Purchase and Sale Agreement, dated October 1, 1997, by and between
Hampden Nursing Homes, Inc. and G&L Senior Care, LLC.
10.54 Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Holding Group, Inc.
10.55 Loan Commitment, dated October 23, 1997, by and between G&L Realty
Partnership, L.P. and Iatros Health Network, Inc.
10.56 Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Nursing Homes, Inc.
10.57 Guaranty of Lease, dated October 1, 1997, by Iatros Health Network,
Inc.
10.58 Limited Liability Company Agreement of G&L Hampden, LLC.
10.59 Loan Agreement by and between Nomura Asset Capital Corporation and
G&L Hampden, LLC.
10.60 Promissory Note in the amount of $6,000,000.00 given by G&L Hampden,
LLC in favor of Nomura Asset Capital Corporation.
10.61 Form of Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing for each of the 3 Hampden Properties.
Page 4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
G & L REALTY CORP.
Date: November 5, 1997 /s/ Quentin Thompson
---------------------------
Quentin Thompson
Chief Accounting Officer, Treasurer and
Secretary
Page 5
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.53 Purchase and Sale Agreement, dated October 1, 1997, by and between
Hampden Nursing Homes, Inc. and G&L Senior Care, LLC.
10.54 Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Holding Group, Inc.
10.55 Loan Commitment, dated October 23, 1997, by and between G&L Realty
Partnership, L.P. and Iatros Health Network, Inc.
10.56 Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Nursing Homes, Inc.
10.57 Guaranty of Lease, dated October 1, 1997, by Iatros Health Network,
Inc.
10.58 Limited Liability Company Agreement of G&L Hampden, LLC.
10.59 Loan Agreement by and between Nomura Asset Capital Corporation and
G&L Hampden, LLC.
10.60 Promissory Note in the amount of $6,000,000.00 given by G&L Hampden,
LLC in favor of Nomura Asset Capital Corporation.
10.61 Form of Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing for each of the 3 Hampden Properties.
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EXHIBIT 10.53
PURCHASE AND SALE AGREEMENT
among
HAMPDEN NURSING HOMES, INC.,
Seller
and
G&L HAMPDEN, LLC
HAMPDEN HOLDING GROUP, INC.
Purchasers
Dated as of October 1, 1997
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TABLE OF CONTENTS
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Page
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1. Purchase and Sale.................................................. 1
2. Purchase Price..................................................... 3
3. Permitted Exceptions and Quality of Title.......................... 3
4. Closing Dates; Expenses............................................ 3
5. Apportionments..................................................... 4
6. Title Insurance.................................................... 4
7. Survey............................................................. 5
8. Due Diligence and Closing Documents................................ 5
9. Representations and Warranties..................................... 8
10. Covenants.......................................................... 12
11. Broker............................................................. 13
12. Condemnation and Destruction....................................... 13
13. Default and Remedies............................................... 14
14. Indemnification.................................................... 14
15. No Personal Liability.............................................. 14
16. Notices............................................................ 15
17. Entire Agreement................................................... 16
18. Amendments......................................................... 16
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19. Waiver............................................................. 16
20. Assignment......................................................... 16
21. Attorneys' Fees.................................................... 16
22. Paragraph Headings................................................. 17
23. Governing Law...................................................... 17
24. Counterparts....................................................... 17
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Exhibits
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A. Description of the Land
B. Permitted Exceptions
C. Form of Deed
D. Bill of Sale and General Assignment
E. Form of Lease
F. Amendment to Management Agreement
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PURCHASE AND SALE AGREEMENT (this "Agreement"), made as of October 1, 1997,
between HAMPDEN NURSING HOMES, INC., a Massachusetts corporation ("Seller"),
having an office at 161 Worcester Road, Framingham, Massachusetts 01701, G&L
HAMPDEN, LLC, a Delaware limited liability company ("G&L"), having an office at
439 North Bedford Drive, Beverly Hills, California 90210 and HAMPDEN HOLDING
GROUP, INC., a Massachusetts corporation ("HHG"; G&L and HHG are collectively
called "Purchasers").
PRELIMINARY STATEMENT
Seller owns three parcels of land in Hampden County, Massachusetts, as
follows: (i) Mary Lyon Nursing Home, 34 Main Street, Hampden, improved with a
100 bed nursing home, (ii) Riverdale Gardens Rehabilitation and Nursing Center,
42 Prospect Avenue, West Springfield, improved with a 168 bed nursing home, and
(iii) Chestnut Hill Rehabilitation and Nursing Center, 32 Chestnut Street, East
Longmeadow, improved with a 123 bed nursing home (collectively, the
"Properties"). Seller will sell and Purchasers will acquire Seller's interest
in the Properties on the terms and subject to the conditions set forth herein.
1. Purchase and Sale; Lease. In consideration of the mutual covenants
and agreements hereinafter set forth, and subject to the satisfaction of all
conditions specified in this Agreement, Seller agrees to sell and convey to G&L
on the First Closing Date hereinafter described, and G&L agrees to purchase from
Seller, all of Seller's right, title and interest in and to:
A. The parcels of land described in Exhibit A annexed hereto and
made a part hereof (the "Land"), together with (i) all easements, rights of way,
privileges, appurtenances and other rights pertaining thereto; (ii) all
buildings, improvements and fixtures now or hereafter located thereon
(collectively, the "Improvements"); (iii) all right, title and interest, if any,
of Seller in and to any land lying in the bed of any street, road or avenue
opened or proposed, public or private, in front of or adjoining the Land, to the
centerline thereof, and all right, title and interest of Seller in and to any
award made or to be made in lieu thereof and in and to any unpaid award for
damage to the Land or the Improvements by reason of change of grade of any
street (the Land, the Improvements and the other rights, improvements and
property heretofore mentioned appurtenant thereto being hereinafter referred to
as the "Real Property").
B. All personal property located on the Real Property, including
without limitation, beds, chairs, tables, storage closets, medical supplies and
equipment, inventories of household goods such as paper towels and cleaning
agents, towels and linens, draperies, rugs and other floor coverings,
refrigerators, cooking utensils, stoves, plates, glass, silverware, computers
and communication equipment (collectively, the "Personal Property"). Personal
Property does not include inventory (such as food, supplies, medicines, and
disposable equipment), any interest in the $385,000 reserve for potential
Medicare/Medicaid charge-backs, deposits and advance payments relating to
services to be provided to residents of the Improvements, trademarks,
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tradenames, books and records relating to Seller's business conduct at the Real
Property (including but not limited to, ledgers, computer programs, licenses
relating to the conduct of such business, data bases and printouts, records and
lists of sources of supply), patient contracts and related records, medical
books and records required for the operation of a nursing home, accounts
receivable or retroactive payments due with respect to periods prior to the
Closing, and amounts on deposit in any and all accounts maintained by or on
behalf of Seller in connection with the operation of the Seller's business
conducted at the Real Property.
C. All assignable permits, licenses, approvals, guaranties,
warranties, lease agreements, utility contracts or other rights relating to the
ownership, use or operation of the Real Property (but not relating to the
conduct of any particularly business therein) and all cash reserve accounts,
including without limitation reserves for principal and interest on debt,
maintenance and tax reserves, and operating reserves (the "Intangibles").
The Real Property, the Personal Property and the Intangibles are
hereinafter collectively referred to as the "Property".
G&L will lease the Real Property and Personal Property to Seller and Seller
will lease the Real Property and Personal Property from G&L under the terms of a
lease (the "Lease") substantially in the form of Exhibit E hereto.
In consideration of the mutual covenants and agreements hereinafter set
forth, and subject to the satisfaction of all conditions specified in this
Agreement, Seller agrees to sell and convey to HHG at a future date as herein
provided ("Second Closing"), and HHG agrees to purchase from Seller, all of
Seller's right, title and interest in and to all inventory (such as food,
supplies, medicines, and disposable equipment), deposits and advance payments
relating to services to be provided to residents of the Improvements,
trademarks, tradenames, books and records relating to the Seller's business
conducted at the Real Property (including but not limited to, ledgers, computer
programs, licenses relating to the conduct of such business, data bases and
printouts, records and lists of sources of supply), patient contracts and
related records and accounts, medical books and records required for the
operation of a nursing home, accounts receivable or retroactive payments due
with respect to periods prior to the Closing, all rights of Seller under the
Amended and Restated Loan and Security Agreement between Seller and HCFP
Funding, Inc., subject to the rights of HCPF Funding, Inc., the $385,000 reserve
for potential Medicare/Medicaid charge-backs, and all amounts on deposit in any
and all accounts maintained by or on behalf of Seller in connection with the
operation of the Seller's business conducted at the Real Property (collectively,
the "Business Assets"). The Business Assets shall not include any of the
Personal Property.
Liabilities of Seller shall be allocated as follows, effective as of the
First Closing Date: (a) liabilities created by or actually known (without
independent investigation) to officers, directors
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and consultants of Seller (including without limitation Benjamin Cohen, Gerald
Tulman and Paul Zelenkofske) and not relating to the operation of the Real
Properties as nursing homes shall all remain with Seller; (b) liabilities
arising out of the conduct of a business at the Real Property incurred prior to
the First Closing Date are to be assumed by HHG pursuant to a separate
assumption of liabilities which shall provide HHG with the benefits of certain
insurance of Seller; and (c) liabilities arising out of the conduct of a
business at the Real Property incurred after the First Closing Date (other than
liabilities arising out of executory contracts relating to the provision of
services after the Closing, all of which shall be assumed by HHG) shall be
indemnified against, as between G&L and Seller, by G&L, and ultimately assumed
by HHG; HHG's payment and performance of its assumed obligation of Seller will
be unconditionally guaranteed by Iatros Health Network, Inc. pursuant to a
separate guarantee agreement.
2. Purchase Price. The purchase price for the Properties (the "Purchase
Price") is $20,042,000 payable at the Closing hereinafter referred to. It is the
intention of the parties that the foregoing Purchase Price (consisting of G&L's
cash, bond reserves and credits will result in Seller having $250,000 in cash
remaining after redemption of bonds as contemplated in paragraph 6.C. In
addition, G&L shall pay to or upon the written direction of Seller, the sum of
$10,000 per month for three months, payable October 31, 1997, November 28, 1997
and December 31, 1997.
3. Permitted Exceptions and Quality of Title.
A. The Real Property shall be sold, and title thereto is to be
conveyed, subject only to those matters listed on Exhibit B (collectively, the
"Permitted Exceptions").
B. Title to the Real Property shall be insurable, subject to
Permitted Exceptions, by Chicago Title Insurance Company (the "Title Company")
at its regular rates, all as more fully described in Paragraph 6 hereof.
C. The Personal Property shall be transferred to G&L.
D. Title to the Intangibles shall be transferred to G&L.
4. Closing Dates; Expenses.
A. The closing for the purchase and sale of the Property (the "First
Closing ") shall take place at 9:00 A.M. at the offices of Day, Berry & Howard,
260 Franklin Street, Boston, Massachusetts or at such other location as may be
mutually agreed in writing, on October 23, 1997 or on such other date as may be
mutually agreed upon in writing by Seller and Purchaser (the "Closing Date"),
but in no event later than October 31, 1997.
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B. The Purchase Price shall be paid on the First Closing Date by
wire transfer of immediately available federal funds through an escrow with the
Title Company.
C. TIME SHALL BE OF THE ESSENCE AS TO EACH PARTY'S OBLIGATIONS
HEREUNDER.
D. Certain costs and expenses of the transactions contemplated
hereby shall be borne as follows whether or not the transactions contemplated by
this Agreement are completed:
(i) Seller shall bear the costs of its legal counsel.
(ii) G&L shall bear the costs of (a) the Engineering Report, the
Appraisal, the Phase I Report, the Survey, the Title Policy and its other due
diligence expenses, (b) recording fees, (c) its legal counsel, and (d) all other
customary closing expenses, including the Title Company's escrow fees.
All such expenses will be paid at or prior to the First Closing.
The closing for the purchase and sale of the Business Assets (the "Second
Closing") shall take place, if at all, at 9:00 A.M. at the offices of
Posternack, Blankstein & Lund, 100 Charles River Plaza, Boston, Massachusetts or
at such other location as may be mutually agreed in writing, on date as may be
mutually agreed upon in writing by Seller and Purchaser (the "Second Closing
Date"), but in no event later than January 31, 1998. The purchase price for the
Business Assets shall be $100, payable in cash at the Second Closing. If HHG
has not obtained all necessary regulatory approvals to operate the Real
Properties as nursing homes by January 31, 1998, HHG shall not be obligated
hereunder but the time for closing shall be extended to April 30, 1998 and the
purchaser of the Business Assets will be another entity which shall have become
the lessee of the Real Properties. If the Second Closing has not occurred by
April 30, 1998, G&L shall have a continuing option to purchase the Business
Assets for $100, which option shall be freely assignable by G&L.
5. Apportionments.
There shall be no apportionment of taxes, insurance or utilities.
6. Title Insurance.
A. G&L shall obtain a current title insurance commitment for the
Real Property (the "Title Commitment") together with legible copies of each
document shown therein as an exception. The Title Commitment shall contemplate
the issuance, at the Closing, of an owner's
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and mortgagee's title insurance policies, ALTA current Form, for the Real
Property in the amount of the Purchase Price (the "Title Policy"). During the
Due Diligence Period (as defined in clause (iii) of Paragraph 8A), G&L shall
determine whether the Title Commitment is acceptable. If, at or before the end
of the Due Diligence Period, G&L does not object in writing to Seller to the
Title Commitment, it will be deemed acceptable to G&L. If the Title Commitment
is acceptable or deemed acceptable to G&L, then the exclusions and exceptions
set forth therein, except for any that Seller is obligated to remove pursuant to
Paragraph 6C, shall be considered Permitted Exceptions for purposes of this
Agreement. If the Title Commitment is objected to in writing and such objection
is not removed at or prior to the expiration of the Due Diligence Period, G&L
may terminate this Agreement by notice to Seller prior to the end of the Due
Diligence Period, in which case no party shall have any further claim hereunder.
B. If the Title Commitment or any title report discloses
bankruptcies, tax liens or other adverse matters affecting persons having names
the same as or similar to that of Seller, Seller, on request, shall deliver to
G&L affidavits showing that such matters do not or will not affect Seller.
Seller also shall deliver customary affidavits, undertakings and documentary
evidence required by the Title Company to eliminate the standard printed
exceptions for parties in possession and mechanic's liens and, without material
expense or liability to Seller, the exclusion from coverage for creditors'
rights issues.
C. G&L agrees to cause GLN Capital Company and The Bank of New York,
as trustee, to deliver into escrow with the Title Company releases of mortgages
held by such entity with instructions to record the releases upon payment of
$22,421,081.26 in respect of the obligations secured by such mortgages.
7. Survey.
To the extent in Seller's possession, Seller shall cause to be furnished to
G&L and the Title Company as promptly as possible maps or plats of surveys (the
"Survey") for the Real Property.
8. Due Diligence and Closing Documents.
A. (i) G&L and its experts have had the right to visit the Real
Property from time to time and to inspect Seller's books and records relating to
the ownership and operation of the Real Property, all licenses, permits,
records, reports and the like relating to the operation of the Real Property.
G&L agrees to indemnify and hold Seller harmless from all loss, cost and damage
arising out of the actions of G&L and its experts during such visits, which
indemnity shall survive the Closing or the termination of this Agreement for a
period of one year. Seller acknowledges that at the date of deliver of this
Agreement, G&L has no liability under this paragraph.
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(ii) Without limiting the generality of G&L's rights to inspect and
evaluate the Real Property and Seller's books and records relating thereto, G&L
shall be entitled to obtain the following, the costs of which will be borne as
set forth in Paragraph 4D:
(a) A fee simple and leased fee appraisal of the Real Property (the
"Appraisal");
(b) A Phase I environmental site assessment report (the "Phase I
Report"); and
(c) A structural engineering report (the "Engineering Report")
covering the structural integrity of the Improvements, the condition of
installed systems, compliance with applicable codes, laws, ordinances,
rules and regulations, and such other matters as G&L may reasonably
specify.
(iii) G&L shall have a due diligence period (the "Due Diligence
Period") within which to satisfy itself with respect to the Appraisal, the Phase
I Report, the Engineering Report, the Survey, the Title Commitment, and may
terminate this Agreement by written notice to Seller at any time during such Due
Diligence Period on account of matters disclosed in those documents. It is
anticipated that Seller shall have delivered to G&L all documents and
information contemplated by this Agreement (except conveyancing documents and
the Title Policy) at the time of executing this Agreement. The Due Diligence
Period shall expire on the Closing Date. If G&L shall not have objected in
writing to any of such documents, information or matters concerning the Property
at or before the end of the Due Diligence Period, they shall be deemed approved
by G&L.
B. At or before the First Closing, Seller, at its sole cost and
expense, shall deliver to G&L the following with respect to the Property:
(i) (a) good and sufficient quitclaim deeds in the form attached
hereto as Exhibit C (the "Deed"), so as to convey to G&L insurable fee simple
absolute title to the Real Property, free and clear of all liens and
encumbrances other than Permitted Exceptions, which Deed shall be in recordable
form, duly executed and acknowledged; (b) a bill of sale and general assignment
substantially in the form of Exhibit D annexed hereto (the "Bill of Sale"), so
as to transfer to G&L title to the Personal Property and Intangibles, (c) three
counterparts of the Lease executed by Seller, (d) three counterparts of the
Amendment to Management Agreement executed by Seller, and (e) such documents in
form and substance reasonably satisfactory to G&L's counsel as shall be
necessary to transfer the Property;
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(ii) to the extent in the possession of Seller, all final inspection
reports issued by the appropriate governmental authorities, including permanent
certificates of occupancy, and copies of all building permits, for the
Improvements;
(iii) to the extent not theretofore delivered and in the possession
of Seller, all (a) original licenses and permits pertaining to the Property and
which may be required for the use or occupancy thereof (exclusive of licenses
and permits required for the conduct of a particular business on the Real
Property), and (b) for the period from January 1, 1994 to date, copies of
records and other documents pertaining to the operation and maintenance of
equipment or building components of the Property.
(iv) to the extent in the possession of Seller, all assignable
guaranties and warranties which Seller has received in connection with any work
or services performed, or to be performed, with respect to equipment or building
components installed in the Property;
(v) copies of all existing soils and hydrology reports,
environmental assessments, engineering or other inspection reports (other than
appraisals) relating to the Real Property and in Seller's possession;
(vi) an executed Affidavit of Non-Foreign Status, in form reasonably
acceptable to G&L, certifying that Seller is not a foreign person pursuant to
Section 1445 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder;
(vii) copies of all plans, specifications, engineering drawings and
the like for the Improvements in the possession of Seller;
(viii) an assignment and assumption of liabilities consistent with
paragraph 1 hereof, together with a release of G&L of all claims and liabilities
other than as expressly assumed by G&L in such assignment and assumption
agreement; and
(ix) such other documents as may be reasonably required to comply
with Seller's obligations under this Agreement.
C. At the First Closing, G&L and HHG shall deliver or cause to be
delivered to Seller the following, each document hereafter mentioned to be in
form and substance reasonably satisfactory to Seller's attorneys:
(i) the Purchase Price;
(ii) three counterparts of the Lease executed by G&L;
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(iii) an assignment and assumption of liabilities consistent with
paragraph 1 hereof, together with a release of Seller of all claims and
liabilities other than as expressly assumed by Seller in such assignment and
assumption agreement; together with Iatros' guaranty of HHG's assumption
obligations.
(iv) three counterparts of the Amendment to Management Agreement
executed by the manager thereunder; and
(v) such other documents as may be reasonably required to comply
with G&L's obligations under this Agreement.
D. At the Second Closing, HHG or G&L's designee, shall deliver to
Seller $100 in cash; and Seller shall deliver to HHG, or G&L's designee, shall
deliver to Seller bills of sale, assignments, and such other documents as may be
reasonably required to comply with Seller's obligations hereunder, all in form
and substance reasonably satisfactory to HHG, or G&L's designee.
9. Representations and Warranties.
A. Benjamin Cohen and Gerald Tulman, in the capacities as officers
of Seller (collectively, "Principals"), represent and warrant to Purchasers
that:
(i) To the actual knowledge of the Principals without
investigation, the Principals have not received any written notice of any
violation of any ordinance, regulation, law, statute, building code, zoning
ordinance or environmental laws pertaining to the Property or any portion
thereof or of any pending zoning change or special assessment pertaining to the
Property;
(ii) To the actual knowledge of the Principals without
investigation, the Principals have not received any written notice from any
insurance company of any defects or inadequacies in the Property or any part
thereof which would adversely affect the insurability of the Property or the
premiums for the insurance therefor;
(iii) To the actual knowledge of the Principals without
investigation, the Principals have not received any written notice that the
Property is listed or proposed for listing or threatened to be listed on the
National Priorities List by the Environmental Protection Agency or on any such
similar list in the Commonwealth of Massachusetts relating to abandoned or
uncontrolled hazardous waste sites, and there have been no discussions directly
between the Principals or to the Principal's actual knowledge without
investigation, Seller or its agents, and state or federal officials concerning
the possibility of such listings;
<PAGE>
-9-
(iv) To the actual knowledge of the Principals without
investigation, the Principals have not received any written notice that there
has been any unlawful contamination (including any disposal, discharge, deposit,
injection, dumping, leaking, spilling, placing or escape) of any hazardous
substance, pollutant or contaminant (as those items are defined under 42 U.S.C.
Section 9601) on, in, under or from the Property;
(v) To the actual knowledge of the Principals without
investigation, there is currently no action, suit or proceeding pending, nor
have the Principals received written notice of any threatened action, suit or
proceeding, which would result in a condemnation of the Property or any portion
thereof or which would affect the access to the Property or the utilities
presently serving the Property; and
(vi) To the actual knowledge of the Principals without
investigation, the Principals have not received any written notice of any
pending changes in zoning of the Property or any zoning actions affecting access
to the Property from dedicated roadways or of any citation for violation of any
building, fire, health, zoning or other governmental requirement which has not
been corrected by Seller.
B. Seller represents and warrants to Purchasers that:
(i) Seller is not a "foreign person" as defined in Section 1445 of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder;
(ii) Seller has not executed any lease with respect to any part of
the Property and/or any part of the Business Assets;
(iii) Seller has not granted any option or other right to purchase
any part of the Property and/or any part of the Business Assets to any person
which has not been terminated;
(iv) Seller (a) is a corporation duly organized and validly existing
under the laws of Massachusetts, and (b) has full power, authority and legal
right to execute and deliver this Agreement and to perform and observe the terms
and conditions of this Agreement;
(v) The execution of this Agreement by Seller and Seller's
observance and performance of all of its covenants and obligations hereunder do
not, to the knowledge of Seller, contravene any judgement, order or provision of
any law or any agreement binding upon Seller;
(vi) Each person signing this Agreement on behalf of Seller is duly
and validly authorized to do so;
<PAGE>
-10-
(vii) Title to Assets. Seller has, and will transfer to HHG on the
---------------
Second Closing Date, good, clear, merchantable title to all of the Seller's
Business Assets;
(viii) Regulatory Filings. Attached hereto as Schedule 9(B)(viii) are
------------------ -------------------
copies of all of the reports and forms filed with the Massachusetts Division of
Health Care Finance and Policy (formerly the Rate Setting Commission) by the
Seller's Business or its predecessor(s) since December 31, 1993 and of all of
the inspection reports made by the Agency or any other federal, state or local
agency regarding the Seller's Business, Seller's Business Assets and the nursing
homes located on the Real Property since December 31, 1994, on Seller's behalf
by OHI Corporation d/b/a Oasis Healthcare ("Oasis"). All rate setting
commission forms and filings, all inspection reports, Personal Trust Accounts
(also called Patient's Personal Needs Accounts) and other similar reports
attached hereto and/or provided to HHG are true, accurate and complete, with the
exception of those prepared on Seller's behalf by Oasis as to which Seller makes
no representation or warranty;
(ix) No Conflict. The execution and delivery of this Agreement and
-----------
the performance of the transactions contemplated hereby does not, and will not,
constitute a violation of, and is not, and will not be, a default under or
conflict with the terms of (i) the charter documents or by-laws of Seller, or
(ii) any contract, lease, indenture, agreement, order, judgment or decree to
which Seller is a party or by which it is bound or to which any of the Seller's
Business Assets being transferred hereunder are subject, and does not, and will
not, violate or constitute a default under any statute, rule, regulation, order,
or ordinance of any governmental, judicial or arbitral body; and
(x) Disclosure. No representations or warranties by Seller in this
----------
Agreement, nor any written statement or certificate furnished or to be furnished
by Seller pursuant to this Agreement, or in connection with the transactions
contemplated hereby, contains or shall contain any untrue statement of material
fact or omits or fails to state a statement of material fact, which omission or
failure makes such statement or certificate misleading or untrue.
C. Except as otherwise provided above, all of the representations
and warranties of Seller set forth herein and elsewhere in this Agreement shall
be true upon the execution of this Agreement, shall be deemed to be repeated at
and as of each Closing Date and shall expire 90 days after each Closing Date
insofar as they pertain to Property and/or Business Assets sold, transferred,
and conveyed at such Closing. Notwithstanding the foregoing, if any Purchaser
has actual knowledge of the inaccuracy of any of Seller's representations and
warranties and such Purchaser nonetheless proceeds with any Closing hereunder,
then Seller shall not be liable for such inaccuracies after the Closing.
<PAGE>
-11-
D. Without limiting any of the rights of G&L elsewhere provided
for in this Agreement, it is agreed that the obligation of G&L to close title
under this Agreement is conditioned upon the accuracy in all material respects
at that time of all of Seller's warranties and representations and the due
compliance in all material respects by Seller with all of its obligations under
this Agreement. If, on or before the Closing Date, any of Seller's
representations or warranties are untrue in any material respect or Seller has
not complied in any material respect with any of its obligations under this
Agreement, then Purchaser shall notify Seller of such fact and Seller may
postpone the Closing (not beyond October 31, 1997) to provide time, if Seller
chooses, to cure the defect. If the defect is incurable or not cured by October
31, 1997, G&L may elect to terminate this Agreement by notice given to Seller,
and thereafter neither party shall have any liability to the other party
hereunder.
E. G&L represents and warrants to Seller that:
(i) G&L (a) is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, (b) has
full power to engage in the transactions contemplated hereby, and (c) has full
power, authority and legal right to execute and deliver this Agreement and to
perform and observe the terms and conditions of this Agreement and other
documents delivered by it to Seller at the Closing and to consummate the
transaction contemplated hereby; and
(ii) Each person signing this Agreement on behalf of G&L is duly and
validly authorized to do so.
F. All of the representations and warranties of G&L set forth
herein shall be true upon the execution of this Agreement and shall be deemed to
be repeated at and as of the Closing Date and shall expire 90 days after the
Closing Date.
G. Without limiting any of the rights of Seller elsewhere provided
for in this Agreement, it is agreed that the obligation of Seller to close title
under this Agreement is conditioned upon the accuracy in all material respects
at the time of all of G&L's warranties and representations and the due
compliance by Purchaser with all of its obligations under this Agreement.
H. HHG's Warranties and Representations. HHG represents and
------------------------------------
warrants and agrees with Seller as follows:
(a) Organization and Existence. HHG has all requisite power to
--------------------------
conduct its business and perform the transactions contemplated hereby,
and is, and
<PAGE>
-12-
on the Closing Date will be, a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(b) Authorization. This Agreement and the transactions
-------------
contemplated hereby by HHG have been or will be duly and validly
authorized and approved by all persons whose authority and approval
are required.
(c) No Conflict. The execution and delivery of this Agreement
-----------
and the performance of the transactions contemplated hereby do not,
and will not, constitute a violation of, and are not, and will not be,
a default under or conflict with the terms of any applicable
organizational documents of HHG, or any contract, lease, indenture,
agreement, order, judgment or decree to which HHG is a party or by
which they are bound and do not, and will not, to the best of HHG's
knowledge, violate or constitute a default under any statute, rule,
regulation, order or ordinance of any governmental, judicial or
arbitral body.
(d) Disclosure. No representations or warranties by HHG in this
----------
Agreement, nor any written statement or certificate furnished, or to
be furnished by HHG pursuant to this Agreement, or in connection with
the transactions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or fails to state a
statement of material fact, which omission or failure makes such
statement or certificate misleading or untrue.
I. Property and the Business Assets shall be conveyed and accepted
"AS IS." "AS IS" means, without limitation: AS IS physical condition (both as
to property defects seen and unseen and conditions natural or artificial), AS IS
with respect to all documents, agreements, restrictions, leases and covenants to
which the Property is subject which have been disclosed by Seller to G&L or
disclosed on the Title Commitments and AS IS with respect to all laws,
ordinances, rules and regulations to which the Property is subject under any
applicable government or regulatory jurisdiction. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall diminish G&L's right to
rely upon Seller's representations and warranties contained in this Agreement,
nor Purchaser's remedies for a breach thereof.
10. Covenants. Seller covenants that:
(i) Between the date hereof and the Closing Date, Seller will not
modify, cancel, extend or otherwise change in any manner any of the terms,
covenants or conditions of any agreements affecting the Property or enter into
any leases of space in the Real Property or any other agreements binding upon
G&L and affecting the Property, without the prior written consent of G&L, which
consent shall not be unreasonably withheld or delayed;
<PAGE>
-13-
(ii) Between the date hereof and the Closing Date, Seller will not
enter into any service contract or any other agreement in respect of the
Property other than routine utility agreements, without the prior written
consent of G&L, which consent shall not be unreasonably withheld or delayed,
unless such contract or agreement does not bind Purchaser or run with the Land;
(iii) Between the date hereof and the Closing Date, Seller will not
cancel or reduce the amount or type of coverage of the insurance policies on the
Real Property (unless replaced by an insurance policy provided by an insurance
company reasonably satisfactory to G&L); and
(iv) After the Closing Date, Seller shall cooperate with G&L in
supplying information and documents as required by Nomura Asset Capital
Corporation in connection with a loan secured in part by the Property.
11. Broker. Purchaser and Seller represent and warrant to each other that
they have had no dealings with respect to this transaction with any broker, firm
or salesman, or any other person or corporation.
12. Condemnation and Destruction.
A. In the event any portion of the Improvements should be damaged
or destroyed by fire or other insured casualty estimated to cost less than
$100,000 to repair, the Closing will proceed as scheduled without adjustment to
Purchase Price, and Seller shall make timely claims under all applicable
insurance policies, assign such claims to Purchaser and cooperate with
reasonable requests in obtaining payment of such claims. In the event all or any
portion of the Improvements should be damaged or destroyed by fire or other
casualty estimated in the case of insured risks to cost $100,000 or more to
repair or in the case of uninsured risk estimated to cost $5,000 or more to
repair, in either case prior to the Closing Date, G&L may, at G&L's sole option,
elect to either:
(i) terminate this Agreement as to the affected parcel; or
(ii) close under this Agreement without reduction in the Purchase
Price and require Seller to assign to G&L at Closing all insurance proceeds
payable for such damage and pay to G&L the amount of any deductible under the
insurance policy.
B. In the event that any portion of the Real Property should be
condemned prior to the Closing, G&L may, at G&L's sole option, elect either to:
<PAGE>
-14-
(i) terminate this Agreement as to the affected parcel; or
(ii) close under this Agreement without reduction in the Purchase
Price and require Seller to assign to G&L at Closing all condemnation proceeds
payable as a result of such condemnation or sale in lieu thereof.
13. Default and Remedies.
A. Seller and Purchasers hereby agree that in the event of a
default under this Agreement by Seller, payment of damages will be inadequate to
compensate Purchasers for their losses. Seller and Purchasers further agree that
in the event of a default by Seller, specific performance of the terms of this
Agreement or termination (at the sole election of G&L) of this Agreement shall
be the only remedies available to Purchasers.
B. Seller and Purchasers hereby agree that in the event of a
default under this Agreement by either Purchaser, payment of damages will be
inadequate to compensate Seller for its losses. Seller and Purchasers further
agree that in the event of a default by either Purchaser, specific performance
of the terms of this Agreement as to the defaulting Purchaser or termination of
this Agreement shall be the only remedies available to Seller.
14. Indemnification.
A. Seller hereby agrees to defend, indemnify and hold Purchasers
harmless from and against all losses, damages, costs and expenses, including,
without limitation, reasonable legal fees and disbursements, incurred by either
Purchaser subsequent to the date of this Agreement and within 90 days after the
First Closing by reason of any claims made against either Purchaser or others
relating to the liabilities allocated to Seller under paragraph 1 hereof, but
excluding from this indemnity any losses, damages and expenses due to the
indemnitee's acts or wrongful failure to act. In no event shall Seller be liable
for indirect, consequential or punitive damages or for lost profits.
B. G&L hereby agrees to defend, indemnify and hold Seller harmless
from and against all losses, damages, costs and expenses, including, without
limitation, reasonable legal fees and disbursements, incurred by Seller
subsequent to the date of this Agreement and within 90 days after the Closing by
reason of any claims made against Seller or others relating to the Property and
arising from acts, occurrences or matters that took place or were claimed to
have taken place after the First Closing hereunder but excluding from this
indemnity any losses, damages and expenses due to Seller's acts or wrongful
failure to act. In no event shall G&L be liable for indirect, consequential or
punitive damages or for lost profits.
<PAGE>
-15-
15. No Personal Liability.
The parties agree that neither the partners, directors, officers,
trustees, beneficiaries, employees nor agents of either party have any personal
obligation hereunder, and that neither party shall seek to assert any claim or
enforce any rights hereunder against such partners, directors, officers,
trustees, beneficiaries, employees, or agents of the other party.
16. Notices.
All notices, demands, requests, approvals or consents made pursuant
to, under or by virtue of this Agreement must be in writing and mailed to the
party to which the notice, demand, request, approval or consent is being sent by
certified or registered mail, return receipt requested, or by overnight courier
delivery, addressed as follows, or at such other address as such party may
designate by notice to the other party;
To Seller: Hampden Nursing Homes, Inc.
161 Worcester Road
Framingham, MA 01701
Attention: Mr. Gerald Tulman
With a copy to: Smith, Gambrell & Russell, LLP
Promenade II, Suite 3100
1230 Peachtree Street, N.E.
Atlanta, GA 30309
Attention: Stanley G. Brading, Jr., Esq.
To G&L: G&L Hampden, LLC
c/o G&L Realty Corp.
439 North Bedford Drive
Beverly Hills, CA 90210
Attention: Mark H. Hamermesh, Senior Vice President
With a copy to: Day, Berry & Howard
260 Franklin Street
Boston, Massachusetts 02110
Attention: Lewis A. Burleigh, Esq.
To HHG: Hampden Health Group, Inc.
c/o Iatros Health Network, Inc.
<PAGE>
-16-
Ten Piedmont Center, Suite 400
Atlanta, GA 30305
With a copy to: Posternack, Blankstein & Lund
100 Charles River Plaza
Boston, MA 02110
Attention: Gerald Billow, Esq.
Any notice, demand, request, approval or consent given in accordance
with the provisions of this Paragraph 16 shall be effective on the date of
receipt or delivery or when proper delivery is refused by the addressee.
17. Entire Agreement.
This Agreement contains all of the terms agreed upon between the
parties with respect to the subject matter hereof.
18. Amendments.
This Agreement may not be changed, modified or terminated, except by
an instrument executed by the parties hereto who are or will be affected by the
terms of such instrument.
19. Waiver.
No waiver by either party of any failure or refusal by the other party
to comply with its obligations shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
20. Assignment.
This Agreement shall benefit and bind Seller and G&L and their respective
successors and assigns. G&L shall have the right, without releasing G&L from
any of its obligations under this Agreement, by giving notice to Seller, at
least 1 day before the Closing Date, to assign this Agreement or to have Seller
convey, assign and transfer the Property in accordance with this Agreement, to
any person who is owned, directly or indirectly, in excess of 50% by Purchaser,
and is controlled, directly or indirectly, by Purchaser, provided that such
assignment will not relieve Purchaser of any of its liabilities or obligations
hereunder. G&L shall also have the right to cause the assignment of HHG's rights
hereunder to another person after January 31, 1998 in accordance with paragraph
4 hereof.
<PAGE>
-17-
21. Attorneys' Fees.
If any party commences an action against any other to enforce any of the
terms of this Agreement or because of the breach by any party of any of the
terms hereof, the losing or defaulting party shall pay to the prevailing party
its reasonable attorneys' fees, costs and expenses actually incurred in
connection with the prosecution or defense of such action.
22. Paragraph Headings.
The headings of the various paragraphs of this Agreement have been inserted
only for the purposes of convenience, and are not part of this Agreement and
shall not be deemed in any manner to modify, explain, expand or restrict any of
the provisions of this Agreement.
23. Governing Law.
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
24. Counterparts.
This Agreement may be executed in one or more counterparts and each party
may execute a separate counterpart, each of which shall be an original, and all
of which shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written and shall take effect as an
instrument under seal.
SELLER:
HAMPDEN NURSING HOMES, INC.
By:_______________________________
Name:
Title:
PURCHASERS:
G&L HAMPDEN, LLC
By: G&L Hampden, Inc., Manager
By: /s/ Mark H. Hamermesh
________________________________
Name: Mark H. Hamermesh
Title: Senior Vice President
HAMPDEN HOLDING GROUP, INC.
By:_________________________________
President
The Principals have executed this Agreement to confirm the representations and
warranties made by them in paragraph 9 in their capacities as officers of the
Seller:
/s/ Benjamin Cohen /s/ Gerald Tulman
________________________ ____________________________
Benjamin Cohen Gerald Tulman
<PAGE>
EXHIBIT 10.54
LEASE AGREEMENT
Between
G&L HAMPDEN, LLC
as Landlord
and
HAMPDEN HOLDING GROUP, INC.
as Tenant
Dated as of October __, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. DEMISE OF PREMISES; QUIET ENJOYMENT.......................... 6
2. USE.......................................................... 7
3. TERM......................................................... 7
4. RENTAL....................................................... 8
5. TAXES; CONTEST OF IMPOSITIONS................................ 9
6. NET LEASE; NON-TERMINABILITY................................. 11
7. SERVICES..................................................... 12
8. REPAIRS AND MAINTENANCE; REPLACEMENT......................... 13
9. DESTRUCTION OF OR DAMAGE TO PREMISES......................... 14
10. INSURANCE, HOLD HARMLESS AND INDEMNIFICATION................. 15
11. COMPLIANCE WITH LAWS, COVENANTS.............................. 18
12. PARTIAL TAKING............................................... 20
13. SUBSTANTIAL TAKING........................................... 20
14. DEFAULT: Events of Default................................... 21
15. REMEDIES..................................................... 22
16. SUBORDINATION................................................ 24
17. LANDLORD'S RIGHT OF ENTRY.................................... 25
18. NOTICES...................................................... 25
19. ESTOPPEL CERTIFICATE; FINANCIAL DATA......................... 27
</TABLE>
<PAGE>
<TABLE>
<S> <C>
20. MECHANICS' LIENS............................................. 28
21. END OF TERM.................................................. 29
22. ALTERATIONS; CAPITAL IMPROVEMENT RESERVE..................... 30
23. MEMORANDUM OF LEASE.......................................... 33
24. SUBLETTING/ASSIGNMENT........................................ 33
25. HAZARDOUS MATERIAL........................................... 33
26. DETERMINATION OF FAIR MARKET RENTAL VALUE.................... 36
27. SINGLE PURPOSE ENTITY........................................ 38
28. CERTAIN COVENANTS AND REPRESENTATIONS........................ 38
29. LANDLORD'S AND MORTGAGEE'S RIGHT OF TERMINATION.............. 41
30. PLEDGE OF COLLATERAL AS SECURITY FOR PERFORMANCE............. 41
31. MISCELLANEOUS PROVISIONS..................................... 42
</TABLE>
EXHIBITS
A. LEGAL DESCRIPTION - REAL ESTATE
B. DESCRIPTION OF PERSONAL PROPERTY AND FIXTURES
C. PERMITTED ENCUMBRANCES
<PAGE>
THIS LEASE, made and entered into as of October __, 1997 (together with
all amendments and supplements hereto, this "Lease"), by and between G&L
HAMPDEN, LLC., a Delaware limited liability company with offices at 439 North
Bedford Drive, Beverly Hills, California 90210, (together with any successor or
assigns, hereinafter called the "Landlord") and HAMPDEN HOLDING GROUP, INC., a
Massachusetts corporation, having an address at c/o Iatros Health Network,
Inc., Ten Piedmont Center, Suite 400, Atlanta, Georgia 30305 (together with any
permitted successors or assigns, hereinafter collectively called the "Tenant").
Capitalized terms used herein not otherwise defined shall have the meanings
specified in the following definitions.
As used in this Lease, the following terms have the meanings specified:
DEFINITIONS
The following terms shall have the following meanings for all purposes of
this Lease and shall be equally applicable to both the singular and plural forms
of the terms herein defined.
"Account Collateral" means with respect to the Premises, any and all bank
------------------
accounts or any similar accounts held at any financial institution and any Money
or investments therein.
"Accounts" means all of Tenant's "accounts," as such term is defined in the
--------
Uniform Commercial Code relating to the Property, and, to the extent not
included in such definition, any of Tenant's rights to payment for goods sold or
leased or for services rendered arising from the ownership or operation of the
Premises and not evidenced by an Instrument, including, without limitation, all
rights to payment from the Medicare and Medicaid programs or similar state or
federal programs, boards, bureaus or agencies (to the extent legally assignable
under applicable law) and rights to payment from patients or private insurers
insuring patient obligations, all accounts and accounts receivable arising from
the ownership or operation of the Facility, now existing or hereafter coming
into existence, and all proceeds thereof (whether cash or non-cash, moveable or
immovable, tangible or intangible), received from the sale, exchange, transfer,
collection or other disposition or substitution thereof.
"Additional Rent" means all liabilities and obligations other than Fixed
-----------------
Rent which Tenant assumes or agrees to pay under this Lease to Landlord or
others, including, but not limited to, Tenant's obligation to remit Gross
Revenues to the cash collateral account as described in paragraph 4(c)..
-1-
<PAGE>
"Basic Lease Information" means the pages preceding this Lease which are
-------------------------
hereby incorporated by reference.
"Commencement Date" is defined in paragraph 3(b) of this Lease.
-------------------
"Environmental Laws" is defined in paragraph 25(b) of this Lease.
--------------------
"Equipment" means all of Tenant's "equipment," as such term is defined in
---------
the Uniform Commercial Code, relating to the Premises, and, to the extent not
included in such definition, all fixtures, appliances, machinery, furniture,
furnishings, decorations, tools and supplies, now owned or hereafter acquired in
connection with the Premises, including but not limited to, all beds, linens,
radios, televisions, carpeting, telephones, cash registers, computers, lamps,
glassware, restaurant and kitchen equipment, all medical, dental,
rehabilitation, therapeutic and paramedic equipment and supplies, any building
equipment, including but not limited to, all heating, lighting, incinerating,
waste removal and power equipment, engines, pipes, tanks, motors, conduits,
switchboards, security and alarm systems, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigeration, washing machines, dryers, stoves,
refrigerators, ventilating, and communications apparatus, air cooling and air
conditioning apparatus, escalators, elevators, ducts, and compressors, materials
and supplies, and all other machinery, apparatus, equipment, fixtures and
fittings now owned or hereafter acquired by Tenant with respect to the Premises
wherever located, any portion thereof or any appurtenances thereto, together
with all additions, replacements, parts, fittings, accessions, attachments,
accessories, modifications and alterations of any of the foregoing.
"Event of Default" is defined in paragraph 14 of this Lease.
------------------
"First Mortgage" or "Mortgage" shall mean a first mortgage on the Premises
------------------------------
given by Landlord to the Mortgagee to secure a loan financing or refinancing the
acquisition of Landlord's interest in the Premises.
"Fixed Rent" is defined in paragraph 4 of this Lease.
------------
"General Intangibles" means all of Tenant's "general intangibles," as such
-------------------
term is defined in the Uniform Commercial Code relating to the Premises, and, to
the extent not included in such definition, all intangible personal property of
Tenant with respect to the Premises (other than Accounts, Rents, Instruments,
Inventory, Money and Permits), including, without limitation, all things in
action, settlements, judgments, contract rights, rights to performance
(including, without limitation, rights under warranties) refunds of real estate
taxes and assessments and other rights to payment of Money, copyrights,
trademarks, trade names and patents now existing or hereafter in existence.
"Gross Revenue" has the meaning specified in the Loan Agreement.
---------------
<PAGE>
"Imposition" means the various tax and other charges referred to in
------------
paragraph 4 and the present and future governmental laws and regulations more
specifically described in paragraph 11.
"Improvements" means all of the buildings, structures, improvements, and
--------------
all building fixtures therein (including, without limitation, parking areas and
driveways) now or hereafter located on the Land.
"Instruments" means all of Tenant's "instruments," as such term is defined
-----------
in the Uniform Commercial Code, relating to the Premises, and, to the extent not
included in such definition, all instruments, chattel paper, documents or other
writings obtained by Tenant evidencing a right to the payment of Money with
respect to the Tenant, including, without limitation, all notes, drafts,
acceptances, documents of title, and policies and certificates of insurance,
including but not limited to, liability, hazard, rental and credit insurance,
guarantees and securities, now or hereafter received by Tenant with respect to
the Premises or in which Tenant has or acquires an interest pertaining to the
foregoing.
"Interim Term" is defined in paragraph 3(a) of this Lease.
------------
"Inventory" means all of Tenant's "inventory," as such term is defined in
---------
the Uniform Commercial Code, relating to the Premises, and, to the extent not
included in such definition, all goods now owned or hereafter acquired by Tenant
with respect to the Premises intended for sale or lease, or to be furnished
under contracts of service by Tenant with respect to the Premises, including
without limitation, all inventories held by Tenant for sale or use at or from
the Premises, and all other such goods, wares, merchandise, and materials and
supplies of every nature owned by Tenant with respect to the Premises and all
such other goods returned to or repossessed by Tenant with respect to the
Premises.
"Land" means the three parcels of land, but none of the Improvements
------
thereon, described in Exhibit A hereto.
"Landlord" is defined in the first paragraph of this Lease.
----------
"Lease" is defined in the first sentence of this Lease.
-------
"Lease Expiration Date" is defined in paragraph 3(a) of this Lease.
-----------------------
"Leases" means for purposes of paragraph 30 all leases and other agreements
------
or arrangements affecting the use or occupancy of all or any portion of the
Premises now in effect or hereafter entered into (including, without limitation,
this Lease, all patient admissions and
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<PAGE>
resident care agreements, lettings, subleases, licenses, concessions, tenancies
and other occupancy agreements covering or encumbering all or any portion of the
Premises), together with any guarantees, supplements, amendments, modifications,
extensions and renewals of the same, and all additional remainders, reversions,
and other rights and estates appurtenant thereto.
"Licenses" means all governmental licenses, permits, regulatory agreements
--------
or other approvals or agreements necessary or desirable for the use or operation
of the Premises as intended held by the Tenant, including, without limitation, a
valid certificate of need or similar certificate, license, or approval issued by
the state department of health for the requisite number of beds, and approved
provider status in any approved provider payment program.
"Loan" means the loan by Nomura Asset Capital Corporation pursuant to the
------
Loan Agreement.
"Loan Agreement" means the Loan Agreement, dated October __, 1997, as the
----------------
same may be amended or restated from time to time, between Landlord and Nomura
Asset Capital Corporation.
"Money" means all moneys, cash, rights to deposit or savings accounts,
-----
credit card receipts, rents or other items of legal tender held by the Tenant
with respect to the Premises or to which the Tenant has any rights with respect
to the Premises; provided, however, the term "Money" shall not include any
"patient trust funds" or "patient needs funds."
"Mortgagee" shall mean Nomura Asset Capital Corporation, its successors and
-----------
assigns, or any holder of a First Mortgage with respect to the Premises or any
part thereof.
"Overdue Rate" means 15% per annum or, if lower, the maximum annual
--------------
interest rate allowed by law for business loans (not primarily for personal,
family or household purposes).
"Person" means any individual, corporation, partnership, limited liability
--------
company, joint venture, association, joint stock company, trust, trustee(s) of a
trust, unincorporated organization, or government or governmental authority,
agency or political subdivision thereof.
"Permits" means, with respect to the Premises, all licenses, registrations,
-------
permits, allocations, filings, authorizations, approvals and certificates used
in connection with the ownership, operation, construction renovation, use or
occupancy of the Premises, or relating to quality or adequacy of medical care,
distribution of pharmaceuticals, rate setting, equipment, personnel, additions
and fee splitting, including, without limitation, building permits, business
licenses, state health department licenses, food service licenses, liquor
licenses, licenses to conduct
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<PAGE>
business, certificates of need or similar certificates, approvals issued by any
state health department, and all such other permits, licenses and rights,
obtained from any governmental authority or private person concerning ownership,
operation, construction, renovation use or occupancy of the Premises.
"Permitted Encumbrances" means:
------------------------
(a) Any liens for taxes, assessments and other governmental charges and
any liens of mechanics, materialmen and laborers for work or services
performed or materials furnished in connection with the Premises,
which are not due and payable;
(b) The easements, rights-of-way, encroachments, encumbrances, restrictive
covenants or other matters affecting the title to the Premises or any
part thereof set forth in Schedule B to the policy of owners title
insurance (or commitments therefor) delivered to and accepted by
Landlord with respect to the Premises in connection with the delivery
of this Lease as shown on Exhibit C attached hereto;
(c) This Lease and the rights of Tenant hereunder;
"Primary Intended Use" means the use of the Premises as three skilled
----------------------
nursing facilities with an aggregate of 391 licensed beds or such additional
number of beds as may hereafter be permitted under this Lease, and such
ancillary uses as are permitted by law and may be necessary in connection
therewith or incidental thereto.
"Primary Term" is defined in paragraph 3(a) of this Lease.
--------------
"Premises" is defined in paragraph 1 of this Lease.
----------
"Renewal Term" is defined in paragraph 3(c) of this Lease.
--------------
"Rent" means Fixed Rent and Additional Rent.
------
"Rents" for purposes of paragraph 30 means with respect to the Premises (x)
-----
all receipts, rents (whether denoted as advance rent, minimum rent, percentage
rent, additional rent or otherwise), issues, income, royalties, profits,
revenues, proceeds, bonuses, deposits (whether denoted as security deposits or
otherwise), lease termination fees or payments, rejection damages, buy-out fees
and any other fees made or to be made in lieu of rent, any award made hereafter
to Tenant with respect to the Premises in any court proceeding involving any
tenant, lessee, licensee or concessionaire under any of the Leases in any
bankruptcy, insolvency or reorganization
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<PAGE>
proceedings in any state or federal court, and all other payments, rights and
benefits of whatever nature from time to time due under the Leases, including,
without limitation, (i) rights to payment earned under the Leases for space in
the Improvements for the operation of ongoing businesses such as restaurants,
news stands, barber shops, beauty shops and pharmacies, and (ii) all other
income, consideration, issues, accounts, profits or benefits of any nature to
which the Tenant has any rights with respect to the Premises, including, without
limitation, all rights to payment from the Medicare and Medicaid programs or
similar state or federal programs (to the extent legally assignable under
applicable law), boards, bureaus or agencies and rights to payment from patients
or private insurers and (y) all revenues, receipts, income, receivables and
accounts relating to or arising from rentals, rent equivalent income, income and
profits from guest rooms, meeting rooms, food and beverage facilities, vending
machines, telephone and television systems, guest laundry, the provision or sale
of other goods and services, and any other items of revenue, receipts or other
income as identified in the Uniform System of Accounts for Hotels, 8th Edition,
International Association of Hospitality Accountants (1986), as from time to
time amended; provided, however, "Rents" shall not include "patient trust
accounts" or "patient needs funds."
"Site Assessments" is defined in paragraph 25(d) of this Lease.
------------------
"Site Reviewers" is defined in paragraph 25(d) of this Lease.
----------------
"Tenant's Trade Fixtures" means all personal property of Tenant in or on
-------------------------
the Premises which is not necessary for the operation of the Improvements.
"Term" means the Interim Term and Primary Term, together with the Renewal
------
Term.
1. DEMISE OF PREMISES; QUIET ENJOYMENT: (a) Landlord hereby demises and
------------------------------------
leases to Tenant and Tenant hereby leases and rents from Landlord the Premises,
IN THEIR "AS IS" CONDITION (WITHOUT EXPRESS OR IMPLIED WARRANTY OF LANDLORD WITH
RESPECT TO THE CONDITION, QUALITY, REPAIR OR FITNESS OF THE PREMISES FOR A
PARTICULAR USE OR TITLE THERETO, ALL SUCH WARRANTIES BEING HEREBY WAIVED AND
RENOUNCED BY TENANT), consisting of the three parcels of Land, the Improvements,
together with any easements, rights, and appurtenances in connection therewith
or belonging to said Land and Improvements, and together with any tangible
personal property owned by Landlord and located within the Improvements, all
being collectively hereinafter referred to as "the Premises". No easement for
light, air or view is included with or appurtenant to the Premises.
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<PAGE>
(b) Landlord covenants with Tenant, that upon the payment of the Fixed Rent
and Additional Rent and the performance of all the terms of this Lease, Tenant
shall at all times during the Term, peaceably and quietly enjoy the Premises
without any disturbance from Landlord or from any person claiming by, through,
or under Landlord. Exercise by Landlord of its rights to come upon the Premises
as set forth in this Lease shall not constitute a violation of this paragraph.
2. USE: Tenant may use and occupy the Premises as skilled nursing
----
facilities with an aggregate of 396 licensed beds or such additional number of
beds as may be permitted by applicable regulatory authorities. In all events,
Tenant shall not use or occupy the same, or knowingly permit them to be used or
occupied, contrary to any statute, rule, order, ordinance, requirement or
regulation applicable thereto, or in any manner which would violate any
certificate of occupancy affecting the same or which would make void or voidable
any insurance then in force with respect thereto, or which would cause
structural injury to the Premises or cause the value or usefulness of the
Premises, or any portion thereof, to diminish, or which would constitute a
public or private nuisance or waste, and Tenant agrees that it will promptly,
upon discovery of any such use, take all necessary steps to compel the
discontinuance of such use. Tenant shall not use, suffer or permit the
Premises, or any portion thereof, to be used by Tenant, any third party or the
public, as such, without restriction or in such manner as might impair
Landlord's title to the Premises, or in such manner as might reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or third Persons, or of implied dedication of the Premises, or any
portion thereof. Nothing contained in this Lease and no action by Landlord
shall be construed to mean that Landlord has granted to Tenant any authority to
do any act or make any agreement that may create any such third party or public
right, title, interest, lien, charge or other encumbrance upon the estate of the
Landlord in the Premises, except Permitted Exceptions.
3. TERM:
-----
(a) The interim term of this Lease ("Interim Term") shall commence on
the Commencement Date and end on the last day of the month in which the
Commencement Date occurs. The primary term of this Lease (the "Primary Term")
shall be for a period of approximately fifteen (15) years, beginning on the
first day of the month following the month in which the Commencement Date
occurred and ending on December 31, 2012 (the "Lease Expiration Date"), subject
to paragraph 25(d).
(b) The term "Commencement Date" shall mean the date on which the
condition set forth in paragraph 28(e) are satisfied. If the Landlord fails to
deliver possession of the Premises to Tenant, subject to no possessory rights
other than of patients, within 30 days after the Commencement Date, Tenant shall
have the right to terminate this Lease by notice to Landlord given no less than
30 days prior to the date of termination.
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<PAGE>
(c) Tenant shall have the right, at its option, to renew the Primary
Term of this Lease, for one (1) renewal term (the "Renewal Term"), which shall
renew the Primary Term for an additional five (5) years. The Renewal Term shall
commence on the day after the expiration of the Primary Term and shall expire on
the fifth (5th) anniversary of the Lease Expiration Date. The option to renew
the Term of this Lease as described above shall be exercised by Tenant by
written notice to Landlord given at least six (6) months prior to the Lease
Expiration Date. Subject to the provisions of paragraph 4, the terms and
conditions of this Lease shall apply to the Renewal Term with the same force and
effect as if the Renewal Term had originally been included in the Primary Term
of the Lease. If such notice is not given in a timely fashion, the option to
renew the term of this Lease shall terminate. The right of Tenant to the
Renewal Term shall be conditioned upon (i) Tenant not being in default under
this Lease beyond any applicable grace period on the date on which notice of
exercise of the renewal option is given and on the Lease Expiration Date, and
(ii) this Lease being in full force and effect as of the Lease Expiration Date.
The Interim Term, Primary Term, together with the Renewal Term, shall constitute
the "Term" of this Lease.
4. RENTAL: (a) Tenant shall pay to Landlord the following amounts as
-------
rent for the Premises:
(i) During the term of this Lease, Tenant shall pay to Landlord, as fixed
monthly rent, the amount of monthly rent specified in the Basic Lease
Information (the Fixed Rent).
(ii) Throughout the term of this Lease, Tenant shall pay, as additional
rent, all other amounts of money and charges required to be paid by Tenant for
specific obligations under this Lease, whether or not such amounts of money or
charges are designated Additional Rent.
(b) It is the intention of Landlord and Tenant that the Fixed Rent payable
by Tenant to Landlord during the entire term of this Lease shall be absolutely
net of all costs and expenses incurred in connection with the management,
operation, maintenance and repair of the Premises in accordance with this Lease.
Landlord shall have no obligations or liabilities whatsoever with respect to the
management, operation, maintenance or repair of the Premises during the term of
this Lease, and Tenant shall manage, operate, maintain and repair the Premises
in accordance with this Lease and shall pay all costs and expenses incurred in
connection therewith before such costs or expenses become delinquent. Without
limiting the generality of the foregoing, throughout the entire term of this
Lease, Tenant shall pay, as Additional Rent, all premiums for all property and
liability insurance covering the Premises, all Property Taxes (as defined in
paragraph 4(e)) and all Other Taxes (as defined in paragraph 5(b)) that accrue
during or are allocable to the terms of this Lease.
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<PAGE>
(c) Tenant shall pay all Fixed Rent to Landlord, in arrears, on or before
the first day of each and every calendar month during the Term of this Lease
without notice, by wire transfer or other electronic means (or otherwise so
there are collected funds available to Landlord on the due date). Landlord and
Tenant acknowledge that so long as the Loan is outstanding, all Gross Revenues
shall be assigned and paid directly to Mortgagee's agent bank. Landlord and
Tenant acknowledge that, so long as the Loan is outstanding, that Gross Revenues
may in part be paid by transfer of funds by HCFP Funding, Inc. or its successors
as receivables lender ("Receivables Lender") to a cash collateral account
maintained on behalf of Mortgagee. To the extent the Gross Revenues for an
Interest Accrual Period (as defined in the Loan Agreement) exceeds the Fixed
Rent (which includes the Required Debt Service Payment), the Basic Carrying
Costs Monthly Installment, the Capital Reserve Monthly Installment, the
Operating Expense Monthly Installment (as such terms are defined in the Loan
Agreement), if any, and all other sums then due and owing under this Lease, if
any, Landlord agrees, subject to the terms of the Loan Agreement, to promptly
remit such excess to Tenant. Tenant shall pay all Additional Rent owing to third
parties promptly when due and shall pay all Additional Rent advanced by
Landlord, together with interest at the Overdue Rate, within five (5) business
days after demand. Tenant shall pay all Fixed Rent to Landlord without notice,
demand, deduction or offset, in lawful money of the United States of America, at
the address of Landlord specified in the Basic Lease Information, or to such
other person or at such other place as Landlord may from time to time designate
in writing.
(d) Tenant acknowledges that the late payment by Tenant of any Fixed Rent
or reimbursement of Additional Rent advanced by Landlord (including the items
described in paragraph 4(b)) will cause Landlord to incur costs and expenses,
the exact amount of which is extremely difficult and impractical to fix. If any
Fixed Rent is not received by Landlord on or before its due date or if
reimbursement for Additional Rent advanced by Landlord is not received by
Landlord within five (5) business days after demand, Tenant shall pay to
Landlord interest on such delinquent amount at the Overdue Rate until paid. In
no event shall payment of interest at the Overdue Rate or of the late charge be
deemed to grant to Tenant a grace period or extension of time within which to
pay any Rent or prevent Landlord from exercising any right or enforcing any
remedy available to Landlord upon Tenant's failure to pay all Rent due under
this Lease in a timely fashion, including the right to terminate this Lease.
All amounts of money payable by Tenant to Landlord hereunder, if not paid when
due, shall bear interest from the due date until paid at the Overdue Rate.
(e) As security for the performance of its obligations hereunder, Tenant
shall be required to maintain reserves in an amount and for such times as are
required of Landlord under the Loan Agreement, such amount to be held as
provided in paragraph 4(c).
5. TAXES; CONTEST OF IMPOSITIONS:
------------------------------
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<PAGE>
(a) Tenant shall pay, as Additional Rent, all Property Taxes prior to the
assessment of any interest or penalty for late payment. Property Taxes shall
mean all taxes, assessments, excises, levies, fees and charges (and any tax,
assessment, excise, levy, fee or charge levied wholly or partly in lieu thereof
or as a substitute therefor or as an addition thereto) of every kind and
description, general or special, ordinary or extraordinary, foreseen or
unforeseen, secured or unsecured, whether or not now customary or within the
contemplation of Landlord and Tenant, that are at any time levied, assessed,
charged, confirmed or imposed by any public or government authority on or
against, or otherwise with respect to, the Premises or any part thereof or any
personal property used in connection with the Premises, and are payable during
the Term of this Lease. Property Taxes shall be pro rated for the tax year in
which the Term hereof ends. If any Property Tax may legally be paid in
installments, Tenant shall be liable only for the installments thereof payable
during the Term of this Lease. Property Taxes shall not include net income
(measured by the income of Landlord from all sources), franchise, capital,
documentary transfer or inheritance taxes of Landlord, unless levied or assessed
against Landlord in whole or in part in lieu of, as a substitute for any
Property Taxes, provided Tenant's liability for such Property Taxes shall be
limited to the amount calculated as if the Premises and five other properties
leased by Landlord to Tenant under leases dated the date hereof were the only
assets owned by Landlord.
(b) Tenant shall pay, as Additional Rent, all Other Taxes prior to the
assessment of any interest or penalty for late payment. Other Taxes shall mean
all taxes, assessments, excises, levies, fees and charges, including all
payments related to the cost of providing facilities or services, whether or not
now customary or within the contemplation of Landlord and Tenant, that are
levied, assessed, charged, confirmed or imposed by any public or government
authority upon, or measured by, or reasonably attributable to (i) the Premises,
(ii) the cost or value of Tenant's equipment, furniture, fixtures and other
personal property located in the Premises or the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, regardless of whether
title to such improvements is vested in Tenant or Landlord, (iii) any Rent
payable under this Lease, including any gross income tax or excise tax levied by
any public or government authority with respect to the receipt of any such Rent,
(iv) the possession, leasing, operation, management, maintenance, alteration,
repair, use or occupancy by Tenant of the Premises, or (v) this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises. Other Taxes shall not include net income (measured
by the income of Landlord from all sources), franchise, capital, documentary
transfer or inheritance taxes of Landlord, unless levied or assessed against
Landlord in while or in part in lieu of, as a substitute for any Other Taxes,
provided that Tenant's liability for Other Taxes shall be limited to the amount
calculated as if the Premises were the only assets owned by Landlord.
(c) Except for any tax on the net income derived from the Fixed Rent, if at
any time during the Term, any method of taxation shall be such that there shall
be levied, assessed or imposed on the Landlord, or on the Fixed Rent or
Additional Rent, or on the Premises, or any
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<PAGE>
portion thereof, a capital levy, gross receipts tax, occupational license tax or
other tax on the Rents received therefrom, or a franchise tax, or an assessment,
gross receipts levy or charge measured by or based in whole or in part upon such
gross Rents, Tenant, to the extent permitted by law, covenants to pay and
discharge the same, it being the intention of the parties hereto that the Fixed
Rent to be paid hereunder shall be paid to Landlord absolutely net without
deduction or charge of any nature whatsoever, foreseeable or unforeseeable,
ordinary or extraordinary, or of any nature, kind, or description, except as
otherwise expressly provided in this Lease.
(d) Tenant covenants to furnish Landlord official receipts of the
appropriate taxing authority, if any, or other appropriate proof reasonably
satisfactory to Landlord, evidencing the payment of the same.
(e) Tenant shall have the right to contest the amount or validity, in whole
or in part, of any Imposition or to seek a reduction in the valuation of the
Premises as assessed for real estate property tax purposes by appropriate
proceedings diligently conducted in good faith (but in the case of Property
Taxes or Other Taxes only after either payment of such Tax or, in the case of
any Imposition where the amount in controversy exceeds $25,000, depositing with
Landlord reasonable security for such contingent obligation). Landlord shall
not be required to join in any proceeding referred to in this subparagraph (e)
unless required by law, in which event Landlord shall, upon written request by
Tenant, join in such proceedings or permit the same to be brought in its name.
Tenant covenants that Landlord shall not suffer or sustain any costs or expenses
(including, but not limited to, counsel fees) or any liability in connection
with any such proceeding. No such consent shall subject Landlord to any
material civil liability or the risk of any criminal liability. Tenant shall be
entitled to any refund and interest thereon of Property Taxes or Other Taxes
paid by Tenant, and Landlord will assign (or pay, if previously received by
Landlord) its interest in any such refund and interest thereon. Upon conclusion
of any such contest in which Tenant does not prevail, Tenant shall pay or
perform the Imposition.
6. NET LEASE; NON-TERMINABILITY: (a) This is an absolutely net lease and
-----------------------------
the Fixed Rent, Additional Rent and all other sums payable hereunder by Tenant
shall be paid without notice (except as expressly provided herein), demand, set-
off, counterclaim, abatement, suspension, deduction or defense. It is the
intention of the parties hereto that the Fixed Rent shall be an absolutely net
return to Landlord throughout the term of this Lease. In order that such Rent
shall be absolutely net to Landlord, Tenant shall pay when due (except as
expressly otherwise permitted herein), and save Landlord harmless from and
against, any and all costs, charges and expenses attributable to the Premises,
including but not limited to, each fine, fee penalty, charge (including
governmental charges), assessments, sewer rent, Impositions, insurance premiums
as may be required from time to time by Mortgagee, utility expenses, carrying
charges, costs, expenses and obligations of every kind and nature whatsoever,
general and special, ordinary and extraordinary, foreseen and unforeseen, the
payment for which Landlord or Tenant is, or shall
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<PAGE>
become liable by reason of any rights or interest of Landlord or Tenant in, to
or under the Premises or this Lease or in any manner relating to the ownership,
leasing, operation, management, maintenance, repair, rebuilding use or
occupation of the Premises, or of any portion thereof; provided, however, that
nothing herein contained shall be construed as imposing upon Tenant any
obligation to pay any estate, inheritance, succession or transfer tax of the
Landlord growing out of, or levied in connection with, this Lease or the
Landlord's right or interest in the Premises.
(b) Subject to the provisions of paragraphs 9 and 13 hereof, this Lease
shall not terminate, nor shall Tenant have any right to terminate this Lease,
nor shall Tenant be entitled to any abatement or reduction of Rent hereunder,
nor shall the obligations of Tenant under this Lease be affected, by reason of
(i) any damage to or destruction of all or any part of the Premises from
whatever cause, (ii) the taking of the Premises or any portion thereof by
condemnation, requisition or otherwise, (iii) the prohibition, limitation or
restriction of Tenant's use of all or any part of the Premises, or any
interference with such use, (iv) any eviction by paramount title or otherwise,
(v) Tenant's acquisition or ownership of all or any part of the Premises
otherwise than as expressly provided herein, or (vi) any default on the part of
Landlord under this Lease, or under any other agreement to which Landlord and
Tenant may be parties. It is the intention of the parties hereto that the
obligations of Tenant hereunder shall be separate and independent covenants and
agreements, that the Fixed Rent, the Additional Rent and all other sums payable
by Tenant hereunder shall continue to be payable in all events and that the
obligations of Tenant hereunder shall continue unaffected unless the requirement
to pay or perform the same shall have been terminated pursuant to any express
provision of this Lease.
(c) Tenant agrees that it will remain obligated under this Lease in
accordance with its terms, and that it will not take any action to terminate,
rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or winding-
up or other proceeding affecting Landlord or its successor in interest, or (ii)
any action with respect to this Lease which may be taken by any trustee or
receiver of Landlord or its successor in interest or by any court in any such
proceeding.
(d) Tenant waives all rights which may now or hereafter be conferred by law
(i) to quit, terminate or surrender this Lease or the Premises or any part
thereof, or (ii) to any abatement, suspension, deferment or (except as provided
in paragraphs 9 and 13) reduction of the Fixed Rent, Additional Rent or any
other sums payable under this Lease, except as otherwise expressly provided
herein.
7. SERVICES
--------
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<PAGE>
Tenant shall, at Tenant's sole cost and expense, supply the Premises with
electricity, heating, ventilating and air conditioning, water, natural gas,
lighting, replacement for all lights, restroom supplies, telephone service,
window washing, security service, janitor, scavenger and disposal services
(including hazardous and biological waste disposal), and such other services as
Tenant determines to furnish to the Premises. Except to the extent damage or
loss results directly from the wilful act of Landlord, Landlord shall not be in
default hereunder or be liable for any damage or loss directly or indirectly
resulting from, and in no event shall the Fixed Rent or Additional Rent be
abated or a constructive or other eviction be deemed to have occurred by reason
of, the installation, use or interruption of use of any equipment in connection
with the furnishing of any of the foregoing services, any failure to furnish or
delay in furnishing any such services, whether such failure or delay is caused
by accident or any condition beyond the control of Landlord or Tenant or by the
making of repairs or improvements to the Premises, or any limitation,
curtailment, rationing or restriction on use of water, electricity, gas or any
form of energy serving the Premises, whether such results from mandatory
governmental restriction or voluntary compliance with governmental guidelines.
Tenant shall pay the full cost of all of the foregoing services and all other
utilities and services supplied to the Premises as Additional Rent.
8. REPAIRS AND MAINTENANCE; REPLACEMENT:
-------------------------------------
(a) Tenant shall, at its own sole cost and expense, keep the Premises in
good order and condition, at all times on and after commencement of the Term to
and including the date of the termination of the Term, by lapse of time or
otherwise. Tenant shall, at its sole cost and expense, promptly and adequately
repair the Premises and all its component parts, and replace or repair all
landscaping and all damaged or broken fixtures, (including Tenant's Trade
Fixtures) and appurtenances.
In addition, to the extent necessary to keep the Premises in good repair
and condition, Tenant shall, at its sole cost and expense, timely and properly
maintain, repair and to the extent necessary, replace all of the Premises
including, but not necessarily limited to, parking lot surface and stripes,
mechanical systems, electrical and lighting systems, plumbing and sewage
systems, roof, foundations and floor slabs, glazing systems, structural steel,
masonry walls and wall enclosures, and water tightness of all curtain walls by a
qualified engineer or otherwise, so as to preserve and protect the useful life,
utility and value of such component, but in all events so as to preserve the
effectiveness of any warranty relating thereto. In addition, Tenant shall, at
its sole cost and expense, maintain and repair or replace, or cause others to
maintain and repair or replace, as the case may be, the roof, and repair or
replace any material defect in materials or workmanship relating to the
foundation, columns, and structural steel which comprise a part of the Premises.
If any building system or component shall become obsolete or uneconomic to
repair, Tenant shall, at its sole cost and expense, remove such item from the
Premises and, promptly replace it with an item of comparable initial value and
function. Without limiting the
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<PAGE>
right of Tenant to perform maintenance in accordance with this Lease, Tenant
shall obtain Landlord's prior written consent before making any material change
in the structure of the Improvements or any building system. Tenant shall, upon
Landlord's request, deliver to Landlord a written statement showing all removals
and replacements of such systems or components during the preceding calendar
year, including manufacturers, model numbers, and serial numbers; Landlord shall
have 30 days after delivery of such statement to object to any item therein, and
such statement shall thereafter be conclusive as to all items not objected to.
Landlord, may upon 48 hours prior notice cause independent private inspectors,
qualified in the specific discipline, to make inspections of any building and
building systems on the Premises or segments thereof to determine Tenant's
compliance under this paragraph 8. Landlord shall endeavor to minimize the
interference with Tenant's use of the Premises during any such inspection.
Landlord may, but is not required to, after five (5) business days notice
to Tenant (except in the case of emergency, in which case Tenant shall be given
notice contemporaneously with entry), enter the Premises and make such repairs,
alterations, improvements, additions, replacements or maintenance as Landlord
deems reasonably necessary and which Tenant failed to do as required in this
Lease after notice and the expiration of any applicable grace period, and Tenant
shall pay Landlord as Additional Rent forthwith upon being billed for same by
Landlord the cost thereof. Such amounts shall bear interest at the Overdue Rate
from the date of billing until paid.
(b) It is intended by Tenant and Landlord that Landlord shall have no
obligation, in any manner whatsoever except in the case of damage caused by
Landlord's wilful act, to repair or maintain the Premises (or any equipment
therein), whether structural or nonstructural, all of which obligations are
intended, as between Landlord and Tenant, to be those of Tenant. Tenant
expressly waives the benefit of any statute now or in the future in effect which
would otherwise afford Tenant the right to make repairs at Landlord's expense or
to terminate this Lease because of Landlord's failure to keep the Premises in
good order, condition and repair.
(c) Tenant shall maintain on the Premises, and turn over to Landlord upon
expiration or termination of this Lease, current operating manuals for the
equipment now or hereafter located on the Premises.
(d) Tenant covenants not to install any underground storage tank on the
Land without the prior written consent of Landlord, which will not be
unreasonably withheld.
9. DESTRUCTION OF OR DAMAGE TO PREMISES: If the Premises, or any part
-------------------------------------
thereof, is damaged by fire or other casualty during the Term of this Lease,
Tenant shall repair such damage and restore the Premises to substantially the
same or better condition as existed before the occurrence of such fire or other
casualty using materials of the same or better grade
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than that of the materials being replaced, and this Lease shall remain in full
force and effect. Such repair and replacement by Tenant shall be done in
accordance with paragraph 22 and the standards of paragraph 8 and Tenant shall,
at its expense, obtain all permits required for such work; if necessary,
Landlord will join at Tenant's expense in the application for any permit. In no
event shall Fixed Rent or Additional Rent abate, nor shall this Lease terminate
by reason of such damage or destruction. Provided Tenant has (i) delivered to
Landlord plans and specifications and a budget for such repair and restoration
(all of which Landlord shall have approved in its reasonable judgment), and (ii)
deposited with Landlord or the Proceeds Trustee hereinafter mentioned cash in
the sum equal to the excess, if any, of the total cost set forth in such
approved budget over the amount of insurance proceeds received on account of
such casualty, then Landlord shall make available to Tenant all insurance
proceeds actually received by Landlord on account of such casualty, for
application to the costs of such approved repair and restoration, as set forth
below, all of which provision are expressly subject to the terms of the Loan
Agreement and the other Loan Documents referred to therein.
All insurance proceeds shall be paid to or deposited with either a bank or
trust company designated by Landlord, subject to the reasonable approval of
Tenant (herein called the "Proceeds Trustee") in the name of the Proceeds
Trustee as trustee for Landlord and Tenant and disbursed in the manner
hereinafter provided. In the event Landlord mortgages the Premises with a First
Mortgage, the mortgagee thereunder may, at its option, be appointed Proceeds
Trustee for so long as such First Mortgage remains outstanding and such Mortgage
does not control Landlord or is not controlled by or under common control with
Landlord. Landlord shall use its best efforts to obtain insurance proceeds and
interest thereon pursuant to the governing terms of the Mortgage for the purpose
of reimbursing Tenant for the cost of repair and replacement.
10. INSURANCE, HOLD HARMLESS AND INDEMNIFICATION:
---------------------------------------------
(a) Landlord shall not be liable to Tenant for any damage to or loss or
theft of any property or for any bodily or personal injury, illness or death of
any person in, on or about the Premises arising at any time and from any cause
whatsoever, except to the extent caused by the gross negligence or willful
misconduct of Landlord. Tenant waives all claims against Landlord arising from
any liability described in this paragraph 10(a), except to the extent caused by
the gross negligence or willful misconduct of Landlord.
(b) Tenant hereby agrees to indemnify and defend Landlord against and hold
Landlord harmless from all claims, demands, liabilities, damages, losses, costs
and expenses, including reasonable attorneys' fees and disbursements, arising
from or related to any use or occupancy of the Premises, or any condition of the
Premises, or any default in the performance of Tenant's obligations hereunder,
or any damage to any property (including property of employees and invitees of
Tenant) or any bodily or personal injury, illness or death of any person
(including
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<PAGE>
employees and invitees of Tenant) occurring in, on or about the Premises or any
part thereof or any part of the building or the land constituting a part of the
Premises arising at any time and from any cause whatsoever (except to the extent
caused by the gross negligence or willful misconduct of Landlord) or occurring
outside the Premises when such damage, bodily or personal injury, illness or
death is caused by any act or omission of Tenant or its agents, officers,
employees, contractors, invitees or licensees. This paragraph 10(b) shall
survive the termination of this Lease with respect to any damage, bodily or
personal injury, illness or death occurring prior to such termination. THE
WAIVER PROVISION IN PARAGRAPH 10(a) AND THE INDEMNITY PROVISION IN THIS
PARAGRAPH 10(b) ARE INTENDED TO EXCULPATE AND INDEMNIFY LANDLORD FROM AND
AGAINST ANY LIABILITY OF LANDLORD BASED ON ANY APPLICABLE DOCTRINE OF STRICT
LIABILITY.
(c) Tenant shall, at all times and during the term of this Lease when the
Loan is not outstanding and at Tenant's sole cost and expense, obtain and keep
in force comprehensive commercial general liability and special cause of loss
insurance, including contractual liability (specifically covering this Lease),
cross liability, fire legal liability, and premises operations, all on an
"occurrence" policy form, with a minimum combined single limit in the amount of
$5,000,000 per occurrence for bodily or personal injury to, illness of, or death
of persons and damage to property occurring in, on or about the Premises, and
such insurance shall name the Landlord and any Mortgagee as additional insureds.
Tenant shall, at Tenant's sole cost and expense, be responsible for insuring
Tenant's furniture, equipment, fixtures, computers, office machines and personal
property.
(d) Tenant shall, at all times during the term of this Lease when the Loan
is not outstanding and at Tenant's sole cost and expense, obtain and keep in
force worker's compensation and employer's liability insurance in all states in
which the Premises and any other operations of the Tenant are located and any
other state in which the Tenant or its contractors or subcontractors may be
subject to any statutory or other liability arising in any manner whatsoever out
of the actual or alleged employment of others.
(e) Tenant shall, at all times during the term of this Lease when the Loan
is not outstanding, at Tenant's sole cost and expense, obtain and keep in force
or, at Tenant's option after 30 day written notice to Landlord, reimburse
Landlord for the cost of (a) insurance against loss (including earthquake and
flood) or damage to the Premises by fire and all other risks of physical loss
(including earthquake and flood) covered by insurance of the type now known as
"all risk," with difference in conditions coverage, in an amount not less than
the full replacement cost of the Premises (without deduction for depreciation),
including the cost of debris removal and such endorsements as Landlord may
reasonably require, and containing "Replacement Cost" and "Agreed Amount"
endorsements; (b) boiler and machinery insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping, heating, ventilation and air
conditioning equipment, and elevator and escalator equipment, provided the
Premises contain equipment of such nature and
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<PAGE>
insurance against loss of occupancy or use arising from any breakdown of any
such items, in such amounts as Landlord may reasonably determine; (c) plate
glass insurance in such amounts as Landlord may reasonably determine if the
Premises contain plate glass; (d) business interruption insurance insuring that
the Fixed Rent will be paid to Landlord for up to eighteen months if the
Premises are destroyed or rendered untenantable by any cause insured against (it
being understood that the existence of such insurance does not reduce Tenant's
obligation to pay Fixed Rent without diminution); and (e) insurance in amounts
and against such other risks as Landlord or Mortgagee may reasonably require and
against such risks as are customarily insured against by operators of similar
properties.
(f) All insurance required to be maintained by Tenant under this paragraph
10 and all renewals thereof shall be issued by good and responsible companies
qualified to do and doing business in the state of where the Premises are
located and having a Standard and Poor's Corporation claims paying ability
rating of at least "AA" and shall be reasonably satisfactory to Landlord. All
deductible amounts under each such insurance policy shall be subject to
Landlord's prior written approval. Each policy to be maintained by Tenant shall
expressly provide that the policy shall not be canceled or altered without
thirty (30) days' prior written notice to Landlord and shall remain in effect
notwithstanding any such cancellation or alteration until such notice shall have
been given to Landlord and such period of thirty (30) days shall have expired.
All insurance under this paragraph 10 to be maintained by Tenant shall name
Landlord, Mortgagee and any other parties designated by Landlord as an
additional insured and loss payee, shall be primary and noncontributing with any
insurance which may be carried by Landlord, shall afford coverage for all claims
based on any act, omission, event or condition that occurred or arose (or the
onset of which occurred or arose) during the policy period, and shall expressly
provide that Landlord, although named as an insured, shall nevertheless be
entitled to recover under the policy for any loss, injury or damage to Landlord.
Upon the issuance of each such policy to be maintained by Tenant, Tenant shall
deliver each such policy or a certified copy and a certificate thereof (Acord 27
form) to Landlord for retention by Landlord. Tenant may maintain the insurance
required by this paragraph 10 under blanket insurance policies, provided that
the insurer provides evidence that an amount necessary to meet the requirements
of this paragraph 10 has been reserved for the Premises.
(g) Tenant waives on behalf of all insurers under all policies of property,
liability and other insurance (excluding workers' compensation) now or hereafter
carried by Tenant insuring or covering the Premises, or any portion or any
contents thereof, or any operations therein, all rights of subrogation which any
insurer might otherwise, if at all, have to any claims of Tenant against
Landlord. Landlord waives on behalf of all insurers under all policies of
property, liability and other insurance (excluding workers' compensation) now or
hereafter carried by Landlord insuring or covering the Premises or any portion
or any contents thereof, or any operations therein, all rights of subrogation
which any insurer might otherwise, if at all, have to any claims
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<PAGE>
of Landlord against Tenant. Tenant shall, prior to or immediately after the date
of this Lease, procure from each of the insurers under all policies of property,
liability and other insurance (excluding workers' compensation) now or hereafter
carried by Tenant insuring or covering the Premises, or any portion or any
contents thereof, or any operations therein, a waiver of all rights of
subrogation which the insurer might otherwise, if at all, have to any claims of
Tenant against Landlord as required by this paragraph 10(g).
(h) While the Loan is outstanding during the term of this Lease, Tenant
shall obtain, at its sole cost and expense, insurance of the character, in the
amounts, with the deductibles and endorsements and with the insureds and loss
payees as required by Section 2.5 of the mortgages securing the Loan.
11. COMPLIANCE WITH LAWS, COVENANTS:
--------------------------------
(a) Tenant shall throughout the Term promptly comply or cause compliance
with or remove or cure any violation of any and all present and future laws,
including, without limitation, the Americans with Disabilities Act of 1990, as
the same may be amended from time to time, ordinances (zoning or otherwise),
orders, rules, regulations and requirements of all Federal, State, municipal and
other governmental bodies having jurisdiction over the Premises and the
appropriate departments, commissions, boards and officers thereof, and the
orders, rules and regulations of the Board of Fire Underwriters where the
Premises are situated, or any other body now or hereafter constituted exercising
lawful or valid authority over the Premises, or any portion thereof, or the
sidewalks, curbs, roadways, alleys or entrances adjacent or appurtenant thereto,
or exercising authority with respect to the use or manner of use of the
Premises, or such adjacent or appurtenant facilities, and whether the
compliance, curing or removal of any such violation and the costs and expenses
necessitated thereby shall have been foreseen or unforeseen, ordinary or
extraordinary, and whether or not the same shall be presently within the
contemplation of Landlord or Tenant or shall involve any change in governmental
policy, or require structural or extraordinary repairs, alterations or additions
by Tenant and irrespective of the amount of the costs thereof. Tenant, at its
sole cost and expense, shall comply with all agreements, contracts, easements,
restrictions, reservations or covenants, if any, running with the land, or
hereafter created by Tenant or consented to, in writing, by Tenant or requested,
in writing, by Tenant. Tenant shall also comply with, observe and perform all
provisions and requirements of all policies of insurance at any time in force
with respect to the Premises and required to be obtained and maintained under
the terms of paragraph 11 hereof and shall comply with all development permits
issued by governmental authorities issued in connection with development of the
Premises.
(b) If Tenant shall at any time fail to pay any Imposition in accordance
with the provisions of paragraph 4, or to take out, pay for, maintain and
deliver any of the insurance policies or certificates of insurance provided for
in paragraph 10, or shall fail to make any other
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<PAGE>
payment or perform any other act on its part to be made or performed hereunder
after any required notice and the expiration of any applicable grace period,
then Landlord, after five business (5) days prior written notice to Tenant (or
without notice in situations where Landlord determines that delay is likely to
cause harm to Landlord's interest in the Premises), and without waiving or
releasing Tenant from any obligation of Tenant contained in this Lease, may, but
shall be under no obligation to do so,
(i) pay any Imposition payable by Tenant pursuant to the provisions
of this paragraph 11;
(ii) take out, pay for and maintain any of the insurance policies
provided for in paragraph 10; or
(iii) make any other payment or perform any other act on Tenant's part
to be paid or performed hereunder, except that any time
permitted to Tenant to perform any act required to be performed
by Tenant hereunder shall be extended for such period as may be
necessary to effectuate such performance, provided Tenant is
continuously, diligently and in good faith prosecuting such
performance.
Landlord may enter upon the Premises for any such purpose and take all such
action therein or thereon as may be necessary therefor. All sums, reasonable
under the circumstances, actually so paid by Landlord and all costs and
expenses, including reasonable attorney's fees and the administrative fee
referred to in paragraph 8(a), incurred by Landlord in connection with the
performance of any such act, together with interest thereon at the Overdue Rate,
shall be paid by Tenant to Landlord on demand and submission of reasonable
evidence of such expenditures. Landlord shall not be limited in the proof of any
damages which Landlord may claim against Tenant arising out of or by reason of
Tenant's failure to provide and keep in force insurance as aforesaid, to the
amount of the insurance premium or premiums not paid or incurred by Tenant, and
which would have been payable upon such insurance, but Landlord shall also be
entitled to recover, as damages for such breach, the uninsured amount of any
loss (to the extent of any deficiency between the dollar limits of insurance
required by the provisions of this Lease and the dollar limits of the insurance
actually carried by Tenant), damages, costs and expenses of suit, including
reasonable attorney's fees, suffered or incurred by reason of damage to or
destruction of the Premises, or any portion thereof or other damage or loss
which Tenant is required to insure against hereunder, occurring during any
period when Tenant shall have failed or neglected to provide insurance as
aforesaid.
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12. PARTIAL TAKING:
---------------
If less than substantially all of the Premises shall be taken for public or
quasi-public purposes, Tenant will promptly, at its sole cost and expense,
restore, repair, replace or rebuild the improvements so taken in conformity with
the requirements of paragraph 8 as nearly as practicable to the condition, size,
quality of workmanship and market value thereof immediately prior to such
taking, without regard to the adequacy of any condemnation award for such
purpose. There shall be no abatement of Rent during such period of restoration.
Subject to the terms of the Subordination, Non-Disturbance and Attornment
Agreement among Landlord Tenant and Nomura Asset Capital Corporation, Tenant
shall be entitled to all condemnation proceeds available to Landlord under the
same terms and conditions for disbursement set forth for casualty proceeds in
paragraph 9 hereof. Any condemnation proceeds in excess of the amounts as are
made available to Tenant for restoration or repair of the Premises, shall be the
sole and exclusive property of Landlord. Tenant shall have the right to
participate in condemnation proceedings with Landlord, and shall be entitled to
receive any award made by the condemning authority in respect of business loss
or, if available, business relocation and any other claim permitted by law which
does not, in any such case, diminish Landlord's recovery.
13. SUBSTANTIAL TAKING:
-------------------
If all or substantially any of the nursing homes constituting a part of
the Premises (a "Unit") shall be taken for public or quasi-public purposes, or
if Tenant, after any taking affecting a Unit or access thereto, determines that
such event has rendered such Unit unavailable for use or unsuitable for
restoration for continued use and occupancy in Tenant's business, then Tenant,
in lieu of rebuilding as contemplated by Paragraph 12, shall, not later than 90
days after such occurrence, deliver to Landlord (i) notice of its intention to
terminate this Lease as to such Unit on a date occurring not more than 95 days
nor less than 60 days after such notice (the Termination Date), (ii) a
certificate of Tenant describing the event giving rise to such termination and
stating that such event has rendered such Unit unavailable for use or unsuitable
for restoration for continued use and occupancy in Tenant's business, and (iii)
an irrevocable offer to purchase such Unit on the next date for the payment of
Fixed Rent (the "Termination Date") which occurs not less than 45 days after the
delivery of such notice, at a price of $3,840,000 in the case of the Unit
located in Hampden, $10,900,000 in the case of the Unit located in East
Longmeadow, and $5,800,000 in the case of the Unit located in West Springfield,
plus in each case all costs of transferring title to the Premises to Tenant,
including without limitation all transfer taxes, recording fees and any unwind
costs resulting from a prepayment of debt secured in part by such Unit
(including prepayment premiums, make whole amounts and defeasance costs with
respect to the Loan or any other Mortgage). Landlord shall accept or reject
such offer by notice given to Tenant not later than thirty (30) days after
receipt of Tenant's notice, and if Landlord fails to act,
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it shall be presumed to have accepted the offer. If Landlord shall have accepted
such offer or is deemed to have accepted such offer, on the Termination Date,
Landlord shall convey by special warranty deed to Tenant any remaining portion
of the affected Unit free of liens and encumbrances (except those existing on
the Commencement Date or thereafter created with the written consent of the
Tenant), along with the right to receive any condemnation award relating to such
Unit to which Landlord is entitled. If Landlord rejects such offer, this Lease
shall terminate on the Termination Date except for liabilities which accrued
prior thereto. Upon payment of all Fixed Rent and Additional Rent payable
through the Termination Date, this Lease shall terminate as to the affected Unit
on the Termination Date, except with respect to liabilities which arose on or
prior to the Termination Date. After the Termination Date with respect to any
Unit, Fixed Rent hereunder shall be reduced by a fraction thereof, the numerator
of which fraction is the fixed dollar purchase price specified above for the
Unit as to which this Lease has terminated, and the denominator of which is the
sum of all such fixed dollar purchase prices specified above for Units which
were subject to this Lease immediately prior to such Termination Date.
14. DEFAULT: Events of Default.
---------------------------
The occurrence of any one or more of the following events ("Event of
Default") shall constitute a breach of this Lease by Tenant:
(a) Tenant fails to pay any Fixed Rent as and when such Fixed Rent becomes
due; or
(b) Tenant fails to pay any Additional Rent as and when such Additional
Rent becomes due and payable and such failure continues for more than five (5)
days after Landlord gives written notice thereof to Tenant; or
(c) Tenant fails to perform or breaches any other agreement or covenant of
this Lease to be performed or observed by Tenant as and when performance or
observance is due and such failure or breach continues for more than thirty (30)
days after Landlord's giving written notice thereof to Tenant; provided,
however, that if, by the nature of such agreement or covenant, such failure or
breach cannot reasonably be cured within such period of thirty (30) days, an
Event of Default shall not exist as long as Tenant commences with due diligence
and dispatch the curing of such failure or breach within such period of ten (10)
days and, having so commenced, thereafter prosecutes with diligence and dispatch
and completes the curing of such failure or breach within 260 days after
Tenant's acquisition of knowledge or notice of such failure or breach; or
(d) Tenant (i) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy, insolvency or other debtors' relief law of any
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jurisdiction, (ii) makes an assignment for the benefit of its creditors, (iii)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers of Tenant or of any substantial part of Tenant's property,
or (iv) takes action for the purpose of any of the foregoing; or
(e) Without consent by Tenant, a court or government authority enters an
order, and such order is not vacated within ninety (90) days, (i) appointing a
custodian, receiver, trustee or other officer with similar powers with respect
to Tenant or with respect to any substantial part of Tenant's property, or (ii)
constituting an order for relief or approving a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, insolvency or
other debtors' relief law of any jurisdiction, or (iii) ordering the
dissolution, winding-up or liquidation of Tenant; or
(f) This Lease or any estate of Tenant hereunder is levied upon under any
attachment or execution and such attachment or execution is not vacated within
thirty (30) days; or
(g) Tenant's representations or warranties contained in this Lease or in
any certificate delivered pursuant hereto or thereto shall have been incorrect
in any material adverse way when made.
Landlord may treat the occurrence of any one or more of the foregoing
Events of Default as a breach of this Lease. For so long as such Event of
Default continues, Landlord, at its option and with or without notice or demand
of any kind to Tenant or any other person, may have any one or more of the
remedies provided in this Lease, in addition to all other remedies and rights
provided at law or in equity.
15. REMEDIES: In the event of any Event of Default, Landlord may, in
---------
addition to, and not in derogation of any remedies for any preceding breach,
with or without notice of demand (except as otherwise expressly provided herein)
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have by reason of such Event of Default:
(a) Landlord shall have the right at any time to give a written termination
notice to Tenant and, on the date specified in such notice (which shall not be
less than ten (10) days after such notice is delivered), Tenant's right to
possession shall terminate and this Lease shall terminate. Upon such
termination, Landlord shall have the right to recover from Tenant:
(i) The worth of all unpaid Rent which had been earned at the time
of termination;
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(ii) The worth at the time of termination of the amount by which all
unpaid Rent for the balance of the term of this Lease after the time of
termination exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; and
(iii) All other amounts necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform all of Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom. The "worth at the time of determination" of the
amounts referred to in clause (i) above shall be computed by allowing interest
at the Overdue Rate. The "worth at the time of determination" of the amount
referred to in clause (ii) above shall be computed by discounting such amount at
the discount rate of the Boston Federal Reserve Bank at the time of award plus
one percent (1%). For the purpose of determining unpaid Rent under clause (i)
and (ii) above, the Rent reserved in this Lease shall be deemed to be the total
Rent payable by Tenant under paragraph 4 hereof.
(b) If an Event of Default shall have occurred and be continuing, Landlord
shall have the immediate right, whether or not this Lease shall have been
terminated pursuant to paragraph 15, to re-enter and repossess the Premises or
any part thereof by notice and judicial proceedings, and shall have the right to
remove all persons and property therefrom. Landlord shall be under no liability
for or by reason of any such re-entry, repossession or removal. No such re-
entry or taking of possession of the Premises by Landlord shall be construed as
an election on Landlord's part to terminate this Lease unless a written notice
of such election is delivered to Tenant pursuant to this paragraph 15 or unless
termination of this Lease is ordered by a court of competent jurisdiction.
(c) Even though Tenant has breached this Lease, this Lease shall continue
in effect for so long as Landlord does not terminate Tenant's right to
possession, and Landlord shall have the right to enforce all its rights and
remedies under this Lease, including the right to recover all Rent as it becomes
due under this Lease. Acts of maintenance or preservation or efforts to relet
the Premises or the appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession unless written notice of termination is given by
Landlord to Tenant.
(d) All agreements and covenants to be performed or observed by Tenant
under this Lease shall be at Tenant's sole cost and expense and without any
abatement of Fixed Rent or Additional Rent.
(e) If Tenant abandons or surrenders the Premises, or is dispossessed by
process of law or otherwise, any movable furniture, equipment, trade fixtures or
personal property belonging to Tenant and left in the Premises shall be deemed
to be abandoned, at the option of Landlord, and Landlord shall have the right to
sell or otherwise dispose of such personal property in any
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commercially reasonable manner. Landlord shall have the right, but not the
obligation, to sublet the Premises on reasonable terms for the account of
Tenant, and Tenant shall be liable for all costs of such subletting, including
without limitation the cost of preparing the Premises for subtenants and leasing
commissions paid to brokers.
16. SUBORDINATION:
--------------
(a) Subordination, Non-Disturbance. Tenant agrees at any time hereafter,
------------------------------
and from time to time within ten (10) days of written request of Landlord, to
execute and deliver to Landlord an instrument in the form customarily used by
any institutional investor becoming a Mortgagee subjecting and subordinating
this Lease to the lien of any mortgage, deed of trust, security instrument,
ground or underlying lease or other document of like nature (hereinafter
collectively referred to as "Superior Mortgage") which at any time may be placed
upon the Premises, or any portion thereof, by Landlord, and to any replacements,
renewals, amendments, consolidations, modifications, extensions or refinancing
thereof, and to each and every advance made under any Superior Mortgage. It is
agreed, nevertheless, that so long as there exists no Event of Default, such
subordination agreement or other instrument, release or document (herein
"Subordination Agreement") shall not interfere with, hinder or reduce Tenant's
right to quiet enjoyment under this Lease, nor the right of Tenant to continue
to occupy the Premises, and all portions thereof, and to conduct its business
thereon in accordance with the covenants, conditions, provisions, terms and
agreements of this Lease. The costs of preparing and recording such document
shall be borne by Landlord, but Tenant shall be responsible for its own counsel
fees.
(b) Mortgagee Protection Clause. In the event of any act or omission of
---------------------------
Landlord constituting a default by Landlord, Tenant shall not exercise any
remedy until Tenant has given Landlord and any Mortgagee of the Premises written
notice of such act or omission, and until a reasonable period of time (not to
exceed 30 business days) to allow Landlord or the Mortgagee to remedy such act
or omission shall have elapsed following receipt of such notice. However, if
such act or omission cannot, with due diligence and in good faith, be remedied
within such period or cannot be cured simply by the payment of money, the
Landlord and the Mortgagee shall be allowed such further period of time as may
be reasonably necessary provided that it commences remedying the same with due
diligence and in good faith and thereafter diligently prosecutes such cure,
provided such cure period shall not extend beyond 270 days after the notice of
such default. Nothing herein contained shall be construed or interpreted as
requiring any Mortgagee receiving such notice to remedy such act or omission.
(c) Attornment. If any Mortgagee shall succeed to the rights of Landlord
----------
under this Lease or to ownership of the Premises, whether through possession or
foreclosure or the delivery of a deed to the Premises in lieu of foreclosure,
then such Mortgagee shall automatically be deemed to have recognized this Lease
and to assume the obligations of Landlord hereunder
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accruing on and after the date such Mortgagee acquired title to the Premises,
and Tenant shall attorn to and recognize such Mortgagee as Tenant's landlord
under this Lease and shall promptly execute and deliver any instrument that such
Mortgagee may reasonably request to evidence such attornment (whether before or
after the making of the Mortgage). In the event of any other transfer of
Landlord's interest hereunder, such transferee shall automatically be deemed to
have recognized this Lease and to assume the obligations of Landlord hereunder
accruing on and after the date of such transfer, Tenant shall attorn to and
recognize such transferee as Tenant's landlord under this Lease and shall
promptly execute and deliver any instrument that such transferee and Landlord
may reasonably request to evidence such attornment.
(d) Upon ten days' advance written notice, Tenant agrees to execute,
acknowledge and deliver a document consenting to the assignment by Landlord of
this Lease to a Mortgagee, in a form then in use among institutional lenders,
with such changes therein as may be reasonably requested by the Mortgagee.
17. LANDLORD'S RIGHT OF ENTRY: Landlord, Mortgagee and their respective
--------------------------
designees shall have the right to enter the public areas of the Premises at any
time during normal business hours and any part of the Premises on 48 hours
advance notice and to inspect the same, post notices of non-responsibility,
exhibit the Premises to prospective purchasers and mortgagees, and examine
Tenant's books and records pertaining to the maintenance of the Premises,
insurance policies, certificates of occupancy and other documents, records and
permits in Tenant's possession with respect to the Premises, all of which shall
be customary and adequate and reasonably satisfactory to Landlord.
18. NOTICES: Notices, statements, demands, or other communications
--------
required or permitted to be given, rendered or made by either party to the other
pursuant to this Lease or pursuant to any applicable law or requirement of
public authority, shall be in writing (whether or not so stated elsewhere in
this Lease) and shall be deemed to have been properly given, rendered or made,
when received by overnight delivery or overnight courier delivery (of if such
delivery is refused) or facsimile transmission with a confirmation copy sent by
overnight delivery or by overnight courier delivery addressed to the other
parties as follows:
To Landlord:
G&L Hampden, LLC
439 North Bedford Drive
Beverly Hills, California 90210
Attention: Mark Hamermesh
Fax: (310) 859-9032
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With a copy to:
Day, Berry & Howard
260 Franklin Street
Boston, Massachusetts 02110
Attention: Lewis A. Burleigh, Esq.
Fax: (617) 345-4745
With a further copy to:
Gilchrist & Rutter
1299 Ocean Avenue, Suite 900
Santa Monica, California 90401
Attention: James R. Andrews, Esq.
Fax: (310) 394-4700
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To Tenant:
Hampden Holding Group, Inc.
c/o Iatros Health Network, Inc.
Ten Piedmont Center, Suite 400
Atlanta, Georgia 30305
Attention: Judson H. Simmons
Fax: (404) 262-7627
To Mortgagee:
Nomura Asset Capital Corporation
Two World Financial Center
Building B, 20th Floor
New York, New York 10281
Attention: Cheryl McAfee
Fax: (212) 667-1526
With a copy to:
Dechert, Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Attention: G. Monique Escudero, Esq.
Fax: (212) 698-3599
Any party listed in this paragraph 18 may, by notices as aforesaid, designate a
different address for addresses for notice, statements, demands or other
communications intended for it.
19. ESTOPPEL CERTIFICATE; FINANCIAL DATA:
-------------------------------------
(a) At any time and from time to time, Tenant shall, within ten (10) days
after written request by Landlord, execute, acknowledge and deliver to Landlord
a certificate certifying: (a) that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that this Lease is in full
force and effect as modified, and stating the date and nature of each
modification); (b) the Commencement Date and the Expiration Date determined in
accordance with paragraph 3 and the date, if any, to which all Rent and other
sums payable hereunder have been paid; (c) that no notice has been received by
Tenant of any default by Tenant hereunder which has not been cured, except as to
defaults specified in such certificate; (d) that, to the best of Tenant's
knowledge, Landlord is not in default under this Lease, except as to defaults
specified
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in such certificate; and (e) such other matters as may be reasonably
requested by Landlord or any actual or prospective purchaser or mortgage lender.
Any such certificate may be relied upon by Landlord and any actual or
prospective purchaser or mortgage lender of the Premises or any part thereof.
(b) Tenant shall deliver to Landlord and to any prospective lender or
purchaser designated by Landlord, promptly upon their filing with the Securities
and Exchange Commission, copies of its annual report on Form 10-K and quarterly
reports on Form 10-Q. If at any time, Tenant is not a reporting company under
the Securities Exchange Act of 1934, as amended, Tenant shall instead deliver
the following information: within 120 days after the end of each fiscal year of
Tenant, an audited balance sheet of Tenant and its consolidated subsidiaries as
at the end of such year, an audited statement of profits and losses of Tenant
and its consolidated subsidiaries for such year, and an audited statement of
cash flows of Tenant and its consolidated subsidiaries for such year, setting
forth in each case, in comparative form, the corresponding figures for the
preceding fiscal year in reasonable detail and scope and certified by
independent certified public accountants of recognized national standing
selected by Tenant; and within 45 days after the end of each of the first three
fiscal quarters of Tenant a balance sheet of Tenant and its consolidated
subsidiaries as at the end of such quarter, statements of profits and losses of
Tenant and its consolidated subsidiaries for such quarter and a statement of
cash flows of Tenant and its consolidated subsidiaries for such quarter, setting
forth in each case, in comparative form, the corresponding figures for the
similar quarter of the preceding year, in reasonable detail and scope, and
certified to be true and complete by a financial officer of Tenant having
knowledge thereof; the foregoing financial statements all being prepared in
accordance with generally accepted accounting principles, consistently applied.
(c) Landlord shall have the right to visit the offices of Tenant, to
discuss its business and finances with its senior officers, and to inspect its
financial records relating to the Premises.
20. MECHANICS' LIENS:
-----------------
Liens and Right of Contest. (a) Tenant shall not suffer or permit any
--------------------------
mechanic's lien or other lien to be filed or recorded against the Premises,
equipment or materials supplied or claimed to have been supplied to the Premises
at the request of Tenant, or anyone holding the Premises, or any portion
thereof, through or under Tenant whereby the estate, rights or title of Landlord
are encumbered. If any such mechanic's lien or other lien shall at any time be
filed or recorded against the Premises, or any portion thereof, Tenant shall
cause the same to be discharged of record within sixty (60) days after the date
of filing or recording of the same. However, in the event Tenant desires to
contest the validity of any such lien, it shall notify Landlord in writing that
Tenant intends to so contest same and, on or before the due date thereof, post
a bond or otherwise discharge of record or procure title insurance over such
lien.
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If Tenant complies with the foregoing, and Tenant continues, in good faith,
to contest the validity of such lien by appropriate legal proceedings which
shall operate to prevent the collection thereof and the sale or forfeiture of
the Premises, or any part thereof, to satisfy the same, Tenant shall be under no
obligation to pay such lien until such time as the same has been decreed, by
court order, to be a valid lien on the Premises. Any surplus deposit retained
by Landlord, after the payment of the lien shall be repaid to Tenant. Landlord
agrees not to pay such lien during the period of Tenant's contest in accordance
with this paragraph. If Tenant fails to discharge or contest any such lien in
accordance with this paragraph and Landlord pays for the discharge of any such
lien or any part thereof from funds of Landlord, any amount paid by Landlord,
together with all costs, fees and expenses in connection therewith (including
reasonable attorney's fees of Landlord), together with interest thereon at the
Overdue Rate, shall be repaid by Tenant to Landlord on demand by Landlord.
Tenant shall indemnify and defend Landlord against and save Landlord and the
Premises, and any portion thereof, harmless from and against all losses, costs,
damages, expenses, liabilities, suits, penalties, claims, demands and
obligations, including, without limitation, reasonable attorney's fees,
resulting from the assertion, filing, foreclosure or other legal proceedings
with respect to any such mechanic's lien or other lien or the attempt by Tenant
to discharge same as above provided.
(b) All materialmen, contractors, artisans, engineers, mechanics, laborers
and any other Person now or hereafter furnishing any labor, services, materials,
supplies or equipment to Tenant with respect to the Premises, or any portion
thereof, are hereby charged with notice that they must look exclusively to
Tenant to obtain payment for the same. Notice is hereby given that Landlord
shall not be liable for any labor, services, materials, supplies, skill,
machinery, fixtures or equipment furnished or to be furnished to Tenant upon
credit, and that no mechanic's lien or other lien for any such labor, services,
materials, supplies, machinery, fixtures or equipment shall attach to or affect
the estate or interest of Landlord in and to the Premises, or any portion
thereof.
(c) Without Landlord's prior written consent, which shall be given or
withheld in Landlord's sole discretion, Tenant shall not create, permit or
suffer, and, subject to the provisions of paragraph 20(a) hereof, shall promptly
discharge and satisfy of record, any other lien, encumbrance, charge, security
interest, or other right or interest which, as a result of Tenant's action or
inaction contrary to the provisions hereof, shall be or become a lien,
encumbrance, charge or security interest upon the Premises, or any portion
thereof, or the income therefrom, other than Permitted Encumbrances.
21. END OF TERM: (a) Upon the expiration or earlier termination of the
------------
Term of this Lease, Tenant shall surrender the Premises to Landlord in the same
condition and suitable for the same use in which the Premises was originally
received from Landlord except as repaired, rebuilt or altered as required or
permitted by this Lease, and shall surrender all keys to the Premises to
Landlord at the place then fixed for notices to Landlord and shall inform
Landlord
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of all combinations on locks, safes and vaults, if any. Except as otherwise
provided herein, Tenant shall at such time remove all of its property (including
Tenant's Trade Fixtures) therefrom, if so requested by Landlord. Tenant shall
repair any damage to the Premises caused by such removal, and any and all such
property not so removed when required shall, at Landlord's option, become the
exclusive property of Landlord or be disposed of by Landlord, at Tenant's cost
and expense, without further notice to or demand upon Tenant. Notwithstanding
the foregoing, Tenant shall have no obligation to surrender any of Tenant's
Trade Fixtures.
(b) If the Premises are not surrendered as above set forth, Tenant shall
pay to Landlord a sum equal to 110% of the Fixed Rent herein provided during
each month or portion thereof for which Tenant shall remain in possession of the
Premises or any part thereof after the termination of the Term or of Tenant's
rights of possession, whether by lapse of time or otherwise. The provisions of
this paragraph 21(b) shall not be deemed to limit or constitute a waiver of any
other rights or remedies of Landlord provided herein, at law or at equity.
(c) All property of Tenant not removed on or before the last day of the
Term of this Lease shall be deemed abandoned. Tenant hereby appoints Landlord
its agent to remove all property of Tenant, including Tenant's Trade Fixtures,
from the Premises upon termination of this Lease and to cause its transportation
and storage for Tenant's benefit, all at the sole cost and risk of Tenant and
Landlord shall not be liable for damage, theft, misappropriation or loss thereof
and Landlord shall not be liable in any manner in respect thereto. Tenant shall
pay all costs and expenses, reasonable under the circumstances, of such removal,
transportation and storage. Tenant shall reimburse Landlord upon demand for any
expenses reasonably and actually incurred by Landlord with respect to removal or
storage of abandoned property and with respect to restoring said Premises to
good order, condition and repair.
(d) Except for surrender upon the expiration or earlier termination of the
Term hereof, no surrender to Landlord of this Lease or of the Premises shall be
valid or effective unless agreed to and accepted in writing by Landlord.
22. ALTERATIONS; CAPITAL IMPROVEMENT RESERVE:
----------------------------------------
(a) Tenant shall not make any alterations, additions or improvements in or
to the Premises or any part thereof, or attach any fixtures or equipment
thereto, without Landlord's prior written consent (which will not be
unreasonably withheld or delayed). Notwithstanding the preceding sentence,
Tenant may make such alterations, additions or improvements without Landlord's
consent only if (i) such alterations, additions or improvements will be in
compliance with all applicable laws, codes, rules, regulations and ordinances,
(ii) such alterations, additions or improvements will not reduce the fair market
value of the Premises, considered as unencumbered by this Lease, and (iii) such
alterations, additions or improvements will not
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adversely affect in any way the structural, exterior or roof elements of the
Premises or mechanical, electrical, plumbing, utility or life safety systems of
the Premises. Tenant shall give prior written notice to Landlord of any such
alterations, additions or improvements having an estimated project cost of more
than $25,000. In no event shall Tenant install underground storage tanks or fuel
systems on the Premises without Landlord's prior written consent, which shall
not be unreasonably withheld or delayed.
(b) All alterations, additions or improvements requiring Landlord's consent
shall be made at Tenant's sole cost and expense as follows:
(i) Tenant shall submit to Landlord, for Landlord's written
approval, complete plans and specifications for all work to be done by Tenant.
Such plans and specifications shall be prepared by the licensed architect(s) and
engineer(s), shall comply with all applicable codes, ordinances, rules and
regulations, shall not adversely affect the structural elements of the Premises,
shall be in a form sufficient to secure the approval of all government
authorities with jurisdiction over the Premises, and shall be otherwise
satisfactory to Landlord in Landlord's reasonable discretion.
(ii) Landlord shall notify Tenant in writing within thirty (30) days
whether Landlord approves, approves on condition that Tenant reverse the
alteration at Tenant's expense at the termination or expiration of this Lease,
or disapproves such plans and specifications; Landlord shall describe the
reasons for any such disapproval which reasons must be based on either
noncompliance with law or insurance policies or on reduction of the value or
utility of the Premises. If Landlord does not respond within such 30 day period,
Tenant may send a second notice, prominently marked "Second Notice--Failure to
Respond Will Result in Deemed Approval", and if Landlord fails to respond within
ten (10) business days, the proposed plans and specifications shall be deemed
approved. Tenant may submit to Landlord revised plans and specifications for
Landlord's prior written approval, which approval shall not be withheld or
delayed if (a) the work to be done would not adversely affect the value,
character, rentability or usefulness of the Premises or any part thereof, or (b)
the work to be done shall be required by any Law (hereinafter defined). Tenant
shall pay all costs, including the fees and expenses of the licensed
architect(s) and engineer(s), in preparing such plans and specifications.
(iii) All material changes in the plans and specifications approved by
Landlord shall be subject to Landlord's prior written approval on the same terms
and conditions as set forth above. If Tenant wishes to make such change in
approved plans and specifications, Tenant shall have such architect(s) and
engineer(s) prepare plans and specifications for such change and submit them to
Landlord for Landlord's written approval. Landlord shall notify Tenant in
writing promptly whether Landlord approves, approves on condition that Tenant
reverse the alteration at Tenant's expense at the termination or expiration of
this Lease, or disapproves such change and,
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if Landlord disapproves such change, Landlord shall describe the reasons for
disapproval. Tenant may submit to Landlord revised plans and specifications for
such change for Landlord's written approval. After Landlord's written approval
of such change, such change shall become part of the plans and specifications
approved by Landlord.
(iv) Tenant shall obtain and comply with all building permits and
other government permits and approvals required in connection with the work.
Tenant shall, through Tenant's licensed contractor, perform the work
substantially in accordance with the plans and specifications approved in
writing by Landlord or deemed approved by Landlord. Tenant shall pay, as
Additional Rent, the entire cost of all work (including the cost of all
utilities, permits, fees, taxes, and property and liability insurance premiums
in connection therewith) actually performed or obtained. Under no circumstances
shall Landlord be liable to Tenant for any damage, loss, cost or expenses
incurred by Tenant on account of any plans and specifications, contractors or
subcontractors, design of any work, construction of any work, or delay in
completion of any work.
(c) Tenant shall give written notice to Landlord of the date on which
construction of any work to be done by outside contractors will be commenced at
least ten (10) days prior to such date. Landlord shall have the right to post
and keep posted on the Premises any notices that may be provided by law or which
Landlord may deem to be proper for the protection of Landlord and the Premises
from such liens, and to take any other action Landlord deems necessary to remove
or discharge liens or encumbrances at the expense of Tenant.
(d) All alterations, additions, fixtures and improvements, whether
temporary or permanent in character, made in or to the Premises by Tenant, shall
become part of the Premises and Landlord's property. Upon termination of this
Lease, Tenant shall, at Tenant's expense, remove all movable furniture,
equipment, trade fixtures, office machines and other personal property from the
Premises and repair all damages caused by such removal. Termination of this
Lease shall not affect the obligations of Tenant pursuant to this paragraph
22(d) to be performed after such termination.
(e) Landlord has established with Nomura Asset Capital Corporation a
$400,000 capital improvement account, which may be drawn on only by the joint
signature of Landlord and Tenant. The capital improvement account is to be used
for the sole purpose of making capital improvements to the Premises, as opposed
to funding maintenance and operating costs. Either Landlord or Tenant may
propose a capital improvement, and if the other agrees with the proposal, the
improvement will be paid for out of the capital improvement account.
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23. MEMORANDUM OF LEASE: The parties agree to promptly execute a
--------------------
Memorandum of Lease in recordable form and either of the parties shall have the
right, without notice to the other party, to record such Memorandum of Lease.
24. SUBLETTING/ASSIGNMENT:
----------------------
(a) Tenant shall not assign, sublease, pledge mortgage or otherwise
transfer or encumber this Lease without the prior written consent of Landlord
and Mortgagee, which may be withheld in the sole discretion of Landlord or
Mortgagee. Tenant shall not transfer any license, permit or approval necessary
for the operation of a nursing home on the Premises without the prior written
consent of Landlord and Mortgagee, which may be withheld in the sole discretion
of Landlord or Mortgagee.
(b) No assignment or sublease whatsoever shall release Tenant from Tenant's
obligations and liabilities under this Lease (which shall continue as the
obligations of a principal and not of a guarantor or surety) or alter the
primary liability of Tenant to pay all Rent and to perform all obligations to be
paid and performed by Tenant. The acceptance of Rent by Landlord from any other
person or entity shall not be deemed to be a waiver by Landlord of any provision
of this Lease. If any assignee, subtenant or successor of Tenant defaults in the
performance of any obligation to be performed by Tenant under this Lease,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against such assignee, subtenant or successor. Landlord may consent to
amendments or modifications to this Lease with assignees, subtenants or
successor of Tenant, without notifying Tenant or any successor of Tenant and
without obtaining any consent thereto from Tenant or any successor of Tenant,
and such action shall not release Tenant from liability under this Lease.
(d) Tenant shall not mortgage its interest under this Lease. The
foregoing prohibition shall not be violated by a lien on all assets of Tenant
granted to institutional lenders as security for a bank loan or line of credit.
25. HAZARDOUS MATERIAL:
-------------------
(a) Tenant (i) shall comply, and cause the Premises to comply, with all
Environmental Laws (as hereinafter defined) applicable to the Premises
(including the making of all submissions to governmental authorities required by
Environmental Laws and the carrying out of any remediation program specified by
such authority), (ii) shall prohibit the use of the Premises for the generation,
manufacture, refinement, production, or processing of any Hazardous Material (as
hereinafter defined) or for the storage, handling, transfer or transportation of
any Hazardous Material (other than in connection with the operation, business
and maintenance of the Premises and in commercially reasonable quantities as a
consumer thereof and supplier of consumer
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products and in compliance with Environmental Laws), (iii) shall not permit to
remain, install or permit the installation on the Premises of any surface
impoundments, underground storage tanks, or asbestos-containing materials except
in compliance with Environmental Laws, and (iv) shall cause any alterations of
the Premises to be done in a way so as to not expose, in violation of any
applicable law, the persons working on or visiting the Premises to Hazardous
Materials and in connection with any such alterations shall remove any Hazardous
Materials present upon the Premises which are not in compliance with
Environmental Laws or which present a danger to persons working on or visiting
the Premises in violation of any applicable law.
(b) "Environmental Laws" means the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. (S)(S)6901, et seq. (RCRA), the Comprehensive
-- ---
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. (S)(S)9601
et seq. (CERCLA), the Toxic Substance Control Act, as amended, 15 U.S.C.
- -- ---
(S)(S)2601 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, as
-- ---
amended, 7 U.S.C. (S)(S)136 et seq., and all applicable federal, state and local
-- ---
environmental laws, ordinances, rules and regulations, as any of the foregoing
may have been or may be from time to time amended, supplemented or supplanted,
and any other federal, state or local laws, ordinances, rules and regulations,
now or hereafter existing relating to regulations or control of Hazardous
Material or materials. The term "Hazardous Materials" as used in this Lease
shall mean substances defined as "hazardous substances", "hazardous materials",
"hazardous wastes" or "toxic substances" in any applicable federal, state or
local statute, rule, regulation or determination, including but not limited to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. (S)(S)9601, et seq.; the Hazardous Materials
-- ---
Transportation Act, 49 U.S.C. (S)(S)1801, et seq.; the Resource, Conservation
-- ---
and Recovery Act of 1976, 42 U.S.C. (S)(S)6901, et seq.; and, asbestos, pcb's,
-- ---
radioactive substances, methane, volatile hydrocarbons, petroleum or petroleum-
derived substances or wastes, radon, industrial solvents or any other material
as may be specified in applicable law or regulations.
(c) Except to the extent of liability resulting from or arising out of the
gross negligence or willful act of Landlord or its Mortgagee or their agents or
their successors and assigns on or about the Premises, Tenant agrees to protect,
defend, indemnify and hold harmless Landlord and its Mortgagee, their respective
directors, officers, employees and agents, and any successors to Landlord's
interest in the chain of title to the Premises, their direct or indirect
partners, directors, officers, employees, and agents, from and against any and
all liability, including all foreseeable and all unforeseeable damages including
but not limited to reasonable attorney's and consultant's fees, fines, penalties
and civil or criminal damages, directly or indirectly arising out of the use,
generation, storage, treatment, release, threatened release, discharge, spill,
presence or disposal of Hazardous Materials from, on, at, to or under the
Premises prior to or during the Term of this Lease, and including, without
limitation, the cost of any required or necessary repair, response action,
remediation, investigation, cleanup or detoxification and the preparation of any
closure or
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other required plans, whether such action is required or necessary prior to or
following transfer of title to the Premises. This agreement to indemnify and
hold harmless shall be in addition to any other obligations or liabilities
Tenant may have to Landlord at common law under all statutes and ordinances or
otherwise, and shall survive following the date of expiration or earlier
termination of this Lease, except where the event giving rise to the liability
for which indemnity is sought arises out of Tenant's acts, in which case the
agreement to indemnify shall survive the expiration or termination of this Lease
without limit of time. Tenant expressly agrees that the representations,
warranties and covenants made and the indemnities stated in this Lease are not
personal to Landlord, and the benefits under this Lease may be assigned to
subsequent parties in interest to the chain of title to the Premises, which
subsequent parties in interest may proceed directly against Tenant to recover
pursuant to this Lease. Tenant, at its expense, may institute appropriate legal
proceedings with respect to environmental matters of the type specified in this
paragraph 25(c) or any lien for such environmental matters, not involving
Landlord or its Mortgagee as a defendant (unless Landlord or its mortgagee is
the alleged cause of the damage), conducted in good faith and with due
diligence, provided that such proceedings shall not in any way impair the
interests of Landlord or Mortgagee under this Lease. Counsel to Tenant in such
proceedings shall be reasonably approved by Landlord if Landlord is a defendant
in the same proceeding. Landlord shall have the right to appoint co-counsel,
which co-counsel will cooperate with Tenant's counsel in such proceedings. The
fees and expenses of such co-counsel shall be paid by Landlord, unless such co-
counsel are appointed because the interests of Landlord and Tenant in such
proceedings, in such counsel's opinion, are or have become adverse, or Tenant or
Tenant's counsel is not conducting such proceedings in good faith or with due
diligence.
(d) Tenant, upon 48 hours prior notice shall permit such persons as
Landlord or any assignee of Landlord may designate and (unless an Event of
Default has occurred and is continuing) approved by Tenant, which approval shall
not be unreasonably withheld or delayed ("Site Reviewers") to visit the Premises
from time to time and perform Environmental site investigations and assessments
("Site Assessments") on the Premises for the purpose of determining whether
there exists on the Premises any environmental condition which may result in any
liability, cost or expense to Landlord or any other owner or occupier of the
Premises relating to Hazardous Material. Such Site Assessments may include both
above and below the ground testing for environmental damage or the presence of
Hazardous Material on the Premises and such other tests on the Premises as may
be necessary to conduct the Site Assessments in the reasonable opinion of the
Site Reviewers. Tenant shall supply to the Site Reviewers such historical and
operational information regarding the Premises as may be reasonably requested by
the Site Reviewers to facilitate the Site Assessments (other than information
previously supplied in writing to Landlord by Tenant) and shall make available
for meetings with the Site Reviewers appropriate personnel having knowledge of
such matters. The cost of performing and reporting all Site Assessments shall
be paid by Landlord unless an Event of Default has occurred and is continuing or
unless the Site Reviewers discover an environmental condition causing the
Premises
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to be in noncompliance with applicable Environmental Laws, in either of which
events such cost will be paid by Tenant within thirty (30) days after demand by
Landlord with interest to accrue at the Overdue Rate. Landlord, promptly after
written request by Tenant and payment by Tenant to the extent required as
aforesaid, shall deliver to Tenant copies of reports, summaries or other
compilations of the results of such Site Assessments. Tenant's sole remedy for
Landlord's breach of the preceding sentence shall be a mandatory injunction, and
not a termination of this Lease or a withholding or reduction of Rent. If a Site
Assessment conducted under this paragraph 25(d) indicates that the Premises are
in violation of Environmental Laws or otherwise do not conform to the
requirements of this paragraph 25 at the time the Term is expiring or being
terminated, the term shall be automatically extended for the period of
remediation of such violation or nonconformity and shall not expire until twelve
months after notice from Tenant specifying the date such remediation shall be
completed, and the remediation is in fact completed before the expiration of
such twelve month period. All of the terms, covenants and conditions of this
Lease shall continue in full force and effect during the period of any such
extension, except that the annual Fixed Rent shall be at the holdover rate
specified in paragraph 29(k). Upon completion of such remediation within the
notice period provided above, this Lease and the obligations of Tenant hereunder
(except those that accrued prior to such date) shall terminate.
(e) Tenant shall notify Landlord in writing, promptly upon Tenant's
learning thereof, of any:
(i) notice or claim to the effect that Tenant is or may be liable to any
Person as a result of the release or threatened release of any Hazardous
Material into the environment from the Premises;
(ii) notice that Tenant is subject to investigation by any governmental
authority evaluating whether any remedial action is needed to respond to the
release or threatened release of any Hazardous Material into the environment
from the Premises; and
(iii) notice that the Premises are subject to an environmental lien.
26. DETERMINATION OF FAIR MARKET RENTAL VALUE:
------------------------------------------
Fair market rental value for purposes of setting Renewal Term Fixed Rent
shall be determined by an appraisal, which shall be performed by an appraiser
selected by Landlord within thirty (30) days after the first day of the ninth
month before the end of the Term or the Renewal Term (as the case may be), and
paid one half by Tenant and one half by Landlord. Any appraiser selected by
Landlord shall have qualifications that include a minimum of five (5) years of
experience in the appraisal of commercial real estate in the County where the
Premises are located. Such appraiser shall be disinterested, and shall be a
member of a nationally recognized
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appraisal association. Further, any such appraiser shall comply with the
licensing law then in effect for appraisers authorized to perform general
appraisals within the sate where the Premises are located. If there are then any
existing United States laws governing appraisers, said appraiser shall be in
compliance with the then applicable Federal laws for appraisers performing
appraisals of commercial real estate. In the event that Tenant disputes the
appraised fair market rental value determined by an appraiser (hereinafter the
"First Appraiser"), who performed an appraisal pursuant to this paragraph 26, it
shall so notify Landlord within twenty (20) days after receipt of such written
determination by the First Appraiser, and the disagreement shall be resolved as
follows:
(i) Within five (5) days after the service of such notice by
Tenant to Landlord, Tenant shall designate a second appraiser (the "Second
Appraiser"), who shall appraise the fair market rental value of the
Premises, assuming the provisions of this Lease (except the Fixed Rent
provision) would govern for a five (5) year term, all in accordance with
the requirements of this paragraph 26. This Second Appraiser shall render
its opinion of the fair market rental value no later than thirty (30) days
after the service of notice by Tenant stated above. In the event that the
higher of the two appraised fair market rental values rendered herein is
not more than ten percent (10%) greater than the lower of the two appraised
fair market rental values, then the mean between the two appraised values
shall be utilized to fix the appraised fair market rental value.
(ii) In the event that the higher of the two appraised fair
rental values is more than ten percent (10%) higher than the lower of the
two appraised fair market rental values, then the First Appraiser and the
Second Appraiser will meet within five (5) days after receipt and
acceptance of the Second Appraisal by Tenant, to attempt to agree upon the
appraised fair market rental value. If the First Appraiser and Second
Appraiser do not agree upon the appraised fair rental value after such
meeting, then they shall appoint a third appraiser (the "Third Appraiser").
(iii) If the First and Second Appraiser shall be unable to agree
upon the appointment of the Third Appraiser within five (5) days after the
time specified in subsection "(ii)" above, then the Third Appraiser shall
be selected by the Tenant and Landlord themselves. If the Tenant and
Landlord cannot agree on the third appraiser, within a further period of
five (5) days, then either, on behalf of both, may apply to the person who
is, at the time, the most senior in service, active Judge of the United
States District Court for the District of where the Premises are located,
for the selection of the Third Appraiser. If that Judge cannot or will not
make the appointment, then the application will be made to the next most
senior
-37-
<PAGE>
Judge, and so on down the line of seniority. The fees and costs of the
Second and Third Appraisers will be divided equally between Tenant and
Landlord. The cost of application to the Judge of the United States
District Court shall be divided equally between Tenant and Landlord.
In the event of the failure, refusal or inability of any appraiser to
act, a new appraiser shall be appointed in this stead, which
appointment shall be made in the same manner as provided herein; e.g.,
if the Second Appraiser must be replaced, then Tenant will have the
right to designate its replacement. In the event that a Third
Appraiser is selected in the manner aforesaid, it shall select one of
the first two appraisals as most nearly establishing fair market
rental value.
27. SINGLE PURPOSE ENTITY
---------------------
At all times, Tenant shall be a single purpose entity which will own no
other assets that the Premises, engage in no business other than the operation
of the Premises for their Primary Intended Use, and incur no debt except in the
ordinary course of such business.
28. CERTAIN COVENANTS AND REPRESENTATIONS
-------------------------------------
(a) Tenant To Equip Facility. Tenant, at its sole cost and expense, shall
------------------------
install, affix or assemble or place on the Premises, sufficient items of
personal property, to enable the operation of the Premises in accordance with
the requirements of this Lease for the Primary Intended Use, and such personal
property and replacements thereof provided by Tenant, shall be at all times the
property of Tenant.
(b) Sufficient Personal Property. Tenant shall, at its sole cost and
----------------------------
expense, maintain, during the entire Term, the personal property in good order
and repair and shall provide at its expense all necessary replacements thereof,
as may be necessary in order to operate the Premises in compliance with all
applicable legal requirements and insurance requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
In addition, Tenant shall, at its sole cost and expense, furnish all necessary
replacements of obsolete items of the personal property during the Term and
shall furnish Landlord at least once a year, and more frequently if requested by
Landlord, a detailed schedule of all such personal property.
(c) Removal and Replacement; Landlord's Option to Purchase. Tenant shall
------------------------------------------------------
not remove from the Premises any one or more items of personal property (whether
now owned or hereafter acquired), the fair market value of which exceeds Twenty
Five Thousand Dollars ($25,000.00), individually or One Hundred Thousand Dollars
($100,000.00), collectively, except if such personal property is simultaneously
suitably replaced or Tenant provides Landlord with
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<PAGE>
an explanation (reasonably satisfactory to Landlord) as to why such personal
property is no longer required in connection with the operation of the Premises.
At its sole cost and expense, Tenant shall restore the Premises to the condition
required by paragraph 8, including repair of all damage to the Premises caused
by the removal of the personal property, whether effected by Tenant or Landlord.
Upon the expiration or earlier termination of this Lease, Landlord shall have
the option, which may be exercised prior to or within sixty (60) days following
such expiration or termination, of (a) acquiring the personal property (pursuant
to a bill of sale and assignments of any equipment leases, all in such forms as
are reasonably satisfactory to Landlord in its sole discretion) upon payment of
its book value (Tenant's cost, minus depreciation), but not in excess of its
fair market value or (b) requiring Tenant to remove the personal property. If
Landlord exercises its option to purchase the personal property, the price to be
paid by Landlord shall be (i) reduced by the amount of all payments due on any
equipment leases and (ii) applied to any equipment lease obligations (whether or
not yet due) before any payment to Tenant. If Landlord requires the removal of
the personal property, then all of the personal property that is not removed by
Tenant within twenty (20) days following such request shall be considered
abandoned by Tenant and may be appropriated, sold, destroyed or otherwise
disposed of by Landlord without first giving notice thereof to Tenant, without
any payment to Tenant and without any obligation to account therefor.
(d) Obligation to Operate. Tenant shall continuously operate the Premises
---------------------
in accordance with the Primary Intended Use and maintain its qualifications for
licensure and accreditation as required by all applicable Legal Requirements and
Insurance Requirements.
(e) No Action By Governmental Authority or Accreditation Body. On the
---------------------------------------------------------
Commencement Date, the following conditions must be satisfied in the reasonable
judgment of Landlord and Tenant, and the parties agree to execute a statement
acknowledging the satisfaction of such conditions:
(i) there is no action pending or, to the best knowledge and belief
of Tenant, recommended, by any governmental authority or accreditation body
either to revoke, repeal, cancel, modify, withdraw or suspend any permit or
contract or to take any other action of any other type which could have a
material adverse effect on the operation of the Premises;
(ii) the Commonwealth of Massachusetts currently imposes no
restrictions or limitations on rates which may be charged to private pay
patients receiving services at the Premises;
(iii) there are no contracts, permits or legal requirements which
require that a percentage of beds or slots in any program at the Premises be
reserved for Medicaid or Medicare
-39-
<PAGE>
eligible patients or that the Premises provide a certain amount of welfare, free
or charity care or discounted or government assisted patient care.
(iv) Tenant or the Premises is fully qualified as a provider of
services under and participates in all third party payor programs and referral
programs as is necessary for the prudent operation of the Premises in the good
faith exercise of commercially reasonable business judgment.
(f) Transfer of Permits and Contracts. In connection with the expiration
---------------------------------
or any earlier termination of this Lease (unless the Lessee has concurrently
purchased the Premises in accordance with the terms hereof), upon any request
made from time to time by Tenant shall (a) promptly and diligently use its best
efforts to (i) transfer and assign all permits and contracts necessary or
desirable for the operation of the Premises in accordance with its Primary
Intended Use to Landlord or its designee and/or (ii) arrange for the transfer or
assignment of such permits and contracts to the Landlord or its designee, all to
the extent the same may be transferred or assigned under applicable law and (b)
cooperate in every respect (and to the fullest extent possible) and assist the
Landlord or its designee in obtaining such permits and contracts (whether by
transfer, assignment or otherwise). Such efforts and cooperation on the part of
the Tenant shall include, without limitation, the execution, delivery and filing
with appropriate governmental authorities, accreditation bodies and third party
payors of any applications, petitions, statements, notices, requests,
assignments and other documents or instruments requested by the Landlord.
Furthermore, Tenant shall not take any action or refrain from taking any action
which would defer, delay or jeopardize the process of Landlord or its designee
obtaining said permits and contracts (whether by transfer, assignment,
allocation to another facility or otherwise). Without limiting the foregoing,
Tenant shall not seek or transfer or relocate any of said permits or contracts
to any location other than the Premises. The provisions of this paragraph shall
survive the expiration or earlier termination of this Lease.
Tenant hereby appoints Landlord as its attorney-in-fact, with full power of
substitution to take such actions, in the event that the Tenant fails to comply
with any request made by Landlord hereunder, as Landlord (in its sole absolute
discretion) may deem necessary or desirable to effectuate the intent of this
paragraph. The power of attorney conferred on the Landlord by the provisions of
this paragraph, being coupled with an interest, shall be irrevocable and shall
not be affected by any disability or incapacity which Tenant may suffer and
shall survive the same. Such power of attorney is provided solely to protect
the interests of Landlord and shall not impose any duty on Landlord to exercise
any such power and neither Landlord nor such attorney-in-fact shall be liable
for any act, omission, error in judgment or mistake of law, except as the same
may result from its gross negligence or willful misconduct.
-40-
<PAGE>
29. LANDLORD'S AND MORTGAGEE'S RIGHT OF TERMINATION:
------------------------------------------------
(a) Tenant covenants and agrees to notify Landlord promptly upon the
cessation of both Reginald Strickland's and William Filippone's being engaged as
part of the management of Tenant with responsibility for the operation of the
Premises. In the event both Reginald Strickland and William Filippone cease to
be part of Tenant's management with responsibility for the operation of the
Premises, Landlord shall have the right, exercisable by ten (10) days written
notice to Tenant, to terminate this Lease. If Landlord wishes to terminate this
Lease, Tenant shall cooperate with Landlord in obtaining an assignment of all
licenses and permits necessary or desirable for the operation of the Premises,
including appearing before state agencies and executing any documents reasonably
necessary to effect the transfer of licenses and permits. Upon such termination,
any unearned rent shall be refunded to Tenant. If Tenant has not become fully
licensed to operate nursing homes in the Premises by January 31, 1998, Landlord
shall thereafter have the right, exercisable by ten (10) days notice to Tenant,
to terminate this Lease.
(b) If in any month Landlord accepts less than the Fixed Rent required
hereunder without terminating this Lease, and such lesser amount is less than
140% of the required debt service on the First Mortgage, the Mortgagee may
terminate this Lease by notice given to both Landlord and Tenant.
30. PLEDGE OF COLLATERAL AS SECURITY FOR PERFORMANCE
------------------------------------------------
Tenant hereby assigns and pledges to Landlord and its assigns, as security
for the performance and payment by Tenant of its obligations under this Lease,
all right, title, and interest of Tenant in and to:
(a) All Inventory, fixtures relating to the Premises, Equipment, Permits,
Licenses, General Intangibles, Instruments, Accounts, Account Collateral,
Leases, Money, investment properties relating to the Premises, rights to
proceeds of letters of credit relating to the Premises and goods relating to the
Premises, now existing or hereafter arising or acquired;
(b) All present and future contract rights relating to the Premises, lease
rights relating to the Premises and Rents, not otherwise included as collateral
under the foregoing clause (a);
(c) All other property relating to or necessary to operate the Premises;
(d) To the extent related to the property described in clauses (a) through
(c) above, all books, correspondence, credit files, records, invoices, bills of
lading and other documents including, without limitation, to the extent so
related, all tapes, cards, computer runs, computer programs and other papers and
documents in the possession or control of Tenant or any computer
-41-
<PAGE>
bureau from time to time acting for Tenant and, to the extent so related, all
rights in, to and under all policies of insurance, including claims or rights to
payments thereunder and proceeds therefrom, including credit insurance;
(e) any other property relating to the Premises in which Landlord may
create or perfect a security interest; and
(f) All proceeds and products of any of the foregoing.
31. MISCELLANEOUS PROVISIONS
------------------------
(a) This Lease and all of the covenants and provisions hereof shall inure
to the benefit of, and be binding upon, the parties hereto and the heirs,
personal representatives, successors and permitted assigns of the parties.
(b) The titles and headings appearing in this Lease are for reference only
and shall not be considered a part of this lease or in any way to modify, amend
or affect the provisions thereof.
(c) This Lease contains the complete agreement of the parties with
reference to the leasing of the Premises, and may not be amended except by an
instrument in writing signed by Landlord and Tenant and consented by Mortgagee
(if any).
(d) Any provision or provisions of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof, and the remaining provisions hereof shall nevertheless remain
in full force and effect.
(e) This Lease may be executed in one or more counterparts, each of which
shall be an original, and all of which shall constitute one and same instrument.
(f) The term "Landlord" as used in this Lease shall mean only the owner or
owners at the time in question of the Premises and in the event of any transfer
of such title or interest, Landlord named in this Lease (and in case of any
subsequent transfers, then the grantor) shall be relieved from and after the
date of such transfer of all liability as respects Landlord's obligations
thereafter to be performed hereunder, provided that any funds in the hands of
Landlord or the then grantor at the time of such transfer, in which Tenant has
an interest, shall be delivered to the grantee. The obligations contained in
this Lease to be performed by Landlord shall, subject as aforesaid, be binding
on Landlord's successors and assigns, only during their respective periods of
ownership.
-42-
<PAGE>
(g) This Lease shall be governed by and construed and enforced in
accordance with and subject to the laws of the state where the Premises are
located.
(h) Any claim based on or in respect of any liability of Landlord under
this Lease shall be enforced only against the Premises and not against any other
assets, properties or funds of (1) Landlord or any director, officer,
shareholder, general partner, limited partner, or direct or indirect partners,
employee or agent of Landlord or its general partners (or any legal
representative, heir, estate, successor or assign of any thereof), (2) any
predecessor or successor partnership or corporation (or other entity) of
Landlord or its general partners, either directly or through Landlord or its
predecessor or successor partnership or corporation (or other Person) of
Landlord or its general partners, and (3) any other person.
(i) Without the written approval of Landlord and Tenant, no Person other
than Landlord (including its direct and indirect partners), Mortgagee, Tenant
and their respective successors and assigns shall have any rights under this
Lease.
(j) There shall be no merger of the leasehold estate created hereby by
reason of the fact that the same Person may own directly or indirectly, (1) the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (2) the fee estate in the Premises. Notwithstanding any such combined
ownership, this Lease shall continue in full force and effect until terminated
by an instrument executed by both Landlord and Tenant.
(k) If, without objection by Landlord, Tenant holds possession of the
Premises after expiration of the Term of this Lease, Tenant shall become a
tenant from month to month upon the terms herein specified but at a Fixed Rent
equal to one hundred fifty percent (150%) of the Fixed Rent in effect at the
expiration of the Term of this Lease pursuant to paragraph 4 payable in advance
on or before the first day of each month. Such month to month tenancy may be
terminated by either Landlord or Tenant by giving thirty (30) days' written
notice of termination to the other at any time, except as otherwise provided in
paragraph 25(d).
(l) It shall be a condition precedent to the merger, consolidation or sale
of substantially all the assets of Tenant in any transaction in which Tenant is
not the surviving party, that the entity or entities into which Tenant is either
merged or consolidated or to which its assets are sold shall (x) upon completion
of such transaction, shall have a net worth and fixed cost coverage ratio equal
to or greater than those of Tenant immediately before such transaction, and (y)
deliver to Landlord a duly authorized assumption of all liabilities of Tenant
under this Lease.
-43-
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands under seal on
the day and year first above written.
G&L Hampden, LLC, Landlord
By: G&L Hampden, Inc., Manager
By: /s/ Mark Hamermesh
______________________________
Name: Mark Hamermesh
Title: Senior Vice President
Hampden Holding Group, Inc.
Tenant
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT A
Legal Description - Real Estate
-------------------------------
-45-
<PAGE>
EXHIBIT B
Description of Personal Property and Fixtures
---------------------------------------------
-46-
<PAGE>
EXHIBIT C
PERMITTED ENCUMBRANCES
----------------------
-47-
<PAGE>
EXHIBIT 10.55
LOAN COMMITMENT
LOAN COMMITMENT dated October 23, 1997 by G&L Realty Partnership, L.P.
("G&L") in favor of Iatros Health Network, Inc. ("Iatros").
An affiliate of G&L is purchasing certain real estate assets associated
with nursing homes located at 34 Main Street, Hampden, Massachusetts, 42
Prospect Avenue, West Springfield, Massachusetts and 32 Chestnut Street, East
Longmeadow, Massachusetts and an affiliate of Iatros is to manage such nursing
homes. In connection with the transfer of ownership of such real estate, Iatros
is assuming certain obligations and liabilities of the prior owner. There is a
potential for Medicare and Medicaid charge-backs that would reduce the revenues
of such nursing homes, potentially below the amount necessary to pay their
current obligations. For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, G&L and Iatros hereby agree as
follows:
1. If, prior to September 30, 1998, there is a Medicaid or Medicare
charge back relating to any of the three facilities referred to above and the
revenues of such facilities are thereby rendered insufficient to meet the
current obligations of such facilities, including rent payable to an affiliate
of G&L and amounts due under the loan by HCFP Funding, Inc. (after application
of existing reserves of approximately $385,000 held by HCFP Funding, Inc.), then
G&L will lend up to an aggregate of $500,000 for the sole purpose of
compensating for such Medicare or Medicaid charge-backs, to the extent necessary
after application of all of the funds, including Iatros' management fee, to such
obligations.
2. Iatros agrees to use all other funds generated by said three
facilities to pay the current obligations of the facilities before drawing on
the foregoing loan commitment. Having exhausted such other funds and the
reserve held by HCFP Funding, Inc., Iatros agrees to borrow from G&L amounts up
to $500,000 necessary to compensate for such Medicare or Medicaid charge back
and necessary to pay current obligations.
3. The financial terms of the loan from G&L to Iatros shall be interest
only at 14% per annum, payable monthly in arrears with a maturity of two years.
Such loan will be prepayable at any time without premium or penalty.
1
<PAGE>
4. This Agreement may be executed by each party on separate counterparts,
which together shall constitute a single instrument. This Agreement shall inure
to the benefit of, and be enforceable by, the successor and assigns of the
parties hereto by merger, consolidation or sal of substantially all assets. This
Agreement shall be governed by the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above set forth.
G&L REALTY PARTNERSHIP, L.P.
By: G&L Realty Corp.
By: /s/ Mark H. Hamermesh
_________________________
Mark H. Hamermesh,
Senior Vice President
IATROS HEALTH NETWORK, INC.
By:________________________________
Executive Vice President
2
<PAGE>
EXHIBIT 10.56
LEASE AND AGREEMENT
Between
G&L Hampden, LLC,
as Lessor
And
Hampden Nursing Homes, Inc.
as Lessee
Dated as of October 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Paragraph Page
- ------------ ----
<S> <C>
1. Lease and Premises; Title and Condition........................ 1
2. Use; Quiet Enjoyment........................................... 1
3. Terms.......................................................... 1
4. Rent........................................................... 1
5. Non-Terminability.............................................. 2
6. Taxes and Assessments; Compliance with Law..................... 3
7. Liens.......................................................... 3
8. Intentionally Omitted.......................................... 3
9. Maintenance and Repair......................................... 3
10. Alterations.................................................... 4
11. Condemnation and Casualty...................................... 4
12. Insurance...................................................... 5
13. Environmental Matters.......................................... 5
14. Operation of Nursing Home...................................... 7
Lessee to Equip Facility....................................... 7
Sufficient Personal Property................................... 7
No Removal of Personalty....................................... 7
Management Agreement........................................... 7
15. Transfer of Permits and Contracts.............................. 7
16. Assignment and Subletting...................................... 8
17. Permitted Contests............................................. 8
</TABLE>
<PAGE>
<TABLE>
ii
<S> <C>
18. Conditional Limitations; Default Provision.................... 8
19. Status of Parties............................................. 10
20. Notices, Demands and Other Instruments........................ 10
21. Estoppel Certificates......................................... 10
22. No Merger..................................................... 10
Surrender............................................................... 10
24. Merger, Consolidation or Sale of Assets....................... 11
25. Separability; Binding Effect; Non-Recourse.................... 11
26. Schedules..................................................... 11
Non-Recourse............................................................ 11
</TABLE>
<PAGE>
iii
Schedule A - Description of Premises; Liens and Encumbrances
Schedule B - Terms and Fixed Rent Payments
Schedule C - Purchase Prices
Location of Definitions:
- -----------------------
Event of Default - paragraph 18(a)
Fixed Rent - paragraph 4 & Schedule B
Improvements - paragraph 1
Mortgagee - paragraph 12
Net Proceeds - paragraph 11(a)
Payment Dates - paragraph 4 & Schedule B
Premises - paragraph 1
Primary Term - paragraph 3 & Schedule B
Termination Date - paragraph 11(b)
<PAGE>
LEASE AND AGREEMENT, dated as of October 1, 1997 (this Lease), between G&L
Hampden, LLC, a Delaware limited liability company (Lessor), having an address
at 439 North Bedford Drive, Beverly Hills, California 90210, and Hampden Nursing
Homes, Inc., a Massachusetts corporation (herein, together with any corporation
succeeding thereto by consolidation, merger or acquisition of its assets
substantially as an entirety, called Lessee), having an address at 161 Worcester
Road, Framingham, Massachusetts 01701.
1. Lease and Premises; Title and Condition. In consideration of the
---------------------------------------
rents and covenants herein stipulated to be paid and performed by Lessee and
upon the terms and conditions herein specified, Lessor hereby leases to Lessee,
and Lessee hereby leases from Lessor, the premises (the Premises) consisting of
the land described in Schedule A, all buildings and other improvements now or
hereafter located thereon (the Improvements), and all easements, rights and
appurtenances relating thereto. The Premises are leased to Lessee in their
present condition without representation or warranty by Lessor and subject to
the rights of parties in possession, to the existing state of title, and to all
applicable legal requirements now or hereafter in effect. Lessee has examined
the Premises and title thereto and has found the same satisfactory. The Premises
will be managed on behalf of Lessee by Hampden Holding Group, Inc.
2. Use; Quiet Enjoyment. Lessee may use the Premises for nursing home
--------------------
purposes in accordance with valid, applicable permits held by Lessee and all
applicable laws, ordinances and regulations. So long as no default has occurred
and is continuing hereunder, Lessor warrants peaceful and quiet enjoyment of the
Premises by Lessee against acts of Lessor or anyone claiming through Lessor;
provided that Lessor and its agents may enter upon and examine the Premises at
reasonable times.
3. Terms. The Premises are leased for a primary term (the Primary Term),
-----
unless and until the term of this Lease shall expire or be terminated pursuant
to any provision hereof. The Primary Term shall commence and expire on the
dates set forth in Schedule B, and is subject to extension for up to three
renewal terms as set forth in Schedule B. Lessor shall have the option of
terminating this Lease upon five (5) business days notice to Lessee, but only if
an entity acceptable to Lessor shall have obtained all regulatory approvals
necessary to operate the Premises.
4. Rent.
----
(a) Lessee covenants and agrees to pay to Lessor at its address set forth
above or such other place as may be designated in writing by Lessor, monthly
rent (the "Fixed Rent") in the amount specified on Exhibit B hereto. Lessee
shall pay all Fixed Rent to Landlord, in arrears, on or before the first day of
each and every calendar month during the Term (commencing November 1, 1997) of
this Lease without notice, by wire transfer or other electronic means (or
otherwise so there are collected funds available to Landlord on the due date).
Lessor and Lessee acknowledge that so long as the Loan (as defined in the Loan
Agreement referred to below) is outstanding, all Gross Revenues, as defined in
the Loan Agreement between Lessor and Nomura Asset Capital
<PAGE>
Corporation ("Nomura") dated October __, 1997, shall be assigned and paid
directly to Nomura's agent bank. Lessor and Lessee acknowledge that such Gross
Revenues may in part be paid by transfer of funds by Healthpartners Funding,
L.P. or its successors as receivables lender to a Cash Collateral Account
maintained on behalf of Nomura. To the extent the amount from time to time paid
shall exceed the Rent then due and reserves required by this Lease, Lessor
agrees, subject to the terms of the Loan Agreement, to instruct Nomura and its
agent bank to promptly remit such excess, at the express irrevocable instruction
of and on behalf of Lessee, to Hampden Holding Group, Inc. Lessee agrees not to
increase the maximum amount of accounts receivable borrowing presently
authorized under its agreement with Receivables Lender and further agree not to
enter into any other accounts receivable financing without the prior written
consent of Nomura, which consent may be withheld in Nomura's sole discretion.
Lessee shall be required to maintain reserves in an amount and for such purposes
and times as are required of Lessor under the Loan, such amounts to be held as
provided in this paragraph 4(a).
(b) All amounts which Lessee is required to pay pursuant to this Lease
(other than Fixed Rent, amounts payable upon purchase of the Premises and
amounts payable as liquidated damages pursuant to Paragraph 18), together with
every fine, penalty, interest, and cost which may be added for nonpayment or
late payment thereof, shall constitute additional rent ("Additional Rent"). If
Lessee shall fail to pay any Additional Rent, Lessor shall have the right to pay
the same and shall have all rights, powers, and remedies with respect thereto as
are provided herein or by law in the case of nonpayment of Fixed Rent. Lessee
shall pay to Lessor interest at the rate of 12% per annum on all overdue Fixed
Rent from the due date thereof until paid, and on all overdue Additional Rent
paid by Lessor on behalf of Lessee from the date of payment by Lessor until
repaid by Lessee. Lessee shall perform all its obligations under this Lease at
its sole cost and expense, and shall pay all Fixed Rent and Additional Rent when
due, without notice or demand.
5. Non-Terminability.
-----------------
(a) This Lease shall not terminate, except as otherwise expressly provided
herein, nor shall Lessee be entitled to any abatement, reduction, set-off,
counterclaim, defense or deduction with respect to any Fixed Rent, Additional
Rent or other sum payable hereunder, nor shall the obligations of Lessee
hereunder be affected, by reason of: any damage to or destruction of the
Premises (subject to paragraph 11 hereof); any taking of the Premises or any
part thereof by condemnation or otherwise (subject to paragraph 11 hereof); any
prohibition, limitation, restriction or prevention of Lessee's use, occupancy or
enjoyment of the Premises, or any interference with such use, occupancy or
enjoyment by any Person; any eviction by paramount title or otherwise; any
default by Lessor hereunder or under any other agreement; any action of any
governmental authority; or any other cause whether similar or dissimilar to the
foregoing. The parties intend that the obligations of Lessee hereunder shall be
separate and independent covenants and agreements and shall continue unaffected
unless such obligations shall have been modified or terminated pursuant to an
express provision of this Lease.
2
<PAGE>
(b) Lessee shall remain obligated under this Lease in accordance with its
terms and shall not take any action to terminate, rescind or avoid this Lease,
notwithstanding any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting Lessor or any assignee of Lessor or
any action with respect to this Lease which may be taken by any trustee,
receiver or liquidator or by any court. Lessee waives all rights to terminate
or surrender this Lease, or to any abatement or deferment of Fixed Rent,
Additional Rent or other sums payable hereunder.
6. Taxes and Assessments; Compliance with Law.
------------------------------------------
(a) Lessee shall pay or cause to be paid: (i) all taxes, assessments,
levies, fees, water and sewer rents and charges, and all other governmental
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, which are, at any time prior to or during the term hereof, imposed
or levied upon or assessed against (A) the Premises, (B) any Fixed Rent,
Additional Rent or other sum payable hereunder or (C) this Lease or the
leasehold estate hereby created, or which arise in respect of the operation,
possession or use of the Premises; (ii) all gross receipts or similar taxes
imposed or levied upon, assessed against or measured by any Fixed Rent,
Additional Rent or other sum payable hereunder; (iii) all sales, use or similar
taxes at any time levied, assessed or payable on account of the acquisition,
leasing or use of the Premises; and (iv) all charges for utilities serving the
Premises. Lessee shall not be required to pay any franchise, estate,
inheritance, transfer, income or similar tax of Lessor (other than any tax
referred to in clause (ii) above) unless such tax is imposed, levied or assessed
in substitution for any other tax, assessment, charge or levy which Lessee is
required to pay pursuant to this paragraph 6(a). If any such assessment may
legally be paid in installments, Lessee may pay such assessment in
installments. Notwithstanding the foregoing, Lessor's sole remedy for breach of
this paragraph shall be to terminate this Lease and shall not be to collect
money from Lessee.
(b) Lessee shall comply with (i) all laws, rules, regulations or statutes
applicable to Lessee or the use of the Premises, and (ii) all contracts
(including without limitation insurance policies), agreements (including without
limitation management agreements) and restrictions applicable to the operation
of the Premises.
7. Liens. Lessee covenants that it shall not create any charge, lien,
-----
security interest or encumbrance upon the Premises or any Fixed Rent, Additional
Rent or other sum payable hereunder.
8. Intentionally Omitted.
----------------------
9. Maintenance and Repair. (a) Lessee will maintain the Premises or
----------------------
cause the Premises to be maintained in good repair and condition, except for
ordinary wear and tear, and will make all structural and non-structural,
foreseen and unforeseen and ordinary and extraordinary changes and repairs which
may be required in Lessor's sole judgment to keep the Premises in good repair
and condition. Lessor shall not be required to maintain, repair or rebuild the
Improvements or to maintain the Premises nor pay for the cost of any such
maintenance, repair or rebuilding, and
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<PAGE>
Lessee waives the right to make repairs at the expense of Lessor.
Notwithstanding the foregoing, Lessor's sole remedy for breach of this paragraph
shall be to terminate this Lease.
(b) Lessee shall permit Lessor and Lender, so long as the loan contemplated
by the Loan Agreement is outstanding, and the authorized representatives of each
to enter the Premises during normal business hours upon one day's advance notice
(except in emergency situations when Lessor and its agents may enter without
notice) for the purpose of inspecting the Premises. Lessor, and as long as such
loan is outstanding, Lender, may enter the Premises for the purposes of
performing work necessary to prevent waste, loss, damage or deterioration to or
in connection with the Premises and of performing any act which Lessee is
required to perform or cause to be performed under any provision of this Lease
and which Lessee has failed to perform.
10. Alterations. Subject to the terms of the Loan Agreement and the other
-----------
Loan Documents referred to therein, and subject to the prior written approval of
Lessee, which approval will not be unreasonably withheld, delayed or
conditioned, Lessor may, at its expense, make additions to and alterations of
the Improvements, construct additional Improvements and make substitutions and
replacements for the Improvements, provided that such work shall be
expeditiously completed in a good and workmanlike manner and in compliance with
all applicable legal requirements and the requirements of any insurance policy
required to be maintained by Lessor hereunder All such additions, alterations,
additional Improvements, substitutions and replacements shall be and remain part
of the realty and the property of Lessor and shall be subject to this Lease.
Lessee shall have no right to make alterations to the Premises.
11. Condemnation and Casualty.
-------------------------
(a) Subject to the terms of the Loan Agreement and the other Loan Documents
referred to therein, Lessee hereby irrevocably assigns to Lessor any award,
compensation or insurance payment to which Lessee may become entitled by reason
of its interest in the Premises (i) if the Premises are damaged or destroyed by
fire or other casualty or (ii) if the use, occupancy or title of the Premises or
any part thereof is taken, requisitioned or sold in, by or on account of any
actual or threatened eminent domain proceeding or other action by any person
having the power of eminent domain. Lessor is hereby authorized and empowered
in the name and on behalf of Lessee to appear in any such proceeding or action,
to negotiate, prosecute and adjust any claim for any award, compensation or
insurance payment on account of such damage, destruction, taking, requisition or
sale, and to collect any such award, compensation or insurance payment. Lessee
shall be entitled to participate in any such proceeding, action, negotiation,
prosecution or adjustment. All amounts paid in connection with any such damage,
destruction, taking, requisition or sale shall be applied pursuant to this
paragraph 11, and all such amounts (minus the expense of collecting such amount)
are herein called the Net Proceeds. Lessor shall take all appropriate action in
connection with each such proceeding, action, negotiation, prosecution and
adjustment and shall pay all expenses thereof, including the cost of Lessor's
participation therein out of proceeds and awards.
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<PAGE>
(b) Subject to the terms of the Loan Agreement and the other Loan Documents
referred to therein, if an occurrence of the character referred to in clause (i)
or (ii) of paragraph 11(a) shall affect all or a substantial portion of the
Premises and shall render the Premises unsuitable for restoration or continued
use and occupancy in Lessee's business, then Lessee may, not earlier than 20
days nor later than 40 days after such occurrence, deliver to Lessor notice of
its intention to terminate this Lease on the next Payment Date (the Termination
Date) which occurs not less than 20 days after the delivery of such notice.
This Lease shall terminate on the Termination Date except with respect to
obligations and liabilities of Lessee hereunder, actual or contingent, which
have arisen on or prior to the Termination Date, upon payment by Lessee of all
Fixed Rent, Additional Rent, and other sums then due and payable hereunder to
and including the Termination Date, and the Net Proceeds shall belong to Lessor.
(c) Subject to the terms of the Loan Agreement and the other Loan Documents
referred to therein, if, after an occurrence of the character referred to in
clause (i) or (ii) of paragraph 11(a), Lessee does not give notice of its
intention to terminate this Lease, then this Lease shall continue in full
effect, and Lessor shall repair any damage to the Premises caused by such event
in conformity with the requirements of paragraph 10 so as to restore the
Premises (as nearly as practicable, but in all event restoring the number of
licensed beds to the number of such beds immediately prior to such occurrence)
to the condition and market value thereof immediately prior to such occurrence.
Any Net Proceeds remaining after final payment has been made for such work shall
be retained by Lessor. In the event of any temporary requisition, this Lease
shall remain in full effect for the remainder of the term hereof, and Lessee
shall be entitled to receive the entire Net Proceeds payable during the
remainder of the term hereof by reason of such requisition. If the cost of any
repairs required to be made by Lessee pursuant to this paragraph 11(c) shall
exceed the amount of such Net Proceeds, the deficiency shall be paid by Lessor.
12. Insurance.
---------
Lessee will maintain insurance of the character and in the amount required
by any first mortgagee of the Premises, provided that Lessor's sole remedy for
breach of this paragraph is to terminate this Lease and not to collect money
from Lessee.
13. Environmental Matters. Lessee (i) shall comply, and cause the
---------------------
Premises to comply, with all Environmental Laws (as hereinafter defined)
applicable to Lessee and its operations (including the making of all submissions
to governmental authorities required by Environmental Laws and the carrying out
of any remediation program specified by such authority); (ii) shall not install
or permit the installation on the Premises of any surface impoundments,
underground storage tanks, or asbestos-containing materials except in compliance
with Environmental Laws; and (iii) shall cause any alterations of the Premises
to be done in a way so as to not expose, in violation of any applicable law, the
persons working on or visiting the Premises to Hazardous Materials and in
connection with any such alterations shall remove any Hazardous Materials
present upon the Premises which are not in compliance with Environmental Laws or
which present a danger to persons working on or visiting the Premises in
violation of any applicable law. Notwithstanding the
5
<PAGE>
foregoing, Lessor's sole remedy for a breach of this paragraph shall be to
terminate this Lease and not to collect money from Lessee.
"Environmental Laws" means the Resource Conservation and Recovery Act of
1976, as amended, 42 U.S.C. (S)(S) 6901, et seq. (RCRA), the Comprehensive
------
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. (S)(S) 9601,
et seq. (CERCLA), the Toxic Substance Control Act, as amended, 15 U.S.C. (S)(S)
- ------
2601, et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, as
------
amended, 7 U.S.C. (S)(S) 136, et seq., and all applicable federal, state and
------
local environmental laws, ordinances, rules and regulations, as any of the
foregoing may have been or may be from time to time amended, supplemented or
supplanted, and any other federal, state or local laws, ordinances, rules and
regulations, now or hereafter existing relating to regulations or control of
Hazardous Material or materials. The term "Hazardous Materials" as used in this
Lease shall mean substances defined as "hazardous substances," "hazardous
materials," "hazardous wastes," or "toxic substances" in any applicable federal,
state or local statute, rule, regulation, or determination, including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. (S)(S) 9601, et seq.; the Hazardous Materials
------
Transportation Act of 1976, 42 U.S.C. (S)(S) 1801, et seq.; the Resource,
------
Conservation and Recovery Act of 1976, 42 U.S.C. (S)(S) 6901, et seq.; and
------
asbestos, PCBs, radioactive substances, methane, volatile hydrocarbons,
petroleum or petroleum-derived substances or wastes, radon, industrial solvents,
or any other material as may be specified in applicable law or regulations.
Lessee shall notify Lessor in writing, promptly upon Lessee's learning
thereof, of any:
(i) notice or claim to the effect that Lessee is or may be liable to any
person as a result of the release or threatened release of any
Hazardous Material into the environment from the Premises;
(ii) notice that Lessee is subject to investigation by any governmental
authority evaluating whether any remedial action is needed to
respond to the release or threatened release of any Hazardous
Material into the environment from the Premises; and
(iii) notice that the Premises are subject to an environmental lien.
6
<PAGE>
14. Operation of Nursing Home.
-------------------------
Lessee to Equip Facility. Lessee, without expense to Lessor, shall
------------------------
install, affix, assemble or place, or cause to be installed, affixed, assembled
or placed, on the Premises sufficient items of personal property to enable the
operation of the Premises in accordance with the requirements of this Lease as a
nursing home, and such personal property and replacements thereof shall be at
all times the property of Lessor. Notwithstanding the foregoing, Lessee shall
have no liability under this paragraph and Lessor's sole remedy for breach of
this paragraph shall be to terminate this Lease.
Sufficient Personal Property. Lessee shall maintain or cause to be
----------------------------
maintained, without expense to Lessor, during the entire Term, the personal
property in good order and repair and shall provide without expense to Lessor
all necessary replacements thereof, as may be necessary in order to operate the
Premises in compliance with all applicable legal requirements and insurance
requirements and otherwise in accordance with customary practice in the industry
for prudent operation of a nursing home. In addition, Lessee shall furnish all
replacements of obsolete items of the personal property necessary in Lessor's
sole judgment during the Term, all without expense to Lessor. Notwithstanding
the foregoing, Lessor's sole remedy for breach of this paragraph shall be to
terminate this Lease.
No Removal of Personalty. Lessee shall not remove from the Premises any
------------------------
personal property (whether now owned or hereafter acquired).
Management Agreement. At all times during the Term of this Lease, Lessee
--------------------
will have a management agreement ("Management Agreement") with a third party
approved by Lessor (the "Manager") to operate and manage the Premises. Under
such agreement, the Manager shall assume and Lessee shall look to the Manager
for performance of all obligations of Lessee under this Lease, and Lessee shall
have no further obligation to Lessor for same. It shall be Lessor's
responsibility to determine that all of Lessee's obligations hereunder have been
assumed by the Manager. Lessor and Lessee acknowledge that the Manager will be
entitled to all profit from the Premises. Lessee shall have no liability to
Lessor, and Lessor shall have no claim against Lessee, as a result of the
failure of the Manager to perform any of its obligations under the Management
Agreement.
15. Transfer of Permits and Contracts. Lessee agrees to cooperate with
---------------------------------
Lessor, at Lessor's expense, to cause the permit and licenses necessary to
operate a nursing home at the Premises to be assigned to Lessor's designee. In
connection with the expiration or any earlier termination of this Lease, upon
any request made from time to time by Lessor, Lessee shall (a) promptly and
diligently use its best reasonable efforts to (i) transfer and assign all
permits and contracts necessary or desirable for the operation of the Premises
as a nursing home to Lessor's designee and/or (ii) at Lessor's expense, arrange
for the transfer or assignment of such permits and contracts to the Lessor's
designee, all to the extent the same may be transferred or assigned under
applicable law and (b) cooperate in every respect (and to the fullest extent
possible but without expense to Lessee) and assist the Lessor's designee in
obtaining such permits and contracts (whether by transfer, assignment, or
otherwise). Such efforts and cooperation on the part of the Lessee shall
7
<PAGE>
include, without limitation, the execution, delivery and filing with appropriate
governmental authorities, accreditation bodies, and third-party payors of any
applications, petitions, statements, notices, requests, assignments, and other
documents or instruments requested by the Lessor, all without expense to Lessee.
Furthermore, Lessee shall not take any action or refrain from taking any action
which would defer, delay or jeopardize the process of Lessor or its designee
obtaining said permits and contracts (whether by transfer, assignment,
allocation to another facility, or otherwise). Without limiting the foregoing,
Lessee shall not transfer or relocate any of said permits or contracts to any
location other than the Premises. The provisions of this paragraph shall
survive the expiration or earlier termination of this Lease.
Lessee hereby appoints Lessor as its attorney-in-fact, with full power of
substitution to take such actions, in the event that the Lessee fails to comply
with any request made by Lessor hereunder, as Lessor (in its sole absolute
discretion) may deem necessary or desirable to effectuate the intent of this
paragraph. The power of attorney conferred on the Lessor by the provisions of
this paragraph, being coupled with an interest, shall be irrevocable and shall
not be affected by any disability or incapacity which Lessee may suffer and
shall survive the same. Such power of attorney is provided solely to protect
the interests of Lessor and shall not impose any duty on Lessor to exercise any
such power and neither Lessor nor such attorney-in-fact shall be liable for any
act, omission, error in judgment, or mistake of law, except as the same may
result from its gross negligence or willful misconduct.
16. Assignment and Subletting. Except for the pledge to Lender described
-------------------------
in the Loan Agreement, Lessee shall not assign, sublease, pledge, mortgage or
otherwise transfer or encumber this Lease. Lessor may assign this Lease only so
long as the Lease is assigned along with any sums due to Lessee hereunder. Any
assignee of Lessor shall, as a condition of such assignment, expressly assume
all of Lessor's obligations hereunder.
17. Permitted Contests. Lessor shall not be required, nor shall Lessee
------------------
have any right, to pay, discharge or remove any tax, assessment, levy, fee,
rent, charge, lien or encumbrance, or to comply with any legal requirement
applicable to the Premises or the use thereof, so long as Lessor shall contest
the existence, amount or validity thereof, and as long as Lessee has no
liability therefor.
18. Conditional Limitations; Default Provision.
------------------------------------------
(a) Any of the following occurrences or acts shall constitute an Event of
Default under this Lease: (i) if Lessee shall (1) fail to pay any Fixed Rent,
Additional Rent or other sum required to be paid by Lessee hereunder and such
failure shall continue for 5 days after notice to Lessee of such failure, or (2)
fail to observe or perform any other provision hereof and such failure shall
continue for 15 days after notice to Lessee of such failure (provided, that in
the case of any such default which cannot be cured by the payment of money and
cannot with reasonable diligence be cured within such 15-day period, if Lessee
shall commence promptly to cure the same and thereafter prosecute the curing
thereof with reasonable diligence, the time within which such default may be
cured shall be extended for such period as is necessary to complete the curing
thereof with
8
<PAGE>
reasonable diligence); or (ii) if Lessee shall file a petition in
bankruptcy or for reorganization or for an arrangement pursuant to any federal
or state bankruptcy law or any similar federal or state law, or shall be
adjudicated a bankrupt or become insolvent or shall make an assignment for the
benefit of creditors or shall admit in writing its inability to pay its debts
generally as they become due, or if a petition or answer proposing the
adjudication of Lessee as a bankrupt or its reorganization pursuant to any
federal or state bankruptcy law or any similar federal or state law shall be
filed in any court and Lessee shall consent to or acquiesce in the filing
thereof or such petition or answer shall not be discharged or denied within 90
days after the filing thereof; or (iii) if a receiver, trustee or liquidator of
Lessee or of all or substantially all of the assets of Lessee or of the Premises
or Lessee's estate therein shall be appointed in any proceeding brought by
Lessee, or if any such receiver, trustee or liquidator shall be appointed in any
proceeding brought against Lessee and shall not be discharged within 90 days
after such appointment, or if Lessee shall consent to or acquiesce in such
appointment; (iv) any representation of Lessee contained in the Purchase and
Sale Agreement dated as of October 1, 1997 between Lessee, as seller, and
Lessor, as purchaser, shall have been materially adversely false at the date it
was made; or (v) if Lessee shall fail to operate a nursing home on the Premises
for a period of 10 consecutive days.
(b) If an event of default shall have happened and be continuing, Lessor
shall have the right as its sole and exclusive remedy to give Lessee notice of
Lessor's intention to terminate the term of this Lease immediately. Upon the
giving of such notice, the term of this Lease and the estate hereby granted
shall expire and terminate on such date as fully and completely and with the
same effect as if such date were the date herein fixed for the expiration of the
term of this Lease, and all rights of Lessee hereunder shall expire and
terminate, and Lessee shall have no further liability hereunder.
(c) If an event of default shall have happened and be continuing, Lessor
shall have the immediate right, whether or not the term of this Lease shall have
been terminated pursuant to paragraph 18(b), to re-enter and repossess the
Premises by summary proceedings, ejectment or in any manner Lessor determines to
be necessary or desirable and the right to remove all persons and property
therefrom. Lessor shall be under no liability by reason of any such re-entry,
repossession or removal. No such re-entry or repossession of the Premises shall
be construed as an election by Lessor to terminate the term of this Lease unless
a notice of such intention is given to Lessee pursuant to paragraph 18(b), or
unless such termination is decreed by a court of competent jurisdiction.
(d) At any time or from time to time after the re-entry or repossession of
the Premises pursuant to paragraph 18(c), whether or not the term of this Lease
shall have been terminated pursuant to paragraph 18(b), Lessor may (but shall be
under no obligation to) relet the Premises for the account of Lessee, in the
name of Lessee or Lessor or otherwise, without notice to Lessee, for such term
or terms and on such conditions and for such uses as Lessor, in its absolute
discretion, may determine. Lessor may collect and receive any rents payable by
reason of such reletting. Lessor shall not be liable for any failure to relet
the Premises or for any failure to collect any rent due upon any such reletting.
9
<PAGE>
19. Status of Parties.
-----------------
Lessor and Lessee agree that the relationship created hereby between
Lessor, on the one hand, and Lessee and Manager, on the other hand, is that of
landlord and tenant, respectively, and that neither is acting as agent for or as
a partner, joint venturer, employer or employee of the other. At no time during
the term of this Lease shall Landlord have physical possession or control of the
Premises of the right or obligation to provide, either directly or indirectly,
services to any occupant of the Premises, nor shall Landlord realize increased
receipts or suffer an increase in expenditures as a result of the successful or
unsuccessful operation, respectively, of the Premises. Lessee and Manager shall
at no time act or be deemed to be acting in the capacity as agent of Lessor for
any purpose.
20. Notices, Demands and Other Instruments. All notices, demands,
--------------------------------------
designations, certificates, requests, offers, consents, approvals and other
instruments given pursuant to this Lease shall be in writing and shall be
validly given when mailed by prepaid registered or certified mail, (a) if to
Lessor, addressed to Lessor at its address set forth above, and (b) if to
Lessee, addressed to Lessee at its address set forth above. Lessor and Lessee
each may from time to time specify any address in the United States as its
address for purposes of this Lease by giving 10 days' notice to the other party.
21. Estoppel Certificates. Lessee will, from time to time, upon 10 days'
---------------------
prior request by Lessor, execute, acknowledge and deliver to Lessor a
certificate of Lessee stating that this Lease is unmodified and in full effect
(or, if there have been modifications, that this Lease is in full effect as
modified, and setting forth such modifications) and the dates to which Fixed
Rent, Additional Rent and other sums payable hereunder have been paid, and
either stating that to the knowledge of the signer of such certificate no
default exists hereunder or specifying each such default of which the signer has
knowledge. Any such certificate may be relied upon by any prospective mortgagee
or purchaser of the Premises.
22. No Merger. There shall be no merger of this Lease or of the leasehold
---------
estate hereby created with the fee estate in the Premises by reason of the fact
that the same person acquires or holds, directly or indirectly, this Lease or
the leasehold estate created or any interest herein or in such leasehold estate
as well as the fee estate in the Premises or any interest in such fee estate.
23. Surrender. Upon the expiration or termination of the term of this
---------
Lease, Lessee shall immediately surrender the Premises and possession thereof to
Lessor. Lessee shall remove from the Premises on or prior to such expiration or
termination all property situated thereon which is not owned by Lessor, and
shall repair any damage caused by such removal. Property not so removed shall
become the property of Lessor, and Lessor may cause such property to be removed
from the Premises and disposed of. If Lessee remains in possession of the
Premises after the expiration of the Primary Term, such occupancy shall
constitute a month-to-month tenancy at a rent equal to 110% of the Rent payable
during the Primary Term, and shall be terminable by Lessor on 30 days notice.
10
<PAGE>
24. Merger, Consolidation or Sale of Assets. During the term of this
---------------------------------------
Lease, there shall be no merger of Lessee into another corporation,
consolidation of Lessee with one or more other corporations or sale or other
disposition of all or substantially all the assets of Lessee to one or more
other entities that the surviving entity or transferee of assets, as the case
may be without Lessor's prior written consent, which may be withheld in Lessor's
sole discretion.
25. Separability; Binding Effect; Non-Recourse. Each provision hereof
------------------------------------------
shall be separate and independent and the breach of any such provision by Lessor
shall not discharge or relieve Lessee from its obligations to perform each and
every covenant to be performed by Lessee hereunder. If any provision hereof or
the application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be valid and shall be enforceable to the extent permitted by law.
All provisions contained in this Lease shall be binding upon, inure to the
benefit of, and be enforceable by, the respective successors and assigns of
Lessor and Lessee to the same extent as if each such successor and assign were
named as a party hereto. This Lease may not be changed, modified or discharged
except by a writing signed by Lessor and Lessee and consented to Mortgagee (if
any). No liability of either Lessor or Lessee hereunder shall be asserted
against any officer, director, shareholder, member or manager or Lessor or
Lessee. This Lease shall be governed by the laws of the Commonwealth of
Massachusetts.
26. Schedules. The following are Schedules A and B referred to in this
---------
Lease, which Schedules are hereby incorporated by reference herein.
27. Non-Recourse. None of the officers, directors, shareholders,
-------------
consultants or members of either party shall be personally liable for any
obligation under this Lease.
11
<PAGE>
SCHEDULE A
Description of the Premises
---------------------------
12
<PAGE>
SCHEDULE B
Terms and Fixed Rent
--------------------
The Primary Term shall commence as of October __, 1997 and end at midnight
on October 31, 2002, subject to Lessor's option to terminate the term pursuant
to paragraph 3 of the Lease. Lessee shall have the right, upon notice given at
least 90 and not more than 120 days prior to the end of the current term of this
Lease, to extend the term hereof for up to three additional terms of five years
each, in all cases subject to Lessor's option to terminate the term pursuant to
paragraph 3 of the Lease.
Fixed rent for the period ending October 31, 1997 shall be $225,000.00.
Fixed Rent for each calendar month thereafter shall be $225,000.00, and
shall be prorated in the case of partial months ending after November 30, 1997.
13
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be
duly executed and delivered, and Lessee has caused its corporate seal to be
hereunto affixed and attested, all as of the date first above written.
G & L Hampden, LLC
as Lessor
By: G&L Hampden, Inc., Manager
By: /s/ Mark Hamermesh
------------------------------------
Mark Hamermesh
Senior Vice President
Hampden Nursing Homes, Inc.,
as Lessee
By: ------------------------------------
President
Attest:------------------------
Secretary
(Acknowledgments)
14
<PAGE>
EXHIBIT 10.57
GUARANTY OF LEASE
-----------------
Guaranty of Lease, dated as of October 1, 1997, by Iatros Health Network,
Inc., a Delaware corporation herein, together with any corporation succeeding
thereto by consolidation, merger or acquisition of its assets substantially as
an entirety, called "Guarantor".
G&L Hampden, LLC, a Delaware limited liability company (herein together
with its successors and assigns as owner of the property hereinafter described,
called "Landlord"), is about to acquire an interest in the land described on
Schedule A hereto together with the buildings, fixtures and other improvements
located on said land (collectively, the "Property"), and lease said Property to
Hampden Holding Group, Inc. ("Tenant"), a wholly owned subsidiary of Guarantor,
pursuant to a lease dated as of the date hereof (the "Lease") effective upon
Tenant becoming licensed to operate the Property as a nursing home. Landlord is
unwilling to acquire the Property or enter into the Lease unless the Guarantor
enters into this agreement. The acquisition by Landlord of the Property and the
lease of the Property to Tenant is of direct benefit to the Guarantor.
NOW, THEREFORE, in consideration of the execution and delivery of the
Lease and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Guarantor, intending to be legally bound,
covenants and agrees with Landlord as follows:
1. The Guarantor unconditionally and irrevocably guarantees to Landlord
that (a) all Basic Rent and Additional Rent (as defined in the Lease) and all
other sums stated in the Lease to be payable by the Tenant, insurance premiums
and costs of maintenance and repair, whether due by acceleration or otherwise,
including costs and expenses of collection (collectively, the "Monetary
Obligations") will be promptly paid in full when due, in accordance with the
provisions thereof, and (b) Tenant will perform and observe each and every
covenant, agreement, term and condition in the Lease (the "Performance
Obligations"). If for any reason any Monetary Obligations shall not be paid
promptly when due after receipt of required notice to Tenant under the Lease, if
any, and after the expiration of any applicable grace period therefor, Guarantor
shall, immediately upon demand, pay the same to Landlord with interest due
thereon as stated in the Lease. In addition to the foregoing, the Guarantor
hereby becomes surety to Landlord for the due and punctual payment and
performance of the Monetary Obligations and the Performance Obligations and the
Guarantor hereby waives all defenses of any nature that may be available to
Guarantor as a surety and guarantor other than the defenses of payment of the
Monetary Obligations and performance of the Performance Obligations.
<PAGE>
2. Landlord may enforce this Guaranty without first having recourse
against Tenant or exhausting its rights or remedies under the Lease; provided,
that nothing herein shall prohibit Landlord from exercising its rights against
both Guarantor and Tenant simultaneously. This Guaranty and the obligations of
the Guarantor hereunder are present, primary, direct, continuing, unconditional,
irrevocable and absolute and independent of any obligations of Tenant. This
Guaranty constitutes the agreement to pay money and to act in the first instance
and is not to be construed as a contract of indemnity or as a guaranty of
collectability.
3. The obligations, covenants, agreements and duties of the Guarantor
under this Guaranty shall in no way be discharged, affected or impaired by any
of the following and Landlord may at any time and from time to time, with or
without consideration, without prejudice to any claim against Guarantor
hereunder, without in any way changing, releasing or discharging Guarantor from
its liabilities and obligations hereunder and without notice to or the consent
of Guarantor waive, release or consent to any of the following:
(a) the waiver by Landlord of the performance or observance by Tenant
or any other party of any of the agreements, covenants, terms or conditions
contained in the Lease;
(b) the extension, in whole or in part, of the time for payment by
Tenant of any sums owing or payable under the Lease, or of any other sums or
obligations under or arising out of or on account of the Lease, or the renewal
or extension of the Lease;
(c) any sublease of any or all of the Property by Tenant to
any other person;
(d) any assumption by any person of any or all of Tenant's
obligations under, or Tenant's assignment of any or all of its interest in the
Lease;
(e) the waiver or release or modification or amendment (whether
material or otherwise) of any provision of the Lease, and Guarantor hereby
consents to any such waivers, releases, modifications and amendments and to any
future terms or agreements heretofore or hereafter made by Landlord and Tenant
in accordance with the terms of the Lease, provided that Guarantor shall not be
responsible for any increase in the obligations of tenant under the Lease
resulting solely from an amendment to the Lease made by a tenant which was not,
at the time of such amendment, an affiliate of Guarantor;
(f) any failure, omission or delay on the part of Landlord to
enforce, assert or exercise any right, power or remedy conferred on or available
to Landlord in or by the Lease or this Guaranty, or any action on the part of
Landlord granting indulgence or extension in any form whatsoever;
<PAGE>
(g) the voluntary or involuntary liquidation, dissolution, sale of
all or substantially all of the assets, marshaling of assets and liabilities,
receivership, conservatorship, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization or other similar proceeding affecting
Landlord, Tenant or Guarantor or any of their assets or any impairment,
modification, release or limitation of liability of Landlord, Tenant or
Guarantor or any of their estates in bankruptcy or of any remedy for the
enforcement of such liability resulting from the operation of any present or
future provision of the Federal Bankruptcy Act or other similar statute or from
the decision of any court;
(h) the release of Tenant from the performance or observance of any
of the agreements, covenants, terms or conditions contained in the Lease by
operation of law;
(i) the power or authority or lack thereof of Tenant to
execute, acknowledge or deliver the Lease;
(j) the legality, validity or invalidity of the Lease;
(k) any defenses whatsoever that Tenant may or might have to the
payment of the Monetary Obligations except for the payment thereof;
(l) the existence or non-existence of Tenant as a legal entity or the
existence or non-existence of any business relationship between Tenant and
Guarantor or between Landlord and Guarantor;
(m) any sale or assignment by Landlord of this Guaranty and/or the
Lease (including any assignment by Landlord to any Mortgagee (as defined in the
Lease);
(n) any default by Guarantor under this Guaranty or any right of
setoff, counterclaim or defense (other than payment in full of the Monetary
Obligations in accordance with the terms of the Lease) that Guarantor may or
might have to its respective undertakings, liabilities and obligations
hereunder, each and every such defense being hereby waived by Guarantor; or
(o) any other cause, whether similar or dissimilar to any of the
foregoing, that might constitute a legal or equitable discharge of Guarantor
(whether or not Guarantor shall have knowledge or notice thereof) other than
payment in full of the Monetary Obligations.
Without in any way limiting the generality of the foregoing, Guarantor
specifically agrees that if Tenant's obligations under the Lease are modified or
amended with the express written consent of Landlord, this Guaranty shall extend
to such obligations as so amended or modified but shall not extend to any
increase in the obligations of
<PAGE>
Tenant under the Lease if such modification or amendment was made by a tenant
which was not, at the time of such modification or amendment, an affiliate of
Guarantor.
4. Guarantor hereby waives notice (other than any notice required by
the terms of the Lease), demand, presentment, protest and notice of protest.
5. Guarantor agrees that, in the event of the rejection or
disaffirmance of the Lease by Tenant or Tenant's trustee in bankruptcy pursuant
to bankruptcy law or any other law affecting creditors rights, the Guarantor
will, if Landlord so requests, assume all obligations and liabilities of Tenant
under the Lease, to the same extent as if the Guarantor had been originally
named instead of Tenant as a party to such document and there had been no such
rejection or disaffirmance; and the Guarantor will confirm such assumption in
writing at the request of Landlord upon or after such rejection or
disaffirmance. The Guarantor, upon such assumption, shall have all rights of
Tenant under the Lease (to the extent permitted by law).
6. The following events following the expiration of the
applicable cure periods, in this Paragraph are sometimes referred to as an
"Event of Default":
a. If default shall be made in the payment of any sum
required to be paid by Guarantor under this Guaranty;
b. If default shall be made in the observance or performance
of any of the other covenants in this Guaranty which the Guarantor is required
to observe and perform and such default shall continue for thirty (30) days
after written notice to the Guarantor provided that the time within which Tenant
is permitted to cure the default shall be extended for such period as may be
necessary for the curing thereof provided Guarantor is continuously, diligently
and in good faith prosecuting such cure;
c. If any representation or warranty made by Guarantor herein
or in any certificate, demand or request proves to be incorrect in any material
respect when made and the representation or warranty continues to be incorrect
for a period of thirty (30) days after written notice from Landlord, or if the
facts cannot be changed so as to make the representation or warranty correct
within such thirty day period, Guarantor fails to provide Landlord with
protection (including, by way of example, additional collateral or letters of
credit) against loss arising from breach of such representation or warranty,
such protection to be satisfactory to Landlord in its sole discretion;
d. If a petition for relief is filed under the Bankruptcy
Code by Guarantor or the Tenant to place Guarantor or Tenant under the
protection of the Bankruptcy Code;
<PAGE>
e. If any involuntary petition in bankruptcy shall be filed
against Guarantor under any Federal or State bankruptcy or insolvency act and
shall not have been dismissed within ninety (90) days of the filing thereof; and
f. If a receiver or similar official shall be appointed for
Guarantor or any substantial portion of the property of Guarantor by any court
and any such receiver shall not have been discharged within thirty (30) days
from the date of his or her appointment.
Upon the occurrence of any such Event of Default, Landlord shall have whatever
rights at law or equity it might have to enforce this Guaranty.
7. Guarantor agrees that any claim or claims or liens or security
interests it may now have or may in the future have against Tenant are or shall
be subordinate to Tenant's obligations to Landlord under the Lease. Guarantor
waives all rights of subrogation against Tenant for any amounts expended by
Guarantor under this Guaranty.
8. If Landlord incurs any expenses in the enforcement of this Guaranty,
including reasonable attorneys' fees and disbursements, whether or not legal
action be instituted, the Guarantor shall pay the same immediately upon demand
by Landlord which shall be accompanied by evidence of such fees and
disbursements.
9. Landlord shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in writing
and signed by Landlord, and then only to the extent specifically set forth
therein; a waiver on one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event.
10. All notices, demands, requests, approvals or consents made pursuant
to, under or by virtue of this Guaranty must be in writing and mailed to the
party to which the notice, demand, request, approval or consent is being sent by
certified or registered mail, return receipt requested, or by overnight courier
delivery, addressed as follows, or at such other address as such party may
designate by notice to the other party:
To Guarantor:
Iatros Health Network, Inc.
10 Piedmont Center, Suite 400
Atlanta, Georgia 30305
Attention: Judson H. Simmons
To Landlord:
G&L Hampden, LLC
<PAGE>
c/o G&L Realty Corp.
439 North Bedford Drive
Beverly Hills, CA 90210
Attention: Mark H. Hamermesh
With a copy to:
Day, Berry & Howard
260 Franklin Street
Boston, MA 02110
Attention: Lewis A. Burleigh
Any notice, demand, request, approval or consent given in accordance
with the provisions of this Paragraph 10 shall be effective on the date of
receipt or delivery or when proper delivery is refused by the addressee.
11. Notice of acceptance of this Guaranty by Landlord and notice of any
obligations or liabilities contracted or incurred by any Tenant under the Lease
are hereby waived by the Guarantor.
12. This Guaranty shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
13. This Guaranty may not be modified or amended except by a written
agreement duly executed by Guarantor and Landlord and Landlord's first fee
mortgagee from time to time, if any. This Guaranty shall be binding upon the
Guarantor, its successor and assigns by merger, consolidation or sale of
substantially all assets, and shall inure to the benefit of Landlord and its
successors and assigns as permitted hereunder, including, without limitation,
any mortgagee of Landlord's interest in the Property. In the event any one or
more of the provisions contained in this Guaranty shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Guaranty, but this Guaranty shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. As used herein the term
"Tenant" includes its successors and assigns with respect to the Lease.
14. The rights of Landlord under this Guaranty may be assigned in whole or
in part by Landlord, its successors and assigns, whether directly or by way of a
grant of a security interest herein, without the consent of Guarantor.
15. Within 15 days after request by Landlord, Guarantor shall deliver a
certificate confirming that this Guaranty is in full force and effect and
unamended (or, if amended, specifying such amendment), and whether, to the
knowledge of Guarantor, any default exists under the Lease or under this
Guaranty.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its officer thereunto duly authorized.
Iatros Health Network, Inc.
By: /s/ Reginald D. Strickland
______________________________
Reginald D. Strickland
President
<PAGE>
EXHIBIT 10.58
================================================================================
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
G&L HAMPDEN, LLC
A DELAWARE LIMITED LIABILITY COMPANY
Dated as of October 15, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE 1
DEFINITIONS
<TABLE>
<S> <C>
1.1 ADJUSTED CAPITAL ACCOUNT DEFICIT 1
1.2 AFFILIATE 1
1.3 AGREEMENT 2
1.4 ARTICLES OF ORGANIZATION 2
1.5 AVAILABLE CASH FLOW 2
1.6 BUSINESS OF THE LLC 2
1.7 CAPITAL ACCOUNT 2
1.8 CAPITAL CONTRIBUTION 2
1.9 CODE 2
1.10 DEPRECIATION 2
1.11 DISSOLUTION 2
1.12 ECONOMIC INTEREST 2
1.13 FACILITIES 3
1.14 FISCAL YEAR 3
1.15 INITIAL MEMBER 3
1.16 LENDER 3
1.17 LLC 3
1.18 LLC INTEREST 3
1.19 LLC LOANS 3
1.20 LLC MINIMUM GAIN 3
1.21 MAJORITY IN INTEREST OF THE MEMBERS 3
1.22 MANAGER 3
1.23 MEMBER NONRECOURSE DEBT 3
1.24 MEMBER NONRECOURSE DEBT MINIMUM GAIN 4
1.25 MEMBER NONRECOURSE DEDUCTIONS 4
1.26 MEMBER 4
1.27 NET CAPITAL CONTRIBUTIONS 4
1.28 NET PROFITS AND NET LOSS 4
1.29 PERCENTAGE INTEREST 5
1.30 PERIOD OF DURATION 5
1.31 PERSON 5
1.32 PRINCIPAL 5
1.33 PROPERTY 5
1.34 REGULATIONS 5
1.35 RESERVES 5
1.36 SECRETARY OF STATE 6
1.37 STATUTE 6
1.38 VOTE 6
</TABLE>
i
<PAGE>
ARTICLE 2
INTRODUCTORY MATTERS
<TABLE>
<S> <C>
2.1 FORMATION OF LLC 6
2.2 NAME 6
2.3 PRINCIPAL OFFICE 6
2.4 AGENT FOR SERVICE OF PROCESS 6
2.5 PERIOD OF DURATION 6
2.6 BUSINESS AND PURPOSE OF THE LLC 7
ARTICLE 3
MEMBERS AND CAPITAL CONTRIBUTIONS
3.1 NAMES AND ADDRESSES OF INITIAL MEMBERS 9
3.2 CONTRIBUTIONS 9
3.3 ADDITIONAL CONTRIBUTIONS 9
3.4 RIGHTS WITH RESPECT TO CAPITAL 9
3.5 GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS 10
3.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS 10
3.7 TRANSFEREE'S CAPITAL ACCOUNT 11
ARTICLE 4
ALLOCATION OF PROFITS AND LOSSES
4.1 ALLOCATION OF NET PROFITS AND LOSSES 11
4.2 RESIDUAL ALLOCATIONS 12
4.3 QUALIFIED INCOME OFFSET 12
4.4 MINIMUM GAIN CHARGEBACK 12
4.5 MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK 12
4.6 MEMBER NONRECOURSE DEDUCTIONS 12
4.7 SPECIAL ALLOCATIONS 12
4.8 FEES TO MEMBERS OR AFFILIATES 13
4.9 SECTION 704(c) ALLOCATION 13
ARTICLE 5
DISTRIBUTIONS
5.1 AVAILABLE CASH FLOW 13
ARTICLE 6
RIGHTS, DUTIES, OBLIGATIONS AND COMPENSATION
OF MANAGERS AND OFFICERS
6.1 MANAGER 14
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
6.2 CO-MANAGERS 15
6.3 LIMITATIONS ON RIGHTS AND POWERS 16
6.4 COMPENSATION OF MANAGER 17
6.5 COMPENSATION OF MEMBERS 17
6.6 EXPENSE REIMBURSEMENT 17
ARTICLE 7
MEMBERS' MEETINGS
7.1 PLACE OF MEETINGS 17
7.2 ANNUAL MEETINGS OF MEMBERS 17
7.3 SPECIAL MEETINGS 17
7.4 NOTICE OF MEETINGS 18
7.5 VALIDATION OF MEMBERS' MEETINGS 18
7.6 ACTIONS WITHOUT A MEETING 18
7.7 QUORUM AND EFFECT OF VOTE 18
ARTICLE 8
RESTRICTIONS ON TRANSFER OR CONVERSION
OF LLC INTERESTS, ADDITIONAL CAPITAL CONTRIBUTIONS;
ADMISSION OF NEW MEMBERS
8.1 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST 19
8.2 VOID TRANSFERS 19
8.3 ADDITIONAL CAPITAL 19
8.4 ADMISSION OF NEW MEMBERS 20
ARTICLE 9
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
9.1 MAINTENANCE OF BOOKS AND RECORDS 20
9.2 ANNUAL ACCOUNTING 21
9.3 INSPECTION AND AUDIT RIGHTS 21
9.4 RIGHTS OF MEMBERS AND NON-MEMBERS 21
9.5 BANK ACCOUNTS 21
9.6 TAX MATTERS HANDLED BY MANAGERS 21
9.7 FEDERAL INCOME TAX ELECTIONS MADE BY MANAGERS 22
9.8 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS 22
ARTICLE 10
TERMINATION AND DISSOLUTION
10.1 DISSOLUTION 22
10.2 STATEMENT OF INTENT TO DISSOLVE 23
10.3 CONDUCT OF BUSINESS 23
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
10.4 DISTRIBUTION OF NET PROCEEDS 23
ARTICLE 11
INDEMNIFICATION OF THE MEMBERS, MANAGERS,
AND THEIR AFFILIATES
11.1 INDEMNIFICATION OF THE MEMBERS AND THEIR PRINCIPALS 23
11.2 EXPENSES 24
11.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE 24
11.4 ERRORS AND OMISSIONS INSURANCE 24
11.5 ASSETS OF THE LLC 24
ARTICLE 12
ISSUANCE OF LLC CERTIFICATES
12.1 ISSUANCE OF LLC CERTIFICATES 24
12.2 TRANSFER OF LLC CERTIFICATES 25
12.3 LOST, STOLEN OR DESTROYED CERTIFICATES 25
ARTICLE 13
AMENDMENTS
13.1 AMENDMENT, ETC. OF OPERATION AGREEMENT 26
13.2 AMENDMENT, ETC. OF ARTICLES OF ORGANIZATION 26
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 COUNTERPARTS 26
14.2 SURVIVAL OF RIGHTS 26
14.3 SEVERABILITY 26
14.4 NOTIFICATION OR NOTICES 26
14.5 CONSTRUCTION 27
14.6 SECTION HEADINGS 27
14.7 GOVERNING LAW 27
14.8 ADDITIONAL DOCUMENTS 27
14.9 PRONOUNS AND PLURALS 27
14.10 TIME OF THE ESSENCE 27
14.11 FURTHER ACTIONS 27
14.12 WAIVER OF JURY 27
14.13 THIRD PARTY BENEFICIARIES 28
14.14 TAX ELECTIONS 28
14.15 PARTITION 28
14.16 ENTIRE AGREEMENT 28
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
14.17 WAIVER 28
14.18 ATTORNEYS' FEES 28
14.19 CONFIDENTIALITY AND PRESS RELEASES 28
</TABLE>
v
<PAGE>
G&L HAMPDEN, LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
This Limited Liability Company Operating Agreement (the "AGREEMENT") is made
and entered into and effective as of October 15, 1997, by and between G&L
HAMPDEN, INC., a Delaware corporation, and G&L REALTY PARTNERSHIP, L.P., a
Delaware limited partnership, with reference to the recitals set forth below.
R E C I T A L S
G&L Hampden, Inc. ("HAMPDEN") and G&L Realty Partnership, L.P. ("GLR") have
formed a limited liability company (hereinafter called the "LLC") pursuant to
the provisions of the Delaware Limited Liability Company Act, as amended from
time to time (the "Statute").
In consideration of the covenants and the promises made herein, the parties
hereto hereby agree as follows.
ARTICLE 1
---------
DEFINITIONS
-----------
1.1 ADJUSTED CAPITAL ACCOUNT DEFICIT. "Adjusted Capital Account
Deficit" means, with respect to any Member, the deficit balance, if any, in such
Member's Capital Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments:
1.1.1 increase such Capital Account by any amounts which such
Member is obligated to contribute to the LLC (pursuant to the terms of this
Agreement or otherwise) or is deemed to be obligated to contribute to the
LLC pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
1.1.2 reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.2 AFFILIATE. "Affiliate" means, when used with reference to a
specified Person, (i) the Principal of the Person, (ii) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(iii) any Person owning or controlling 10% or more of the outstanding voting
interests of such Person, and (iv) any relative or spouse of such Person.
-1-
<PAGE>
1.3 AGREEMENT. "Agreement" means this Limited Liability Company
Operating Agreement, as originally executed and as amended from time to time, as
the context requires. Words such as "herein", "hereinafter", "hereto", "hereby"
and "hereunder", when used with reference to this Agreement, refer to this
Agreement as a whole, unless the context otherwise requires.
1.4 ARTICLES OF ORGANIZATION. "Articles of Organization" means the
articles of organization filed with the Secretary of State for State of Delaware
for the purpose of forming the LLC.
1.5 AVAILABLE CASH FLOW. "Available Cash Flow" means, with respect to
any Fiscal Year or other period, the sum of all cash receipts of the LLC from
any and all sources, less all cash disbursements (including loan repayments,
capital improvements and replacements) and a reasonable allowance for Reserves,
contingencies and anticipated obligations as determined by the Manager.
1.6 BUSINESS OF THE LLC. "Business of the LLC" shall have the meaning
set forth in Section 26 hereof.
1.7 CAPITAL ACCOUNT. "Capital Account" of a Member shall have the
meaning set forth in Sections 3.4 and 35 hereof.
1.8 CAPITAL CONTRIBUTION. "Capital Contribution" shall have the meaning
set forth in Article 3 hereof.
1.9 CODE. "Code" means the Internal Revenue Code of 1986, as amended
(or any corresponding provision or provisions of any succeeding law).
1.10 DEPRECIATION. "Depreciation" means, for each Fiscal Year or other
period, an amount equal to the depreciation, amortization or other cost recovery
reduction allowable with respect to an asset for such Fiscal Year or other
period.
1.11 DISSOLUTION. "Dissolution" means (i) when used with reference to
the LLC, the earlier of (a) the date upon which the LLC is terminated under the
Statute, or any similar provision enacted in lieu thereof, or (b) the date upon
which the LLC ceases to be a going concern, and (ii) when used with reference to
any Member, the earlier of (a) the date upon which there is a Dissolution of the
LLC or (b) the date upon which such Member's entire interest in the LLC is
terminated by means of a distribution or series of distributions by the LLC to
such Member.
1.12 ECONOMIC INTEREST. "Economic Interest" means a Person's right to
share in the Net Profits, Net Loss or similar items of, and to receive
distributions from, the LLC, but does not include any other rights of a Member
including, without limitation, the right to vote or to participate in the
management of the LLC, or, except as provided in Section 94, any right to
information concerning the business and affairs of the LLC.
-2-
<PAGE>
1.13 FACILITIES. "Facilities" means those three senior care facilities
located in Hampden County, Massachusetts, commonly known as: (a) Mary Lyon
Nursing Home, 34 Main Street, Hampden, improved with a 100 bed nursing home, (b)
Riverdale Gardens Rehabilitation and Nursing Center, 42 Prospect Avenue, West
Springfield, improved with a 168 bed nursing home, and (c) Chestnut Hill
Rehabilitation and Nursing Center, 32 Chestnut Street, East Long Meadow,
improved with a 128 bed nursing home.
1.14 FISCAL YEAR. "Fiscal Year" means the period of January 1 to and
including December 31.
1.15 INITIAL MEMBER. "Initial Member" shall mean any of the Members
listed in Section 3.1.
1.16 LENDER. "Lender" means, collectively, Nomura Asset Capital
Corporation or its successors or assigns.
1.17 LLC. "LLC" means G&L HAMPDEN, LLC.
1.18 LLC INTEREST. "LLC Interest" or "Interest" means an ownership
interest in the LLC, which includes the Economic Interest, the right to vote or
participate in the management of the LLC, and the right to information
concerning the business and affairs of the LLC, as provided in this Agreement
and under the Statute.
1.19 LLC LOANS. "LLC Loans" shall refer to any loans or advances made by
any Member to the LLC at the Member's option, without obligation to so do, to
the extent the LLC does not have sufficient resources (assets, borrowings or
otherwise) to meet its LLC obligations. Such LLC Loans shall bear interest at
the rate agreed to between the Member and the Manager.
1.20 LLC MINIMUM GAIN. "LLC Minimum Gain" means the amount determined by
computing with respect to each nonrecourse liability of the LLC, the amount of
gain (of whatever character), if any, that would be realized by the LLC if it
disposed (in a taxable transaction) of the Property subject to such liability in
full satisfaction thereof, and by then aggregating the amounts so computed as
set forth in Regulations Section 1.704-2(d).
1.21 MAJORITY IN INTEREST OF THE MEMBERS. "Majority in Interest of the
Members," unless otherwise provided in the Agreement, means more than fifty
percent (50%) of the interests of the Members in the current profits of the LLC.
1.22 MANAGER. "Manager" means the Person elected to manage the LLC
pursuant to Section 61 of this Agreement. At any time that the Members shall
have elected to have more than one Manager, all such Persons so elected shall be
referred to as the "Managers."
1.23 MEMBER NONRECOURSE DEBT. "Member Nonrecourse Debt" has the meaning
set forth in Regulations Section 1.704-2(b)(4).
-3-
<PAGE>
1.24 MEMBER NONRECOURSE DEBT MINIMUM GAIN. "Member Nonrecourse Debt
Minimum Gain" means an amount, with respect to each Member Nonrecourse Debt,
equal to the LLC Minimum Gain that would result if such Member Nonrecourse Debt
were treated as a nonrecourse liability of the LLC, determined in accordance
with Regulations Sections 1.704-2(i)(2) and (3).
1.25 MEMBER NONRECOURSE DEDUCTIONS. "Member Nonrecourse Deductions" has
the meaning set forth in Regulations Section 1.704-2(i)(2). The amount of
Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
Fiscal Year of the LLC equals the excess (if any) of the net increase (if any)
in the amount of Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt during that Fiscal Year over the aggregate amount of any
distributions during that Fiscal Year to the Member that bears (or is deemed to
bear) the economic loss for such Member Nonrecourse Debt to the extent such
distributions are from the proceeds of such Member Nonrecourse Debt and are
allocable to an increase in Member Nonrecourse Debt Minimum Gain attributable to
such Member Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(2).
1.26 MEMBER. "Member" means a Person who:
1.26.1 Has been admitted to the LLC as a member in accordance with
the Articles of Organization or this Agreement, or an assignee of an
Interest, other than an Economic Interest, who has become a Member pursuant
to Section 81.
1.26.2 Has not resigned, withdrawn or been expelled as a Member or,
if other than an individual, been dissolved.
1.27 NET CAPITAL CONTRIBUTIONS. "Net Capital Contributions" means the
aggregate of a Member's Capital Contributions over the aggregate distributions
theretofore made to such Member pursuant to Section 51.
1.28 NET PROFITS AND NET LOSS. "Net Profits" and "Net Loss" mean, for
each Fiscal Year or other period, an amount equal to the LLC's taxable income or
loss for such year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
1.28.1 Any income of the LLC that is exempt from Federal income tax
and not otherwise taken into account in computing Net Profits or Net Loss
shall be added to such taxable income or loss;
1.28.2 Any expenditures of the LLC described in Code Section
705(b)(2)(B) or treated as Code Section 705(b)(2)(B) expenditures pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Net Profits or Net Loss shall be subtracted from such
taxable income or loss;
-4-
<PAGE>
1.28.3 Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the fair market value of the Property
disposed of, notwithstanding that the adjusted tax basis of such Property
differs from its fair market value;
1.28.4 In lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year
or other period, computed in accordance with the subsection hereof entitled
"Depreciation"; and
1.28.5 Notwithstanding any other provision of this subsection, any
items of income, gain, loss or deduction which are specifically allocated
shall not be taken into account in computing Net Profits or Net Loss.
1.29 PERCENTAGE INTEREST. The Initial Members' "Percentage Interests"
shall be in the following percentages:
<TABLE>
<CAPTION>
<S> <C>
G&L REALTY PARTNERSHIP, L.P. 99%
G&L HAMPDEN, INC. 1%
-----------
100%
</TABLE>
1.30 PERIOD OF DURATION. "Period of Duration" shall have the meaning set
forth in Section 25 hereof.
1.31 PERSON. "Person" means an individual, partnership, limited
partnership, corporation, trust, estate, association, limited liability company,
or other entity, whether domestic or foreign.
1.32 PRINCIPAL. "Principal" means the natural Person which is in
ultimate control of a Member.
1.33 PROPERTY. "Property" means all assets of the LLC, both tangible and
intangible, or any portion thereof.
1.34 REGULATIONS. "Regulations" means the federal income tax regulations
promulgated by the Treasury Department under the Code, as such regulations may
be amended from time to time. All references herein to a specific section of
the Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Regulations.
1.35 RESERVES. "Reserves" means funds set aside from Capital
Contributions or gross cash revenues as reserves. Such Reserves shall be
maintained in amounts reasonably deemed sufficient by the Manager for working
capital and the payment of taxes, insurance, debt service,
-5-
<PAGE>
repairs, replacements renewals, or other costs or expenses incident to the
Business of the LLC, or in the alternative, the Dissolution of the LLC.
1.36 SECRETARY OF STATE. "Secretary of State" shall mean the Secretary of
State of the State of Delaware.
1.37 STATUTE. "Statute" shall mean the Delaware Limited Liability
Company Act, as amended from time to time (or any corresponding provision or
provisions of any succeeding law).
1.38 VOTE. Except where superseded by another Section of this Agreement,
or required by the terms of the Statute, Code or applicable Regulations
thereunder, all decisions made by the LLC shall be approved by fifty-one percent
(51%) of the votes ("Vote") of the Members, wherein each Member casts a number
of votes equal to the Member's Percentage Interest in the LLC.
ARTICLE 2
---------
INTRODUCTORY MATTERS
--------------------
2.1 FORMATION OF LLC. The parties have formed the LLC pursuant to the
provisions of the Statute by filing the Articles of Organization with the
Secretary of State.
2.2 NAME. The name of the LLC is "G&L HAMPDEN, LLC". The Members shall
operate the Business of the LLC under such name or use such other or additional
names as the Members may deem necessary or desirable provided that: (i) no such
name shall contain the words "bank," "insurance," "trust," "trustee,"
"incorporated," "inc.," "corporation," "corp.," or any similar name or variation
thereof; (ii) the Members shall have reasonably determined, before use of any
such name, that the LLC is entitled to use such name and will not by reason of
such use infringe upon any rights of any other Person, or violate any applicable
laws or governmental regulations; and (iii) the Members shall register such name
under assumed or fictitious name statutes or similar laws of the states in which
the LLC operates.
2.3 PRINCIPAL OFFICE. The LLC shall maintain its principal place of
business at 435 North Bedford Drive, Beverly Hills, California 90210, or any
other location mutually agreed upon by the Members.
2.4 AGENT FOR SERVICE OF PROCESS. The name and address of the LLC's
agent for service of process is James R. Andrews, Esq., Gilchrist & Rutter, 1299
Ocean Avenue, Suite 900, Santa Monica, California 90401.
2.5 PERIOD OF DURATION. The period of duration of the LLC ("Period of
Duration") shall be thirty (30) years, commencing on the date of the filing of
the Articles of Organization with the Delaware Secretary of State, unless the
LLC is terminated or dissolved sooner, in accordance with the provisions of this
Agreement.
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2.6 BUSINESS AND PURPOSE OF THE LLC. The purpose of the LLC is to engage
in any lawful activities for which a LLC may be organized under the Statute,
including, but not limited to, the acquisition and leasing of the Facilities;
provided that the LLC shall not conduct any banking, insurance or trust company
business. Notwithstanding the foregoing, for so long as any indebtedness
remains owed by the LLC to Nomura Asset Capital Corporation or its successors or
assigns (collectively, "Lender") the LLC:
(i) will be organized solely for the purpose of owning or operating the
Facilities,
(ii) will not engage in any business unrelated to the ownership or
operation of the Facilities,
(iii) will not have any assets other than those related to the Facilities,
(iv) will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, and, except as otherwise
expressly permitted by the loan documents between Lender and the LLC
(the "Loan Documents"), has not and will not engage in, seek or
consent to any asset sale, transfer of membership interests, or
amendment of its certificate of formation or operating agreement,
(v) will have at least one member that is and will be a Single-Purpose
Entity which is and will be a corporation, which corporation will be
G&L HAMPDEN, INC., a Delaware corporation ("Hampden"), and Hampden
is and will be the Manager of the LLC,
(vi) without the unanimous consent of all the Members including the vote
of the independent director of Hampden, has not and will not with
respect to itself or to any other entity in which it has a direct or
indirect legal or beneficial ownership interest (a) file a
bankruptcy, insolvency or reorganization petition or otherwise
institute insolvency proceedings or otherwise seek any relief under
any laws relating to the relief from debts or the protection of
debtors generally; (b) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or
any similar official for such entity or all or any portion of such
entity's properties; (c) make any assignment for the benefit of such
entity's creditors; or (d) take any action that might cause such
entity to become insolvent,
(vii) will maintain its accounts, books and records separate from any
other person or entity
(viii) will maintain its books, records, resolutions and agreements as
official records;
(ix) will not commingle its funds or assets with those of any other
entity,
(x) will conduct its business in its name,
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(xi) will hold its assets in its own name,
(xii) will maintain its financial statements, accounting records and other
entity documents separate from any other person or entity,
(xiii) will pay its own liabilities out of its own funds and assets
(xiv) will observe all limited liability company formalities
(xv) will maintain arms-length relationship with its Affiliates,
(xvi) will have no indebtedness other than the Indebtedness as defined in
the Loan Documents and unsecured trade payables in the ordinary
course of business relating to the ownership and operation of the
Facilities which (1) do not exceed, at any time, a maximum amount of
one percent (1%) of the Loan Amount as defined in the Loan Documents
and (2) are paid within thirty (30) days of the date incurred,
(xvii) will not assume or guarantee or become obligated for the debts of
any other entity or hold out its credit as being available to
satisfy the obligations of any other entity except for the
Indebtedness as defined in the Loan Documents,
(xviii)has not acquired and will not acquire obligations or securities of
its Members
(xix) has allocated and will allocate fairly and reasonably shared
expenses, including, without limitation, shared office space and
uses separate stationary, invoices and checks,
(xx) except pursuant to the Loan Documents, will not pledge its assets
for the benefit of any person or entity,
(xxi) will hold itself out and identify itself as a separate and distinct
entity under its own name and not as a division or part of any other
person or entity,
(xxii) will not make loans to any person or entity,
(xxiii)will not identify its members or any Affiliates of any of them as
a division or part of it,
(xxiv) will not enter into or be a party to, any transaction with its
members or its Affiliates except in the ordinary course of business
and on terms which are intrinsically fair and are no less favorable
to it than would be obtained in a comparable arms-length transaction
with an unrelated third party,
(xxv) will pay the salaries of its own employees from its own funds,
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(xxvi) will maintain adequate capital in light to its contemplated business
operations and
(xxvii)shall continue (and not dissolve) for so long as a solvent Manager
exists and such entity's organizational documents shall contain such a
provision.
2.7 In the event of a termination event, the vote of a majority of the
remaining members is sufficient to continue the life of the Company, and in the
event such vote of the remaining members is not obtained, the Company will not
liquidate collateral without the consent of the holders of the related
securities.
ARTICLE 3
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MEMBERS AND CAPITAL CONTRIBUTIONS
---------------------------------
3.1 NAMES AND ADDRESSES OF INITIAL MEMBERS. The names and addresses of
the Initial Members are as follows:
3.1.1 G&L HAMPDEN, INC., a Delaware corporation, whose address is
435 North Bedford Drive, Second Floor, Beverly Hills, California 90210.
3.1.2 G&L REALTY PARTNERSHIP, L.P., a Delaware limited partnership,
whose address is 439 Bedford Drive, Beverly Hills, California 90210.
3.2 CONTRIBUTIONS. The Initial Members shall contribute the following
to the LLC:
3.2.1 Hampden shall contribute the sum of One Hundred Dollars
($10.00) in cash.
3.2.2 GLR shall contribute the sum of Nine Hundred Ninety Dollars
($990.00) in cash.
3.3 ADDITIONAL CONTRIBUTIONS. Except as shall be expressly set forth
herein, no Member shall be required to (a) make any additional Capital
Contributions, (b) make any loan, or (c) cause to be loaned any money or other
assets to the LLC.
3.4 RIGHTS WITH RESPECT TO CAPITAL.
3.4.1 LLC CAPITAL. No Member shall have the right to withdraw, or
receive any return of, its Capital Contribution, and no Capital
Contribution may be returned in the form of property other than cash except
as specifically provided herein.
3.4.2 NO INTEREST ON CAPITAL CONTRIBUTIONS. Except as expressly
provided in this Agreement, no Capital Contribution of any Member shall
bear any
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interest or otherwise entitle the contributing Member to any compensation
for use of the contributed capital.
3.4.3 ESTABLISHMENT OF CAPITAL ACCOUNTS. A separate capital
account ("Capital Account") shall be maintained for each Member. For book
purposes, each Member's Capital Account will be separated into a
contribution account and an income (loss) account and will be maintained
according to generally accepted accounting principles. Sections 36 and 37
below describe the appropriate accounting treatment for tax purposes of the
Capital Accounts.
3.5 GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS. The Capital
Account of each Member shall be:
3.5.1 INCREASES. Increased by:
(i) Such Member's cash contributions;
(ii) The agreed fair market value of property contributed by
such Member (net of liabilities secured by such contributed property
that the LLC is considered to assume or take subject to under Code
Section 752);
(iii) All items of LLC income and gain (including income
and gain exempt from tax) allocated to such Member pursuant to
Article 4 or other provisions of this Agreement; and
3.5.2 DECREASES. Decreased by:
(i) The amount of cash distributed to such Member;
(ii) The agreed fair market value of all actual and deemed
distributions of property made to such Member pursuant to this
Agreement (net of liabilities secured by such distributed property
that the Member is considered to assume or take subject to under
Code Section 752);
(iii) All items of LLC deduction and loss allocated to
such Member pursuant to Article 4 or other provisions of this
Agreement.
3.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS.
3.6.1 TIME OF ADJUSTMENT FOR CAPITAL CONTRIBUTIONS. For purposes
of computing the balance in a Member's Capital Account, no credit shall be
given for any Capital Contribution which such Member is to make until such
contribution is actually made. "Capital Contribution" refers to the total
amount of cash and the agreed fair market value (net of liabilities)
contributed to the LLC by that Member and any subsequent
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contributions of cash and the agreed fair market value (net of liabilities)
of any other property subsequently contributed to the LLC by that Member.
3.6.2 INTENT TO COMPLY WITH TREASURY REGULATIONS. The foregoing
provisions of Sections 36 and 37 and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations Section. To the extent such
provisions are inconsistent with such Regulations Section or are incomplete
with respect thereto, Capital Accounts shall be maintained in accordance
with such Regulations Section.
3.7 TRANSFEREE'S CAPITAL ACCOUNT. In the event a Member, of the holder
of an Economic Interest, transfers an Interest in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred Interest.
ARTICLE 4
---------
ALLOCATION OF PROFITS AND LOSSES
--------------------------------
4.1 ALLOCATION OF NET PROFITS AND LOSSES. Except as otherwise provided
in this Article 4, Net Profits and Net Loss of the LLC in each Fiscal Year shall
be allocated among the Members as follows:
4.1.1 NET PROFITS. Net Profits shall be allocated among the
Members as follows:
(i) first, to each of the Members until the cumulative Net
Profits allocated to such Member pursuant to this Section 411 is
equal to the cumulative Net Loss allocated to the Member pursuant to
Section 412 for any prior period; and
(ii) thereafter, to the Members in accordance with their
Percentage Interests.
4.1.2 ALLOCATION OF NET LOSS. Except as otherwise provided in this
Article 4, Net Loss shall be allocated among the Members as follows:
(i) first, to offset any Net Profits allocated pursuant to
Section 411 hereof, and then to offset any Net Profits allocated
pursuant to Section 411 hereof (in each case pro rata in proportion
to their shares of Net Profits being offset);
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(ii) second, in proportion to the positive balances, if any,
in the Members' respective Capital Accounts, until such balances are
reduced to zero; and
(iii) third, to the Members, pro rata, in accordance with
their Percentage Interests; provided, however, that if, and to the
extent that the allocation of Net Loss in this manner would cause a
Member to have an Adjusted Capital Account Deficit at the end of the
Fiscal Year, then such Net Loss shall instead be allocated to the
Member who has the largest Percentage Interest.
4.2 RESIDUAL ALLOCATIONS. Except as otherwise provided in this
Agreement, all items of LLC income, gain, loss, deduction, and any other
allocations not otherwise provided for shall be divided among the Members in the
same proportions as they share Net Profits or Net Losses, as the case may be,
for the Fiscal Year.
4.3 QUALIFIED INCOME OFFSET. If any Member unexpectedly receives any
adjustments, allocation or distributions described in clauses (4), (5) or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d), items of LLC income shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 43 is intended to constitute
a "qualified income offset" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(d)(3).
4.4 MINIMUM GAIN CHARGEBACK. If there is a net decrease in LLC Minimum
Gain during a Fiscal Year, each Member will be allocated, before any other
allocation under this Article 4, items of income and gain for such Fiscal Year
(and if necessary, subsequent years) in proportion to and to the extent of an
amount equal to such Member's share of the net decrease in LLC Minimum Gain
determined in accordance with Regulations Section 1.704-2(g)(2). This Section
44 is intended to comply with, and shall be interpreted consistently with, the
"minimum gain chargeback" provisions of Regulations Section 1.704-2(f).
4.5 MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Article 4, but except Section 44, if there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year of the LLC, each Member who has a share
of the Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(5), shall be specially allocated items of LLC income and gain for
such year (and, if necessary, subsequent years) in an amount equal such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 45 is intended
to comply with a minimum gain chargeback requirement of that Section of the
Regulations and shall be interpreted consistently therewith.
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4.6 MEMBER NONRECOURSE DEDUCTIONS. Any Member Nonrecourse Deductions for
any Fiscal Year or other period shall be specially allocated to the Member who
bears (or is deemed to bear) the economic risk of loss with respect to the
Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
4.7 SPECIAL ALLOCATIONS. Any special allocations of items of Net
Profits pursuant to Sections 44, 45 and 46 shall be taken into account in
computing subsequent allocations of Net Profits pursuant to Section 41, so that
the net amount of any items so allocated and the gain, loss and any other item
allocated to each Member pursuant to Section 41 shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Member
pursuant to the provisions of this Article if such special allocations had not
occurred.
4.8 FEES TO MEMBERS OR AFFILIATES. Notwithstanding the provisions of
Section 41, in the event that any fees, interest, or other amounts paid to any
Member or any Affiliate thereof pursuant to this Agreement or any other
agreement between the LLC and any Member or Affiliate thereof providing for the
payment of such amount, and deducted by the LLC in reliance on Section 707(a)
and/or 707(c) of the Code, are disallowed as deductions to the LLC on its
federal income tax return and are treated as LLC distributions, then
4.8.1 the Net Profits or Net Loss, as the case may be, for the
Fiscal Year in which such fees, interest, or other amounts were paid shall
be increased or decreased, as the case may be, by the amount of such fees,
interest, or other amounts that are treated as LLC distributions; and
4.8.2 there shall be allocated to the Member to which (or to whose
Affiliate) such fees, interest, or other amounts were paid, prior to the
allocations pursuant to Section 41, an amount of gross income for the
Fiscal Year equal to the amount of such fees, interest, or other amounts
that are treated as LLC distributions.
4.9 SECTION 704(C) ALLOCATION. Any item of income, gain, loss, and
deduction with respect to any property (other than cash) that has been
contributed by a Member to the capital of the LLC and which is required or
permitted to be allocated to such Member for income tax purposes under Section
704(c) of the Code so as to take into account the variation between the tax
basis of such property and its fair market value at the time of its contribution
shall be allocated to such Member solely for income tax purposes in the manner
so required or permitted.
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ARTICLE 5
---------
DISTRIBUTIONS
-------------
5.1 AVAILABLE CASH FLOW. Available Cash Flow of the LLC shall be
distributed to the Members in accordance with the following priority and
agreements:
5.1.1 FIRST. Pro rata among the Members, in the ratio of the
principal loan balances outstanding, until all of the accrued but unpaid
interest on all LLC Loans, if any, has been paid, and then the principal
amounts thereof.
5.1.2 SECOND. Pro rata among Members who have positive Net Capital
Contributions, in the ratio of their positive Net Capital Contributions,
until all Net Capital Contributions are reduced to zero.
5.1.3 THIRD. To the Members in accordance with their applicable
Percentage Interests as of the time of such distribution.
ARTICLE 6
---------
RIGHTS, DUTIES, OBLIGATIONS AND COMPENSATION
--------------------------------------------
OF MANAGERS AND OFFICERS
6.1 MANAGER. The LLC shall be managed initially by G&L HAMPDEN, INC.
(the "Manager"). The Manager shall have such rights, duties and powers as are
specified in this Agreement, or conferred upon the Manager by Vote of the
Members.
6.1.1 DUTIES OF THE MANAGER. The Manager is the general manager
and chief executive officer of the LLC and has, subject to the control of
the Members (except as otherwise provided in Section 2.6(v)), general
supervision, direction, and control of the business of the LLC. The
Manager shall preside at all meetings of the Members. The Manager shall
have the general powers and duties of management typically vested in the
office of president of a corporation, and such other powers and duties as
may be prescribed by the Members. Until the Members shall have elected
more than one Manager for the LLC, the term "Manager" as used in this
Agreement shall mean the Person who alone has the powers and duties
specified in this Section 611.
6.1.2 ELECTION. Except as otherwise provided in Section 2.6(v),
each Manager of the LLC shall be chosen annually by the Vote of the
Members. In voting for Managers, each Member shall have a number of votes
equal to its Percentage Interest in the LLC. The candidate for each
Manager position who obtains the majority of Member votes
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cast shall succeed to that Manager position. Each Manager shall hold office
until the Manager resigns or shall be removed or otherwise disqualified to
serve, or the Manager's successor is elected and qualified.
6.1.3 SUBORDINATE OFFICERS. The Members may appoint a secretary, a
chief financial officer, and such other officers of the LLC as the Business
of the LLC may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in this
Agreement, or as the Members determine.
6.1.4 REMOVAL AND RESIGNATION. Except as otherwise provided in
Section 2.6(v), any Manager or other officer of the LLC may be removed,
with or without cause, by the Vote of the Members. Any Manager or other
officer of the LLC may resign at any time without prejudice to any rights
of the LLC under any contract to which the Manager or other officer of the
LLC is a party, by giving written notice to the Members, or to the Manager,
as applicable. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
6.1.5 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled
by a Vote of the Members through the appointment of a successor officer who
shall hold the office for the unexpired term.
6.2 CO-MANAGERS. Except as otherwise provided in Section 2.6(v), if at
any time during the Period of Duration, the Members by Vote shall determine to
have more than one Manager, the Managers shall be elected pursuant to the
provisions of Section 612 and shall be subject to removal pursuant to the
provisions of Section 614. Each Manager shall also have the right to resign
provided in Section 614, and any vacancy in a Manager position shall be filled
pursuant to the provisions of Section 615. The following provisions of this
Section 62 shall govern the manner in which the Managers shall manage the
Business of the LLC if the Members have elected more than one Manager.
6.2.1 The Managers shall share in the duties described in Section
611.
6.2.2 Meetings of the Managers shall be held at the principal
office of the LLC, unless some other place is designated in the notice of
the meeting. Any Manager may participate in a meeting through use of a
conference telephone or similar communication equipment so long as all
Managers participating in such a meeting can hear one another. Accurate
minutes of any meeting of the Managers shall be maintained by the officer
designated by the Managers for that purpose.
6.2.3 Regular meetings of the Managers shall be held immediately
following the adjournment of the annual meeting of the Members at which the
Managers are elected. No notice need be given of such regular meetings.
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6.2.4 Special meetings of the Managers for any purpose may be
called at any time by any Manager. At least forty-eight (48) hours notice
of the time and place of a special meeting of the Managers shall be
delivered personally to the Managers or personally communicated to them by
an officer of the LLC by telephone, telegraph or facsimile. If the notice
is sent to a Manager by letter, it shall be addressed to him at his last
known business address as it is shown on the records of the LLC. In case
such notice is mailed, it shall be deposited in the United States mail,
first-class postage, prepaid, in the place in which the principal office of
the LLC is located at least four (4) days prior to the time of the holding
of the meeting. Such mailing, telegraphing, telephoning or delivery as
above provided shall be considered due, legal and personal notice to such
Manager.
6.2.5 With respect to a special meeting which has not been duly
called or noticed pursuant to the provisions of Section 624, all
transactions carried out at the meeting are as valid as if had at a meeting
regularly called and noticed if: (i) all Managers are present at the
meeting, and sign a written consent to the holding of such meeting, or (ii)
if a majority of the Managers are present and if those not present sign a
waiver of notice of such meeting or a consent to holding the meeting or an
approval of the minutes thereof, whether prior to or after the holding of
such meeting, which waiver, consent or approval shall be filed with the
other records of the LLC, or (iii) if a Manager attends a meeting without
notice and does not protest prior to the meeting or at its commencement
that notice was not given to him or her.
6.2.6 Any action required or permitted to be taken by the Managers
may be taken without a meeting and will have the same force and effect as
if taken by a vote of Managers at a meeting properly called and noticed, if
authorized by a writing signed individually or collectively by all, but not
less than all, the Managers. Such consent shall be filed with the records
of the LLC.
6.2.7 A majority of the total number of incumbent Managers shall be
necessary to constitute a quorum for the transaction of business at any
meeting of the Managers, and except as otherwise provided in this Agreement
or by the Statute, the action of a majority of the Managers present at any
meeting at which there is a quorum, when duly assembled, is valid. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of Managers, if any action taken
is approved by a majority of the required quorum for such meeting.
6.3 LIMITATIONS ON RIGHTS AND POWERS. Except by the written approval by
a Majority in Interest of the Members, neither the Manager nor any other officer
of the LLC shall have authority to:
6.3.1 Enter into or commit to any agreement, contract, commitment
or obligation on behalf of the LLC obligating any Member or Principal to
find additional capital, to make or guarantee a loan or to increase its
personal liability either to the LLC or to third parties;
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6.3.2 Materially alter the Business of the LLC;
6.3.3 Permit or cause the LLC to place title to any Property in the
name of a nominee;
6.3.4 Permit the LLC's funds to be commingled with the funds of any
other Person;
6.3.5 Do any act in contravention of this Agreement;
6.3.6 Do any act which would make it impossible to carry on the
Business of the LLC;
6.3.7 Confess a judgment against the LLC;
6.3.8 Possess Property, or assign rights in specific Property, for
other than a LLC purpose;
6.3.9 Admit any person as a Member, except as otherwise provided in
this Agreement; and
6.3.10 Dissolve the LLC.
6.4 COMPENSATION OF MANAGER. The LLC shall pay to the Manager such
salary and other benefits as shall be approved from time to time by Vote of the
Members. The LLC shall reimburse the Manager for any expense paid by the
Manager that properly is to be borne by the LLC.
6.5 COMPENSATION OF MEMBERS. The Manager may cause the LLC to pay
compensation to any Member or any Principal of any Member for their services to
the LLC provided that said payment is for services rendered and is reasonable in
amount.
6.6 EXPENSE REIMBURSEMENT. The LLC shall reimburse the Members for any
expense paid by them that properly is to be borne by the LLC, as approved from
time to time by the Manager.
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ARTICLE 7
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MEMBERS' MEETINGS
-----------------
7.1 PLACE OF MEETINGS. Meetings of the Members shall be held at the
principal office of the LLC, unless some other appropriate and convenient
location, either within or without the state where the Articles of Organization
were filed, shall be designated for that purpose from time to time by the
Manager.
7.2 ANNUAL MEETINGS OF MEMBERS. An annual meeting of the Members shall be
held, each year, on October 1st, at 10:00 a.m. If this day shall be a legal
holiday, then the meeting shall be held on the next succeeding business day, at
the same time. Except as otherwise provided in Section 2.6, at the annual
meeting, the Members shall elect the Manager (or Managers) and transact such
other business as may be properly brought before the meeting.
7.3 SPECIAL MEETINGS. Special meetings of the Members may be called at
any time by the Manager or by one or more Members holding in the aggregate more
than ten percent (10%) of the Percentage Interests. Upon receipt of a written
request, which request may be mailed or delivered personally to the Manager, by
any Person entitled to call a special meeting of Members, the Manager shall
cause notice to be given to the Members that a meeting will be held at a time
requested by the Person or Persons calling the meeting, which time for the
meeting shall be not less than ten (10) nor more than sixty (60) days after the
receipt of such request. If such notice is not given within twenty (20) days
after receipt of such request, the Persons calling the meeting may give notice
thereof in the manner provided by this Agreement.
7.4 NOTICE OF MEETINGS. Except as provided for in Section 73 for
special meetings, notice of meetings shall be given to the Members in writing
not less than ten (10) nor more than sixty (60) days before the date of the
meeting by the Manager. Notices for regular and special meetings shall be given
personally, by mail, or by facsimile, and shall be sent to each Member's last
known business address appearing on the books of the LLC. Such notice shall be
deemed given at the time it is delivered personally, or deposited in the mail,
or sent by facsimile. Notice of any meeting of Members shall specify the place,
the day and the hour of the meeting, and (i) in case of a special meeting, the
general nature of the business to be transacted, or (ii) in the case of an
annual meeting, those matters which the Manager, at the date of mailing, intends
to present for action by the Members.
7.5 VALIDATION OF MEMBERS' MEETINGS. The transactions of a meeting of
Members which was not called or noticed pursuant to the provisions of Section 73
or 74 shall be valid as though transacted at a meeting duly held after regular
call and notice, if Members holding in the aggregate fifty-one percent (51%) or
more of the Percentage Interests are present, and if, either before or after the
meeting, each of the Members entitled to vote but not present (whether in person
or by proxy, as that term is used in the Statute) at the meeting signs a written
waiver of notice, or a consent to the holding of such meeting, or an approval of
the minutes thereof. All such waivers,
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consents or approvals shall be filed with the records of the LLC. Attendance
shall constitute a waiver of notice, unless objection shall be made.
7.6 ACTIONS WITHOUT A MEETING.
7.6.1 Any action which may be taken at any annual or special
meeting of Members may be taken without a meeting and without prior notice
if a consent in writing, setting forth the action so taken, shall be signed
by Members holding in the aggregate the number of votes equal to or greater
than the Vote, unless a lesser vote is provided for by this Agreement or
the Statute; provided, however, that any action which by the terms of this
Agreement or by the Statute is required to be taken pursuant to a
greater vote of the Members may only be taken by a written consent which
has been signed by Members holding the requisite number of votes.
7.6.2 Unless the consents of all Members have been given in
writing, notice of any approval made by the Members without a meeting by
less than unanimous written consent shall be given at least ten (10) days
before the consummation of the action authorized by such approval. Any
Member giving a written consent may revoke the consent by a writing
received by the LLC prior to the time that written consents of Members
required to authorize the proposed action have been filed with the LLC.
Such revocation is effective upon its receipt by the LLC.
7.7 QUORUM AND EFFECT OF VOTE. Each Member shall have a number of votes
equal to the Percentage Interest held by such Member, provided that if, pursuant
to the Statute or the terms of this Agreement, a Member is not entitled to vote
on a specific matter, then such Member's number of votes and Percentage Interest
shall not be considered for purposes of determining whether a quorum is present,
or whether approval by Vote of the Members has been obtained, in respect of such
specific matter. Members holding an aggregate of fifty-one percent (51%) or
more of the Percentage Interests shall constitute a quorum at all meetings of
the Members for the transaction of business, and the Vote of Members shall be
required to approve any action, unless a greater vote is required or a lesser
vote is provided for by this Agreement or by the Statute.
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ARTICLE 8
---------
RESTRICTIONS ON TRANSFER OR CONVERSION
--------------------------------------
OF LLC INTERESTS, ADDITIONAL CAPITAL CONTRIBUTIONS;
ADMISSION OF NEW MEMBERS
8.1 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST. The Interest of each
Member and the Economic Interest of a Person who is not a Member constitutes
personal property of the Member or Economic Interest holder. Each Member and
each Economic Interest holder has no interest in the Property.
8.1.1 A Member's Interest or an Economic Interest may be
transferred or assigned only as provided in this Agreement.
8.1.2 No transfer, hypothecation, encumbrance or assignment
("Transfer") of a Member's Interest, or any part thereof, in the LLC will
be valid without the consent of a Majority in Interest of the Members,
other than the Member proposing to dispose of its Interest.
8.1.3 A Transfer of an Economic Interest may be done without the
consent of the other Members or of the Manager. Any holder of an Economic
Interest shall have no right to participate in the management of the
business and affairs of the LLC or to become a Member thereof.
8.2 VOID TRANSFERS. Any Transfer of an Interest which does not satisfy
the requirement of Section 812 shall only effect a Transfer of an Economic
Interest, and the transferring Member shall continue to be obligated under each
and every provision of this Agreement.
8.3 ADDITIONAL CAPITAL. During the Period of Duration, each of the
Members shall be required to make additional Capital Contributions to the LLC if
such additional Capital Contributions are approved by Members holding, in the
aggregate, seventy-five percent (75%) or more of the Percentage Interests.
8.3.1 Each Member shall be obligated to contribute an amount of
additional capital equal to such Member's Percentage Interest times the
total Capital Contribution amount required of all Members.
8.3.2 The Members' Percentage Interests shall be adjusted to
recognize any Member's failure to make the required additional Capital
Contribution.
8.3.3 Any Member who fails to contribute some or all of the
required additional capital shall be in default of this Agreement and shall
have no right to participate
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in the management of the business and affairs of the LLC, but such Member
shall not forfeit its rights to distributions and Net Profits and Net Loss
allocations.
8.4 ADMISSION OF NEW MEMBERS. A new Member may be admitted into the LLC
only upon the consent of a Majority in Interest of the Members.
8.4.1 The amount of Capital Contribution which must be made by a
new Member shall be determined by the vote of all existing Members.
8.4.2 A new Member shall not be deemed admitted into the LLC until
the Capital Contribution required of such Person shall have been made and
such Person has become a party to this Agreement.
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ARTICLE 9
---------
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
-----------------------------------------
9.1 MAINTENANCE OF BOOKS AND RECORDS. The LLC shall cause books and
records of the LLC to be maintained in accordance with generally accepted
accounting principles, and shall give reports to the Members in accordance with
prudent business practices and the Statute. There shall be kept at the
principal office of the LLC, as well as at the office of record of the LLC
specified in Section 2.3, if different, the following LLC documents:
9.1.1 A current list of the full name and last known business or
residence address of each Member and of each holder of an Economic Interest
in the LLC set forth in alphabetical order, together with the Capital
Contributions and share in Net Profits and Net Loss of each Member and
holder of an Economic Interest;
9.1.2 A current list of the full name and business or residence
address of each Manager;
9.1.3 A copy of the Articles of Organization and any amendments
thereto, together with any powers of attorney pursuant to which the
Articles of Organization and any amendments thereto were executed;
9.1.4 Copies of the LLC's federal, state and local income tax or
information returns and reports, if any, for the six most recent Fiscal
Years;
9.1.5 A copy of this Agreement and any amendments thereto, together
with any powers of attorney pursuant to which this Agreement and any
amendments thereto were executed;
9.1.6 Copies of the financial statements of the LLC, if any, for
the six most recent Fiscal Years;
9.1.7 The LLC's books and records as they relate to the internal
affairs of the LLC for at least the current and past four Fiscal Years;
9.1.8 Originals or copies of all minutes, actions by written
consent, consents to action and waivers of notice to Members and Member
Votes, actions and consents; and
9.1.9 Any other information required to be maintained by the LLC
pursuant to the Statute.
9.2 ANNUAL ACCOUNTING. Within 120 days after the close of each Fiscal
Year of the LLC, the LLC shall (i) cause to be prepared and submitted to each
Member a balance sheet
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and income statement for the preceding Fiscal Year of the LLC (or portion
thereof) in conformity with generally accepted accounting principles and (ii)
provide to the Members all information necessary for them to complete federal
and state tax returns.
9.3 INSPECTION AND AUDIT RIGHTS. Each Member and each holder of an
Economic Interest in the LLC who is not a Member has the right upon reasonable
request, for purposes reasonably related to the interest of that Person, to
inspect and copy during normal business hours any of the LLC books and records
required to be maintained in accordance with Section 91. Such right may be
exercised by the Person or by that Person's agent or attorney. Any Member may
require a review and/or audit of the books, records and reports of the LLC. The
determination of the Manager as to adjustments to the financial reports, books,
records and returns of the LLC, in the absence of fraud or gross negligence,
shall be final and binding upon the LLC and all of the Members.
9.4 RIGHTS OF MEMBERS AND NON-MEMBERS. Upon the request of a Member or a
holder of an Economic Interest who is not a Member, for purposes reasonably
related to the interest of that Person, the Manager shall promptly deliver to
the Member or holder of an Economic Interest, at the expense of the LLC, a copy
of this Agreement and a copy of the information listed in Sections 911, 912 and
914 of this Agreement.
9.5 BANK ACCOUNTS. The bank accounts of the LLC shall be maintained in
such banking institutions as the Manager shall determine, provided such
institutions have a net worth in excess of One Hundred Million Dollars
($100,000,000).
9.6 TAX MATTERS HANDLED BY MANAGERS. One of the Managers who is also a
Member, or in the event no Manager is a Member, a Member or an officer of a
corporate Member, shall be designated as "Tax Matters Partner" (as defined in
Code section 6231), to represent the LLC (at the LLC's expense) in connection
with all examinations of the LLC's affairs by tax authorities, including
resulting judicial and administrative proceedings, and to expend LLC funds for
professional services and costs associated therewith. In its capacity as "Tax
Matters Partner," the designated Person shall oversee the LLC tax affairs in the
overall best interests of the LLC. Unless the Members designate another to be
"Tax Matters Partner," the Manager shall be the "Tax Matters Partner," provided
that Person is a Member or an officer of a corporate Member.
9.7 FEDERAL INCOME TAX ELECTIONS MADE BY MANAGERS. The Manager on
behalf of the LLC may make all elections for federal income tax purposes,
including but not limited to, the following:
9.7.1 USE OF ACCELERATED DEPRECIATION METHODS. To the extent
permitted by applicable law and regulations, the LLC may elect to use an
accelerated depreciation method on any depreciable unit of the assets of
the LLC; and
9.7.2 ADJUSTMENT OF BASIS OF ASSETS. In case of a transfer of all
or part of the Interest of any Member, the LLC may elect, pursuant to code
Sections 734, 743, and 754 of the Code to adjust the basis of the assets of
the LLC.
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9.7.3 ACCOUNTING METHOD. For financial reporting purposes, the
books and records of the LLC shall be kept on the accrual method of
accounting applied in a consistent manner and shall reflect all
transactions of the LLC and be appropriate and adequate for the purposes of
the LLC.
9.8 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members are aware
of the income tax consequences of the allocations made by this Agreement and
hereby agree to be bound by the provisions of this Section 98 in reporting their
shares of the LLC income and loss for income tax purposes.
ARTICLE 10
----------
TERMINATION AND DISSOLUTION
---------------------------
10.1 DISSOLUTION. Except as otherwise provided in Section 6.2, the LLC
shall be dissolved upon the occurrence of any of the following events:
10.1.1 When the Period of Duration of the LLC expires;
10.1.2 The written approval by a Majority In Interest of the
Members to dissolve the LLC;
10.1.3 The death, withdrawal, resignation, expulsion, bankruptcy or
dissolution of a Member or the occurrence of any other event which
terminates the Member's continued membership in the LLC, unless the
business of the LLC is continued by the unanimous vote of all remaining
Members within ninety (90) days of the happening of that event.
10.2 STATEMENT OF INTENT TO DISSOLVE. As soon as possible after the
occurrence of any of the events specified in Section 101 above, the LLC shall
execute a Statement of Intent to Dissolve in such form as prescribed by the
Secretary of State.
10.3 CONDUCT OF BUSINESS. Upon the filing of the Statement of Intent to
Dissolve with the Secretary of State, the LLC shall cease to carry on its
business, except insofar as may be necessary for the winding up of its business,
but the LLC's separate existence shall continue until the Articles of
Dissolution have been filed with the Secretary of State or until a decree
dissolving the LLC has been entered by a court of competent jurisdiction.
10.4 DISTRIBUTION OF NET PROCEEDS. The Members shall continue to divide
Net Profits and Losses and Available Cash Flow during the winding-up period in
the same manner and the same priorities as provided for in Articles 4 and 5
hereof. The proceeds from the liquidation of Property shall be applied in the
following order:
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10.4.1 To the payment of creditors, in the order of priority as
provided by law, except to Members on account of their contributions;
10.4.2 To the payment of loans or advances that may have been made
by any of the Members or their Principals for working capital or other
requirements of the LLC;
10.4.3 To the Members in accordance with the positive balances in
their Capital Accounts after adjustments for all allocations of Net Profits
and Net Loss.
Where the distribution pursuant to this Section 104 consists both of cash
(or cash equivalents) and non-cash assets, the cash (or cash equivalents)
shall first be distributed, in a descending order, to fully satisfy each
category starting with the most preferred category above. In the case of
noncash assets, the distribution values are to be based on the fair market
value thereof as determined in good faith by the liquidator, and the
shortest maturity portion of such non-cash assets (e.g., notes or other
indebtedness) shall, to the extent such non-cash assets are readily
divisible, be distributed, in a descending order, to fully satisfy each
category above, starting with the most preferred category.
ARTICLE 11
----------
INDEMNIFICATION OF THE MEMBERS, MANAGERS,
-----------------------------------------
AND THEIR AFFILIATES
11.1 INDEMNIFICATION OF THE MEMBERS AND THEIR PRINCIPALS. The LLC shall
indemnify and hold harmless the Members, the Managers, their Affiliates and
their respective officers, directors, employees, agents and Principals
(individually, an "Indemnitee") from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which the Indemnitee was involved or may be involved, or threatened to be
involved, as a party or otherwise, arising out of or incidental to the Business
of the LLC, excluding liabilities to any Member, regardless of whether the
Indemnitee continues to be a Member, an Affiliate, or an officer, director,
employee, agent or Principal of the Member at the time any such liability or
expense is paid or incurred, to the fullest extent permitted by the Statute and
all other applicable laws.
11.2 EXPENSES. Expenses incurred by an Indemnitee in defending any
claim, demand, action, suit or proceeding subject to Section 111 shall, from
time to time, be advanced by the LLC prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the LLC of an
undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that such Person is not entitled to be indemnified as authorized
in Section 111.
11.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE. The indemnification provided
by Section 111 shall be in addition to any other rights to which those
indemnified may be
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entitled under any agreement, vote of the Members, as a matter of law or equity
or otherwise, both as to action in the Indemnitee's capacity as a Member, as an
Affiliate or as an officer, director, employee, agent or Principal of a Member
and as to any action in another capacity, and shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.
11.4 ERRORS AND OMISSIONS INSURANCE. The LLC may purchase and maintain
insurance, at the LLC's expense, on behalf of the Members and such other Persons
as the Members shall determine, against any liability that may be asserted
against, or any expense that may be incurred by, such Person in connection with
the activities of the LLC and/or the Members' acts or omissions as the Members
of the LLC regardless of whether the LLC would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
11.5 ASSETS OF THE LLC. Any indemnification under Section 111 shall be
satisfied solely out of the assets of the LLC. No Member shall be subject to
personal liability or required to fund or to cause to be funded any obligation
by reason of these indemnification provisions.
ARTICLE 12
----------
ISSUANCE OF LLC CERTIFICATES
----------------------------
12.1 ISSUANCE OF LLC CERTIFICATES. The interest of each Member in the
LLC shall be represented by an LLC Certificate. Upon the execution of this
Agreement and the payment of the Capital Contributions by the Members pursuant
to Section 3.2 hereof, the Manager shall cause the LLC to issue one or more LLC
Certificates in the name of each Member certifying that the Person named therein
is the record holder of the LLC Units set forth therein. For purposes of this
Agreement, the term "record holder" shall mean the person whose name appears in
Section 3.1 as the Member owning the LLC Interest at issue.
12.2 TRANSFER OF LLC CERTIFICATES. An LLC Interest which is transferred
in accordance with the terms of Section 81 of this Agreement shall be
transferable on the books of the LLC by the record holder thereof in person or
by such record holder's duly authorized attorney, but, except as provided in
Section 123 hereof with respect to lost, stolen or destroyed certificates, no
transfer of an LLC Interest shall be entered until the previously issued LLC
Certificate representing such LLC Interest shall have been surrendered to the
LLC and cancelled and a replacement LLC Certificate issued to the assignee of
such LLC Interest in accordance with such procedures as the Manager may
establish. The Manager shall issue to the transferring Member a new LLC
Certificate representing the LLC Interests not being transferred by the Member,
in the event such Member only transferred some, but not all, of the LLC
Interests represented by the original LLC Certificate. Except as otherwise
required by law, the LLC shall be entitled to treat the record holder of an LLC
Certificate on its books as the owner thereof for all purposes regardless of any
notice or knowledge to the contrary.
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12.3 LOST, STOLEN OR DESTROYED CERTIFICATES. The LLC shall issue a new
LLC Certificate in place of any LLC Certificate previously issued if the record
holder of the LLC Certificate:
12.3.1 makes proof by affidavit, in form and substance satisfactory
to the Manager, that a previously issued LLC Certificate has been lost,
destroyed or stolen;
12.3.2 requests the issuance of a new LLC Certificate before the
LLC has notice that the LLC Certificate has been acquired by a purchaser
for value in good faith and without notice of an adverse claim;
12.3.3 if requested by the Manager, delivers to the LLC a bond, in
form and substance reasonably satisfactory to the Manager, with such surety
or sureties and with fixed or open penalty as the Manager may direct, in
his reasonable discretion, to indemnify the LLC against any claim that may
be made on account of the alleged loss, destruction or theft of the LLC
Certificate; and
12.3.4 satisfies any other reasonable requirements imposed by the
Manager.
If a Member fails to notify the LLC within a reasonable time after
it has notice of the loss, destruction or theft of an LLC
Certificate, and a transfer of the LLC Interest represented by the
LLC Certificate is registered before receiving such notification,
the LLC shall have no liability with respect to any claim against
the LLC for such transfer or for a new LLC Certificate.
ARTICLE 13
----------
AMENDMENTS
----------
13.1 AMENDMENT, ETC. OF OPERATION AGREEMENT. This Agreement may be
adopted, altered, amended, or repealed and a new operating agreement may be
adopted by a Majority In Interest of the Members.
13.2 AMENDMENT, ETC. OF ARTICLES OF ORGANIZATION. Notwithstanding any
provision to the contrary in the Articles of Organization or this Agreement, in
no event shall the Articles of Organization be amended without the vote of
Members representing a Majority In Interest of the Members.
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ARTICLE 14
----------
MISCELLANEOUS PROVISIONS
------------------------
14.1 COUNTERPARTS. This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one Agreement,
binding on all of the parties hereto, notwithstanding that all of the parties
are not signatory to the original or the same counterpart.
14.2 SURVIVAL OF RIGHTS. This Agreement shall be binding upon, and, as
to permitted or accepted successors, transferees and assigns, inure to the
benefit of the Members and the LLC and their respective heirs, legatees, legal
representatives, successors, transferees and assigns, in all cases whether by
the laws of descent and distribution, merger, reverse merger, consolidation,
sale of assets, other sale, operation of law or otherwise.
14.3 SEVERABILITY. In the event any Section, or any sentence within any
Section, is declared by a court of competent jurisdiction to be void or
unenforceable, such sentence or Section shall be deemed severed from the
remainder of this Agreement and the balance of this Agreement shall remain in
full force and effect.
14.4 NOTIFICATION OR NOTICES. Except for notices to be given under
Articles 6 and 7 for purposes of meetings of Managers and meetings of Members,
any notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given if personally delivered,
transmitted by facsimile (with mechanical confirmation of transmission), or
deposited in the United States mail, registered or certified, postage prepaid,
addressed to the parties' addresses set forth below. Notices given in the
manner provided for in this Section 144 shall be deemed effective on the third
day following deposit in the mail or on the day of transmission or delivery if
given by facsimile or by hand. Notices must be addressed to the parties hereto
at the following addresses, unless the same shall have been changed by notice in
accordance herewith:
14.5 CONSTRUCTION. The language in all parts of this Agreement shall be
in all cases construed simply according to its fair meaning and not strictly for
or against any of the Members.
14.6 SECTION HEADINGS. The captions of the Articles or Sections in this
Agreement are for convenience only and in no way define, limit, extend or
describe the scope or intent of any of the provisions hereof, shall not be
deemed part of this Agreement and shall not be used in construing or
interpreting this Agreement.
14.7 GOVERNING LAW. This Agreement shall be construed according to the
laws of the State of Delaware.
14.8 ADDITIONAL DOCUMENTS. Each Member, upon the request of another
Member, agrees to perform all further acts and execute, acknowledge and deliver
all documents
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which may be reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement, including but not limited to acknowledging before
a notary public any signature heretofore or hereafter made by a Member.
14.9 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine and
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
14.10 TIME OF THE ESSENCE. Except as otherwise provided herein, time is
of the essence in connection with each and every provision of this Agreement.
14.11 FURTHER ACTIONS. Each of the Members agrees to execute, acknowledge
and deliver such additional documents, and take such further actions, as may
reasonably be required from time to time to carry out each of the provisions,
and the intent, of this Agreement, and every agreement or document relating
hereto, or entered into in connection herewith.
14.12 WAIVER OF JURY. WITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, AS TO WHICH NO MEMBER
INVOKES THE RIGHT TO ARBITRATION HEREINABOVE PROVIDED, OR AS TO WHICH LEGAL
ACTION NEVERTHELESS OCCURS, EACH MEMBER HEREBY IRREVOCABLY WAIVES ALL RIGHTS IT
MAY HAVE TO DEMAND A JURY TRIAL. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY THE MEMBERS AND EACH MEMBER ACKNOWLEDGES THAT NONE OF THE
OTHER MEMBERS NOR ANY PERSON ACTING ON BEHALF OF THE OTHER PARTIES HAS MADE ANY
REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. THE MEMBERS EACH FURTHER ACKNOWLEDGE THAT IT HAS
BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING
OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THIS WAIVER WITH COUNSEL. THE MEMBERS EACH FURTHER ACKNOWLEDGES THAT IT HAS
READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION.
14.13 THIRD PARTY BENEFICIARIES. There are no third party beneficiaries
of this Agreement except (i) Affiliates and Principals of the Members and (ii)
any other Persons as may be entitled to the benefits of Section 111 hereof.
14.14 TAX ELECTIONS. The Manager, in his sole discretion, shall cause the
LLC to make or not make all elections required or permitted to be made for
income tax purposes.
14.15 PARTITION. The Members agree that the Property that the LLC may own
or have an interest in is not suitable for partition. Each of the Members
hereby irrevocably waives any and all rights that it may have to maintain any
action for partition of any Property in which the LLC may at any time have an
interest.
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14.16 ENTIRE AGREEMENT. This Agreement and the Articles of Organization
constitute the entire agreement of the Members with respect to, and supersedes
all prior written and oral agreements, understandings and negotiations with
respect to, the subject matter hereof.
14.17 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
14.18 ATTORNEYS' FEES. In the event of any litigation, arbitration or
other dispute arising as a result of or by reason of this Agreement, the
prevailing party in any such litigation, arbitration or other dispute shall be
entitled to, in addition to any other damages assessed, its reasonable
attorneys' fees, and all other costs and expenses incurred in connection with
settling or resolving such dispute. The attorneys' fees which the prevailing
party is entitled to recover shall include fees for prosecuting or defending any
appeal and shall be awarded for any supplemental proceedings until the final
judgment is satisfied in full. In addition to the foregoing award of attorneys'
fees to the prevailing party, the prevailing party in any lawsuit or arbitration
procedure on this Agreement shall be entitled to its reasonable attorneys' fees
incurred in any post judgment proceedings to collect or enforce the judgment.
This attorneys' fees provision is separate and several and shall survive the
merger of this Agreement into any judgment.
14.19 CONFIDENTIALITY AND PRESS RELEASES. The Members and their
respective Affiliates and Principals hereby agree that it is in all of their
best interests to keep this Agreement and the Business of the LLC and all
information concerning such business confidential. Such parties each agree that
they will not take any action nor conduct themselves in any fashion, including
giving press releases or granting interviews, that would disclose to third
parties unrelated to the LLC or the Business of the LLC any aspect of the LLC or
the Business of the LLC without the written approval of a Majority in Interest
of the Members. To the extent such prior approval is given, it may be
conditioned upon approval of the text of any press release or the scope of any
intended interview.
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IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement as of the date first written above.
G&L REALTY PARTNERSHIP, L.P.,
A Delaware Limited Partnership
By: G&L Realty Corp.,
a Maryland Corporation,
as General Partner
By: /s/ Mark H. Hamermesh
_____________________________
Name: Mark H. Hamermesh
Its: Sr. Vice President
G&L HAMPDEN, INC.,
A Delaware Corporation
By: /s/ Mark H. Hamermesh
________________________________
Name: Mark H. Hamermesh
Its: Sr. Vice President
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EXHIBIT A
(FACE OF CERTIFICATE)
THE MEMBERSHIP PERCENTAGE INTEREST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE. SUCH INTEREST MAY NOT BE SOLD OR TRANSFERRED UNLESS
SUBSEQUENTLY REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE LLC AGREEMENT (AS DEFINED BELOW) PROVIDES FOR FURTHER RESTRICTIONS ON
TRANSFER OF THE INTEREST REPRESENTED HEREBY.
CERTIFICATE FOR A MEMBERSHIP PERCENTAGE INTEREST
IN
G&L HAMPDEN, LLC
Certificate No. ______________ ____________ Percentage Interest
G&L HAMPDEN, INC., as the Manager of G&L HAMPDEN, LLC, a Delaware
limited liability company (the "LLC"), hereby certifies that
_____________________________________________________________ is the
holder of a Membership Percentage Interest, as that term is defined in
the Operating Agreement of G&L HAMPDEN, LLC, dated as of OCTOBER 15,
1997, as amended and restated from time to time (the "Agreement")
(copies of which are on file at the principal office of the LLC).
This Certificate is not negotiable or transferable except by operation
of law, or as otherwise provided in the Agreement, and any such
transfer will be valid only upon delivery of this Certificate,
together with an assignment in the form set forth on the reverse
hereof (or otherwise acceptable to the Manager and sufficient to
convey an interest in an limited liability company pursuant to the
Delaware Limited Liability Company Act, as it may be amended and in
effect from time to time, or any successor statute thereto), duly
executed, to the Manager of the LLC.
Dated: ______________________
MANAGER
G&L HAMPDEN, INC.,
A Delaware Corporation
By: _____________________________
Mark H. Hamermesh
Senior Vice President
EXHIBIT A
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(REVERSE OF CERTIFICATE)
ASSIGNMENT OF PERCENTAGE INTEREST
IN
G&L HAMPDEN, LLC
FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns,
conveys, sells and transfers unto
("Assignee")
(Please insert Social Security (Please print or typewrite
or other identifying number of Assignee) name and address of Assignee)
all rights and interest of Assignor in _________ of the Membership Percentage
Interest evidenced hereby and directs that all future distributions and
allocations with respect to such specified assigned Percentage Interest be paid
or allocated by the LLC to such Assignee. The Assignor hereby irrevocably
constitutes and appoints the Manager as Assignor's attorney-in-fact with full
power of substitution in the premises to transfer the same on the books of the
LLC.
Dated:
Signature of Assignor
Signature guaranteed:
Note: The signature to any assignment must correspond with the name as
written upon the face of this Certificate, in every particular,
without alteration or enlargement or any change whatever. If the
assignment is executed by an attorney, executor, administrator,
trustee or guardian, the person executing the assignment must give
such person's full title in such capacity, and proper evidence of
authority to act in such capacity, if not on file with the LLC or its
transfer agent, must be forwarded with this Certificate.
The undersigned, the Manager of the LLC, hereby consents to this
Assignment pursuant to Section 122 of the Agreement.
Dated: ______________________________
EXHIBIT A
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THE CLASS A MEMBERSHIP PERCENTAGE INTEREST EVIDENCED HEREBY ARE SUBJECT TO ALL
TERMS AND CONDITIONS OF THE AGREEMENT AND UNLESS AND UNTIL ADMITTED TO THE LLC
AS A MEMBER, NO ASSIGNEE SHALL BE ENTITLED TO ANY OF THE RIGHTS, POWERS OR
PRIVILEGES OF THE ASSIGNOR EXCEPT THAT ASSIGNEE SHALL BE ENTITLED TO THE
DISTRIBUTIONS PAID AND ALLOCATIONS MADE WITH RESPECT TO SUCH INTEREST AS
DIRECTED BY THE ASSIGNOR ABOVE.
MANAGER
G&L HAMPDEN, INC.,
A Delaware Corporation
By:___________________________
Mark H. Hamermesh
Senior Vice President
FOOTER PAGE:
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
G&L HAMPDEN, LLC
A DELAWARE LIMITED LIABILITY COMPANY
EXHIBIT A
- 3 -
<PAGE>
EXHIBIT 10.59
LOAN AGREEMENT
Dated as of October __, 1997
by and between
G&L HAMPDEN, LLC
(as Borrower)
and
NOMURA ASSET CAPITAL CORPORATION
(as Lender)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I CERTAIN DEFINITIONS........................................... 1
Section 1.1. Definitions....................................................... 1
ARTICLE II GENERAL TERMS................................................. 38
Section 2.1 Amount of the Loan............................................ 38
Section 2.2 Use of Proceeds............................................... 38
Section 2.3 Security for the Loan......................................... 38
Section 2.4 Borrower's Note............................................... 38
Section 2.5 Principal and Interest Payments............................... 39
Section 2.6 Prepayment.................................................... 41
Section 2.7 Application of Payments....................................... 42
Section 2.8 Payment of Debt Service, Method and Place of Payment.......... 42
Section 2.9 Taxes......................................................... 42
Section 2.10 Defeasance Requirements....................................... 42
Section 2.11 Central Cash Management....................................... 45
Section 2.12 Security Agreement............................................ 53
Section 2.13 Securitization................................................ 55
Section 2.14 Supplemental Mortgage Affidavits.............................. 57
ARTICLE III CONDITIONS PRECEDENT.......................................... 58
Section 3.1 Conditions Precedent to the Making of the Loan................ 58
Section 3.2 Required Deliveries Prior to Termination of Post-Closing
Period................................................................ 63
Section 3.4 Required Deliveries Prior to Stabilization Date............... 66
Section 3.5 Form of Loan Documents and Related Matters.................... 67
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................ 67
Section 4.1 Representations and Warranties of Borrower.................... 67
Section 4.2. Survival of Representations and Warranties.................... 80
ARTICLE V AFFIRMATIVE COVENANTS......................................... 81
Section 5.1 Borrower Covenants............................................ 81
ARTICLE VI NEGATIVE COVENANTS............................................ 98
Section 6.1 Borrower Negative Covenants................................... 98
ARTICLE VII DEFAULTS...................................................... 101
Section 7.1 Event of Default.............................................. 101
Section 7.2 Remedies...................................................... 105
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 7.3 Remedies Cumulative........................................... 106
Section 7.4 Lender's Right to Perform..................................... 107
ARTICLE VIII MISCELLANEOUS................................................. 107
Section 8.1 Survival...................................................... 107
Section 8.2 Lender's Discretion........................................... 107
Section 8.3 Governing Law................................................. 108
Section 8.4 Modification, Waiver in Writing............................... 109
Section 8.5 Delay Not a Waiver............................................ 109
Section 8.6 Notices....................................................... 109
SECTION 8.7 TRIAL BY JURY................................................. 110
Section 8.8 Headings...................................................... 111
Section 8.9 Assignment.................................................... 111
Section 8.10 Severability.................................................. 111
Section 8.11 Preferences................................................... 111
Section 8.12 Waiver of Notice.............................................. 111
Section 8.13 Remedies of Borrower.......................................... 112
Section 8.14 Exculpation................................................... 112
Section 8.15 Exhibits Incorporated......................................... 114
Section 8.16 Offsets, Counterclaims and Defenses........................... 114
Section 8.17 No Joint Venture or Partnership............................... 114
Section 8.18 Waiver of Marshalling of Assets Defense....................... 114
Section 8.19 Waiver of Counterclaim........................................ 115
Section 8.20 Conflict; Construction of Documents........................... 115
Section 8.21 Brokers and Financial Advisors................................ 115
Section 8.22 Counterparts.................................................. 115
Section 8.23 Estoppel Certificates......................................... 115
Section 8.24 Payment of Expenses........................................... 116
Section 8.25 Bankruptcy Waiver............................................. 116
Section 8.26 Entire Agreement.............................................. 117
Section 8.27 Dissemination of Information.................................. 117
Section 8.28 Limitation of Interest........................................ 117
Section 8.29 Indemnification............................................... 118
Section 8.30 Borrower Acknowledgments...................................... 119
Section 8.31 Publicity..................................................... 119
Section 8.32 Recalculation of Loan Amount.................................. 119
Section 8.33 Cross Collateralization....................................... 120
Section 8.34 REIT Status................................................... 121
</TABLE>
<PAGE>
EXHIBITS
Exhibit A - Operating Expense Certificate
Exhibit B - Additional Definitions
Exhibit C - Capital Improvements and Repair and Environmental Remediation
Exhibit
Exhibit D - Underwriting NOI Criteria
<PAGE>
Page
----
SCHEDULES
Schedule 4.1(al)(ix) - Audits
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of October __, 1997, is by and between
NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation, having an address at
Two World Financial Center, Building B, New York, New York 10281-1198,
Attention: Raymond Anthony, Telefax Number (212) 667-1666, (together, with its
successors and assigns, "Lender"), and G&L HAMPDEN, LLC, a Delaware limited
------
liability company with an address of 435 North Bedford Drive, First Floor,
Beverly Hills, California 90210, Attention: Mark H. Hamermesh, Telefax Number:
(310) 248-2222 (the "Borrower").
--------
RECITALS
WHEREAS, Borrower desires to obtain a loan (the "Loan") from Lender in
----
the principal amount of $6,000,000 (the "Loan Amount");
-----------
WHEREAS, Lender is willing to make the Loan on the condition that
Borrower joins in the execution and delivery of this Agreement which shall
establish the terms and conditions of the Loan; and
WHEREAS, Lender and Borrower contemplate that all or any portion of
Lender's interest in the Loan and the Loan Documents may be assigned, in whole
or in part, by Lender to another Person, including, without limitation, to a
trustee on behalf of security holders in connection with a Securitization.
NOW, THEREFORE, in consideration of the making of the Loan by Lender,
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
Section 1.1. Definitions . For all purposes of this Agreement:
------------
(a) the capitalized terms defined in this Article I have the
---------
meanings assigned to them in this Article I, and include the plural as well as
---------
the singular;
(b) all accounting terms have the meanings assigned to them in
accordance with GAAP;
<PAGE>
2
(c) the words "herein", "hereof", and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section, or other subdivision; and
(d) the following terms have the following meanings:
"Account Collateral" has the meaning provided in Section 2.12(a).
------------------ ------- -------
"Accounts" means all of the Accounts defined and described in the
--------
Mortgages.
"Accrued Interest" has the meaning provided in Section 2.5(e).
---------------- ------- ------
"Actual Prepayment Amount" has the meaning provided in Section
------------------------ -------
8.32(c).
- -------
"Adjusted Net Operating Income" means for any Facility, for any
-----------------------------
period, the Net Operating Income for such period reduced by (i) the Capital
Reserve Amount, pro rated for the applicable period, (ii) only prior to the
Permitted License Transfer, annual base management fees, pro rated for the
applicable period, equal to the greater of (y) actual base management fees paid
pursuant to the Management Agreement and (z) five percent (5%) of Gross
Revenues, (iii) an amount necessary to reflect a minimum annual vacancy factor
pro rated for the applicable period, equal to the greater of (a) the actual
vacancy for the Facility and (b) five percent (5%) of Gross Revenues and (iv)
such other adjustment reasonably determined by Lender in accordance with its
underwriting standards (including without limitation, adjustments for any
financing costs in connection with any receivables financing). Notwithstanding
the foregoing part of this definition of "Adjusted Net Operating Income" to the
-----------------------------
contrary, if the period for which Adjusted Net Operating Income is being
calculated includes periods prior to the Closing Date, Adjusted Net Operating
Income shall be calculated for such period based on the applicable pro rata
portion of Base Adjusted NOI.
"Advisor" means Nomura Securities International, Inc.
-------
"Affiliate" of any specified Person means any other Person
---------
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the
<PAGE>
3
ownership of voting securities or other beneficial interests, by contract or
otherwise; and the terms "controls", "controlling" and "controlled" have the
meanings correlative to the foregoing.
"Agreement" means this Loan Agreement, as the same may from time to
---------
time hereafter be modified, supplemented or amended.
"Allocated Loan Amount" means the portion of the Loan Amount
---------------------
allocated to each Facility as set forth on Exhibit B hereto, as such amounts
---------
shall be adjusted from time to time as hereinafter set forth. Upon each
adjustment in the amount of Principal Indebtedness due to either (i) a regular
monthly payment of principal pursuant to Section 2.5(c), (ii) a prepayment of
--------------
principal pursuant to Section 2.6(c) or (iii) a payment of Excess Cash Flow
-------------
pursuant to Section 2.6(a), each Allocated Loan Amount shall be decreased by an
--------------
amount equal to the product of (i) the amount of such principal payment and (ii)
a fraction, the numerator of which is the applicable Allocated Loan Amount
(prior to the adjustment in question) and the denominator of which is the total
of all Allocated Loan Amounts (prior to the adjustment in question).
Notwithstanding the foregoing sentence to the contrary, when the Principal
Indebtedness is reduced as a result of Lender's receipt of proceeds with respect
to a Taking or casualty affecting one hundred percent (100%) of a Facility, the
Allocated Loan Amount for such Facility with respect to which the proceeds were
received shall, at Lender's sole discretion, be reduced to zero (such Allocated
Loan Amount prior to reduction being referred to as the "Withdrawn Allocated
-------------------
Amount"), and each other Allocated Loan Amount shall, if the Withdrawn Allocated
- ------
Amount exceeds the proceeds (such excess being referred to as the "Proceeds
--------
Deficiency"), be increased by an amount equal to the product of (1) the Proceeds
- ----------
Deficiency and (2) a fraction, the numerator of which is the applicable
Allocated Loan Amount (prior to the adjustment in question) and the denominator
of which is the aggregate of all of the Allocated Loan Amounts (prior to the
adjustment in question) other than the Withdrawn Allocated Amount. The Allocated
Loan Amount for each Facility shall be increased as determined by Lender in the
event Lender makes any future advances to Borrower pursuant to that certain side
letter of even date herewith; provided, however, Lender may in its sole
discretion recalculate each Allocated Loan Amount on the Stabilization Date.
"Annual Operating Budget" means an annual budget for the operations
-----------------------
of the Facilities (broken down on a month-by-month basis and a Facility-by-
Facility basis) prepared and submitted by Borrower to Lender for the period from
the Closing Date until December 31, 1997. Thereafter, Borrower shall only be
required to submit such a budget to Lender on and
<PAGE>
4
after the Optional Prepayment Date and on each December 1 thereafter for each
succeeding calendar year, all in form and substance reasonably satisfactory to
Lender and as reasonably approved by Lender, as the same shall be amended by
Borrower from time to time, with Lender's written consent. Lender's approval
shall be deemed given if Lender does not respond to Borrower's proposed budget
within thirty (30) days of Lender's receipt thereof.
"Appraisals" means the appraisals, if any, with respect to any
----------
Facility delivered to and approved by Lender in connection with the Loan and any
more recent appraisal of any Facility delivered to Lender or Lender's servicer,
as applicable, each made by an Appraiser at the request of Borrower or Lender,
as any of the same may be updated by recertification from time to time (and
pursuant to the terms of this Agreement) by the Appraiser performing such
Appraisal.
"Appraiser" means any Independent appraiser selected by Borrower,
---------
and Institute with a national practice and who has at least ten (10) years
experience with real estate of the same type and in the geographic area of the
relevant Facility to be appraised or (ii) otherwise acceptable to Lender.
"Appurtenant Rights" means all the Appurtenant Rights defined and
------------------
described in the Mortgages.
"Assignment of Agreements" means, with respect to the Facility, a
------------------------
first priority Assignment of Agreements Affecting Real Estate, in form and
substance satisfactory to Lender, dated as of the Closing Date, from Borrower,
as assignor, to Lender, as assignee, as the same may thereafter from time to
time be supplemented, amended, modified or extended by one or more written
agreements supplemental thereto and "Assignments of Agreements" means all such
-------------------------
documents collectively.
"Assignment of Leases" means, with respect to each Facility, a first
--------------------
priority Assignment of Leases and Rents, in form and substance satisfactory to
Lender, dated as of the Closing Date from the Borrower, as assignor, to Lender,
as assignee, assigning to Lender all of Borrower's right, title and interest in
and to the Leases and the Rents with respect to such Facility as security for
the Loan, as the same may thereafter from time to time be supplemented, amended,
modified or extended by one or more written agreements supplemental thereto and
"Assignments of Leases" means all such instruments collectively.
---------------------
<PAGE>
5
"Base Adjusted NOI" means the amount(s) shown on Exhibit B.
----------------- ---------
"Base Payment" has the meaning provided in Section 2.5(c).
------------ ------- ------
"Basic Carrying Costs" means the following costs with respect to
--------------------
each Facility: (i) real property taxes, assessments and Impositions (including,
without limitation, any payments due under any ground lease and any ground
rents) applicable to such Facility; and (ii) insurance premiums for policies of
insurance required or permitted to be maintained by Borrower and/or Operator
pursuant to this Agreement, the Operator Lease or the other Loan Documents.
"Basic Carrying Costs Monthly Installment" means, with respect to
----------------------------------------
all of the Facilities, Lender's reasonable and good faith estimate of one-
twelfth (1/12th) of the sum of the annual amounts of all of the relevant Basic
Carrying Costs (provided, that Lender may calculate reasonably and in good faith
the monthly amount to assure that funds are reserved in sufficient amounts to
enable the payment of all Impositions, including, without limitation, taxes and
insurance premiums thirty (30) days prior to their respective due dates). If the
relevant Basic Carrying Costs for the then current Fiscal Year or payment period
are not ascertainable by Lender at the time a monthly deposit is required to be
made, the Basic Carrying Costs Monthly Installment shall be Lender's reasonable
and good faith estimate based on one-twelfth (1/12th) of the relevant aggregate
Basic Carrying Costs for the prior Fiscal Year or payment period, with
reasonable adjustments as determined by Lender. As soon as the relevant Basic
Carrying Costs are fixed for the then current Fiscal Year or period, the next
ensuing Basic Carrying Costs Monthly Installment shall be adjusted to reflect
any deficiency or surplus in prior Basic Carrying Costs Monthly Installments.
"Basic Carrying Costs Sub-Account" means the Sub-Account of the Cash
--------------------------------
Collateral Account established and maintained pursuant to Section 2.11 relating
------- ----
to the payment of Basic Carrying Costs.
"Borrower" has the meaning provided in the preamble to this
--------
Agreement.
"Business Day" means any day other than (i) a Saturday or a Sunday,
------------
and (ii) a day on which federally insured depository institutions in New York,
New York, Chicago, Illinois or any jurisdiction in which any Facility, the Cash
Collateral Account or any Collection
<PAGE>
6
Account is located, are authorized or obligated by law, regulation, governmental
decree or executive order to be closed.
"Capital Improvement Costs" means costs incurred by Borrower in
-------------------------
connection with capital improvements to the Facilities.
"Capital Reserve Amount" means, with respect to each Facility, an
----------------------
amount equal to the greater of (i) the sum of the amounts obtained by
multiplying Two Hundred Fifty Dollars ($250) by the number of beds for such
Facility (as approved by Lender in Lender's reasonable business judgment) per
annum and (ii) the sum of the amounts indicated in the Engineering Report(s) as
the annual amount required to maintain such Facility.
"Capital Reserve Monthly Installment" means, with respect to the
-----------------------------------
Facilities, an amount equal to one-twelfth (1/12th) of the Capital Reserve
Amount for all of the Facilities.
"Capital Reserve Sub-Account" means the Sub-Account of the Cash
---------------------------
Collateral Account established and maintained pursuant to Section 2.11 relating
------- ----
to the payment of Capital Improvement Costs.
"Cash Collateral Account" has the meaning provided in Section
----------------------- -------
2.11(b).
- -------
"Cash Collateral Account Bank" means the bank which holds the Cash
----------------------------
Collateral Account.
"Closing Date" means the date of this Agreement.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and as
----
it may be further amended from time to time, any successor statutes thereto,
together with applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.
"Collateral" means, collectively, the Accounts, Account Collateral,
----------
Appurtenant Rights, Equipment, General Intangibles, goods, Improvements,
Instruments, Inventory, Leases, Land, Money, Permitted Investments, (to the full
extent assignable) Permits, Rents, investment properties, and letters of credit,
and all Proceeds and products of any of the foregoing, all whether now owned or
hereafter acquired, and all other property which is or hereafter may become
subject to a Lien in favor of Lender.
<PAGE>
7
"Collateral Security Instrument" means any right, document or
------------------------------
instrument, other than a Mortgage, given as security for the Loan (including,
without limitation, the Assignments of Leases and the Assignments of
Agreements), in each case as the same may hereafter from time to time be
supplemented, amended, extended or modified by one or more written agreements
supplemental thereto.
"Collection Account" has the meaning provided in Section 2.11(a).
------------------ ------- -------
"Collection Account Agreement" has the meaning set forth in Section
---------------------------- -------
2.11(b).
- -------
"Collection Account Bank" means, with respect to each Facility, the
-----------------------
collection bank and any successor bank hereafter selected by Borrower and
approved by Lender in accordance with the Collection Account Agreement.
"CON" has the meaning set forth in Section 4.1(b)(al)(ii).
--- ------- --------------
"Condemnation Proceeds" means all of the Condemnation Proceeds
---------------------
defined and described in the Mortgages.
"Contingent Obligation" means any obligation of Borrower
---------------------
guaranteeing any indebtedness, leases, dividends or other obligations ("primary
-------
obligations") of any other Person (the "primary obligor") in any manner, whether
- ----------- ---------------
directly or indirectly, including, without limitation, any obligation of
Borrower, whether or not contingent; (i) to purchase any such primary
obligation, or any property constituting direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital of the
primary obligor; (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner or obligee under any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation; or (iv) otherwise to assure or hold harmless the owner or obligee
under such primary obligation against loss in respect thereof. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
anticipated liability in respect thereof (assuming that Borrower is required to
perform thereunder) as determined by Lender in good faith.
<PAGE>
8
"Current Interest Accrual Period" has the meaning provided in
-------------------------------
Section 2.11(g).
- ------- -------
"Cut-Off Date" means November 11, 1999.
------------
"Debt Service" means, for any period, the aggregate of all
------------
principal, interest payments, Default Rate interest, Late Charges and Yield
Maintenance Premium that accrue or are due and payable in accordance with the
Loan Documents during such period.
"Debt Service Coverage Ratio" means, for any period, the quotient
---------------------------
obtained by dividing Adjusted Net Operating Income for all of the Facilities for
the specified period by the aggregate amount of the Base Payments due for such
period.
"Debt Service Payment Sub-Account" means the Sub-Account of the Cash
--------------------------------
Collateral Account established and maintained pursuant to Section 2.11 relating
------- -----
to the payment of Debt Service.
"Deed of Trust Trustee" means each of the trustees, if any, under
---------------------
the Mortgages.
"Default" means the occurrence of any event which, but for the
-------
giving of notice or the passage of time, or both, would be an Event of Default.
"Default Collateral" has the meaning provided in Section 8.14.
------------------ ------- ----
"Default Rate" means the per annum interest rate equal to the lesser
------------
of (i) the Maximum Amount or (ii) the Interest Rate plus five percent (5%).
"Defeasance Debt Service Coverage Ratio" means, in respect of any
--------------------------------------
period, the quotient obtained by dividing (i) Adjusted Net Operating Income of
the Facilities remaining after a defeasance pursuant to Section 2.10 by (ii) the
------- ----
aggregate amount of the Base Payments due for such period minus the payments
Lender would have received had the relevant U.S. Obligations referred to in
Section 2.10 been held as security for the Note for such period.
- ------- ----
"Defeasance Deposit" means the following in each of the following
------------------
circumstances:
<PAGE>
9
(i) in the case of a total defeasance of the Loan and each
Facility pursuant to Section 2.10, "Defeasance Deposit" means the
------------
amount that will be sufficient to purchase U.S. Obligations (A) having
maturity dates on or prior to, but as close as possible to, successive
scheduled Payment Dates (after the Defeasance Release Date) upon which
Payment Dates interest and principal payments would be required under
the Note as though the Maturity Date of the Note was the Optional
Prepayment Date and (B) in amounts sufficient to pay all scheduled
principal and interest payments on the Note as if the Maturity Date of
the Note was the Optional Prepayment Date (but without any adjustment
of the monthly amortization schedule); or
(ii) in the case of a partial defeasance of the Loan on a
Facility-by-Facility basis pursuant to Section 2.10, "Defeasance
------------
Deposit" means the amount that will be sufficient to purchase U.S.
Obligations (A) having maturity dates on or prior to, but as close as
possible to, the successive scheduled Payment Dates (after the date of
such voluntary defeasance) upon which Payment Dates interest and
principal payments would be required under the Note as though the
Maturity Date of the Note was the Optional Prepayment Date and (B) in
amounts sufficient to pay all scheduled principal and interest
payments on the Note (1) as if the Maturity Date of the Note was the
Optional Prepayment Date (but without any adjustment of the monthly
amortization schedule) and (2) as if the outstanding principal
indebtedness due under the Note was an amount equal to one hundred
twenty-five percent (125%) of the Allocated Loan Amount for the
Facility being defeased; and
(iii) in the case of a partial defeasance of the Loan pursuant
to Section 5.1(p), "Defeasance Deposit" means the amount that will be
sufficient to purchase U.S. Obligations (A) having maturity dates on
or prior to, but as close as possible to, the successive scheduled
Payment Dates (after the date of such voluntary defeasance) upon which
Payment Dates interest and principal payments would be required under
the Note as though the Maturity Date of the Note was the Optional
Prepayment Date and (B) in amounts sufficient to pay all scheduled
principal and interest payments on the Note (1) as if the Maturity
Date of the Note was the Optional Prepayment Date (but without any
adjustment of the monthly amortization schedule) and (2) as if the
outstanding principal indebtedness due under the Note was an amount
<PAGE>
10
equal to the amount required to be defeased pursuant to Section 5.1(p)
in connection with such partial defeasance.
"Defeasance Release Date" has the meaning provided in Section
----------------------- -------
2.10(d).
- -------
"Determination Date" means with respect to any Interest Accrual
------------------
Period, the date which is two (2) London Business Days before the commencement
of such Interest Accrual Period.
"Difference" has the meaning provided in Section 8.32(c).
---------- ------- -------
"DOH" has the meaning set forth in Section 4.1(b)(al)(i).
--- ------- -------------
"Eligible Account" means (i) an account maintained with a federal or
----------------
state chartered depository institution or trust company whose (x) commercial
paper, short-term debt obligations or other short-term deposits are rated at
least A-1 by each Rating Agency if the deposits in such account are to be held
in such account for thirty (30) days or less or (y) long-term unsecured debt
obligations are rated at least AA- by each Rating Agency if the deposits in such
account are to be held in such account for more than thirty (30) days; or (ii) a
segregated trust account maintained with the trust department of a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity which institution or trust company is subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R. (S) 9.10(b); or
(iii) an account otherwise acceptable to each Rating Agency, as confirmed in
writing that such account would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any security
issued in connection with a Securitization.
"Engineer" means any reputable Independent engineer, properly
--------
licensed in the relevant jurisdiction and approved by Lender in Lender's
reasonable discretion.
"Engineering Reports" means the structural engineering reports with
-------------------
respect to each Facility (i) prepared by an Engineer, (ii) addressed to Lender,
(iii) prepared based on a scope of work determined by Lender in Lender's
discretion, and (iv) in form and content acceptable to Lender in Lender's
discretion, together with any amendments or supplements thereto.
<PAGE>
11
"Entity" means a (a) corporation, if Borrower is listed as a
------
corporation in the preamble to this Agreement, (b) limited partnership, if
Borrower is listed as a limited partnership in the preamble to this Agreement or
(c) limited liability company, if Borrower is listed as a limited liability
company in the preamble to this Agreement.
"Environmental Claim" means any written request for information by a
-------------------
Governmental Authority, or any written notice, notification, claim,
administrative, regulatory or judicial action, suit, judgment, demand, decree or
other written communication by any Person or Governmental Authority requiring,
alleging or asserting liability with respect to Borrower, or any Facility,
whether for damages, contribution, indemnification, cost recovery, compensation,
injunctive relief, investigatory, response, remedial or cleanup costs, damages
to natural resources, personal injuries, fines or penalties arising out of,
based on, resulting from or related to: (i) the presence, Use, Release or
threatened Release of any Hazardous Substance originating at or from, or
otherwise affecting any Facility or any part thereof; (ii) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law by Borrower or otherwise affecting
any Facility or any part thereof; or (iii) any alleged injury or threat of
injury to health, safety or the environment by Borrower or otherwise affecting
the Facility or any part thereof.
"Environmental Guaranty" means the Environmental Indemnity Agreement
----------------------
in form and substance satisfactory to Lender dated as of the Closing Date from
Parent to Lender, as the same may thereafter be from time to time supplemented,
amended, modified or extended by one or more agreements supplemental thereto.
"Environmental Laws" means any and all applicable federal, state,
------------------
local and foreign laws, rules, regulations or ordinances, each as amended from
time to time, any judicial or administrative orders, decrees, settlement
agreements or judgments thereunder, and any Permits, approvals, licenses,
registrations, filings and authorizations, in each case as in effect as of the
relevant date, relating to the environment, health or safety, or the Release or
threatened Release, or otherwise relating to the presence or Use of Hazardous
Substances.
"Environmental Reports" means, with respect to any Facility,
---------------------
environmental audit report(s) (i) prepared by a reputable environmental Engineer
approved by Lender in Lender's discretion, (ii) addressed to Lender (iii)
prepared based on a scope of work determined by Lender in Lender's discretion,
and (iv) in form and content acceptable to
<PAGE>
12
Lender in Lender's discretion, together with any amendments or supplements
thereto delivered to Lender.
"Equipment" means all of the Equipment defined and described in the
---------
Mortgages.
"Equity Interests" means with respect to Borrower or the Subsequent
----------------
Operator (a) if Borrower or the Subsequent Operator, as applicable, is a limited
partnership, limited partnership interests in Borrower or the Subsequent
Operator, as applicable; (b) if Borrower or the Subsequent Operator, as
applicable, is a limited liability company, membership interests in Borrower or
the Subsequent Operator, as applicable; or (c) if Borrower or the Subsequent
Operator, as applicable, is a corporation, shareholder interest in Borrower or
the Subsequent Operator, as applicable; provided, however, Equity Interests
-------- -------
shall not include any direct or indirect legal or beneficial ownership interest,
or any other interest of any nature or kind whatsoever, of any SPE Equity Owner
in Borrower, or the general partner or managing member of the Subsequent
Operator.
"ERISA" means the Employee Retirement Income Security Act of 1974,
-----
as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or business that is
---------------
a member of any group of organizations (i) described in Section 414(b) or (c) of
the Code, of which Borrower is a member, and (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 Borrower
is a member.
"Event of Default" has the meaning set forth in Section 7.1.
---------------- ------- ---
"Excess Cash Flow" has the meaning set forth in Section 2.11(g).
---------------- ------- -------
"Extra Funds" has the meaning set forth in Section 2.11(f).
----------- ------- -------
<PAGE>
13
"Facility" means the Land, Improvements and Equipment and all other
--------
Collateral subject to a Related Mortgage.
"Facilities" means, collectively every Facility.
----------
"Fifteen Year Treasury Rate" means the yield, calculated by linear
--------------------------
interpolation (rounded to three decimal places) of the yields of United States
Treasury Constant Maturities with terms (one longer and one shorter) most nearly
approximating that of noncallable United States Treasury obligations having
maturities as close as possible to fifteen (15) years from the Optional
Prepayment Date, as determined by Lender on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by Lender for the week prior to the
Optional Prepayment Date.
"Fiscal Year" means the 12-month period ending on December 31 of
-----------
each year or such other fiscal year of Borrower as Borrower may select from time
to time with the prior written consent of Lender, such consent not to be
unreasonably withheld or delayed.
"GAAP" means generally accepted accounting principles consistently
----
applied in the United States of America as of the date of the applicable
financial report.
"General Intangibles" means all of the General Intangibles defined
-------------------
and described in the Mortgages.
"Governmental Authority" means any national, federal, state,
----------------------
regional or local government, or any other political subdivision of any of the
foregoing, in each case with jurisdiction over Borrower, any Facility, or any
SPE Equity Owner, or any Person with jurisdiction over Borrower, any Facility or
any SPE Equity Owner, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Gross Revenue" means, with respect to any Facility, the total
-------------
dollar amount of all income and receipts whatsoever received by Borrower and the
Subsequent Operator in the ordinary course of its respective business with
respect to such Facility, including, without limitation, all Rents (but
excluding security deposits) and Money.
<PAGE>
14
"Hazardous Substance" means: (i) any petroleum or petroleum products
-------------------
or waste oils, explosives, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls ("PCBs"), lead in drinking water, and
----
lead-based paint, the presence, generation, Use, transportation, storage or
disposal of or exposure to which (x) is regulated or could lead to liability
under any Environmental Law or (y) is subject to notice or reporting
requirements under any Environmental Law, (ii) any chemicals or other materials
or substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "pollutants" or words of similar import
under any Environmental Law or (iii) any other chemical or any other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"Impositions" means all of the Impositions defined and described in
-----------
the Mortgages.
"Improvements" means all of the Improvements defined and described
------------
in the Mortgages.
"Indebtedness" means, at any given time, the Principal Indebtedness,
------------
together with all accrued and unpaid interest thereon and all other obligations
and liabilities due or to become due to Lender pursuant hereto, under the Note
or in accordance with any of the other Loan Documents, and all other amounts,
sums and expenses paid by or payable to Lender hereunder or pursuant to the Note
or any of the other Loan Documents.
"Indemnified Party" shall have the meaning set forth in Section
----------------- -------
8.29.
- ----
"Independent" means, when used with respect to any Person, a Person
-----------
who: (i) does not have any direct financial interest or any material indirect
financial interest in Borrower, any Operator or in any Affiliate of Borrower or
any Operator (including, without limitation, in any SPE Equity Owner), (ii) is
not connected with Borrower, any Operator or and any Affiliate of Borrower or
any Operator (including, without limitation, any SPE Equity Owner), as an
officer, employee, promoter, underwriter, trustee, partner, member, manager,
creditor, director or person performing similar functions, and (iii) is not a
member of the immediate family of a Person defined in (i) or (ii) above.
--- ----
<PAGE>
15
"Independent Director" means a duly appointed member of the board of
--------------------
directors of the relevant entity who shall not have been, at the time of such
appointment, at any time after appointment, or at any time in the preceding five
(5) years, (i) a direct or indirect legal or beneficial owner in such entity or
any of its affiliates, (ii) a creditor, supplier, employee, officer, director,
manager or contractor of such entity or any of its affiliates, (iii) a person
who controls such entity or any of its affiliates, or (iv) a member of the
immediate family of a person defined in (i), (ii) or (iii) above.
--- ---- -----
"Initial Basic Carrying Costs Amount" means, the amount shown as
-----------------------------------
such on Exhibit B.
---------
"Initial Capital Reserve Amount" means the amount shown as such on
------------------------------
Exhibit B.
- ---------
"Initial Interest Rate" means 8.62%.
---------------------
"Initial Operator" means Hampden Nursing Homes, Inc., a
----------------
Massachusetts not-for-profit corporation.
"Instruments" means all of the Instruments defined and described the
-----------
Mortgages.
"Insurance Proceeds" means all of the Insurance Proceeds defined and
------------------
described in the Mortgages.
"Insurance Requirements" has the meaning provided in the Mortgages.
----------------------
"Interest Accrual Period" means each period of time running from and
-----------------------
including the eleventh (11th) day of a calendar month to and including the tenth
(10th) day of the following calendar month during the term of the Loan. If the
Closing Date shall occur prior to the tenth (10th) day of a calendar month, the
first Interest Accrual Period shall commence on and include the Closing Date and
end on and include the tenth (10th) day of the calendar month in which the
Closing Date occurs. If the Closing Date shall occur after the tenth (10th) day
of a calendar month, the first Interest Accrual Period shall commence on the
Closing Date and end on and include the tenth (10th) day of the calendar month
following the month in which the Closing Date occurs. If the Closing Date shall
occur on the tenth (10th)
<PAGE>
16
day of a calendar month, the first Interest Accrual Period shall consist of a
one (1) day period consisting of the Closing Date.
"Interest Rate" means, as applicable, (i) during the period
-------------
commencing on (and including) the Closing Date to the Optional Prepayment Date,
provided no Event of Default has occurred, the Initial Interest Rate, and (ii)
commencing on (and including) the Optional Prepayment Date, provided no Event of
Default has occurred, the Revised Interest Rate.
"Inventory" means all of the Inventory defined and described in the
---------
Mortgages.
"Investor" has the meaning provided in Section 8.27.
-------- ------- ----
"Issuer" means any issuer of securities issued in connection with a
------
Securitization.
"Land" means all of the Land defined and described in the Mortgages.
----
"Late Charge" means the lesser of (i) five percent (5%) of any
-----------
unpaid amount and (ii) the maximum late charge permitted to be charged under the
laws of the State of New York.
"Late Payment" means Borrower's failure to pay any amount hereunder
------------
when due, without giving effect to any cure period, if any.
"Leases" means all of the Leases defined and described in the
------
Mortgages.
"Legal Requirements" means all statutes, laws, rules, orders,
------------------
regulations, ordinances, judgments, orders, decrees and injunctions of
Governmental Authorities affecting Borrower, the Loan Documents, any Facility or
any part thereof, or the ownership, construction, use, alteration or operation
thereof, or any part thereof, enacted or entered and in force as of the relevant
date, and all Permits, Licenses and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting any Facility or any part thereof, including, without limitation, any
which (i) may require repairs, modifications, or alterations
<PAGE>
17
in or to any Facility or any part thereof, or (ii) in any way limit the use and
enjoyment thereof, and further including, without limitation, all Environmental
Laws and the Americans with Disabilities Act, as they may be amended from time
to time, together with all regulations promulgated pursuant thereto or in
connection therewith.
"Lender" has the meaning provided in the preamble to this Agreement.
------
"Liabilities" has the meaning set forth in Section 2.13.
----------- ------- ----
"Licenses" has the meaning set forth in Section 4.1(b)(al)(ii).
-------- ------- --------------
"Lien" means any mortgage, deed of trust, deed to secure debt, lien
----
(statutory or other), pledge, easement, restrictive covenant, hypothecation,
assignment, preference, priority, security interest, or any other encumbrance or
charge on or affecting any Facility or any portion thereof or any Collateral or
Borrower, or any interest in any of the foregoing, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement or similar instrument under the
UCC or comparable law of any other jurisdiction, domestic or foreign, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" has the meaning provided in the Recitals hereto.
----
"Loan Amount" has the meaning provided in the Recitals hereto.
-----------
"Loan Documents" means, collectively, this Agreement, the Note, the
--------------
Mortgages, the Assignments of Leases, the Assignments of Agreements, the
Environmental Guaranty, the Collection Account Agreements, the Recourse Guaranty
and all other agreements, instruments, certificates and documents executed or
delivered by or on behalf of Borrower or any Affiliate to evidence or secure the
Loan or otherwise in satisfaction of the requirements of this Agreement, the
Mortgages or the other documents listed above.
"Losses" has the meaning provided in Section 5.1(i).
------ ------- ------
"Management Agreement" means, with respect to a Facility, the
--------------------
Management Agreement entered into between the Manager and the Initial Operator
pertaining
<PAGE>
18
to the management of such Facility in the form attached to the Manager's
Subordination and "Management Agreements" means all such agreements,
---------------------
collectively.
"Manager" means the Subsequent Operator, as Manager of the
-------
Facilities, or any successor or assignee of such Manager, provided that each
successor or assignee shall be acceptable to Lender in Lender's discretion.
"Managers" means all such Managers, collectively.
- ---------
"Material Adverse Effect" means a material adverse effect upon (i)
-----------------------
the business or the financial position or results of operation of Borrower, (ii)
the ability of Borrower to perform, or of Lender to enforce, any of the Loan
Documents or (iii) the value of (x) the Collateral taken as a whole or (y) any
Facility.
"Material Lease" means each Material Lease defined and described
--------------
in the Mortgages.
"Maturity Date" means November 11, 2024 or such earlier date
-------------
resulting from acceleration of the Indebtedness by Lender.
"Maximum Amount" means the maximum rate of interest designated by
--------------
applicable laws relating to payment of interest and usury.
"Medicare/Medicaid Payors" has the meaning set forth in Section
------------------------ -------
4.1(al)(ix).
- -----------
"Money" means all moneys, cash, rights to deposit or savings
-----
accounts, credit card receipts, rents or other items of legal tender obtained
from or for use in connection with the ownership or operation of any Facility.
"Mortgage" means, as applicable, with respect to a Facility, a first
--------
priority Mortgage or Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing or such other comparable document which is customarily used by
prudent lenders in the jurisdiction in which such Facility is located, in form
and substance satisfactory to Lender in Lender's discretion, dated as of the
Closing Date, granted by Borrower to Lender (or, in the case of a Deed of Trust,
to Deed of Trust Trustee for the benefit of Lender) with respect to such
Facility as security for the Loan, as the same may thereafter from time to time
be
<PAGE>
19
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto, and "Mortgages" means all such instruments collectively.
---------
"Mortgaged Property" means collectively, as applicable, the
-----------------
"Mortgaged Property" or the "Trust Estate" defined and described in the
------------------ ------------
Mortgages.
"Multiemployer Plan" means a multiemployer plan defined as such in
------------------
Section 3(37) of ERISA to which contributions have been made by Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Operating Income" means for any period (as calculated either
--------------------
for a Facility or all Facilities) the excess, if any, of Operating Income for
such period over Operating Expenses for such period.
"Note" means and refers to the promissory note, in form and
----
substance satisfactory to Lender in Lender's discretion, dated the Closing Date,
made by Borrower to Lender pursuant to this Agreement as such promissory note
may be modified, amended, supplemented, extended or consolidated in writing, and
any note(s) issued in exchange therefor or in replacement thereof.
"Officer's Certificate" means a certificate of the Borrower which is
---------------------
signed by the managing equity owner of the Borrower.
"Operating Expense Certificate" means a certificate of the Borrower
-----------------------------
in the form attached hereto as Exhibit A.
---------
"Operating Expense Monthly Installment" means, with respect to a
-------------------------------------
given Interest Accrual Period, the amount shown on the Annual Operating Budget
for such period.
"Operating Expense Sub-Account" means the Sub-Account of the Cash
-----------------------------
Collateral Account established and maintained pursuant to Section 2.11 relating
------- ----
to the payment of operating expenses, as reasonably approved by Lender.
"Operating Expenses" means, for any period, for Borrower and the
------------------
Subsequent Operator, (a) all expenditures by Borrower and, without duplication
(b) all expenditures by the Subsequent Operator, as and to the extent required
to be expensed under
<PAGE>
20
GAAP during such period in connection with the ownership, operation,
maintenance, repair or leasing of the Facilities (or of a Facility), including,
without limitation or duplication:
(i) expenses in connection with cleaning, repair, replacement,
painting and maintenance;
(ii) wages, benefits, payroll taxes, uniforms, insurance costs
and all other related expenses for employees of Borrower, the
Subsequent Operator or any Affiliate engaged in repair, operation,
maintenance of the Facilities (or of a Facility) or service to
tenants, patrons or guests of the Facilities (or of a Facility), as
applicable;
(iii) prior to the Permitted License Transfer, any management
fees and expenses;
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar
item and overtime services;
(v) the cost of cleaning supplies;
(vi) Impositions;
(vii) business interruption, liability, casualty and fidelity
insurance premiums;
(viii) legal, accounting and other professional fees and
expenses incurred in connection with the ownership, leasing or
operation of the Facilities (or a Facility), including, without
limitation, collection costs and expenses;
(ix) costs and expenses of security and security systems;
(x) trash removal and exterminating costs and expenses;
(xi) advertising and marketing costs;
<PAGE>
21
(xii) costs of environmental audits and monitoring,
environmental, investigation, remediation or other response actions or
any other expenses incurred with respect to compliance with
Environmental Laws; and
(xiii) all other ongoing expenses which in accordance with GAAP
are required to be or are included in Borrower's or the Subsequent
Operator's annual financial statements as operating expenses of the
Facilities (or of a Facility).
Notwithstanding the foregoing, Operating Expenses shall not include (x) any
taxes imposed on Borrower's net income, (y) depreciation or amortization of
intangibles or (z) Debt Service and other payments in connection with the
Indebtedness. Operating Expenses shall be calculated in accordance with GAAP.
"Operating Income" means, for any period, for Borrower and
----------------
Subsequent Operator, (a) all regular ongoing income of the Subsequent Operator
during such period from the operation of the Facilities (or of a Facility) and,
without duplication, (b) all regular ongoing income of Borrower during such
period from the operation of the Facilities (or of a Facility) from any source
other than the Subsequent Operator, including, without limitation:
(i) all amounts payable as Rents (other than security deposits) and all
other amounts payable under Leases or other third party agreements relating to
the ownership and operation of the Facilities (or of a Facility);
(ii) business interruption insurance proceeds; and
(iii) all other amounts which in accordance with GAAP are
required to be or are included in Borrower's or the Subsequent Operator's annual
financial statements as operating income of the Facilities (or of a Facility)
except that, in the case of the Borrower, such other amounts shall only be
included if from a source other than the Subsequent Operator.
"Operator" means each of the Initial Operator and the Subsequent
--------
Operator, or any successor or assign, as operator of the Facility, which
successor or assign shall be
<PAGE>
22
acceptable to Lender in Lender's sole discretion and "Operators" means all
---------
such entities collectively.
"Operator Lease" means with respect to a Facility, that certain
--------------
operator lease between the Borrower and the applicable Operator for the lease of
all or a part of a Facility, together with any guarantees, supplements,
amendments, modifications, extensions and renewals of the same, and all
additional remainders, reversions, and other rights and estates appurtenant
thereto and "Operator Leases" means all such agreements collectively.
---------------
"Optional Prepayment Date" means November 11, 2009.
------------------------
"Other Borrowings" means, without duplication (but not including the
----------------
Indebtedness or any Transaction Costs payable in connection with the
Transactions), (i) all indebtedness of Borrower for borrowed money or for the
deferred purchase price of property or services, (ii) all indebtedness of
Borrower evidenced by a note, bond, debenture or similar instrument, (iii) the
face amount of all letters of credit issued for the account of Borrower and,
without duplication, all unreimbursed amounts drawn thereunder, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by Borrower
whether or not such indebtedness has been assumed, (v) all Contingent
Obligations of Borrower, and (vi) all payment obligations of Borrower under any
interest rate protection agreement (including, without limitation, any interest
rate swaps, caps, floors, collars or similar agreements) and similar agreements.
"Parent" means G&L Realty Partnership, L.P., a Delaware limited
------
partnership and G&L Realty Corp., a Maryland corporation,.
"Payment Date" means the eleventh (11th) day of each calendar month
------------
during the term of the Loan; provided, however, that for purposes of making
-------- -------
payments hereunder, but not for purposes of calculating interest accrual
periods, if the eleventh (11th) day of a given month shall not be a Business
Day, then the Payment Date for such month shall be the next succeeding Business
Day.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
under ERISA, or any successor thereto.
<PAGE>
23
"PCBs" has the meaning provided in the definition of "Hazardous
---- ---------
Substance".
- ---------
"Permits" means all of the Permits defined and described in the
-------
Mortgages.
"Permitted Encumbrances" means, with respect to a Facility (or, as
----------------------
applicable, with respect to all of the Facilities), collectively, (i) the Lien
created by the Related Mortgage or the other Loan Documents, (ii) all Liens and
other matters disclosed in the applicable Title Insurance Policy concerning such
Facility, or any part thereof which have been approved by Lender in Lender's
discretion, (iii) Liens, if any, for Impositions imposed by any Governmental
Authority not yet due or delinquent or being contested in good faith and by
appropriate proceedings in accordance with the Related Mortgage, (iv) without
limiting the foregoing, any and all governmental, public utility and private
restrictions, covenants, reservations, easements, licenses or other agreements
of an immaterial nature which may be granted by Borrower after the Closing Date
and which do not materially and adversely affect (a) the ability of Borrower to
pay any of its obligations to any Person as and when due, (b) the marketability
of title to such Facility, (c) the fair market value of such Facility, or (d)
the use or operation of such Facility as of the Closing Date and thereafter and
(v) only until satisfaction in full of the Receivables Financing, the Lien
granted by the Operator in connection with the Receivables Financing on the
Pledged Receivables.
"Permitted Investments" means any one or more of the following
---------------------
obligations or securities payable on demand or having a scheduled maturity on or
before the Business Day immediately preceding the date upon which the funds in
the Cash Collateral Account are required to be drawn, and having at all times
the required ratings, if any, provided for in this definition, unless each
Rating Agency shall have confirmed in writing to Lender that a lower rating
would not, in and of itself, result in a downgrade, qualification or withdrawal
of the then current ratings assigned to any security issued in connection with a
Securitization:
(iv) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or
any agency or instrumentality thereof provided such
obligations are backed by the full faith and credit of the
United States of America including, without limitation,
obligations of: the U.S. Treasury (all direct or fully
guaranteed obligations), the Farmers Home Administration
(certificates of beneficial ownership), the General
Services Administration
<PAGE>
24
(participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small
Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local
authority bonds) and the Washington Metropolitan Area
Transit Authority (guaranteed transit bonds); provided,
--------
however, that the investments described in this clause must
-------
(A) have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must
move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to
their maturity;
(v) Federal Housing Administration debentures;
(vi) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated
systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National
Mortgage Association (debt obligations), the Student Loan
Marketing Association (debt obligations), the Financing
Corp. (debt obligations), and the Resolution Funding Corp.
(debt obligations); provided, however, that the investments
-------- -------
described in this clause must (A) have a predetermined
fixed dollar amount of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with
that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
(vii) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements
with maturities of not more than 365 days of any bank, the
short term obligations of which are
<PAGE>
25
rated in the highest short term rating category by each
Rating Agency (or otherwise acceptable to each Rating
Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification
or withdrawal of the then current ratings assigned to any
security issued in connection with a Securitization),
provided, however, that the investments described in this
-------- -------
clause must (A) have a predetermined fixed dollar amount of
principal due at maturity that cannot vary or change, (B)
if rated by S&P, must not have an "r" highlighter affixed
to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a
single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to
their maturity;
(viii) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of, or
bankers' acceptances issued by, any bank or trust company,
savings and loan association or savings bank, the short
term obligations of which are rated in the highest short
term rating category by each Rating Agency (or otherwise
acceptable to each Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the then
current ratings assigned to any security issued in
connection with a Securitization), provided, however, that
-------- -------
the investments described in this clause must (A) have a
predetermined fixed dollar amount of principal due at
maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating,
(C) if such investments have a variable rate of interest,
such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments
must not be subject to liquidation prior to their maturity;
(xi) debt obligations with maturities of not more than 365 days
and rated by each Rating Agency (or otherwise acceptable to
each Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then
<PAGE>
26
current ratings assigned to any security issued in
connection with a Securitization); in its highest long-term
unsecured rating category; provided, however, that the
-------- -------
investments described in this clause must (A) have a
predetermined fixed dollar amount of principal due at
maturity that cannot vary or change, (B) if rated by S&P,
must not have an "r" highlighter affixed to their rating,
(C) if such investments have a variable rate of interest,
such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments
must not be subject to liquidation prior to their maturity;
(x) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one
year after the date of issuance thereof) with maturities of
not more than 365 days and that is rated by each Rating
Agency (or otherwise acceptable to each Rating Agency, as
confirmed in writing that such investment would not, in and
of itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any
security issued in connection with a Securitization), in
its highest short-term unsecured debt rating; provided,
--------
however, that the investments described in this clause must
-------
(A) have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an "r" highlighter affixed to their
rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must
move proportionately with that index, and (D) such
investments must not be subject to liquidation prior to
their maturity;
(xi) the Federated Prime Obligation Money Market Fund (the
"Fund") so long as the Fund is rated "AAAm" or "AAAm-G" by
S&P, or the equivalent by each other Rating Agency (or
otherwise acceptable to each Rating Agency, as confirmed in
writing that such investment would not, in and of itself,
result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any security issued in
connection with a Securitization);
<PAGE>
27
(xii) any other demand, money market or time deposit, demand
obligation or any other obligation, security or investment,
provided that each Rating Agency has confirmed in writing
to Lender, that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal
of the then current ratings assigned to any security issued
in connection with a Securitization; and
(xiii) such other obligations as are acceptable as Permitted
Investments to each Rating Agency, as confirmed in writing
to Lender, that such obligations would not, in and of
itself, result in a downgrade, qualification or withdrawal
of the then current ratings assigned to any security issued
in connection with a Securitization;
provided, however, that, in the judgment of Lender, such instrument continues to
- -------- -------
qualify as a "cash flow investment" pursuant to Code Section 860G(a)(6) earning
a passive return in the nature of interest and provided further that no
-------- ------- ----
instrument or security shall be a Permitted Investment if (i) such instrument or
security evidences a right to receive only interest payments, (ii) the right to
receive principal and interest payments derived from the underlying investment
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment or (iii) such
investments have a maturity in excess of one (1) year.
"Permitted Transfers" shall mean, provided that no Event of Default
-------------------
has occurred: (i) Permitted Encumbrances; (ii) all transfers of worn out or
obsolete furnishings, fixtures or equipment that are promptly replaced with
property of equivalent value and functionality; (iii) all Leases which are not
Material Leases; (iv) all Material Leases which have been approved by Lender in
writing in Lender's discretion; (v) transfers of Equity Interests which in the
aggregate during the term of the Loan (a) do not exceed forty-nine percent (49%)
of the total interests in Borrower or the Subsequent Operator, as applicable,
and (b) do not result in any partner's, member's or other Person's interest in
Borrower or the Subsequent Operator, as applicable, exceeding 49%, of the total
interests in Borrower or the Subsequent Operator, as applicable; and (vi) any
other transfer of Equity Interests provided that (a) prior to any
Securitization, Lender shall have consented to such transfer or transfers, (b)
after any Securitization, (1) Lender shall have consented to such transfer or
transfers and (2) the Rating Agencies shall have confirmed in writing that such
transfer or transfers shall not result in a downgrade, withdrawal or
qualification of any securities issued in connection with
<PAGE>
28
such Securitization, (c) acceptable opinions relating to such transfer or
transfers shall have been delivered by Borrower or the Subsequent Operator, as
applicable, to Lender and the Rating Agencies (including, without limitation,
tax and bankruptcy opinions), and (d) Borrower or the Subsequent Operator, as
applicable, pays all reasonable expenses incurred by Lender in connection with
such transfer or transfers; and (vi) a transfer of all the Facilities to a
single purchaser not more than one time during the term of the Loan, provided
that prior to such transfer (a) Borrower shall pay Lender a fee equal to one
percent (1%) of the Loan Amount, (b) prior to a Securitization, Lender shall
have consented to such transfer, (c) after a Securitization, (i) Lender shall
have consented to such transfer and (ii) the Rating Agencies shall have
confirmed in writing that such transfer shall not result in a downgrade,
withdrawal or qualification of any securities issued in connection with such
Securitization, (d) acceptable opinions relating to such transfer shall have
been delivered by Borrower to Lender and to the Rating Agencies (including
without limitation tax and bankruptcy opinions), (e) the transferee assumes in
writing all obligations of the transferor under the Loan Documents and executes
and delivers such other documentation as may be required by Lender or the Rating
Agencies and (f) Borrower pays all reasonable expenses incurred by Lender in
connection with such transfer.
"Permitted License Transfer" has the meaning set forth in Section
-------------------------- -------
5.1(y).
- ------
"Permitted License Transfer Date" has the meaning set forth in
-------------------------------
Section 5.1(y).
- ------- ------
"Person" means any individual, corporation, limited liability
------
company, partnership, joint venture, estate, trust, unincorporated association,
or any other entity, any federal, state, county or municipal government or any
bureau, department or agency thereof and any fiduciary acting in such capacity
on behalf of any of the foregoing.
"Physical Plant Standards" has the meaning provided in Section
------------------------ --------
4.1(b)(al)(vii).
- ---------------
"Plan" means an employee benefit or other plan established or
----
maintained by Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
<PAGE>
29
"Pledged Receivables" means the "Collateral" as defined in the
-------------------
Receivables Loan Agreement to the extent such Collateral are originated prior to
a Receivables Termination Date.
"Post-Closing Period" means the period beginning on the Closing Date
-------------------
and terminating on the date which is twenty-one (21) days after the Closing
Date.
"Principal Indebtedness" means the principal amount of the entire
----------------------
Loan outstanding as the same may be increased or decreased, as a result of
prepayment or otherwise, from time to time.
"Proceeds" means all of Borrower's "proceeds," as such term is
--------
defined in the UCC, and, to the extent not included in such definition, all
proceeds whether cash or non-cash, movable or immovable, tangible or intangible
(including Insurance Proceeds, Condemnation Proceeds and proceeds of proceeds),
from the Collateral, including, without limitation, those from the sale,
exchange, transfer, collection, loss, damage, disposition, substitution or
replacement of any of the Collateral and all income, gain, credit, distributions
and similar items from or with respect to the Collateral.
"Rating Agencies" means Fitch Investors Service, Inc., Moody's
---------------
Investors Service, Inc., Duff & Phelps Credit Rating Co. and S&P or any
successor thereto, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by Lender or its designees in connection with or in anticipation of a
Securitization (each, individually a "Rating Agency").
-------------
"Recalculated Loan Amount" has the meaning provided in Section 8.32.
------------------------ ------- ----
"Receivables Documents" means the Receivables Loan Agreement and the
---------------------
other documents executed in connection with and evidencing the Receivables
Financing, as such documents may be amended, modified or supplemented and in
effect from time to time.
"Receivables Financing" means a revolving loan from the Receivables
---------------------
Lender to Initial Operator (which loan may be assigned to the Subsequent
Operator) in a principal amount not to exceed at any time $1,500,000 evidenced
by that certain the Receivables Loan Agreement.
<PAGE>
30
"Receivables Financing Proceeds" means contract rights, rights to
------------------------------
performance and rights to payment of money, cash or other items of legal tender
and advances payable under or advanced by the Receivables Lender under the
Receivables Financing and all proceeds thereof (whether cash or non-cash,
moveable or immoveable, tangible or intangible).
"Receivables Lender" means HCFP Funding, Inc., a Delaware limited
------------------
partnership.
"Receivables Loan Agreement" means the Amended and Restated Loan and
--------------------------
Security Agreement by and between the Initial Operator and the Receivables
Lender, dated on or about the Closing Date, as amended, modified and in effect
from time to time, as assigned to the Subsequent Operator.
"Receivables Termination Date" means the date on which the
----------------------------
Receivables Financing terminates and the Receivables Lender is not making
advances under the Receivables Loan Agreement.
"Recourse Guaranty" means a Guaranty and Suretyship Agreement in
-----------------
form and substance satisfactory to Lender dated as of the Closing Date from the
Parent to Lender as the same may thereafter from time to time be supplemented,
amended, modified or extended by one or more written agreements supplemental
thereto.
"Recourse Distributions" has the meaning provided in Section 8.14.
---------------------- ------- ----
"Related Mortgage" means, with respect to a particular Facility, the
----------------
Mortgage relating to such Facility.
"Release" means any release, threatened release, spill, emission,
-------
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment of Hazardous Substances,
including, without limitation, the movement of Hazardous Substances through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata.
"Remedial Work" has the meaning provided in Section 5.1(d)(i).
------------- ------- ---------
<PAGE>
31
"REMIC" means a real estate mortgage investment conduit as defined
-----
under Section 860D of the Code.
"Rents" means of all of the Rents defined and described in the
-----
Mortgages.
"Required Base Debt Service Payment" means all of the Required Debt
----------------------------------
Service Payment except for that portion of the Required Debt Service Payment
which consists of payments of Excess Cash Flow which may be due and payable on
and after the Optional Prepayment Date.
"Required Debt Service Payment" means, on any Payment Date, the Debt
-----------------------------
Service then due and payable by Borrower.
"Revised Interest Rate" means the greater of (i) the sum of the
---------------------
Initial Interest Rate plus five hundred (500) basis points, and (ii) as of the
Optional Prepayment Date, the sum of the Fifteen Year Treasury Rate plus five
hundred (500) basis points, Revised Interest Rate not to exceed the Maximum
Amount.
"S&P" means Standard & Poor's Ratings Services, a division of The
---
McGraw Hill Companies, Inc.
"Secretary's Certificate" means, with respect to Borrower, the
-----------------------
certificate in form and substance satisfactory to Lender in Lender's discretion
dated as of the Closing Date.
"Securitization" shall have the meaning provided in Section 2.13.
-------------- ------- ----
"Securitization Closing Date" means the date on which a
---------------------------
Securitization is effected.
"Security Agreement" has the meaning provided in Section 2.10(d).
------------------ ------- -------
"Security Deposit Account" has the meaning set forth in Section
------------------------ -------
2.11(a).
- -------
"Side Letter" has the meaning set forth in Section 4.1(al)(ix).
----------- ------- -----------
"Single-Purpose Entity" means a corporation, limited partnership, or
---------------------
limited liability company which, at all times since its formation and thereafter
<PAGE>
32
(i) was and will be organized solely for the purpose of (x) owning, operating or
managing the Facilities or (y) acting as the managing member of the limited
liability company which owns, operates or manages Facilities or (z) acting as
the general partner of a limited partnership which owns, operates or manages the
Facilities, (ii) has not and will not engage in any business unrelated to the
(x) the ownership, operation or management of the Facilities or (y) acting as a
member of a limited liability company which owns, operates or manages the
Facilities or (z) acting as a general partner of a limited partnership which
owns, operates or manages the Facilities, (iii) has not and will not have any
assets other than (x) those related to the Facilities or (y) its member interest
in the limited liability company which owns, operates or manages the Facilities
or (z) its general partnership interest in the limited partnership which owns,
manages or operates the Facilities, as applicable, (iv) has not and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation or merger, and, except as otherwise expressly permitted by this
Agreement, has not and will not engage in, seek or consent to any asset sale,
transfer of partnership or membership or shareholder interests, or amendment of
its limited partnership agreement, articles of incorporation, articles of
organization, certificate of formation or operating agreement (as applicable),
(v) if such entity is a limited partnership, has and will have as its only
general partners, general partners which are and will be Single-Purpose Entities
which are corporations, (vi) if such entity is a corporation, at all relevant
times, has and will have at least one Independent Director, (vii) the board of
directors of such entity has not taken and will not take any action requiring
the unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including without limitation all Independent
Directors, shall have participated in such vote, (viii) has not and will not
fail to correct any known misunderstanding regarding the separate identity of
such entity, (ix) if such entity is a limited liability company, has and will
have at least one member that is and will be a Single-Purpose Entity which is
and will be a corporation, and such corporation is and will be the managing
member of such limited liability company, (x) without the unanimous consent of
all of the partners, directors (including without limitation all Independent
Directors) or members, as applicable, has not and will not with respect to
itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest (a) file a bankruptcy, insolvency or
reorganization petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally; (b) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar
official for such entity or all or any portion of such entity's properties; (c)
make any assignment for the benefit of such entity's creditors; or (d) take any
action that might cause such entity to become insolvent, (xi) has maintained and
will maintain its accounts, books and records separate from
<PAGE>
33
any other person or entity, (xii) has maintained and will maintain its books,
records, resolutions and agreements as official records, (xiii) has not
commingled and will not commingle its funds or assets with those of any other
entity, (xiv) has held and will hold its assets in its own name, (xv) has
conducted and will conduct its business in its name, (xvi) has maintained and
will maintain its financial statements, accounting records and other entity
documents separate from any other person or entity, (xvii) has paid and will pay
its own liabilities out of its own funds and assets, (xviii) has observed and
will observe all partnership, corporate or limited liability company formalities
as applicable, (xix)has maintained and will maintain an arms-length relationship
with its affiliates, (xx) (a) if such entity owns the Facilities, has and will
have no indebtedness other than the Indebtedness and unsecured trade payables in
the ordinary course of business relating to the ownership and operation of the
Facilities which (1) do not exceed, at any time, a maximum amount of one percent
(1%) of the Loan Amount and (2) are paid within thirty (30) days of the date
incurred, or (b) if such entity acts as the manager of the Facility or is the
general partner of a limited partnership which owns, operates or manages the
Facilities has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as the manager of the
Facilities or as the general partner of the limited partnership which owns,
operates and manages the Facilities which (1) do not exceed, at any time, Ten
Thousand Dollars ( $10,000.00) and (2) are paid within thirty (30) days of the
date incurred, or (c) if such entity acts as a managing member of a limited
liability company which owns, operates or manages the Facilities, has and will
have no indebtedness other than unsecured trade payables in the ordinary course
of business relating to acting as a member of the limited liability company
which owns the Facilities which (1) do not exceed, at any time, Ten Thousand
Dollars ( $10,000.00) and (2) are paid within thirty (30) days of the date
incurred, or (d) if such entity operates a Facility, has no indebtedness other
than the Receivables Financing and unsecured trade payables in the ordinary
course of business relating to the operation of the Facilities which (1) do not
exceed, at any one time, Ten Thousand Dollars ($10,000) and (2) are paid within
thirty (30) days of the date incurred, (xxi) has not and will not assume or
guarantee or become obligated for the debts of any other entity or hold out its
credit as being available to satisfy the obligations of any other entity except
for the Indebtedness, (xxii) has not acquired and will not acquire obligations
or securities of its partners, members or shareholders, (xxiii) has allocated
and will allocate fairly and reasonably shared expenses, including, without
limitation, shared office space and uses separate stationary, invoices and
checks, (xxiv) except pursuant hereto, has not and will not pledge its assets
for the benefit of any other person or entity, (xxv) has held and identified
itself and will hold itself out and identify itself as a separate and distinct
entity under its own name and not as a division or part of any other
<PAGE>
34
person or entity, (xxvi) has not made and will not make loans to any person or
entity, (xvii) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division or part of it,
(xxviii) if such entity is a limited liability company, such entity shall
dissolve only upon the bankruptcy of the managing member, and such entity's
articles of organization, certificate of formation and/or operating agreement,
as applicable, shall contain such provision, (xxix) has not entered and will not
enter into or be a party to, any transaction with its partners, members,
shareholders or its affiliates except in the ordinary course of its business and
on terms which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arms-length transaction with an unrelated third
party, (xxx) has paid and will pay the salaries of its own employees from its
own funds, (xxxi) has maintained and will maintain adequate capital in light of
its contemplated business operations and (xxxii) if such entity is a limited
liability company or limited partnership, and such entity has one or more
managing members or general partners, as applicable, then such entity shall
continue (and not dissolve) for so long as a solvent managing member or general
partner, as applicable, exists and such entity's organizational documents shall
contain such provision.
"SPE Equity Owner" means, as applicable, G&L Hampden, Inc., a
----------------
Delaware corporation, as to Borrower, and the managing member or general partner
of the Subsequent Operator, as to the Subsequent Operator.
"SPE Equity Owner's Certificate" means the SPE Equity Owner's
------------------------------
Certificate in form and substance satisfactory to Lender dated as of the Closing
Date.
"Stabilization Date" means the earlier to occur of (i) the date on
------------------
which Borrower (A) has requested that Lender recalculate the Principal
Indebtedness outstanding on such date, (B) has provided to Lender all
information required pursuant to Section 8.32, and (C) has established, to
------- ----
Lender's satisfaction, that the Recalculated Loan Amount (calculated based upon
the Underwriting NOI Criteria and in accordance with the methodology and debt
service coverage ratio tests set forth in Section 8.32(a)), will be an amount
------- -------
equal to or exceeding the then outstanding Indebtedness, (ii) the date on which
Lender recalculates the Principal Indebtedness as described in Section 8.32 and
------- ----
(iii) the Cut-Off Date.
"Stabilization Date Loan Amount" means the outstanding Principal
------------------------------
Indebtedness on the Stabilization Date (and before giving effect to any
recalculation of the Loan Amount on the Stabilization Date).
<PAGE>
35
"Stabilization Date Payment Date" means the first Payment Date after
-------------------------------
the Stabilization Date.
"Start-Up Day" means the "start-up day," within the meaning of
------------
Section 860G(a)(9) of the Code, of any REMIC that holds the Note.
"Sub-Account" shall have the meaning provided in Section 2.11(c).
----------- ------- -------
"Subsequent Operator" means Hampden Holding Group, Inc., a
-------------------
Massachusetts corporation.
"Successor Obligor" has the meaning provided in Section 2.10(h).
----------------- ------- -------
"Survey" means, with respect to a Facility, a survey of such
------
Facility satisfactory to Lender, (i) prepared by a registered Independent
surveyor satisfactory to Lender and Title Insurer, (ii) together with a metes
and bounds legal description of the land corresponding with the survey and
containing the Surveyor's Certification, and (iii) prepared based on a scope of
work determined by Lender in Lender's discretion.
"Surveyor's Certification" means a surveyor's certification in form
------------------------
and substance satisfactory to Lender.
"Taking" has the meaning provided in the Mortgages.
------
"Tax Fair Market Value" means, with respect to a Facility, the fair
---------------------
market value of such Facility, and (x) shall not include the value of any
personal property or other property that is not an "interest in real property"
within the meaning of Treasury Regulation (S)(S)1.860G-2 and 1.856-3(c), or is
not "qualifying real property" within the meaning of Treasury Regulation
(S)1.593-11(b)(iv), and (y) shall be reduced by the "adjusted issue price"
(within the meaning of Code (S) 1272(a)(4)) (the "Tax Adjusted Issue Price") of
------------------------
any indebtedness, other than the Loan, secured by a Lien affecting such
Facility, which Lien is prior to or on a parity with the Lien created under the
Related Mortgage.
"Third Party Payors' Programs" has the meaning set forth in Section
---------------------------- -------
4.1(b)(al)(v).
- -------------
<PAGE>
36
"Title Instruction Letter" means an instruction letter in form and
------------------------
substance satisfactory to Lender in Lender's discretion.
"Title Insurance Policy" means, with respect to a Facility, the loan
----------------------
policy of title insurance for such Facility issued by Title Insurer with respect
to such Facility in an amount acceptable to Lender and insuring the first
priority lien in favor of Lender created by the Related Mortgage, in each case
acceptable to Lender in Lender's discretion and "Title Insurance Policies" means
------------------------
all such policies collectively.
"Title Insurer" means Chicago Title Insurance Company and any
-------------
reinsurer reasonably required by Lender and/or any other nationally recognized
title insurance company acceptable to Lender in Lender's reasonable discretion;
provided, however, that the reinsurer of any Title Insurance Policy may include,
- -------- -------
in amounts reasonably acceptable to Lender, Lawyers Title Insurance Corporation,
First American Title Insurance Corporation or Stewart Title Guaranty Company.
"Transaction Costs" means all fees, costs, expenses and
-----------------
disbursements paid or payable by Borrower relating to the Transactions,
including, without limitation, all appraisal fees, legal fees, accounting fees
and the costs and expenses described in Section 8.24.
------- ----
"Transactions" means the transactions contemplated by the Loan
------------
Documents.
"Transfer" means any conveyance, transfer (including, without
--------
limitation, any transfer of any direct or indirect legal or beneficial interest
(including, without limitation, any profit interest) in Borrower, the Subsequent
Operator or any SPE Equity Owner), sale, Lease (including, without limitation,
any amendment, extension, modification, waiver or renewal thereof), or Lien,
whether by law or otherwise, of, on or affecting any Collateral, Borrower, the
Subsequent Operator or any SPE Equity Owner, other than a Permitted Transfer.
"UCC" means, with respect to any Collateral, the Uniform Commercial
---
Code in effect in the jurisdiction in which the relevant Collateral is located.
"UCC Searches" has the meaning provided in Section 3.1.
------------ ------- ---
<PAGE>
37
"U.S. Obligations" means obligations or securities not subject to
----------------
prepayment, call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, the
obligations of which are backed by the full faith and credit of the United
States of America.
"Underwriting NOI Criteria" shall have the meaning set forth in
-------------------------
Exhibit D.
- ---------
"Use" means, with respect to any Hazardous Substance, the
---
generation, manufacture, processing, distribution, handling, use, treatment,
recycling or storage of such Hazardous Substance or transportation to or from
the property by any Person of any Hazardous Substance.
"Yield Maintenance Premium" means, if all or any portion of the Note is
-------------------------
accelerated, the amount that, when added to the amount otherwise due as a result
of such acceleration, would be sufficient to purchase U.S. Obligations (a)
having maturity dates on or prior to, but as close as possible to, successive
scheduled Payment Dates (after the date of such acceleration of the Note) upon
which Payment Dates interest and principal payments would be required under the
Note as though the Maturity Date of the Note was the Optional Prepayment Date
and (b) in amounts sufficient to pay all scheduled principal and interest
payments on the Note as if the Maturity Date of the Note was the Optional
Prepayment Date (but without any adjustment of the monthly amortization
schedule); provided, however, under no circumstances shall the Yield Maintenance
-------- -------
Premium be less than zero.
ARTICLE II
GENERAL TERMS
-------------
Section 2.1 Amount of the Loan. Lender shall lend to Borrower a
-------------------
total aggregate amount equal to the Loan Amount.
Section 2.2 Use of Proceeds. Proceeds of the Loan shall be used for
----------------
the following purposes: (a) to pay the acquisition costs for the Facilities
owned by Borrower, (b) to fund any upfront reserves or escrow amounts required
hereunder, and (c) to pay any
<PAGE>
38
Transaction Costs. Any excess will be available to Borrower and may be used for
any lawful purpose.
Section 2.3 Security for the Loan. The Note and Borrower's
---------------------
obligations hereunder and under the other Loan Documents shall be secured by the
Mortgages, the Assignments of Leases, the Assignments of Agreements and the
security interests and Liens granted in this Agreement and in the other Loan
Documents.
Section 2.4 Borrower's Note.
----------------
(a) Borrower's obligation to pay the principal of and interest on the Loan
(including Late Charges, Default Rate interest, and the Yield Maintenance
Premium, if any), shall be evidenced by this Agreement and by the Note, duly
executed and delivered by Borrower. The Note shall be payable as to principal,
interest, Late Charges, Default Rate interest and Yield Maintenance Premium, if
any, as specified in this Agreement, with a final maturity on the Maturity Date.
Borrower shall pay all outstanding Indebtedness on the Maturity Date.
(b) Lender is hereby authorized, at its option, (i) to endorse on a
schedule attached to the Note (or on a continuation of such schedule attached to
the Note and made a part thereof) an appropriate notation evidencing the date
and amount of each payment of principal, interest, Late Charges, Default Rate
interest and Yield Maintenance Premium, if any, in respect thereof, which
schedule shall be made available to Borrower, at Borrower's sole cost and
expense on reasonable advance notice, for examination at Lender's offices and/or
(ii) to record the Allocated Loan Amounts in its books and records.
Section 2.5 Principal and Interest Payments.
--------------------------------
(a) Accrual of Interest before the Optional Prepayment Date. Prior
-------------------------------------------------------
to the Optional Prepayment Date, interest shall accrue on the outstanding
principal balance of the Note and all the other amounts due to Lender under the
Loan Documents, at the Initial Interest Rate.
(b) Accrual of Interest on and after the Optional Prepayment Date.
-------------------------------------------------------------
Commencing on the Optional Prepayment Date, interest shall accrue on the
outstanding
<PAGE>
39
principal balance of the Note and all other amounts due to Lender under the Loan
Documents at the Revised Interest Rate.
(c) Monthly Base Payments of Principal and Interest. Commencing
------------------------------------------------
on the first Payment Date after the Closing Date, and continuing on each Payment
Date thereafter until the Stabilization Date, Borrower shall pay to Lender
monthly payments of accrued interest only on the Principal Indebtedness. On
each Payment Date commencing on the Payment Date immediately following the
Stabilization Date, Borrower shall pay to Lender a monthly constant payment of
principal and interest, which payment shall be based on the Initial Interest
Rate and an amortization schedule of 300 months. Each payment required to be
made by Borrower pursuant to this Section 2.5(c) is hereinafter sometimes
------- ------
referred to as a "Base Payment".
------------
(d) Payments of Excess Cash Flow. On and after the earlier to
----------------------------
occur of (i) the Optional Prepayment Date or (ii) at Lender's sole election,
upon the occurrence of an Event of Default hereunder, any date on or after the
occurrence of such Event of Default, in addition to the Base Payment, Borrower
shall pay to Lender all Excess Cash Flow to be applied as described in Section
-------
2.7.
- ---
(e) Payments of Excess of Revised Interest Rate Over Initial
--------------------------------------------------------
Interest Rate. To the extent, for any period, that accrued interest at the
- -------------
Revised Interest Rate exceeds interest required to be paid hereunder for such
period at the Initial Interest Rate (such amount, the "Accrued Interest"),
----------------
Borrower shall only be required to pay such Accrued Interest after the
outstanding principal balance of the Note has been paid in full. Unpaid Accrued
Interest shall accrue interest at the Revised Interest Rate and shall be
computed based on the actual number of days elapsed, based on a 360-day year,
compounded monthly .
(f) Payment Dates. All payments required to be made pursuant to
-------------
paragraphs (a) through (f) above shall be made beginning on the first Payment
- ----------
Date immediately after the end of the second Interest Accrual Period; provided,
--------
however, that Borrower shall pay interest for the first Interest Accrual Period
- -------
on the Closing Date.
(g) Calculation of Interest. Interest shall accrue on the
-----------------------
outstanding principal balance of the Loan and all other amounts due to Lender
under the Loan Documents commencing upon the Closing Date. Interest shall
accrue on Accrued Interest commencing on the first Payment Date following the
Optional Prepayment Date. Interest shall be computed on the actual number of
days elapsed, based on a 360 day year, compounded monthly.
<PAGE>
40
(h) Default Rate Interest. Upon the earlier to occur of a Late
---------------------
Payment or an Event of Default, if any, the entire unpaid amount outstanding
hereunder and under the Note will bear interest at the Default Rate.
(i) Late Charge. If Borrower fails to make any payment of any
-----------
sums due under the Loan Documents on the date when the same is due, without
giving effect to any cure period, if any, Borrower shall pay a Late Charge.
(j) Maturity Date. On the Maturity Date, Borrower shall pay to
-------------
Lender all amounts owing under the Loan Documents including, without limitation,
interest, principal, Late Charges, Default Rate interest, Accrued Interest and
any Yield Maintenance Premium; provided, however, Yield Maintenance Premium
-------- -------
shall only be due and payable if the Maturity Date occurs as a result of
acceleration of the Note.
Section 2.6 Prepayment.
----------
(a) On and after the earlier to occur of (i) the Optional
Prepayment Date or (ii) at Lender's election, upon the occurrence of an Event of
Default hereunder, any date on or after such Event of Default, in addition to
all other payments required hereunder, Borrower shall pay and use all Excess
Cash Flow to prepay the Loan on each Payment Date in accordance with Section
-------
2.11(g) and Section 2.7 and, after payment in full of the Principal Indebtedness
- ------- ------- ---
(but not Accrued Interest or interest thereon) to pay Accrued Interest and
interest thereon and all other amounts then owing.
(b) If Borrower is required by Lender under the provisions of any
Mortgage to prepay the Loan or any portion thereof in the event of damage to or
destruction of, or a Taking of a Facility, Borrower shall prepay the Loan to the
full extent of the Insurance Proceeds or the Condemnation Proceeds, as
applicable, and there shall be no Yield Maintenance Premium or penalty assessed
against Borrower by reason of such prepayment.
(c) On and after the Optional Prepayment Date (provided no Default or
Event of Default has occurred), Borrower may voluntarily prepay the Loan in
whole or in part, and there shall be no Yield Maintenance Premium or penalty
assessed against Borrower by reason of such prepayment.
<PAGE>
41
(d) All prepayments made pursuant to this Section shall be
-------
applied in accordance with the provisions of Section 2.7.
------- ---
(e) Any prepayment of the Loan by Borrower shall be made on a
Payment Date.
(f) Borrower shall not be permitted at any time to prepay all or
any part of the Loan except as expressly provided in this Section.
-------
Section 2.7 Application of Payments. Prior to the occurrence of an
-----------------------
Event of Default, all proceeds of any repayment, including prepayments, of the
Loan shall be applied to pay: first, any costs and expenses of Lender,
-----
including, without limitation, the Lender's reasonable attorney's fees and
disbursements actually arising as a result of such repayment or reasonably
expended by Lender to protect the Collateral; second, accrued and unpaid
------
interest at the Initial Interest Rate; third, to the Principal Indebtedness (but
-----
not to Accrued Interest or interest thereon); fourth, to Accrued Interest and
------
interest accrued thereon; and fifth, any other amounts then due and owing under
-----
the Loan Documents. After the occurrence of an Event of Default, all proceeds
of repayment, including any payment or recovery on the Collateral shall, unless
otherwise provided in the Mortgage, be applied in such order and in such manner
as Lender shall elect in Lender's discretion.
Section 2.8 Payment of Debt Service, Method and Place of Payment.
----------------------------------------------------
(a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Note shall be made to
Lender not later than 12:00 noon, New York City time, on the date when due, and
shall be made in lawful money of the United States of America in federal or
other immediately available funds to an account specified to Borrower by Lender
in writing, and any funds received by Lender after such time, for all purposes
hereof, shall be deemed to have been paid on the next succeeding Business Day.
(b) All payments made by Borrower hereunder or by Borrower under
the other Loan Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
<PAGE>
42
Section 2.9 Taxes. All payments made by Borrower under this Agreement
-----
and under the other Loan Documents shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority.
Section 2.10 Defeasance Requirements.
-----------------------
(a) Provided that no Default or Event of Default has occurred,
after the earlier to occur of (i) two (2) years after the Start-Up Day and (ii)
four (4) years after the Closing Date (but only before the Optional Prepayment
Date), Borrower may voluntarily defease (A) all of the Loan or (B) part of the
Loan on a Facility-by-Facility basis, or (C) part of the Loan on a non-Facility-
by-Facility basis, but only pursuant to Section 5.1(p).
------- ------
(b) Any defeasance of the Loan by Borrower shall be made on a
Payment Date.
(c) Borrower shall not be permitted at any time to defease all
or any part of the Loan except as expressly provided in this Section.
-------
(d) Subject to the terms and conditions of this Agreement,
Borrower may defease the Loan if Borrower: (i) provides, in the case of a
defeasance pursuant to Section 5.1(p), not less than ten (10) days, and, in all
------- ------
other cases, not less than thirty (30) days prior written notice to the Lender
specifying a Payment Date (the "Defeasance Release Date") on which the payments
-----------------------
provided in clauses (ii) and (iii) below are to be made and the deposit provided
in clause (iv) below is to be made, (ii) pays all interest accrued and unpaid on
the Principal Indebtedness to and including the Defeasance Release Date, (iii)
pays all other sums then due and payable under the Loan Documents, (iv) deposits
with the Lender an amount equal to the Defeasance Deposit, and (v) in the case
of a defeasance in part on a Facility-by-Facility basis, provides to Lender
evidence satisfactory to Lender that the Defeasance Debt Service Coverage Ratio
for all Facilities (after giving effect to the defeasance and calculated on the
basis of the prior twelve (12) calendar months) shall be greater than the
greater of (x) 1.40 and (y) the Debt Service Coverage Ratio (calculated on the
basis of the prior twelve (12) calendar months) for all Facilities as of the
Payment Date immediately preceding the Defeasance Release Date, and (vi)
delivers to the Lender (A) a security agreement, in form and substance
satisfactory to Lender, creating a first priority perfected Lien on the deposits
<PAGE>
43
required pursuant to this Section and the U.S. Obligations purchased on behalf
-------
of Borrower in accordance with this Section (the "Security Agreement"), (B) for
------- ------------------
execution by the Lender, a release of each relevant Mortgaged Property from the
lien of the Related Mortgage in a form appropriate for each jurisdiction in
which the relevant Mortgaged Property is located, (C) an Officer's Certificate
of Borrower certifying that the requirements set forth in this Section have been
-------
satisfied including, without limitation, that no Default or Event of Default has
occurred, (D) an opinion of Borrower's counsel in form and substance
satisfactory to the Lender stating, among other things, (x) that, without
qualification, the U.S. Obligations have been duly and validly assigned and
delivered to Lender and Lender has a first priority perfected security interest
in and Lien on the deposits required pursuant to this Section and a first
-------
priority perfected security interest in and Lien on the U.S. Obligations
purchased pursuant hereto and the Proceeds thereof, and (y) that the defeasance
will not adversely affect the status of any REMIC formed in connection with a
Securitization, and (E) such other certificates, documents or instruments as the
Lender may request including, without limitation, (x) written confirmation from
the relevant Rating Agencies that such defeasance will not cause any Rating
Agency to withdraw, qualify or downgrade the then-applicable rating on any
security issued in connection with any Securitization and (y) a certificate from
an Independent certified public accountant certifying that the amounts of the
U.S. Obligations comply with all of the requirements of this Loan Agreement.
(e) The U.S. Obligations shall mature on or be redeemable, or
provide for payment thereon, on or prior to the Business Day immediately
preceding the date on which payments under the Note are due and payable and the
proceeds thereof shall be payable directly to the Lender. In connection with
the foregoing, Borrower appoints the Lender as Borrower's agent for the purpose
of applying the amounts delivered pursuant to clause (d)(iv) above to purchase
--------------
U.S. Obligations.
(f) If any notice of defeasance is given, Borrower shall be
required to defease the Loan (or a portion thereof if such defeasance is a
partial defeasance) on the specified Payment Date (unless such notice is revoked
in writing by Borrower prior to the date specified therein in which event
Borrower shall immediately reimburse Lender for any costs incurred by Lender in
connection with Borrower's giving of such notice and revocation).
(g) Upon compliance with the requirements of this Section in the
-------
event of a total defeasance of the Loan, or a partial defeasance of the Loan on
a Facility by
<PAGE>
44
Facility basis, the relevant Mortgaged Property as to which such defeasance has
been consummated shall be released from the lien of the Related Mortgage.
(h) In connection with a complete defeasance of the Loan,
Borrower may be required by Lender to assign its obligations under the Note, the
other Loan Documents and the Security Agreements together with the pledged U.S.
Obligations to such other entity or entities established or designated by Lender
(the "Successor Mortgagor"). Such Successor Mortgagor shall assume the
-------------------
obligations under the Note, the other Loan Documents and the Security Agreements
and, upon such assignment Borrower shall, except as set forth herein, be
relieved of its obligations hereunder.
(i) Nothing in this Section shall release Borrower from any
-------
liability or obligation relating to any environmental matters arising under
Sections 4.1(v) or 5.1(d) through 5.1(i), inclusive, hereof.
- -------- ------ ------ ------
Section 2.11 Central Cash Management.
------------------------
(a) Collection Accounts and Security Deposit Accounts.
-------------------------------------------------
(i) Borrower shall open and maintain at the Collection
Account Bank two (2) trust accounts (the "Collection Account" and the "Security
------------------ --------
Deposit Account", respectively).
- ---------------
(ii) The Collection Account shall be assigned an
identification number by the relevant Collection Account Bank and shall be
opened and maintained in the name "Nomura Asset Capital Corporation as Mortgagee
of G&L Hampden, LLC." Borrower, Operators and Manager shall not have any right
of withdrawal from the Collection Account. Each Operator will direct the
Receivables Lender to deposit all Receivables Financing Proceeds into the Cash
Collateral Account pursuant to a letter of instructions by such Operator (the
"Letter of Instructions"). Upon the occurrence of a Receivables Termination
- -----------------------
Date, Borrower shall cause the applicable Operator to direct the payors under
Third-Party Payors' Programs to remit all payments directly to the Cash
Collateral Account or Collection Account, as requested by Lender. Borrower will
direct and shall cause the Operators to deposit all lease payments under the
Operator Leases and all Rents, Moneys and Gross Revenue directly into the
Collection Account and shall cause all checks to be made payable to the name of
the
<PAGE>
45
Collection Account and Operators will direct all payors under the Third Party
Payors' Programs to deposit all payments thereunder directly into the Collection
Account. Without in any way limiting Borrower's or Operators' obligations
pursuant to the preceding sentence, Borrower and each Operator shall deposit
directly into the Collection Account all Rents, Moneys or other items of Gross
Revenue (other than security deposits) received by Borrower or any Operator in
violation or contradiction of the preceding sentence within one (1) Business Day
after receipt thereof.
(iii) The Security Deposit Account shall be assigned an
identification number by the Collection Account Bank and shall be opened and
maintained in the name "Nomura Asset Capital Corporation as Mortgagee of G&L
Hampden, LLC." Borrower will direct and cause each Operator to deposit all
security deposits with respect to the Facility directly into the Security
Deposit Account and shall cause all relevant checks to be made payable to the
name of the Security Deposit Account. Without in any way limiting Borrower's
obligations pursuant to the preceding sentence, Borrower shall deposit directly
into the Security Deposit Account all security deposits received by Borrower in
violation or contradiction of the preceding sentence, within one (1) Business
Day after receipt thereof. Borrower, Operators and Manager shall not have any
right of withdrawal from the Security Deposit Account except that, prior to the
occurrence of an Event of Default, Borrower may withdraw funds from the Security
Deposit Account in accordance with the Collection Account Agreement. Borrower
may designate a new financial institution to serve as a Collection Account Bank
if approved by Lender in Lender's discretion. If any Collection Account Bank
resigns pursuant to the terms of any Collection Account Agreement, Borrower
shall replace such Collection Account Bank with a bank and documentation
acceptable to Lender prior to the date that such resignation becomes effective
pursuant to such Collection Account Agreement.
(iv) Any breach of this Section by Borrower shall be an
-------
Event of Default.
(b) Payments. Pursuant to the Collection Account Agreement
--------
among the Collection Account Bank, Borrower and Lender (each a "Collection
----------
Account Agreement"), Borrower will authorize and direct the Collection Account
- -----------------
Bank to transfer on a daily basis, all funds deposited in the Collection Account
to Lender or Lender's designee to be held in an Eligible Account established by
Lender or Lender's designee (the "Cash Collateral Account"). The Cash
-----------------------
Collateral Account shall be under the sole dominion and control of Lender. None
of
<PAGE>
46
Borrower, Operators or Manager shall have any right of withdrawal in respect
to the Cash Collateral Account.
(c) Establishment of Sub-Accounts. The Cash Collateral Account
-----------------------------
shall contain a Debt Service Payment Sub-Account, a Basic Carrying Costs Sub-
Account, a Capital Reserve Sub-Account and an Operating Expense Sub-Account,
each of which sub-accounts (i) may be ledger or book entry accounts and need not
be actual accounts (individually, a "Sub-Account" and collectively, the "Sub-
----------- ---
Accounts") and (ii) shall be an Eligible Account to which certain funds shall be
- --------
allocated and from which disbursements shall be made pursuant to the terms of
this Loan Agreement.
(d) Permitted Investments. Upon the written request of
---------------------
Borrower, which request may be made once per Interest Accrual Period, Lender
shall direct the Cash Collateral Account Bank to invest and reinvest any balance
in the Cash Collateral Account from time to time in Permitted Investments as
instructed by Borrower; provided, however, that: (i) if Borrower fails to so
-------- -------
instruct Lender, or if a Default or an Event of Default shall have occurred,
Lender may direct the Cash Collateral Account Bank to invest and reinvest such
balance in Permitted Investments as Lender shall determine in Lender's
discretion; (ii) the maturities of the Permitted Investments on deposit in the
Cash Collateral Account shall, to the extent such dates are ascertainable, be
selected and coordinated to become due not later than the day before any
disbursements from the Sub-Accounts must be made; (iii) all such Permitted
Investments shall be held in the name and be under the sole dominion and control
of Lender; (iv) no Permitted Investment shall be made unless Lender shall retain
a first priority perfected Lien in such Permitted Investment and all filings and
other actions necessary to ensure the validity, perfection, and priority of such
Lien have been taken; (v) Lender shall only be required to follow the written
investment instructions which were most recently received by Lender and Borrower
shall be bound by such last received investment instructions; and (vi) any
request from Borrower containing investment instructions shall contain an
Officer's Certificate from Borrower (which may be conclusively relied upon by
Lender and its agents) that any such investments constitute Permitted
Investments. It is the intention of the parties hereto that all amounts
deposited in the Cash Collateral Account shall at all times be invested in
Permitted Investments. All funds in the Cash Collateral Account that are
invested in a Permitted Investment are deemed to be held in such Cash Collateral
Account for all purposes of this Agreement and the other Loan Documents. Lender
shall have no liability for any loss in investments of funds in the Cash
Collateral Account that are invested in Permitted Investments (unless invested
contrary to Borrower's request other than after the occurrence of a Default or
<PAGE>
47
an Event of Default) and no such loss shall affect Borrower's obligation to
fund, or liability for funding, the Cash Collateral Account and each Sub-
Account, as the case may be. Borrower and Lender agree that Borrower shall
include all such earnings and losses (other than those for Lender's account in
accordance with the immediately preceding sentence) on the Cash Collateral
Account as income of Borrower for federal and applicable state tax purposes.
Borrower shall be responsible for any and all fees, costs and expenses with
respect to Permitted Investments.
(e) Interest on Accounts. All interest paid or other earnings
--------------------
on the Permitted Investments made hereunder shall be income of Borrower and
shall be deposited into the Cash Collateral Account and shall be subject to
allocation and distribution like any other monies deposited therein.
(f) Payment of Basic Carrying Costs, Debt Service, Capital
------------------------------------------------------
Improvement Costs and Operating Expenses.
- ----------------------------------------
(i) Payment of Basic Carrying Costs.
-------------------------------
a. At least five (5) Business Days prior to the
due date of any Basic Carrying Cost payment, and not more frequently than once
each Interest Accrual Period, Borrower shall notify Lender in writing and
request that Lender make such Basic Carrying Cost payment on behalf of Borrower
or, to the extent an Operator is obligated under an Operator Lease to pay such
Basic Carrying Cost, on behalf of such Operator, on or prior to the due date
thereof. Together with each such request, Borrower shall furnish Lender with
copies of bills and other documentation as may be reasonably required by Lender
to establish that such Basic Carrying Cost payment is then due. Lender shall be
entitled to conclusively rely on all bills or other documentation received from
Borrower, in each case without independent investigation or verification. Lender
shall make such payments out of the Basic Carrying Cost Sub-Account before the
same shall be delinquent to the extent that there are funds available in the
Basic Carrying Cost Sub-Account and Lender has received appropriate
documentation to establish the amount(s) due and the due date(s) as and when
provided above.
b. Except to the extent that Lender is
obligated to pay Basic Carrying Costs from the Basic Carrying Costs Sub-Account
pursuant to the terms of this
<PAGE>
48
Section, Borrower shall pay all Basic Carrying Costs with respect to itself and
- -------
the Facility in accordance with the provisions of the Mortgage. Borrower's
obligation to pay (or enable Lender to pay) Basic Carrying Costs pursuant to
this Agreement shall include, to the extent permitted by applicable law,
Impositions resulting from future changes in law which impose upon Lender or any
Deed of Trust Trustee an obligation to pay any property taxes or other
Impositions or which otherwise adversely affect Lender's or the Deed of Trust
Trustee's interests. (In the event such a change in law prohibits Borrower from
assuming liability for payment of any such Imposition, the outstanding
Indebtedness shall, at the option of Lender, become due and payable on the date
that is one hundred twenty (120) days after such change in law; and failure to
pay such amounts on the date due shall be an Event of Default.) If an Event of
Default has occurred, the proceeds on deposit in the Basic Carrying Costs Sub-
Account may be applied by Lender in any manner as Lender in its discretion may
determine.
(ii) Payment of Debt Service. At or before 12:00 noon, New
-----------------------
York City time, on each Payment Date during the term of the Loan, Lender shall
transfer to Lender's own account from the Debt Service Payment Sub-Account an
amount equal to the Required Debt Service Payment for the applicable Payment
Date. Borrower shall be deemed to have timely made the Required Debt Service
Payment pursuant to Section 2.8 regardless of the time Lender makes such
------- ---
transfer as long as sufficient funds are on deposit in the Debt Service Payment
Sub-Account at 12:00 noon, New York City time on the applicable Payment Date.
(iii) Payment of Capital Improvement Costs. Not more
------------------------------------
frequently than twice each Interest Accrual Period, and provided that no Default
or Event of Default has occurred, Borrower may notify Lender in writing and
request that Lender release to Borrower or its designee funds from the Capital
Reserve Sub-Account, to the extent funds are available therein, for payment of
Capital Improvement Costs. Together with each such request, Borrower shall
furnish Lender with copies of bills and other documentation as may be reasonably
required by Lender to establish that such Capital Improvement Costs are
reasonable, that the work relating thereto has been completed and that such
amounts are then due or have been paid. Lender shall approve or disapprove such
request within ten (10) Business Days after Lender's receipt of such request
and, if approved, Lender shall release the funds to Borrower or Borrower's
designee within ten (10) Business Days after Lender's approval. Upon completion
of the repairs and environmental remediation to the Facility itemized on Exhibit
-------
C hereto, Borrower may provide Lender with the documentation described in this
- -
paragraph and subject to the terms set forth in this paragraph, Lender shall
release the
<PAGE>
49
remainder of the Initial Capital Reserve Amount, to the extent such funds have
not been released to Borrower.
(iv) Intentionally deleted.
(v) Payment of Operating Expenses. On and after the
-----------------------------
Optional Prepayment Date, not more frequently than once each Interest Accrual
Period and provided that no Default or Event of Default has occurred, Lender
shall direct the Cash Collateral Account Bank to, within five (5) Business Days
after Lender's receipt of an Operating Expense Certificate from Borrower, such
Operating Expense Certificate to be delivered by Borrower not more frequently
than once each Interest Accrual Period, transfer funds to Borrower or its
designee from the Operating Expense Sub-Account, to the extent that there are
funds available therein, in an amount not to exceed the amount stated in the
Operating Expense Certificate up to the Operating Expense Monthly Installment.
Together with each such Operating Expense Certificate, Borrower shall furnish
Lender with an Officer's Certificate stating that all operating expenses from
previous periods have been paid in full and that such amounts are then due or
have been paid.
(vi) Extra Funds for Operating Expenses. On and after the
----------------------------------
Optional Prepayment Date, not more frequently than once each Interest Accrual
Period and provided that no Default or Event of Default has occurred, if in a
given Interest Accrual Period, Borrower requires amounts in excess of the
Operating Expense Monthly Installment (such excess amounts, "Extra Funds"),
-----------
Borrower, at the time it delivers the Operating Expense Certificate, may deliver
a written request to Lender for a disbursement of Extra Funds stating the amount
of such Extra Funds and the purpose for such amount, together with copies of
bills and other documentation as may be required by Lender to establish that
such Extra Funds operating expenses are reasonable and that such amounts are
then due or expected to become due in that month. Lender shall approve or
disapprove such request within ten (10) Business Days after Lender's receipt of
such request and, if approved, Lender shall release the Extra Funds to Borrower
or its designee within ten (10) Business Days after Lender's approval.
(vii) Reconciliation. Borrower shall furnish Lender
--------------
monthly, on each Payment Date on and after the Optional Prepayment Date, a
budget variance report reconciling the Operating Expenses shown on the Annual
Operating Budget with requested disbursements for payment of Operating Expenses
pursuant to Section 2.11(f).
------- --------
<PAGE>
50
(g) Monthly Funding of Sub-Accounts. During each Interest Accrual
-------------------------------
Period and, except as provided below, during the term of the Loan commencing
with the Interest Accrual Period in which the Closing Date occurs (each, the
"Current Interest Accrual Period"), Lender shall allocate all funds then on
- --------------------------------
deposit in the Cash Collateral Account among the Sub-Accounts as follows and in
the following priority:
(i) first, on and after the Stabilization Date, to the
-----
Basic Carrying Costs Sub-Account, until an amount equal to the Basic Carrying
Costs Monthly Installment for the Current Interest Accrual Period has been
allocated to the Basic Carrying Costs Sub-Account;
(ii) second, to the Debt Service Payment Sub-Account, until
------
an amount equal to the Required Base Debt Service Payment for the Payment Date
immediately after the Current Interest Accrual Period has been allocated to the
Debt Service Payment Sub-Account;
(iii) third, on and after the Stabilization Date, to the
-----
Capital Reserve Sub-Account, until an amount equal to the Capital Reserve
Monthly Installment for the Current Interest Accrual Period has been allocated
to the Capital Reserve Sub-Account;
(iv) fourth, on and after the Optional Prepayment Date, or
------
at Lender's election, upon the occurrence of an Event of Default, any date on or
after the occurrence of such Event of Default, to the Operating Expense Sub-
Account, until an amount equal to the Operating Expense Monthly Installment for
the Current Interest Accrual Period has been allocated to the Operating Expense
Sub-Account; and
(v) fifth, provided that (i) no Event of Default has
-----
occurred and (ii) Lender has received all financial information described in
Section 5.1(Q) for the most recent periods for which the same are due, Lender
- ------- ------
agrees that in each Current Interest Accrual Period any amounts deposited into
or remaining in the Cash Collateral Account after (A) the minimum amounts set
forth in clauses (i), (ii), (iii), and (iv) above have been satisfied with
----------- ---- ----- ----
respect to the Current Interest Accrual Period and any periods prior thereto and
(B) the funding of additional reserves at levels determined by Borrower to be
prudent for working capital, Capital Improvement Costs and other Borrower costs,
which levels shall be satisfactory to Lender, in Lender's discretion, shall be
disbursed by Lender on the first Payment Date after the end of the then Current
Interest Accrual Period, at Borrower's expense, to such account
<PAGE>
51
that Borrower may request in writing. Lender and its agents shall not be
responsible for monitoring Borrower's use of any funds disbursed from the Cash
Collateral Account or any of the Sub-Accounts. Notwithstanding anything in this
Agreement to the contrary, on and after the Optional Prepayment Date, any
amounts deposited into or remaining in the Cash Collateral Account after (A) the
minimum amounts set forth in clauses (i), (ii), (iii), and (iv) above have been
----------- -- --- --
satisfied with respect to the Current Interest Accrual Period and any periods
prior thereto and (B) the funding of additional reserves at levels determined by
Borrower to be prudent for working capital, Capital Improvement Costs and other
Borrower costs, which levels shall be satisfactory to Lender, in Lender's
discretion (such remaining amounts, the "Excess Cash Flow"), shall be allocated
----------------
to the Debt Service Sub-Account and be applied by Lender on each Payment Date in
accordance with Section 2.7 and shall not be disbursed to Borrower; and further
------- --- -------
provided, however, that if an Event of Default has occurred any amounts
- -------- -------
deposited into or remaining in the Cash Collateral Account shall be for the
account of Lender and may be withdrawn by Lender to be applied in any manner as
Lender may elect in Lender's discretion.
If an Event of Default has occurred or if on any Payment Date the
balance in any Sub-Account is insufficient to make the required payment due from
such Sub-Account, Lender may, in its sole discretion, in addition to any other
rights and remedies available hereunder, withdraw funds from any other Sub-
Account to pay such deficiency. If Lender elects to apply funds of any such
Sub-Account to pay any Required Base Debt Service Payment, Borrower shall, upon
demand, repay to Lender the amount of such withdrawn funds to replenish such
Sub-Account, and if Borrower shall fail to repay such amounts within one (1)
Business Day after notice of such withdrawal, an Event of Default shall exist
hereunder. Notwithstanding anything contained herein to the contrary, on the
Closing Date Borrower shall deposit (i) the Initial Basic Carrying Costs Amount
into the Basic Carrying Costs Sub-Account and (ii) the Initial Capital Reserve
Amount into the Capital Reserve Sub-Account.
(h) Termination of Central Cash Management. The obligations of
--------------------------------------
Borrower under Section 2.11 and Section 2.12 to maintain and fund each
------- ---- ------- ----
Collection Account and the Cash Collateral Account shall terminate in their
entirety and be of no further force or effect upon the satisfaction of each of
the following conditions: (i) no Default or Event of Default shall have
occurred and is continuing; (ii) the total defeasance of the Loan in accordance
with the provisions of this Agreement and the other Loan Documents; (iii) the
release of the Mortgages by Lender in accordance with the provisions of this
Agreement and the other Loan Documents; and (iv) Borrower's receipt of Lender's
written acknowledgement
<PAGE>
52
that the conditions described in (i), (ii) and (iii) above have been satisfied
- -- ---
to Lender's satisfaction.
Section 2.12 Security Agreement.
------------------
(a) Pledge of Accounts. To secure the full and punctual payment
------------------
and performance of all of the Indebtedness, Borrower hereby sells, assigns,
conveys, pledges and transfers to Lender and grants to Lender a first and
continuing Lien on and security interest in and to, the following property,
whether now owned or existing or hereafter acquired or arising and regardless of
where located (collectively, the "Account Collateral"):
------------------
(i) all of Borrower's right, title and interest in the
Cash Collateral Account (including all Sub-Accounts) and all Money and Permitted
Investments, if any, from time to time deposited or held in the Cash Collateral
Account;
(ii) all of Borrower's right, title and interest in each
Collection Account and Security Deposit Account and all Money, if any, from time
to time deposited or held in each Collection Account and Security Deposit
Account;
(iii) all interest, dividends, Money, Instruments and other
property from time to time received, receivable or otherwise payable in
respect of, or in exchange for, any of the foregoing; and
(iv) to the extent not covered by clauses (i), (ii), or
----------- ----
(iii) above, all Proceeds and products of any or all of the foregoing.
- -----
(b) Covenants. Borrower covenants that (i) all Rents, Money,
---------
and other items of Gross Revenue received by Borrower, the Subsequent Operator
or Manager, shall be deposited by Borrower, the Subsequent Operator or Manager,
as applicable, directly into the Collection Account or the Security Deposit
Account, as applicable, in accordance with Section 2.11(a), (ii) Borrower shall
------- -------
cause each Operator to cause all Receivables Financing Proceeds to be deposited
by the Receivables Lender directly into the Cash Collateral Account in
accordance with Section 2.11(a) and (iii) so long as any portion of the
---------------
Indebtedness is outstanding, Borrower shall not open (nor permit any Operator,
Manager or any Person to open) any other accounts for the collection of Rents
(as defined herein), Money (as defined
<PAGE>
53
herein) or other items of Gross Revenue, other than a replacement Collection
Account or Security Deposit Account approved by Lender in Lender's discretion.
(c) Instructions and Agreements. On or before the Closing Date,
---------------------------
Borrower will submit to each Collection Account Bank for each Facility a
Collection Account Agreement to be executed by such Collection Account Bank.
(d) Financing Statements; Further Assurances. Borrower will
----------------------------------------
execute and deliver to Lender for filing a financing statement or statements in
connection with the Account Collateral in the form required to properly perfect
Lender's security interest in the Account Collateral to the extent that it may
be perfected by such a filing. Borrower agrees that at any time and from time
to time, at the expense of Borrower, Borrower shall promptly execute and deliver
all further instruments, and take all further action, that Lender may request,
in order to perfect and protect the pledge, security interest and Lien granted
or purported to be granted hereby, or to enable Lender to exercise and enforce
Lender's rights and remedies hereunder with respect to, the Account Collateral.
(e) Transfers and Other Liens. Borrower agrees that it will not
-------------------------
sell or otherwise dispose of any of the Account Collateral other than pursuant
to the terms hereof and of the other Loan Documents, or create or permit to
exist any Lien upon or with respect to all or any of the Account Collateral,
except for the Lien granted to Lender under this Agreement.
(f) Lender's Reasonable Care. Beyond the exercise of reasonable
------------------------
care in the custody thereof, Lender shall not have any duty as to any Account
Collateral or any income thereon in Lender's possession or control or in the
possession or control of any agents for, or of Lender, or the preservation of
rights against any Person or otherwise with respect thereto. Lender shall be
deemed to have exercised reasonable care in the custody of the Account
Collateral in Lender's possession if the Account Collateral is accorded
treatment substantially equal to that which Lender accords Lender's own
property, it being understood that Lender shall not be liable or responsible for
(i) any loss or damage to any of the Account Collateral, or for any diminution
in value thereof from a loss of, or delay in Lender's acknowledging receipt of,
any wire transfer from any Collection Account Bank or (ii) any loss, damage or
diminution in value by reason of the act or omission of Lender, or Lender's
agents, employees or bailees.
<PAGE>
54
(g) Lender Appointed Attorney-In-Fact. Borrower hereby
---------------------------------
irrevocably constitutes and appoints Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence of an Event of Default to execute, acknowledge and deliver any
instruments and to exercise and enforce every right, power, remedy, option and
privilege of Borrower with respect to the Account Collateral, and do in the
name, place and stead of Borrower, all such acts, things and deeds for and on
behalf of and in the name of Borrower with respect to the Account Collateral,
which Borrower could or might do or which Lender may deem necessary or desirable
to more fully vest in Lender the rights and remedies provided for herein with
respect to the Account Collateral and to accomplish the purposes of this
Agreement. The foregoing powers of attorney are irrevocable and coupled with an
interest.
(h) Continuing Security Interest; Termination. This Section
----------------------------------------- -------
shall create a continuing pledge of, Lien on and security interest in the
Account Collateral and shall remain in full force and effect until payment in
full of the Indebtedness. Upon payment in full of the Indebtedness, Borrower
shall be entitled to the return, upon Borrower's written request and at
Borrower's expense, of such of the Account Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof, and Lender shall execute
such instruments and documents as may be reasonably requested by Borrower in
writing to evidence such termination and the release of the pledge and Lien
hereof, provided, however, that Borrower shall pay on demand all of Lender's
-------- -------
reasonable expenses in connection therewith.
Section 2.13 Securitization. Borrower hereby acknowledges that
--------------
Lender, its successors or assigns, may sell or securitize the Loan or portions
thereof in one or more transactions through the issuance of securities, which
securities may be rated by the Rating Agencies (each, a "Securitization"; and
--------------
collectively, the "Securitizations"). Borrower agrees that it shall cooperate
---------------
with Lender and use Borrower's best efforts to facilitate the consummation of
each Securitization including, without limitation, by: (i) amending or causing
the amendment of this Agreement, the other Loan Documents, and executing such
additional documents, instruments and agreements including amendments to
Borrower's organizational documents and preparing financial statements as
requested by the Rating Agencies to conform the terms of the Loan to the terms
of similar loans underlying completed or pending securitized transactions having
or seeking ratings similar to those then being sought in connection with the
relevant Securitization (provided, however, Borrower shall not be obligated to
modify the Interest Rate, Maturity Date, amortization schedule, non-recourse
provisions of the Loan Documents or any material economic terms and conditions
of the Loan,
<PAGE>
55
except to the extent that such changes are to correct clerical errors); (ii)
promptly and reasonably providing such information as may be requested in
connection with the preparation of a private placement memorandum, prospectus or
a registration statement required to privately place or publicly distribute the
securities in a manner which does not conflict with federal or state securities
laws; (iii) providing in connection with each of (a) a preliminary and a private
placement memorandum or (b) a preliminary and final prospectus, as applicable,
an indemnification certificate (x) certifying that Borrower has carefully
examined such private placement memorandum, prospectus or registration
statement, as applicable, including, without limitation, the sections entitled
"Special Considerations", "Description of the Mortgage Loan", "The Underlying
Mortgaged Properties", "The Managers", "Borrower" and "Certain Legal Aspects of
the Mortgage Loan", and such sections (and any other sections requested) insofar
as they relate to Borrower, its Affiliates, the Loan or the Facilities do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading; provided, however,
-------- -------
that Borrower shall not be required to indemnify Lender for any losses relating
to untrue statements or omissions which Borrower identified to Lender in writing
at the time of Borrower's examination of such memorandum or prospectus, as
applicable, and (y) indemnifying each Indemnified Party, the Issuer and the
Advisor for any losses, claims, damages, costs, expenses or liabilities
(including, without limitation, all liabilities under all applicable federal and
state securities laws) (collectively, the "Liabilities") to which any of them
-----------
may become subject (i) insofar as the Liabilities arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact relating
to Borrower, its Affiliates, the Loan, the Facilities, the Managers or any
aspect of the subject financing or the parties directly involved therein
contained in such sections or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in such
sections or necessary in order to make the statements in such sections, in light
of the circumstances under which they were made, not misleading or (ii) as a
result of any untrue statement of material fact in any of the financial
statements of Borrower incorporated into any placement memorandum, prospectus,
registration statement or other document connected with the issuance of
securities or the failure to include in such financial statements or in any
placement memorandum, prospectus, registration statement or other document
connected with the issuance of securities any material fact relating to
Borrower, its Affiliates, the Facilities, the Loan, the Managers and any aspect
of the subject financing necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; and (z)
agreeing to reimburse Lender, the Issuer and the Advisor for any legal or other
expenses reasonably incurred by Lender, the Issuer and the Advisor in connection
with
<PAGE>
56
investigating or defending the Liabilities; (iv) causing to be rendered such
customary opinion letters as shall be requested by the Rating Agencies for other
securitizations having or seeking ratings comparable to that then being sought
for the relevant Securitization; (v) making such representations, warranties and
covenants, as may be reasonably requested by the Rating Agencies and comparable
to those required in other securitized transactions having or seeking the same
rating as is then being sought for the Securitization; (vi) providing such
information regarding the Collateral as may be reasonably requested by the
Rating Agencies or otherwise required in connection with the formation of a
REMIC; and (vii) providing any other information and materials required in the
Securitization.
Section 2.14 Supplemental Mortgage Affidavits. The Liens to be created
--------------------------------
by each Mortgage are intended to encumber the Facility described therein to the
full extent of Borrower's obligations under the Loan Documents. As of the
Closing Date, Borrower shall have paid all state, county and municipal recording
and all other taxes imposed upon the execution and recordation of the Mortgages.
Notwithstanding anything contained herein to the contrary, if at any time Lender
determines, based on Lender's estimation of market value and applicable law,
that Lender is not being afforded the maximum amount of security available from
any Facility as a direct, or indirect, result of applicable taxes not having
been paid with respect to the Related Mortgage, Lender may request, and Borrower
agrees that it (i) will execute, acknowledge and deliver to Lender, within a
reasonable period of time after Lender's request, supplemental affidavits
increasing the amount of Indebtedness for which all applicable taxes have been
or are required to be paid under the Related Mortgage to an amount determined by
Lender, in its reasonable discretion, to be appropriate and (ii) will pay any
and all applicable recording, intangible or similar taxes.
ARTICLE III
CONDITIONS PRECEDENT
--------------------
Section 3.1 Conditions Precedent to the Making of the Loan.
----------------------------------------------
(a) As a condition precedent to the making of the Loan, Borrower
shall have satisfied the following conditions (unless waived by Lender in
accordance with Section 8.4) with respect to each Facility on or before the
------- ---
Closing Date:
<PAGE>
57
(A) Loan Documents.
--------------
(i) Loan Agreement. Borrower shall have executed and
--------------
delivered this Agreement to Lender.
(ii) Note. Borrower shall have executed and delivered
----
to Lender the Note.
(iii) Mortgages. Borrower shall have executed and
---------
delivered to Lender the Mortgages and each Mortgage shall have been filed of
record in the appropriate filing offices in the jurisdiction in which the
related Facility is located or irrevocably delivered to an authorized title
agent for the Title Insurer for such recordation.
(iv) Supplemental Mortgage Affidavits. The Liens to be
--------------------------------
created by each Mortgage are intended to encumber the Facility described therein
to the full extent of Borrower's obligations under the Loan Documents. As of the
Closing Date, Borrower shall have paid all state, county and municipal recording
and all other taxes imposed upon the execution and recordation of each Mortgage.
(v) Assignments of Leases. Borrower shall have
---------------------
executed and delivered to Lender the Assignments of Leases and each Assignment
of Leases shall have been filed of record in the appropriate filing offices in
the jurisdiction in which the related Facility is located or irrevocably
delivered to an authorized title agent for the Title Insurer for such
recordation.
(vi) Assignments of Agreements. Borrower shall have
-------------------------
executed and delivered to Lender the Assignments of Agreements and the
Assignments of Agreements shall, to the extent prudent pursuant to local
practice, have been filed of record in the appropriate filing offices in the
jurisdiction in which the related Facility is located or irrevocably delivered
to an authorized title agent for the Title Insurer for such recordation.
(vii) Financing Statements. Borrower and its partners
--------------------
or members (and their shareholders), as applicable, shall have executed and
delivered to Lender all financing statements required by Lender and such
financing statements shall have
<PAGE>
58
been filed of record in the appropriate filing offices in each of the
appropriate jurisdictions or irrevocably delivered to an authorized title agent
for the Title Insurer for such recordation.
(viii) Intentionally deleted.
(ix) Environmental Guaranty. The Parent shall have
----------------------
executed and delivered to Lender the Environmental Guaranty.
(x) Intentionally deleted.
(xi) Intentionally deleted.
(xii) Collection Account Agreement. Borrower and the
----------------------------
Collection Account Bank shall have executed and delivered the Collection Account
Agreement and shall have delivered an executed copy of such agreement to Lender.
(xiii) Recourse Guaranty. The Parent shall have
-----------------
executed and delivered the Recourse Guaranty and executed copies of such
agreement shall have been delivered to Lender.
(B) Opinions of Counsel. Lender shall have received from counsel
-------------------
satisfactory to Lender, legal opinions in form and substance satisfactory to
Lender in Lender's discretion (including, without limitation, a bankruptcy
opinion). All such legal opinions will be addressed to Lender and the Rating
Agencies, dated as of the Closing Date, and in form and substance satisfactory
to Lender, the Rating Agencies and their counsel. Borrower hereby instructs any
of the foregoing counsel, to the extent that such counsel represents Borrower,
to deliver to Lender such opinions addressed to Lender and the Rating Agencies.
(C) Secretary's Certificates and SPE Equity Owner's Certificate.
-----------------------------------------------------------
Lender shall have received a Secretary's Certificate with respect to Borrower's
managing equity owner and Manager and the SPE Equity Owner's Certificates with
respect to Borrower. Lender shall have also received a Secretary's Certificate
with respect to the Manager and the Initial Operator.
<PAGE>
59
(D) Insurance. Lender shall have received certificates of insurance
---------
demonstrating insurance coverage in respect of each Facility as required by and
in accordance with the Mortgages.
(E) Lien Search Reports. Lender shall have received satisfactory
-------------------
reports of UCC (collectively, the "UCC Searches"), federal tax lien, bankruptcy,
------------
state tax lien, judgment and pending litigation searches conducted by a search
firm reasonably acceptable to Lender. Such searches shall have been received in
relation to Borrower, each Operator, and Manager and each equity owner in
Borrower, Operator and Manager as well as under any "doing business as" or "also
known as" names of such entities. Such searches shall have been conducted in
each of the locations designated by Lender in Lender's reasonable discretion and
shall have been dated not more than fifteen (15) days prior to the Closing Date.
(F) Title Insurance Policy. Lender shall have received (i) Title
----------------------
Insurance Policies or marked-up commitments (in form and substance satisfactory
to Lender) from Title Insurer to issue the Title Insurance Policies and (ii) a
fully executed copy of the Title Instruction Letter from the Title Insurer.
(G) Environmental Matters. Lender shall have received an
---------------------
Environmental Report with respect to each Facility.
(H) Consents, Licenses, Approvals. Lender shall have received copies
------------------------------
of all consents, licenses and approvals, if any, required in connection with the
execution, delivery and performance by Borrower under, and the validity and
enforceability of, the Loan Documents, and such consents, licenses and approvals
shall be in full force and effect.
(I) Additional Matters. Lender shall have received such other
------------------
Permits, certificates (including certificates of occupancy reflecting the
permitted uses of each Facility as of the Closing Date), opinions, documents and
instruments (including, without limitation, written proof from the appropriate
Governmental Authority regarding the zoning of each Facility in form and
substance satisfactory to Lender in Lender's discretion) relating to the Loan as
may be required by Lender and all other documents and all legal matters in
connection with the Loan shall be satisfactory in form and substance to Lender.
Borrower shall provide Lender with information reasonably satisfactory to Lender
regarding the Basic Carrying Costs on or before the Closing Date.
<PAGE>
60
(J) Representations and Warranties. The representations and
------------------------------
warranties herein and in the other Loan Documents shall be true and correct.
(K) No Injunction. No law or regulation shall have been adopted, no
-------------
order, judgment or decree of any Governmental Authority shall have been issued
or entered, and no litigation shall be pending or threatened, which in the
judgment of Lender would enjoin, prohibit or restrain, or impose or result in an
adverse effect upon the making or repayment of the Loan or the consummation of
the Transactions.
(L) Security Deposits. All security deposits with respect to each
-----------------
Facility on the Closing Date shall have been transferred to the relevant
Security Deposit Account, and Borrower shall be in compliance with all
applicable Legal Requirements relating to such security deposits.
(M) Service Contracts and Permits. Borrower shall have delivered to
-----------------------------
Lender true, correct and complete copies of all material contracts and Permits
relating to the Facilities.
(N) Site Inspection. Unless waived by Lender in accordance with
---------------
Section 8.4, Lender shall have performed, or caused to be performed on its
- ------- ---
behalf, an on-site due diligence review of the Facilities to be acquired or
refinanced with the Loan, the results of which shall be satisfactory to Lender
in Lender's discretion.
(O) Use. The Facilities shall be operating and operated only as
---
nursing homes.
(P) Financial Information. Lender shall have received all financial
---------------------
information (which financial information shall be satisfactory to Lender in
Lender's discretion) relating to the Facilities including, without limitation,
audited financial statements of Borrower and other financial reports requested
by Lender in Lender's discretion. Such financial information shall be (i)
prepared by an accounting firm approved by Lender in Lender's discretion, (ii)
prepared based on a scope of work determined by Lender in Lender's discretion
and (iii) in form and content acceptable to Lender in Lender's discretion.
(Q) Management Agreement. With respect to each Facility, Lender shall
--------------------
have received the relevant Management Agreement.
<PAGE>
61
(R) Leases; Tenant Estoppels; Subordination, Nondisturbance and
-----------------------------------------------------------
Attornment Agreements. With respect to each Facility, Borrower shall have
- ---------------------
delivered a true, complete and correct rent roll and a copy of each of the
Leases identified in such rent roll, and each Lease shall be satisfactory to
Lender in Lender's discretion. Borrower shall, among other things and without
limitation, provide (i) evidence that each Lease is in full force and effect and
(ii) originally executed tenant estoppel certificates and subordination,
nondisturbance and attornment agreements from tenants with leases which in the
aggregate account for at least one hundred percent (100%) of the total square
footage of each Facility in form and substance satisfactory to Lender in
Lender's discretion.
(S) Subdivision. Evidence satisfactory to Lender (including title
-----------
endorsements) that the Land with respect to each Facility constitutes a separate
lot for conveyance and real estate tax assessment purposes.
(T) Transaction Costs. Borrower shall have paid or caused
-----------------
to be paid all Transaction Costs.
(U) Receivables Financing. Borrower shall have delivered an
---------------------
intercreditor agreement from the Receivables Lender in form satisfactory to
Lender in its sole discretion and evidence that the Initial Operator has
delivered the Letter of Instructions to the Receivables Lender.
(b) Lender shall not make the Loan unless and until each of the
applicable conditions precedent set forth in this Section 3.1 is satisfied and
------- ---
until Borrower provides any other information reasonably required by Lender.
(c) In connection with the Loan, Borrower shall execute and/or deliver to
Lender all additions, amendments, modifications and supplements to the items set
forth in this Article III, including, without limitation, amendments,
-----------
modifications and supplements to the Note, any Mortgage, any Assignment of
Leases, any Assignment of Agreements, and any Manager's Subordination, if
reasonably requested by Lender to effectuate the provisions hereof, and to
provide Lender with the full benefit of the security intended to be provided
under the Loan Documents (provided, however, Borrower shall not be obligated to
modify any material economic terms and conditions of this Loan). Without in any
way limiting the foregoing, such additions, modifications and supplements shall
include those
<PAGE>
62
deemed reasonably desirable by Lender's counsel in each jurisdiction in which a
Facility is located.
(d) The making of the Loan shall constitute, without the necessity of
specifically containing a written statement to such effect, a confirmation,
representation and warranty by Borrower to Lender that all of the applicable
conditions to be satisfied in connection with the making of the Loan have been
satisfied (unless waived by Lender in accordance with Section 8.4,) and that all
------- ----
of the representations and warranties of Borrower set forth in the Loan
Documents are true and correct as of the date of the making of the Loan.
Section 3.2 Required Deliveries Prior to Termination of Post-Closing
--------------------------------------------------------
Period. Notwithstanding the terms of Section 3.1, the Lender may agree to make
- ------ ------- ---
the Loan without the satisfaction of certain of the terms in such Section. To
-------
the extent such terms are not satisfied on the Closing Date, Borrower shall
satisfy the following conditions with respect to each Facility on or before the
termination of the Post-Closing Period unless otherwise stated in this Section
-------
3.2, in which case the Post-Closing Period shall be as provided in this Section
- --- -------
3.2:
- ---
(A) Opinions of Counsel. Lender shall have received from counsel
-------------------
satisfactory to Lender, legal opinions in form and substance satisfactory to
Lender in Lender's discretion (including, without limitation, a bankruptcy
opinion). All such legal opinions will be addressed to Lender and the Rating
Agencies, dated as of the Closing Date, and in form and substance satisfactory
to Lender, the Rating Agencies and their counsel. Borrower hereby instructs any
of the foregoing counsel, to the extent that such counsel represents Borrower,
to deliver to Lender such opinions addressed to Lender and the Rating Agencies.
(B) Lien Search Reports. Lender shall have received satisfactory
-------------------
reports of UCC (collectively, the "UCC Searches"), federal tax lien, bankruptcy,
------------
state tax lien, judgment and pending litigation searches conducted by a search
firm reasonably acceptable to Lender. Such searches shall have been received in
relation to Borrower, each Operator, and Manager and each equity owner in
Borrower, each Operator and Manager as well as under any "doing business as" or
"also known as" names of such entities. Such searches shall have been conducted
in each of the locations designated by Lender in Lender's reasonable discretion
and shall have been dated not more than fifteen (15) days prior to the Closing
Date.
<PAGE>
63
(C) Additional Matters. Lender shall have received such other
------------------
Permits, certificates (including certificates of occupancy reflecting the
permitted uses of each Facility as of the Closing Date), opinions, documents and
instruments (including, without limitation, written proof from the appropriate
Governmental Authority regarding the zoning of each Facility in form and
substance satisfactory to Lender in Lender's discretion) relating to the Loan as
may be required by Lender and all other documents and all legal matters in
connection with the Loan shall be satisfactory in form and substance to Lender.
Borrower shall provide Lender with information reasonably satisfactory to Lender
regarding the Basic Carrying Costs on or before the Closing Date.
(D) Survey. Lender shall have received the Survey with respect to each
------
Facility.
(E) Engineering Report. Lender shall have received the Engineering
------------------
Report with respect to each Facility.
(F) Appraisal. Lender shall have received an Appraisal satisfactory
---------
to Lender with respect to each Facility which shall be (i) prepared by an
Appraiser approved by Lender in Lender's discretion, (ii) prepared based on a
scope of work determined by Lender in Lender's discretion and (iii) in form and
content acceptable to Lender in Lender's discretion.
(G) Financial Information. Lender shall have received all financial
---------------------
information (which financial information shall be satisfactory to Lender in
Lender's discretion) relating to the Facilities including, without limitation,
audited financial statements of Borrower, the Manager, each Operator and other
financial reports requested by Lender in Lender's discretion. Such financial
information shall be (i) prepared by an accounting firm approved by Lender in
Lender's discretion, (ii) prepared based on a scope of work determined by Lender
in Lender's discretion and (iii) in form and content acceptable to Lender in
Lender's discretion.
(H) Transaction Costs. All the Lender's Transaction Costs shall have
-----------------
been paid.
(I) Zoning Endorsement. Lender shall have received a zoning
------------------
endorsement satisfactory to Lender with respect to each Facility delivered by
the Title
<PAGE>
64
Company, provided the Title Company insures that such post-closing delivery will
--------
not affect the title insurance provided at Closing, including without limitation
altering the priority of Lender's lien.
(J) Manager Opinion Letter. Lender shall have received an opinion
----------------------
letter from the Manager's counsel in form satisfactory to Lender in its sole
discretion.
Section 3.3 Required Deliveries Prior to the Permitted License Transfer.
------------------------------------------------------------
(a) As a condition precedent to the Permitted License Transfer,
Borrower shall have satisfied the following conditions with respect to each
Facility on or before the Permitted License Transfer Date:
(A) Operator Lease. An executed copy of the applicable
--------------
Operator Lease with the Subsequent Operator shall be provided to Lender and be
in a form acceptable to Lender in its sole discretion.
(B) Opinions of Counsel. Lender shall have received from
-------------------
counsel satisfactory to Lender, legal opinions in form and substance
satisfactory to Lender in Lender's discretion (including, without limitation, a
bankruptcy opinion). All such legal opinions will be addressed to Lender and the
Rating Agencies, dated as of the Permitted License Transfer Date, and in form
and substance satisfactory to Lender, the Rating Agencies and their counsel.
Borrower hereby instructs any of the foregoing counsel, to the extent that such
counsel represents Borrower, to deliver to Lender such opinions addressed to
Lender and the Rating Agencies.
(C) Secretary's Certificates. Lender shall have received a
------------------------
Secretary's Certificate with respect to the Subsequent Operator.
(D) Consents, Licenses, Approvals. Lender shall have received
-----------------------------
copies of all consents, licenses and approvals, if any, required in connection
with the execution, delivery and performance by the Subsequent Operator, under,
and the validity and enforceability of, the applicable Loan Documents, and such
consents, licenses and approvals shall be in full force and effect.
<PAGE>
65
(E) Additional Matters. Lender shall have received such other
------------------
Permits, certificates (including certificates of occupancy reflecting the
permitted uses of each Facility as of the Permitted License Transfer Date),
opinions, documents and instruments (including, without limitation, written
proof from the appropriate Governmental Authority regarding the zoning of each
Facility in form and substance satisfactory to Lender in Lender's discretion)
relating to the Loan as may be required by Lender and all other documents and
all legal matters in connection with the Loan shall be satisfactory in form and
substance to Lender.
(F) No Injunction. No law or regulation shall have been
-------------
adopted, no order, judgment or decree of any Governmental Authority shall have
been issued or entered, and no litigation shall be pending or threatened, which
in the judgment of Lender would enjoin, prohibit or restrain, or impose or
result in an adverse effect upon the making or repayment of the Loan or the
consummation of the Transactions.
(G) Transaction Costs. All the Lender's Transaction Costs
-----------------
shall have been paid.
Section 3.4 Required Deliveries Prior to Stabilization Date. Prior to
-----------------------------------------------
in Sections 3.1, 3.2 and 3.3, including without limitation, a bankruptcy opinion
------------- --- ---
with respect to Borrower and Operator, and updates of those deliveries of such
items made prior to the Stabilization Date, to the extent requested by Lender in
its sole discretion.
Section 3.5 Form of Loan Documents and Related Matters. The Loan
------------------------------------------
Documents and all of the certificates, agreements, legal opinions and other
documents and papers referred to in this Article III, unless otherwise
-----------
specified, shall be delivered to Lender, and shall be in form and substance
satisfactory to Lender.
<PAGE>
66
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Representations and Warranties of Borrower.
------------------------------------------
(a) Organization. Borrower (i) is a duly organized and validly
------------
existing Entity in good standing under the laws of the State of its formation,
(ii) is duly qualified as a foreign Entity in each jurisdiction in which the
nature of its business, the Facility or any of the Collateral makes such
qualification necessary or desirable, (iii) has the requisite Entity power and
authority to carry on its business as now being conducted, and (iv) has the
requisite Entity power to execute and deliver, and perform its obligations
under, the Loan Documents.
(b) Authorization. The execution and delivery by Borrower of
-------------
the Loan Documents, Borrower's performance of its obligations thereunder and the
creation of the security interests and Liens provided for in the Loan Documents
(i) have been duly authorized by all requisite Entity action on the part of
Borrower, (ii) will not violate any provision of any applicable Legal
Requirements, any order, writ, decree, injunction or demand of any court or
other Governmental Authority, any organizational document of Borrower or any
indenture or agreement or other instrument to which Borrower is a party or by
which Borrower is bound, (iii) will not be in conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under, or
result in the creation or imposition of any Lien of any nature whatsoever upon
any of the property or assets of Borrower pursuant to, any indenture or
agreement or instrument, and (iv) have been duly executed and delivered by
Borrower. Except for those obtained or filed on or prior to the Closing Date,
Borrower is not required to obtain any consent, approval or authorization from,
or to file any declaration or statement with, any Governmental Authority or
other agency in connection with or as a condition to the execution, delivery or
performance of the Loan Documents. The Loan Documents to which Borrower or any
Manager is a party have been duly authorized, executed and delivered by such
parties.
<PAGE>
67
(c) Single-Purpose Entity.
---------------------
(i) The Borrower has been, and will continue to be, a duly
formed and existing Entity, and a Single-Purpose Entity.
(ii) The SPE Equity Owner at all times since its formation
has been, and will continue to be, a duly formed and existing corporation in
good standing under the laws of the jurisdiction of its formation and a Single-
Purpose Entity, is duly qualified as a foreign entity in each other jurisdiction
in which the nature of its business, any Facility or any of the Collateral makes
such qualification necessary or desirable, and Borrower will take no action to
cause the SPE Equity Owner not to be a duly formed and existing corporation in
good standing under the laws of the jurisdiction of its formation and a Single-
Purpose Entity.
(iii) Borrower at all times since its formation has complied,
and will continue to comply, with the provisions of all of its organizational
documents, and the laws of the state in which Borrower was formed relating to
the Entity.
(d) Litigation. There are no actions, suits or proceedings at
----------
law or in equity by or before any Governmental Authority or other agency now
pending and served or, to the knowledge of Borrower, threatened against
Borrower, the applicable Operator, Manager, the SPE Equity Owner or any
Facility.
(e) Agreements. Borrower is not a party to any agreement or
----------
instrument or subject to any restriction which is likely to have a Material
Adverse Effect. Borrower is not in default in any respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any indenture, agreement or instrument to which it is a party or by
which Borrower or any Facility is bound.
(f) No Bankruptcy Filing. Borrower is not contemplating either
--------------------
the filing of a petition by Borrower under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of Borrower's
assets or property, and Borrower has no knowledge of any Person contemplating
the filing of any such petition against Borrower.
(g) Full and Accurate Disclosure. No statement of fact made by
----------------------------
or on behalf of Borrower in the Loan Documents or in any other document or
certificate delivered to Lender by Borrower contains any untrue statement of a
material fact or omits to state any
<PAGE>
68
material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to Borrower which has not been
disclosed to Lender which materially adversely affects, nor as far as Borrower
can foresee, might materially adversely affect the business, operations or
condition (financial or otherwise) of Borrower.
(h) Location of Chief Executive Offices. The location of
-----------------------------------
Borrower's principal place of business and the location of Borrower's chief
executive office is 435 North Bedford Drive, First Floor, Beverly Hills, CA
90210 and Borrower has no other places of business.
(i) Compliance. Borrower, each Facility and Borrower's and the
----------
applicable Operator's respective use thereof and operations thereat comply in
all material respects with all applicable Legal Requirements and all Insurance
Requirements. Borrower is not in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which is reasonably likely to have a Material Adverse Effect.
(j) Other Debt and Obligations. Borrower has no financial
--------------------------
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Borrower is a party, or by which Borrower or
any Facility is bound, other than unsecured trade payables incurred in the
ordinary course of business relating to the ownership and operation of such
Facility which do not exceed a maximum amount of one percent (1%) of the Loan
Amount and are paid within thirty (30) days of the date incurred, and other than
obligations under the Mortgage and the other Loan Documents. Borrower has not
borrowed or received other debt financing that has not been heretofore repaid in
full and Borrower has no known material contingent liabilities.
(k) ERISA. Each Plan and, to the knowledge of Borrower, each
-----
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, its terms and the
applicable provisions of ERISA, the Code and any other federal or state law, and
no event or condition has occurred as to which Borrower would be under an
obligation to furnish a report to Lender under Section 5.1(S).
------- ------
(l) Solvency. Borrower (i) has not entered into this Loan
--------
Agreement or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and (ii) has received reasonably equivalent value in
exchange for its obligations under the Loan
<PAGE>
69
Documents. Giving effect to the transactions contemplated hereby, the fair
saleable value of Borrower's assets exceeds and will, immediately following the
execution and delivery of this Agreement, exceed Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, or disputed
liabilities or Contingent Obligations. The fair saleable value of Borrower's
assets is and will, immediately following the execution and delivery of this
Agreement, be greater than Borrower's probable liabilities, including the
maximum amount of its Contingent Obligations or its debts as such debts become
absolute and matured. Borrower's assets do not and, immediately following the
execution and delivery of this Agreement, will not, constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, and does not believe that it will, incur
debts and liabilities (including, without limitation, Contingent Obligations and
other commitments) beyond its ability to pay such debts as they mature (taking
into account the timing and amounts to be payable on or in respect of
obligations of Borrower).
(m) Not Foreign Person. Borrower is not a "foreign person"
------------------
within the meaning of (S) 1445(f)(3) of the Code.
(n) Investment Company Act; Public Utility Holding Company Act.
----------------------------------------------------------
Borrower is not (i) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, (ii) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (iii) subject to any other federal or state law or regulation
which purports to restrict or regulate its ability to borrow money.
(o) No Defaults. No Default or Event of Default exists under or
-----------
with respect to any Loan Document.
(p) Labor Matters. Borrower is not a party to any collective
-------------
bargaining agreements.
(q) Title to the Mortgaged Properties. Borrower owns good,
---------------------------------
indefeasible, marketable and insurable fee simple title to each Facility, free
and clear of all Liens, other than the Permitted Encumbrances applicable to such
Facility. There are no outstanding options to purchase or rights of first
refusal affecting any Facility. The Permitted Encumbrances do not and will not
materially and adversely affect (i) the ability of Borrower to
<PAGE>
70
pay in full all sums due under the Note or any of its other obligations in a
timely manner or (ii) the use of any Facility for the use currently being made
thereof, the operation of any Facility as currently being operated or the value
of any Facility.
(r) Use of Proceeds; Margin Regulations. Borrower will use the
-----------------------------------
proceeds of the Loan for the purposes described in Section 2.2. No part of the
------- ---
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by applicable Legal Requirements.
(s) Financial Information. All historical financial data
---------------------
concerning Borrower and each Facility that has been delivered by Borrower to
Lender is true, complete and correct in all material respects. Since the
delivery of such data, except as otherwise disclosed in writing to Lender, there
has been no material adverse change in the financial position of Borrower or any
Facility, or in the results of operations of Borrower. Borrower has not
incurred any obligation or liability, contingent or otherwise, not reflected in
such financial data which might materially adversely affect its business
operations or any Facility.
(t) Condemnation. No Taking has been commenced or, to
------------
Borrower's knowledge, is contemplated with respect to all or any portion of any
Facility or for the relocation of roadways providing access to any Facility.
(u) Utilities and Public Access. Each Facility has adequate
---------------------------
rights of access to public ways and is served by adequate water, sewer, sanitary
sewer and storm drain facilities as are adequate for full utilization of such
Facility for its current purpose. Except as otherwise disclosed by the Surveys,
all public utilities necessary to the continued use and enjoyment of each
Facility as presently used and enjoyed are located in the public right-of-way
abutting the premises, and all such utilities are connected so as to serve each
Facility either (i) without passing over other property or, (ii) if such
utilities pass over other property, pursuant to valid easements. All roads
necessary for the full utilization of each Facility for its current purpose have
been completed and dedicated to public use and accepted by all Governmental
Authorities or are the subject of access easements for the benefit of such
Facility.
(v) Environmental Compliance. Borrower represents, warrants and
------------------------
covenants, as to itself and each Facility:
<PAGE>
71
(i) Borrower and each Facility are in compliance with all
applicable Environmental Laws, which compliance includes, without limitation,
the possession by Borrower or the applicable Operator, as applicable, of and
compliance with all environmental, health and safety Permits, licenses and other
governmental authorizations required in connection with the ownership and
operation of each Facility under all Environmental Laws, except where the
failure to comply with such laws is not reasonably likely to result in a
Material Adverse Effect.
(ii) There is no Environmental Claim pending or, to
Borrower's knowledge, threatened, and no penalties arising under Environmental
Laws have been assessed, against Borrower, any Facility or against any Person
whose liability for any Environmental Claim Borrower has or may have retained or
assumed either contractually or by operation of law, and no investigation or
review is pending or, to the knowledge of Borrower, threatened by any
Governmental Authority, citizens group, employee or other Person with respect to
any alleged failure by Borrower, or any Facility to have any environmental,
health or safety permit, license or other authorization required under, or to
otherwise comply with, any Environmental Law or with respect to any alleged
liability of Borrower for any Use or Release of any Hazardous Substances or the
presence, Use, or Release of any Hazardous Substances at, on, in, under, or from
any Facility.
(iii) To the knowledge of Borrower after due inquiry, there
have been and are no past or present Releases or threats of Release of any
Hazardous Substance that are likely to form the basis of any Environmental Claim
against Borrower, any Facility or, to Borrower's knowledge, against any Person
whose liability for any Environmental Claim Borrower has or may have retained or
assumed either contractually or by operation of law.
(iv) To the knowledge of Borrower after due inquiry and
except as disclosed in the Environmental Reports, without limiting the
generality of the foregoing, there is not present at, on, in or under any
Facility, PCB-containing equipment, asbestos or asbestos containing materials,
underground or aboveground storage tanks or surface impoundments for Hazardous
Substances, lead in drinking water (except in concentrations that comply with
all Environmental Laws), or lead-based paint (nor have there been any
underground storage tanks present at, on, in, or under any Facility).
<PAGE>
72
(v) No Liens are presently recorded with the appropriate
land records under or pursuant to any Environmental Law with respect to any
Facility and, to Borrower's knowledge, no Governmental Authority has been taking
or is in the process of taking any action that could subject any Facility to
Liens under any Environmental Law.
(vi) There have been no environmental investigations,
studies, audits, reviews or other analyses conducted by or on behalf of Borrower
that are in the possession or control of Borrower in relation to any Facility
which have not been provided to Lender.
(vii) No conditions exist which would require Borrower
under any Environmental Laws to place a notice on any deed to any Facility with
respect to the presence, Use or Release of Hazardous Substances at, on, in,
under or from any Facility and no Facility has any such notice in its deed.
(w) No Joint Assessment; Separate Lots. Borrower has not and
----------------------------------
shall not suffer, permit or initiate the joint assessment of any Facility (i)
with any other real property constituting a separate tax lot, and (ii) with any
portion of such Facility which may be deemed to constitute personal property, or
any other procedure whereby the lien of any taxes which may be levied against
such personal property shall be assessed or levied or charged to such Facility
as a single lien. Each Facility is comprised of one or more parcels, each of
which constitutes a separate tax lot and none of which constitutes a portion of
any other tax lot.
(x) Assessments. Except as disclosed in the Title Insurance
-----------
Policies, there are no pending or, to the knowledge of Borrower, proposed
special or other assessments for public improvements or otherwise affecting any
Facility, nor, to the knowledge of Borrower, are there any contemplated
improvements to any Facility that may result in such special or other
assessments.
(y) Mortgages and Other Liens. Each Mortgage creates a valid
-------------------------
and enforceable first mortgage Lien on the relevant Facility as security for the
repayment of the Indebtedness, subject only to the Permitted Encumbrances
applicable to such Facility. Each Collateral Security Instrument establishes
and creates a valid, effective, and enforceable Lien on and a security interest
in, or claim to, the rights and property described therein. All property
covered by such Collateral Security Instrument is subject to a UCC financing
statement filed and/or recorded, as appropriate, or irrevocably delivered to an
authorized agent
<PAGE>
73
of the Title Insurer for such recordation or filing in all places necessary to
perfect a valid first priority Lien with respect to the rights and property that
are the subject of such Collateral Security Instrument to the extent governed by
the UCC. All continuations and any assignments of any such financing statements
have been or will be timely filed or refiled, as appropriate, in the appropriate
recording offices.
(z) Enforceability. The Loan Documents executed by Borrower in
--------------
connection with the Loan, including, without limitation, any Collateral Security
Instrument, are the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their terms, subject only to
bankruptcy, insolvency and other limitations on creditors' rights generally and
to equitable principles. Such Loan Documents are, as of the Closing Date, not
subject to any right of rescission, set-off, counterclaim or defense by
Borrower, including the defense of usury, nor will the operation of any of the
terms of the Note, the Mortgages, or such other Loan Documents, or the exercise
of any right thereunder, render the Mortgages unenforceable against Borrower, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense by Borrower, including the defense of usury, and Borrower has not
asserted any right of rescission, set-off, counterclaim or defense with respect
thereto.
(aa) No Liabilities. Borrower has no liabilities or obligations
--------------
including, without limitation, Contingent Obligations (and including, without
limitation, liabilities or obligations in tort, in contract, at law, in equity,
pursuant to a statute or regulation, or otherwise) other than those liabilities
and obligations expressly permitted by this Agreement.
(bb) No Prior Assignment. As of the Closing Date, (i) Lender is
-------------------
the assignee of Borrower's interest under the Leases, and (ii) there are no
prior assignments of the Leases or any portion of the Rents due and payable or
to become due and payable which are presently outstanding.
(cc) Certificate of Occupancy. Borrower has obtained (in its own
------------------------
name and/or in the applicable Operator's name, as applicable and in any event,
in the name of the Person(s) as required under all applicable Legal
Requirements) all Permits necessary to use and operate the Facilities for the
uses described in Section 3.1(R), and all such Permits are in full force and
------- ------
effect. The use being made of each Facility is in conformity in all respects
with the certificate of occupancy and/or Permits for such Facility and any other
restrictions,
<PAGE>
74
covenants or conditions affecting such Facility. Each Facility contains all
Equipment necessary to use and operate such Facility in a first-class manner.
(dd) Flood Zone. Except as shown on the related Survey, no
----------
Facility is located in a flood hazard area as designated by the Federal
Emergency Management Agency.
(ee) Physical Condition. Except as disclosed in the related
------------------
Engineering Reports, each Facility is free of material structural defects and
all building systems contained therein are in good working order in all material
respects subject to ordinary wear and tear.
(ff) Intellectual Property. All trademarks, trade names and
---------------------
service marks that Borrower owns or has pending, or under which Borrower is
licensed, are in good standing and uncontested. There is no right under any
trademark, trade name or service mark necessary to the business of Borrower as
presently conducted or as Borrower contemplates conducting its business.
Borrower has not infringed, is not infringing, and has not received notice of
infringement with respect to asserted trademarks, trade names and service marks
of others. To Borrower's knowledge, there is no infringement by others of
trademarks, trade names and service marks of Borrower.
(gg) Security Deposits. All security deposits with respect to
-----------------
each Facility on the Closing Date have been transferred to the relevant Security
Deposit Account on or prior to the Closing Date, and Borrower is in compliance
with all applicable Legal Requirements relating to such security deposits.
(hh) Conduct of Business. Borrower does not conduct its business
-------------------
"also known as", "doing business as" or under any name other than Mary Lyons
Nursing Home, Chestnut Hill Nursing Home and Riverdale Gardens Nursing Home.
(ii) Title Insurance. Each Facility is covered by either an
---------------
American Land Title Association (ALTA) mortgagee's title insurance policy, or a
commitment to issue such a title insurance policy, insuring a valid first lien
on such Facility, which is in full force and effect and is freely assignable to
and will inure to the benefit of Lender and any successor or assignee of Lender,
including but not limited to the trustee in a Securitization, subject only to
the Permitted Encumbrances.
<PAGE>
75
(jj) Tax Fair Market Value. Each Allocated Loan Amount with
---------------------
respect to the relevant Facility does not exceed the Tax Fair Market Value of
such Facility. If the Note is significantly modified prior to the closing date
of a Securitization so as to result in a taxable exchange under Code Section
1001, Borrower will, if requested by Lender, represent that each Allocated Loan
Amount does not exceed the Tax Fair Market Value of the relevant Facility as of
the date of such significant modification.
(kk) Leases. (a) Borrower is the sole owner of the entire
------
lessor's interest in the Leases; (b) the Leases are the valid, binding and
enforceable obligations of Borrower and the applicable tenant or lessee
thereunder; (c) the terms of all alterations, modifications and amendments to
the Leases are reflected in the certified rent roll statements delivered to and
approved by Lender; (d) none of the Rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated; (e) none of the Rents have been
collected for more than one (1) month in advance; (f) the premises demised under
the Leases have been completed and the tenants under the Leases have accepted
the same and have taken possession of the same on a rent-paying basis; (g) there
exists no offset or defense to the payment of any portion of the Rents; (h) no
Lease contains an option to purchase, right of first refusal to purchase,
expansion right, or any other similar provision; (i) no Person has any
possessory interest in, or right to occupy, any Facility except under and
pursuant to a Lease; (j) each Lease is subordinate to the Loan Documents, either
pursuant to its terms or a recorded subordination agreement; and (k) no Lease
has the benefit of a non-disturbance agreement that would be considered
unacceptable to prudent institutional lenders.
(ll) Use-Specific Representations.
----------------------------
(i) Compliance with Laws. Borrower, the applicable Operator and
--------------------
the Facilities comply in all material respects with all applicable federal,
state and local laws, regulations, quality and safety standards, accreditation
and certification standards and requirements of the applicable state and local
Department of Public Health (each a "DOH") and all other Governmental
---
Authorities including, without limitation, those relating to the quality and
adequacy of medical care, pharmacy or drug and medicine services, including,
without limitation, the distribution of pharmaceuticals, emergency medical
services and treatment, laboratory facilities and services, infectious or
communicable diseases, psychiatric programs, child welfare and care programs,
blood donation, x-rays, resident care, alternative care, accreditation,
discrimination, chronic disease care, medical services, including, without
limitations, those relating to maternity, anesthesia, rehabilitation and
radiology, rate setting,
<PAGE>
76
equipment, medical staff, medical students, nursing staff, health care
professionals and other personnel, operating policies, additions to facilities
and services and fee splitting.
(ii) Licenses. All material governmental licenses, permits,
--------
regulatory agreements or other approvals or agreements necessary or desirable
for the use, establishment or operation of the Facilities as intended are held
by the Borrower and/or the applicable Operator, as applicable and in any event
are held by the Person(s) required under all applicable Legal Requirements and
are in full force and effect, including, without limitation, (a) valid
certificates of need or necessity ("CON") or certificates of exception ("COE")
--- ---
or similar certificates, licenses to operate, permits to establish a hospital,
or approvals issued by the DOH for the requisite number of beds; (b) licenses to
practice medicine and provide other health care services relating to the
physicians and other health care providers employed by Borrower, the applicable
Operator and/or any Affiliate of either of them or any other Person providing
medical and other health care services at the Facility; and (c) approved
provider status in any approved provider payment program; (collectively, the
"Licenses").
--------
(iii) Ownership of Licenses. The Licenses, including without
---------------------
limitation, each, if any, CON or COE:
(a) may not be, and have not been, transferred to any
location other than the Facility for which such Licenses were originally issued;
(b) have not been pledged as collateral security for any
other loan or indebtedness;
(c) are held free from restrictions or known conflicts
which would materially impair the use or operation of any Facility as intended,
and are not provisional, probationary or restricted in any way; and
(d) have at all applicable times been, and are, in full
force and effect.
(iv) Medicare and Medicaid Compliance. Each Facility, Borrower
--------------------------------
and the applicable Operator are in compliance with all material requirements for
participation in Medicare and Medicaid, including without limitation, the
Medicare and Medicaid Patient and Program Protection Act of 1987. Each
Facility, Borrower and the applicable Operator are
<PAGE>
77
in conformance in all respects with all insurance, reimbursement and cost
reporting requirements, and has a current provider agreement which is in full
force and effect under Medicare and Medicaid.
(v) Third Party Payors' Programs. There is no threatened or
----------------------------
pending revocation, suspension, termination, probation, restriction, limitation,
or non-renewal affecting Borrower, the applicable Operator or any Facility or
any participation or provider agreement with any third party payor (including
Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other private
commercial insurance managed care and employee assistance program) (such
programs, the "Third Party Payors' Programs") to which Borrower or the
----------------------------
applicable Operator presently is subject. All Medicaid, Medicare, and private
insurance cost reports and financial reports submitted by Borrower or the
applicable Operator are and will be materially accurate and complete and have
not been and will not to be misleading in any material respects. No cost
reports or financial reports for any Facility remain "open" or unsettled.
(vi) Governmental Proceedings and Notices. None of Borrower, the
------------------------------------
applicable Operator or any Facility is currently the subject of any proceeding
by any Governmental Authority, and no notice of any violation has been received
from a Governmental Authority that would, directly or indirectly, or with the
passage of time:
(a) affect Borrower's or the applicable Operator's ability
to accept and/or retain patients or result in the imposition of a fine, a
sanction, a lower rate certification or a lower reimbursement rate for services
rendered to eligible patients;
(b) modify, limit or annul or result in the transfer,
suspension, revocation or imposition of probationary use on any License;
(c) affect Borrower's or the applicable Operator's
continued participation in the Medicaid or Medicare programs or any other of the
Third Party Payors' Programs, or any successor programs thereto, at current rate
certifications.
(vii) Physical Plant Standards. Each Facility and the use thereof
------------------------
complies in all respects with all local, state and federal building codes, fire
codes, health care, nursing facility and other similar regulatory requirements
(the "Physical Plant Standards") and no waivers of Physical Plant Standards
------------------------
exist at such Facility.
<PAGE>
78
(viii) Past Violations. There is no pending uncured "Level A" (or
---------------
equivalent) violation at any Facility. Each Facility is in material compliance
with all local, federal and state laws and regulations relating to, as
applicable, nursing homes, hospitals or continuing care facilities and no
statement of charges or deficiencies has been made or penalty enforcement action
has been undertaken against any Facility or against Borrower, the applicable
Operator or any partner, member, officer, director or stockholder of Borrower or
the applicable Operator by any Governmental Authority and there have been no
material violations which have threatened any Facility's or Borrower's or the
applicable Operator's certification for participation in Medicare or Medicaid or
the other Third Party Payors' Programs.
(ix) Audits. There are no current, pending or outstanding
------
Medicaid, Medicare or Third Party Payors' Programs reimbursement audits or
appeals pending at any Facility, and there are no years that are subject to
audits, except as otherwise set forth on Schedule 4.1(al)(ix) attached hereto
-------- -----------
(the "Pending Medicare/Medicaid Audit"). With respect to the Pending
-------------------------------
Medicare/Medicaid Audit, the Borrower hereby represents and warrants as follows:
(A) such audit relates to the calendar years 1988 and 1989 and claims by Third
Party Payors administering the Medicare and Medicaid programs (the
"Medicare/Medicaid Payors") that the licensee of the Facility was overpaid in
- -------------------------
such years as follows: (i) Chestnut Hill - $345,000, (ii) Mary Lyons - $390,000
and (iii) Riverdale Gardens - $470,000; (B) currently the licensee of the
Facility is appealing $500,000 worth of such claims; (C) accounts receivables
predating the Closing Date for the year 1996 and January through October 1997 in
the following amounts: (i) Chestnut Hill - $103,000, (ii) Mary Lyons - $18,000
and (iii) Riverdale Gardens - $25,000, will be transferred to the Reserve Bank
Account (as defined in that certain side letter of even date herewith by and
among the Receivables Lender, the Initial Operator and the Subsequent Operator
(the "Side Letter")); and (D) the amount of funds in the Reserve Bank Account
-----------
(as defined in the Side Letter) as of the Closing Date are $385,000.
(x) Recoupment. There are no current or pending Medicaid or
----------
Medicare or Third Party Payors' Programs recoupment efforts at any Facility.
Neither Borrower nor the applicable Operator is a participant in any federal
program whereby any Governmental Authority may have the right to recover funds
by reason of the advance of federal funds.
<PAGE>
79
(xi) Pledges of Receivables. Except for the pledge of the
----------------------
Pledged Receivables in connection with the Receivables Financing, neither
Borrower nor the applicable Operator has pledged its receivables as collateral
security for any other loan or indebtedness.
(xii) Intentionally deleted.
(xiii) Patient Records. All patient or resident records at each
---------------
Facility, including patient or resident trust fund accounts, are true, complete
and correct in all material respects and have at all times and currently are
maintained in accordance with all applicable Legal Requirements, including,
without limitation, with respect to retention and confidentiality.
(xiv) Management Agreement and Operator Lease. Each Management
---------------------------------------
Agreement and Operator Lease existing on the Closing Date with respect to each
Facility is in full force and effect and is not in default by any party thereto.
The term of each Management Agreement and each Operator Lease does not extend
beyond the Optional Prepayment Date; provided, however, each Management
Agreement and each Operating Lease provides that from and after the Optional
Prepayment Date and for so long as the Loan is outstanding, each Management
Agreement and each Operator Lease may be renewed only with Lender's approval.
In the event any Management Agreement is terminated or any Operator Lease is
terminated or in the event of foreclosure or other acquisition of any Facility
by the Lender, under applicable Legal Requirements none of Borrower, Lender, the
applicable Operator or any subsequent purchaser is required to obtain a CON (or
similar certificate, license, or approval issued by the DOH for the requisite
number of beds, and approval provider status in any approved provider payment
program) prior to applying for and receiving a license to operate the Facility
or prior to receiving Medicare or Medicaid payments.
(xv) Receivables Financing. As of the Closing Date, there is no
---------------------
default or event of default under any of the Receivables Documents and as of the
Closing Date, the amount due and owing (including, all principal advanced and
interest accrued thereon) by the Initial Operator under the Receivables
Financing is $896,162.42 as of October 22, 1997.
Section 4.2. Survival of Representations and Warranties . Borrower
-------------------------------------------
agrees that (i) all of the representations and warranties of Borrower set forth
in this Agreement and in the other Loan Documents delivered on the Closing Date
are made as of the Closing Date (except as expressly otherwise provided) and
(ii) all representations and warranties made by Borrower
<PAGE>
80
shall survive the delivery of the Note and continue for so long as any amount
remains owing to Lender under this Agreement, the Note or any of the other Loan
Documents; provided, however, that the representations, warranties and
-------- ------- ----
covenants set forth in Section 4.1(v) and Sections 5.1(d) through 5.1(i),
-------------- --------------- ------
inclusive, shall survive in perpetuity and shall not be subject to the
exculpation provisions of Section 8.14. All representations, warranties,
------------
covenants and agreements made in this Agreement or in the other Loan Documents
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
Section
5.1 Borrower Covenants. Borrower covenants and agrees that, from the date here
------------------
of and until payment in full of the Indebtedness:
(a) Existence; Compliance with Legal Requirements;
----------------------------------------------
Insurance.
- ----------
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its Entity existence, rights, licenses,
Permits and franchises necessary for the conduct of its business and comply in
all respects with all applicable Legal Requirements and Insurance Requirements
applicable to it and any Facility. Borrower shall notify Lender promptly of any
written notice or order that Borrower receives from any Governmental Authority
relating to Borrower's failure to comply with such applicable Legal Requirements
relating to any Facility and promptly take any and all actions necessary to
bring its operations at such Facility into compliance with such applicable Legal
Requirements (and shall fully comply with the requirements of such Legal
Requirements that at any time are applicable to its operations at any Facility)
provided, that Borrower at its expense may, after prior notice to the Lender,
contest by appropriate legal, administrative or other proceedings conducted in
good faith and with due diligence, the validity or application, in whole or in
part, of any such applicable Legal Requirements as long as (i) neither the
applicable Collateral nor any part thereof or any interest therein, will be
sold, forfeited or lost if Borrower pays the amount or satisfies the condition
being contested, and Borrower would have the opportunity to do so, in the event
of Borrower's failure to prevail in the contest, (ii) Lender would not, by
virtue of such permitted contest, be exposed to any risk of any civil liability
for which Borrower has not
<PAGE>
81
furnished additional security as provided in clause (iii) below, or to any risk
------------
of criminal liability, and neither the applicable Collateral nor any interest
therein would be subject to the imposition of any Lien as a result of the
failure to comply with such Legal Requirement or of such proceeding and (iii)
Borrower shall have furnished to the Lender additional security in respect of
the claim being contested or the loss or damage that may result from Borrower's
failure to prevail in such contest in such amount as may be reasonably
requested by Lender but in no event less than one hundred twenty-five percent
(125%) of the amount of such claim. Borrower shall at all times maintain,
preserve and protect all franchises and trade names and preserve all the
remainder of its property necessary for the continued conduct of its business
and keep each Facility in good repair, working order and condition, except for
reasonable wear and use, and from time to time make, or cause to be made, all
necessary repairs, renewals, replacements, betterments and improvements
thereto, all as more fully provided in the Mortgages. Borrower and each
Operator shall keep each Facility insured at all times, as provided in the
Mortgages.
(b) Impositions and Other Claims. Borrower shall pay and
----------------------------
discharge or cause to be paid and discharged all Impositions, as well as all
lawful claims for labor, materials and supplies or otherwise, which could become
a Lien, all as more fully provided in, and subject to any rights to contest
contained in, the relevant Mortgage.
(c) Litigation. Borrower shall give prompt written
----------
notice to Lender of any litigation or governmental proceedings pending or
threatened against Borrower which is reasonably likely to have a Material
Adverse Effect.
(d) Environmental Remediation.
-------------------------
(i) If any investigation, site monitoring,
cleanup, removal, abatement, restoration remedial work or other response action
of any kind or nature is required pursuant to an order, directive, decree or
settlement agreement of or with any Governmental Authority or under any
applicable Environmental Law (collectively, the "Remedial Work"), because of or
-------------
in connection with the (x) past, present or future presence, suspected presence,
Release or threatened Release of a Hazardous Substance at, on, in, under or from
any Facility or any portion thereof or (y) violation of or compliance with
applicable Environmental Laws, Borrower shall promptly commence and diligently
prosecute to completion all such Remedial Work. In all events, such Remedial
Work shall be commenced within the time period ordered or directed by such
Governmental Authority or such shorter period as may be required under
<PAGE>
82
any applicable Environmental Law; provided, however, that Borrower shall not be
-------- ------- ----
required to commence such Remedial Work within the above specified time periods:
(x) if prevented from doing so by any Governmental Authority, (y) if commencing
such Remedial Work within such time periods would result in Borrower or such
Remedial Work violating any Environmental Law, or (z) if Borrower, at its
expense and after prior notice to Lender, is contesting by appropriate legal,
administrative or other proceedings, conducted in good faith and with due
diligence, the need to perform Remedial Work, as long as (1) Borrower is
permitted by the applicable Environmental Laws to delay performance of the
Remedial Work pending such proceedings, (2) no Facility nor any part thereof or
interest therein will be sold, forfeited or lost if Borrower performs the
Remedial Work being contested, and if Borrower fails to prevail in contest,
Borrower would thereafter have the opportunity to perform such Remedial Work,
(3) Lender would not, by virtue of such permitted contest, be exposed to any
risk of any civil liability for which Borrower has not furnished additional
security as provided in clause (4) below, or to any risk of criminal liability,
----------
and no Facility nor any interest therein would be subject to the imposition of
any Lien for which Borrower has not furnished additional security as provided in
clause (4) below, as a result of the failure to perform such Remedial Work and
- ----------
(4) Borrower shall have furnished to Lender additional security in respect of
the Remedial Work being contested and the loss or damage that may result from
Borrower's failure to prevail in such contest in such amount as may be
reasonably requested by Lender but in no event less than one hundred twenty-five
percent (125%) of the cost of such Remedial Work and any loss or damage that may
result from Borrower's failure to prevail in such contest.
(ii) All Remedial Work under clause (i) above
----------
shall be performed by contractors, and under the supervision of a consulting
environmental Engineer, each approved in advance by Lender which approval will
not be unreasonably withheld or delayed. All costs and expenses incurred in
connection with such Remedial Work shall be paid by Borrower. If Borrower does
not timely commence and diligently prosecute to completion the Remedial Work,
Lender may (but shall not be obligated to), upon sixty (60) days prior written
notice to Borrower of its intention to do so, cause such Remedial Work to be
performed. Borrower shall pay or reimburse Lender on demand for all Advances
(as defined in the Mortgage) and expenses (including reasonable attorneys' fees
and disbursements) relating to or incurred by Lender in connection with
monitoring, reviewing or performing any Remedial Work in accordance herewith.
(iii) Unless otherwise required by law,
Environmental Laws or any Governmental Authority, Borrower shall not commence
any Remedial Work under clause
------
<PAGE>
83
(i) above, nor enter into any settlement agreement, consent decree or other
- ---
compromise relating to any Hazardous Substances or Environmental Laws which is
reasonably likely to have a Material Adverse Effect. Notwithstanding the
foregoing, if the presence or threatened presence or Release of Hazardous
Substances at, on, in, under, from or about any Facility poses an immediate
threat to the health, safety or welfare of any Person or the environment, or is
of such a nature that an immediate response is necessary, Borrower may complete
all necessary Remedial Work. In such events, Borrower shall notify Lender as
soon as practicable and, in any event, within three (3) Business Days, of any
action taken.
(e) Environmental Matters; Inspection.
---------------------------------
(i) Borrower shall not cause, allow or authorize a
Hazardous Substance to be present at, on, in, under or to emanate from any
Facility, or migrate from adjoining property onto or into any Facility except
under conditions permitted by applicable Environmental Laws and, in the event
that such Hazardous Substances are present at, on, in, under or emanate from any
Facility, or migrate onto or into any Facility, Borrower shall cause the
performance of Remedial Work, removal or remediation of such Hazardous
Substances, in accordance with this Agreement and Environmental Laws. Borrower
shall use best efforts to prevent, and to seek the remediation of, any migration
of Hazardous Substances onto or into any Facility from any adjoining property.
(ii) Upon prior written notice to Borrower, Lender
shall have the right at all reasonable times to enter upon and inspect all or
any portion of any Facility. If Lender has reason to believe that Remedial Work
may be required, Lender may select or may require Borrower to select a
consulting environmental Engineer reasonably satisfactory to Lender to conduct
and prepare environmental reports assessing the environmental condition of any
Facility. Lender shall be given a reasonable opportunity to review any reports,
data and other documents or materials reviewed or prepared by the environmental
Engineer. The inspection rights granted to Lender in this Section 5.1(e) shall
--------------
be in addition to, and not in limitation of, any other inspection rights granted
to Lender in the Loan Documents, and shall expressly include the right (if
Lender suspects that Remedial Work may be required) to conduct or require
Borrower to conduct soil borings, establish ground water monitoring wells and
conduct other customary environmental tests, assessments and audits.
(iii) Borrower agrees to bear and shall pay or
reimburse Lender, on demand, for all sums advanced and expenses incurred
(including reasonable
<PAGE>
84
attorneys' fees and disbursements, but excluding internal overhead,
administrative and similar costs of Lender) relating to, or incurred by Lender
in connection with, the inspections and reports described in this Section 5.1
------- ---
(e) in the following situations:
- ---
(x) If Lender has grounds to believe, at the time
any such inspection is ordered, that there exists an occurrence or
condition that could lead to an Environmental Claim;
(y) If any such inspection reveals an occurrence or
condition that could lead to an Environmental Claim; or
(z) If an Event of Default with respect to any
Facility exists a the time any such inspection is ordered, and such Event
of Default relates to any representation, covenant or other obligation
pertaining to Hazardous Substances, Environmental Laws or any other
environmental matter.
(f) Environmental Notices. Borrower shall promptly provide
---------------------
notice to Lender of:
(i) any Environmental Claim asserted or threatened,
in writing, by any Governmental Authority or other Person with respect to any
Hazardous Substance at, on, in, under or emanating from any Facility, which
could reasonably be expected to impair the value of Lender's interests or have a
Material Adverse Effect;
(ii) any Environmental Claim or proceeding,
investigation or inquiry commenced or threatened, in writing, by any
Governmental Authority or Person, against Borrower, with respect to the
presence, suspected presence, Release or threatened Release of Hazardous
Substances from or onto, in or under any property not owned by Borrower,
including, without limitation, proceedings under the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C. (S) 9601, et
--
seq., which could reasonably be expected to impair the value of Lender's
- ----
security interests or have a Material Adverse Effect;
(iii) all Environmental Claims asserted or threatened
against Borrower, against any other party occupying any Facility or any portion
thereof which become
<PAGE>
85
known to Borrower, or against any Facility, which could reasonably be expected
to impair the value of Lender's security interests or have a Material Adverse
Effect;
(iv) the discovery by Borrower of any occurrence or
condition on any Facility or on any real property adjoining or in the vicinity
of any Facility which could reasonably be expected to lead to an Environmental
Claim against Borrower or Lender; and
(v) the commencement or completion of any Remedial
Work.
(g) Copies of Notices. Borrower shall immediately transmit
-----------------
to Lender copies of any citations, orders, notices or other written
communications received from any Person or any Governmental Authority and any
notices, reports or other written communications submitted to any Governmental
Authority with respect to the matters described in Section 5.1(f).
------- ------
(h) Environmental Claims. Lender and/or, to the extent
--------------------
authorized by Lender if applicable, the relevant Deed of Trust Trustee may join
and participate in, as a party if Lender so determines, any legal or
administrative proceeding or action concerning any Facility or any portion
thereof under any Environmental Law, if, in Lender's reasonable judgment, the
interests of Lender or such Deed of Trust Trustee, will not be adequately
protected by Borrower. Borrower agrees to bear and shall pay or reimburse Lender
and such Deed of Trust Trustee on demand for all reasonable sums advanced and
reasonable expenses incurred (including reasonable attorneys' fees and
disbursements) and such Deed of Trust Trustee, incurred by Lender and such Deed
of Trust Trustee in connection with any such action or proceeding.
(i) Indemnification. Borrower agrees to indemnify,
---------------
reimburse, defend (with counsel satisfactory to Lender, at Lender's election)
and hold harmless any Indemnified Party and any Deed of Trust Trustee, for,
from, and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without limitation,
interest, penalties, consequential damages, attorneys' fees, disbursements and
expenses, and consultants' fees, disbursements and expenses, including costs of
Remedial Work (collectively, "Losses") asserted against, resulting to, imposed
------
on, or incurred by Lender or any Deed of Trust Trustee, directly or indirectly,
in connection with any of the following:
<PAGE>
86
(i) events, circumstances, or conditions which are
alleged to, or do, form the basis for an Environmental Claim;
(ii) the presence, Use or Release of Hazardous
Substances at, on, in, under or from any Facility, which presence, Use or
Release requires or could require Remedial Work;
(iii) any Environmental Claim against Borrower, Lender,
any Deed of Trust Trustee or any Person whose liability for such Environmental
Claim Borrower has or may have assumed or retained either contractually or by
operation of law; or
(iv) the breach of any representation, warranty or
covenant set forth in Section 4.1(v) and Sections 5.1(d) through 5.1(i),
------- ------ -------- ------ ------
inclusive.
The indemnity provided in this Loan Agreement is not and shall not be
included in any exculpation of Borrower from personal liability provided in this
Loan Agreement or in any other Loan Document. Nothing in this Section 5.1(i)
------- ------
shall be deemed to deprive Lender of any rights or remedies provided to it
elsewhere in this Agreement or the other Loan Documents or otherwise available
to it under law. Borrower waives and releases Lender and any Deed of Trust
Trustee from any rights or defenses Borrower may have under common law or
Environmental Laws for liability arising from or resulting from the presence,
Use or Release of Hazardous Substances except to the extent directly and solely
caused by the fraud or willful misconduct of Lender, Lender's agents, or such
Deed of Trust Trustee. Borrower shall not indemnify Lender with respect to any
Losses incurred in connection with, or as a result of, any or all of the matters
described in subparagraphs 5.1(i)(i) through 5.1(i)(iii) to the extent arising
directly and solely from Hazardous Substances being placed on, above, or under
such Facility as the result of the willful act of Lender.
(j) Access to Facilities. Borrower shall or shall cause
--------------------
each Operator to permit agents, representatives and employees of Lender to
inspect any Facility or any part thereof at such reasonable times as may be
requested by Lender upon advance notice.
(k) Notice of Default. Borrower shall promptly advise
-----------------
Lender of any material adverse change in Borrower's condition, financial or
otherwise, or of the occurrence of any Default or Event of Default.
<PAGE>
87
(l) Cooperate in Legal Proceedings. Except with respect to
------------------------------
any claim by Borrower against Lender, Borrower shall cooperate with Lender with
respect to any proceedings before any Governmental Authority which may in any
way affect the rights of Lender hereunder or any rights obtained by Lender under
any of the Loan Documents and, in connection therewith, not prohibit Lender, at
its election, from participating in any such proceedings.
(m) Perform Loan Documents. Borrower shall observe,
----------------------
perform and satisfy all the terms, provisions, covenants and conditions required
to be observed, performed or satisfied by it, and shall pay when due all costs,
fees and expenses required to be paid by it, under the Loan Documents executed
and delivered by Borrower.
(n) Insurance Benefits; Condemnation Claims. Borrower shall
---------------------------------------
cooperate with Lender in settling any insurance or condemnation claim and/or
obtaining for Lender the benefits of any Insurance Proceeds and/or Condemnation
Proceeds lawfully or equitably payable to Lender in connection with any
Facility, and Lender shall be reimbursed for any expenses incurred in connection
therewith (including reasonable attorneys' fees and disbursements) and the
payment by Borrower of the expense of an Appraisal on behalf of Lender in case
of a fire or other casualty affecting any Facility or any part thereof out of
such Insurance Proceeds and/or Condemnation Proceeds, all as more specifically
provided in the Mortgages.
(o) Further Assurances. Borrower shall, at Borrower's sole
------------------
cost and expense:
(i) upon Lender's request therefor given from time to
time after the occurrence of any Default or Event of Default pay for (a)
reports of UCC, federal tax lien, state tax lien, judgment and pending
litigation searches with respect to Borrower and (b) searches of title to
any Facility, each such search to be conducted by search firms reasonably
designated by Lender in each of the locations reasonably designated by
Lender.
(ii) furnish to Lender all instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, Appraisals, title and other insurance reports and
agreements, and each and every other
<PAGE>
88
document, certificate, agreement and instrument required to be furnished
pursuant to the terms of the Loan Documents;
(iii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such
other acts necessary, to evidence, preserve and/or protect the Collateral
at any time securing or intended to secure the Note, as Lender may require
in Lender's discretion; and
(iv) do and execute all and such further lawful acts,
conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Loan
Documents, as Lender shall require from time to time in its discretion.
(p) Management and Operation of Mortgaged Property. While
----------------------------------------------
the Initial Operator is operating the Facilities, each Facility will be managed
at all times by the Manager pursuant to a Management Agreement unless terminated
as herein provided. From and after the Permitted License Transfer to the
Subsequent Operator, the Management Agreement shall terminate. Any Management
Agreement or, after the Permitted License Transfer, the applicable Operator
Lease shall be terminated by Borrower, at Lender's request, upon thirty (30)
days prior written notice to Borrower and the relevant Manager or the Subsequent
Operator, as applicable, (i) upon the occurrence of an Event of Default, (ii) if
such Manager or the Subsequent Operator, as applicable, commits any act which
would permit termination by Borrower under such Management Agreement or Operator
Lease as applicable, or (iii) in the event that, as of the last day of a
calendar quarter, the Debt Service Coverage Ratio for any or all of the
Facilities, computed on the basis of the prior twelve (12) calendar months, is
less than 1.20. Lender shall not have the right to terminate any Management
Agreement or Operator Lease pursuant to clause (iii) above, if on the first
Payment Date after Lender made the determination that Lender had the right to
terminate a Manager or the applicable Operator pursuant to clause (iii) above,
Borrower defeases the Loan in accordance with the terms of Section 2.10 in an
------- ----
amount sufficient to cause the Debt Service Coverage Ratio for all of the
Facilities (calculated as if such amount was actually applied to reduce the
Principal Indebtedness upon which Debt Service was paid and calculated as if the
Principal Indebtedness was reamortized on a straight-line basis (as if the
reduction had occurred) over the remaining number of months until the Maturity
Date) computed on the basis of the prior twelve (12) calendar months, to be at
least equal to 1.40. If a manager or the Subsequent Operator is terminated
pursuant hereto, Borrower shall immediately seek to appoint a
<PAGE>
89
replacement manager or Operator, as applicable, acceptable to Lender in Lender's
discretion, and Borrower's failure to appoint an acceptable manager or Operator
within thirty (30) days after Lender's request of Borrower to terminate any
Management Agreement or Operator Lease shall constitute an immediate Event of
Default. Borrower may from time to time appoint a successor manager to manage
the relevant Facilities, which successor manager shall be approved in writing by
Lender in Lender's discretion. Notwithstanding the foregoing, any successor
manager selected hereunder by Lender or Borrower to serve a Manager (i) shall be
a reputable management company having at least seven (7) years' experience in
the management of commercial properties with similar uses as the Facilities and
in the jurisdictions in which the relevant Facility or Facilities are located
and (ii) shall not be paid management fees in excess of fees which are market
fees for comparable managers of comparable properties in the same geographic
area.
(q) Financial Reporting.
-------------------
(i) Borrower shall keep and maintain or shall cause
to be kept and maintained, on a Fiscal Year basis, in accordance with
GAAP, books, records and accounts reflecting in reasonable detail all of
the financial affairs of Borrower and the Subsequent Operator and all
items of income and expense in connection with the operation of the
Facilities and in connection with any services, equipment or furnishings
provided in connection with the operation of each Facility. Lender, at
Lender's cost and expense, whether such income or expense may be realized
by Borrower or by any other Person whatsoever, shall have the right from
time to time and at all times during normal business hours upon reasonable
prior written notice to Borrower to examine such books, records and
accounts at the office of Borrower or other Person maintaining such books,
records and accounts and to make such copies or extracts thereof as Lender
shall desire. After the occurrence of an Event of Default, Borrower shall
pay any costs and expenses incurred by Lender to examine any and all of
Borrower's, the Subsequent Operator's or any other Person's books, records
and accounts as Lender shall determine in Lender's discretion to be
necessary or appropriate in the protection of Lender's interest.
(ii) Borrower shall furnish to Lender annually within
ninety (90) days following the end of each Fiscal Year, a true, complete,
correct and accurate copy of Borrower's and the Subsequent Operator's
financial statement audited by a "Big Six" accounting firm or other firm
acceptable to Lender in Lender's discretion
<PAGE>
90
which shall (a) be presented on a consolidated as well as a Facility-by-
Facility basis, (b) be in form and substance acceptable to Lender in
Lender's discretion, (c) be prepared in accordance with GAAP, (d) include,
without limitation, a statement of operations (profit and loss), a
statement of cash flows, a calculation of Net Operating Income, a balance
sheet, an aged accounts receivable report and such other information or
reports as shall be requested by Lender or any applicable Rating Agency,
(e) be accompanied by an Officer's Certificate from a senior executive of
Borrower and the Subsequent Operator certifying as of the date thereof (x)
that such statement is true, correct, complete and accurate, and fairly
reflects the results of operations and financial condition of Borrower and
the Subsequent Operator for the relevant period, and (y) notice of whether
there exists an Event of Default or Default, and if such Event of Default
or Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy same and (f) be accompanied by
an unqualified opinion from an Independent certified public accountant
acceptable to Lender in Lender's discretion.
(iii) Borrower shall furnish to Lender annually within
forty (40) days following the end of each Fiscal Year, a true, complete,
correct and accurate copy of Borrower's and the Subsequent Operator's
unaudited financial statement which shall (a) be presented on a
consolidated as well as a Facility-by-Facility basis, (b) be in form and
substance acceptable to Lender in Lender's discretion, (c) be prepared in
accordance with GAAP, (d) include, without limitation, a statement of
operations (profit and loss), a statement of cash flows, a calculation of
Net Operating Income, a balance sheet, an aged accounts receivable report
and such other information or reports as shall be requested by Lender or
any applicable Rating Agency and (e) be accompanied by an Officer's
Certificate from a senior executive of Borrower and the Subsequent
Operator certifying as of the date thereof (x) that such statement is
true, correct, complete and accurate and fairly reflects the results of
operations and financial condition of Borrower and the Subsequent Operator
for the relevant period, and (y) notice of whether there exists an Event
of Default or Default, and if such Event of Default or Default exists, the
nature thereof, the period of time it has existed and the action then
being taken to remedy same.
(iv) Borrower shall furnish to Lender within twenty
(20) days following the end of each calendar month, a true, correct,
complete and accurate monthly unaudited financial statement for Borrower
and the Subsequent Operator which
<PAGE>
91
shall (a) be presented on a consolidated as well as a Facility-by-Facility
basis, (b) be in form and substance acceptable to Lender in Lender's
discretion, (c) be prepared in accordance with GAAP, (d) include, without
limitation, a statement of operations (profit and loss), a statement of
cash flows, a calculation of Net Operating Income, a consolidated balance
sheet, an aged accounts receivable report and such other information or
reports as shall be requested by Lender or any applicable Rating Agency
and (e) be accompanied by an Officer's Certificate from a senior executive
of Borrower and the Subsequent Operator certifying as of the date thereof
(x) that such statement is true, correct, complete and accurate and fairly
reflects the results of operations and financial condition of Borrower and
the Subsequent Operator for the relevant period, and (y) notice of whether
there exists an Event of Default or Default, and if such Event of Default
or Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy same.
(v) Borrower shall furnish to Lender, within twenty
(20) days following the end of each calendar month, a true, complete,
correct and accurate rent roll and occupancy report and such other
occupancy and rate statistics as Lender shall request in Lender's
discretion. Each such document shall (a) be presented on a consolidated as
well as a Facility-by-Facility basis, (b) be in form and substance
acceptable to Lender in Lender's discretion, and (c) be accompanied by an
Officer's Certificate from a senior executive of Borrower certifying as of
the date thereof (x) that such statement is true, correct, complete and
accurate and (y) notice of whether there exists an Event of Default or
Default, and if such Event of Default or Default exists, the nature
thereof, the period of time it has existed and the action then being taken
to remedy same.
(vi) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further information with respect to the
operation of the Facilities, and the financial affairs of Borrower and the
Subsequent Operator as may be requested by Lender including, without
limitation, all business plans prepared for Borrower or the Subsequent
Operator and for the operation of the Facilities.
(vii) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further information regarding any Plan
or Multiemployer Plan and any reports or other information required to be
filed under ERISA as may be requested by Lender.
<PAGE>
92
(viii) Borrower shall, concurrently with Borrower's
delivery to Lender, provide a copy of the items required to be delivered
to Lender under this Section 5.1(q) to the Rating Agencies, the trustee,
------- ------
and any servicer and/or special servicer that may be retained in
conjunction with the Loan or any Securitization. Borrower shall furnish to
Lender written notice, within two (2) Business Days after receipt by
Borrower, of any Rents, Money or other items of Gross Revenue that
Borrower is not required by this Agreement to deposit in the Collection
Account, the Cash Collateral Account or the Security Deposit Account,
together with such other documents and materials relating to such Rents,
Money or other items of Gross Revenue as Lender requests in Lender's
discretion.
(ix) Borrower shall provide Lender with updated
information (satisfactory to Lender in Lender's discretion) concerning the
Basic Carrying Costs for the next succeeding Fiscal Year prior to the
termination of each Fiscal Year.
(x) Borrower shall furnish to Lender such other
financial information with respect to Borrower, the Subsequent Operator or
Manager as Lender may, from time to time request (including, without
limitation, in the case of a defeasance pursuant to Section 2.10, a review
------- ----
by a third party acceptable to Lender, of the calculations required to be
made pursuant to Section 2.10).
------- ----
(xi) Borrower shall furnish or shall cause to be
furnished to Lender, within fifteen (15) days of the receipt by Borrower,
the Subsequent Operator or Manager any and all notices (regardless of
form) from any licensing and/or certifying agency that any License of any
Facility or the Medicare or Medicaid certification of any Facility is
being downgraded to a substandard category, revoked, or suspended, or that
action is pending or being considered to downgrade to a substandard
category, revoke, or suspend any License or certification;
(xii) Borrower shall furnish or shall cause to be
furnished to Lender, within fifteen (15) Business Days of the date of the
required filing of cost reports for each Facility with the Medicaid agency
or the date of actual filing of such cost report of such Facility with
such agency, whichever is earlier, a complete and accurate copy of the
annual Medicaid cost report for each Facility, which will be prepared by a
certified public accountant or by an experienced cost report preparer
acceptable to Lender, and promptly furnish Lender any amendments filed
with respect
<PAGE>
93
to such reports and all responses, audit reports or inquiries with respect
to such reports; and
(xiii) Borrower shall furnish to Lender, within fifteen
(15) Business Days of receipt, a copy of any Medicare, Medicaid or other
licensing agency survey or report and any statement of deficiencies, and
within the time period required by the particular agency for furnishing a
plan of correction also shall furnish or cause to be furnished to Lender a
copy of the plan of correction generated from such survey or report for
each Facility, and correct or cause to be corrected any deficiency, the
curing of which is a condition of continued licensure or for full
participation in Medicare and Medicaid for existing patients or for new
patients to be admitted with Medicare or Medicaid coverage, by the date
required for cure by such agency (plus extensions granted by such agency).
(r) Conduct of Business. Borrower shall cause the
-------------------
operation of each Facility to be conducted at all times in a manner
consistent with the following:
(i) to maintain or cause to be maintained the standard of
operations at each Facility at all times at a level necessary to insure a
level of quality for each Facility consistent with similar facilities in
the same competitive market;
(ii) to operate or cause to be operated each Facility in a
prudent manner in compliance in all respects with applicable Legal
Requirements and Insurance Requirements relating thereto and cause all
licenses, Permits, and any other agreements necessary for the continued
use and operation of such Facility to remain in effect; and
(iii) to maintain or cause to be maintained sufficient
Inventory and Equipment of types and quantities at each Facility to enable
Borrower or the relevant Manager to operate such Facility.
(s) ERISA. Borrower shall deliver to Lender as soon as
-----
possible, and in any event within ten (10) days after Borrower knows or has
reason to believe that any of the events or conditions specified below with
respect to any Plan or Multiemployer Plan has occurred or exists, a statement
signed by a senior financial officer of Borrower setting forth details
respecting such event or condition and the action, if any, that Borrower or its
ERISA
<PAGE>
94
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 Borrower or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, 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 Borrower 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 Borrower 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 Borrower 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 by Borrower 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 of any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within thirty
(30) days;
<PAGE>
95
(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 Borrower or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions of said
Sections; and
(vii) the imposition of a lien or a security interest in
connection with a Plan.
(t) Single Purpose Entity.
---------------------
(i) Borrower shall at all times be a duly formed and existing
Entity and a Single-Purpose Entity and the Subsequent Operator shall
at all times be a Single-Purpose Entity.
(ii) Each SPE Equity Owner will continue to be a duly formed
and existing entity (of the type such SPE Equity Owner was on the Closing Date)
in good standing and a Single-Purpose Entity, and Borrower will take no action
to cause any SPE Equity Owner not to be so duly formed and existing and in good
standing and a Single-Purpose Entity.
(iii) Borrower will continue to comply with the provisions of
all of its organizational documents, and the laws of the state in which Borrower
was formed relating to the Entity.
(iv) All customary formalities regarding the Entity
existence of Borrower will continue to be observed.
(v) Borrower will continue to be adequately capitalized in
light of the nature of its business.
(u) Trade Indebtedness. Borrower will pay, and cause the
------------------
Subsequent Operator to pay, its trade payables within thirty (30) days of the
date incurred, unless Borrower or the Subsequent Operator is in good faith
contesting Borrower's or the Subsequent Operator's obligation to pay such trade
payables in a manner satisfactory to Lender
<PAGE>
96
(which may include Lender's requirement that Borrower or the Subsequent Operator
post security with respect to the contested trade payable).
(v) Capital Improvements and Environmental Remediation.
--------------------------------------------------
Borrower shall, within six (6) months of the date hereof, perform the repairs
and environmental remediation to each Facility itemized on Exhibit C hereto.
---------
(w) Annual Operating Budgets. Borrower shall submit to Lender
------------------------
Annual Operating Budgets at those times and in such form and substance as set
forth in the definition of "Annual Operating Budget" in this Agreement.
(x) Use Specific Covenants. Borrower shall:
----------------------
(1) operate each Facility or cause each Facility to be operated
in full compliance with the laws and requirements referred to in
Section 4.1(b)(al)(i);
(2) operate each Facility or cause each Facility to be operated
in a manner such that the Licenses shall remain in full force and
effect and such that any new or additional License that may, at any
time or from time to time, be required pursuant to any Legal
Requirements are timely obtained and maintained in full force and
effect; and
(3) comply or cause each Operator and the Manager to comply
with all requirements for participation in Medicare and Medicaid, and
shall keep in full force and effect a current provider agreement under
Medicare and Medicaid.
(y) Permitted License Transfer. The Borrower, Initial Operator
--------------------------
and Manager contemplate that (i) the Licenses to operate the Facility will be
transferred to the Subsequent Operator or the Subsequent Operator will obtain
the Licenses to operate the Facility and (ii) the Subsequent Operator will enter
into a new Operator Lease with the Borrower and the Initial Operator will assign
its rights and obligations with respect to the Receivables Financing to the
Subsequent Operator. Prior to the transfer of the Licenses, the assignment of
the Receivables Financing or the entry into the new Operator Lease with the
Subsequent Operator, the Borrower, the Subsequent Operator and Manager must (A)
provide Lender with written notice of such proposed transfer together with
copies of the proposed
<PAGE>
97
documents to effectuate such transactions, (B) the terms of Section 3.3 hereof
------- ---
must be complied with and (C) Lender must have approved in writing of such
transfers. The transfer described in this Section 5.1(y) shall be deemed a
------- ------
"Permitted License Transfer" upon compliance with the terms of this
Section. The date on which all such terms have been complied with is referred
- -------
to herein as the "Permitted License Transfer Date."
-------------------------------
(z) Post-Closing Period. Borrower shall provide Lender with
-------------------
each of the items in Section 3.2 by the termination of the Post-Closing Period.
------- ---
If Borrower fails to do so, such failure shall be an Event of Default hereunder.
ARTICLE VI
NEGATIVE COVENANTS
------------------
Section 6.1 Borrower Negative Covenants. Borrower covenants and agrees that,
---------------------------
until payment in full of the Indebtedness, it will not do, directly or
indirectly, any of the following unless Lender consents thereto in writing:
(a) Liens on the Mortgaged Properties. Incur, create, assume,
---------------------------------
become or be liable in any manner with respect to, or permit to exist, any Lien
with respect to any Facility or any portion thereof, except: (i) Liens in favor
of Lender, and (ii) the Permitted Encumbrances.
(b) Transfer. Except as expressly permitted by or pursuant to
--------
this Agreement or any Mortgage, or except as otherwise approved by Lender in
writing in Lender's discretion, allow any Transfer to occur, terminate or modify
any Management Agreement (other than in connection with the Permitted License
Transfer), or enter into a Management Agreement (other than the Management
Agreement in place at the Closing) with respect to any Facility.
(c) Other Borrowings. Incur, except for unsecured trade
----------------
payables incurred in the ordinary course of business relating to the ownership
and operation of the Facilities which do not exceed, at any time, for all
Facilities, a maximum amount of one
<PAGE>
98
percent (1%) of the Loan Amount and are paid within thirty (30) days of the date
incurred, create, assume, become or be liable in any manner with respect to
Other Borrowings.
(d) Change In Business. Cease to be a Single-Purpose Entity or
------------------
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business.
(e) Debt Cancellation. Cancel or otherwise forgive or release
-----------------
any material claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower's business.
(f) Affiliate Transactions. Enter into, or be a party to, any
----------------------
transaction with an Affiliate of Borrower, except in the ordinary course of
business and on terms which are no less favorable to Borrower or such Affiliate
than would be obtained in a comparable arm's length transaction with an
unrelated third party, and, if the amount to be paid to the Affiliate pursuant
to the transaction or series of related transactions is greater than Fifty
Thousand Dollars ($50,000.00) (determined annually on an aggregate basis) fully
disclosed to Lender in advance.
(g) Creation of Easements. Create, or permit any Facility or
---------------------
any part thereof to become subject to, any easement, license or restrictive
covenant, other than a Permitted Encumbrance. Without limiting the generality
of the immediately preceding sentence, Borrower shall not enter into, consent
to, grant, amend, modify, restate or supplement any document, instrument or
agreement affecting, related to or impacting upon the Facility, the title
thereto or any portion or aspect thereof, including, without limitation, any
easement, reciprocal easement agreement, or any declaration of easements or
covenants.
(h) Misapplication of Funds. Distribute any Rents or Money
-----------------------
received from Accounts in violation of the provisions of Section 2.11.
------- ----
(i) Certain Restrictions. Enter into any agreement which
--------------------
expressly restricts the ability of Borrower to enter into amendments,
modifications or waivers of any of the Loan Documents.
<PAGE>
99
(j) Issuance of Equity Interests. Issue or allow to be created
----------------------------
any stocks or shares or shareholder, partnership or membership interests, as
applicable, or other ownership interests other than the stocks, shares,
shareholder, partnership or membership interests and other ownership interests
which are outstanding or exist on the Closing Date or any security or other
instrument which by its terms is convertible into or exercisable or exchangeable
for stock, shares, shareholder, partnership or membership interests or other
ownership interests in Borrower. Borrower shall not allow to be issued or
created any stock in Borrower's general partner or managing member, as
applicable, other than the stock which is outstanding or existing on the Closing
Date or any security or other instrument which by its terms is convertible into
or exercisable or exchangeable for any stock in Borrower's general partner or
managing member, as applicable.
(k) Assignment of Licenses and Permits. Assign or transfer any
----------------------------------
of its interest in any Permits pertaining to any Facility, or assign, transfer
or remove or permit any other Person to assign, transfer or remove any records
pertaining to any Facility without Lender's prior written consent which consent
may be granted or refused in Lender's discretion.
(l) Place of Business. Change its chief executive office or its
-----------------
principal place of business or place where its books and records are kept
without giving Lender at least thirty (30) days' prior written notice thereof
and promptly providing Lender such information as Lender may reasonably request
in connection therewith.
(m) Use Specific Negative Covenants: Borrower shall not and
-------------------------------
shall not allow any Operator to:
2. transfer any License to any location other than the Facility for which such
License was originally issued nor pledge any License as collateral security for
any other loan or indebtedness;
(1) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of any License for any Facility
which rescission, withdrawal, revocation, amendment, modification,
supplement or other alteration would have a material affect on any
Facility, except as otherwise specifically provided for under the terms
hereof;
<PAGE>
100
(2) amend or otherwise change any Facility's authorized bed
capacity and/or the number of beds approved by the DOH which amendment or
other change would have a material affect on any Facility;
(3) replace or transfer all or any part of any Facility's beds
to another site or location;
(4) jeopardize in any manner Borrower's or any Operator's
participation with any Third-Party Payors' Programs to which Borrower or
such Operator is subject as of the Closing Date;
(5) other than the pledge by the applicable Operator of the
Pledged Receivables as security for the Receivables Financing, pledge any
receivables as collateral security for any other loan or indebtedness;
(6) enter into any patient or resident care agreements with
patients or residents or with any other persons which deviate in any
material respect from the standard form customarily used at any Facility;
or
(7) change the terms of any of the Third Party Payors' Programs
or its normal billing payment or reimbursement policies and procedures
with respect thereto (including without limitation the amount and timing
of finance charges, fees and write-offs).
ARTICLE VII
DEFAULTS
--------
Section 7.1 Event of Default. The occurrence of one or more of the
----------------
following events shall be an "Event of Default" hereunder:
----------------
(i) if on any Payment Date the funds in the Debt Service
Payment Sub-Account are insufficient to pay the Required Debt Service Payment
due on such Payment Date;
<PAGE>
101
(ii) if on any Payment Date Borrower fails to pay the Required
Debt Service Payment due on such Payment Date;
(iii) if Borrower fails to pay the outstanding Indebtedness
on the Maturity Date;
(iv) if on any Payment Date Borrower fails to pay the Basic
Carrying Costs Monthly Installment or the Capital Reserve Monthly Installment
due on such Payment Date;
(v) if on the date any payment of a Basic Carrying Cost would
become delinquent, the funds in the Basic Carrying Costs Sub-Account are
insufficient to make such payment;
(vi) the occurrence of the events identified elsewhere in the
Loan Documents as constituting an "Event of Default" hereunder or thereunder;
(vii) a Transfer, unless the prior written consent of Lender
is obtained (which consent may be withheld in Lender's discretion);
(viii) if Borrower fails to pay any other amount payable
pursuant to this Agreement or any other Loan Document when due and payable in
accordance with the provisions hereof or thereof, as the case may be;
(ix) if any representation or warranty made herein or in any
other Loan Document, or in any report, certificate, financial statement or other
Instrument, agreement or document furnished by Borrower in connection with this
Agreement, the Note or any other Loan Document executed and delivered by
Borrower, shall be false in any material respect as of the date such
representation or warranty was made or remade;
(x) if Borrower, any of Borrower's partners or members, as
applicable, or any SPE Equity Owner makes an assignment for the benefit of
creditors;
(xi) if a receiver, liquidator or trustee shall be appointed
for Borrower, any of Borrower's partners, members or shareholders, as
<PAGE>
102
applicable, or any SPE Equity Owner or if Borrower, any of Borrower's partners,
members or shareholders, as applicable, or any SPE Equity Owner shall be
adjudicated as bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by Borrower, any of Borrower's partners, members or shareholders, as
applicable, or any SPE Equity Owner or if any proceeding for the dissolution or
liquidation of Borrower, any of Borrower's partners, members or shareholders, as
applicable, or any SPE Equity Owner shall be instituted; provided, however, that
-------- ------- ----
if such appointment, adjudication, petition or proceeding was involuntary and
not consented to by Borrower, any of Borrower's partners, members or
shareholders, as applicable, or any SPE Equity Owner as the case may be, upon
the same not being discharged, stayed or dismissed within ninety (90) days; or
if Borrower, any of Borrower's partners, members or shareholders, as applicable,
or any SPE Equity Owner shall generally not be paying its debts as they become
due;
(xii) if Borrower attempts to delegate its obligations or
assign its rights under this Agreement, any of the other Loan Documents or any
interest herein or therein, except as otherwise specifically permitted
hereunder;
(xiii) if any provision of any organizational document of
Borrower or any SPE Equity Owner is amended or modified in any respect, or if
Borrower, any SPE Equity Owner or any of their respective partners, members, or
shareholders as applicable, fails to perform or enforce the provisions of such
organizational documents or attempts to dissolve Borrower or any SPE Equity
Owner; or if Borrower or any SPE Equity Owner or any of their respective
partners, members or shareholders, as applicable, breaches any of the covenants
set forth in Sections 5.1(t), or 6.1(d);
--------------- ------
(xiv) if Borrower fails to (A) notify Lender of the occurrence
of a Default under any of the Loan Documents within ten (10) days of the day on
which Borrower first has knowledge of such Default or (B) give any notice due to
any Person under any Loan Document (a) within two (2) days after such notice was
due or (b) in accordance with the applicable procedural requirements set forth
in the Loan Documents;
(xv) if an event or condition specified in Section 5.1(s)
------- ------
shall occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, Borrower or any ERISA Affiliate shall incur or in the opinion of
Lender shall be reasonably likely to incur a liability to a Plan, a
<PAGE>
103
Multiemployer Plan or PBGC (or any combination of the foregoing) which would
constitute, in the determination of Lender, a Material Adverse Effect;
(xvi) except as permitted by this Agreement, if without
Lender's prior written consent (A) any Manager resigns or is removed, (B) the
management or control of such Manager is transferred or (C) any Management
Agreement is entered into for any Facility or (D) there is any change in or
termination of any Management Agreement for any Facility;
(xvii) if Borrower shall be in default under any of the other
obligations, agreements, undertakings, terms, covenants, provisions or
conditions of this Agreement, the Note, the Mortgage or the other Loan
Documents, not otherwise referred to in this Section 7.1, for ten (10) days
------- ---
after written notice to Borrower from Lender or its successors or assigns, in
the case of any default which can be cured by the payment of a sum of money or
for thirty (30) days after written notice from Lender or its successors or
assigns, in the case of any other default (unless otherwise provided herein or
in such other Loan Document); provided, however, that if such non-monetary
-------- -------
default under this subparagraph is susceptible of cure but cannot reasonably be
------------
cured within such thirty (30) day period and provided further that Borrower
shall have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such default, but in no event
shall such period exceed ninety (90) days after the original notice from Lender;
(xviii) if any Event of Default occurs (as to any party) under
any Operating Lease (subject to any applicable notice and cure periods required
under such Operating Lease);
(xix) if Borrower shall fail to correct, within the time
deadlines set by any Medicare, Medicaid, health, reimbursement, licensing or
similar agency, any deficiency that justifies either of the following actions by
such agency with respect to the Facility and such agency commences either of the
following actions:
(i) a termination of any Medicare contract, Medicaid
contract or License;
<PAGE>
104
(ii) a ban on new admissions generally or on admission
of patients otherwise qualifying for Medicaid or Medicare
coverage;
(xx) if any Facility is assessed material fines or penalties
(as distinguished from establishment of standard settlement accounts) by any
state or any Medicare, Medicaid, health, reimbursement, licensing or similar
agency having jurisdiction over Borrower, any Operator or such Facility;
(xxi) any default or event of default under the Receivables
Loan Agreement or any of the other documents evidencing or executed in
connection with the Receivables Financing which is not cured within any
applicable cure period;
(xxii) if Borrower fails to deliver each of the items
described in Section 3.2 hereof by the termination of the Post-Closing Period;
------- ---
and
(xxiii) if any Operator Lease, License or Receivables Financing
is transferred without compliance with the terms of Section 5.1(y).
------- ------
Section 7.2 Remedies. (a) Upon the occurrence of an Event of
--------
Default, all or any one or more of the rights, powers and other remedies
available to Lender against Borrower under this Agreement, the Note, the
Mortgages or any of the other Loan Documents, or at law or in equity may be
exercised by Lender at any time and from time to time (including, without
limitation, the right to accelerate and declare the outstanding principal
amount, unpaid interest, Default Rate interest, Late Charges, Yield Maintenance
Premium and any other amounts owing by Borrower to be immediately due and
payable), without notice or demand, whether or not all or any portion of the
Indebtedness shall be declared due and payable, and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to any
Facility or all or any portion of the Collateral. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
Lender may determine in its discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Notwithstanding anything contained to the contrary herein, the
outstanding principal amount, unpaid interest, Default Rate interest, Late
Charges, Yield Maintenance
<PAGE>
105
Premium and any other amounts owing by Borrower shall be accelerated and
immediately due and payable, without any election by Lender upon the occurrence
of an Event of Default described in Section 7.1(x) or Section 7.1(xi).
-------------- ---------------
Notwithstanding that this Agreement may refer to a continuing Event of Default,
and without limiting Borrower's right to cure a Default which may, with the
passage of time, become an Event of Default, Borrower shall have no right
pursuant to this Agreement to cure any Event of Default unless this Agreement is
amended by Borrower and Lender in writing.
Section 7.3 Remedies Cumulative. The rights, powers and remedies of
-------------------
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents executed by or with respect to Borrower,
or existing at law or in equity or otherwise. Lender's rights, powers and
remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine in Lender's discretion. No delay or omission
to exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of any Default or Event of
Default shall not be construed to be a waiver of any subsequent Default or Event
of Default or to impair any remedy, right or power consequent thereon. Any and
all of Lender's rights with respect to the Collateral shall continue unimpaired,
and Borrower shall be and remain obligated in accordance with the terms hereof,
notwithstanding (i) the release or substitution of Collateral at any time, or of
any rights or interest therein or (ii) any delay, extension of time, renewal,
compromise or other indulgence granted by Lender in the event of any Default or
Event of Default with respect to the Collateral or otherwise hereunder.
Notwithstanding any other provision of this Agreement, Lender reserves the right
to seek a deficiency judgment or preserve a deficiency claim, in connection with
the foreclosure of any Mortgage on a related Facility, to the extent necessary
to foreclose on other parts of the Mortgaged Property and/or Mortgaged
Properties.
Section 7.4 Lender's Right to Perform. If Borrower fails to perform
-------------------------
any covenant or obligation contained herein and such failure shall continue for
a period of (5) five Business Days after the Borrower's receipt of written
notice thereof from Lender, without in any way limiting Section 7.1 hereof,
------- ---
Lender may, but shall have no obligation to, itself perform, or cause
performance of, such covenant or obligation, and the expenses of Lender incurred
in connection therewith shall be payable by Borrower to Lender upon demand.
<PAGE>
106
Notwithstanding the foregoing, Lender shall have no obligation to send notice to
Borrower of any such failure.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1 Survival. Subject to Section 4.2, this Agreement and all
-------- ------- ---
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the execution and delivery
of this Agreement and the execution and delivery by Borrower to Lender of the
Note, and shall continue in full force and effect so long as any portion of the
Indebtedness is outstanding and unpaid. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement contained, by or on behalf of Borrower, shall inure to the
benefit of the respective successors and assigns of Lender. Nothing in this
Agreement or in any other Loan Document, express or implied, shall give to any
Person other than the parties and the holder(s) of the Note, the Mortgages and
the other Loan Documents, and their legal representatives, successors and
assigns, any benefit or any legal or equitable right, remedy or claim hereunder.
Section 8.2 Lender's Discretion. Whenever pursuant to this Agreement
-------------------
or any other Loan Document, Lender exercises any right, option or election given
to Lender to approve or disapprove, or consent or withhold consent, or any
arrangement or term is to be satisfactory to Lender or is to be in Lender's
discretion, the decision of Lender to approve or disapprove, consent or withhold
consent, or to decide whether arrangements or terms are satisfactory or not
satisfactory or acceptable or not acceptable to Lender in Lender's discretion,
shall (except as is otherwise specifically herein provided) be in the sole and
absolute discretion of Lender.
Section 8.3 Governing Law. (a) The proceeds of the Note delivered
-------------
pursuant hereto were disbursed from New York, which State the parties agree has
a substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects, including, without limitation, matters of
construction, validity and performance, this Agreement and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and
<PAGE>
107
performed in such State and any applicable law of the United States of America.
To the fullest extent permitted by law, Borrower hereby unconditionally and
irrevocably waives any claim to assert that the law of any other jurisdiction
governs this Agreement and the Note, and this Agreement and the Note shall be
governed by and construed in accordance with the laws of the State of New York
pursuant to (S) 5-1401 of the New York General Obligations Law.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE
COURT IN NEW YORK, NEW YORK, PURSUANT TO (S) 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW OR IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION IN WHICH
ANY COLLATERAL IS LOCATED, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT CSC
NETWORKS, 500 CENTRAL AVENUE, ALBANY, NEW YORK 12206-2209, AS ITS AUTHORIZED
AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR
STATE COURT AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS
(OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED BY BORROWER FROM TIME TO TIME IN
ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO BORROWER AT ITS PRINCIPAL
EXECUTIVE OFFICES, ATTENTION: GENERAL COUNSEL AND WRITTEN NOTICE OF SAID
SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED
HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING. BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
<PAGE>
108
Section 8.4 Modification, Waiver in Writing. No modification,
-------------------------------
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note or any other Loan Document, or consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given. Except as otherwise expressly provided herein, no
notice to or demand on Borrower shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.
Section 8.5 Delay Not a Waiver. Neither any failure nor any delay on
------------------
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note, or of any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement, the Note
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.
Section 8.6 Notices. All notices, consents, approvals and requests
-------
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) hand delivery, with proof of attempted delivery, (b) certified or registered
United States mail, postage prepaid, (c) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of attempted
delivery, or (d) by telecopier (with answerback acknowledged) provided that such
telecopied notice must also be delivered by one of the means set forth in (a),
(b) or (c) above, addressed if to Lender at its address set forth on the first
page hereof, and if to Borrower at its designated address set forth on the first
page hereof, or at such other address and Person as shall be designated from
time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section 8.6. A copy of
------- ---
all notices, consents, approvals and requests directed to Lender shall be
delivered concurrently to each of the following: Dechert Price & Rhoads, 1717
Arch Street, 4000 Bell Atlantic Tower, Philadelphia, PA 19103, Attention:
Joseph B. Heil, Esquire, Telefax Number 215/994-2222; Raymond Anthony, Two World
Financial Center, Building B, New York, New
<PAGE>
109
York 10281-1198, Telefax Number (212) 667-1666; Two World Financial Center,
Building B, New York, NY 10281-1198, Attention: Sheryl McAfee, Telefax Number
(212) 667-1022; and Two World Financial Center, Building B, New York, NY 10281-
1198, Attention: Barry Funt, General Counsel, Telefax Number (212) 667-1206. A
copy of all notices, consents, approvals and requests directed to Borrower shall
be delivered concurrently to each of the following: Gilchrist & Rutter, 1299
Ocean Avenue, Suite 900, Santa Monica, CA 90401, Attention: James R. Andrews,
Esq., Telefax Number (310) 394-4700. A notice shall be deemed to have been
given: (a) in the case of hand delivery, at the time of delivery; (b) in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; (c) in the case of expedited prepaid delivery upon
the first attempted delivery on a Business Day; or (d) in the case of
telecopier, upon receipt of answerback confirmation, provided that such
telecopied notice was also delivered as required in this Section 8.6. A party
-----------
receiving a notice which does not comply with the technical requirements for
notice under this Section 8.6 may elect to waive any deficiencies and treat the
-----------
notice as having been properly given.
SECTION 8.7 TRIAL BY JURY. BORROWER AND LENDER, TO THE FULLEST EXTENT
-------------
THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY
HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
Section 8.8 Headings. The Article and Section headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9 Assignment. Lender shall have the right to assign in
----------
whole or in part this Agreement and/or any of the other Loan Documents and the
obligations hereunder or thereunder to any Person and to participate all or any
portion of the Loan evidenced hereby, including without limitation, any servicer
or trustee in connection with a Securitization. Lender shall provide Borrower
with written notice of any such assignment; provided, however, that such notice
-------- -------
shall not be a condition of Lender's right to assign this Agreement and/or any
of the Loan Documents and the failure to deliver such notice shall not
constitute a default under this Loan Agreement.
<PAGE>
110
Section 8.10 Severability. Wherever possible, each provision of this
-------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 8.11 Preferences. Lender shall have no obligation to marshal
-----------
any assets in favor of Borrower or any other party or against or in payment of
any or all of the obligations of Borrower pursuant to this Agreement, the Note
or any other Loan Document. Lender shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any
portion of the obligations of Borrower hereunder. To the extent Borrower makes
a payment or payments to Lender for Borrower's benefit, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 8.12 Waiver of Notice. Borrower shall not be entitled to any
-----------------
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 8.13 Remedies of Borrower. In the event that a claim or
--------------------
adjudication is made that Lender or its agents, has acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement,
the Note, the Mortgages or the other Loan Documents, Lender or such agent, as
the case may be, has an obligation to act reasonably or promptly, Borrower
agrees that neither Lender nor its agents, shall be liable for any monetary
damages, and Borrower's sole remedies shall be limited to commencing an action
seeking injunctive relief or declaratory judgment. The parties hereto agree
that any action or
<PAGE>
111
proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment.
Section 8.14 Exculpation. Except as otherwise set forth in this
-----------
Section 8.14 and Section 4.2 to the contrary, from and after the date on which
- ------------ -----------
the Difference and any applicable hedging or interest rate management breakage
costs incurred by Lender on the Stabilization Date Payment Date, if any, is paid
to Lender pursuant to Section 8.32(c), Lender shall not enforce the liability
---------------
and obligation of Borrower to perform and observe the obligations contained in
this Agreement, the Note, the Mortgages or any of the other Loan Documents
executed and delivered by Borrower except that Lender may pursue any power of
sale, bring a foreclosure action, action for specific performance, action for
money judgment, or other appropriate action or proceeding (including, without
limitation, to obtain a deficiency judgment) against Borrower or any other
Person solely for the purpose of enabling Lender to realize upon (a) the
Collateral, and (b) the Rents and Accounts arising from any Facility to the
extent (x) received by Borrower, any Operator or any Manager (or any of their
affiliates), after the occurrence of an Event of Default or (y) distributed to
Borrower, any Operator or any Manager, or their respective shareholders, or
partners or members, as applicable, or affiliates during or with respect to any
period for which Lender did not receive the full amounts it was entitled to
receive as prepayments of the Loan pursuant to Section 2.6, 2.11 (all Rents and
----------- ----
Accounts covered by clauses (x) and (y) being hereinafter referred to as the
----------- ---
"Recourse Distributions") and (c)) any other collateral given to Lender under
----------------------
the Loan Documents ((a), (b), and (c) collectively, the "Default Collateral");
------------------
provided, however, that any judgment in any such action or proceeding shall be
- -------- ------- ----
enforceable only to the extent of any such Default Collateral. The provisions of
this Section 8.14 shall not, however, (a) impair the validity of the
------- ----
Indebtedness evidenced by the Loan Documents or in any way affect or impair the
Liens of the Mortgages or any of the other Loan Documents or the right of Lender
to foreclose the Mortgages following an Event of Default; (b) impair the right
of Lender to name any Person as a party defendant in any action or suit for
judicial foreclosure and sale under any of the Mortgages; (c) affect the
validity or enforceability of the Note, the Mortgages or the other Loan
Documents; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the right of Lender to bring suit for any damages, losses,
expenses, liabilities or costs resulting from fraud, material misrepresentation,
intentional misrepresentation, physical waste of all or any portion of any
Facility, or wrongful removal or disposal of all or any portion of any Facility
by any Person in connection with this Agreement, the Note, the Mortgages or the
other Loan Documents; (f) impair the right of Lender to obtain the Recourse
Distributions received by any Person; (g) impair the right of Lender to bring
suit with respect to any
<PAGE>
112
misappropriation of security deposits or Rents collected more than one (1) month
in advance; (h) impair the right of Lender to obtain Insurance Proceeds or
Condemnation Proceeds due to Lender pursuant to the Mortgage; (i) impair the
right of Lender to enforce the provisions of Sections 4.1(v) or 5.1(d) through
-------------- ------
5.1(i), inclusive of this Agreement, Section 2.8 of the Mortgage or the
- ------ -----------
Environmental Guaranty even after repayment in full by Borrower of the
Indebtedness; (j) prevent or in any way hinder Lender from exercising, or
constitute a defense, or counterclaim, or other basis for relief in respect of
the exercise of, any other remedy against any or all of the Collateral securing
the Note as provided in the Loan Documents; (k) impair the right of Lender to
bring suit with respect to any misapplication of any funds; or (l) impair the
right of Lender to sue for, seek or demand a deficiency judgment against any
Person solely for the purpose of foreclosing the Mortgaged Properties or any
part thereof, or realizing upon the Default Collateral; provided, however, that
-------- ------- ----
any such deficiency judgment referred to in this clause (l) shall be enforceable
----------
only to the extent of any of the Default Collateral. The provisions of this
Section shall be inapplicable to any Person if (i) any petition for bankruptcy,
- -------
reorganization or arrangement pursuant to federal or state law against Borrower
shall be filed by or against Borrower or consented to or acquiesced to by
Borrower, (ii) if Borrower shall institute any proceeding for the dissolution or
liquidation of Borrower, (iii) if Borrower shall make an assignment for the
benefit of creditors or (iv) if Borrower shall breach the representation and
warranty in Section 4.1(aa). Prior to the date on which the Difference and any
---------------
applicable hedging or interest rate management brokerage costs incurred by
Lender on the Stabilization Payment Date is paid to Lender, Lender's judgment in
any action or proceeding shall not be limited to the Default Collateral and the
Loan shall be fully recourse to the Borrower, its shareholders, members and
partners and their respective shareholders, members and partners, and the
Parent.
Section 8.15 Exhibits Incorporated. The information set forth on the
---------------------
cover, heading and recitals hereof, and the Exhibits attached hereto, are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.
Section 8.16 Offsets, Counterclaims and Defenses. Any assignee of
-----------------------------------
Lender's interest in and to this Agreement, the Note, the Mortgages and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Loan, this Agreement, the
Note, the Mortgages and the other Loan Documents which Borrower may otherwise
have against any assignor, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon this Agreement, the Note, the Mortgages and other Loan
Documents
<PAGE>
113
and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by Borrower.
Section 8.17 No Joint Venture or Partnership. Borrower and Lender
-------------------------------
intend that the relationship created hereunder be solely that of borrower and
lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Mortgaged Property other than that of
mortgagee or lender.
Section 8.18 Waiver of Marshalling of Assets Defense. To the fullest
---------------------------------------
extent that Borrower may legally do so, Borrower waives all rights to a
marshalling of the assets of Borrower, and others with interests in Borrower,
and of the Mortgaged Property, or to a sale in inverse order of alienation in
the event of foreclosure of the interests hereby created, and agrees not to
assert any right under any laws pertaining to the marshalling of assets, the
sale in inverse order of alienation, homestead exemption, the administration of
estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of any Facility
for the collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender or Deed of Trust Trustee to the payment of
the Indebtedness in preference to every other claimant whatsoever.
Section 8.19 Waiver of Counterclaim. Borrower hereby waives the right
----------------------
to assert a counterclaim, other than compulsory counterclaim, in any action or
proceeding brought against Borrower by Lender or Lender's agents.
Section 8.20 Conflict; Construction of Documents. In the event of any
-----------------------------------
conflict between the provisions of this Agreement and the provisions of the
Note, the Mortgages or any of the other Loan Documents, the provisions of this
Agreement shall prevail. The parties hereto acknowledge that they were
represented by counsel in connection with the negotiation and drafting of the
Loan Documents and that the Loan Documents shall not be subject to the principle
of construing their meaning against the party which drafted same.
Section 8.21 Brokers and Financial Advisors. Borrower and Lender
------------------------------
hereby represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a
<PAGE>
114
claim by any Person, that such Person acted on behalf of Borrower in connection
with the transactions contemplated herein. The provisions of this Section
-------
shall survive the expiration and termination of this Agreement and the
repayment of the Indebtedness.
Section 8.22 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 8.23 Estoppel Certificates. Borrower and Lender each hereby
---------------------
agree at any time and from time to time upon not less than fifteen (15) days
prior written notice by Borrower or Lender to execute, acknowledge and deliver
to the party specified in such notice, a statement, in writing, certifying that
this Agreement is unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in full force and effect and
stating the modifications hereto), and stating whether or not, to the knowledge
of such certifying party, any Default or Event of Default has occurred, and, if
so, specifying each such Default or Event of Default; provided, however, that it
-------- ------- ----
shall be a condition precedent to Lender's obligation to deliver the statement
pursuant to this Section, that Lender shall have received, together with
-------
Borrower's request for such statement, an Officer's Certificate stating that no
Default or Event of Default exists as of the date of such certificate (or
specifying such Default or Event of Default).
Section 8.24 Payment of Expenses. Borrower shall, whether or not the
-------------------
Transactions are consummated, pay all Transaction Costs, which shall include,
without limitation, reasonable out-of-pocket fees, costs, expenses, and
disbursements of Lender and its attorneys, local counsel, accountants and other
contractors in connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents and the documents and instruments referred to
therein, (ii) the creation, perfection or protection of Lender's Liens in the
Collateral (including, without limitation, fees and expenses for title and lien
searches and filing and recording fees, intangibles taxes, personal property
taxes, mortgage recording taxes, due diligence expenses, travel expenses,
accounting firm fees, costs of the Appraisals, Environmental Reports (and an
environmental consultant), Surveys and the Engineering Reports), (iii) the
negotiation, preparation, execution and delivery of any amendment, waiver or
consent relating to any of the Loan Documents, and (iv) the preservation of
rights under and enforcement of the Loan Documents and the documents and
instruments referred to therein, including any restructuring or rescheduling of
the Indebtedness.
<PAGE>
115
Section 8.25 Bankruptcy Waiver. Borrower hereby agrees that, in
-----------------
consideration of the recitals and mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, if Borrower (i) files with any bankruptcy court of
competent jurisdiction or be the subject of any petition under Title 11 of the
U.S. Code, as amended, (ii) is the subject of any order for relief issued under
Title 11 of the U.S. Code, as amended, (iii) files or is the subject of any
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or law relating to
bankruptcy, insolvency or other relief of debtors, (iv) has sought or consents
to or acquiesces in the appointment of any trustee, receiver, conservator or
liquidator or (v) is the subject of any order, judgment or decree entered by any
court of competent jurisdiction approving a petition filed against such party
for any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency or other relief for debtors, the
automatic stay provided by the Federal Bankruptcy Code shall be modified and
annulled as to Lender, so as to permit Lender to exercise any and all of its
rights and remedies, upon request of Lender made on notice to Borrower and any
other party in interest but without the need of further proof or hearing.
Neither Borrower nor any Affiliate of Borrower shall contest the enforceability
of this Section.
-------
Section 8.26 Entire Agreement. This Agreement, together with the
----------------
Exhibits hereto and the other Loan Documents constitutes the entire agreement
among the parties hereto with respect to the subject matter contained in this
Agreement, the Exhibits hereto and the other Loan Documents and supersedes all
prior agreements, understandings and negotiations between the parties.
Section 8.27 Dissemination of Information. If Lender determines at any
----------------------------
time to sell, transfer or assign the Note, this Loan Agreement and any other
Loan Document and any or all servicing rights with respect thereto, or to grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement, Lender may forward to each purchaser, transferee,
assignee, servicer, participant or investor in such securities (collectively,
the "Investor") or any Rating Agency rating such securities and each prospective
--------
Investor, all documents and information which Lender now has or may hereafter
acquire relating to the Loan, Borrower, any guarantor, any indemnitor and any
Facility, which shall have been furnished by Borrower, any guarantor, any
indemnitor, or any party to any
<PAGE>
116
Loan Document, or otherwise furnished in connection with the Loan, as Lender in
its discretion determines necessary or desirable.
Section 8.28 Limitation of Interest. It is the intention of Borrower
----------------------
and Lender to conform strictly to applicable usury laws. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law, then,
in that event, notwithstanding anything to the contrary in any Loan Document, it
is agreed as follows: (i) the aggregate of all consideration which constitutes
interest under applicable law that is taken, reserved, contracted for, charged
or received under any Loan Document or otherwise in connection with the Loan
shall under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited to principal by Lender (or if
the Loan shall have been paid in full, refunded to Borrower); and (ii) in the
event that maturity of the Loan is accelerated by reason of an election by
Lender resulting from any default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum amount of interest allowed by
applicable law, and any interest in excess of the maximum amount of interest
allowed by applicable law, if any, provided for in the Loan Documents or
otherwise shall be cancelled automatically as of the date of such acceleration
or prepayment and, if theretofore prepaid, shall be credited to principal (or if
the principal portion of the Loan and any other amounts not constituting
interest shall have been paid in full, refunded to Borrower.)
In determining whether or not the interest paid or payable under any
specific contingency exceeds the maximum amount allowed by applicable law,
Lender shall, to the maximum extent permitted under applicable law (a) exclude
voluntary prepayments and the effects thereof, and (b) amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout the
entire contemplated term of the Loan so that the interest rate is uniform
throughout the entire term of the Loan; provided, that if the Loan is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received for the actual period of existence thereof exceeds the
maximum amount allowed by applicable law, Lender shall refund to Borrower the
amount of such excess, and in such event, Lender shall not be subject to any
penalties provided by any laws for contracting for, charging or receiving
interest in excess of the maximum amount allowed by applicable law.
Section 8.29 Indemnification. Borrower shall indemnify and hold
---------------
Lender and each of its affiliates and their respective successors and assigns
(including their respective officers, directors, partners, employees, attorneys,
accountants, professionals and agents and
<PAGE>
117
each other person, if any, controlling Lender or any of its affiliates within
the meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended) (each, including
Lender, an "Indemnified Party") harmless against any and all losses, claims,
-----------------
damages, costs, expenses (including the fees and disbursements of outside
counsel retained by any such person) or liabilities in connection with, arising
out of or as a result of the transactions and matters referred to or
contemplated by this Agreement, except to the extent that it is finally
judicially determined that any such loss, claim, damage, cost, expense or
liability resulted directly and solely from the fraud or willful misconduct of
such Indemnified Party. If any Indemnified Party becomes involved in any action,
proceeding or investigation in connection with any transaction or matter
referred to or contemplated in this Agreement, Borrower shall periodically
reimburse any Indemnified Party upon demand therefor in an amount equal to its
reasonable legal and other expenses (including the costs of any investigation
and preparation) incurred in connection therewith to the extent such legal or
other expenses are the subject of indemnification hereunder.
Section 8.30 Borrower Acknowledgments. Borrower hereby acknowledges to
------------------------
and agrees with Lender that (i) the scope of Lender's business is wide and
includes, but is not limited to, financing, real estate financing, investment in
real estate and other real estate transactions which may be viewed as adverse to
or competitive with the business of Borrower or its Affiliates and (ii) Borrower
has been represented by competent legal counsel and Borrower has consulted with
such counsel prior to executing this Loan Agreement and of the other Loan
Documents.
Section 8.31 Publicity. Lender shall have the right to issue press
---------
releases, advertisements and other promotional materials describing Lender's
participation in the origination of the Loan or the Loan's inclusion in any
Securitization effectuated or to be effectuated by Lender.
Section 8.32 Recalculation of Loan Amount.
----------------------------
(a) On the Stabilization Date, Lender shall calculate a new loan
amount for the Principal Indebtedness then outstanding (the "Recalculated Loan
-----------------
Amount") utilizing an underwriting cash flow methodology (calculated by Lender
- ------
in Lender's discretion, including without limitation, adjusting for any
financing costs in connection with any receivables financing) based upon the
Underwriting NOI Criteria and a debt service constant equal to the greater of
the actual constant and ten and forty eight one hundredths percent
<PAGE>
118
(10.48%) and a minimum Debt Service Coverage Ratio (calculated by Lender in
Lender's sole discretion) of 1.40:1; provided, however, if a Default or an Event
-------- -------
of Default has occurred, Lender shall have the right but not the obligation to
calculate a new loan amount; and provided, further, Lender's obligation to
-------- -------
calculate a new loan amount is subject to completion of Lender's due diligence
and delivery to Lender of those items described in Article III.
(b) If the Recalculated Loan Amount is greater than the Stabilization
Date Loan Amount, then, provided that (i) no Default or Event of Default has
occurred and (ii) Lender determines in its discretion that Borrower has as of
the Stabilization Date (or the Stabilization Date Payment Date, as applicable),
satisfied all of the other conditions precedent set forth in Article III and all
-----------
other terms and conditions of this Agreement, the amount of the Loan shall be
the Stabilization Date Loan Amount.
(c) If the Recalculated Loan Amount is less than the Stabilization
Date Loan Amount (the excess of the Stabilization Date Loan Amount over the
Recalculated Loan Amount, the "Difference"), then Borrower shall prepay on the
----------
Stabilization Date Payment Date the Difference. Borrower shall also pay to
Lender on the Stabilization Date Payment Date the any hedging or interest rate
management breakage costs incurred by Lender. Any failure by Borrower to pay
Lender the Difference and the applicable hedging or interest rate management
breakage costs incurred by Lender on the Stabilization Date Payment Date shall
constitute an immediate Event of Default.
(d) All prepayments made pursuant to this Section shall be applied
-------
in accordance with the provisions of Section 2.7.
------- ---
(e) Any failure by Borrower to provide all annual financial
information that Borrower is required to provide pursuant to Section 5.1(q) when
------- ------
due shall constitute an immediate Event of Default. Any failure by Borrower to
provide any other information requested by Lender in connection with the
recalculation of the Loan amount pursuant to this Section within two (2)
-------
Business Days after request therefor (provided that Borrower could reasonably
provide such information within such period) shall constitute an immediate Event
of Default.
(f) In the event the Pending Medicare/Medicaid Audit (as defined in
Section 4.1(al)(ix)) is not resolved by the Stabilization Date, Borrower agrees
- ------- -----------
to establish such
<PAGE>
119
reserves (in addition to the Reserve Bank Account (as defined in the Side
Letter)) as Lender requests in its sole discretion.
Section 8.33 Cross Collateralization. Without limitation to any
-----------------------
other right or remedy provided to Lender in this Agreement or any of the other
Loan Documents, Borrower acknowledges and agrees that, to the full extent
permitted under applicable law, upon the occurrence of an Event of Default (i)
Lender shall have the right to pursue all of its rights and remedies in one
proceeding, or separately and independently in separate proceedings which it, as
Lender, in its sole and absolute discretion, shall determine from time to time,
(ii) Lender is not required to either marshall assets, sell Collateral in any
inverse order of alienation, or be subjected to any "one action" or "election of
remedies" law or rule, (iii) the exercise by Lender of any remedies against any
Collateral will not impede Lender from subsequently or simultaneously exercising
remedies against any other Collateral, (iv) all Liens and other rights, remedies
and privileges provided to Lender in this Agreement and in the other Loan
Documents or otherwise shall remain in full force and effect until Lender has
exhausted all of its remedies against the Collateral and all Collateral has been
foreclosed, sold and/or otherwise realized upon and (v) each Facility shall be
security for the performance of all of Borrower's obligations hereunder.
Section 8.34 REIT Status. Notwithstanding any provision of this
-----------
Agreement, it is understood that the Borrower is a real estate investment trust,
not an operating company, and will not receive operating income from the
Facilities.
[Signatures on the following pages]
<PAGE>
120
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
LENDER:
NOMURA ASSET CAPITAL CORPORATION, a
Delaware corporation
By:
----------------------------------------
Name:
Title:
<PAGE>
121
BORROWER:
G&L HAMPDEN, LLC, a Delaware limited
liability company
By: G&L Hampden, Inc., a
Delaware corporation,
its general partner
By: /s/ Mark H. Hamermesh
______________________
Mark H. Hamermesh
Senior Vice President
<PAGE>
EXHIBIT A
Operating Expense Certificate
Nomura Asset Capital Corporation
Two World Financial Center, Building B
New York, New York 10281-1198
Attention: Raymond M. Anthony
Re: Loan Agreement (the "Loan Agreement") dated as of _____________,
1997 between G&L Hampden, LLC ("Borrower") and Nomura Asset
Capital Corporation (together with its successors and assigns
-------------------------------------------------------------
"Lender")
---------
Ladies and Gentlemen:
This certificate is delivered in accordance with Section 2.11(f) of
------- -------
the Loan Agreement. All capitalized terms not defined herein shall have the
meanings ascribed to them in the Loan Agreement.
Borrower hereby certifies that the Operating Expenses for the Interest
Accrual Period from ______________, ____ to ______________, ____ are
______________________ Dollars ($_________) and that such Operating Expenses are
equal to or less than the Operating Expenses for such period set forth on the
Operating Budget.
G&L HAMPDEN, LLC, a Delaware limited
liability company
By: G&L Hampden, Inc., a
Delaware corporation
By: ______________________
Mark H. Hamermesh
Senior Vice President
<PAGE>
EXHIBIT B
Additional Definitions
<TABLE>
<CAPTION>
<S> <C>
Base Adjusted NOI $1,800,000.00
Initial Basic Carrying Costs Amount $ 0.00
Initial Capital Reserve Amount $ 400,000.00
Allocated Loan Amounts
Chestnut Hill $3,272,727.00
Mary Lyons $1,090,909.00
Rivedale Gardens $1,636,364.00
</TABLE>
<PAGE>
EXHIBIT C
Capital Improvement and Repair and Environmental Remediation Exhibit
[Intentionally left blank]
<PAGE>
EXHIBIT D
Underwriting NOI Criteria
At the Stabilization Date, Lender shall determine the Adjusted Net
Operating Income of the Facility (as determined in accordance with the terms of
this Exhibit) on a trailing 12-month basis (based on the consecutive 12-month
-------
period ending in the month immediately preceding the Closing Date for which
detailed financial information is available).
Adjusted Net Operating Income will be calculated based on the revenues
based on the trailing twelve (12) month period subject to adjustments for:
a. all Operating Expenses, including without limitation, a
management fee equal to the greater of actual management fees or
five percent (5.0%) of total revenues;
b. a reserve for capital expenditures and capital replacements
equal to at least $250 per bed (or such greater amount as shall
be indicated in the independent engineering reports);
c. an adjustment for a vacancy allowance at the market vacancy rate
(but no less than five (5%)) if actual vacancy is less than
market or five percent (5%);
d. reserves for Basic Carrying Costs and Capital Expenses;
e. verification of all sources of other income to determine
whether such income is recurring; and
f. any other factors or matters that may have an impact on the
Adjusted Net Operating Income.
The expenses will be based on the trailing twelve (12) month period
preceding the Closing Date for which full operating statements are available as
adjusted for any items that are non-recurring or not supported by historical
statements and for anticipated increases.
<PAGE>
In determining Adjusted Net Operating Income, all pro forma
adjustments to revenue and expenses shall be approved by Lender in Lender's
discretion and shall be subject to Lender's full due diligence.
The above underwriting assumes that there is no material adverse
change anticipated in the operations of the Facility or in the Adjusted Net
Operating Income of the Facility from the Closing Date to and including the
Stabilization Date.
Other adjustments as determined by Lender in its discretion consistent
with its due diligence findings and prevailing market conditions.
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
<PAGE>
Schedule 4.1(al)(ix)
Audits
Audit relating to the calendar years 1988 and 1989 and claims by
Medicare/Medicaid Payors that the licensee of the Facility was overpaid in such
years as follows: (i) Chestnut Hill - $345,000, (ii) Mary Lyons - $390,000 and
(iii) Riverdale Gardens - $470,000.
<PAGE>
EXHIBIT 10.60
PROMISSORY NOTE
---------------
$6,000,000 October 28, 1997
New York, New York
FOR VALUE RECEIVED, the undersigned, G&L HAMPDEN, LLC, a Delaware limited
liability company with an address of 435 North Bedford Drive, 1st Floor, Beverly
Hills, California 90210, Attention: Mark H. Hamermesh, Telefax Number (310) 248-
2222 ("Maker"), promises to pay to the order of NOMURA ASSET CAPITAL
-----
CORPORATION, a Delaware corporation (together with any subsequent holder of this
Note, and their respective successors and assigns, "Holder") having an address
------
at Two World Financial Center, Building B, New York, NY 10281-1198, Attention:
Raymond M. Anthony, Telefax Number (212) 667-1666, or at such other address as
Holder may from time to time designate in writing, the principal sum of Six
Million Dollars ($6,000,000) together with interest thereon, Late Charges,
Default Rate interest, Yield Maintenance Premium, if any and all other sums due
under and secured by the Mortgages or by any other Loan Documents; such
principal, interest, Late Charges, Default Rate interest, Yield Maintenance
Premium, if any, and other sums to be calculated and payable as provided in that
certain Loan Agreement of even date herewith between Maker and Holder (as
amended, modified and supplemented and in effect from time to time, the "Loan
----
Agreement"). Capitalized terms used herein without definition shall have the
- ---------
meanings ascribed to such terms in the Loan Agreement.
All payments made hereunder shall be applied as provided in Section
-------
2.7 of the Loan Agreement.
- ---
The Loan Agreement provides for, among other things:
(1) a payment of interest only for the first Interest Accrual Period
on October 28, 1997;
(2) commencing on the first Payment Date and continuing on each
Payment Date thereafter until the Stabilization Date, monthly payments of
accrued interest;
(3) on each Payment Date commencing on the Payment Date immediately
following the Stabilization Date and continuing on each Payment Date thereafter,
a monthly constant payment of principal and interest (which payment is
calculated by using the Initial Interest Rate and an amortization schedule of
300 months);
(4) a maturity date of November 11, 2024;
(5) an Optional Prepayment Date of November 11, 2009;
<PAGE>
(6) an Initial Interest Rate equal to 8.62% per annum;
(7) a Revised Interest Rate equal to the greater of (x) the sum of the
Initial Interest Rate plus five hundred (500) basis points, and (y) as of the
Optional Prepayment Date, the sum of the Fifteen Year Treasury Rate plus five
hundred (500) basis points, and (b) the Maximum Rate;
(8) a Default Rate equal to the lesser of (i) the Maximum Rate or (ii)
the Interest Rate plus five percent (5%);
(9) except in connection with a prepayment of the Difference under
Section 8.32 of the Loan Agreement, the Loan cannot be voluntarily prepaid prior
to the Optional Prepayment Date; on and after the Optional Prepayment Date, (a)
the Loan may be prepaid in whole or in part and (b) Section 2.6 of the Loan
Agreement requires mandatory prepayment of all Excess Cash Flow; and
(10) interest shall accrue on the outstanding principal balance of
the Loan and all other amounts due to Holder under the Loan Documents commencing
on the Closing Date, and such interest shall accrue (a) from (and including) the
Closing Date to the Optional Prepayment Date, at the Initial Interest Rate and
(b) on and after the Optional Prepayment Date, at the Revised Interest Rate.
Interest shall be computed on the actual number of days elapsed, based on a 360
day year.
The obligations of Maker under this Note are secured by, among other
things, the following:
(1) the Mortgages; and
(2) the other Loan Documents, and Liens granted in favor of Holder by
Maker and/or encumbering or affecting the Facilities.
The principal sum evidenced by this Note, together with accrued
interest, Default Rate interest, Late Charges and Yield Maintenance Premium, if
any, and all other sums due under and secured by the Mortgage or by any other
Loan Document shall become immediately due and payable at the option of Holder
upon the occurrence of any Event of Default.
If Maker fails to make (i) the payment due on the Maturity Date or
(ii) any other payment of principal or interest, the Yield Maintenance Premium,
if any, Late Charge or other sum due on any date on which such payment is due,
all amounts due hereunder thereafter will bear interest at the Default Rate.
Maker will also pay to Holder, after the occurrence of an Event of Default, in
addition to the amount due, all reasonable costs of collecting, securing, or
-2-
<PAGE>
attempting to collect or secure this Note or any other Loan Document, including,
without limitation, court costs and reasonableattorneys' fees (including
reasonable attorneys' fees on any appeal by either Maker or Holder and in any
bankruptcy proceedings).
With respect to the amounts due pursuant to this Note, Maker waives
the following:
(1) All rights of exemption of property from levy or sale under execution or
other process for the collection of debts under the Constitution or laws of the
United States or any State thereof;
(2) Demand, presentment, protest, notice of dishonor, notice of
nonpayment, notice of protest, notice of intent to accelerate, notice of
acceleration, suit against any party, diligence in collection of this Note and
in the handling of securities at any time existing in connection herewith, and
all other requirements necessary to enforce this Note except for notices
required by Governmental Authorities and notices required by the Loan Agreement;
and
(3) Any further receipt by Holder or acknowledgement by Holder of any
collateral now or hereafter deposited as security for the Loan.
It is the intention of Maker and Holder to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law then, in that event, notwithstanding
anything to the contrary in any agreement entered into in connection with or as
security for this Note, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under applicable law that is taken,
reserved, contracted for, charged or received under this Note or under any of
the other aforesaid agreements or otherwise in connection with this Note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited on account of this Note by the
holder hereof (or if this Note shall have been paid in full, refunded to Maker)
in accordance with the Loan Agreement; and (ii) in the event that maturity of
this Note is accelerated by reason of an election by the Holder resulting from
any default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount of interest allowed by applicable law, and any
interest in excess of the maximum amount of interest allowed by applicable law,
if any, provided for in this Note or otherwise shall be cancelled automatically
as of the date of such acceleration or prepayment and, if theretofore prepaid,
shall be credited on account of this Note (or if this Note shall have been paid
in full, refunded to Maker).
In determining whether or not the interest paid or payable under any
specific contingency exceeds the maximum amount allowed by applicable law, the
Holder shall, to the
-3-
<PAGE>
maximum extent permitted under applicable law (a) exclude voluntary prepayments
and the effects thereof, and (b) amortize, prorate, allocate and spread, in
equal parts, the total amount of interest throughout the entire contemplated
term of this Note so that the interest rate is uniform throughout the entire
term of this Note; provided, that if this Note is paid and performed in full
prior to the end of the full contemplated term hereof, and if the interest
received for the actual period of existence thereof exceeds the maximum amount
allowed by applicable law, Holder shall refund to Maker the amount of such
excess, and in such event, Holder shall not be subject to any penalties provided
by any laws for contracting for, charging or receiving interest in excess of the
maximum amount allowed by applicable law.
Holder shall not by any act, delay, omission or otherwise be deemed to
have modified, amended, waived, extended, discharged or terminated any of its
rights or remedies, and no modification, amendment, waiver, extension, discharge
or termination of any kind shall be valid unless in writing and signed by Holder
and Maker. All rights and remedies of Holder under the terms of this Note and
applicable statutes or rules of law shall be cumulative, and may be exercised
successively or concurrently. Maker agrees that there are no defenses, equities
or setoffs with respect to the obligations set forth herein, and to the extent
any such defenses, equities, or setoffs may exist, the same are hereby expressly
released, forgiven, waived and forever discharged.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable Legal Requirements,
but if any provision of this Note shall be prohibited by or invalid under
applicable Legal Requirements, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.
Holder may, at its option, release any Collateral given to secure the
indebtedness evidenced hereby, and no such release shall impair the obligations
of Maker to Holder.
The proceeds of this Note were disbursed from the State of New York,
which State the parties agree has a substantial relationship to the parties and
to the underlying transaction embodied hereby, and in all respects, including,
without limitation, matters of construction, validity and performance, this Note
and the obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and performed in such State and any applicable law of the United States of
America. To the fullest extent permitted by law, Maker hereby unconditionally
and irrevocably waives any claim to assert that the law of any other
jurisdiction governs this Note, and this Note shall be governed by and construed
in accordance with the laws of the State of New York pursuant to (S) 5-1401 of
the New York General Obligations Law.
Any legal suit, action or proceeding against Holder or Maker arising
out of or relating to this Note shall be instituted in any federal or state
court in New York, New York,
-4-
<PAGE>
pursuant to (S) 5-1402 of the New York General Obligations Law, or in any
federal or state court in the jurisdiction in which any Collateral is located,
and Maker waives any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding, and Maker hereby irrevocably
submits to the jurisdiction of any such court in any suit, action or proceeding.
Maker does hereby designate and appoint CT Corporation Systems, 1633 Broadway,
New York, NY 10019, Telecopy No. (212) 586-4986 as its authorized agent to
accept and acknowledge on its behalf service of any and all process which may be
served in any such suit, action or proceeding in any such federal or state
court, and agrees that service of process upon said agent at said address (or at
such other office in New York, New York as may be designated by such agent in
accordance with the terms hereof) with copies to Maker at the address set forth
in the first paragraph of this Note and written notice of said service of Maker
mailed or delivered to Maker in the manner provided in the Loan Agreement shall
be deemed in every respect effective service of process upon Maker, in any such
suit, action or proceeding. Maker (i) shall give prompt notice to Holder of any
changed address of its authorized agent hereunder, (ii) may at any time and from
time to time designate a substitute authorized agent (which office shall be
designated as the address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to have an office or
is dissolved without leaving a successor.
MAKER AND HOLDER TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO,
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS NOTE OR THE
OTHER LOAN DOCUMENTS. EACH OF MAKER AND HOLDER AGREES THAT THE OTHER MAY FILE A
COPY OF THIS WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY
AND BARGAINED AGREEMENT OF THE OTHER IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY
JURY, AND THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN MAKER AND HOLDER SHALL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Holder may assign all or part of its right, title and interest in and
to this Note to another Person, including without limitation, to a trustee or
servicer before or after a Securitization, and such Person shall be entitled to
exercise all or any portion of Holder's rights hereunder.
Without limiting the applicability of the terms of any Loan Document
to this Note, this Note is and shall be subject to the exculpation provisions of
Section 8.14 of the Loan Agreement; provided, however, prior to the payment of
- ------- ----
the Difference and any applicable hedging or interest rate management breakage
costs incurred by Holder on the Stabilization Date Payment Date pursuant to
Section 8.32(c) of the Loan Agreement, the Loan
- ------- -------
-5-
<PAGE>
shall be fully recourse to Maker and Parent as described in Section 8.32 of the
Loan Agreement.
[Signature on the following page]
-6-
<PAGE>
IN WITNESS WHEREOF, Maker has caused this Promissory Note to be
properly executed as of the date first above written and has authorized this
Promissory Note to be dated as of the day and year first above written.
MAKER:
G&L HAMPDEN, LLC, a Delaware limited liability
company
By: G&L Hampden, Inc., its managing member
By: /s/ Mark H. Hamermesh
__________________________
Mark H. Hamermesh
Senior Vice President
-7-
<PAGE>
Pay to the order of ________________________________________________________,
a_____________________________________________________, having an address of
____________________________________________________________________________
____________________________________________________________________________,
without recourse, representation or warranty.
NOMURA ASSET CAPITAL CORPORATION, a Delaware
Corporation
By:________________________________________
Name:
Title:
-8-
<PAGE>
EXHIBIT 10.61
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Attention: G. Monique Escudero, Esq.
SPACE ABOVE THIS LINE FOR RECORDER'S USE
- --------------------------------------------------------------------------------
MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
by
G&L HAMPDEN, LLC
a Delaware limited liability company
having an address of
435 North Bedford Drive, 1st Floor
Beverly Hills, California 90210 (as Mortgagor)
to
NOMURA ASSET CAPITAL CORPORATION
having an address at
Two World Financial Center, Building B
New York, New York 10281-1198
(as Mortgagee)
Property: _______________________________
____________, Massachusetts
<PAGE>
MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
(this "Mortgage") is made as of the ___ day of October, 1997 by and among G&L
--------
HAMPDEN, LLC, a Delaware limited liability company, having an address at 435
North Bedford Drive, 1st Floor, Beverly Hills, California 90210, Attention:
Mark H. Hamermesh, Telefax Number (310) 248-2222 (the "Mortgagor"), for the
---------
benefit of NOMURA ASSET CAPITAL CORPORATION, having an address at Two World
Financial Center, Building B, New York, New York 10281-1198, Attention: Raymond
M. Anthony, Telefax Number (212) 667-1666 (together with its successors and
assigns, the "Mortgagee").
---------
W I T N E S S E T H:
WHEREAS, the Mortgagor and the Mortgagee are parties to a Loan Agreement
dated as of the date hereof (said Loan Agreement, as modified and supplemented
and in effect from time to time, the "Loan Agreement");
--------------
WHEREAS, the Loan being made in connection with this Mortgage is to be
evidenced by, and repayable with interest thereon, Default Rate interest, and
Late Charges, together with the Yield Maintenance Premium, if any, in accordance
with a promissory note executed and delivered to the order of the Mortgagee
(such note, as modified and supplemented and in effect from time to time, the
"Note");
- -----
WHEREAS, Mortgagor contemplates that Mortgagee's interest in and to, inter
alia, the Loan (or a portion thereof), the Note, this Mortgage and the Loan
Documents may be assigned by Mortgagee to another Person, including without
limitation to a trustee on behalf of security holders in connection with a
Securitization;
NOW, THEREFORE, in consideration of the making of the Loan by the Mortgagee
to the Mortgagor and the covenants, agreements, representations and warranties
set forth in the Loan Documents, and for the purpose of securing the following
(collectively, the "Loan Obligations"):
----------------
(a) all principal (including, without limitation, any advance to the
Mortgagor now or hereafter made), interest, Default Rate interest, Late Charges,
the Yield Maintenance Premium, if any, owing from time to time under the Note,
and all obligations owing by the Mortgagor under the Loan Documents and all
amounts from time to time owing by the
<PAGE>
Mortgagor under this Mortgage or any of the other Loan Documents; and
(b) all covenants, agreements and other obligations of Mortgagor under the
Loan Documents;
the Mortgagor hereby irrevocably grants, bargains, sells, releases, conveys,
warrants, assigns, transfers, mortgages, pledges, sets over and confirms unto
Mortgagee, its successors and assigns, WITH POWER OF SALE AND RIGHT OF ENTRY AND
POSSESSION, to have and to hold forever, subject to all of the terms,
conditions, covenants and agreements herein set forth, for the security and
benefit of Mortgagee and its respective successors and assigns, with MORTGAGE
COVENANTS, all Mortgagor's interest now owned or hereafter acquired in the
following described land, real estate, buildings, improvements, equipment,
fixtures, furniture, and other personal property (which together with the
Security Interest Property and any additional such property and interests
hereafter acquired by the Mortgagor and subjected to the lien of this Mortgage,
or intended to be so, as the same may be from time to time constituted, is
hereafter referred to as the "Mortgaged Estate") to-wit:
----------------
(a) All the land located in the County and State identified in Exhibit A
---------
attached hereto, as more particularly described in such Exhibit A, subject,
---------
however, to the Permitted Encumbrances (the "Land");
----
(b) All Improvements and Equipment (the Land, Improvements and Equipment
collectively, the "Facility");
--------
(c) All Appurtenant Rights;
(d) All Rents;
(e) All Collateral; and
(f) All products and Proceeds.
AND, as additional security, Mortgagor, as debtor, hereby grants to
Mortgagee, as secured party, a continuing security interest in the foregoing
property and in the Collateral, and any property as to which a security interest
can be created or perfected, now existing or hereafter coming into existence,
and all substitutions, replacements, renewals and additions to and all products
and Proceeds of the foregoing (collectively, the "Security Interest Property").
--------------------------
-2-
<PAGE>
This Mortgage is intended to be and shall be effective as a security agreement
pursuant to the UCC.
TO HAVE AND TO HOLD the Mortgaged Estate and all parts thereof unto the
Mortgagee, its successors and assigns, their successors and assigns forever,
subject however to the Permitted Encumbrances and the terms and conditions
herein;
PROVIDED, HOWEVER, that these presents are upon the express condition that,
if the Mortgagor shall (i) pay or cause to be paid to the Mortgagee the
principal, interest, Default Rate interest, Late Charges, and the Yield
Maintenance Premium, if any, payable in respect to the Note, at the times and in
the manner stipulated therein and herein, all without any deduction or credit
for taxes or other similar charges paid by the Mortgagor, and shall keep,
perform, and observe all and singular the covenants and promises in each of the
Loan Documents and in the Loan Agreement expressed to be kept, performed, and
observed by and on the part of the Mortgagor, all without fraud or delay or (ii)
comply with the provisions of Section 2.11 of the Loan Agreement, then this
------------
Mortgage, and all the properties, interests, and rights hereby granted,
bargained, and sold shall cease, terminate and be void; otherwise the same shall
remain in full force and effect.
TO PROTECT THE SECURITY OF THIS MORTGAGE, THE MORTGAGOR HEREBY COVENANTS
AND AGREES AS FOLLOWS:
ARTICLE I
Definitions
-----------
Section 1.1. Certain Defined Terms. For all purposes of this Mortgage all
---------------------
capitalized terms shall have the meaning ascribed thereto in the Loan Agreement
unless defined herein, and:
"Accounts" means all of Mortgagor's "accounts," as such term is defined in
--------
the UCC, and, to the extent not included in such definition, all rights to
payment for goods sold or leased arising from the ownership of the Facility and
not evidenced by an Instrument, including, without limitation, all accounts and
accounts receivable arising from the ownership of the Facility, now existing or
hereafter coming into existence, and all proceeds thereof (whether cash or non
cash, movable or immovable, tangible or intangible) received from the sale,
exchange, transfer, collection or other disposition or substitution thereof.
-3-
<PAGE>
"Appurtenant Rights" means all easements, rights-of-way, strips and gores
------------------
of land, vaults, streets, ways, alleys, passages, sewer rights, waters, water
courses, water rights, air rights, development rights and powers, and, to the
extent now or hereafter owned by the Mortgagor, all minerals, flowers, shrubs,
crops, trees, timber and other emblements now or hereafter appurtenant to, or
used in connection with, or located on, under or above the Land, or any part or
parcel thereof, and all ground leases, subleases, estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances,
reversions, and remainders whatsoever, in any way belonging, relating or
appertaining to the Land or any part thereof.
"Collateral" means, collectively, the Accounts, Account Collateral,
----------
Appurtenant Rights, Equipment, General Intangibles, goods, Improvements,
Instruments, Inventory, Leases, Land, Licenses, Money, Permitted Investments (to
the full extent assignable) Permits, Rents, investment properties, and letters
of credit, and all Proceeds and products of any of the foregoing, all whether
now owned or hereafter acquired, and all other property which is or hereafter
may become subject to a Lien in favor of Lender.
"Condemnation Proceeds" means any and all awards, compensation,
---------------------
reimbursement and proceeds paid or to be paid in connection with a Taking.
"Equipment" means all of Mortgagor's "equipment," as such term is defined
---------
in the UCC, and, to the extent not included in such definition, all fixtures,
appliances, machinery, furniture, furnishings, decorations, tools and supplies,
now owned or hereafter acquired by Mortgagor, including without limitation, all
beds, linens, radios, televisions, carpeting, telephones, cash registers,
computers, lamps, glassware, restaurant and kitchen equipment, all medical,
dental, rehabilitation, therapeutic and paramedic equipment and supplies, any
building equipment, including without limitation, all heating, lighting,
incinerating, waste removal and power equipment, engines, pipes, tanks, motors,
conduits, switchboards, security and alarm systems, plumbing, lifting, cleaning,
fire prevention, fire extinguishing, refrigeration, washing machines, dryers,
stoves, refrigerators, ventilating, and communications apparatus, air cooling
and air conditioning apparatus, escalators, elevators, ducts, and compressors,
materials and supplies, and all other machinery, apparatus, equipment, fixtures
and fittings now owned or hereafter acquired by Mortgagor wherever located, any
portion thereof or any appurtenances thereto, together with all additions,
replacements, parts, fittings, accessions, attachments, accessories,
modifications and alterations of any of the foregoing.
"Equity Interests" mean (a) if Mortgagor is a limited partnership, limited
----------------
partnership interests in Mortgagor or (b) if Mortgagor is a limited liability
company, membership interests in Mortgagor; provided, however, that Equity
Interests shall not include any direct or indirect legal or beneficial ownership
interest, or any other interest of any nature or kind whatsoever, of the SPE
Equity Owner in any Mortgagor.
-4-
<PAGE>
"Event of Default" has the meaning provided in Section 5.1.
---------------- -----------
"Facility" has the meaning provided in the Recitals of this Mortgage.
--------
"General Intangibles" means all of Mortgagor's "general intangibles," as
-------------------
such term is defined in the UCC, and, to the extent not included in such
definition, all intangible personal property of Mortgagor (other than Accounts,
Rents, Instruments, Inventory, Money and Permits), including, without
limitation, chooses in action, settlements, judgments, contract rights, rights
to performance (including, without limitation, rights under warranties) refunds
of real estate taxes and assessments and other rights to payment of Money,
copyrights, trademarks, trade names, service marks, trade secrets, and patents,
the goodwill associated with any of the foregoing, and all applications for any
of the foregoing, in each case whether now existing or hereafter in existence.
"Initial Operator" means Hampden Nursing Homes, Inc., a Massachusetts not-
----------------
for-profit corporation.
"Impositions" means all ground rents and all taxes (including, without
-----------
limitation, all real estate, ad valorem or value added, sales (including those
imposed on lease rentals), use, single business, gross receipts, value added,
intangible transaction privilege, privilege, license or similar taxes),
assessments (including, without limitation, to the extent not discharged prior
to the Closing Date, all assessments for public improvements or benefits,
whether or not commenced or completed within the term of this Mortgage), water,
sewer or other rents and charges, excises, levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees), and
all other governmental charges, in each case whether general or special,
ordinary or extraordinary, foreseen or unforeseen, of every character in respect
of the Facility, (including all interest and penalties thereon), which at any
time prior to, during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a Lien upon (i) Mortgagor (including, without
limitation, all income, franchise, single business or other taxes imposed on
Mortgagor for the privilege of doing business in the jurisdiction in which the
Facility, or any other Security Interest Property is located), (ii) the
Facility, or any other Security Interest Property or any part thereof, or (iii)
any occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Facility or the leasing or use of the
Facility or any part thereof, or the acquisition or financing of the acquisition
of the Facility by Trustor.
"Improvements" means all buildings, structures and improvements of every
------------
nature whatsoever situated on the Land on the Closing Date for the Facility or
thereafter, including, without limitation, to the extent of Mortgagor's right,
title or interest therein or thereto, all gas and electric fixtures, radiators,
heaters, washing machines, dryers, refrigerators, ovens,
-5-
<PAGE>
engines and machinery, boilers, ranges, elevators and motors, plumbing and
heating fixtures, antennas, carpeting and other floor coverings, water heaters,
awnings and storm sashes, and cleaning apparatus which are or shall be attached
to the Land or said buildings, structures or improvements.
"Instruments" means all of Mortgagor's "instruments," as such term is
-----------
defined in the UCC, and, to the extent not included in such definition, all
instruments, chattel paper, documents or other writings obtained by Mortgagor
from or in connection with the ownership of the Facility evidencing a right to
the payment of Money, including, without limitation, all notes, drafts,
acceptances, documents of title, and policies and certificates of insurance,
including but not limited to, liability, hazard, rental and credit insurance,
guarantees and securities, now or hereafter received by Mortgagor or in which
Mortgagor has or acquires an interest pertaining to the foregoing.
"Insurance Proceeds" means any and all Proceeds of any policy of insurance
------------------
required by this Mortgage to be obtained and maintained by Mortgagor.
"Insurance Requirements" means all material terms of any insurance policy
----------------------
required pursuant to this Mortgage and all material regulations and any use or
condition thereof, which may, at any time, be recommended by the Board of Fire
Underwriters, if any, having jurisdiction over the Mortgaged Estate, or such
other body exercising similar function.
"Inventory" means all of Mortgagor's "inventory," as such term is defined
---------
in the UCC, and, to the extent not included in such definition, all goods now
owned or hereafter acquired by Mortgagor intended for sale or lease, including
without limitation, all inventories held by Mortgagor for sale or use at or from
the Facility, and all other such goods, wares, merchandise, and materials and
supplies of every nature owned by Mortgagor and all such other goods returned to
or repossessed by Mortgagor.
"Land" has the meaning provided in the Recitals to this Mortgage.
----
"Leases" means all leases and other agreements or arrangements affecting
------
the use or occupancy of all or any portion of the Facility now in effect or
hereafter entered into (including, without limitation, all lettings, subleases,
licenses, concessions, tenancies and other occupancy agreements covering or
encumbering all or any portion of the Facility), together with any guarantees,
supplements, amendments, modifications, extensions and renewals of the same, and
all additional remainders, reversions, and other rights and estates appurtenant
thereto.
"Loan" has the meaning provided in the Recitals to this Mortgage.
----
-6-
<PAGE>
"Loan Agreement" has the meaning provided in the Recitals to this Mortgage.
--------------
"Loan Obligations" has the meaning provided in the Recitals to this
----------------
Mortgage.
"Material Lease" means the Operator Lease.
--------------
"Money" means all moneys, cash, rights to deposit or savings accounts,
-----
credit card receipts, rents or other items of legal tender obtained from or for
the use in connection with the ownership or operation of the Facility.
"Mortgaged Estate" has the meaning provided in the recitals to this
----------------
Mortgage.
"Mortgagee" has the meaning provided in the heading of this Mortgage.
---------
"Mortgagor" has the meaning provided in the heading of this Mortgage.
---------
"Note" has the meaning provided in the recitals to this Mortgage.
----
"Operator" means each of the Initial Operator and the Subsequent Operator,
--------
or any successor or assign, as operator of the Facility, which successor or
assign shall be acceptable to Lender in Lender's sole discretion and "Operators"
---------
means all such entities collectively.
"Operator Lease" means with respect to a Facility, that certain operator
--------------
lease between the Borrower and the applicable Operator for the lease of all or a
part of a Facility, together with any guarantees, supplements, amendments,
modifications, extensions and renewals of the same, and all additional
remainders, reversions, and other rights and estates appurtenant thereto and
"Operator Leases" means all such agreements collectively.
---------------
"Permits" means Mortgagor's interest in, with respect to the Facility, all
-------
licenses, registrations, permits, allocations, filings, authorizations,
approvals and certificates used in connection with the ownership, construction,
renovation, use or occupancy of the Facility, including, without limitation, to
the extent issued to Mortgagor as owner of the Mortgaged Property, building
permits, business licenses, state health department licenses, food service
licenses, liquor licenses, licenses to conduct business, certificates of need or
similar certificates, approvals issued by any state health department, and all
such other permits, licenses and rights, obtained from any Governmental
Authority or private Person concerning ownership, construction or renovation,
use or occupancy of the Facility.
"Permitted Encumbrances" means, with respect to a Facility (or, as
----------------------
applicable, with respect to all of the Facilities), collectively, (i) the Lien
created by the Related Mortgage or the
-7-
<PAGE>
other Loan Documents, (ii) all Liens and other matters disclosed in the
applicable Title Insurance Policy concerning such Facility, or any part thereof
which have been approved by Lender in Lender's discretion, (iii) Liens, if any,
for Impositions imposed by any Governmental Authority not yet due or delinquent
or being contested in good faith and by appropriate proceedings in accordance
with the Related Mortgage, (iv) without limiting the foregoing, any and all
governmental, public utility and private restrictions, covenants, reservations,
easements, licenses or other agreements of an immaterial nature which may be
granted by Borrower after the Closing Date and which do not materially and
adversely affect (a) the ability of Borrower to pay any of its obligations to
any Person as and when due, (b) the marketability of title to such Facility, (c)
the fair market value of such Facility, or (d) the use or operation of such
Facility as of the Closing Date and thereafter and (v) only until satisfaction
in full of the Receivables Financing, the Lien granted by the Operator in
connection with the Receivables Financing on the Pledged Accounts.
"Permitted Transfers" shall mean, provided that no Event of Default has
-------------------
occurred: (i) Permitted Encumbrances; (ii) all transfers of worn out or obsolete
furnishings, fixtures or equipment that are promptly replaced with property of
equivalent value and functionality; (iii) all Leases which are not Material
Leases; (iv) all Material Leases which have been approved by Mortgagee in
writing in Mortgagee's discretion; (v) transfers of Equity Interests in
Mortgagor which in the aggregate during the term of the Loan (a) do not exceed
49% of the total interests in Mortgagor and (b) do not result in any partner's,
member's or other Person's interest in Mortgagor exceeding 49% of the total
interests in Mortgagor and (vi) any other transfer of Equity Interests provided
that (a) prior to any Securitization, Mortgagee shall have consented to such
transfer or transfers, (b) after any Securitization, Mortgagee shall have
consented to such transfer or transfers and the Rating Agencies shall have
confirmed in writing that such transfer or transfers shall not result in a
downgrade, withdrawal or qualification of any securities issued in connection
with such Securitization, (c) acceptable opinions relating to such transfer or
transfers shall have been delivered by Mortgagor to Mortgagee and the Rating
Agencies (including without limitation tax and bankruptcy opinions) and (d)
Mortgagor pays all reasonable expenses incurred by Mortgagee in connection with
such transfer or transfers and (vii) a transfer of the Facility to a single
purchaser not more than one time during the term of the Loan, provided that
prior to such transfer (a) Mortgagor shall pay Mortgagee a fee of one percent
(1%) of the Loan Amount, (b) prior to a Securitization, Mortgagee shall have
consented to such transfer, (c) after a Securitization, (i) Mortgagee shall have
consented to such transfer and (ii) the Rating Agencies shall have confirmed in
writing that such transfer shall not result in a downgrade, withdrawal or
qualification of any securities issued in connection with such Securitization,
(d) acceptable opinions relating to such transfer shall have been delivered by
Mortgagor to Mortgagee and to the Rating Agencies (including without limitation
tax and bankruptcy opinions) then rating any securities issued in connection
with a Securitization, (e) the transferee assumes in writing all obligations of
the transferor under the
-8-
<PAGE>
Loan Documents and executes and delivers such other documentation as may be
required by Mortgagee or the Rating Agencies and (f) Mortgagor pays all
reasonable expenses incurred by Mortgagee in connection with such transfer.
"Proceeds" means all of Mortgagor's "proceeds," as such term is defined in
--------
the UCC, and, to the extent not included in such definition, all proceeds,
whether cash or non-cash, movable or immovable, tangible or intangible
(including Insurance Proceeds, Condemnation Proceeds, and proceeds of proceeds),
from the Security Interest Property, including, without limitation, those from
the sale, exchange, transfer, collection, loss, damage, disposition,
substitution or replacement of any of the Security Interest Property and all
income, gain, credit, distributions and similar items from or with respect to
the Security Interest Property, and including, without limitation, all
compensation (or rights thereto) paid to Mortgagor as manager of the Facility.
"Rating Agencies" means Fitch Investors Service, Inc., Moody's Investors
---------------
Service, Inc., Duff & Phelps Credit Rating Co. and S&P, or any successor
thereto, and any other nationally recognized statistical rating organization to
the extent that any of the foregoing have been or will be engaged by Mortgagee
or its designees in connection with a Securitization (each, individually, a
"Rating Agency").
-------------
"Rents" means, with respect to the Facility, (x) all receipts, rents,
-----
(whether denoted as advance rent, minimum rent, percentage rent, additional rent
or otherwise), issues, income, royalties, profits, revenues, proceeds, bonuses,
deposits (whether denoted as security deposits or otherwise), lease termination
fees or payments, rejection damages, buy-out fees and any other fees made or to
be made in lieu of rent, any award made hereafter to Mortgagor in any court
proceeding involving any tenant, lessee, licensee or concessionaire under any of
the Leases in any bankruptcy, insolvency or reorganization proceedings in any
state or federal court, and all other payments, rights and benefits of whatever
nature from time to time due under any of the Leases, including, without
limitation, (i) rights to payment earned under any of the Leases for space in
the Improvements for the operation of ongoing businesses such as restaurants,
news stands, barber shops, beauty shops and pharmacies and (ii) all other
income, consideration, issues, accounts, profits or benefits of any nature
arising from the ownership or possession of the Facility
"S&P" means Standard and Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc.
"SPE Equity Owner" means, as applicable, G&L Hampden, Inc., a Delaware
----------------
corporation, as to Borrower, and the managing member or general partner of the
Subsequent Operator, as to the Subsequent Operator.
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<PAGE>
"Subsequent Operator" means Hampden Holding Group, Inc., a Massachusetts
-------------------
corporation.
"Taking" means a temporary or permanent taking or voluntary conveyance of
------
all or part of the Facility, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority affecting the Facility
or any portion thereof whether or not the same shall have actually been
commenced.
"Transfer" means any conveyance, transfer (including, without limitation,
--------
any transfer of any direct or indirect legal or beneficial interest (including,
without limitation, any profit interest) in Mortgagor or any SPE Equity Owner),
sale, Lease (including, without limitation, any amendment, extension,
modification, waiver or renewal thereof), or Lien, whether by law or otherwise,
of, on or affecting the Security Interest Property, Mortgagor or any SPE Equity
Owner, other than a Permitted Transfer.
"UCC" means the Uniform Commercial Code in effect in the jurisdiction in
---
which the Facility or any of the Security Interest Property is located, as
applicable.
Section 1.2. Interpretation of Defined Terms.
-------------------------------
Singular terms shall include the plural forms and vice versa, as
applicable, of the terms defined.
All references to other documents or instruments shall be deemed to refer
to such documents or instruments as they may hereafter be extended, renewed,
modified or amended, and all replacements and substitutions therefor.
ARTICLE II
Particular Covenants and Agreements of the Mortgagor
----------------------------------------------------
Section 2.1. Payment of Secured Loan Obligations. The Mortgagor shall pay
-----------------------------------
when due the principal, the interest, Default Rate interest, Late Charges, and
the Yield Maintenance Premium, if any, owing from time to time under the Note
and all charges, fees and other Loan Obligations as provided in and strictly in
accordance with the Loan Agreement, this Mortgage and the other Loan Documents.
-10-
<PAGE>
Section 2.2. Title, etc.
-----------
(a) The Mortgagor represents and warrants that (i) Mortgagor owns and has
good, marketable and insurable fee simple title in and to the Facility, free and
clear of all covenants, liens, encumbrances, restrictions, easements and other
matters affecting title other than the Permitted Encumbrances, and (ii) there
are no outstanding options to purchase or rights of first refusal affecting the
Facility.
(b) The Mortgagor represents and warrants that it owns and has good and
absolute title to all existing personal property and fixtures hereby mortgaged,
subject only to the Permitted Encumbrances. The personal property and fixtures
hereby mortgaged, are free and clear of all liens, charges and encumbrances
whatsoever, including, without limitation, conditional sales contracts, chattel
mortgages, security agreements, financing statements and everything of a similar
nature other than the Permitted Encumbrances.
(c) The Mortgagor represents and warrants that it has the full power and
lawful authority to grant, bargain, sell, release, convey, warrant, assign,
transfer, mortgage, pledge, set over and confirm unto the Mortgagee the
Mortgaged Estate as hereinabove provided and warrants that it will forever
defend the title to the Mortgaged Estate and the validity and priority of the
lien or estate hereof against the claims and demands of all Persons whomsoever.
Section 2.3. Further Assurances; Filing; Re-Filing; etc.
-------------------------------------------
(a) The Mortgagor shall execute, acknowledge and deliver, from time to
time, such further instruments as Mortgagee may reasonably require to accomplish
the purposes of this Mortgage.
(b) The Mortgagor, immediately upon the execution and delivery of this
Mortgage, and thereafter from time to time, shall cause this Mortgage, any
security agreement, mortgage, modification or amendment supplemental hereto and
each document, instrument and agreement of further assurance to be filed,
registered or recorded and refiled, re-registered or re-recorded in such manner
and in such places as may be required by any present or future law in order to
publish notice of and perfect the lien or estate of this Mortgage upon the
Mortgaged Estate.
(c) The Mortgagor shall pay all intangible taxes, recording taxes, filing,
registration and recording fees, all refiling, re-registration and re-recording
fees, and all expenses incident to the execution, filing, recording and
acknowledgment of this Mortgage, any security agreement or mortgage,
modification or amendment supplemental hereto and any document, instrument and
agreement of further assurance, and all federal, state, county and municipal
stamp taxes and other taxes, duties, imposts, assessments and charges arising
out of the
-11-
<PAGE>
execution, delivery, filing, registration and recording of the Note, this
Mortgage or any of the other Loan Documents, any security agreement or mortgage
supplemental hereto or any document, instrument or agreement of further
assurance.
(d) In the event of the passage of any state, federal, municipal or other
governmental law, order, rule or regulation, subsequent to the date hereof, in
any manner changing or modifying the laws now in force governing the taxation of
mortgages or security agreements or debts secured thereby or the manner of
collecting such taxes so as to adversely affect the Mortgagee, the Mortgagor,
this Mortgage or the lien hereof, the Mortgagor will pay any such tax on or
before the due date thereof. If the Mortgagor fails to make such prompt payment
or if, in the reasonable opinion of the Mortgagee, any such state, federal,
municipal, or other governmental law, order, rule or regulation prohibits the
Mortgagor from making such payment or would penalize the Mortgagee if the
Mortgagor makes such payment or if, in the opinion of the Mortgagee, the making
of such payment might result in the imposition of interest beyond the Maximum
Amount, then the entire balance of the Loan Obligations shall, at the option of
the Mortgagee, become due and payable on the date that is one hundred and twenty
(120) days after the passage of such law, order, rule or regulation.
(e) The Mortgagor hereby indemnifies and holds the Mortgagee harmless from
any sales or use tax that may be imposed on the Mortgagee by virtue of the Loan
from the Mortgagee to the Mortgagor other than taxes imposed on the income,
stock or assets of the Mortgagee.
Section 2.4. Liens. Without limiting the obligations of the Mortgagor
-----
under Section 2.6, the Mortgagor shall not create or suffer to be created any
-----------
mortgage, deed of trust, lien, security interest, charge or encumbrance upon the
Mortgaged Estate or any portion thereof, prior to, on a parity with, or
subordinate to the lien of this Mortgage other than a Permitted Encumbrance.
The Mortgagor shall pay and promptly discharge at the Mortgagor's cost and
expense, any such mortgages, deeds of trust, liens, security interests, charges
or encumbrances upon the Mortgaged Estate or any portion thereof or interest
therein.
Section 2.5. Insurance and Casualty Events.
-----------------------------
(a) At all times while the Mortgagor is indebted to the Mortgagee, the
Mortgagor shall maintain the following insurance:
(i) During any period of repair or restoration including, without
limitation, during any period of repair or restoration necessitated by a
casualty loss or a Taking, builder's "all risk" insurance in an amount equal to
not less than the full insurable value of the Facility against such risks
(including, without limitation, fire and extended
-12-
<PAGE>
coverage and collapse of the Improvements to agreed limits) as Mortgagee may
request, in form and substance acceptable to Mortgagee.
(ii) Insurance with respect to the Improvements, Equipment and Inventory
against any peril included within the classification "All Risks of Physical
Loss" with extended coverage in amounts at all times sufficient to prevent the
Mortgagor from becoming a co-insurer within the terms of the applicable
policies, but in any event such insurance shall be maintained in an amount equal
to the full insurable value of the Improvements, Equipment and Inventory located
on the Facility. As used herein, "full insurable value" means the actual
replacement cost of the Improvements, Equipment and Inventory (without taking
into account any depreciation), determined annually by an insurer or by the
Mortgagor or, at the request of the Mortgagee, by an Independent insurance
broker (subject to the Mortgagee's reasonable approval) including an endorsement
covering acts of municipal authorities including increased cost of construction
and demolition;
(iii) Commercial general liability insurance, including contractual injury,
bodily injury, broad form death and property damage liability, and umbrella
liability insurance against any and all claims, including all legal liability to
the extent insurable imposed upon the Mortgagor and all court costs and
attorneys' fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Facility in such
amounts as are generally required by institutional lenders for properties
comparable to the Facility but in no event with limits for the Facility of less
than $1,000,000 per occurrence with combined single limit coverage for bodily
injury or property damage and excess (umbrella) liability coverage for the
Facility of no less than $10,000,000 per occurrence and $10,000,000 aggregate;
(iv) Statutory workers' compensation insurance (to the extent the risks to
be covered thereby are not already covered by other policies of insurance
maintained by the Mortgagor), with respect to any work on or about the Facility;
(v) Business interruption and/or loss of "rental value" insurance for the
Facility in an amount equal to eighteen(18) months estimated Gross Revenue
attributable to the Facility and based on the Gross Revenue for the immediately
preceding year and otherwise sufficient to avoid any co-insurance penalty;
(vi) If all or any portion of the Improvements, or any portion of the Land
is located within a federally designated flood hazard zone, flood insurance in
an amount equal to the lesser of the full insurable value of the Facility or the
maximum amount of flood insurance available;
-13-
<PAGE>
(vii) Insurance against loss or damage from (A) leakage of sprinkler
systems and (B) explosion of steam boilers, air conditioning equipment,
pressure vessels or similar apparatus now or hereafter installed at the
Facility, in such amounts as the Mortgagee may from time to time require
and which are customarily required by institutional mortgagees with respect
to similar properties similarly situated; and
(viii) Earthquake insurance (if necessary) satisfactory to and from
an insurer satisfactory to Mortgagee.
(ix) Such other insurance with respect to the Improvements, Equipment
and Inventory located on the Facility against loss or damage as is
requested by the Mortgagee (including, without limitation liquor/dramshop,
hurricane and earthquake (if necessary) insurance) provided such insurance
is of the kind for risks from time to time customarily insured against and
in such amounts as are generally required by institutional lenders for
properties comparable to the Facility or which Mortgagee may deem necessary
in its reasonable discretion.
(b) The Mortgagor will maintain the insurance coverage described in Section
-------
2.5 with companies acceptable to Mortgagee and with a claims paying ability of
- ---
not less than "AA" by S&P and AA or its equivalent by any one of the other
Rating Agencies (except for earthquake insurance, which may be issued by
companies having a claims paying ability of not less than "BBB" by S&P and BBB
or its equivalent by any one of the other Rating Agencies). All insurers
providing insurance required by this Mortgage shall be authorized to issue
insurance in the state where the Facility is located.
The insurance coverage required under Section 2.5(a) may be effected under
--------------
a blanket policy or policies covering the Mortgaged Estate and other property
and assets not constituting a part of the Mortgaged Estate; provided that any
such blanket policy shall specify, except in the case of public liability
insurance, the portion of the total coverage of such policy that is allocated to
the Facility and Equipment and Inventory located thereon, and any sublimits in
such blanket policy applicable to the Mortgaged Estate, which amounts shall not
be less than the amounts required pursuant to Section 2.5(a) and which shall in
--------------
any case comply in all other respects with the requirements of this Section 2.5.
-----------
(c) All insurance policies shall be in such form and with such endorsements
and in such amounts as shall be satisfactory to Mortgagee (and Mortgagee shall
be entitled to approve amounts, form, risk coverage, deductibles, loss payees
and insureds). The policy referred to in Section 2.5(a)(ii) shall contain a
----------
replacement cost endorsement and a waiver of depreciation. Certified copies of
all of the above-mentioned insurance policies have been delivered to and shall
be held by the Mortgagee. All such policies shall name the Mortgagee as an
additional
-14-
<PAGE>
insured/loss payee, shall provide that all Insurance Proceeds be payable to the
Mortgagee as set forth in Section 2.5(d), and shall contain: (i) "Non
--------------
Contributory Standard Lender Clause" and a Lender's Loss Payable Endorsement
(Form 438 BFUNS) or their equivalents naming Mortgagee as the person to whom all
payments shall be paid and a provision that payment of Insurance Proceeds in
excess of One Hundred Thousand Dollars ($100,000.00) shall be made by a check
payable only to Mortgagee; (ii) a waiver of subrogation endorsement as to the
Mortgagee and its assigns providing that no policy shall be impaired or
invalidated by virtue of any act, failure to act, negligence of, or violation of
declarations, warranties or conditions contained in such policy by the
Mortgagor, the Mortgagee or any other named insured, additional insured or loss
payee, except for the willful misconduct of the Mortgagee knowingly in violation
of the conditions of such policy; (iii) an endorsement indicating that neither
the Mortgagee nor the Mortgagor shall be or be deemed to be a co-insurer with
respect to any risk insured by such policies and shall provide for an aggregate
deductible per loss for all policies of an amount not more than that which is
customarily maintained by prudent owners of property of the same type and
quality as the Facility, but in no event in excess of five percent (5%) of the
full insurable value of the Improvements, Equipment and Inventory (ten percent
(10%) in the case of earthquake insurance), if required, with respect to all
casualty insurance policies and Five Thousand Dollars ($5,000.00) in the case of
all other policies of insurance maintained hereunder; (iv) a provision that such
policies shall not be canceled or amended, including, without limitation, any
amendment reducing the scope or limits of coverage, without at least thirty (30)
days prior written notice to the Mortgagee in each instance; and (v) include
effective waivers by the insurer of all claims for insurance premiums against
any loss payees, additional insureds and named insureds (other than the
Mortgagor). Certificates of insurance with respect to all renewal and
replacement policies shall be delivered to the Mortgagee not less than ten (10)
days prior to the expiration date of any of the insurance policies required to
be maintained hereunder which certificates shall bear notations evidencing
payment of applicable premiums and certified copies of such insurance policies
shall be delivered to the Mortgagee promptly after the Mortgagor's receipt
thereof. If the Mortgagor fails to maintain and deliver to the Mortgagee the
certified copies of the original policies or certificates of insurance required
by this Mortgage, the Mortgagee may, at its option, not earlier than two (2)
days after written notice to Mortgagor, procure such insurance, and the
Mortgagor shall reimburse the Mortgagee for the amount of all premiums paid by
the Mortgagee thereon promptly, after demand by the Mortgagee, with interest
thereon at the Default Rate from the date paid by the Mortgagee to the date of
repayment, and such sum shall be a part of the Loan Obligations secured by this
Mortgage.
The Mortgagee shall not by the fact of approving, disapproving, accepting,
preventing, obtaining or failing to obtain any insurance, incur any liability
for or with respect to the amount of insurance carried, the form or legal
sufficiency of insurance contracts, solvency of insurance companies, or the
carriers' or the Mortgagor's payment or defense of lawsuits, and
-15-
<PAGE>
the Mortgagor hereby expressly assumes full responsibility therefor and all
liability, if any, with respect thereto.
(d) The Mortgagee shall be entitled to receive and collect all Insurance
Proceeds and all of the Insurance Proceeds are hereby assigned to the Mortgagee.
The Mortgagor shall instruct and cause the issuer of each policy of insurance
described herein to deliver to Mortgagee all Insurance Proceeds. The Mortgagor
shall execute such further assignments of the Insurance Proceeds as the
Mortgagee may from time to time reasonably require. Without limiting the
generality of the foregoing, following the occurrence of any casualty or damage
involving the Estate or any part thereof, the Mortgagor shall give prompt notice
thereof to the Mortgagee and shall cause all Insurance Proceeds payable as a
result of such casualty or damage to be paid to the Mortgagee, as additional
collateral security hereunder subject to the lien of this Mortgage, to be
applied by the Mortgagee to the Loan Obligations.
(e) In the event of damage, destruction or a casualty with respect to the
Facility, except as provided in Section 2.5(f) below, Mortgagor shall cause all
------- ------
Insurance Proceeds to be paid to the Mortgagee, which shall apply such Insurance
Proceeds to reduce the Indebtedness in accordance with Section 2.7 and Section
------- --- -------
2.8 of the Loan Agreement. All Insurance Proceeds received by Mortgagor or
- ---
Mortgagee in respect of business interruption coverage shall be deposited and
maintained in the Cash Collateral Account to be applied by Mortgagee in the same
manner as Rents (other than security deposits); provided, however, that if the
-------- -------
Insurance Proceeds of any such business interruption insurance policy are paid
in a lump sum in advance, Mortgagee shall hold such Insurance Proceeds or
Condemnation Proceeds in a segregated interest-bearing escrow account at the
Cash Collateral Account Bank, and Mortgagee shall estimate the number of months
required for Mortgagor to restore the damage caused by the casualty to the
Facility, shall divide the aggregate business interruption Insurance Proceeds in
connection with such casualty by such number of months, and shall disburse from
such escrow account into the Cash Collateral Account each month during the
performance of such restoration such monthly installment of said Insurance
Proceeds. Any Insurance Proceeds made available to Mortgagor for restoration or
repair in accordance herewith, to the extent not used by Mortgagor in connection
with, or to the extent they exceed the cost of, such restoration, shall be paid
to Mortgagor. Interest accruing on the Insurance Proceeds deposited into the
segregated interest account and may be paid to Mortgagor at such time that all
repairs have been completed and all Insurance Proceeds dispersed.
(f) Notwithstanding anything to the contrary set forth in Section 2.5(e)
--------------
above, the Mortgagee agrees that the Mortgagee shall make the Insurance Proceeds
(other than business interruption insurance proceeds, which shall be held and
disbursed as provided in Section 2.5(e)), available to Mortgagor for Mortgagor's
repair, restoration and replacement of the
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<PAGE>
Improvements, Equipment and Inventory damaged or taken on the following terms
and subject to the Mortgagor's satisfaction of the following conditions:
(i) At the time of such loss or damage and at all times thereafter, there
shall exist no Default or Event of Default which is continuing;
(ii) The Improvements, Equipment and Inventory for which loss or damage has
resulted shall be capable of being restored (including replacements) to their
pre-existing condition and utility as existed immediately prior to the
occurrence of the loss or damage then in question in all material respects with
a value equal to or greater than prior to such loss or damage, and shall be
capable of being completed six months prior to the Maturity Date, and prior to
the expiration of business interruption insurance;
(iii) The Mortgagor shall demonstrate to the Mortgagee's reasonable
satisfaction the Mortgagor's ability to pay the Loan Obligations coming due
during such restoration period;
(iv) Within thirty (30) days from the date of such loss or damage the
Mortgagor shall have given the Mortgagee a written notice electing to have the
Insurance Proceeds applied for repair, restoration or replacement of the
Improvements, Equipment or Inventory, as applicable;
(v) Within sixty (60) days following the date of notice under the preceding
subparagraph (iv) and prior to any Insurance Proceeds being disbursed to the
- -----------------
Mortgagor, the Mortgagor shall have provided to the Mortgagee all of the
following:
(1) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), complete plans and specifications for restoration, repair and
replacement of the Improvements, Equipment and Inventory lost or damaged to the
condition, utility and value required by the preceding subparagraph (ii),
-----------------
(2) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), fixed-price or guaranteed maximum cost construction contracts for
completion of the repair, restoration and replacement work in accordance with
the aforementioned plans and specifications,
(3) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), builder's risk insurance for the full cost of construction with
the Mortgagee named under a standard mortgagee loss payable clause,
-17-
<PAGE>
(4) such additional funds (if any) as in the Mortgagee's
reasonable opinion are necessary to complete the repair, restoration
and replacement, and
(5) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), copies of all permits and licenses necessary to
complete the work in accordance with the plans and specifications and
applicable law;
(vi) If loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), Mortgagee may, at Mortgagor's expense, retain an independent
inspector to review and approve plans and specifications and completed
construction and to approve all requests for disbursement, which approvals
shall be conditions precedent to release of the Insurance Proceeds as work
progresses;
(vii) The Mortgagor shall commence such work within one hundred
twenty (120) days after such loss or damage and shall diligently pursue
such work to completion;
(viii) If loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), each disbursement by the Mortgagee of such Insurance
Proceeds shall be funded subject to conditions and in accordance with
disbursement procedures which a commercial construction lender would
typically establish in the exercise of sound banking practices and shall be
made only upon receipt of disbursement requests on an AIA G702/703 form (or
similar form approved by the Mortgagee) signed and certified by the
Mortgagor and its architect and general contractor with appropriate
invoices, lien waivers and any other documents, instruments or items which
may be required by the Mortgagee in the Mortgagee's sole discretion; and
(ix) The Mortgagee shall have a first lien and security interest in
all building materials and completed repair and restoration work and in all
fixtures and equipment acquired with such Insurance Proceeds, and the
Mortgagor shall execute and deliver such mortgages, deeds of trust,
security agreements, financing statements and other instruments as the
Mortgagee shall reasonably request to create, evidence, or perfect such
lien and security interest.
(g) If and to the extent such Insurance Proceeds are not required to be
made available to Mortgagor to be used for the repair, restoration and
replacement of the Improvements, Equipment and Inventory for which a loss or
damage has occurred, or in the event the Mortgagor fails to timely make such
election or having made such election fails to timely comply with or is
otherwise unable to satisfy the terms and conditions set forth herein, upon five
Business Days prior notice to the Mortgagor, the Mortgagee shall be entitled
without
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<PAGE>
consent from the Mortgagor to apply such Insurance Proceeds, or the balance
thereof, at the Mortgagee's option either (x) to the full or partial payment or
prepayment of the Loan Obligations in accordance with Section 2.7 and Section
2.8 of the Loan Agreement, or (y) to the repair, restoration and/or replacement
of all or any part of such Improvements, Equipment and Inventory for which a
loss or damage has occurred.
(h) Subject to the Mortgagee's rights under Section 2.5(f) and (g),
------- ------ ---
provided no Default or Event of Default has occurred and the replacement,
restoration or repair has been completed in accordance with this Mortgage, any
Insurance Proceeds available to Mortgagor for replacement, restoration or
repair, to the extent not used by Mortgagor in connection with, or to the extent
they exceed the cost of such replacement, restoration or repair shall be paid to
Mortgagor.
(i) The Mortgagor appoints the Mortgagee to act after the occurrence of an
Event of Default as the Mortgagor's attorney-in-fact, coupled with an interest,
to cause the issuance of or an endorsement of any policy to bring the Mortgagor
into compliance herewith and, as limited above, at the Mortgagee's sole option,
to make any claim for, receive payment for, and execute and endorse any
documents, checks or other instruments in payment for loss, theft, or damage
covered under any such insurance policy; however, in no event will the Mortgagee
be liable for failure to collect any amounts payable under any insurance policy.
(j) The Mortgagee shall be entitled at its option to participate in any
compromise, adjustment or settlement in connection with any claims for loss,
damage or destruction under any policy or policies of insurance, in excess of
One Hundred Thousand Dollars ($100,000.00), and the Mortgagor shall within ten
(10) Business Days after request therefor reimburse the Mortgagee for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
disbursements) incurred by the Mortgagee in connection with such participation.
The Mortgagor shall not make any compromise, adjustment or settlement in
connection with any such claim in excess of One Hundred Thousand Dollars
($100,000.00), without the prior written approval of the Mortgagee.
(k) In the event of foreclosure of the lien of this Mortgage or other
transfer of title or assignment of the Mortgaged Estate in extinguishment, in
whole or in part, of the Loan Obligations, all right, title and interest of the
Mortgagor in and to all policies of casualty insurance covering all or any part
of the Mortgaged Estate shall inure to the benefit of and pass to the successors
in interest to the Mortgagee or the purchaser or grantee of the Mortgaged Estate
or any part thereof.
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<PAGE>
(i) Mortgagor shall not obtain or maintain any policy of insurance with
respect to Mortgagor, the Mortgaged Estate or any part thereof which does not
satisfy each of the requirements of this Section.
Section 2.6 Impositions.
-----------
(a) The Mortgagor shall pay or cause to be paid, before any fine, penalty,
interest or cost attaches thereto, all of the Impositions, including, without
limitation, any ground rents due under any ground lease agreements, if
applicable, as well as all claims for labor, materials or supplies that, if
unpaid, might by law become a lien on the Mortgaged Estate, and shall submit to
Mortgagee such evidence of the due and punctual payment of all such Impositions
and claims as may be required by law; provided, however, that if by law any such
Imposition may be paid in installments (whether or not interest shall accrue on
the unpaid balance thereof), the Mortgagor may pay the same in installments
(together with accrued interest on the unpaid balance thereof) as the same
respectively become due, before any fine, penalty, interest or cost attaches
thereto.
(b) The Mortgagor at its expense may, after prior notice to the Mortgagee,
contest by appropriate legal, administrative or other proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition or lien therefor or any claims of mechanics,
materialmen, suppliers or vendors or liens thereof, and may withhold payment of
the same pending such proceedings if permitted by law, as long as (i) in the
case of any Impositions or lien therefor or any claims of mechanics,
materialmen, suppliers or vendors or liens thereof, such proceedings shall
suspend the collection thereof from the Mortgaged Estate, (ii) neither the
Mortgaged Estate nor any part thereof or interest therein will be sold,
forfeited or lost if the Mortgagor pays the amount or satisfies the condition
being contested, and the Mortgagor would have the opportunity to do so, in the
event of the Mortgagor's failure to prevail in the contest, (iii) the Mortgagee
would not, by virtue of such permitted contest, be exposed to any risk of any
civil liability for which the Mortgagor has not furnished additional security as
provided in clause (iv) below, or to any risk of criminal liability, and neither
-----------
the Mortgaged Estate nor any interest therein would be subject to the imposition
of any lien for which the Mortgagor has not furnished additional security as
provided in clause (iv) below, as a result of the failure to comply with such
-----------
law or of such proceeding and (iv) the Mortgagor shall have furnished to the
Mortgagee additional security in respect of the claim being contested or the
loss or damage that may result from the Mortgagor's failure to prevail in such
contest in such amount as may be reasonably requested by the Mortgagee, but in
no event less than one hundred and twenty five percent (125%) of the amount of
such claim.
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<PAGE>
(c) Without in any way limiting Mortgagor's obligations hereunder,
Mortgagor shall fund the Basic Carrying Costs Sub-Account to the extent required
pursuant to the Loan Agreement and the real property taxes and assessments
applicable to the Facility shall be paid from the Basic Carrying Costs Sub-
Account, all in accordance with the Loan Agreement.
Section 2.7 Maintenance of the Improvements and Equipment. The Mortgagor
---------------------------------------------
shall not permit the Improvements or Equipment to be removed or demolished or
otherwise altered (provided, however, that the Mortgagor may remove, demolish or
alter such Improvements and Equipment that become obsolete in the usual conduct
of the Mortgagor's business and the removal or alteration of which do not
materially detract from the operation of the Mortgagor's business and Mortgagor
promptly replaces the same with Improvements or Equipment, as applicable, of
equivalent value and functionality); shall maintain the Mortgaged Estate in good
repair, working order and condition, except for reasonable wear and use; shall
not commit or suffer any waste; shall not do or suffer to be done anything which
would or could increase the risk of fire or other hazard to the Mortgaged Estate
or which would or could result in the cancellation of any insurance policy
carried with respect to the Mortgaged Estate, restore and repair the
Improvements and Equipment or any part thereof now or hereafter damaged or
destroyed by any fire or other casualty or affected by any Taking; provided,
however, that if the fire or other casualty is not insured against or insurable,
the Mortgagor shall so restore and repair even though no Insurance Proceeds are
received.
Section 2.8. Compliance With Laws.
--------------------
(a) The Mortgagor represents and warrants that the Facility and the
Mortgagor's operations at and use of the Facility currently comply in all
material respects with all Legal Requirements, including without limitation, the
Americans with Disabilities Act, and the orders, rules and regulations of the
American Insurance Association or any other body now or hereafter constituted
exercising similar functions. The Mortgagor shall maintain the Facility in
compliance with all future Legal Requirements.
(b) The Mortgagor hereby confirms the representations, warranties and
covenants set forth in Section 4.1(v) and Sections 5.1(d) through (i),
inclusive, of the Loan Agreement (relating to liabilities of the Mortgagor under
applicable Environmental Laws) insofar as such representations, warranties and
covenants apply to the Mortgaged Estate.
(c) The Mortgagor shall notify the Mortgagee promptly of any written notice
or order that the Mortgagor receives from any Governmental Authority with
respect to the Mortgagor's compliance with any Legal Requirements, including,
without limitation, the Americans with Disabilities Act and the Environmental
Laws, relating to the Facility and promptly take any and all actions necessary
to bring its operations at the Facility into compliance with such Legal
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<PAGE>
Requirements, including, without limitation, the Americans with Disabilities Act
and the Environmental Laws (and shall fully comply with the requirements of such
Legal Requirements, including, without limitation, the Americans with
Disabilities Act and the Environmental Laws, that at any time are applicable to
its operations at the Facility) all to the extent required under the applicable
provisions of the Loan Agreement; provided, that, subject to Section 5.1(d) of
------- ------
the Loan Agreement, the Mortgagor at its expense may, after prior notice to the
Mortgagee, contest by appropriate legal, administrative or other proceedings
conducted in good faith and with due diligence, the validity or application, in
whole or in part, of any such Legal Requirements, including, without limitation,
Environmental Laws, as long as (i) neither the Mortgaged Estate nor any part
thereof or any interest therein, will be sold, forfeited or lost if the
Mortgagor pays the amount or satisfies the condition being contested, and the
Mortgagor would have the opportunity to do so, in the event of the Mortgagor's
failure to prevail in the contest, (ii) the Mortgagee would not, by virtue of
such permitted contest, be exposed to any risk of any civil liability for which
the Mortgagor has not furnished additional security as provided in clause (iii)
------------
below, or to any risk of criminal liability, and neither the Mortgaged Estate
nor any interest therein would be subject to the imposition of any lien for
which the Mortgagor has not furnished additional security as provided in clause
------
(iii) below as a result of the failure to comply with such Legal Requirement or
- -----
Environmental Law or the Americans with Disabilities Act or of such proceeding
and (iii) the Mortgagor shall have furnished to the Mortgagee additional
security in respect of the claim being contested or the loss or damage that may
result from the Mortgagor's failure to prevail in such contest in such amount as
may be reasonably requested by the Mortgagee in light of the risk attendant to
such contest, but in no event less than one hundred and twenty five percent
(125%) of the amount of such claim.
(d) After thirty (30) days prior written notice (except in the case of a
bona fide emergency in which no such prior written notice shall be required, but
in which event notice shall be given as soon as practicable) and the Mortgagor's
failure to so comply, but subject to subparagraph (c) above, the Mortgagee, at
----------------
its election and in its sole discretion may (but shall not be obligated to) cure
any failure on the part of the Mortgagor to comply with any Legal Requirements,
including Environmental Laws, and without limitation, may take any of the
following actions:
(i) arrange for the prevention of any Release or threat of Release of
Hazardous Substances at the Facility in violation of, or potentially
requiring clean up, removal or remediation under, Environmental Laws, and
pay any costs associated with such prevention;
(ii) arrange for the removal or remediation of Hazardous Substances
that may be Released or result from a Release at the Facility in violation
of, or potentially
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<PAGE>
requiring clean up, removal or remediation under, Environmental Laws, and
pay any costs associated with such removal and/or remediation;
(iii) pay, on behalf of the Mortgagor, any costs, fines or penalties
imposed on the Mortgagor by any Governmental Authority in connection with
such Release or threat of Release of Hazardous Substances in violation of,
or potentially requiring clean up, removal or remediation under,
Environmental Laws; or
(iv) make any other payment or perform any other act intended to
prevent a lien in favor of any Governmental Authority from attaching to the
Mortgaged Estate.
Any partial exercise by the Mortgagee of the remedies hereinafter set forth, or
any partial undertaking on the part of the Mortgagee to cure the Mortgagor's
failure to comply with such Legal Requirements, including Environmental Laws,
shall not obligate the Mortgagee to complete the actions taken or require the
Mortgagee to expend further sums to cure the Mortgagor's noncompliance; nor
shall the exercise of any such remedies operate to place upon the Mortgagee any
responsibility for the operation, control, care, management or repair of the
Facility or make the Mortgagee the "operator" of the Facility within the meaning
of any Environmental Laws. Any amount paid or costs incurred by the Mortgagee
as a result of the exercise by the Mortgagee of any of the rights hereinabove
set forth, together with interest thereon at the Default Rate from the date paid
by the Mortgagee, shall be due and payable by the Mortgagor to the Mortgagee
within ten (10) days after demand therefor, and until paid shall be added to and
become a part of the Loan Obligations secured hereby; and the Mortgagee, by
making any such payment or incurring any such costs, shall be subrogated to any
rights of the Mortgagor to seek reimbursement from any third parties, including,
without limitation, a predecessor-in-interest to the Mortgagor's title who may
be a "responsible party" or otherwise liable under any Environmental Law in
connection with any such Release or threat of Release of Hazardous Substances.
(e) If the Mortgagee suspects that Remedial Work may be required, the
Mortgagee may request that an environmental survey and risk assessment with
respect to the Mortgaged Estate be prepared and the Mortgagor agrees to supply,
at its cost, such a survey and risk assessment by an Independent Engineer
selected by the Mortgagor and satisfactory to the Mortgagee, in form and detail
satisfactory to the Mortgagee (including, if the Mortgagee reasonably suspects
that Remedial Work may be required, test borings of the ground and chemical
analyses of air, water and waste discharges), estimating current liabilities and
assessing potential sources of future liabilities of the Mortgagor or any other
owner or operator of the Facility under applicable Environmental Laws.
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<PAGE>
(f) The Mortgagor agrees to indemnify, reimburse, defend (with counsel
satisfactory to Mortgagee at Mortgagee's election), and hold harmless the
Mortgagee for, from, and against all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties, consequential damages,
attorneys' fees, disbursements and expenses, and consultants' fees,
disbursements and expenses, including costs of Remedial Work, asserted against,
resulting to, imposed on, or incurred by the Mortgagee, directly or indirectly,
in connection with any of the following:
(i) events, circumstances, or conditions which are alleged to, or do,
form the basis for an Environmental Claim;
(ii) the presence, Use or Release of Hazardous Substances at, on, in,
under or from any Facility which presence, Use or Release requires or could
require Remedial Work;
(iii) any Environmental Claim against Mortgagor, Mortgagee, or any
Person whose liability for such Environmental Claim the Mortgagor has or
may have assumed or retained either contractually or by operation of law;
or
(iv) the breach of any representation, warranty or covenant set forth
in Section 4.1(v) and Sections 5.1(d) through 5.1(i), inclusive, of the
------ ------ -------- ------ ------
Loan Agreement.
(v) any failure by Mortgagor to fulfill each and every obligation
undertaken pursuant to this Section 2.8(f).
------- ------
The indemnity provided in this Section 2.8(f) shall not be included in any
------- ------
exculpation of the Mortgagor or its partners, members, shareholders or any other
Person from personal liability provided in this Mortgage or in any of the other
Loan Documents. Further, Mortgagor's obligations under this Section 2.8(f)
------- ------
shall survive (in perpetuity) the closing and disbursement of the funds
evidenced by the Note, payment of the Note, payment and performance of the Loan
Obligations, any release, reconveyance, discharge or foreclosure of this
Mortgage, conveyance by deed in lieu of foreclosure, transfer by Mortgagee's
sale, and any subsequent conveyance of the Mortgaged Estate. Nothing in this
Section 2.8(f) shall be deemed to deprive the Mortgagee of any rights or
- ------- ------
remedies provided to it elsewhere in this Mortgage or the other Loan Documents
or otherwise available to it under law. Mortgagor waives and releases Mortgagee
from any rights or defenses Mortgagor may have under common law or Environmental
Laws for liability arising or resulting from the presence, Use or Release of
Hazardous Substances except to the extent directly and solely caused by the
gross negligence, fraud or willful misconduct of Mortgagee or Mortgagee's
agents.
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<PAGE>
Section 2.9. Limitations of Use. The Facility is and shall be used
------------------
exclusively as set forth in Section 3.1(o) of the Loan Agreement and uses
------- ------
reasonably ancillary thereto. The Mortgagor shall not, without the prior
written consent of the Mortgagee (a) materially change the use of the Facility
or (b) initiate, join in or consent to any change in any private restrictive
covenant, zoning ordinance or other public or private restrictions limiting or
defining the uses that may be made of the Facility or any part thereof, except
as may be necessary in connection with the uses permitted pursuant to the first
sentence of this Section 2.9. The Mortgagor shall comply with the provisions of
-----------
all Leases, licenses, agreements and private covenants, conditions and
restrictions that at any time are applicable to the Facility.
Section 2.10. Inspection of the Property. The Mortgagor shall keep
--------------------------
adequate records, accounts and books in accordance with GAAP and shall permit
the Mortgagee and its authorized representatives to enter the Facility and
inspect the Mortgaged Estate and examine the records, accounts and books of the
Mortgagor with respect thereto and make copies or extracts thereof, at
Mortgagee's cost and expense, all upon reasonable advance notice and at such
reasonable times as may be requested by the Mortgagee, subject, however, to the
rights of the tenants or occupants of the Facility. Notwithstanding the
foregoing, after the occurrence and continuation of an Event of Default,
Mortgagor shall pay any costs and expenses incurred by Mortgagee to examine
Mortgagor's records, and accounts relating to the Mortgaged Estate as Mortgagee
shall determine to be necessary or appropriate in the protection of Mortgagee's
interest.
Section 2.11. Actions to Protect Mortgaged Estate. If the Mortgagor shall
-----------------------------------
fail to (a) effect the insurance required by Section 2.5, or (b) make the
-----------
payments required by Section 2.6, the Mortgagee may, without obligation to do
-----------
so, and upon notice to the Mortgagor (except in an emergency) effect or pay the
same. If the Mortgagor shall fail to perform or observe any of its other
covenants or agreements hereunder, the Mortgagee may, without obligation to do
so, and upon 30 days' prior written notice to the Mortgagor (except in an
emergency) effect the same. To the maximum extent permitted by law, all sums,
including reasonable attorneys' fees and disbursements, so expended or expended
to sustain the lien or estate of this Mortgage or its priority, or to protect or
enforce any of the rights hereunder, or to recover any of the Loan Obligations,
shall be a lien on the Mortgaged Estate, shall be deemed to be added to the Loan
Obligations secured hereby, and shall be paid by the Mortgagor within ten (10)
days after demand therefor, together with interest thereon at the Default Rate.
Section 2.12. Condemnation.
------------
(a) Should the Mortgaged Estate or any part thereof be taken or damaged by
reason of a Taking, or should the Mortgagor receive any written notice regarding
any such proceeding, the Mortgagor shall give prompt notice thereof to the
Mortgagee.
-25-
<PAGE>
(b) The Mortgagee shall be entitled to receive and collect all Condemnation
Proceeds, and all such compensation, awards, damages and other payments or
relief, together with all rights and causes of action relating thereto or
arising out of any Taking, are hereby assigned to the Mortgagee subject to the
terms of Section 2.12(c) hereof. The Mortgagor shall execute such further
assignments of the Condemnation Proceeds as the Mortgagee may from time to time
require. Without limiting the generality of the foregoing, following the
occurrence of any Taking involving the Mortgaged Estate or any part thereof, the
Mortgagor shall give prompt notice thereof to the Mortgagee and shall cause all
Condemnation Proceeds payable as a result of such Taking to be paid to the
Mortgagee as additional collateral security hereunder subject to the lien of
this Mortgage and applied in accordance with Section 2.12(b).
---------------
(c) Notwithstanding anything to the contrary in Section 2.12(b) above, the
---------------
Mortgagee agrees that the Mortgagee shall make the Condemnation Proceeds (other
than Condemnation Proceeds in respect of a temporary Taking, which shall be held
and disbursed in accordance with Section 2.12(b) above) available to the
------- -------
Mortgagor for the Mortgagor's repair, restoration or replacement of the
Improvements, Equipment or Inventory affected by the Taking on the following
terms and subject to the Mortgagor's satisfaction of the following conditions:
(i) At the time of such Taking and at all times thereafter, there
shall exist no Default or Event of Default which is continuing;
(ii) The Improvements, Equipment and Inventory affected by the Taking
shall be capable of being restored to their pre-existing condition and
utility as existed immediately prior to the Taking, in all material
respects with a value equal to or greater than prior to such Taking and
shall be capable of being completed six (6) months prior to the Maturity
Date and prior to the expiration of business interruption insurance;
(iii) The Mortgagor shall demonstrate to the Mortgagee's reasonable
satisfaction the Mortgagor's ability to pay the Loan Obligations relating
to the Facility coming due during such restoration period;
(iv) Within thirty (30) days from the date of such Taking the
Mortgagor shall have given the Mortgagee a written notice electing to have
the Condemnation Proceeds applied for such repair, restoration or
replacement of the Improvements, Equipment or Inventory, as applicable;
(v) Within sixty (60) days following the date of notice under the
preceding subparagraph (iv) and prior to any Condemnation Proceeds being
-----------------
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<PAGE>
disbursed to the Mortgagor, the Mortgagor shall have provided to the
Mortgagee all of the following:
(1) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), complete plans and specifications for restoration, repair
and replacement of the Improvements, Equipment and Inventory lost or
damaged to the condition, utility and value required by the preceding
subparagraph (ii),
-----------------
(2) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), fixed-price or guaranteed maximum cost construction
contracts for completion of the repair, restoration and replacement work in
accordance with such plans and specifications,
(3) if loss or damage exceeds $100,000, builder's risk insurance for
the full cost of construction with the Mortgagee named under a standard
mortgagee loss payable clause,
(4) such additional funds (if any) as in the Mortgagee's reasonable
opinion are necessary to complete the repair, restoration and replacement,
and
(5) if loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), copies of all permits and licenses (if any) necessary to
complete the work in accordance with the plans and specifications and
applicable law;
(vi) If loss or damage exceeds One Hundred Thousand Dollars ($100,000.00),
Mortgagee may, at Mortgagor's expense, retain an independent inspector to review
and approve plans and specifications and completed construction and to approve
all requests for disbursement, which approvals shall be conditions precedent to
release of the Condemnation Proceeds as work progresses;
(vii) The Mortgagor shall commence such work within one hundred twenty
(120) days after such Taking and shall diligently pursue such work to
completion;
(viii) If loss or damage exceeds One Hundred Thousand Dollars
($100,000.00), each disbursement by the Mortgagee of such Condemnation
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Proceeds shall be funded subject to conditions and in accordance with
disbursement procedures which a commercial construction lender would
typically establish in the exercise of sound banking practices and
shall be made only upon receipt of disbursement requests on an AIA
G702/703 form (or similar form reasonably approved by the Mortgagee)
signed and certified by the Mortgagor and its architect and general
contractor with appropriate invoices, lien waivers and any other
documents, instruments and items as may be required by the Mortgagee
in Mortgagee's sole discretion; and
(ix) The Mortgagee shall have a first lien and security interest in
all building materials and completed repair and restoration work and in all
fixtures and equipment acquired with such Condemnation Proceeds, and the
Mortgagor shall execute and deliver such mortgages, deeds of trust,
security agreements, financing statements and other instruments as the
Mortgagee shall reasonably request to create, evidence, or perfect such
lien and security interest.
(d) If and to the extent such Condemnation Proceeds are not required to be
made available to Mortgagor to be used for the repair, restoration and
replacement of the Improvements, Equipment and Inventory affected by the Taking
or if Mortgagor fails to timely make such election or having made such election
fails to timely comply with or is otherwise unable to satisfy the terms and
conditions set forth herein, upon five Business Days prior notice to the
Mortgagor, the Mortgagee shall be entitled without consent from the Mortgagor to
apply such Condemnation Proceeds, or the balance thereof, at the Mortgagee's
option either (x) to the full or partial payment or prepayment of the Loan
Obligations in accordance with Section 2.7 of the Loan Agreement, or (y) to the
repair, restoration and/or replacement of all or any part of such Improvements,
Equipment and Inventory affected by the Taking.
(e) Subject to Mortgagee's rights under Section 2.12(d), provided no Event
------- -------
of Default has occurred and the replacement, restoration or repair has been
completed in accordance with this Mortgage, any Condemnation Proceeds, available
to Mortgagor for replacement, restoration or repair, to the extent not used by
Mortgagor in connection with, or to the extent they exceed the cost of, such
replacement, restoration or repair, shall be paid to the Mortgagor.
(f) The Mortgagee shall be entitled at its option to participate in any
compromise, adjustment or settlement in connection with any Taking involving an
amount in controversy in excess of One Hundred Thousand Dollars ($100,000.00),
and the Mortgagor shall within ten (10) Business Days after request therefor
reimburse the Mortgagee for all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and disbursements) incurred by the Mortgagee in
connection with such participation. The Mortgagor shall not make any
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compromise, adjustment or settlement in connection with any such claim in excess
of One Hundred Thousand Dollars ($100,000.00) without the prior written approval
of the Mortgagee.
Section 2.13. Leases; Management Agreements.
-----------------------------
(a) Mortgagor shall timely perform all of its obligations under the terms
and conditions of any Leases (including ground leases) and shall not accept rent
therefor in advance for a period of more than one (1) month. Mortgagor
represents that there are no Leases or agreements to lease all or any part of
the Mortgaged Estate now in effect, except those specifically assigned to
Mortgagee by the Assignment of Leases. There is no assignment or pledge of any
Rents now in effect, except pursuant to the Assignment of Leases. Mortgagor
shall not make any assignment or pledge thereof to anyone other than Mortgagee
until the Loan Obligations are paid in full.
(b) Mortgagor shall not enter into any Lease after the date hereof that
does not contain terms to the effect as follows:
(i) such Lease and the rights of the tenant thereunder
(including, without limitation, any options to purchase or rights of
first offer or refusal) shall be subject and subordinate to the
rights of Mortgagee under and the Lien of this Mortgage and
Mortgagee's rights under all Loan Documents, and any renewals,
modifications and amendments thereto and thereof;
(ii) such Lease has been assigned as collateral security by
Mortgagor as landlord thereunder to Mortgagee under this Mortgage;
(iii) in the case of any foreclosure hereunder or the giving or
granting ofh a deed in lieu thereof, the rights and remedies of the
tenant in respect of any obligations of any successor landlord
thereunder shall be limited to the equity interest of such successor
landlord in the Mortgaged Estate and any successor landlord shall in
no event and to no extent (1) be liable for any act, omission or
default of any prior landlord under the Lease or (2) be required to
make or complete any tenant improvements or capital improvements or
repair, restore, rebuild or replace the demised premises or any part
thereof in the event of damage, casualty or condemnation or (3) be
required to pay any amounts to tenant arising under the Lease prior
to such successor landlord taking possession;
(iv) the tenant's obligation to pay rent and any additional rent
shall not be subject to any abatement, deduction, counterclaim or
setoff as against any
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mortgagee, deed of trust trustee, beneficiary under any deed of trust
or purchaser upon the foreclosure of any of the Mortgaged Estate or
the giving or granting of a deed in lieu thereof by reason of a
landlord default occurring prior to such foreclosure and such
mortgagee, deed of trust trustee, beneficiary under any deed of trust
or purchaser will not be bound by any advance payments of rent in
excess of one month or any security deposit unless such security
deposit was actually received (or in the case of a letter of credit,
was properly transferred in negotiable form);
(v) the tenant agrees to attorn to Mortgagee or any purchaser of
the Mortgaged Estate upon a foreclosure of the Mortgaged Estate or
the giving or granting of a deed in lieu thereof, at the option of
Mortgagee or such purchaser;
(vi) the tenant agrees to give notice to Mortgagee of any
default by landlord under the Lease and Mortgagee shall have a
reasonable time to cure, should Mortgagee so elect, any default of
landlord prior to tenant exercising any rights of tenant to terminate
or cancel such Lease; and
(vii) all lease payments shall be due on or before the fifth
(5th) day of each calendar month.
(c) The Mortgagor shall not without the prior consent of the Mortgagee
enter into, amend or terminate any management agreements, franchise agreements
or Operator Lease, except as otherwise specifically permitted pursuant to the
Loan Agreement. The Mortgagor shall diligently perform all terms and covenants
of any and all Management Agreements.
(d) Mortgagor shall not create, or permit the Mortgaged Estate or any part
thereof to become subject to, any easement, license or restrictive covenant,
other than a Permitted Encumbrance. Without limiting the generality of the
immediately preceding sentence, Mortgagor shall not enter into, consent to,
grant, amend, modify, restate or supplement any document, instrument or
agreement affecting, related to or impacting upon the Mortgaged Estate, the
title thereto or any portion or aspect thereof, including, without limitation,
any easement, reciprocal easement agreement, or any declaration of easements or
covenants.
Section 2.14. Mortgagee Reliance. Mortgagor acknowledges that Mortgagee has
------------------
examined and relied on the experience of Mortgagor and its partners,
shareholders and members (including, without limitation, the direct and indirect
legal and beneficial owners of Mortgagor), in owning and operating properties
such as the Facility in agreeing to make the Loan, and will continue to rely on
Mortgagor and such experience of such persons as a means of maintaining the
value of the Facility as security for repayment of the Loan and performance
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of all of Mortgagor's obligations under the Loan Documents. Mortgagor
acknowledges that Mortgagee has a valid interest in maintaining the value of the
Facility so as to insure that, should Mortgagor allow a Transfer to occur
without Mortgagee's prior written consent, Mortgagee may exercise all of its
rights hereunder.
Section 2.15. No Transfer. Except for Permitted Transfers, Mortgagor shall
-----------
not and shall not cause, allow, or permit, and shall prevent from occurring, a
Transfer, without the prior written consent of Mortgagee, which consent may be
withheld or conditioned in Mortgagee's sole and absolute discretion. Consent to
any such Transfer by Mortgagee shall not be deemed a waiver of Mortgagee's right
to require such consent to any further or future Transfers. In the event of any
violation of this Section 2.15, Mortgagee may, at its option, accelerate and
------------
declare the outstanding principal amount, unpaid interest, Default Rate
interest, Late Charges, Yield Maintenance Premium and any other amounts owing by
Mortgagor to be immediately due and payable, without notice or demand, and
whether or not Mortgagee shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to any Facility or all or any portion of the
Security Interest Property.
ARTICLE III
Assignment of Rents, Issues and Profits
---------------------------------------
Section 3.1. Assignment of Rents, Issues and Profits. The Mortgagor does
----------------------------------------
hereby absolutely and unconditionally assign to the Mortgagee the Mortgagor's
right, title and interest in all current and future Leases and Rents, it being
intended by the Mortgagor that this assignment constitutes a present, absolute
assignment and not an assignment for additional security only. This Section 3.1
-----------
presently gives Mortgagee the right to collect the Rents and to apply the Rents
in partial payment of the Note and Loan Obligations and otherwise in accordance
with the terms of the Loan Agreement. Mortgagor intends that the Rents and
Leases be absolutely assigned as provided in this Section 3.1 and that they no
-----------
longer be, during the term of this Section, property of the Mortgagor or
property of the estate of Mortgagor, as defined by 11 U.S.C. (S)541. If any law
exists requiring Mortgagee to take actual possession of the Mortgaged Estate (or
some action equivalent to taking possession of the Mortgaged Estate, such as
securing the appointment of a receiver) in order for Mortgagee to "perfect" or
"activate" the rights and remedies of Mortgagee as provided in this Section,
Mortgagor waives the benefit of such law. Such assignment to the Mortgagee
shall not be construed to bind the Mortgagee to the performance of any of the
covenants, conditions or provisions contained in any such Leases or otherwise
impose any obligation upon the Mortgagee and notwithstanding the assignment,
Mortgagor shall remain liable for any obligations undertaken by Mortgagor
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pursuant to any Lease. Mortgagor agrees that, further to evidence and reflect
the assignment granted herein, Mortgagor shall execute, acknowledge and deliver
to Mortgagee such additional instruments in form and substance reasonably
satisfactory to Mortgagee as may hereafter be requested by Mortgagee (but which
are not inconsistent with the terms of this Section 3.1 and the other Loan
-----------
Documents) and shall record such leases or memoranda thereof, and all
assignments thereof, all at Mortgagor's expense. Subject to the terms of this
Section 3.1 and the Loan Agreement, the Mortgagee grants to the Mortgagor a
- -----------
license, revocable as hereinafter provided, to collect and use the Rents subject
to the requirements of the Loan Agreement. Upon the occurrence of an Event of
Default (except an Event of Default set forth in Sections 7.1(x), (xi) and (xii)
-------- ------ ---- -----
of the Loan Agreement, in which event the revocation hereinafter described shall
be automatic and simultaneous with the occurrence of such Event of Default), the
license granted to Mortgagor herein shall, at Mortgagee's election, be revoked
by the Mortgagee, and the Mortgagee shall immediately be entitled to possession
of all Rents then or thereafter in the Collection Account and in the Cash
Collateral Account or wherever they may be and all Rents collected thereafter
(including Rents past due and unpaid), whether or not the Mortgagee enters upon
or takes control of the Mortgaged Estate. Upon such a revocation of the license
granted herein, Mortgagee shall provide Mortgagor with written notice of same.
Any Rents collected by the Mortgagor from and after the date on which an Event
of Default occurred shall be held by Mortgagor in trust for Mortgagee. The
Mortgagee is hereby granted and assigned by the Mortgagor the right, at its
option, upon revocation of the license granted herein, to enter upon the
Mortgaged Estate in person, by agent or by court appointed receiver to collect
Rents with or without taking the actual possession of the Mortgaged Estate or
any equivalent action. Any Rents collected after the revocation of the license
may be applied by Mortgagee in its sole and absolute discretion toward payment
of the Loan Obligations in accordance with Section 2.8 of the Loan Agreement.
-----------
ARTICLE IV
Security Agreement
------------------
Section 4.1. Security Agreement. This Mortgage creates a lien on and a
-------------------
security interest in the Security Interest Property, and shall constitute a
security agreement and "fixture filing" under the UCC or other law applicable to
the creation of liens on and security interests in personal property and
fixtures. As further security for the payment and performance of the Loan
Obligations this Mortgage shall constitute a financing statement under the UCC
with the Mortgagor as the "debtor" and the Mortgagee as the "secured party". To
the extent permitted by law, Mortgagor hereby authorizes Mortgagee to file
financing and continuation statements necessary to continue the lien of and
security interest evidenced by this Mortgage with respect
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to the Security Interest Property without the signature of Mortgagor, and
Mortgagor hereby irrevocably appoints Mortgagee as attorney-in-fact (which
appointment shall be deemed coupled with an interest) for the purposes of
executing and filing such financing and continuation statements.
Section 4.2. Rights Upon Default. If an Event of Default occurs, the
-------------------
Mortgagee, in addition to the rights and remedies granted to the Mortgagee by
applicable law and this Mortgage, shall have all rights and remedies of a
secured party under the UCC, and in addition, Mortgagee shall have all of the
rights and remedies of a secured party and Mortgagee under a Mortgage granted,
conferred or permitted by applicable law. Any notice of sale, disposition or
other intended action by the Mortgagee with respect to the Mortgagee's rights
under the UCC sent to the Mortgagor in accordance with the notice provision
hereof at least ten (10) days prior to such action shall constitute commercially
reasonable notice to the Mortgagor. The proceeds of any such sale or
disposition, or any part thereof, may be applied by the Mortgagee to the payment
of the Loan Obligations in accordance with Section 2.7 of the Loan Agreement.
-----------
Section 4.3. Warranties, Representations and Covenants. The Mortgagor
------------------------------------------
hereby warrants, represents and covenants that: (a) the Equipment and Inventory
will be kept on or at the Facility and the Mortgagor will not remove any
Equipment or Inventory from the Facility, except such portions or items of the
Equipment or Inventory that are consumed or worn out in ordinary usage, all of
which shall be promptly replaced by the Mortgagor with Equipment or Inventory,
as applicable, of equivalent value and functionality, except as otherwise
expressly provided in Section 2.7 with respect to Equipment, and (b) all
-----------
covenants and obligations of the Mortgagor contained herein relating to the
Mortgaged Estate shall be deemed to apply to the Equipment and Inventory whether
or not expressly referred to herein. Information relative to the security
interest created hereby may be obtained by application to the Mortgagee (secured
party). The mailing addresses of the Mortgagor and the Mortgagee are set forth
on Page 1.
------
ARTICLE V
Events of Default; Remedies
---------------------------
Section 5.1. Events of Default. The term "Event of Default" wherever used
------------------ -----------------
in this Mortgage, shall mean any one of the following events: (a) if Mortgagor
fails to pay any amount payable hereunder when due and payable; (b) if any
representation or warranty made herein shall be false in any material respect as
of the date such representation or warranty was made or remade; (c) the
occurrence of a default on the part of Mortgagor under any Lease (subject,
however, to any applicable notice and cure periods required under the applicable
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Lease) provided that such default adversely affects the value of the Mortgaged
Estate or in any way impairs Mortgagor's ability to perform its obligations
under the Loan Documents; (d) the failure of Mortgagor to maintain the insurance
required in this Mortgage; (e) if a Transfer shall occur without Mortgagee's
prior written consent, which consent may be withheld in Mortgagee's sole and
absolute discretion; (f) the occurrence of any "Event of Default" under any of
the Loan Documents, including, without limitation, the Loan Agreement; or (g) if
Mortgagor shall be in default under any of the other obligations, agreements,
undertakings, terms, covenants, provisions or conditions of this Mortgage, not
otherwise referred to in this Section 5.1, for ten (10) days after written
notice to Mortgagor from Mortgagee, in the case of any default which can be
cured by the payment of a sum of money or for thirty (30) days after written
notice from Mortgagee, in the case of any other default (unless otherwise
provided herein); provided, however, that if such non-monetary default is
susceptible of cure but cannot reasonably be cured within such thirty (30) day
period and provided further that Mortgagor shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for Mortgagor in the exercise
of due diligence to cure such default but in no event shall such period exceed
ninety (90) days after the original notice from Mortgagee.
Section 5.2. Acceleration of Maturity. If an Event of Default shall have
------------------------
occurred, then the entire principal amount of the indebtedness secured hereby
with interest accrued thereon and all other Loan Obligations shall, at the
option of the Mortgagee, become immediately due and payable without notice or
demand, time being of the essence; and any omission on the part of the Mortgagee
to exercise such option when entitled to do so shall not be considered as a
waiver of such right. Mortgagor hereby expressly waives presentment, demand for
payment, notice of protest, notice of dishonor, notice of intent to accelerate
the maturity of the indebtedness secured hereby and notice of acceleration of
the maturity of the indebtedness secured hereby. Notwithstanding anything
contained to the contrary herein, the outstanding principal amount, unpaid
interest, Default Rate interest, Late Charges, Yield Maintenance Premium and any
other amounts owing by Mortgagor shall be accelerated and immediately due and
payable, without any election by Mortgagee upon the occurrence of an Event of
Default described in Sections 7.1(x), (xi) or (xii) of the Loan Agreement.
-------- ------ ---- -----
Section 5.3. Default Remedies.
-----------------
(a) If an Event of Default shall have occurred and be continuing, this
Mortgage may, to the maximum extent permitted by law, be enforced, and the
Mortgagee may exercise any right, power or remedy permitted to it hereunder,
under the Loan Agreement or under any of the other Loan Documents or by law or
in equity, and, without limiting the generality of the
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<PAGE>
foregoing, the Mortgagee may, personally or by their agents, to the maximum
extent permitted by law:
(i) enter into and take possession of the Mortgaged Estate or any
part thereof, exclude the Mortgagor and all Persons claiming under the
Mortgagor whose claims are junior to this Mortgage, wholly or partly
therefrom, and use, operate, manage and control the same or any part
thereof either in the name of the Mortgagor or otherwise as the Mortgagee
shall deem best, and upon such entry, from time to time at the expense of
the Mortgagor and the Mortgaged Estate, make all such repairs,
replacements, alterations, additions or improvements to the Facility or any
part thereof as the Mortgagee may deem proper and, whether or not the
Mortgagee has so entered and taken possession of the Mortgaged Estate or
any part thereof, collect and receive all Rents and apply the same to the
payment of all expenses that the Mortgagee may be authorized to make under
this Mortgage, the remainder to be applied to the payment of the Loan
Obligations until the same shall have been repaid in full; if the Mortgagee
demands or attempts to take possession of the Mortgaged Estate or any part
thereof in the exercise of any rights hereunder, the Mortgagor shall
promptly turn over and deliver complete possession thereof to the
Mortgagee; and
(ii) personally or by agents, with or without entry, if the Mortgagee
shall deem it advisable:
(x) invoke the power of sale and pursuant to the procedures
prescribed by law as a result thereof, sell the Mortgaged Estate or
cause the Mortgaged Estate or any part thereof, to be sold at a sale
or sales held at such place or places and time or times and upon such
notice and otherwise in such manner and in such order as may be
required by law, or, in the absence of any such requirements, as the
Mortgagee may deem appropriate and from time to time adjourn any such
sale by announcement at the time and place specified for such sale or
for such adjourned sale without further notice, except such as may be
required by law;
(y) proceed to protect and enforce their rights under this
Mortgage, by suit for specific performance of any covenant contained
herein or in the Loan Documents or in aid of the execution of any
power granted herein or in the Loan Documents, or for the foreclosure
of this Mortgage (as a mortgage or otherwise) and the sale of the
Mortgaged Estate or any part thereof under the judgment or decree of a
court of competent jurisdiction, or for the enforcement of any other
right as the Mortgagee shall elect, provided, that in the event of a
sale, by foreclosure or otherwise, of less than all of the Mortgaged
Estate, this
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<PAGE>
Mortgage shall continue as a lien on, and security
interest in, the remaining portion of the Mortgaged Estate; or
(z) exercise any or all of the remedies available to a secured
party under the UCC, including, without limitation:
(1) either personally or by means of a court appointed
receiver, take possession of all or any of the Security
Interest Property and exclude therefrom the Mortgagor and all
Persons claiming under the Mortgagor, and thereafter hold,
store, use, operate, manage, maintain and control, make
repairs, replacements, alterations, additions and improvements
to and exercise all rights and powers of the Mortgagor in
respect of the Security Interest Property, or any part thereof;
if the Mortgagee demands or attempts to take possession of the
Security Interest Property in the exercise of any rights
hereunder, the Mortgagor shall promptly turn over and deliver
complete possession thereof to the Mortgagee, as the case may
be;
(2) without further notice to or demand upon the Mortgagor
(except those otherwise required hereby or by the Loan
Agreement), make such payments and do such acts as the
Mortgagee may deem necessary to protect its security interest
in the Security Interest Property, including, without
limitation, paying, purchasing, contesting or compromising any
encumbrance that is prior to or superior to the security
interest granted hereunder, and in exercising any such powers
or authority paying all expenses incurred in connection
therewith, which expenses shall thereafter become part of the
Loan Obligations secured by the lien of this Mortgage ;
(3) require the Mortgagor to assemble the Security Interest
Property or any portion thereof, at a place designated by the
Mortgagee and reasonably convenient to both parties, and
promptly to deliver the Security Interest Property to the
Mortgagee, or an agent or representative designated by the
Mortgagee, and its agents and representatives, shall have the
right to enter upon the premises and property of the Mortgagor
to exercise the Mortgagee's rights hereunder;
(4) sell, lease or otherwise dispose of the Security
Interest Property, with or without having the Security Interest
Property at the place of sale, and upon such terms and in such
manner as the Mortgagee may determine (and the Mortgagee may be
a purchaser at any such sale), provided, however, that
Mortgagee, may dispose of the Security Interest Property in
accordance with the Mortgagee's rights and remedies in respect
of the Mortgaged Estate pursuant to the provisions of this
Mortgage in lieu of proceeding under the UCC; and
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<PAGE>
(5) unless the Security Interest Property is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Mortgagee, shall
give the Mortgagor at least ten (10) days prior notice of the
time and place of any sale of the Security Interest Property or
other intended disposition thereof, which notice Mortgagor
agrees is commercially reasonable.
(b) If an Event of Default shall have occurred, the Mortgagee, to the
maximum extent permitted by law, shall be entitled, as a matter of right, to the
appointment of a receiver of the Mortgaged Estate, without notice or demand, and
without regard to the adequacy of the security for the Loan Obligations or the
solvency of the Mortgagor. The Mortgagor hereby irrevocably consents to such
appointment and waives notice of any application therefor. Any such receiver or
receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of the Mortgagee in case of entry
and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Mortgaged Estate, unless such receivership is sooner
terminated.
(c) In any sale under any provision of this Mortgage or pursuant to any
judgment or decree of court, the Mortgaged Estate, to the maximum extent
permitted by law, may be sold in one or more parcels or as an entirety and in
such order as the Mortgagee may elect, without regard to the right of the
Mortgagor or any Person claiming under the Mortgagor to the marshalling of
assets. The purchaser at any such sale shall take title to the Mortgaged Estate
or the part thereof so sold free and discharged of the estate of the Mortgagor
therein, the purchaser being hereby discharged from all liability to see to the
application of the purchase money. Upon the completion of any such sale by
virtue of this Section 5.3 the Mortgagee, as the case may be, shall execute and
-----------
deliver to the purchaser an appropriate instrument that shall effectively
transfer all of the Mortgagor's estate, right, title, interest, property, claim
and demand in and to the Mortgaged Estate or portion thereof so sold, but
without any covenant or warranty, express or implied. The Mortgagee is hereby
irrevocably appointed the attorney-in-fact of the Mortgagor, coupled with an
interest, in its name and stead to make all appropriate transfers and deliveries
of the Mortgaged Estate or any portions thereof so sold and, for that purpose,
the Mortgagee may execute all appropriate instruments of transfer, and may
substitute one or more Persons with like power, the Mortgagor hereby ratifying
and confirming all that said attorneys or such substitute or substitutes shall
lawfully do by virtue hereof. Nevertheless, the Mortgagor shall ratify and
confirm, or cause to be ratified and confirmed, any such sale or sales by
executing and delivering, or by causing to be executed and delivered to the
Mortgagee or to such purchaser or purchasers all such instruments as may
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<PAGE>
be advisable, in the judgment of the Mortgagee, for such purpose, and as may be
designated in such request. Any sale or sales made under or by virtue of this
Mortgage, to the extent not prohibited by law, shall operate to divest all the
estate, right, title, interest, property, claim and demand whatsoever, whether
at law or in equity, of the Mortgagor in, to and under the Mortgaged Estate, or
any portions thereof so sold, and shall be a perpetual bar both at law and in
equity against the Mortgagor and against any and all Persons claiming or who may
claim the same, or any part thereof, by, through or under the Mortgagor. The
powers and agency herein granted are coupled with an interest and are
irrevocable.
(d) All rights of action under the Loan Documents and this Mortgage may be
enforced by the Mortgagee without the possession of the original Loan Documents
and without the production thereof at any trial or other proceeding relative
thereto.
Section 5.4. Application of Proceeds.
------------------------
(a) Prior to the occurrence and continuance of an Event of Default, any
amounts received or collected by Mortgagee under this Mortgage shall be applied
in accordance with Section 2.7 of the Loan Agreement. After the occurrence of
an Event of Default, any amounts received or collected by the Mortgagee under
this Mortgage or any other Loan Document may be applied to any one or more of
the following in such order and in such amounts as the Mortgagee may elect in
its sole discretion:
(i) To the payment of all costs, expenses and advances incurred by
the Mortgagee, or made by the Mortgagee in the enforcement of this Mortgage
or any of the other Loan Documents, the protection of the Lien and security
afforded thereby, and the preservation of the Mortgaged Estate, including,
without limitation, all expenses of managing the Facility, including,
without limitation, the salaries, fees and wages of any managing agent and
such other employees as Mortgagee may deem necessary and all expenses of
operating and maintaining the Facility, including, without limitation, all
taxes, charges, claims, assessments, water rents, sewer rents and any other
liens, and premiums for all insurance which are due and payable and the
cost of all alterations, renovations, repairs or replacements, and all
costs and expenses incident to taking and retaining possession of the
Facility and the enforcement of any of Mortgagee's rights and remedies
hereunder; and
(ii) To the payment of the Loan Obligations in accordance with the
Loan Agreement, this Mortgage and the other Loan Documents.
(b) No sale or other disposition of all or any part of the Mortgaged Estate
pursuant to Section 5.3 shall be deemed to relieve the Mortgagor of its
-----------
obligations under the Loan
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<PAGE>
Agreement or any other Loan Document except to the extent the proceeds thereof
are applied to the payment of such obligations. If the proceeds of sale,
collection or other realization of or upon the Mortgaged Estate are insufficient
to cover the costs and expenses of such realization and the payment in full of
the Loan Obligations, the Mortgagor shall remain liable for any deficiency
subject to Section 6.14 hereof.
(c) Upon any sale made under the powers of sale herein granted and
conferred, the receipt given by Mortgagee will be sufficient discharge to the
purchaser or purchasers at any sale for the purchase money, and such purchaser
or purchasers and their heirs, devisees, personal representatives, successors
and assigns thereof will not, after paying such purchase money and receiving
such receipt of Mortgagee be obligated to see to the application thereof or be
in any way answerable for any loss, misapplication or non-application thereof.
Section 5.5 Right to Sue. The Mortgagee shall have the right from time to
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time to sue for any sums required to be paid by the Mortgagor under the terms of
this Mortgage as the same become due, without regard to whether or not the Loan
Obligations shall be, or have become, due and without prejudice to the right of
the Mortgagee thereafter to bring any action or proceeding of foreclosure or any
other action upon the occurrence and continuance of any Event of Default
existing at the time such earlier action was commenced.
Section 5.6. Powers of the Mortgagee. The Mortgagee may at any time or
------------------------
from time to time renew or extend this Mortgage or (with the agreement of the
Mortgagor) alter or modify the same in any way, or waive any of the terms,
covenants or conditions hereof or thereof, in whole or in part, and may release
or reconvey any portion of the Mortgaged Estate or any other security, and grant
such extensions and indulgences in relation to the Loan Obligations, or release
any Person liable therefor as the Mortgagee may determine without the consent of
any junior lienor or encumbrancer, without any obligation to give notice of any
kind thereto, without in any manner affecting the priority of the lien and
estate of this Mortgage on or in any part of the Mortgaged Estate, and without
affecting the liability of any other Person liable for any of the Loan
Obligations.
Section 5.7. Remedies Cumulative.
--------------------
(a) No right or remedy herein conferred upon or reserved to the Mortgagee
is intended to be exclusive of any other right or remedy, and each and every
right and remedy shall be cumulative and in addition to any other right or
remedy under this Mortgage, or under applicable law, whether now or hereafter
existing; the failure of the Mortgagee to insist at any time upon the strict
observance or performance of any of the provisions of this Mortgage or to
exercise any right or remedy provided for herein or under applicable law, shall
not impair any such right or remedy nor be construed as a waiver or
relinquishment thereof.
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(b) To the fullest extent permitted by applicable law, the Mortgagee shall
be entitled to enforce payment and performance of any of the obligations of the
Mortgagor and to exercise all rights and powers under this Mortgage or under any
Loan Document or any laws now or hereafter in force, notwithstanding that some
or all of the Loan Obligations may now or hereafter be otherwise secured,
whether by mortgage, deed of trust, pledge, lien, assignment or otherwise;
neither the acceptance of this Mortgage nor its enforcement, whether by court
action or pursuant to the power of sale or other powers herein contained, shall
prejudice or in any manner affect the right of the Mortgagee to realize upon or
enforce any other security now or hereafter held by the Mortgagee, it being
stipulated that the Mortgagee shall be entitled to enforce this Mortgage and any
other security now or hereafter held by the Mortgagee in such order and manner
as the Mortgagee, in its sole discretion, may determine; every power or remedy
given by the Loan Agreement, this Mortgage or any of the other Loan Documents to
the Mortgagee, or to which or the Mortgagee is otherwise entitled, may be
exercised, concurrently or independently, from time to time and as often as may
be deemed expedient by the Mortgagee, and the Mortgagee may pursue inconsistent
remedies.
Section 5.8. Waiver of Stay, Extension, Moratorium Laws; Equity of
-----------------------------------------------------
Redemption. To the maximum extent permitted by law, the Mortgagor shall not at
- ----------
any time insist upon, or plead, or in any manner whatever claim or take any
benefit or advantage of any applicable present or future stay, extension or
moratorium law, that may affect observance or performance of the provisions of
this Mortgage; nor claim, take or insist upon any benefit or advantage of any
present or future law providing for the valuation or appraisal of the Mortgaged
Estate or any portion thereof prior to any sale or sales thereof that may be
made under or by virtue of Section 5.3; and the Mortgagor, to the extent that it
-----------
lawfully may, hereby waives all benefit or advantage of any such law or laws.
The Mortgagor, for itself and all who may claim under it, hereby waives, to the
maximum extent permitted by applicable law, any and all rights and equities of
redemption from sale under the power of sale created hereunder or from sale
under any foreclosure of this Mortgage and (if an Event of Default shall have
occurred) all notice or notices of seizure, and all right to have the Mortgaged
Estate marshalled upon any foreclosure hereof. The Mortgagee shall not be
obligated to pursue or exhaust its rights or remedies as against any other part
of the Mortgaged Estate and the Mortgagor hereby waives any right or claim of
right to have the Mortgagee proceed in any particular order.
Section 5.9. Waiver of Homestead. The Mortgagor hereby waives and
--------------------
renounces all homestead and exemption rights provided for by the Constitution
and the laws of the United States and of any state, in and to the Mortgaged
Estate as against the collection of the Loan Obligations, or any part thereof.
Section 5.10. Discontinuance of Proceedings. In case the Mortgagee shall
------------------------------
have proceeded to enforce any right, power or remedy under this Mortgage by
foreclosure, power
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of sale, entry or otherwise, and such proceedings shall have been discontinued
or abandoned for any reason, or shall have been determined adversely to the
Mortgagee, then in every such case, the Mortgagor, and the Mortgagee shall be
restored to their former positions and rights hereunder, and all rights, powers
and remedies of the Mortgagee shall continue as if no such proceedings had
occurred.
ARTICLE VI
Miscellaneous
-------------
Section 6.1. Reconveyance by Mortgagee. Upon payment in full of the Loan
--------------------------
Obligations or a complete defeasance with respect to the Mortgaged Estate which
complies with the Loan Agreement (if the Loan Agreement provides for
defeasance), the Mortgagee shall release the lien of this Mortgage, or upon the
request of the Mortgagor, and at the Mortgagor's expense, assign this Mortgage
without recourse to the Mortgagor's designee, or to the Person or Persons
legally entitled thereto, by an instrument duly acknowledged in form for
recording.
Section 6.2. Notices. All notices, demands, consents, requests or other
--------
communications that are permitted or required to be given by any party to the
other hereunder shall be in writing and given in the manner specified in Section
8.6 of the Loan Agreement.
Section 6.3. Amendments; Waivers; etc. This Mortgage cannot be modified,
-------------------------
changed or discharged except by an agreement in writing, duly acknowledged in
form for recording, signed by the Mortgagor and the Mortgagee.
Section 6.4. Successors and Assigns. This Mortgage applies to, inures to
-----------------------
the benefit of and binds the Mortgagor, the Mortgagee and each of their
respective successors and assigns and shall run with the Land.
Section 6.5. Captions. The captions or headings at the beginning of each
--------
Article and Section hereof are for the convenience of the parties hereto and are
not a part of this Mortgage.
Section 6.6. Severability. If any term or provision of this Mortgage or
------------
the application thereof to any Person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Mortgage, or the application of
such term or provision to Persons or circumstances other than those as to which
it is invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Mortgage shall be valid and enforceable to the maximum extent
permitted by law. If any portion of the Loan Obligations shall for any reason
not be secured by a valid and enforceable lien upon any part of the
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Mortgaged Estate, then any payments made in respect of the Loan Obligations
(whether voluntary or under foreclosure or other enforcement action or procedure
or otherwise) shall, for purposes of this Mortgage (except to the extent
otherwise required by applicable law) be deemed to be made (a) first, in respect
of the portion of the Loan Obligations not secured by the lien of this Mortgage,
(b) second, in respect of the portion of the Loan Obligations secured by the
lien of this Mortgage, but which lien is on less than all of the Mortgaged
Estate, and (c) last, to the portion of the Loan Obligations secured by the lien
of this Mortgage, and which lien is on all of the Mortgaged Estate.
Section 6.7. Indemnity; Expenses. Except for actions by Mortgagor against
--------------------
Mortgagee where Mortgagor is the prevailing party, Mortgagor will pay or
reimburse the Mortgagee for all reasonable attorneys' fees, costs and expenses
incurred by it in any suit, action, legal proceeding or dispute of any kind in
which it is made a party or appears as party plaintiff or defendant, affecting
the Loan Obligations, this Mortgage or the interest created herein, or the
Mortgaged Estate, or any appeal thereof, including, without limitation,
activities related to enforcement of the remedies of Mortgagee, activities
related to protection of Mortgagee's collateral, any foreclosure action or
exercise of the power of sale, any action commenced under Section 5.3, any
------- ---
condemnation action involving the Mortgaged Estate or any action to protect the
security hereof, any bankruptcy or other insolvency proceeding commenced by or
against the Mortgagor, or any lessee of the Mortgaged Estate (or any part
thereof), and any such amounts paid or incurred by the Mortgagee shall be added
to the Loan Obligations and shall be secured by this Mortgage. The Mortgagor
will indemnify, defend and hold the Mortgagee harmless from and against all
claims, damages, and expenses, including reasonable attorneys' fees and court
costs, resulting from any action by a third party against the Mortgagee relating
to this Mortgage or the interest created herein, or the Mortgaged Estate,
including, but not limited to, any action or proceeding claiming loss, damage or
injury to person or property, or any action or proceeding claiming a violation
of or liability under any Legal Requirements, including applicable Environmental
Laws, provided the Mortgagor shall not be required to indemnify the Mortgagee
for matters to the extent caused by the gross negligence, willful misconduct or
fraud by either of them, respectively. The Mortgagor acknowledges that it has
undertaken the obligation to pay all intangibles taxes and documentary taxes now
or hereafter due in connection with the Loan Obligations and the Loan Documents,
and the Mortgagor agrees to indemnify and hold the Mortgagee harmless from any
intangibles taxes and documentary stamp taxes, and any interest or penalties,
which the Mortgagee may hereafter be required to pay in connection with the Loan
Obligations or Loan Documents. The agreements of this Section 7.7 shall
expressly survive in perpetuity satisfaction of this Mortgage and repayment of
the Loan Obligations, any release, reconveyance, discharge or foreclosure of
this Mortgage, conveyance by deed in lieu of foreclosure, sale, and any
subsequent transfer by Mortgagee's conveyance of the Mortgaged Estate. The
indemnification by Mortgagor of Mortgagee does not and shall not be deemed to
limit or modify Mortgagor's
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insurance or other obligations under the Loan Documents and, Mortgagor's
compliance with the insurance requirements under the Loan Documents shall not
limit or modify Mortgagor's indemnification obligations under the Loan
Documents. Mortgagor's duty to defend is independent of Mortgagor's duty to
indemnify, and shall be applicable regardless of mortgagor's independent
liability for such claims, claims based on Mortgagee's strict liability or
liability without fault, or Mortgagee's lack of detriment or payment of claims.
At any stage in the claim or suit against Mortgagee, Mortgagee is entitled to
obtain summary adjudication regarding Mortgagor's duty to defend.
Section 6.8. Estoppel Certificates. The Mortgagor and the Mortgagee each
----------------------
hereby agree at any time and from time to time upon not less than fifteen (15)
days prior written notice from the other party to execute, acknowledge and
deliver to the party specified in such notice, a statement, in writing,
certifying that this Mortgage is unmodified and in full force and effect (or if
there have been modifications, that the same, as modified, is in full force and
effect and stating the modifications hereto), and stating whether or not, to the
best knowledge of such certifying party, any Default or Event of Default has
occurred, and, if so, specifying each such Default or Event of Default;
provided, however, that it shall be a condition precedent to the Mortgagee's
obligation to deliver the statement pursuant to this Section 6.8, that the
-----------
Mortgagee shall have received, together with the Mortgagor's request for such
statement, an Officer's Certificate stating that no Default or Event of Default
exists as of the date of such certificate (or specifying such Default or Event
of Default).
Section 6.9. Applicable Law. This Mortgage shall be governed by and
---------------
construed in accordance with the laws of the State in which the Facility is
located.
Section 6.10. Limitation of Interest. It is the intention of Mortgagor and
----------------------
Mortgagee to conform strictly to applicable usury laws. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law, then,
in that event, notwithstanding anything to the contrary in any Loan Document, it
is agreed as follows: (i) the aggregate of all consideration which constitutes
interest under applicable law that is taken, reserved, contracted for, charged
or received under any Loan Document or otherwise in connection with the Loan
shall under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited to principal by Mortgagee (or
if the Loan shall have been paid in full, refunded to Mortgagor); and (ii) in
the event that maturity of the Loan is accelerated by reason of an election by
Mortgagee resulting from any default hereunder or otherwise, or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum amount of interest allowed by
applicable law, and any interest in excess of the maximum amount of interest
allowed by applicable law, if any, provided for in the Loan Documents or
otherwise shall be cancelled automatically as of the date of such acceleration
or prepayment and, if theretofore prepaid,
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shall be credited to principal (or if the principal portion of the Loan and any
other amounts not constituting interest shall have been paid in full, refunded
to Mortgagor.)
In determining whether or not the interest paid or payable under any
specific contingency exceeds the maximum amount allowed by applicable law,
Mortgagee shall, to the maximum extent permitted under applicable law (a)
exclude voluntary prepayments and the effects thereof, and (b) amortize,
prorate, allocate and spread, in equal parts, the total amount of interest
throughout the entire contemplated term of the Loan so that the interest rate is
uniform throughout the entire term of the Loan; provided, that if the Loan is
paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence thereof
exceeds the maximum amount allowed by applicable law, Mortgagee shall refund to
Mortgagor the amount of such excess, and in such event, Mortgagee shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the maximum amount allowed by applicable law.
Section 6.11. Assignment. The Mortgagee shall have the right to assign
----------
this Mortgage and the obligaitions hereunder to any Person in accordance with
the Loan Agreement. The parties hereto acknowledge that following the execution
and delivery of this Mortgage, the Mortgagee may sell, transfer or assign this
Mortgage and any or all of the other Loan Documents to the trustee or servicer
in connection with a Securitization. All references to "Mortgagee" hereunder
shall be deemed to include the assigns of the Mortgagee including the trustee or
servicer in any Securitization.
Section 6.12. Time of the Essence. Time is of the essence with respect to
-------------------
each and every covenant, agreement and obligation of the Mortgagor under this
Mortgage, the Note and all other Loan Documents.
Section 6.13. WAIVER OF JURY TRIAL. THE MORTGAGOR AND MORTGAGEE, HEREBY
--------------------
WAIVE ANY RIGHT THAT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM,
COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN
ANY WAY RELATED TO THIS MORTGAGE OR THE LOAN, OR (B) IN ANY WAY CONNECTED WITH
OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF MORTGAGOR AND/OR
THE MORTGAGEE WITH RESPECT TO THE LOAN DOCUMENTS OR IN CONNECTION WITH THIS
MORTGAGE OR THE EXERCISE OF ANY PARTY'S RIGHTS AND REMEDIES UNDER THIS MORTGAGE
OR OTHERWISE, OR THE CONDUCT OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL
OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH OF THE
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MORTGAGOR AND THE MORTGAGEE AGREES THAT EITHER OF THEM MAY FILE A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND
BARGAINED AGREEMENT OF THE MORTGAGOR, AND MORTGAGEE IRREVOCABLY TO WAIVE ITS
RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT OF THE MORTGAGEE TO MAKE THE LOAN AND
THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY
WHATSOEVER (WHETHER OR NOT MODIFIED HEREIN) BETWEEN THE MORTGAGOR, AND THE
MORTGAGEE SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
Section 6.14. Exculpation. This Mortgage and the obligations of Mortgagor
-----------
hereunder are and shall be subject to and limited by the exculpation provisions
of Section 8.14 of the Loan Agreement; provided, however, prior to the payment
of the Difference and any applicable hedging or interest rate management
breakage costs incurred by the Mortgagee on the Stabilization Date Payment Date
pursuant to Section 8.32(c) of the Loan Agreement, the Loan shall be fully
------- -------
recourse as described in Section 8.14 of the Loan Agreement.
------- ----
Section 6.15. Cross-Collateralization. Without limitation to any other
-----------------------
right or remedy provided to Mortgagee in this Mortgage or any of the other Loan
Documents, Mortgagor acknowledges and agrees that (i) upon the occurrence of an
Event of Default, to the fullest extent permitted by law, Mortgagee shall have
the right to pursue all of its rights and remedies in one proceeding, or
separately and independently in separate proceedings which Mortgagee, in its
sole and absolute discretion, shall determine from time to time, (ii) Mortgagee
is not required to either marshall assets, sell Collateral in any inverse order
of alienation, or be subjected to any "one action" or "election of remedies" law
or rule, (iii) the exercise by Mortgagee of any remedies against any Collateral
will not impede Mortgagee from subsequently or simultaneously exercising
remedies against other Collateral; (iv) all Liens and other rights, remedies and
privileges provided to Mortgagee in the Loan Documents or otherwise shall remain
in full force and effect until Mortgagee has exhausted all of its remedies
against the Collateral and all Collateral has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Loan, and (v) all of the
Facilities (as defined in the Loan Agreement) shall remain security for the
performance of all of Mortgagor's obligations hereunder, under the Note and
under any of the other Loan Documents.
Section 6.16. Exhibits. The information set forth on the cover, heading
--------
and recitals hereof, and the Exhibits attached hereto, are hereby incorporated
herein as a part of this Mortgage with the same effect as if set forth in the
body hereof.
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Section 6.17. Future Advances. This Mortgage is intended to secure future
---------------
advances. Mortgagee has no obligation whatsoever to make any future advance
hereunder.
Section 6.18. No Endorsement. The Mortgagee shall neither become or be
--------------
considered to be an endorser, co-maker or co-obligor on the Note or any
obligation of the Mortgagor secured by this Mortgage.
Section 6.19. Collateral. In the event that Mortgagor granted any
----------
collateral under any other Loan Document that otherwise is not granted in this
Mortgage, then such collateral shall be deemed granted pursuant to this
Mortgage.
Section 6.20. Power of Sale. This Mortgage is upon the STATUTORY CONDITION
-------------
and upon the further condition that all covenants and agreements on the part of
Mortgagor herein undertaken and in the Note and every other document executed in
connection therewith shall be kept and fully performed and that no breach of any
other of the conditions specified herein shall be permitted, for any breach of
which covenants, agreements, or conditions the Mortgagee shall have the
STATUTORY POWER OF SALE.
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IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor
as of the day and year first above written and this document shall take effect
as an instrument under seal.
G&L HAMPDEN, LLC
a Delaware limited liability company
By: G&L Hampden, Inc., its
Managing Member
By: __________________________
Mark H. Hamermesh
Senior Vice President
STATE OF ______________ )
SS:
COUNTY OF _____________ )
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the County aforesaid to take
acknowledgments, the foregoing instrument was acknowledged before me by Mark H.
Hamermesh, as Senior Vice President of G&L HAMPDEN, INC., a Delaware
corporation, to me personally known, which corporation is the Managing Member of
G&L, HAMPDEN LLC, a Delaware limited liability company, freely and voluntarily
under authority duly vested in him by said corporation and is the free act and
deed of Mark H. Hamermesh, as Senior Vice President, as aforesaid, on behalf of
said limited liability company, and that the seal affixed thereto is the true
corporate seal of said corporation.
WITNESS my hand and official seal in the County and State last
aforesaid this _____ day of October, 1997.
_____________________________________
Notary Public
________________________________________
Typed, printed or stamped
name of Notary Public
My Commission Expires:
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Exhibit A
---------
DESCRIPTION OF PROPERTY
-----------------------
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