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)
TABLE OF CONTENTS
Page
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
Page
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
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
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SCHEDULES
Schedule 4.1(al)(ix) - Audits
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 Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, Xxx Xxxx 00000-0000,
Attention: Xxxxxxx Xxxxxxx, Telefax Number (000) 000-0000, (together, with its
successors and assigns, "Lender"), and G&L HAMPDEN, LLC, a Delaware limited
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liability company with an address of 000 Xxxxx Xxxxxxx Drive, First Floor,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxxxx, Telefax Number:
(000) 000-0000 (the "Borrower").
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RECITALS
WHEREAS, Borrower desires to obtain a loan (the "Loan") from Lender in
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the principal amount of $6,000,000 (the "Loan Amount");
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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
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Section 1.1. Definitions . For all purposes of this Agreement:
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(a) the capitalized terms defined in this Article I have the
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meanings assigned to them in this Article I, and include the plural as well as
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the singular;
(b) all accounting terms have the meanings assigned to them in
accordance with GAAP;
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(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).
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"Accounts" means all of the Accounts defined and described in the
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Mortgages.
"Accrued Interest" has the meaning provided in Section 2.5(e).
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"Actual Prepayment Amount" has the meaning provided in Section
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8.32(c).
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"Adjusted Net Operating Income" means for any Facility, for any
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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
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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.
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"Affiliate" of any specified Person means any other Person
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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
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
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time hereafter be modified, supplemented or amended.
"Allocated Loan Amount" means the portion of the Loan Amount
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allocated to each Facility as set forth on Exhibit B hereto, as such amounts
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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
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principal pursuant to Section 2.6(c) or (iii) a payment of Excess Cash Flow
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pursuant to Section 2.6(a), each Allocated Loan Amount shall be decreased by an
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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
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Amount"), and each other Allocated Loan Amount shall, if the Withdrawn Allocated
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Amount exceeds the proceeds (such excess being referred to as the "Proceeds
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Deficiency"), be increased by an amount equal to the product of (1) the Proceeds
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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
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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
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
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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,
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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
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described in the Mortgages.
"Assignment of Agreements" means, with respect to the Facility, a
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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
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documents collectively.
"Assignment of Leases" means, with respect to each Facility, a first
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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.
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5
"Base Adjusted NOI" means the amount(s) shown on Exhibit B.
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"Base Payment" has the meaning provided in Section 2.5(c).
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"Basic Carrying Costs" means the following costs with respect to
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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
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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
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Collateral Account established and maintained pursuant to Section 2.11 relating
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to the payment of Basic Carrying Costs.
"Borrower" has the meaning provided in the preamble to this
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Agreement.
"Business Day" means any day other than (i) a Saturday or a Sunday,
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and (ii) a day on which federally insured depository institutions in Xxx Xxxx,
Xxx Xxxx, Xxxxxxx, Xxxxxxxx or any jurisdiction in which any Facility, the Cash
Collateral Account or any Collection
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
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connection with capital improvements to the Facilities.
"Capital Reserve Amount" means, with respect to each Facility, an
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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
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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
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Collateral Account established and maintained pursuant to Section 2.11 relating
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to the payment of Capital Improvement Costs.
"Cash Collateral Account" has the meaning provided in Section
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2.11(b).
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"Cash Collateral Account Bank" means the bank which holds the Cash
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Collateral Account.
"Closing Date" means the date of this Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended, and as
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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,
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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.
7
"Collateral Security Instrument" means any right, document or
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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).
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"Collection Account Agreement" has the meaning set forth in Section
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2.11(b).
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"Collection Account Bank" means, with respect to each Facility, the
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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).
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"Condemnation Proceeds" means all of the Condemnation Proceeds
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defined and described in the Mortgages.
"Contingent Obligation" means any obligation of Borrower
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guaranteeing any indebtedness, leases, dividends or other obligations ("primary
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obligations") of any other Person (the "primary obligor") in any manner, whether
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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.
8
"Current Interest Accrual Period" has the meaning provided in
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Section 2.11(g).
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"Cut-Off Date" means November 11, 1999.
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"Debt Service" means, for any period, the aggregate of all
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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
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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
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Collateral Account established and maintained pursuant to Section 2.11 relating
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to the payment of Debt Service.
"Deed of Trust Trustee" means each of the trustees, if any, under
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the Mortgages.
"Default" means the occurrence of any event which, but for the
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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.
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"Default Rate" means the per annum interest rate equal to the lesser
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of (i) the Maximum Amount or (ii) the Interest Rate plus five percent (5%).
"Defeasance Debt Service Coverage Ratio" means, in respect of any
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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
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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.
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"Defeasance Deposit" means the following in each of the following
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circumstances:
9
(i) in the case of a total defeasance of the Loan and each
Facility pursuant to Section 2.10, "Defeasance Deposit" means the
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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
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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
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
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2.10(d).
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"Determination Date" means with respect to any Interest Accrual
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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).
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"DOH" has the meaning set forth in Section 4.1(b)(al)(i).
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"Eligible Account" means (i) an account maintained with a federal or
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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
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licensed in the relevant jurisdiction and approved by Lender in Lender's
reasonable discretion.
"Engineering Reports" means the structural engineering reports with
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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.
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"Entity" means a (a) corporation, if Borrower is listed as a
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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
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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
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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,
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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,
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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
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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
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Mortgages.
"Equity Interests" means with respect to Borrower or the Subsequent
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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
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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,
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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).
----------- ------- -------
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.
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.
--- ----
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)
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
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
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
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
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;
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
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.
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
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
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
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);
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
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.
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., Xxxxx'x
---------------
Investors Service, Inc., Duff & Xxxxxx 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.
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).
------------- ------- ---------
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
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
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
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).
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).
-------------
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 Xxxxxxx 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.
------------ ------- ---
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
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
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.
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.
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.
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
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
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
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
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
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
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
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).
------- --------
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
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
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
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.
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,
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
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:
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
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.
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.
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.
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
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.
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
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.
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.
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.
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
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 000 Xxxxx Xxxxxxx Drive, First Floor, Xxxxxxx Xxxxx, XX
00000 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
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
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:
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).
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
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,
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 xxxx 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 Xxxx Xxxxx
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.
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,
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 ("XXX")
--- ---
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 XXX:
(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
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.
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) Xxxx Xxxxx - $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) Xxxx Xxxxx - $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.
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
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
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
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
------
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 xxxxx 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
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
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:
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.
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
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
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
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
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.
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
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
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;
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
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
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
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.
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;
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;
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
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
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;
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
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.
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
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, 000 XXXXXXX XXXXXX, XXXXXX, XXX XXXX 00000-0000, 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.
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 & Xxxxxx, 0000
Xxxx Xxxxxx, 0000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000, Attention:
Xxxxxx X. Xxxx, Esquire, Telefax Number 215/994-2222; Xxxxxxx Xxxxxxx, Two World
Financial Center, Building B, New York, New
109
York 10281-1198, Telefax Number (000) 000-0000; Two World Xxxxxxxxx Xxxxxx,
Xxxxxxxx X, Xxx Xxxx, XX 00000-0000, Attention: Xxxxxx XxXxxx, Telefax Number
(000) 000-0000; and Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx Xxxx, XX 00000-
1198, Attention: Xxxxx Xxxx, General Counsel, Telefax Number (000) 000-0000. A
copy of all notices, consents, approvals and requests directed to Borrower shall
be delivered concurrently to each of the following: Xxxxxxxxx & Xxxxxx, 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxxx,
Esq., Telefax Number (000) 000-0000. 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.
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
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
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 xxx 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
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
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.
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
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
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
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
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 xxxxxxxx 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]
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:
121
BORROWER:
G&L HAMPDEN, LLC, a Delaware limited
liability company
By: G&L Hampden, Inc., a
Delaware corporation,
its general partner
By: /s/ Xxxx X. Xxxxxxxxx
______________________
Xxxx X. Xxxxxxxxx
Senior Vice President
EXHIBIT A
Operating Expense Certificate
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
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")
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Ladies and Gentlemen:
This certificate is delivered in accordance with Section 2.11(f) of
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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: ______________________
Xxxx X. Xxxxxxxxx
Senior Vice President
EXHIBIT B
Additional Definitions
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
Xxxx Xxxxx $1,090,909.00
Rivedale Gardens $1,636,364.00
EXHIBIT C
Capital Improvement and Repair and Environmental Remediation Exhibit
[Intentionally left blank]
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
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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.
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.
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) Xxxx Xxxxx - $390,000 and
(iii) Riverdale Gardens - $470,000.
