Exhibit 10.2.1
LOAN AGREEMENT
Dated as of November 1, 2002
Among
THOSE ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III,
collectively, as Borrowers
and
VENTAS REALTY, LIMITED PARTNERSHIP,
as Lender
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.............................1
Section 1.1. Definitions...................................................1
Section 1.2. Principles of Construction...................................24
ARTICLE II. THE LOAN..........................................................24
Section 2.1. The Loan.....................................................24
Section 2.2. Interest Rate................................................25
Section 2.3. Loan Payments................................................26
Section 2.4. Prepayments..................................................29
Section 2.5. Extension of Loan............................................30
Section 2.6. Supplemental Mortgage Affidavits.............................31
ARTICLE III. REPRESENTATIONS AND WARRANTIES...................................31
Section 3.1. Borrower Representations.....................................31
Section 3.2. Survival of Representations..................................41
ARTICLE IV. BORROWER COVENANTS................................................41
Section 4.1. Borrower Affirmative Covenants...............................41
Section 4.2. Borrower Negative Covenants..................................49
ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION...............................52
Section 5.1. Insurance....................................................52
Section 5.2. Casualty and Condemnation....................................56
Section 5.3. Delivery of Net ProceedS.....................................57
ARTICLE VI. ACCOUNTS..........................................................61
Section 6.1. Cash Management Account/Collection Account...................61
Section 6.2. Distributions from Cash Management Account...................62
Section 6.3. Tax and Insurance Escrow Account.............................64
Section 6.4. Debt Service Account.........................................65
Section 6.5. Operating Expense Reserve Account............................65
Section 6.6. Capital Expenditure Reserve Account..........................66
Section 6.7. Deferred Maintenance and Environmental Escrow Account........66
Section 6.8. Net Proceeds Account.........................................67
Section 6.9. Excess Cash Reserve Account..................................67
Section 6.10. Intentionally Deleted........................................68
Section 6.11. Account Collateral...........................................68
Section 6.12. Permitted Investments........................................68
Section 6.13. Bankruptcy...................................................69
Section 6.14. Letters of Credit............................................69
Section 6.15. Provisions Regarding Letters of Credit.......................70
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ARTICLE VII. PROPERTY MANAGEMENT..............................................71
Section 7.1. The Management Agreement.....................................71
Section 7.2. Prohibition Against Termination or Modification..............71
Section 7.3. Replacement of Manager.......................................72
ARTICLE VIII. TRANSFERS.......................................................72
Section 8.1. Transfer of the Properties...................................72
Section 8.2. Transfer of Equity Interests.................................72
Section 8.3. Lender's Consent Rights......................................72
ARTICLE IX. SALE AND SECURITIZATION OF MORTGAGE...............................73
Section 9.1. Sale of Mortgages and Securitization.........................73
Section 9.2. Securitization Indemnification...............................74
ARTICLE X. DEFAULTS...........................................................77
Section 10.1. Event of Default.............................................77
Section 10.2. Remedies.....................................................80
Section 10.3. Remedies Cumulative..........................................82
ARTICLE XI. MISCELLANEOUS.....................................................82
Section 11.1. Successors and Assigns.......................................82
Section 11.2. Lender's Discretion..........................................82
Section 11.3. Governing Law................................................82
Section 11.4. Modification, Waiver in Writing..............................84
Section 11.5. Delay Not a Waiver...........................................84
Section 11.6. Notices......................................................84
Section 11.7. Waiver of Right to Trial by Jury.............................85
Section 11.8. Headings.....................................................86
Section 11.9. Severability.................................................86
Section 11.10. Preferences..................................................86
Section 11.11. Waiver of Notice.............................................86
Section 11.12. Remedies of Borrower.........................................86
Section 11.13. Expenses; Indemnity..........................................87
Section 11.14. Schedules Incorporated.......................................88
Section 11.15. Offsets, Counterclaims and Defenses..........................88
Section 11.16. No Joint Venture or Partnership; No Third Party
Beneficiaries.............................................88
Section 11.17. Publicity....................................................88
Section 11.18. Waiver of Marshalling of Assets..............................89
Section 11.19. Waiver of Offsets/Defenses/Counterclaims.....................89
Section 11.20. Conflict; Construction of Documents; Reliance................89
Section 11.21. Brokers and Financial Advisors...............................89
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Section 11.22. Exculpation..................................................90
Section 11.23. Prior Agreements.............................................92
Section 11.24. Servicer.....................................................92
Section 11.25. Duplicate Originals; Counterparts............................92
Section 11.26. Cross Collateralization......................................92
Section 11.27. Joint and Several Liability..................................93
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SCHEDULES
Schedule I - Operating Leases
Schedule II - Intentionally Deleted
Schedule III - Borrowers, Fee Owners, Operators, Licensed Beds
Schedule IV - Organizational Chart
Schedule V - Allocated Loan Amount
Schedule VI - Amortization
Schedule VII - Intentionally deleted
Schedule VIII - Guarantors
Schedule IX - Insurance Claims
Schedule X - Waivers of Physical Plant Standards
Schedule XI - Pending Audits
Schedule XII - Waivers in Connection with Licensed Beds
Schedule XIII - Proceedings and Notices
Schedule XIV - Enforcement Actions
EXHIBITS
Exhibit A - Payor Notice (Medicare and Medicaid Third Party Payors)
Exhibit B - Interest Rate Cap Requirements
Exhibit C - Form of Nonconsolidation Opinion
Exhibit D - Material Agreements
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 1, 2002 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), among VENTAS REALTY, LIMITED PARTNERSHIP, a Delaware limited
partnership, having an address at 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000 (together with its successors and assigns "Lender") and THOSE
ENTITIES LISTED AS A "BORROWER" ON SCHEDULE III attached hereto, each a Delaware
limited liability company and each having an address at 0000 Xxxxxxx Xxxx, Xxxxx
000, Xxxx Xxxx, Xxxxxxxxxxxx 00000 (each, a "Borrower" and collectively, the
"Borrowers").
All capitalized terms used herein shall have the respective meanings
set forth in Article I hereof.
W I T N E S S E T H :
WHEREAS, Borrowers desire to obtain a loan in the maximum principal
amount of $55,000,000 from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the conditions and terms of this Agreement and the other
Loan Documents.
NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided:
"Acceptable Interest Rate Cap Agreement" means an interest rate cap
agreement (together with the confirmation, definitions and schedules relating
thereto) acceptable to Lender among Borrowers and a financial institution cap
provider with a LIBOR strike price no higher than seven percent (7%) per annum
and a notional amount equal to the Maximum Principal Loan Amount, and otherwise
satisfying the requirements set forth on Exhibit B.
"Account Collateral" means, collectively, the Collateral Accounts and
all sums at any time held, deposited or invested therein, together with any
interest or other earnings thereon, and all proceeds thereof (including proceeds
of sales and other dispositions), whether accounts, general intangibles, chattel
paper, deposit accounts, instruments, documents or securities.
"Accreditation" means certification by a generally recognized
independent agency or other organization that a facility fully complies with the
standards set by such agency or organization for operation of such a facility.
"Affiliate" of any specified Person means any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this Agreement, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the 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 be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Allocated Loan Amount" means the portion of the Loan Amount allocated
to each Property as set forth on Schedule V, as such amounts shall be adjusted
from time to time as hereinafter set forth. Upon each adjustment in the amount
of Debt due to (A) a regular payment of monthly Debt Service pursuant to Section
2.3.1, each Allocated Loan Amount shall be decreased by an amount equal to the
product of (i) the amount of such 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) or (B) an adjustment of the Loan
Amount as a result of a reallocation of the aggregate principal balance of the
Loan and the Mezzanine Loan pursuant to Section 2 of the Cooperation Agreement,
each Allocated Loan Amount shall be decreased or increased by an amount equal to
the product of (i) the amount by which the Loan Amount is to be decreased or
increased in connection with a reallocation pursuant to Section 2 of the
Cooperation Agreement 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 Debt is reduced as the result of Lender's receipt of proceeds with
respect to a Condemnation or Casualty affecting one hundred percent (100%) of a
Property, the Allocated Loan Amount for such Property with respect to which the
insurance proceeds or Award were received shall, at Lender's sole discretion, be
reduced to zero (such Allocated Loan Amount prior to reduction being referred to
as the "Withdrawn Allocated Amount"), and each other Allocated Loan Amount
shall, if the Withdrawn Allocated Amount exceeds the proceeds (such excess being
referred to as the "Proceeds Deficiency"), be increased by an amount equal to
the product of (1) the Proceeds Deficiency and (2) a fraction, the numerator of
which is the applicable Allocated Loan Amount (prior to the adjustment in
question) and the denominator of which is the aggregate of all of the Allocated
Loan Amounts (prior to the adjustment in question) other than the Withdrawn
Allocated Amount.
"ALTA" means American Land Title Association, or any successor
thereto.
"Alteration Threshold" means (a) with respect to any Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such Property
or (ii) $200,000 and (b) with respect to the Properties, two percent (2%) of the
Loan Amount.
"Annual Budget" means the operating and capital budget for the
Properties on a combined basis and for each Property setting forth, in
reasonable detail, (i) Borrowers' good faith estimate of the anticipated results
of operations, including Operating Income, Operating Expenses, and Capital
Expenditures for the applicable Fiscal Year and (ii) a breakdown of
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projected Patient Revenues and other revenues of each Operator and its
Affiliates itemized by payor type.
"Assignment of Leases" means, with respect to each Property, that
certain first priority Assignment of Leases and Rents and Contracts, dated as of
the date hereof, from the applicable Borrower, as assignor, to Lender, as
assignee, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, and "Assignments of Leases and Rents"
means all such instruments collectively.
"Assisted Living Facility" means a residential or facility-based
program that provides housing and supportive services, supervision, personalized
assistance, health-related services or a combination thereof which meets the
needs of individuals who are unable to perform or who need assistance in
performing the activities of daily living, whether licensed as an assisted
living facility, a residential care facility or adult care facility.
"Assignment of Management Agreement" means that certain Assignment of
Management Agreement and Subordination of Management Fees dated the date hereof
among Borrowers, Manager and Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, and "Assignments
of Management Agreements" means all such instruments collectively.
"Award" means any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of a Property.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors'
rights.
"Basic Carrying Costs" means, with respect to each Property, the sum
of the following costs associated with such Property: (i) Taxes, (ii) Insurance
Premiums and (iii) ground rents, if any.
"Borrower" and "Borrowers" each has the meaning set forth in the first
paragraph of this Agreement.
"Borrower Party" means each Borrower and any entity which held any
Regulatory Permit relating to any Property prior to transferring same to a
Borrower.
"Breakage Costs" has the meaning set forth in Section 2.3.8.
"Business Day" means any day other than a Saturday, a Sunday or a
legal holiday on which national banks are not open for general business in the
State of New York or the State where the Cash Management Bank is located.
"Capital Expenditure Reserve Account" shall have the meaning set forth
in Section 6.6(a).
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"Capital Expenditures" means, with respect to each Property, hard and
soft costs incurred by any Borrower with respect to replacements and capital
repairs made to the Property (including repairs to, and replacements of,
structural components, roofs, building systems, parking garages and parking
lots), in each case to the extent capitalized in accordance with GAAP and to the
extent not paid for by Net Proceeds.
"Cash Management Account" has the meaning set forth in Section 6.1(a).
"Cash Management Agreement" means that certain Cash Management
Agreement of even date herewith among Lender, Borrowers and Cash Management
Bank, as the same may from time to time be modified, amended or replaced.
"Cash Management Bank" means The Bank of New York, a New York banking
institution, and any other Eligible Institution from time to time selected in
accordance with Section 6.1(c).
"Cash Management Event" means at any time the Debt Service Coverage
Ratio falls below 1.35:1.00.
"Cash Management Period" means the period of time commencing on the
occurrence of a Cash Management Event and ending on the Payment Date following
the date that the Debt Service Coverage Ratio is at or above 1.35:1.00 for two
(2) consecutive quarters.
"Casualty" means the occurrence of any casualty, damage or injury, by
fire or otherwise, to a Property or any part thereof.
"Casualty Consultant" has the meaning set forth in Section 5.3.2(c).
"Casualty Retainage" has the meaning set forth in Section 5.3.2(d).
"Closing Date" means the date of funding the Loan.
"CMS" means the Centers for Medicare and Medicaid Services (formerly
known as the Health Care Financing Administration ("HCFA")).
"Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral Accounts" means, collectively, the Cash Management
Account, the Collection Account, the Tax and Insurance Escrow Account, the Debt
Service Account, the Net Proceeds Account, the Capital Expenditure Reserve
Account, the Operating Expense Reserve Account, the Excess Cash Reserve Account
and the Deferred Maintenance and Environmental Escrow Account.
"Collateral Assignment of Interest Rate Cap" means, that certain
Collateral Assignment of Interest Rate Cap Agreement, dated the date hereof,
from Borrowers, as assignors, to Lender, as assignee, as the same may be
amended, restated, replaced, supplemented
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or otherwise modified from time to time and any other Collateral Assignment of
Interest Rate Cap Agreement hereafter delivered.
"Collection Account" has the meaning set forth in Section 6.1.
"Collection Account Agreement" means that certain Collection Account
Agreement of even date herewith among Lender, Borrowers and Collection Account
Bank, as the same may from time to time be modified, amended or replaced.
"Collection Account Bank" means First Union National Bank or any other
Eligible Institution from time to time selected in accordance with Section
6.1(c).
"CON" means a certificate of need or similar permit or approval (not
including conventional building permits) from a Governmental Authority related
to the construction and/or operation of Improvements at any Property for use for
a specified number of beds in a Nursing Facility, Assisted Living Facility
and/or Specialty Hospital, or alteration of any such Improvements or
modifications of services provided at a Property used as a Nursing Facility,
Assisted Living Facility and/or Specialty Hospital.
"Condemnation" means a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of a
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting the applicable Property or
any part thereof.
"Cooperation Agreement" means that certain Cooperation Agreement of
even date herewith among Lender, Borrowers, Mezzanine Borrowers and Guarantors,
as the same may from time to time be modified, amended or replaced.
"Debt" means the outstanding principal amount of the Loan together
with all interest accrued and unpaid thereon and all other sums (including,
without limitation, the Spread Maintenance Premium, the Prepayment Fee payable
pursuant to Section 2.4.1 hereof, any Breakage Costs and any of Lender's costs
and expenses for which any Borrower is responsible under the terms of any of the
Loan Documents) due to Lender in respect of the Loan under the Note, this
Agreement, the Mortgages, the Environmental Indemnity or any other Loan
Document.
"Debt Constant" means eleven and thirty-three one hundredths percent
(11.33%).
"Debt Service" means, with respect to any particular period of time,
scheduled principal and interest payments under the Note.
"Debt Service Account" has the meaning set forth in Section 6.4.
"Debt Service Coverage Ratio" shall mean, for any twelve (12) calendar
month period, the ratio of (i) the Pro Forma Net Operating Income for all
Properties for such period immediately preceding the date of calculation to (ii)
Debt Service plus the Mezzanine Debt Service for the twelve (12) calendar month
period following the date of calculation assuming, as
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to the Debt Service, an interest rate equal to the greater of the Debt Constant
and the Interest Rate in effect on the date of such calculation.
"Default" means the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"Default Rate" means, with respect to the Loan, a rate per annum equal
to the lesser of (i) the Maximum Legal Rate, or (ii) four percent (4%) above the
Interest Rate.
"Deferred Maintenance Amount" means $179,456.25.
"Deferred Maintenance and Environmental Escrow Account" has the
meaning set forth in Section 6.7(a).
"Deferred Maintenance Conditions" means those items described in the
property condition reports delivered to Lender in connection with the Loan.
"Disclosure Document" has the meaning set forth in Section 9.2(a).
"Eligible Account" means a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (ii)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company is subject to regulations substantially similar to 12 C.F.R. (S)
9.10(b), having in either case a combined capital and surplus of at least fifty
million dollars ($50,000,000) and subject to supervision or examination by
federal and state authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
"Eligible Institution" means a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Xxxxx'x, and F-1+ by Fitch in the case of accounts in which funds are held
for thirty (30) days or less or, in the case of Letters of Credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least "AA-" by Fitch and S&P and "Aa2" by
Xxxxx'x.
"Embargoed Person" has the meaning set forth in Section 3.1.37.
"Environmental Indemnity" means that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrowers and Guarantors in
connection with the Loan for the benefit of Lender.
"Equipment" has the meaning set forth in the Granting Clause of the
Mortgages.
"ERISA" has the meaning set forth in Section 4.2.11.
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"Event of Default" has the meaning set forth in Section 10.1.
"Excess Cash Reserve Account" has the meaning set forth in Section
6.9(a).
"Exchange Act" has the meaning set forth in Section 9.2(a).
"Extension Fee" means one percent (1%) of the outstanding principal
balance of the Loan as of the Maturity Date (or, with respect to the second one
(1) year extension option, the Maturity Date as previously extended).
"Fee Owner" means, with respect to a Property, the applicable Borrower
identified as "owner" on Schedule III attached hereto, in its capacity as fee
owner of such Property, or its successors or permitted assigns hereunder.
"Fiscal Year" means each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"Fitch" means Fitch, Inc.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.
"Governmental Authority" means any court, board, agency, commission,
office or authority of any nature whatsoever or any governmental xxxx (xxxxxxx,
xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) whether now or hereafter
in existence, including, without limitation, CMS, the United States Department
of Health and Human Services, any state licensing agency and/or any state
Medicaid agency.
"Guarantors" means, collectively, Trans Healthcare, Inc., a Delaware
corporation, and each of its subsidiaries shown in the attached Schedule VIII
and "Guarantor" shall mean each such entity.
"Guaranty (Recourse Obligations)" means that certain Guaranty of
Recourse Obligations of even date herewith from Guarantors for the benefit of
Lender.
"Improvements" has the meaning set forth in the Granting Clause of the
Mortgages.
"Indebtedness" means, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any
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mandatory redemption of shares or interests, (iv) all Indebtedness of others
guaranteed by such Person, directly or indirectly, (v) all obligations under
leases that constitute capital leases for which such Person is liable, and (vi)
all obligations of such Person under interest rate swaps, caps, floors, collars
and other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations such Person otherwise assures a creditor against loss.
"Indemnified Liabilities" has the meaning set forth in Section
11.13(b).
"Independent Director" means a duly appointed member of the board of
directors (or with respect to a Single Member LLC, its board of managers) of the
relevant entity who shall not have been, at the time of such appointment or at
any time while serving as a director of the relevant entity and may not have
been at any time in the preceding five (5) years, (a) a direct or indirect legal
or beneficial owner in such entity or any of its affiliates, (b) a creditor,
supplier, employee, officer, director, family member, manager, or contractor of
such entity or any of its affiliates, or (c) a person who controls (whether
directly, indirectly, or otherwise) such entity or its affiliates or any
creditor, supplier, employee, officer, director, manager, or contractor of such
entity or its affiliates.
"Insolvency Opinion" means that certain bankruptcy nonconsolidation
opinion letter substantially in the form attached hereto as Exhibit C delivered
by Xxxxxxxx & Xxxxx in connection with the Securitization, provided that the
assumptions set forth in such form upon which such opinions are based are true
and correct as of the date such opinion is to be delivered.
"Insurance Premiums" has the meaning set forth in Section 5.1.1(b).
"Interest Accrual Period" means, subject to the proviso in the
definition of the defined term "Payment Date," each period of time running from
and including the fifteenth (15th) day of a calendar month to and including the
fourteenth (14th) day of the following calendar month during the term of the
Loan. If the Closing Date shall occur prior to the fifteenth (15th) day of a
calendar month, the first Interest Accrual Period shall commence on and include
the Closing Date and end on and include the fourteenth (14th) day of the
calendar month in which the Closing Date occurs. If the Closing Date shall occur
after the fourteenth (14th) day of a calendar month, the first Interest Accrual
Period shall commence on the Closing Date and end on and include the fourteenth
(14th) day of the calendar month following the month in which the Closing Date
occurs. If the Closing Date shall occur on the fourteenth (14th) 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 six percent (6%) per annum for the initial
Interest Accrual Period and with respect to any subsequent Interest Accrual
Period, an annual rate of interest that is the sum of (i) LIBOR on the
applicable LIBOR Determination Date plus (ii) the Spread. Each determination by
Lender of the Interest Rate shall be conclusive and binding absent manifest
error.
"Inventory" means all "inventory," as such term is defined in the UCC
and, to the extent not included in such definition, any goods now owned or
hereafter acquired by any Borrower intended for sale or lease, or to be used in
connection with services furnished by any
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Borrower in connection with any Property, including without limitation, all
inventories held by each Borrower for sale or use at or from any Property, and
all other such goods, wares, merchandise, and materials and supplies of every
nature owned by any Borrower and all such other goods returned to or repossessed
by any Borrower.
"Lease" means any lease, sublease, sub-sublease or other agreement or
arrangement affecting the use or occupancy of all or any portion of any Property
now in effect or hereafter entered into (including, without limitation, any
Operating Lease, patient admission and resident care agreement, letting,
sublease, license, concession, tenancy or other occupancy agreement covering or
encumbering all or any portion of such Property), together with any guarantee,
supplement, amendment, modification, extension or renewal of the same, and any
additional remainder, reversion, or other right and estate appurtenant thereto.
"Legal Requirements" means, with respect to each Borrower and each
Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, guidelines, ordinances, judgments, decrees and
injunctions of Governmental Authorities affecting such Borrower or such Property
or any part thereof or the construction, use, alteration or operation thereof,
or any part thereof, whether now or hereafter enacted and in force, including,
without limitation, (i) the Americans with Disabilities Act of 1990, (ii) all
zoning, subdivision and land use laws, regulations and ordinances, health, fire,
building codes and parking laws, (iii) skilled nursing facility, residential
care, personal care, adult care, boarding home and/or assisted living facility
laws, rules, regulations and guidelines, including, without limitation, Medicare
Regulations and Medicaid Regulations and (iv) any licensure requirements or
certification requirements under applicable federal and/or state cost
reimbursement programs, including, without limitation, Medicare and Medicaid,
and all permits, licenses and authorizations and regulations relating thereto,
and all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to any Borrower, at any time in force
affecting such Property or any part thereof, including, without limitation, any
which may (i) require repairs, modifications or alterations in or to such
Property or any part thereof, or (ii) in any way limit the use and enjoyment
thereof.
"Lender" means Ventas Realty, Limited Partnership, a Delaware limited
partnership, together with its successors and assigns.
"Lender Indemnities" has the meaning set forth in Section 11.13(b).
"Letter of Credit" means a clean, irrevocable, unconditional,
transferable evergreen letter of credit with respect to which no Borrower has
any reimbursement obligation, payable on sight draft only, in favor of Lender
and entitling Lender to draw thereon in New York, New York, issued by an
Eligible Institution. A Letter of Credit must expressly provide that (i) partial
draws are permitted thereunder, (ii) it is freely transferable to any successor
or assign of Lender without cost, and (iii) Lender is entitled to draw on it
immediately and without further notice (a) upon the occurrence and during the
continuance of a Default or Event of Default, (b) if any Borrower fails to
deliver to Lender, no less than thirty (30) days prior to the termination of a
Letter of Credit (including any renewal or extension thereof), a renewal or
extension of such Letter of Credit or a replacement Letter of Credit, or (c) if
the issuing bank is
9
no longer an Eligible Institution and Borrowers fail to deliver to Lender a
replacement Letter of Credit within ten (10) days of the date that the issuing
bank is no longer an Eligible Institution.
"Liabilities" has the meaning set forth in Section 9.2(b).
"LIBOR" means, for each Interest Accrual Period, the rate for deposits
in United States dollars for a one-month period which appears on the display
designated as "Page 3750" on the Dow Xxxxx Telerate Service (or such other page
as may replace 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for U.S.
dollar deposits) as of 11:00 a.m. London time on the LIBOR Determination Date.
If no such rate appears on Telerate Page 3750 as described above, LIBOR for the
applicable Interest Accrual Period will be determined on the basis of the rates
at which deposits in United States dollars are offered by four major banks in
the London interbank market selected by the Lender (the "Reference Banks") at
approximately 11:00 a.m., London time, on the applicable LIBOR Determination
Date to prime banks in the London interbank market for a one-month period (each
a "Reference Bank Rates"). The Lender shall request the principal London office
of each of the Reference Ban to provide a quotation of its Reference Bank Rate.
If at least two such quotations are provided, LIBOR for such Interest Accrual
Period will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR for such Interest Accrual Period will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Lender, at approximately 11:00 a.m., New York City time, on such date for
loans in United States dollars to leading European banks for a one-month period.
If, on any LIBOR Determination Date, the Lender is required but unable to
determine LIBOR in the manner provided herein, LIBOR for the next Interest
Accrual Period shall be LIBOR as determined on the previous LIBOR Determination
Date. Notwithstanding the foregoing, in no event shall LIBOR be less than the
LIBOR Floor Rate.
"LIBOR Determination Date" means, with respect to any Interest Accrual
Period and subject to the proviso in the definition of the term "Payment Date",
the date that is two London Business Days prior to the first day of such
Interest Accrual Period.
"LIBOR Floor Rate" means a rate equal to three percent (3%) per annum.
"Lien" means, with respect to each Property, any mortgage, deed of
trust, lien, pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting such Property or any portion
thereof or any Borrower or any interest therein, 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, and mechanic's, materialmen's and other
similar liens and encumbrances.
"Loan" means the loan made by Lender to Borrowers pursuant to this
Agreement.
"Loan Amount" shall mean the outstanding principal balance of the
Loan, as the same may be increased or decreased as a result of the Re-sizing,
prepayment or otherwise from time to time.
10
"Loan Documents" means, collectively, this Agreement, the Note, the
Mortgages, the Assignments of Leases, the Cash Management Agreement, the
Collection Account Agreement, the Guaranty (Recourse Obligations), Master
Guaranty, the Environmental Indemnity, the Assignment of Management Agreement,
the Collateral Assignment of Interest Rate Cap and any other document pertaining
to the Properties as well as all other documents now or hereafter executed
and/or delivered in connection with the Loan as such documents may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Lockout Date" means the date that is eighteen (18) months after the
Re-sizing Date.
"London Business Day" means any day on which commercial banks are open
for business (including dealings in foreign exchange and foreign currency
deposits) in London, England.
"Management Agreement" means the Management Services Agreement, dated
as of the date hereof, between the Operators, as operator, and the Manager, as
manager, pursuant to which such manager is to provide management and other
services with respect to all of the Properties.
"Manager" means Trans Health Management, Inc., a Delaware corporation
, in its capacity as manager under the Management Agreement, or its successors
or permitted assigns thereunder.
"Maryland Borrowers" means each of the Borrowers that owns or leases a
Property in the State of Maryland.
"Maryland Staff Leasing Agreement" means the Staff Leasing Agreement
dated the date hereof between certain of the Maryland Borrowers and the Ohio
Staff Provider, as staff provider, pursuant to which the Maryland Staff Provider
is to provide personnel for all the Properties located in the State of Maryland.
"Maryland Staff Provider" means THI Services of Maryland, Inc., a
Delaware corporation.
"Master Guaranty" means that certain Master Guaranty, dated as of the
date hereof, from the Guarantors to Lender, Mezzanine Lender and Sale/Leaseback
Lessor, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"Master Guaranty Pledge" means that certain Guarantor Pledge and
Security Agreement, dated as of the date hereof, from the Guarantors to Lender,
Mezzanine Lender and Sale/Leaseback Lessor, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"Material Adverse Effect" means a material adverse effect upon (i) the
ability of any Borrower to perform, or of Lender to enforce, any material
provision of any Loan Document, (ii) the enforceability of any material
provision of any Loan Document, or (iii) the
11
value, Net Operating Income, use or enjoyment of any Property or the operation
thereof. In determining whether any individual event would result in a Material
Adverse Effect, notwithstanding that such event does not of itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.
"Material Agreement" means each contract or agreement (including the
Operating Lease) relating to the ownership, management, development, use,
operation, leasing maintenance, repair or improvement of a Property, or
otherwise imposing obligations on a Borrower, under which a Borrower would have
the obligation to pay more than $50,000 per annum or which cannot be terminated
by a Borrower without cause upon ninety (90) days notice or less without the
payment of a termination fee.
"Maturity Date" means November 15, 2005, as the same may be extended
pursuant to Section 2.5 hereof, or such other date on which the final payment of
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise. At Lender's option, the Maturity Date may be changed from November
15, 2005 to the Re-sizing Maturity Date in accordance with the Cooperation
Agreement.
"Maximum Legal Rate" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"Maximum Loan Amount" means $55,000,000.
"Medicaid" means that certain program of medical assistance, funded
jointly by the federal government and the states for impoverished individuals
who are aged, blind and/or disabled, and for members of families with dependent
children, which program is more fully described in Title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) and the regulations promulgated
thereunder.
"Medicaid Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicaid Regulations or any similar certification issued by CMS or a state
agency.
"Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act (42 U.S.C. (S)(S)
1396 et seq.) or elsewhere) affecting the medical assistance program established
by Title XIX of the Social Security Act; (ii) all applicable provisions of all
federal rules, regulations, manuals, orders and administrative, reimbursement
and other guidelines of all Governmental Authorities (whether or not having the
force of law) promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes enacted and all state
plans for medical assistance, and state plan
12
amendments filed by the state with CMS in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all applicable
provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, and other guidelines of all Governmental Authorities (whether or
not having the force of law) promulgated pursuant to or in connection with any
of the foregoing, in each case as may be amended, supplemented or otherwise
modified from time to time.
"Medicare" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, Nursing Facilities, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. (S)(S) 1395 et seq.) and the regulations promulgated
thereunder.
"Medicare Certification" means, with respect to any Person, health
care facility, or Nursing Facility, certification by CMS or a state agency or
entity under contract with CMS that such Person, facility or Nursing Facility,
as applicable, complies with the conditions of participation set forth in
Medicare Regulations or any similar certification issued by CMS or a state
agency.
"Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act (42 U.S.C. (S)(S)
1395 et seq.) or elsewhere) affecting the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act, together
with all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities promulgated pursuant to or in connection with any of the foregoing
(whether or not having the force of law), as each may be amended, supplemented
or otherwise modified from time to time.
"Mezzanine Borrowers" means, collectively, THI of Ohio SNFs, LLC, THI
of Ohio ALFs I, LLC, THI of Maryland SNFs I, LLC, THI of Maryland SNFs II, LLC,
THI of Maryland at Franklin Square, LLC, THI of Maryland at Fort Washington,
LLC, THI of Ohio at Kent, LLC, THI of Ohio at Cortland, LLC and THI of Ohio at
Berea, LLC, each a Delaware limited liability company and "Mezzanine Borrower"
means each such entity individually.
"Mezzanine Cash Management Account" means that certain cash management
account established pursuant to the terms of the Mezzanine Loan Agreement.
"Mezzanine Cash Management Period" means the "Cash Management Period"
as defined in the Mezzanine Loan Agreement.
"Mezzanine Debt Service" means, with respect to any particular period
of time, scheduled principal and interest payments under the Mezzanine Loan.
"Mezzanine Lender " means Ventas Realty, Limited Partnership, a
Delaware limited partnership, and its successors and assigns.
"Mezzanine Loan" means that certain loan in the original principal
amount of Twenty Two Million and No/100 Dollars ($22,000,000) of even date
herewith made by Mezzanine Lender to Mezzanine Borrowers, together with any
permitted refinancing thereof.
13
"Mezzanine Loan Agreement" means that certain Mezzanine Loan Agreement
of even date herewith among Mezzanine Borrowers, as borrowers and Mezzanine
Lender, as lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.
"Mezzanine Payment Date" means the "Payment Date" as defined in the
Mezzanine Loan Agreement.
"Monthly Capital Expenditure Reserve Amount" means $35,050.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means, (a) with respect to each Property located in the
State of Ohio, a first priority Open-Ended Fee and Leasehold Mortgage and
Security Agreement or (b) with respect to each Property located in the State of
Maryland, a first priority Deed of Trust and Security Agreement, or similar
security instrument, dated the date hereof, executed and delivered by a Borrower
as security for the Loan and encumbering such Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, and "Mortgages" means all such instruments collectively.
"Net Operating Income" means, for any period, the amount by which
Operating Income exceed Operating Expenses.
"Net Proceeds" means: (i) the net amount of all insurance proceeds
payable as a result of a Casualty to a Property, after deduction of reasonable
costs and expenses (including, but not limited to, reasonable attorneys' fees),
if any, in collecting such insurance proceeds and taxes, if any, payable by a
Borrower with respect to such proceeds, or (ii) the net amount of the Award,
after deduction of reasonable costs and expenses (including, but not limited to,
reasonable attorneys' fees), if any, in collecting such Award and taxes, if any,
payable by a Borrower with respect to such proceeds.
"Net Proceeds Account" has the meaning set forth in Section 6.8(a).
"Net Proceeds Deficiency" has the meaning set forth in Section
5.3.2(f).
"Note" has the meaning set forth in Section 2.1.3.
"Notice" has the meaning set forth in Section 11.6.
"Nursing Facility" means a facility (including any Alzheimer's or
dementia care unit of sub acute unit), which offers nonacute inpatient care to
patients who suffer from a disease, chronic illness, or disability requiring
nursing care without continuous hospital services, and who require medical
services and nursing services rendered by or under the supervision of a licensed
medical professional, together with convalescent or restorative services now or
hereafter located on a Property.
"Officer's Certificate" means a certificate delivered to Lender by a
Borrower which is signed by an authorized senior officer of such Borrower.
14
"Ohio Borrowers" means each of the Borrowers that owns or leases a
Property in Ohio.
"Ohio Staff Leasing Agreement" means the Staff Leasing Agreement,
dated the date hereof, between certain of the Ohio Borrowers and the Ohio Staff
Provider, as staff provider, pursuant to which the Ohio Staff Provider is to
provide personnel for all the Properties located in the State of Ohio.
"Ohio Staff Provider" means THI Services Corp., a Delaware
corporation.
"Operating Expense Reserve Account" shall have the meaning set forth
in Section 6.5(a).
"Operating Expenses" means, with respect to a Property (or the
Properties) and without duplication, all costs and expenses incurred by a
Borrower determined on an accrual basis, relating to the operation, maintenance,
repair, use and management of such Property (or the Properties), including,
without limitation, utilities, repairs and maintenance, insurance, property
taxes and assessments, advertising expenses, payroll and related taxes,
equipment lease payments, actual management fees but excluding (i) rent payments
made by any Operator under an Operating Lease and principal, interest and other
payments made by a Borrower under the Loan Documents, (ii) depreciation,
amortization and other non-cash expenses of the Properties; provided, however,
such costs and expenses shall be subject to reasonable adjustment by Lender to
normalize such costs and expenses and (iii) capital expenditures.
"Operating Income" means, without duplication, all revenue derived
from the ownership and/or operation of a Property (or Properties) by any
Borrower (other than Rents received from any Operator under any Operating Lease)
from whatever source determined on an accrual basis, including, but not limited
to, (i) Rents, including, but not limited to, Patient Revenues received by any
Operator or by any subtenant or licensee which is an Affiliate of any Operator
(but excluding any revenues received by any subtenant or licensee which is not
an Affiliate of any Operator) and (ii) Rents received by any Operator from any
subtenant or licensee which is not an Affiliate of any Operator (but excluding
any rents received from any subtenant or licensee which is an Affiliate of any
Operator); but excluding (a) sales, use and occupancy or other taxes on receipts
required to be accounted for by any Borrower to any governmental authority, (b)
non-recurring revenues as reasonably determined by Lender (e.g. proceeds from a
sale of assets or refinancing), (c) security deposits (except to the extent
determined by Lender to be properly utilized to offset a loss of rent received
by any Operator), (d) proceeds of casualty insurance and condemnation awards
(other than business interruption or other loss of income insurance related to
business interruption or loss of income for the period in question) and (e) any
proceeds from the sale or refinancing of any Property or recapitalization of any
Borrower. In addition, if required by Lender, income accrued but not paid in
cash during an accounting period shall be adjusted for an allowance for doubtful
accounts in a manner consistent with historical net realizable value.
"Operating Lease" means, with respect to each Property, the Operating
Lease Agreement, dated as of the date hereof, between the applicable Fee Owner,
as lessor, and the
15
applicable Operator, as lessee, as the same may be modified or amended from time
to time in accordance with the terms and conditions of this Agreement.
"Operator" means, with respect to a Property, the applicable Borrower
identified as "operator" on Schedule III attached hereto (if any), in its
capacity as: (i) the licensee entitled to deliver health care services at such
Property, (ii) as the provider under all Third Party Payor Programs, including,
but not limited to, Medicare and Medicaid and (iii) as the lessee under the
applicable Operating Lease, or its successors or permitted assigns thereunder.
"Other Charges" means all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Properties, now or hereafter levied or assessed or
imposed against the Properties or any part thereof.
"Other Taxes" has the meaning set forth in Section 2.3.6.
"Parent" means Trans Healthcare, Inc., a Delaware corporation
"Patient Revenues" means revenues generated from the sale of goods or
services at or through the Properties, whether by an Operator or any subtenant
or licensee of such Operator, or any other party, which revenues are primarily
derived from services provided to patients (including, without limitation,
revenues received or receivable for the use of or otherwise by reason of all
rooms, beds and other facilities provided, meals served, services performed or
goods sold at the Properties), including but not limited to, Self-Pay
Receivables and all other income, consideration, issues, accounts, profits or
benefits of any nature arising from the ownership, possession, use or operation
of such Property, including, without limitation, all rights to payment from the
Medicare and Medicaid programs or similar state or federal programs, boards,
bureaus or agencies (to the extent legally assignable under applicable law) and
rights to payment from patients or private insurers, arising from the operation
of such Property and all revenues, receipts, income, receivables and accounts
relating to or arising from rentals, rent equivalent income, income and profits
from guest rooms, meeting rooms, food and beverage facilities, vending machines,
telephone and television systems, guest laundry, and the provision or sale of
other goods and services.
"Payment Date" means the fifteenth (15th) day of every calendar month
occurring during the term of the Loan; provided, however, in connection with a
Securitization of the Loan, Lender may change the Payment Date, the LIBOR
Determination Date and the Interest Accrual Period. Each Borrower shall promptly
execute an amendment to this Agreement to evidence any such change and any
necessary amendment to the Acceptable Interest Rate Cap Agreement as approved by
the Lender and the Rating Agencies.
"Payor Notice" has the meaning set forth in Section 6.1(b).
"Permitted Debt" means as to a Property or Borrower (x) (i) unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of such Property which are paid within ninety (90) days
of the date incurred and (ii) financing of Equipment or vehicles used in the
ordinary course of operating and owning a Property (including capitalized leases
of such Equipment and vehicles) and (y) which unsecured trade payables and
16
financing do not exceed at any one time an aggregate amount as to all Borrowers
and their Properties on an aggregate basis of $3,500,000.
"Permitted Encumbrances" means, with respect to each Property,
collectively, (i) the Liens and security interests created by the Loan
Documents, (ii) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Property or any part thereof, (iii) Liens,
if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, (iv) such other title and survey exceptions as Lender has approved
or may approve in writing in Lender's sole discretion, none of which adversely
affect the use, value or operation of such Property, (v) Liens on the Equipment
or vehicles used in the ordinary course of business of operating and owning such
Property which are the subject of a financing of such Equipment or vehicles
(including capitalized leases of such Equipment or vehicles) which financing
complies with the terms of the definition of the term "Permitted Debt" and (vi)
the Operating Lease and the Leases consisting of Borrowers' standard form
patient admission and resident care agreements.
"Permitted Investments" has the meaning set forth in the Cash
Management Agreement.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, 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 set forth in Section
3.1.40(g).
"Policies" has the meaning specified in Section 5.1.1(b).
"Prepayment Fee" has the meaning set forth in Section 2.4.1.
"Prepayment Notice" has the meaning set forth in Section 2.4.1.
"Pro Forma Net Operating Income" means with respect to a Property, Net
Operating Income for any period for such Property adjusted as follows: (i) if
the actual occupancy percentage of such Property is greater than ninety-five
percent (95%), Operating Income for such Property shall be reduced by the
product of (1) the difference between the actual occupancy percentage of such
Property and ninety-five percent (95%) times (2) the Operating Income for such
Property, (ii) Operating Income for such Property shall be reduced by (x) a bad
debt expense for such Property equal to the greater of (A) the actual bad debt
expense and (B) six-tenths of one percent (0.6%) of Operating Income for such
Property for such period (after deducting the vacancy factor as calculated
above, if any); (y) a management fee for such Property equal to the greater of
(A) the actual management fee and (B) five percent (5%) of Operating Income for
such Property for such period (after deducting any vacancy factor and for bad
debt expenses as calculated above, as applicable); (z) a reserve for Capital
Expenditures equal to $300 per annum per licensed bed at each Property
consisting of a Nursing Facility or Assisted Living Facility and for each
Property which does not constitute a Nursing Facility or Assisted Living
Facility such per bed per annum amount as reasonably determined by the Lender;
provided, however, that Lender may further adjust Pro Forma Net Operating Income
as
17
Lender deems reasonably necessary based upon the occurrence of tangible events
that Lender reasonably determines may have a material effect on any Borrower or
Property.
"Property" means each parcel of real property, the Improvements
thereon and all personal property owned by any Borrower and encumbered by a
Mortgage, together with all rights pertaining to such property and Improvements,
all as more particularly described in the Granting Clauses of such Mortgage, and
"Properties" means all such parcels and other properties collectively.
"Qualified Equity Transferee" means an entity (i) with a minimum of
five (5) years experience operating Nursing Facilities, Assisted Living
Facilities and/or Specialty Hospitals similar to the Properties in the
jurisdictions in which the Properties are located with a minimum of 1,000 beds
in such facilities, (ii) which entity makes representations and warranties as
reasonably requested by Lender as to such entity's operations but shall at a
minimum make such representations and warranties substantially similar to those
set forth in Article III hereof and (iii) as to which a Rating Agency
Confirmation is delivered.
"Rating Agencies" means, prior to the final Securitization of the
Loan, each of S&P, Xxxxx'x and Fitch or any other nationally-recognized
statistical rating agency which has been designated by Lender and, after the
final Securitization of the Loan, shall mean any of the foregoing that have
rated any of the Securities.
"Rating Agency Confirmation" means a written affirmation from each of
the Rating Agencies that the credit rating of the Securities rated by such
Rating Agency immediately prior to the occurrence of the event with respect to
which such Rating Agency Confirmation is sought will not be qualified,
downgraded or withdrawn as a result of the occurrence of such event, which
affirmation may be granted or withheld in such Rating Agency's sole and absolute
discretion.
"Re-sizing" has the meaning set forth in the Cooperation Agreement.
"Re-sizing Date" means the earlier of (i) the Payment Date upon which
the Re-sizing shall occur or (ii) February 15, 2003.
"Re-sizing Maturity Date" means the date that is the third anniversary
of the Re-sizing Date.
"Reference Bank Rate" has the meaning set forth in the definition of
LIBOR.
"Reference Banks" has the meaning set forth in the definition of LIBOR
"Registration Statement" has the meaning set forth in Section 9.2(b).
"Regulatory Permits" has the meaning set forth in Section 3.1.40(b).
"Reimbursement Contracts" means all third party reimbursement
contracts for the Properties which are now or hereafter in effect with respect
to residents or patients qualifying for coverage under the same, including,
without limitation, Medicare, Medicaid and private
18
insurance agreements, and any successor program or other similar reimbursement
program and/or private insurance agreements.
"Rents" means, with respect to each Property, (x) all receipts, rents
(whether denoted as advance rent, minimum rent, percentage rent, additional rent
or otherwise), issues, income, royalties, profits, revenues (including, without
limitation, Patient Revenues and Self-Pay Receivables), proceeds, bonuses,
deposits (whether denoted as security deposits, utility deposits or otherwise),
lease termination fees or payments, rejection damages, buy-out fees and any
other fees made or to be made in lieu of rent, any award made hereafter to any
Borrower in any court proceeding involving any tenant, lessee, licensee or
concessionaire under any of the Leases in any bankruptcy, insolvency or
reorganization proceedings in any state or federal court, and all other
payments, rights and benefits of whatever nature from time to time due under any
of the Leases, including, without limitation, rights to payment earned under the
Leases for space in the Improvements for the operation of ongoing businesses,
such as restaurants, news stands, xxxxxx shops, beauty shops and pharmacies;
provided, however, "Rents" shall not include "patient trust accounts" or
"patient needs funds."
"Restoration" has the meaning set forth in Section 5.2.1.
"Restoration Threshold" means (a) with respect to any Property, the
greater of (i) five percent (5%) of the Allocated Loan Amount for such Property
or (ii) $200,000 and (b) with respect to the Properties, two percent (2%) of the
Loan Amount.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"Sale/Leaseback Lessor" means Ventas Realty, Limited Partnership, a
Delaware limited partnership, in its capacity as lessor under the Lease
Documents (as defined in the Master Guaranty).
"SAP Completion Date" has the meaning set forth in the Cooperation
Agreement.
"Secondary Market Transaction" has the meaning set forth in Section
9.1(a).
"Securities" has the meaning set forth in Section 9.1(a).
"Securities Act" has the meaning set forth in Section 9.2(a).
"Securitization" has the meaning set forth in Section 9.1(a).
"Self-Pay Receivables" means those receivables whereby an individual
or resident of a Property is the payor of such receivables.
"Servicer" has the meaning set forth in Section 11.24.
"Servicing Agreement" has the meaning set forth in Section 11.24.
"Severed Loan Documents" has the meaning set forth in Section 10.2(c).
19
"Single Member LLC" means a limited liability company that (i) is
either (a) a single member limited liability company or (b) a multiple member
limited liability company that does not have a Single-Purpose Entity that owns
at least 1% of the equity interests in such limited liability company as its
managing member, and (ii) is organized under the laws of the State of Delaware.
"Single-Purpose Entity" means a corporation, limited partnership, or
limited liability company which, at all times since its formation and thereafter
(i) was and will be organized solely for the purpose of (x) owning or operating
the applicable Property or (y) acting as the managing member of the limited
liability company which owns or operates a Property or (z) acting as the general
partner of a limited partnership which owns or operates a Property, (ii) has not
and will not engage in any business unrelated to (x) the ownership or operation
of the applicable Property or (y) acting as a member of a limited liability
company which owns or operates such Property or (z) acting as a general partner
of a limited partnership which owns or operates such Property, (iii) has not and
will not have any assets other than (x) those related to the applicable Property
or (y) its memberbership interest in the limited liability company which owns or
operates such Property or (z) its general partnership interest in the limited
partnership which owns or operates such Property, 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 two Independent Directors, (vii) the
board of directors of such entity has not taken and will not take any action
requiring the unanimous affirmative vote of one hundred percent (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, is either a Single Member LLC or 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 or managers (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 (w) 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; (x) 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; (y) make any
assignment for the benefit of such entity's creditors; or (z) take any action
that might cause such entity to become insolvent, (xi) has maintained and will
maintain its accounts, books and records separate from any other person or
entity (except that, for accounting and reporting purposes, each Borrower may be
included in the consolidated financial statements of any equity owner of such
Borrower in accordance with GAAP provided that such financials will contain
detailed notes stating that such entity is a separate legal entity that owns its
own assets and has creditors that
20
have a security interest in such assets and that, as to each Fee Owner, the
applicable Property has been sold to such Fee Owner), (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 (except
that, for accounting and reporting purposes, each Borrower may be included in
the consolidated financial statements of any equity owner of such Borrower in
accordance with GAAP), (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) if (x) such entity owns or operates a Property, has and will have no
Indebtedness other than (A) the Debt and (B) Permitted Debt, or (y) such entity
acts as the general partner of a limited partnership which owns or operates such
Property, has and will have no indebtedness other than unsecured trade payables
in the ordinary course of business relating to acting as general partner of the
limited partnership which owns or operates such Property which (1) do not
exceed, at any time, Ten Thousand Dollars ($10,000.00) and (2) are paid within
ninety (90) days of the date incurred, or (z) such entity acts as a managing
member of a limited liability company which owns or operates such Property, 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 or operates such Property which (1) do not exceed,
at any time, Ten Thousand Dollars ( $10,000.00) and (2) are paid within ninety
(90) 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
Debt, (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 use separate stationery, invoices and checks and has and will
maintain office space separate from any other entity (which may be a separately
identified area in office space shared with one or more entity) and maintain a
separate sign in the office directory, (xxiv) except for the Liens granted
pursuant to the Loan Documents, 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 legal entity
under its own name and not as a division or part of any other person or entity
so as not to mislead others with whom it is dealing (except that, for accounting
and reporting purposes, each Borrower may be included in the consolidated
financial statements of any equity owner of such Borrower in accordance with
GAAP provided that such financials will contain detailed notes stating that such
entity is a separate legal entity that owns its own assets and has creditors
that have a security interest in such assets and that, as to each Fee Owner, the
applicable Property has been sold to such Fee Owner), (xxvi) has not made and
will not make loans to any person or entity, (xxvii) 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 (other than a Single Member LLC), 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, (xxiv) 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
21
which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arms-length transaction and on a commercially
reasonably basis with an unrelated third party, (xxx) has paid and will pay the
salaries of its own employees from its own funds and has and will maintain a
sufficient number of employees in light of its contemplated business operations,
(xxxi) has maintained and will maintain adequate capital in light of its
contemplated business operations (xxxii) if such entity is a limited liability
company (other than a Single Member LLC) 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; (xxxiii) if such entity
is a Single Member LLC, its organizational documents shall provide that, as long
as any portion of the Debt remains outstanding, upon the occurrence of any event
that causes the sole member of such Single Member LLC to cease to be a member of
such Single Member LLC (other than (y) upon an assignment by such member of all
of its limited liability company interest in such Single Member LLC and the
admission of the transferee, if permitted pursuant to the organizational
documents of such Single Member LLC and the Loan Documents, or (z) the
resignation of such member and the admission of an additional member of such
Single Member LLC, if permitted pursuant to the organizational documents of such
Single Member LLC and the Loan Documents) at least one individual acting as an
Independent Director of such Single Member LLC shall, without any action of any
Person and simultaneously with the sole member of the Single Member LLC ceasing
to be a member of the Single Member LLC, automatically be admitted as the sole
member of the Single Member LLC (the "Special Member") and shall preserve and
continue the existence of the Single Member LLC without dissolution; (xxxiv) if
such entity is a Single Member LLC, its organizational documents shall provide
that for so long as any Obligation is outstanding, no Special Member may resign
or transfer its rights as Special Member unless (y) a successor Special Member
has been admitted to such Single Member LLC as a Special Member, and (z) such
successor Special Member has also accepted its appointment as an Independent
Director; and (xxxv) has and shall maintain its assets in a manner that will not
be costly or difficult to segregate, ascertain or identify its individual assets
for those of any other entity.
"Special Member" has the meaning set forth in the definition of
Single-Purpose Entity.
"Specialty Hospital" means a facility that is operated as a special
hospital for providing specialized services, including but not limited to
rehabilitation services, on an inpatient basis. For purposes of this Agreement,
the term "Specialty Hospital" shall include "rehabilitation hospital" and
"long-term acute care hospital" as those terms are defined under applicable
Medicare Regulations.
"Spread" means three hundred (300) basis points; provided, the Spread
shall be (i) four hundred (400) basis points commencing on December 1, 2002 if
the SAP Completion Date shall not have occurred on or prior to November 30,
2002, (ii) five hundred (500) basis points commencing on January 1, 2003 if the
SAP Completion Date shall not have occurred on or prior to December 31, 2002 and
(iii) six hundred (600) basis points commencing on February 1, 2003 if the SAP
Completion Date shall not have occurred on or prior to January 31, 2003.
Notwithstanding the foregoing, upon completion of the Securitization Accounting
Procedures,
22
commencing on the Payment Date first occurring after such completion, the Spread
shall be three hundred (300) basis points.
"Spread Maintenance Premium" means, if all or any portion of the Note
is prepaid (other than a permitted prepayment hereunder) or accelerated, an
amount equal to the present value, discounted at LIBOR on the most recent LIBOR
Determination Date, of all future installments of interest which would have been
due hereunder through and including the Lockout Date on the portion of the
outstanding principal balance of the Loan being prepaid as if interest accrued
on such portion of the principal balance being prepaid at an interest rate per
annum equal to the Spread; provided, however, under no circumstances shall the
Spread Maintenance Premium be less than four percent (4%) of the principal
amount of the Loan being repaid. The calculation of the Spread Maintenance
Premium shall be made by Lender and shall, absent manifest error, be final,
conclusive and binding upon all parties.
"Staff Leasing Agreement" means the Ohio Staff Leasing Agreement or
the Maryland Staff Leasing Agreement, as the case may be.
"Staff Provider" means the Ohio Staff Provider or the Maryland Staff
Provider, as the case may be.
"State" means, with respect to a Property, the State or Commonwealth
in which such Property or any part thereof is located.
"Tax and Insurance Escrow Account" has the meaning set forth in
Section 6.3(a).
"Taxes" means all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any of the Properties or part thereof, together with all
interest and penalties thereon.
"Third Party Payor" means any state, federal or municipal boards,
bureaus, corporations or agencies and any private commercial insurers remitting
payments to any Borrower pursuant to Medicare, Medicaid, Blue Cross and/or Blue
Shield or other insurance, health plan, managed care or employee assistance
programs.
"Third Party Payor Programs" has the meaning set forth in Section
3.1.40(e).
"Title Insurance Policy" means, with respect to each Property, an ALTA
mortgagee title insurance policy in the form reasonably acceptable to Lender
issued with respect to such Property and insuring the lien of the Mortgage
encumbering such Property.
"Transfer" means any voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of: (a)
all or any part of a Property or the Properties or any estate or interest
therein including, but not be limited to, (i) an installment sales agreement
wherein any Borrower agrees to sell a Property or the Properties or any part
thereof for a price to be paid in installments, (ii) an agreement by any
Borrower leasing all or a substantial part of a Property or the Properties, for
other than actual occupancy by a tenant (other than the Operator pursuant to the
Operating Lease) thereunder and its affiliates or (iii) a sale, assignment or
other transfer of, or the grant of a security interest in, any Borrower's right,
title
23
and interest in and to any Leases or any Rents; or (b) any ownership interest in
(i) any Borrower or any Guarantor or (ii) any corporation, partnership, limited
liability company, trust or other Person owning, directly or indirectly, any
interest in any Borrower or any Guarantor.
"Trustee" means any trustee holding the Loan in a Securitization.
"UCC" or "Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State.
"Underwriter Group" has the meaning set forth in Section 9.2(b).
"Updated Information" has the meaning set forth in Section 9.1(b)(i).
"U.S. Obligations" means direct full faith and credit obligations of
the United States of America that are not subject to prepayment, call or early
redemption.
"U.S. Person" means a United States person within the meaning of
Section 7701(a)(30) of the Code.
"U.S. Tax" means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the United States of America or any taxing
authority thereof.
"Ventas Group" has the meaning set forth in Section 9.2(b).
Section 1.2. Principles of Construction.
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. Unless otherwise specified,
the words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
ARTICLE II. THE LOAN
Section 2.1. The Loan.
2.1.1. Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrowers and
Borrowers shall accept the Loan from Lender on the Closing Date.
2.1.2. Single Disbursement to Borrowers. Borrowers shall receive only
one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed. Notwithstanding
the foregoing, the parties acknowledge that the Loan Amount may be increased or
decreased as a result of the Re-sizing.
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2.1.3. The Note. The Loan shall be evidenced by that certain
Promissory Note of even date herewith, in the maximum principal amount of Fifty
Five Million and No/100 Dollars ($55,000,000) executed by Borrowers and payable
to the order of Lender in evidence of the Loan (as the same may hereafter be
amended, supplemented, restated, componitized, split, increased, extended or
consolidated, the "Note") and shall be repaid in accordance with the terms of
this Agreement and the Note.
2.1.4. Use of Proceeds. Borrowers shall use proceeds of the Loan to
(i) pay and discharge any existing loans relating to certain of the Properties
and to acquire certain of the Properties, (ii) pay all past-due Basic Carrying
Costs, if any, in respect of the Properties, (iii) deposit the initial required
amounts into the Collateral Accounts, (iv) pay costs and expenses incurred in
connection with the closing of the Loan, including, but not limited to, Lender's
costs and expenses, all as approved by Lender, (v) fund any working capital
requirements of the Properties, as approved by Lender and (vi) pay any
recoupment of deposits or expenses in connection with the acquisition of any of
the Properties or in any failed financing in the past nine (9) months.
Section 2.2. Interest Rate.
2.2.1. Interest Rate. Interest on the outstanding principal balance of
the Loan shall accrue from the Closing Date up to but excluding the Maturity
Date at the Interest Rate.
2.2.2. Default Rate. In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest in
respect of the Loan, shall accrue interest at the Default Rate, calculated from
the date on which the default which gave rise to the Event of Default occurred
without regard to any grace or cure periods contained herein.
2.2.3. Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the applicable Interest Accrual Period by (b) a daily rate based
on a three hundred sixty (360) day year (that is, the Interest Rate or the
Default Rate, as the case may be, divided by three hundred sixty (360)) by (c)
the outstanding principal balance.
2.2.4. Usury Savings. This Agreement and the other Loan Documents are
subject to the express condition that at no time shall Borrowers be required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, any Borrower is at any time required or obligated to pay interest on
the principal balance due hereunder at a rate in excess of the Maximum Legal
Rate, the Interest Rate or the Default Rate, as the case may be, shall be deemed
to be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does
25
not exceed the Maximum Legal Rate from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.
Section 2.3. Loan Payments.
2.3.1. Payment Before Maturity Date. Borrowers shall make a payment to
Lender of interest only on the Closing Date for the period from the Closing Date
through the last day of the Interest Accrual Period in which the Closing Date
occurs (unless the Closing Date is the fifteenth (15th) day of a calendar month,
in which case no such separate payment of interest shall be due) (the "Stub
Interest Payment"). Notwithstanding the foregoing, Lender will waive the
requirement of payment of the Stub Interest Payment on the Closing Date and the
Borrowers hereby agree and covenant to pay the Stub Interest Payment on November
15, 2002. Borrowers shall make a payment to Lender of monthly interest on the
Loan on the Payment Date occurring in December, 2002 and on each Payment Date
thereafter to and including the Maturity Date. Together with each monthly
payment of interest, Borrowers shall make a payment of principal to Lender in
the amount set forth on the amortization schedule attached hereto as Schedule
VI. Notwithstanding the foregoing, if any Re-sizing or adjustment in the Loan
Amount shall have occurred pursuant to the Cooperation Agreement, Borrowers
shall make a payment of principal to Lender in the amount set forth on any
replacement amortization schedule hereafter delivered in connection with such
Re-sizing or adjustment. All payments to Lender by Borrowers under this Loan
Agreement shall be made by wire transfer of funds to an account designated by
Lender.
2.3.2. Payment on Maturity Date. Borrowers shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgages and the other Loan Documents.
2.3.3. Late Payment Charge. If any principal, interest or any other
sum due under the Loan Documents (excluding the principal payment due on the
Maturity Date) is not paid by any Borrower on the date on which it is due,
Borrowers shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by Lender in handling and processing
such delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Mortgages and the
other Loan Documents.
2.3.4. 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 or Lender's designee not later than 11:00 A.M., New York City time, on
the date when due and shall be made in lawful money of the United States of
America in immediately available funds at Lender's office or such other place as
Lender shall direct, and any funds received by Lender after such time shall, for
all purposes hereof, be deemed to have been paid on the next succeeding Business
Day.
26
(b) Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be the preceding Business Day.
(c) All payments required to be made by Borrowers hereunder or
under the Note or the other Loan Documents shall be made irrespective of, and
without deduction for, any setoff, claim or counterclaim and shall be made
irrespective of any defense thereto.
2.3.5. Acceptable Interest Rate Cap Agreement. Borrowers shall obtain
and maintain an Acceptable Interest Rate Cap Agreement throughout the term of
the Loan, including any extension thereof contemplated herein, and shall cause
such Acceptable Interest Rate Cap Agreement to be collaterally assigned to
Lender pursuant to the terms set forth in the Collateral Assignment of Interest
Rate Cap. Each Borrower shall comply with all of its obligations under the terms
and provisions of each Acceptable Interest Rate Cap Agreement. All amounts paid
by the cap provider under an Acceptable Interest Rate Cap Agreement shall be
deposited directly by the cap provider into the Cash Management Account. Each
Borrower shall take all actions reasonably requested by Lender to enforce
Lender's rights under the Acceptable Interest Rate Cap Agreement in the event of
a default by the cap provider thereunder and shall not waive, amend or otherwise
modify any of its rights or any provisions thereunder without Lender's consent
and Rating Agency Confirmation.
2.3.6. Other Taxes. (a) All payments made by any Borrower hereunder
shall be made free and clear of, and without reduction for or on account of,
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, reserves or withholdings imposed, levied, collected, withheld or
assessed by any Governmental Authority, which are imposed, enacted or become
effective after the date hereof excluding income and franchise taxes of the
United States of America or any political subdivision or taxing authority
thereof or therein (such non-excluded taxes being referred to collectively as
"Other Taxes"). If any Other Taxes are required to be withheld from any amounts
payable to Lender hereunder, the amounts so payable to Lender shall be increased
to the extent necessary to yield to Lender (after payment of all Other Taxes)
interest or any such other amounts payable hereunder at the rate or in the
amounts specified hereunder. Whenever any Other Taxes are payable pursuant to
applicable law by any Borrower, as promptly as possible thereafter, such
Borrower shall send to Lender an original official receipt, if available, or
certified copy thereof showing payment of such Other Taxes. Each Borrower hereby
indemnifies Lender for any incremental taxes, interest or penalties that may
become payable by Lender which may result from any failure by such Borrower to
pay any such Other Taxes when due to the appropriate taxing authority or any
failure by any Borrower to remit to Lender the required receipts or other
required documentary evidence.
(b) If any Borrower is required by law to withhold or deduct any
amount from any payment hereunder in respect of any U.S. Tax, such Borrower
shall withhold or deduct the appropriate amount, remit such amount to the
appropriate Governmental Authority and pay to each Person to whom there has been
an assignment or participation of the Loan and who is not a U.S. Person such
additional amounts as are necessary in order that the net payment of any amount
due to such non-U.S. Person hereunder after deduction for or withholding in
respect of any U.S. Tax imposed with respect to such payment (or in lieu
thereof, payment of such U.S.
27
Tax by such non-U.S. Person), will not be less than the amount stated herein to
be then due and payable; provided that the foregoing obligation to pay such
additional amounts shall not apply (i) to any assignee that has not complied
with the obligations contained in Section 9.1(d), (ii) to any U.S. Taxes imposed
solely by reason of the failure by such Person (or, if such Person is not the
beneficial owner of the Loan, such beneficial owner) to comply with applicable
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the United
States of America of such Person (or beneficial owner, as the case may be) if
such compliance is required by statute or regulation of the United States of
America as a precondition to relief or exemption from such U.S. Taxes; or (iii)
with respect to any Person who is a fiduciary or partnership or other than the
sole beneficial owner of such payment, to any U.S. Tax imposed with respect to
payments made under the Note to a fiduciary or partnership to the extent that
the beneficial owner or member of the partnership would not have been entitled
to the additional amounts if such beneficial owner or member of the partnership
had been the holder of the Note.
2.3.7. Regulatory Change. In the event that any change in any
requirement of law or in the interpretation or application thereof, or
compliance by Lender with any request or directive (whether or not having the
force of law) hereafter issued from any central bank or other Governmental
Authority, including, without limitation, any imposition of or increase in any
reserve requirement with respect to a LIBOR-based loan: (i) shall hereafter have
the effect of reducing the rate of return on Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into consideration
Lender's policies with respect to capital adequacy) by any amount deemed by
Lender to be material; or (ii) shall hereafter impose on Lender any other
condition and the result of any of the foregoing is to increase the cost to
Lender of making, renewing or maintaining loans or extensions of credit or to
reduce any amount receivable hereunder; then, in any such case, Borrowers shall
promptly pay Lender, upon demand, any additional amounts necessary to compensate
Lender for such additional cost or reduced amount receivable which Lender deems
to be material as determined by Lender. Lender shall take reasonable steps to
minimize or eliminate such additional costs. If Lender becomes entitled to claim
any additional amounts pursuant to this Section, Lender shall provide Borrowers
with not less than thirty (30) days written notice specifying in reasonable
detail the event by reason of which it has become so entitled and the additional
amount required to fully compensate Lender for such additional cost or reduced
amount. A certificate as to any additional costs or amounts payable pursuant to
the foregoing sentence, executed by an authorized signatory of Lender and
submitted by Lender to any Borrower shall be conclusive in the absence of
manifest error. If Lender shall fail to notify Borrowers of any such event
within 180 days following the end of the month during which such event occurred,
each Borrower's liability for any amounts described in this Section incurred by
such Lender as a result of such event shall be limited to those attributable to
the period occurring subsequent to the 180th day prior to the date upon which
such Lender actually notified Borrowers of the occurrence of such event. This
Section shall survive payment of the Note and the satisfaction of all other
obligations of any Borrower under this Agreement and the Loan Documents.
2.3.8. Breakage Costs. Each Borrower agrees to indemnify Lender and to
hold Lender harmless from any loss or expense which Lender sustains or incurs as
a consequence of (i) any default by any Borrower in payment of the Loan,
including, without limitation, any loss
28
or expense arising from interest or fees payable by Lender to lenders of funds
obtained by it in order to maintain a LIBOR-based loan hereunder, and (ii) any
prepayment (whether voluntary or mandatory) of the Loan on a day that is not a
Payment Date, including, without limitation, such loss or expense arising from
interest or fees payable by Lender to lenders of funds obtained by it in order
to maintain the Loan, unless such prepayment includes interest on the amount
being prepaid through the next Payment Date (the amounts referred to in clauses
(i) and (ii) are herein referred to collectively as the "Breakage Costs").
Whenever in this Section the term "interest or fees payable by Lender to lenders
of funds obtained by it" is used and no such funds were actually obtained from
such lenders, it shall include interest or fees which would have been payable by
Lender if it had obtained funds from lenders in order to maintain a LIBOR-based
loan hereunder. Lender will provide to Borrowers a statement detailing such
Breakage Costs and the calculation thereof.
2.3.9. Survival. The provisions of Sections 2.3.6 through 2.3.8 shall
survive payment of the Note in full and the satisfaction of all other
obligations of any Borrower under this Agreement and the other Loan Documents.
Section 2.4. Prepayments.
2.4.1. Voluntary Prepayments. Except as otherwise provided herein, no
Borrower shall have the right to prepay the Loan in whole or in part prior to
the Lockout Date. Beginning on the Lockout Date or on any Business Day
thereafter, any Borrower may, at its option, prepay the Debt in whole, but not
in part. Any prepayment made on or after the Lockout Date shall be accompanied
by a prepayment fee (a "Prepayment Fee") equal to (i) four percent (4%) of the
outstanding principal balance if the prepayment occurs on or after the Lockout
Date but prior to the second anniversary of the Re-sizing Date or (ii) two
percent (2%) of the outstanding principal balance if the prepayment occurs on or
after the second anniversary of the Re-sizing Date. In addition, if any Borrower
prepays the Loan on any date other than a Payment Date, Borrowers shall pay to
Lender on the date of such prepayment an amount equal to the interest that would
have accrued on the Loan through the next Payment Date. As a condition to any
voluntary prepayment, each Borrower shall give Lender written notice (a
"Prepayment Notice") of its intent to prepay, which notice must be given not
later than thirty (30) days prior to the date on which such prepayment is to be
made and must specify the Business Day on which such prepayment is to be made.
2.4.2. Mandatory Prepayments. (a) On each date on which Lender
actually receives a distribution of Net Proceeds, and if Lender does not make
such Net Proceeds available to any Borrower for a Restoration of the applicable
Property, Borrowers shall, at Lender's option, prepay the outstanding principal
balance of the Note in an amount equal to one hundred percent (100%) of such Net
Proceeds together with interest that would have accrued on such amounts through
the next Payment Date. The Allocated Loan Amount with respect to such Property
will be reduced in an amount equal to such prepayment. No Prepayment Fee or
Spread Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.4.2. Any prepayment received by Lender pursuant to
this Section 2.4.2 on a date other than a Payment Date shall be held by Lender
as collateral security for the Loan in the Net Proceeds Account, and shall be
applied by Lender on the next Payment Date.
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(b) In the event, prior to a Securitization, the equity holders
of the Parent propose a Change of Control (as defined in the Master Guaranty) to
the Parent, as a condition to such Change of Control, in connection with the
mandatory prepayment of the Mezzanine Loan as set forth in Section 2.4.2(d) of
the Mezzanine Loan, Borrowers shall prepay the entire outstanding principal
balance of the Loan together with interest that would have accrued on the
principal balance of the Mortgage Loan through the next Payment Date (in the
event the prepayment occurs on a date other than a Payment Date) plus the
Prepayment Fee.
2.4.3. Prepayments After Default. If after an Event of Default,
payment of all or any part of the principal of the Loan is tendered by any
Borrower, a purchaser at foreclosure or any other Person, such tender shall be
deemed an attempt to circumvent the prohibition against prepayment set forth in
Section 2.4.1 and Borrowers, such purchaser at foreclosure or other Person shall
pay the Spread Maintenance Premium, in addition to the outstanding principal
balance, all accrued and unpaid interest and other amounts payable under the
Loan Documents.
Section 2.5. Extension of Loan. Borrowers shall have the option to
extend the original Maturity Date of the Loan on the same terms and conditions
in effect during the initial term, for two additional one (1) year periods
subject to satisfaction as of the Maturity Date (or, with respect to the second
one (1) year extension option, the Maturity Date as previously extended) of each
of the terms and conditions set forth in this Section. Borrowers shall give
Lender written notice of its exercise of the option to extend, not less than
sixty (60) days prior to the Maturity Date (or, with respect to the second one
(1) year extension option, the Maturity Date as previously extended). Each of
the following conditions must be satisfied prior to any extension:
(a) No Default or Event of Default shall have occurred and be
continuing under the Loan Documents;
(b) The Debt Service Coverage Ratio as of the Maturity Date (or,
with respect to the second one (1) year extension option, the Maturity Date as
previously extended) shall be no less than one hundred and three percent (103%)
of the Debt Service Coverage Ratio as of the Closing Date.
(c) Borrowers shall obtain and maintain throughout the extended
term an Acceptable Interest Rate Cap Agreement with a term equal to the extended
term and collaterally assign the same pursuant to a Collateral Assignment of
Interest Rate Cap;
(d) Each Borrower shall pay all reasonable costs and expenses,
including reasonable legal fees, actually incurred by Lender or otherwise
involved in extending the Maturity Date;
(e) Each Borrower shall execute and/or deliver to Lender any
other documentation reasonably requested by Lender, including, without
limitation, security agreements, financing statements, opinions of counsel and
title endorsements, all of which shall be reasonably satisfactory in form and
substance to Lender;
(f) All Regulatory Permits with respect to the Properties shall
be in full force and effect; and
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(g) Borrowers shall pay the Extension Fee.
Section 2.6 Supplemental Mortgage Affidavits. The Liens created by
each Mortgage are intended to encumber the Property described therein to the
full extent of Borrowers' obligations under the Loan Documents. As of the
Closing Date, Borrowers 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 Property as a direct, or indirect, result of applicable taxes
not having been paid with respect to the related Mortgage, Lender may request,
and each 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. REPRESENTATIONS AND WARRANTIES
Section 3.1. Borrower Representations.
Each Borrower represents and warrants that:
3.1.1. Organization. Each Borrower is duly organized, validly existing
and in good standing with full power and authority to own its assets and conduct
its business, and is duly qualified in all jurisdictions in which the ownership
or lease of its property or the conduct of its business requires such
qualification. Each Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the full power and authority to execute, deliver and
perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby. Each Borrower's exact and correct legal name as it appears
on file with the Secretary of State of Delaware is as set forth in Schedule III
attached hereto. Each Borrower is a limited liability company organized under
the laws of the State of Delaware. Each Borrower's organization identification
number assigned by the state of its organization is as set forth opposite such
Borrower's name on Schedule III. Borrower's federal tax identification number is
as set forth opposite such Borrower's name on Schedule III.
3.1.2. Proceedings. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by each Borrower and, as
applicable, each Guarantor and constitute a legal, valid and binding obligation
of each Borrower and, as applicable, each Guarantor, enforceable against each
Borrower and, as applicable, each Guarantor in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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3.1.3. No Conflicts. The execution and delivery of this Agreement and
the other Loan Documents by each Borrower and, as applicable, each Guarantor,
and the performance of its obligations hereunder and thereunder will not
conflict with or violate any provision of any law, or regulation to which or
each Guarantor is subject, or conflict with, result in a breach of, or
constitute a default, including due notice or lapse of time or both, under, any
of the terms, conditions or provisions of any of any Borrower's or any
Guarantor's organizational documents or any agreement or instrument to which any
Borrower or any Guarantor is a party or by which it is bound, or any order or
decree applicable to any Borrower or any Guarantor, or result in the creation or
imposition of any lien on any of any Borrower's or any Guarantor's assets or
property (other than pursuant to the Loan Documents) or otherwise materially and
adversely affect performance of its respective duties.
3.1.4. Litigation. There is no action, suit, proceeding arbitration or
investigation pending or, to such Borrower's knowledge, threatened against any
Borrower, any Borrower Party, any Guarantor, Manager or any of the Properties in
any court or by or before any other Governmental Authority which could
reasonably be expected to have a Material Adverse Effect.
3.1.5. Agreements. No Borrower Party is in default with respect to any
order or decree of any court or any order, regulation or demand of any
Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of any Borrower or any of the Properties or might have consequences that would
adversely affect its performance hereunder.
3.1.6. Consents. No consent, approval, authorization, order or filings
of or with any court or Governmental Authority is required for the execution,
delivery and performance by any Borrower of, or compliance by any Borrower with,
this Agreement or the consummation of the transactions contemplated hereby
except those the absence of which would not have a Material Adverse Effect,
other than those which have been obtained by such Borrower; provided, however,
Borrowers will obtain within sixty (60) days (or, in the case of Medicare
provider agreements only, one hundred and eighty (180) days) of the Closing Date
the state licenses for the operation of each Property as a Nursing Facility or
Assisted Living Facility, as applicable, and the Medicare and Medicaid provider
agreements in the names of each applicable Borrower which have not been obtained
as of the Closing Date.
3.1.7. Title. Each Fee Owner has good, marketable and insurable fee
title to the real property comprising the applicable Property and each Operator
has a valid leasehold interest to the real property comprising the applicable
Property and good title to the balance of such Property, in each case, free and
clear of all Liens whatsoever except the Permitted Encumbrances. Each Mortgage,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, and enforceable first priority, perfected
Lien on the applicable Property, subject only to Permitted Encumbrances and (ii)
valid and enforceable perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any Permitted
Encumbrances. There are no mechanics', materialman's or other similar Liens or
claims which have been filed for work, labor or materials affecting any Property
which are or may be Liens prior to, or equal or coordinate with, the Lien of the
related Mortgage or for which Borrower has
32
not provided title insurance over such Lien. None of the Permitted Encumbrances,
individually or in the aggregate, materially interfere with the benefits of the
security intended to be provided by the Mortgages and this Agreement, materially
and adversely affect the value of the Properties, impair the intended use or
operations of the Properties or impair any Borrower's ability to pay its
obligations in a timely manner.
3.1.8. No Plan Assets. As of the date hereof and throughout the term
of the Loan (a) no Borrower is and will be an "employee benefit plan," as
defined in Section 3(3) of ERISA, subject to Title I of ERISA, or a "plan," as
defined in Section 4975(e)(1) of the Code, subject to Code Section 4975, (b) no
Borrower is and will be a "governmental plan" within the meaning of Section
3(32) of ERISA, (c) none of the assets of any Borrower constitutes or will
constitute "plan assets" of one or more of any such plans within the meaning of
29 C.F.R. Section 2510.3-101, and (d) transactions by or with any Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.
3.1.9. Compliance. Each Borrower Party and each of the Properties and
the use thereof is in substantial compliance with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes. No Borrower Party is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of any Borrower. No Borrower Party has committed any act which may
give any Governmental Authority the right to cause any Borrower to forfeit any
of the Properties or any part thereof or any monies paid in performance of any
Borrower's obligations under any of the Loan Documents.
3.1.10. Financial Information. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of the Properties and each Borrower
Party (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of the Properties as of the date of
such reports, and (iii) have been prepared in accordance with GAAP throughout
the periods covered, except as disclosed therein. No Borrower Party has any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to any Borrower and reasonably likely to have a materially
adverse effect on the Properties or the operation thereof, except as referred to
or reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial
condition, operations or business of a Borrower Party or the Properties from
that set forth in said financial statements.
3.1.11. Condemnation. No Condemnation or other proceeding is pending
or, to such Borrower's knowledge, is threatened with respect to all or any
portion of any of the Properties or for the relocation of roadways providing
access to any of the Properties.
3.1.12. Utilities and Public Access. Except as denoted on the
application Survey or Title Policy, each Property has adequate rights of access
to public ways and is served by utilities, including, without limitation,
adequate water, sewer, electricity, gas, telephone, sanitary sewer and storm
drain facilities. All public utilities necessary to the continued use and
enjoyment of each Property as presently used and enjoyed are located in the
public right-of-way
33
abutting such Property, and all such utilities are connected
so as to serve such Property without passing over other property. All roads
necessary for the full utilization of each Property 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
Property.
3.1.13. Separate Lots. Except as denoted by the applicable Title
Policy, each Property is comprised of one (1) or more parcels which constitute
separate tax lots and do not constitute a portion of any other tax lot not a
part of the applicable Property.
3.1.14. Assessments. There are no pending or, to Borrower's knowledge,
proposed special or other assessments for public improvements or otherwise
affecting any of the Properties, nor are there any contemplated improvements to
any of the Properties that may result in such special or other assessments.
3.1.15. Enforceability. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by any Borrower or, as
applicable, any Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither any
Borrower nor any Guarantor has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
3.1.16. Assignment of Leases. Each Assignment of Leases creates a
valid assignment of, or a valid security interest in, certain rights under the
related Leases, subject only to a license granted to the applicable Borrower to
exercise certain rights and to perform certain obligations of the lessor under
such Leases, including the right to operate the related Property. No Person
other than Lender has any interest in or assignment of the Leases or any portion
of the Rents due and payable or to become due and payable thereunder.
3.1.17. Insurance. Each Borrower has obtained and has delivered to
Lender original or certified copies of all of the Policies for each Property,
with all premiums prepaid thereunder, reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. Except as set forth
in Schedule IX, no claims have been made by any Borrower under any of the
Policies which remain unresolved, and no Person, including each Borrower, has
done, by act or omission, anything which would impair the coverage of any of the
Policies.
3.1.18. Licenses. All permits, authorizations, licenses and approvals
(including, without limitation, CONs, Accreditations, Medicaid Provider
Agreements and Certifications, Medicare Participation Agreements and
Certifications and certificates of occupancy) required by any Governmental
Authority for the use, occupancy and operation of each Property in the manner in
which such Property is currently being used, occupied and operated have been
obtained, except those the absence of which would not mean a Material Adverse
Effect and are valid and in full force and effect; provided, however, Borrowers
will obtain within sixty (60) days (or in the case of Medicare provider
agreements only, one hundred eighty (180) days) of the Closing Date the state
licenses for operation of each Property as a Nursing Facility or Assisted Living
Facility, as applicable, and the Medicare and Medicaid provider agreements in
the names of the applicable Borrowers which have not been obtained as of the
Closing Date.
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3.1.19. Flood Zone. None of the Improvements on any of the Properties
are located in an area identified by the Federal Emergency Management Agency as
a special flood hazard area.
3.1.20. Physical Condition. Except as set forth on the applicable
Property Condition Report, each Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any of the Properties, whether latent or
otherwise, and no Borrower has received notice from any insurance company or
bonding company of any defects or inadequacies in any of the Properties, or any
part thereof, which would materially and adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.
3.1.21. Boundaries. Except as denoted on the applicable Survey, all of
the improvements which were included in determining the appraised value of each
Property lie wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon such
Property, and no easements or other encumbrances affecting the applicable
Property encroach upon any of the improvements, so as to affect the value or
marketability of the applicable Property except those which are insured against
by title insurance.
3.1.22. Leases. Each Borrower represents and warrants to Lender with
respect to the Leases that: (a) the list of Operating Leases described on
Schedule I attached hereto is true, complete and correct and none of the
Properties are subject to any Leases other than (i) such Operating Leases and
(ii) the resident care agreements entered into by the Operators and the
residents of the Properties, (b) the Operating Leases are in full force and
effect and there are no defaults thereunder by either party, (c) the copies of
the Operating Leases delivered to Lender are true and complete, and there are no
oral agreements with respect thereto, (d) no Rent (including security deposits)
has been paid more than one (1) month in advance of its due date, (e) all work
to be performed by any Borrower under each Lease has been performed as required
and has been accepted by the applicable tenant, and (f) any payments, free rent,
partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by any Borrower to any tenant has already been
received by such tenant.
3.1.23. Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Properties to any Borrower have been paid or will be paid at closing. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgages, have been paid
or are being paid simultaneously herewith. All taxes and governmental
assessments due and owing in respect of the Properties have been paid, or an
escrow of funds in an amount sufficient to cover such
35
payments has been established hereunder or are insured against by the title
insurance policy to be issued in connection with the Mortgages.
3.1.24. Single Purpose. Each Borrower hereby represents and warrants
to, and covenants with, Lender that each Borrower has been at all times since
its formation, and will continue to be a Single-Purpose Entity.
3.1.25. Tax Filings; Payroll Taxes. Each Borrower and each Guarantor
has filed (or have obtained effective extensions for filing) all federal, state
and local tax returns required to be filed and have paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by any Borrower and any Guarantor. Each Borrower believes
that its tax returns and those of each Guarantor properly reflect the income and
taxes of each Borrower and each Guarantor for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit. Each of each Borrower and each
Guarantor have paid all payroll taxes required to be paid by any such party by
any Governmental Authorities.
3.1.26. Solvency. Each Borrower (a) has not entered into the
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor and (b) received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the Loan, the
fair saleable value of each Borrower's assets exceeds and will, immediately
following the making of the Loan, exceed such Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities. The fair saleable value of each Borrower's assets is and
will, immediately following the making of the Loan, be greater than such
Borrower's probable liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and matured. Each
Borrower's assets do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Each Borrower does not intend to, and
does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by such Borrower and the amounts to be payable on
or in respect of obligations of such Borrower).
3.1.27. Federal Reserve Regulations. 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 Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
3.1.28. Organizational Chart. The organizational chart attached as
Schedule IV hereto, relating to Borrowers and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof.
3.1.29. Bank Holding Company. Each Borrower is not a "bank holding
company" or a direct or indirect subsidiary of a "bank holding company" as
defined in the Bank
36
Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.
3.1.30. No Other Debt. Each Borrower has not borrowed or received debt
financing (other than permitted pursuant to this Agreement) that has not been
heretofore repaid in full.
3.1.31. Investment Company Act. Each Borrower is not (1) an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended; (2) 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 (3)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrower money.
3.1.32. No Bankruptcy Filing. Each Borrower is not contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of its assets or property, and each Borrower
does not have any knowledge of any Person contemplating the filing of any such
petition against it or any Guarantor and the Properties are not the subject of,
and each Borrower and each Guarantor are not a debtor in, any state or federal
bankruptcy, insolvency or similar proceeding.
3.1.33. Full and Accurate Disclosure. No information contained in this
Agreement, the other Loan Documents, or any written statement furnished by or on
behalf of any Borrower pursuant to the terms of this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. There is no fact or circumstance
presently known to any Borrower which has not been disclosed to Lender and which
materially adversely affects, or is reasonably likely to materially adversely
affect, any of the Properties, any Borrower or its business, operations or
condition (financial or otherwise).
3.1.34. Foreign Person. Each Borrower is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code.
3.1.35. No Change in Facts or Circumstances; Disclosure. There has
been no material adverse change in any condition, fact, circumstance or event
that would make the financial statements, rent rolls, reports, certificates or
other documents submitted in connection with the Loan inaccurate, incomplete or
otherwise misleading in any material respect or that otherwise materially and
adversely affects the business operations or the financial condition of any
Borrower or any of the Properties.
3.1.36. Security Deposits. Each Borrower Party is and each Borrower
will continue to be in substantial compliance in all material respects with all
Legal Requirements relating to security deposits and resident trust funds. Each
Borrower is and will continue to hold all related security deposits and resident
trust funds collected in connection with each of the Properties in segregated
Eligible Accounts.
37
3.1.37. Embargoed Person. (a) None of the funds or other assets of any
Borrower or any Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any person, entity or government subject to trade
restrictions under U.S. law, including but not limited to, the International
Emergency Economic Powers Act, 50 U.S.C.(S)(S) 1701 et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq. , and any Executive Orders or
regulations promulgated thereunder with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law
("Embargoed Person"); (b) no Embargoed Person has any interest of any nature
whatsoever in any Borrower or any Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law; and (c)
none of the funds of any Borrower or any Guarantor, as applicable, have been
derived from any unlawful activity with the result that the investment in any
Borrower or any Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
3.1.38. Intentionally deleted.
3.1.39. Management Agreement/Staff Leasing Agreement. Each Management
Agreement and Staff Leasing Agreement is in full force and effect and there is
no default, breach or violation existing thereunder by any party thereto and no
event has occurred that, with the passage of time or the giving of notice, or
both, would constitute a default, breach or violation by any party thereunder.
3.1.40. Use-Specific Representations.
(a) Compliance with Laws. Each Borrower Party and each Property
are in substantial compliance with all applicable federal, state and local laws,
regulations and guidelines (including any government payment program
requirements and disclosure of ownership and related information requirements),
quality and safety standards, accepted professional standards and principles
that apply to professionals providing services to Nursing Facilities and/or
Assisted Living Facilities, in each case, as applicable, accreditation
standards, and requirements of the applicable state licensing agency, CMS and
all other Governmental Authorities including, without limitation, those
requirements relating to the physical structure and environment of each
Property, licensing, quality and adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies,
additions to facilities and services and fee splitting except for any
non-compliance with any of the foregoing that could have a Material Adverse
Effect. No Borrower Party has committed any act which may give any Governmental
Authority the right to cause any Borrower to lose any applicable Regulatory
Permits the loss of which could have a Material Adverse Effect.
(b) Regulatory Permits. All governmental licenses, permits,
regulatory agreements or other approvals or agreements necessary or desirable
for the use or operation of each Property as intended are held by the applicable
Borrower and are in full force and effect, including, without limitation,
approved provider participation status in any provider payment program
(including, but not limited to, Medicare and Medicaid), and a valid CON or
similar certificate, license, or approval issued by the applicable state and/or
federal agency for the requisite number and type of beds (collectively, the
"Regulatory Permits") except for any Regulatory Permits the failure to hold or
maintain in full force or effect could have a Material
38
Adverse Effect; provided, however, Borrower will obtain within sixty (60) days
or, in the case of Medicare provider agreements only, one hundred and eighty
(180) days of the Closing Date the state licenses for the operation of each
Property as a Nursing Facility or Assisted Living Facility, as applicable, and
the Medicare and Medicaid provider agreements in the names of the applicable
Borrowers which have not been obtained as of the Closing Date.
(c) Ownership of Regulatory Permits. The Regulatory Permits,
including without limitation, each CON:
(i) are not and have not been, transferred to any
location other than the Property to which such Regulatory Permits relate;
(ii) are not and have not been, pledged as collateral
security for any loan or indebtedness other than the Loan; and
(iii) are held free from restrictions or known
conflicts which would materially impair the use or operation of each
Property as intended, and are not provisional, probationary or restricted
in any way.
(d) Medicare and Medicaid Compliance. To the extent applicable,
each Borrower Party and each Property is in substantial compliance with all
requirements for participation in Medicare and Medicaid, including without
limitation, the Medicare and Medicaid Patient and Program Protection Act of
1987. To the extent applicable, each Borrower Party and each Property is in
conformance in all material respects with all conditions of participation,
reimbursement and cost reporting requirements, and each applicable Borrower has
a current provider agreement which is in full force and effect under Medicare
and Medicaid for the number and type of beds.
(e) Third Party Payor Programs. There is no threatened or pending
revocation, suspension, termination, probation, restriction, limitation, fine,
civil monetary penalty, recoupment or non-renewal affecting any Borrower Party
or any Property in respect of any participation or provider agreement with any
third-party payor, including, without limitation, Medicare, Medicaid, Blue Cross
and/or Blue Shield, and any other private commercial insurance managed care and
employee assistance program (collectively, the "Third Party Payor Programs") to
which any Borrower presently is subject. All Medicaid, Medicare, and private
insurance cost reports and financial reports submitted by any Borrower Party are
and will be materially accurate and complete and have not been and will not be
misleading in any material respects. No cost reports or financial reports for
any Property remain "open" or unsettled except for those reports that remain
open for the current period.
(f) Governmental Proceedings and Notices. Except as described on
the attached Schedule XIII, no Borrower Party and no Property is currently the
subject of any proceeding by any Governmental Authority, and no notice of any
violation or subpoena or inquiry of any nature has been received from a
Governmental Authority that would, directly or indirectly, or with the passage
of time:
(i) have a material adverse impact on any Borrower's
ability to accept and/or retain patients or result in the imposition of a
fine, a sanction, an
39
administrative or criminal action, a lower rate certification or a lower
reimbursement rate for services rendered to eligible patients;
(ii) modify, limit or annul or result in the transfer,
suspension, revocation or imposition of probationary use on any Regulatory
Permit the absence of which would have a Material Adverse Effect;
(iii) affect any Borrower's continued participation in
Medicare, Medicaid or other Third Party Payor Programs, as applicable, or
any successor programs thereto, at current rate certifications.
(g) Physical Plant Standards. Each Property and the use thereof
complies in all material respects with all applicable local, state and federal
building codes, fire codes, life safety codes, health care, nursing facility and
other similar regulatory requirements, including, without limitation,
participation requirements in Medicare and Medicaid (collectively, the "Physical
Plant Standards") and, except as described on the attached Schedule X, no
waivers of the Physical Plant Standards exist at such Property.
(h) Past Violations. Except as set forth on the attached Schedule
XIV, here have been no penalty enforcement actions undertaken by any
Governmental Authority during the last three (3) calendar years or during the
last survey cycle against any Property, against any Borrower Party, or against
any partner, member, officer, director, stockholder or Affiliate of any Borrower
Party which enforcement action could have a Material Adverse Effect. There have
been no violations over the past three (3) years that have threatened any
Property's or any Borrower's certification for participation in any Medicare,
Medicaid or other Third Party Payor Programs. No Borrower Party has been the
subject of a "double G" determination for the last three (3) calendar years or
since January 14, 2000, whichever date is later.
(i) Audits. Except as set forth on the attached Schedule XI,
there are no current, pending or outstanding reimbursement audits regarding
Medicaid, Medicare or other Third Party Payor Programs nor any appeals pending
at any Property that (x) are not applicable in the ordinary course to Nursing
Facilities or Assisted Living Facilities, as applicable, comparable to the
Properties and (y) could have a Material Adverse Effect.
(j) Recoupment. There are no current or pending recoupment
efforts regarding Medicaid, Medicare or other Third Party Payor Programs at (or
with respect to) any Property that (x) are not applicable in the ordinary course
to Nursing Facilities or Assisted Living Facilities, as applicable, comparable
to any Property and (y) could have a Material Adverse Effect. No Borrower 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.
(k) Pledges of Receivables. No Borrower Party has pledged its
receivables or any Rents as collateral security for any outstanding loan or
indebtedness other than the Loan.
(l) Patient Care Agreements. There are no patient or resident
care agreements with patients or residents or with any other persons that
deviate in any material adverse respect from the standard form customarily used
at each Property.
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(m) Patient Records. All patient and resident records at each
Property, and all patient and resident trust fund accounts, are maintained in
substantial compliance with all regulatory requirements and are true and correct
in all respects.
(n) Reimbursement Contracts. All Reimbursement Contracts
applicable to any Borrower Party or any Property are in good standing with all
applicable Governmental Authorities, Regulatory Permits, Medicare Certifications
and/or Medicaid Certifications. Each Borrower Party is current in the payment of
all so-called provider specific taxes, bed taxes or other assessments with
respect to any Reimbursement Contracts.
(o) Licensed Beds. The number and category of licensed beds at
each Property is as set forth on Schedule III attached hereto. Except as set
forth in Schedule XII, no waivers of any laws, rules, regulations or
requirements (including, without limitation minimum square foot requirements per
bed) are required for each Property to operate at the licensed bed capacities
listed on Schedule III and to operate in substantial compliance with applicable
Legal Requirements. No Borrower Party has been granted nor has any Borrower
Party requested the right, to reduce the number of licensed beds at any
Property. No Borrower Party has applied for approval to move any and all of the
licensed beds at any Property to any other location.
(p) Intentionally deleted.
3.1.41. Material Agreements. There are no Material Agreements except
as described in Exhibit D. Each Borrower has made available to Lender true and
complete copies of all Material Agreements. Each Material Agreement has been
entered into at arm's length in the ordinary course of business by or on behalf
of a Borrower.
Section 3.2 Survival of Representations.
The representations and warranties set forth in Section 3.1 shall
survive for so long as any amount remains payable to Lender under this Agreement
or any of the other Loan Documents.
ARTICLE IV. BORROWER COVENANTS
Section 4.1 Borrower Affirmative Covenants.
Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower hereby
covenants and agrees with Lender that:
4.1.1. Existence; Compliance with Legal Requirements. Each Borrower
shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, rights, licenses, permits and franchises
except to the extent such preservation, renewal and effectiveness could not have
a Material Adverse Effect, and substantially comply with all Legal Requirements
applicable to it and the Properties.
4.1.2. Taxes and Other Charges. Each Borrower shall pay all Taxes and
Other Charges and payroll taxes now or hereafter levied or assessed or imposed
against the Properties
41
or any part thereof or any Borrower as the same become due and payable;
provided, however, each Borrower's obligation to directly pay Taxes shall be
suspended for so long as such Borrower complies with the terms and provisions of
Section 6.3 hereof and there are adequate funds in the Tax and Insurance Escrow
Account. Each Borrower shall furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent;
provided, however, that each Borrower is not required to furnish such receipts
for payment of Taxes in the event that such Taxes have been paid by Lender
pursuant to Section 6.3 hereof. Each Borrower shall not permit or suffer and
shall promptly discharge any liens or charges against the Properties, except
Permitted Encumbrances. After prior notice to Lender, each Borrower, at its own
expense, may contest by appropriate legal proceeding, conducted in good faith
and with due diligence, the amount or validity of any Taxes or Other Charges,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) none of the
Properties nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) each Borrower shall promptly
upon final determination thereof pay the amount of any such Taxes or Other
Charges, together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the applicable Property; and (vi) upon request of Lender,
each Borrower shall deposit with Lender cash, or other security as may be
approved by Lender, in an amount equal to one hundred twenty-five percent (125%)
of the contested amount, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash or other security held by Lender to the claimant entitled thereto
at any time when, in the judgment of Lender, the entitlement of such claimant is
established.
4.1.3. Litigation. Each Borrower shall give prompt notice to Lender of
any litigation or governmental proceedings pending or threatened against any
Borrower which might materially adversely affect any of the Properties or any
Borrower's ability to perform its obligations hereunder or under the other Loan
Documents.
4.1.4. Access to Properties. Each Borrower shall permit agents,
representatives and employees of Lender to inspect each Property or any part
thereof at reasonable hours upon reasonable advance written notice. Lender shall
not unreasonably interfere with any Borrowers' business operations during such
inspection.
4.1.5. Further Assurances. Each Borrower shall, at such Borrower's
sole cost and expense, from time to time as reasonably requested by Lender,
execute, acknowledge, record, register, file and/or deliver to Lender such other
instruments, agreements, certificates and documents (including UCC financing
statements and amended or replacement mortgages) as Lender may reasonably
request to evidence, confirm, perfect and maintain the liens securing or
intended to secure the obligations of any Borrower under the Loan Documents or
to facilitate a replacement of the Cash Management Bank or Collection Account
Bank if requested by Lender, and do and execute all such further lawful and
reasonable 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 reasonably require from time to time. Each Borrower
hereby authorizes and appoints Lender as its attorney-in-fact to execute,
acknowledge, record, register and/or file such instruments, agreements,
certificates and documents, and to do and
42
execute such acts, conveyances and assurances, should any Borrower fail to do so
itself in violation of this Agreement following written request from Lender, in
each case without the signature of any Borrower. The foregoing grant of
authority is a power of attorney coupled with an interest and such appointment
shall be irrevocable for the term of this Agreement. Each Borrower hereby
ratifies all actions that such attorney shall lawfully take or cause to be taken
in accordance with this Section.
4.1.6. Financial Reporting.
(a) Each Borrower shall keep and maintain or will cause to be
kept and maintained proper and accurate books and records, in accordance with
GAAP in all material respects, reflecting the financial affairs of each
Borrower. Lender shall have the right from time to time during normal business
hours upon reasonable notice to the applicable Borrower to examine such books
and records at the office of such Borrower or other Person maintaining such
books and records and to make such copies or extracts thereof as Lender shall
desire.
(b) As soon as available, and in any event within one hundred
twenty (120) days after the close of each Fiscal Year, each Borrower shall
furnish to Lender, in hard copy and electronic format and presented on a
consolidated as well as a property-by-property basis, financial statements
prepared for such year with respect to Borrowers, including a balance sheet and
operating statement as of the end of such year, together with related statements
of income and members' or partners' capital for such Fiscal Year, audited by a
"Big Four" accounting firm or a nationally recognized, independent certified
public accounting firm reasonably satisfactory to Lender whose opinion shall be
to the effect that such financial statements have been prepared in accordance
with GAAP applied on a consistent basis and shall not be qualified as to the
scope of the audit or as to the status of each Borrower as a going concern.
Together with each Borrower's annual financial statements, such Borrower shall
furnish to Lender an Officer's Certificate certifying as of the date thereof
whether to the best of such Borrower's knowledge there exists an event or
circumstance which constitutes a Default or Event of Default by any Borrower
under the Loan Documents and if such Default or Event of Default exists, the
nature thereof, the period of time it has existed and the action then being
taken to remedy the same. Together with each Borrower's annual financial
statements, such Borrower shall furnish to Lender, in hard copy and electronic
format:
(i) a statement of cash flows for each Property; and
(ii) such other information as Lender shall reasonably
request.
(c) As soon as available, and in any event within forty-five (45)
days after the end of each fiscal quarter (based on Borrrower's Fiscal Year),
each Borrower shall furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, quarterly
and year-to-date unaudited financial statements prepared for such fiscal quarter
with respect to Borrowers, including a balance sheet and operating statement as
of the end of such fiscal quarter, together with related statements of income,
members' or partners' capital and cash flows for such fiscal quarter and for the
portion of the Fiscal Year ending with such fiscal quarter,which statements
shall be accompanied by (i) an
43
Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as of the date thereof whether to the best of
such Borrower's knowledge there exists an event or circumstance which
constitutes a Default or Event of Default by any Borrower under the Loan
Documents and if such Default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same. Each such quarterly statement shall show the separate operations of each
Property, including, without limitation, (1) a breakdown of Patient Revenues and
other revenues itemized by payor type and a reasonably detailed breakdown of
operating expenses and (2) patient census by payor type. Each such quarterly
report shall be accompanied by the following, in hard copy and electronic
format:
(i) a statement in reasonable detail which calculates Net
Operating Income for each Property for the trailing four fiscal quarters,
in each case, ending at the end of such fiscal quarter;
(ii) then current occupancy report for each Property; and
(iii) such other information as Lender shall reasonably
request.
(d) As soon as available, and in any event within thirty (30)
days after the end of each calendar month, each Borrower shall furnish (x) a
report describing in reasonable detail the occurrence during such calendar month
of any of the following: the termination, cancellation or entry into, or default
by any party under, any Operating Lease at any of the Properties or any event
which is reasonably likely to result in a material adverse effect on the the
ability of any Borrower to perform any material provision of any Loan
Document,or the value, use or enjoyment of any of the Properties or the
operation thereof and (y) such Borrower's calculation of Debt Service Coverage
Ratio and adequate back-up to support such calculation.
(e) Until the occurrence of a Securitization or series of
Securitizations, which, in the aggregate, shall have securitized the entire
Loan, each Borrower shall, simultaneously with delivering the report described
in the foregoing clause (d), furnish, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, monthly and
year-to-date unaudited financial statements prepared for the applicable month
with respect to Borrowers, including a balance sheet and operating statement as
of the end of such month, together with related statements of income, members'
or partners' capital and cash flows for such month and for the portion of the
Fiscal Year ending with such month, which statements shall be accompanied by (i)
an Officer's Certificate certifying that the same are true and correct and were
prepared in accordance with GAAP applied on a consistent basis, subject to
changes resulting from audit and normal year-end audit adjustments and (ii) an
Officer's Certificate certifying as to any material variances from the approved
Annual Budget on a line-item basis. Each monthly report shall show the separate
operations of each Property, including, without limitation, (1) a breakdown of
Patient Revenues and other revenues itemized by payor type and a reasonably
detailed breakdown of operating expenses and (2) patient census by payor
44
type. Each such monthly report shall be accompanied by the following in hard
copy and electronic format:
(i) a statement in reasonable detail which calculates Net
Operating Income for each Property for the trailing twelve (12) months, in
each case, ending at the end of that month;
(ii) then current occupancy report for each Property; and
(iii) such other information as Lender shall reasonably
request.
(f) As soon as available, and in any event within ninety (90)
days after the end of each calendar year, each Borrower shall furnish to Lender
true and complete copies of a report regarding the compliance of the Properties
with all Regulatory Permits.
(g) Upon Lender's written request, as soon as available, and in
any event within five (5) days after preparation thereof, each Borrower shall
furnish to Lender the weekly and monthly consolidated cash flow reports of each
Operator and consolidated patient census reports for each Operator.
(h) As soon as available, and in any event no later than thirty
(30) days after the end of each fiscal quarter, each Borrower shall furnish to
Lender (i) the quarterly consolidated survey deficiency summary report,
indicating for each Property whether any survey, citation or report alleging any
deficiency with respect to such Property has been issued during the prior month
and, if so, setting forth, the identity of the Governmental Authority that
issued such survey, citation or report, a description of the alleged deficiency
and the timetable or deadline for same and the applicable Borrower's plan for
curing such deficiency and (ii) to the extent existing, all actuarial reports
relating to all professional liability claims. Each Borrower shall also deliver
to Lender promptly after request therefor by Lender any other Property specific
survey reports reasonably requested by Lender.
(i) As soon as available, and in any event within forty-five (45)
days after the end of each calendar quarter, each Borrower shall deliver to
Lender copies of the Officer's Certificates, setting forth whether any event(s)
of default has occurred and is continuing with respect to the reduction of the
number of licensed beds at any Property or the revocation of certification for
reimbursement under Medicare or Medicaid with respect to any Property.
(j) As soon as available, and in any event within ten (10) days
of receipt, each Borrower shall deliver to Lender any and all notices
(regardless of form) from any licensing and/or certifying agency (i) that any
Regulatory Permit for any Property or the Medicare Certification or Medicaid
Certification of any Property is the subject of any enforcement action,
revocation or suspension, or is subject to assessment for civil monetary
penalties or is the subject of any overpayment claim or recoupment claim or (ii)
that action is pending or being considered to revoke or suspend any Regulatory
Permit or to institute enforcement actions of any kind.
45
(k) Upon the request of Lender, within five (5) days of the
earlier of (i) the date of the required filing of cost reports for any Property
with the Medicaid agency or (ii) the date of actual filing of such cost report
for any Property with such agency, each Borrower shall furnish to Lender a
complete and accurate copy of the annual Medicaid cost report for each Property,
which will be prepared by an independent certified public accountant or by an
experienced cost report preparer acceptable to Lender in its sole discretion,
and promptly furnish to Lender any amendments filed with respect to such reports
and all responses, audit reports or inquiries with respect to such reports.
(l) As soon as available, and in any event within five (5) days
of receipt, each Borrower shall deliver to Lender 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, shall also furnish or cause to be furnished to
Lender, a copy of the plan of correction generated from such survey or report
for a Property,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 or 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 any extensions of time granted by such agency).
(m) Borrowers have previously delivered to Lender the Annual
Budget for each Property for the 2002 Fiscal Year. At least thirty (30) days
prior to the commencement of each subsequent Fiscal Year during the term of the
Loan, Borrowers shall deliver to Lender for approval an Annual Budget presented
on a consolidated as well as a property-by-property basis for the ensuing Fiscal
Year and, promptly after preparation thereof, any subsequent revisions to the
Annual Budget.
(n) As soon as available, and in any event within one hundred
twenty(120) days after the close of each Fiscal Year, each Borrower shall cause
each Guarantor to furnish to Lender, in hard copy and electronic format and
presented on a consolidated as well as a property-by-property basis, financial
statements prepared for such year with respect to Guarantors, including a
balance sheet and operating statement as of the end of such year, together with
related statements of income and members' or partners' capital for such Fiscal
Year, audited by a "Big Four" accounting firm or a nationally recognized,
independent certified public accounting firm reasonably satisfactory to Lender
whose opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP applied on a consistent basis and shall not be
qualified as to the scope of the audit or as to the status of each Guarantor as
a going concern. Together with each Guarantor's annual financial statements,
each Borrower shall cause each Guarantor to furnish to Lender an Officer's
Certificate certifying as of the date thereof whether to the best of such
Guarantor's knowledge there exists an event or circumstance which constitutes a
Default or Event of Default by any Guarantor under any guaranty and if such
Default or Event of Default exists, the nature thereof, the period of time it
has existed and the action then being taken to remedy the same.
(o) Notwithstanding the foregoing, in the event the Parent makes
a public offering of its stock and becomes subject to public record disclosure,
Mortgage Borrowers shall provide Lender with copies of all financial statements
filed by Parent with the Securities and Exchange Commission within two (2) days
of such filing.
46
4.1.7. Title to the Properties. Each Borrower will warrant and defend
the validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties against the claims of all Persons whomsoever, subject
only to Permitted Encumbrances.
4.1.8. Estoppel Statement.
(a) After request by Lender, each Borrower shall within ten (10)
Business Days furnish Lender with a statement, duly acknowledged and certified,
stating (i) the unpaid principal amount of the Note, (ii) the Interest Rate of
the Note, (iii) the date installments of interest and/or principal were last
paid, (iv) any offsets or defenses to the payment of the Debt, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.
(b) Each Borrower shall deliver to Lender, upon request, an
estoppel certificate from each tenant under any Lease (other than tenants under
patient admission and resident care agreements) at any of the Properties;
provided that such certificate may be in the form required under such Lease;
provided further that each Borrower shall not be required to deliver such
certificates more frequently than two (2) times in any calendar year.
4.1.9. Operating Leases. Without the prior written consent of Lender
and without delivery of a Rating Agency Confirmation, each Borrower shall not
(i) cancel or terminate any Operating Lease in whole or in part, (ii) approve
any assignment of any Operating Lease, (iii) amend or modify any economic terms
or otherwise amend or modify or waive any provisions of any Operating Lease,
(iv) cancel or modify any guaranty, or release any security deposit, letter of
credit or other item constituting security pertaining to such Operating Lease.
Each Borrower agrees to take all necessary action requested by Lender to
facilitate the transfer of all Regulatory Permits to Lender, its designee or
assignee, or any subsequent purchaser, provided that (i) the number of beds and
the scope of services provided are not changed and (ii) Lender, its designee or
assignee, or subsequent purchaser submits prior notification of such change to
the applicable regulatory agency.
4.1.10. Alterations. Lender's prior approval shall be required in
connection with any alterations to any Improvements on any Property (a) that may
have a material adverse effect on any Borrower's financial condition, the value
of the related Property or the Net Operating Income or (b) the cost of which
(including any related alteration, improvement or replacement) is reasonably
anticipated to exceed the Alteration Threshold. If the total unpaid amounts
incurred and to be incurred with respect to such alterations to the Improvements
shall at any time exceed the Alteration Threshold, Borrowers shall promptly
deliver to Lender as security for the payment of such amounts and as additional
security for each Borrowers' obligations under the Loan Documents any of the
following: (i) cash, (ii) U.S. Obligations, (iii) other securities acceptable to
Lender, provided that Lender shall have received a Rating Agency Confirmation as
to the form and issuer of same, or (iv) a completion bond, provided that Lender
shall have received a Rating Agency Confirmation as to the form and issuer of
same. Such security shall be in an amount equal to the excess of the total
unpaid amounts incurred and to be incurred with respect to such alterations to
the Improvements on the applicable Property (other
47
than such amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold.
4.1.11. Use-Specific Covenants.
(a) Each Borrower shall:
(i) operate each Property or cause each Property to be
operated in substantial compliance with the laws and requirements referred
to in Section 3.1.40 hereof;
(ii) operate each Property or cause each Property to be
operated in a manner such that the Regulatory Permits shall remain in full
force and effect;
(iii) maintain or cause to be maintained the number and type
of licensed beds at each Property at the licensure/certification levels set
forth in Schedule III; provided, however, a Borrower may remove from
service a number of licensed beds at its Property by not more than the
greater of ten (10) beds and ten percent (10%) of the number of licensed
beds at such Property immediately prior to the proposed reduction provided
such removal from service is on a temporary basis and Borrower delivers to
Lender from each applicable Governmental Authority written evidence that
such removal from service is on a temporary, and not permanent, basis and
that such beds may be placed back into service without approval from any
Governmental Authority; and provided further that the Borrower shall not
adjust the number of licensed beds at the facility; and
(iv) to the extent applicable, substantially comply with all
requirements for participation in Medicare, Medicaid and any other Third
Party Payor Programs, and shall keep in full force and effect a current
provider agreement under Medicare, Medicaid and any other Third Party Payor
Programs as are financially prudent.
(b) Each Borrower shall cause the operation of each Property 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 Property at all times at a level necessary to insure a
level of quality for each Property consistent with similar facilities in
the same competitive market;
(ii) to maintain or cause to be maintained a standard of
care in the storage, use, transportation and disposal of all medical
equipment, medical supplies, medical products and medical waste, of any
kind and in any form, that is in accordance at least, with that of the
highest prudent industry standard and in substantial conformity with all
applicable Legal Requirements;
(iii) to operate or cause each Property to be operated in a
prudent manner in substantial compliance in all respects with applicable
Legal Requirements and requirements of the Policies relating thereto and,
except where the
48
failure to maintain their effectiveness could not have a Material Adverse
Effect, cause all licenses, Regulatory Permits, and any other agreements
necessary for the continued use and operation of such Property or for
participation in the Medicare, Medicaid or other Third Party Payor Programs
to remain in full force and effect;
(iv) to maintain or cause to be maintained sufficient
Inventory and Equipment of types and quantities at each Property to enable
the applicable Borrower to operate such Property.
4.1.12. Material Agreements. No Borrower shall amend, modify,
surrender or waive any material rights or remedies under, or enter into or
terminate, any Material Agreement unless any such amendment, modification,
surrender, waiver, entry or termination would not have a Material Adverse
Effect.
Section 4.2. Borrower Negative Covenants.
Until all amounts are paid in full under the Loan Documents (excluding
contingent indemnity obligations that survive repayment), each Borrower
covenants and agrees with Lender that:
4.2.1. Due on Sale and Encumbrance; Transfers of Interests. Without
the prior written consent of Lender, neither any Borrower nor any Person having
a direct or indirect interest ownership or beneficial interest in any Borrower
or any Guarantor shall sell, convey, mortgage, grant, bargain, encumber, pledge,
assign or otherwise Transfer any interest, direct or indirect in any Borrower,
any Guarantor, any of the Properties or any part thereof, whether voluntarily or
involuntarily, in violation of the covenants and conditions set forth in the
Mortgages, this Agreement or the Master Guaranty; provided, that this Section
shall not prohibit transfers of equity interest in the Parent permitted under
Section 8.2.
4.2.2. Liens. Each Borrower shall not create, incur, assume or suffer
to exist any Lien on any portion of any of the Properties except for Permitted
Encumbrances.
4.2.3. Issuance of Equity Interests. Each Borrower shall not issue or
allow to be created any stocks or shares or shareholder, partnership or
membership interests in any Borrower, 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 any Borrower.
4.2.4. Change in Business. Each Borrower shall not 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 provided, however,
with the prior written consent of the Lender, not to be unreasonably withheld,
and, after a Securitization of the Loan, a Rating Agency Confirmation, a
Borrower may amend its business operations at a Property to include a Specialty
Hospital (in which event Schedule III hereto shall be amended to reflect such
amendment).
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4.2.5. Debt Cancellation. Each Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to any Borrower by any Person, except for adequate
consideration and in the ordinary course of any Borrower's business.
4.2.6. Affiliate Transactions. Each Borrower shall not enter into, or
be a party to, any transaction with an Affiliate of any Borrower or any of the
partners of any Borrower except in the ordinary course of business and on terms
that are no less favorable to any Borrower or such Affiliate than would be
obtained in a comparable arm's-length transaction with an unrelated third party.
4.2.7. Zoning. Each Borrower shall not initiate or consent to any
zoning reclassification of any portion of any of the Properties or seek any
variance under any existing zoning ordinance or use or permit the use of any
portion of any of the Properties in any manner that could result in such use
becoming a non-conforming use under any zoning ordinance or any other applicable
land use law, rule or regulation, without the prior consent of Lender.
4.2.8. Assets. Each Borrower shall not purchase or own any properties
other than the Properties and any other property necessary or incidental for the
operation of the Properties.
4.2.9. No Joint Assessment. Each Borrower shall not suffer, permit or
initiate the joint assessment of any Property (i) with any other real property
constituting a tax lot separate from such Property, and (ii) with any portion of
such Property 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 Property.
4.2.10. Principal Place of Business. Each Borrower shall not change
its jurisdiction of organization or its name without first obtaining the written
consent of Lender.
4.2.11. ERISA.
(a) Each Borrower shall not engage in any transaction which would
cause any obligation, or action taken or to be taken, hereunder (or the exercise
by Lender of any of its rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) Each Borrower shall deliver to Lender such certifications or
other evidence from time to time throughout the term of the Loan, as requested
by Lender in its sole discretion, that (A) such Borrower is not and does not
maintain an "employee benefit plan" as defined in Section 3(3) of ERISA, which
is subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (B) such Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in such Borrower are publicly offered
securities, within the meaning of 29 C.F.R.(S)2510.3-101(b)(2);
50
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in such Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R.(S)2510.3-101(f)(2); or
(iii) Such Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29
C.F.R.(S)2510.3-101(c) or (e).
4.2.12. Other Indebtedness. Each Borrower shall not incur, create,
assume or become liable in any manner with respect to any Indebtedness, except
the Debt and the Permitted Debt.
4.2.13. Use-Specific Negative Covenants: Each Borrower shall not and
shall not allow the Manager, if any, to:
(a) transfer any Regulatory Permits to any location other than
the related Property nor pledge any Regulatory Permits as collateral security
for any loan or indebtedness other than the Loan;
(b) rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of (i) any Regulatory Permit for any
Property or (ii) any applicable provider payment program participation for any
Property;
(c) except as permitted by the proviso to Section 4.1.11(a)(iii),
amend or otherwise change any Property's authorized bed capacity and/or the
number or type of beds, and/or licensing category or type and/or the number of
beds participating in governmental payment programs approved by the applicable
state licensing agency, CMS or other Governmental Authority without Lender's
prior written consent which may be given or denied in Lender's sole discretion;
(d) replace or transfer all or any part of any Property's
licensed beds to another site or location, change the type of licensed beds at
any Property or reduce the number of licensed beds at any Property;
(e) apply for approval to (i) move any licensed beds to another
site or location, (ii) change the type of licensed beds at any Property or (iii)
reduce the number of licensed beds at any Property;
(f) jeopardize in any manner any Borrower's participation in any
Third Party Payor Programs to which any Borrower is subject as of the Closing
Date; provided, to the extent financially prudent and consistent with the terms
of the Loan Agreements, each Borrower may terminate participation in any Third
Party Payor Program with any private commercial insurance to the extent such
termination could not have a Material Adverse Effect;
(g) pledge any receivables as collateral security for any loan or
indebtedness other than the Loan;
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(h) 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 by any Borrower at any Property;
(i) 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); provided a Borrower may enter into changes which
do not have a Material Adverse Effect; or
(j) assign or transfer any of its interest in any Regulatory
Permit or Reimbursement Contract (including any right to payment thereunder) or
assign, transfer or remove or permit any other person to assign, transfer or
remove any records pertaining to any Property including, without limitation,
patient records, medical and clinical records (except for removal of such
patient records as directed by the patients owning such records).
ARTICLE V. INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1. Insurance.
5.1.1. Insurance Policies.
(a) Each Borrower shall obtain and maintain, or cause to be
maintained, insurance for such Borrower and each Property providing at least the
following coverages:
(i) coverage for loss or damage by fire, lightning, wind and
such other perils as are included in a standard "all risk" or "special
causes of loss" endorsement and against loss or damage by other risks and
hazards covered by a standard property insurance policy including, without
limitation, riot, civil commotion, vandalism, malicious mischief, burglary
and theft on the Improvements and the personal property at the Property,
including contingent liability from Operation of Building Laws, Demolition
Costs and Increased Cost of Construction Endorsements, in each case (A) in
an amount equal to one hundred percent (100%) of the "Full Replacement
Cost," which for purposes of this Agreement shall mean actual replacement
value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation, but the amount shall
in no event be less than the Allocated Loan Amount of the Property; (B)
containing an agreed amount endorsement with respect to the Improvements
and personal property at the Property waiving all co-insurance provisions;
(C) providing for no deductible in excess of Ten Thousand and No/100
Dollars ($10,000) for all such insurance coverage; and (D) containing (a)
an "Ordinance or Law Coverage" or "Enforcement" endorsement and (b)
"demolition" insurance (in an amount equal to ten percent (10%) of the
value of the Improvements) and "increased cost of construction" insurance
(equal to twenty-five percent (25%) of the value of the Improvements, or
such other amount approved by Lender, if any of the Improvements or the use
of the applicable Property shall at any time constitute legal
non-conforming structures or uses. In addition, each Borrower shall obtain:
(y) if any portion of the Improvements is currently or at any time in the
future located in a federally designated "special flood
52
hazard area", flood hazard insurance in an amount equal to the lesser of
(1) the "Full Replacement Cost" (defined above) but no less than the
Allocated Loan Amount of the applicable Property or (2) the maximum amount
of such insurance available under the National Flood Insurance Act of 1968,
the Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
amounts and in form and substance satisfactory to Lender in the event the
applicable Property is located in an area with a high degree of seismic
activity, provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk
insurance policy required under this subsection (i).
(ii) commercial general liability insurance against claims
for personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, such insurance (A) to be on the so-called
"occurrence" (or claims made form if the "occurrence" form is not available
at commercially reasonable prices) form with a combined limit, excluding
umbrella coverage, of not less than One Million and No/100 Dollars
($1,000,000) per occurrence with a minimum Three Million and No/100 Dollars
($3,000,000) general aggregate; (B) to continue at not less than the
aforesaid limit until required to be changed by Lender by reason of changed
economic conditions making such protection inadequate; and (C) to cover at
least the following hazards: (1) premises and operations; (2) products and
completed operations on an "if any" basis; (3) independent contractors; (4)
blanket contractual liability for all legal contracts; (5) contractual
liability covering the indemnities contained in Article 9 of the related
Mortgage to the extent the same is available; (6) broad form property
damage; (7) personal injury (including death resulting therefrom); (8)
healthcare professional liability and (9) a liquor liability endorsement if
alcoholic beverages are sold at the Property and (B) with a deductible of
no more than $10,000.
(iii) business interruption insurance (A) with loss payable
to Lender; (B) covering all risks required to be covered by the insurance
provided for in subsection (i) above and (xi) below; (C) in an amount
sufficient to avoid any co-insurance penalty and to provide proceeds which
will cover a period of not less than eighteen (18) months from the date of
casualty or loss; (D) containing an extended period of indemnity
endorsement which provides that after the physical loss to the Property has
been repaired, the continued loss of income will be insured until such
income returns to the same level it was prior to the loss, or the
expiration twenty-four (24) months from the date of the loss, whichever
first occurs, and notwithstanding that the policy may expire prior to the
end of such period. The amount of coverage shall be no less than
$12,000,000;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements, and
only if the applicable Property's coverage form does not otherwise apply,
(A) owner's contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance
provided for in subsection (i) above written in a so-called builder's risk
completed value form (1) on a non-reporting basis, (2) against all risks
insured against
53
pursuant to subsection (i) above, (3) including permission to occupy the
applicable Property, and (4) with an agreed amount endorsement waiving
co-insurance provisions;
(v) workers' compensation, subject to the statutory limits
of the state in which the applicable Property is located, and employer's
liability insurance with a limit of at least One Hundred Thousand and
No/100 Dollars ($100,000) per accident and per disease per employee, and
Five Hundred Thousand and No/100 Dollars ($500,000) aggregate in respect of
any work or operations on or about the Property, or in connection with the
applicable Property or its operation (if applicable);
(vi) broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers or other pressure vessels,
machinery, and equipment located in, on or about any Property (including
"system breakdown coverage") in an amount equal to or greater than the
repair and full replacement cost of such equipment and insurance against
loss of occupancy or use arising from any breakdown of such equipment in
such amounts as are generally required by institutional lenders for
properties comparable to the Properties;
(vii) umbrella liability insurance in addition to primary
coverage in an aggregate amount not less than Nine Million and No/100
Dollars ($9,000,000) on terms consistent with the commercial general
liability insurance policy required under subsection (ii) above that cover
all claims typically covered by an umbrella liability policy including all
legal liability imposed upon any Borrower and all court costs and
attorneys' fees connection with the ownership, operation and maintenance of
the Properties;
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, of One Million and
No/100 Dollars ($1,000,000);
(ix) if alcoholic beverages are sold at the applicable
Property, so-called "dramshop" insurance or other liability insurance
required in connection with the sale of alcoholic beverages;
(x) insurance against employee dishonesty in an amount not
less than $100,000 and with a deductible not greater than Ten Thousand and
No/100 Dollars ($10,000);
(xi) If the insurance required under clause (i) above
excludes coverage for acts of terrorism, each Borrower shall provide
terrorism insurance coverage in an amount equal to the lesser of (1) the
"Full Replacement Cost" (defined above) but no less than the Loan Amount or
(2) the maximum amount of such insurance which is commercially reasonably
available, unless at the time of determination: (i) it is not available at
commercially reasonable rates; (ii) no Affiliates of Borrower are
maintaining terrorism insurance with respect to another property; (iii)
terrorism insurance is not commonly maintained by owners of other similar
properties and (iv) terrorism
54
insurance is not required for securitized loans similar to the Loan and
secured by property similar to the Properties and with similar ratings as
the Loan in the commercial mortgage-backed securities market; and
(xii) such other reasonable insurance and in such reasonable
amounts as Lender from time to time may reasonably request against such
other insurable hazards or casualties which at the time are commonly
insured against for property similar to the Properties located in or around
the region in which the Properties are located including, without
limitation, sinkhole, mine subsidence and environmental insurance, due
regard being given to the height and type of property, construction,
location, use and occupancy.
(b) All insurance provided for in Section 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "Policies" or
in the singular, the "Policy") and, to the extent not specified above, shall be
subject to the approval of Lender as to deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the "Insurance Premiums"), shall be delivered by
Borrowers to Lender. Borrowers shall deliver certified copies of the Policies to
Lender within thirty (30) days of the Closing Date and thereafter upon request.
All Policies must have a term of not less than one (1) year.
(c) Intentionally deleted.
(d) All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name each applicable Borrower as the insured and Lender and its successors
and/or assigns as the additional insured, as its interests may appear, and in
the case of property damage, terrorism insurance, boiler and machinery, flood
and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 5.1.1(a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of any Borrower, or anyone acting
for any Borrower, or of any tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a
forfeiture of the insurance or any part thereof, shall in any way affect
the validity or enforceability of the insurance insofar as Lender is
concerned;
(ii) the Policy shall not be materially changed (other than
to increase the coverage provided thereby) or canceled without at least
thirty (30) days' written notice to Lender and any other party named
therein as an additional insured;
(iii) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder; and
55
(iv) to the extent available at commercially reasonable
rates, a waiver of subrogation rights as to Lender.
(f) If at any time Lender is not in receipt of written evidence
that all insurance required hereunder is in full force and effect, Lender shall
have the right, without notice to any Borrower, to take such action as Lender
deems necessary to protect its interest in the Properties, including, without
limitation, the obtaining of such insurance coverage as Lender in its sole
discretion deems appropriate and all premiums incurred by Lender in connection
with such action or in obtaining such insurance and keeping it in effect shall
be paid by Borrowers to Lender upon demand and until paid shall be secured by
the Mortgages and shall bear interest at the Default Rate.
(g) In the event of foreclosure of any Mortgage or other transfer
of title to any Property in extinguishment in whole or in part of the Debt, all
right, title and interest the applicable Borrower in and to the Policies that
are not blanket Policies then in force concerning the Properties and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of
title.
5.1.2. Insurance Company. The Policies shall be issued by one or more
domestic primary insurance companies, duly qualified in the jurisdiction where
the Properties are located and rated A: VII or better by A.M. Best and having a
claims-paying ability of at least "AA" or its equivalent by each of the Rating
Agencies, or by a syndicate of insurers through which at least seventy-five
percent (75%) of the coverage (if there are four (4) or fewer members of the
syndicate) or at least sixty percent (60%) of the coverage (if there are five
(5) or more members of the syndicate) is with carriers having such claims-paying
ability ratings (provided that all such carriers shall have claims-paying
ability ratings of not less than "A" or the equivalent by each of the Rating
Agencies).
Section 5.2 Casualty and Condemnation.
5.2.1. Casualty. If a Property shall sustain a Casualty, each Borrower
shall give prompt notice of such Casualty to Lender (provided that notice shall
not need to be required for a Casualty which causes less than $50,000 worth of
damage to a Property) and, provided Lender permits the applicable Borrower to
utilize the Net Proceeds, if any, for any such Restoration, shall promptly
commence and diligently prosecute to completion the repair and restoration of
any Property as nearly as possible to the condition such Property was in
immediately prior to such Casualty (a "Restoration") and otherwise in accordance
with Section 5.3. Borrowers shall pay all costs of such Restoration whether or
not such costs are covered by insurance. Lender may, but shall not be obligated
to, make proof of loss if not made promptly by any Borrower. In the event of a
Casualty where the loss does not exceed the Restoration Threshold, a Borrower
may settle and adjust such claim; provided that (a) no Event of Default has
occurred and is continuing and (b) such adjustment is carried out in a
commercially reasonable and timely manner. In the event of a Casualty where the
loss exceeds the Restoration Threshold or if an Event of Default then exists, a
Borrower may settle and adjust such claim only with the consent of Lender (which
consent shall not be unreasonably withheld or delayed) and Lender shall have the
opportunity to participate, at Borrowers' cost, in any such adjustments.
Notwithstanding any
56
Casualty, each Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement.
5.2.2. Condemnation. Each Borrower shall give Lender prompt notice of
any actual or threatened Condemnation by any Governmental Authority of all or
any part of any Property (provided that notice shall not be required for a
Condemnation which could result in less than $50,000 in Condemnation Proceeds)
and shall deliver to Lender a copy of any and all papers served in connection
with such proceedings. Provided no Event of Default has occurred and is
continuing, in the event of a Condemnation where the amount of the taking does
not exceed the Restoration Threshold, a Borrower may settle and compromise such
Condemnation; provided that the same is effected in a commercially reasonable
and timely manner. In the event a Condemnation where the amount of the taking
exceeds the Restoration Threshold or if an Event of Default then exists, a
Borrower may settle and compromise the Condemnation only with the consent of
Lender (which consent shall not be unreasonably withheld or delayed) and Lender
shall have the opportunity to participate, at Borrowers' cost, in any litigation
and settlement discussions in respect thereof and each Borrower shall from time
to time deliver to Lender all instruments requested by Lender to permit such
participation. Each Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any Condemnation, each Borrower shall continue to pay the Debt
at the time and in the manner provided for its payment in the Note and in this
Agreement. Lender shall not be limited to the interest paid on the Award by any
Governmental Authority but shall be entitled to receive out of the Award
interest at the rate or rates provided herein or in the Note. If any Property or
any portion thereof is taken by any Governmental Authority and provided Lender
permits the applicable Borrowers to utilize the Net Proceeds, if any, for the
Restoration of the applicable Property, each Borrower shall promptly commence
and diligently prosecute the Restoration of such Property and otherwise comply
with the provisions of Section 5.3. If such Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.
Section 5.3 Delivery of Net Proceeds.
5.3.1. Minor Casualty or Condemnation. If a Casualty or Condemnation
has occurred to a Property and the Net Proceeds shall be less than the
Restoration Threshold and the costs of completing the Restoration shall be less
than the Restoration Threshold, and provided no Event of Default shall have
occurred and remain uncured, the Net Proceeds will be disbursed by Lender to the
applicable Borrower. Promptly after receipt of the Net Proceeds, such Borrower
shall commence and satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement. If any Net Proceeds are received by
any Borrower and may be retained by such Borrower pursuant to the terms hereof,
such Net Proceeds shall, until completion of the Restoration, be held in trust
for Lender and shall be segregated from other funds of such Borrower to be used
to pay for the cost of Restoration in accordance with the terms hereof.
57
5.3.2. Major Casualty or Condemnation.
(a) If a Casualty or Condemnation has occurred to a Property and
the Net Proceeds are equal to or greater than the Restoration Threshold or the
costs of completing the Restoration is equal to or greater than the Restoration
Threshold, Lender shall make the Net Proceeds available for the Restoration,
provided that each of the following conditions are met:
(i) no Event of Default shall have occurred and be
continuing;
(ii) (A) in the event the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area of
the Improvements at the applicable Property has been damaged, destroyed or
rendered unusable as a result of such Casualty or (B) in the event the Net
Proceeds are an Award, less than ten percent (10%) of the land constituting
applicable Property is taken, and such land is located along the perimeter
or periphery of the Property, and no portion of the Improvements is the
subject of the Condemnation;
(iii) (A) in the event of a Casualty, the Casualty resulted
in an actual or constructive loss of less than twenty-five percent (25%) of
the fair market value of the applicable Property or (B) in the event of a
Condemnation, the Condemnation resulted in an actual or constructive loss
of less than ten percent (10%) of the fair market value of the applicable
Property.
(iv) Intentionally Omitted.
(v) The applicable Borrower shall commence the Restoration
as soon as reasonably practicable (but in no event later than sixty (60)
days after such Casualty or Condemnation or such longer period, not to
exceed 120 days, as is reasonably necessary to adjust the claim or receive
the award; provided, however, with respect to each Property the use of
which is a legal non-conforming use under applicable Legal Requirements,
the Restoration shall be commenced within such period as required by such
Legal Requirements to maintain such status) and shall diligently pursue the
same to satisfactory completion and in any event, as to each Property the
use of which is a legal non-conforming use under applicable Legal
Requirements, within such period as required by such Legal Requirements to
maintain such status;
(vi) Lender shall be satisfied that any operating deficits
and all payments of principal and interest under the Note will be paid
during the period required for Restoration from (A) the Net Proceeds, or
(B) other funds of the applicable Borrower;
(vii) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (A) the date six (6) months
prior to the Maturity Date, (B) such time as may be required under
applicable Legal Requirements in order to repair and restore the applicable
Property to the condition it was in immediately prior to such Casualty or
to as nearly as possible the condition it was in immediately prior
58
to such Condemnation, as applicable or (C) the expiration of the insurance
coverage referred to in Section 5.1.1(a)(iii);
(viii) Lender shall be satisfied that after the Restoration,
the fair market value of the applicable Property will be at least equal to
the fair market value of such Property prior to the Casualty or
Condemnation;
(ix) the applicable Property and the use thereof after the
Restoration will be in substantial compliance with and permitted under all
applicable Legal Requirements;
(x) the Restoration shall be done and completed by the
applicable Borrower in an expeditious and diligent fashion and in
substantial compliance with all applicable Legal Requirements; and
(xi) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the applicable Property or the related
Improvements.
(b) The Net Proceeds shall be paid directly to Lender and held by
Lender in the Net Proceeds Account, and until disbursed in accordance with the
provisions of this Section 5.3.2, shall constitute additional security for the
Debt. The Net Proceeds shall be disbursed by Lender to, or as directed by, the
applicable Borrower from time to time during the course of the Restoration, upon
receipt of evidence satisfactory to Lender that (A) all requirements set forth
in Section 5.3.2(a) have been satisfied, (B) all materials installed and work
and labor performed (except to the extent that they are to be paid for out of
the requested disbursement) in connection with the Restoration have been paid
for in full, and (C) there exist no notices of pendency, stop orders, mechanic's
or materialman's liens or notices of intention to file same, or any other liens
or encumbrances of any nature whatsoever on the applicable Property arising out
of the Restoration which have not either been fully bonded to the satisfaction
of Lender and discharged of record or in the alternative fully insured to the
reasonable satisfaction of Lender by the title company issuing the Title
Insurance Policy.
(c) All plans and specifications required in connection with the
Restoration shall be subject to prior approval of Lender and an independent
architect selected by Lender (the "Casualty Consultant"). The plans and
specifications shall require that the Restoration be completed in a first-class
workmanlike manner at least equivalent to the quality and character of the
original work in the Improvements (provided, however, that in the case of a
partial Condemnation, the Restoration shall be done to the extent reasonably
practical after taking into account the consequences of such partial
Condemnation), so that upon completion thereof, the applicable Property is
restored to be of at least equal value and of substantially the same character
as prior to the Casualty. The applicable Borrower shall restore all Improvements
such that when they are fully restored and/or repaired, such Improvements and
their contemplated use substantially comply with all applicable material Legal
Requirements. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under which they have been
engaged, shall be subject to reasonable approval of Lender and the Casualty
Consultant. All costs and expenses incurred by Lender in connection with
recovering, holding and advancing the Net Proceeds for the Restoration
including, without
59
limitation, reasonable attorneys' fees and disbursements and the Casualty
Consultant's fees and disbursements, shall be paid by Borrowers.
(d) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually incurred
from time to time for work in place as part of the Restoration, as certified by
the Casualty Consultant, less the Casualty Retainage. The term "Casualty
Retainage" shall mean, as to each contractor, subcontractor or materialman
engaged in the Restoration, an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 5.3.2(d), be less than the amount actually held back
by the applicable Borrower from contractors, subcontractors and materialmen
engaged in the Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 5.3.2(d) and that
all approvals necessary for the re-occupancy and use of the applicable Property
have been obtained from all appropriate Governmental Authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration have
been paid in full or will be paid in full out of the Casualty Retainage;
provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the related Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.
(e) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
reasonably estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrowers shall deposit the deficiency
(the "Net Proceeds Deficiency") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender in the Net Proceeds Account and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.3.2 shall constitute additional security
for the Debt.
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(g) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after the
Casualty Consultant certifies to Lender that the Restoration has been completed
in accordance with the provisions of this Section 5.3.2, and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to the
applicable Borrower, provided no Event of Default shall have occurred and shall
be continuing under any of the Loan Documents.
(h) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to a Borrower as excess Net Proceeds
pursuant to Section 5.3.2(g) may be retained and applied by Lender toward the
payment of the Debt, whether or not then due and payable, in such order,
priority and proportions as Lender in its sole discretion shall deem proper
without any Prepayment Fee or Spread Maintenance Premium, or, at the discretion
of Lender, the same may be paid, either in whole or in part, to a Borrower for
such purposes as Lender shall designate.
ARTICLE VI. ACCOUNTS
Section 6.1. Cash Management Account/Collection Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the
collection of all income from each Property (the "Cash Management Account"). As
a condition precedent to the closing of the Loan, Borrowers shall cause the Cash
Management Bank to execute and deliver the Cash Management Agreement, which
provides, inter alia, that no party other than Lender and Servicer shall have
the right to withdraw funds from the Cash Management Account. The fees and
expenses of the Cash Management Bank shall be paid by Borrower. On or prior to
the Closing Date, the Borrowers shall establish and thereafter maintain with the
Collection Account Bank a lockbox account (the "Collection Account"). As a
conditon precedent to the closing of the Loan, Borrowers shall cause the
Collection Account Bank to execute and deliver the Collection Account Agreement,
which provides, inter alia, that no party other than Lender and Servicer shall
have the right to withdraw funds from the Collection Account. The fees and
expenses of the Collection Account Bank shall be paid by the Borrowers.
(b) On the Closing Date, each Borrower shall deliver a written
notice (a "Payor Notice") in the form of Exhibit A to each Third Party Payor
that is under Medicare and Medicaid, which notice shall provide that (A) all
payments from such Third Party Payor shall thereafter be transmitted directly by
it to, and deposited directly into, the Collection Account and (B) such
instruction may not be rescinded unless and until such Third Party Payor
receives from a Borrower or Lender a copy of Lender's written consent to such
rescission. Each Borrower shall send a copy of each such written notice to
Lender and shall re-deliver such notices to each Third Party Payor until such
time as such Third Party Payor complies therewith. Each Borrower covenants to
cause all Rents relating to the Properties and all other money received by each
Borrower or Manager with respect to the Properties, including, but not limited
to, payments from all other Third Party Payors excluding Medicare and Medicaid
("Private Third Party Payors") and Self-Pay Receivables to be deposited in the
Collection Account by the end of the first (1st) Business Day following any
Borrower's or Manager's receipt thereof; and each Borrower shall
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be permitted to deposit in the Collection Account such additional amounts as any
Borrower may elect. Notwithstanding the foregoing, the parties acknowledge and
agree that with respect to each Property, the payments from the Private Third
Party Payors and the Self-Pay Receivables constituting checks will be remitted
by each Borrower once such Borrower has accumulated $1,000.00 worth of such
checks by overnight delivery to Manager. Manager shall hold such checks in trust
and will deposit such checks within one (1) Business Day of receipt thereof into
the Collection Account.
(c) Lender shall have the right to replace the Cash Management
Bank or request the Borrower to replace the Collection Account Bank with any
other Eligible Institution in which Eligible Accounts may be maintained which
will promptly execute and deliver to Lender a Cash Management Agreement or
Collection Account Agreement, (and each Borrower shall cooperate with Lender in
connection with such transfer) in the event that (i) at any time the Cash
Management Bank or the Collection Account Bank ceases to be an Eligible
Institution or (ii) the Cash Management Bank or the Collection Account Bank
resigns or otherwise fails to comply with the Cash Management Agreement, as
applicable or (iii) there is a default by the Cash Management Bank or the
Collection Account Bank, as applicable under its Cash Management Agreement or
Collection Account Agreement. Notwithstanding the foregoing, Lender shall have
the right to hold the Collateral Accounts at any other Eligible Institution.
Section 6.2. Distributions From Cash Management Account.
(a) At the end of each Business Day, the Collection Account Bank
shall remit all available funds in the Collection Account to the Cash Management
Account.
(b) On each Business Day, provided no Event of Default has
occurred and no Cash Management Period or Mezzanine Cash Management Period
exists, the Cash Management Bank shall withdraw all available funds in the Cash
Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:
(i) intentionally deleted;
(ii) to the Tax and Insurance Escrow Account, the amount
required to be deposited therein pursuant to Section 6.3;
(iii) to the Debt Service Account, the amount required to be
deposited therein pursuant to Section 6.4;
(iv) to the Capital Expenditure Reserve Account, the amount
required to be deposited therein pursuant to Section 6.6; and
(v) any remaining amounts to the Mezzanine Cash Management
Account; provided, however, if the Mezzanine Loan shall have been paid in
full, any remaining amounts shall be disbursed to such account as the
applicable Borrower may direct.
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(c) If a Cash Management Period or Mezzanine Cash Management
Period exists but no Event of Default has occurred and is continuing, the Cash
Management Bank shall withdraw on each Business Day all available funds in the
Cash Management Account and shall disburse such funds in the following order of
priority until such time as the maximum amount required to be deposited in each
Collateral Account has been so deposited:
(i) intentionally deleted;
(ii) to the Tax and Insurance Escrow Account, the amount
required to be deposited therein pursuant to Section 6.3;
(iii) to the Debt Service Account, the amount required to be
deposited therein pursuant to Section 6.4;
(iv) to the Operating Expense Reserve Account, the amount
required to be deposited therein pursuant to Section 6.5;
(v) to the Capital Expenditure Reserve Account, the amount
required to be deposited therein pursuant to Section 6.6; and
(vi) any remaining amounts to be disbursed as follows:
(1) if no Cash Management Period exists and the Mezzanine
Loan is outstanding, to the Mezzanine Cash Management
Account;
(2) if a Cash Management Period exists and the Mezzanine
Loan is outstanding, to the Mezzanine Cash Management
Account in an amount equal to the Mezzanine Debt Service due
on the next Mezzanine Payment Date, with any amounts in
excess thereof, to the Excess Cash Reserve Account; or
(3) if a Cash Management Period exists and the Mezzanine
Loan is not outstanding, all remaining amounts to the Excess
Cash Reserve Account.
(d) If an Event of Default has occurred and is continuing, Lender
shall promptly notify Cash Management Bank of such Event of Default and Lender
may, in addition to all other rights and remedies provided for under the Loan
Documents, disburse and apply the amounts in the Cash Management Account toward
the payment of the Debt and/or toward the payment of Basic Carrying Costs,
Operating Expenses or Capital Expenditures, in such sequence as Lender shall
elect in its sole discretion.
(e) If on any Payment Date, any Collateral Account has not been
fully funded in the applicable amount described in Section 6.2(b) or Section
6.2(c), as applicable, Borrowers shall deposit into the Cash Management Account
on such Payment Date the amount of such deficiency. If Borrowers shall fail to
make such deposit, the same shall constitute an
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Event of Default and, in addition to all other rights and remedies provided for
under the Loan Documents, Lender may disburse and apply the amounts in the Cash
Management Account toward the payment of the Debt and/or toward the payment of
Basic Carrying Costs, Operating Expenses or Capital Expenditures, in such
sequence as Lender shall elect in its sole discretion.
Section 6.3. Tax and Insurance Escrow Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts payable by any Borrower in respect of Taxes and Insurance
Premiums for each Property (the "Tax and Insurance Escrow Account").
(b) On or prior to the Closing Date, the Tax and Insurance Escrow
Account shall be funded in an amount equal to the sum of (i) an amount
sufficient to pay all Taxes for the Properties by the thirtieth (30th) day prior
to the date they come due, assuming subsequent monthly fundings on Payment Dates
of one-twelfth (1/12th) of projected annual Taxes, plus (ii) an amount
sufficient to pay all Insurance Premiums for the Properties by the thirtieth
(30th) day prior to the date they come due, assuming subsequent monthly fundings
on Payment Dates of one-twelfth (1/12th) of projected Insurance Premiums.
(c) On each subsequent Business Day during an Interest Accrual
Period, the Cash Management Bank shall withdraw all available funds in the Cash
Management Account and shall disburse such funds into the Tax and Insurance
Escrow Account in accordance with the provisions set forth in Section 6.2 until
an amount equal to the sum of:
(A) one-twelfth (1/12th) of the Taxes for the Properties
that Lender reasonably estimates, based on information provided by
Borrowers, will be payable during the next ensuing twelve (12) months, plus
(B) one-twelfth (1/12th) of the Insurance Premiums for the
Properties that Lender reasonably estimates, based on information provided
by Borrowers, will be payable during the next ensuing twelve (12) months;
has been deposited into the Tax and Insurance Escrow Account provided, however,
that if at any time Lender reasonably determines that the amount in the Tax and
Insurance Escrow Account will not be sufficient to accumulate (upon payment of
subsequent monthly amounts in accordance with the provisions of this Agreement)
the full amount of all installments of Taxes and Insurance Premiums for the
Properties by the date on which such amounts come due, then Lender shall notify
Borrowers of such determination and Borrowers shall increase the monthly
payments to the Tax and Insurance Escrow Account by the amount that Lender
reasonably estimates is sufficient to achieve such accumulation.
(d) Each Borrower shall provide Lender with copies of all tax and
insurance bills relating to each Property promptly after the applicable
Borrower's receipt thereof. Lender will apply amounts in the Tax and Insurance
Escrow Account toward the purposes for which such amounts are deposited therein.
In connection with the making of any payment from the Tax and Insurance Escrow
Account, Lender may cause such payment to be made according to any xxxx,
statement or estimate procured from the appropriate public office or insurance
carrier,
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without inquiry into the accuracy of such xxxx, statement or estimate or into
the validity of any tax, assessment, sale, forfeiture, tax lien or title or
claim thereof unless given written advance notice by a Borrower of such
inaccuracy, invalidity or other contest.
Section 6.4. Debt Service Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts payable by Borrowers in respect of Debt Service (the "Debt
Service Account").
(b) On each Business Day during an Interest Accrual Period, the
Cash Management Bank shall withdraw all available funds in the Cash Management
Account and shall disburse such funds into the Debt Service Account in
accordance with the provisions set forth in Section 6.2 until an amount equal to
the amount of all scheduled or delinquent interest on the Loan and other amounts
due and payable under the Loan Documents on the next Payment Date has been
deposited into the Debt Service Account. To the extent Lender receives any
prepayments of the Debt in an Interest Accrual Period on a date other than a
Payment Date, the total amount of such prepayment shall be deposited into the
Debt Service Account, together with all other sums payable with respect to such
prepayment including, but not limited to, any Prepayment Fee and all interest
that would have accrued from the date of such prepayment through the applicable
Payment Date. Any Net Proceeds actually received by Lender shall be deposited
directly into the Net Proceeds Account pursuant to Section 6.8 hereof.
Section 6.5. Operating Expense Reserve Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts in respect of Operating Expenses (the "Operating Expense
Reserve Account").
(b) On each Business Day during a Cash Management Period or a
Mezzanine Cash Management Period, the Cash Management Bank shall withdraw all
available funds in the Cash Management Account and shall disburse such funds
into the Operating Expense Reserve Account in accordance with the provisions set
forth in Section 6.2 until an amount equal to the funds necessary to pay all
Operating Expenses which are (A) to be incurred during the applicable Interest
Accrual Period in accordance with the Annual Budget, or (B) certified by
Borrowers from time to time and approved by Lender in its sole discretion, has
been deposited into the Operating Expense Reserve Account.
(c) Upon the request of a Borrower at any time, provided that no
Event of Default has occurred, Lender shall remit to such Borrower from the
Operating Expense Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Operating Expenses incurred by such Borrower in
connection with any of the Properties, provided that:
(i) Such Borrower shall deliver to Lender invoices
evidencing that the costs for which such disbursements are requested are
due and payable;
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(ii) Such Borrower shall deliver to Lender an Officer's
Certificate confirming that all such costs are within the limits of the
Annual Budget and all such costs have been previously paid by such Borrower
or will be paid from the proceeds of the requested disbursement; and
(iii) Lender may condition the making of a requested
disbursement on reasonable evidence establishing that each Borrower has
applied any amounts previously received by it in accordance with this
Section for the expenses to which specific draws made hereunder relate.
Section 6.6. Capital Expenditure Reserve Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving amounts in respect of Capital Expenditures (the "Capital
Expenditure Reserve Account").
(b) On each Business Day, the Cash Management Bank shall withdraw
all available funds in the Cash Management Account and shall disburse such funds
into the Capital Expenditure Reserve Account in accordance with the provisions
set forth in Section 6.2 until an amount equal to the Monthly Capital
Expenditure Reserve Amount has been deposited therein.
(c) Upon the request of any Borrower at any time (but not more
often than once per calendar month), provided no Event of Default has occurred
and is continuing, Lender shall remit to such Borrower from the Capital
Expenditure Reserve Account amounts to permit such Borrower to pay (or to
reimburse such Borrower) for Capital Expenditures made in accordance herewith;
provided that:
(i) Such Borrower shall deliver to Lender invoices
evidencing that the costs for which such disbursements are requested are
due and payable;
(ii) Such Borrower shall deliver to Lender an Officer's
Certificate confirming that all such costs have been previously paid by
such Borrower or will be paid from the proceeds of the requested
disbursement; and
(iii) Lender may condition the making of a requested
disbursement on (1) reasonable evidence establishing that each Borrower has
applied any amounts previously received by it in accordance with this
Section for the expenses to which specific draws made hereunder relate, (2)
a reasonably satisfactory site inspection, and (3) receipt of lien releases
and waivers from any contractors, subcontractors and others in connection
with such amounts.
Section 6.7. Deferred Maintenance and Environmental Escrow Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of reserving
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amounts anticipated to be required to correct Deferred Maintenance Conditions
(the "Deferred Maintenance and Environmental Escrow Account").
(b) On the Closing Date, Borrowers shall deposit into the
Deferred Maintenance and Environmental Escrow Account, from the proceeds of the
Loan, an amount equal to the Deferred Maintenance Amount.
(c) Borrowers shall correct the Deferred Maintenance Conditions
in a diligent, workmanlike manner and shall complete the same within twelve (12)
months of the Closing Date. Upon the request of a Borrower at any time (but not
more often than once per calendar month), provided no Event of Default has
occurred and is continuing, Lender shall disburse to such Borrower from the
Deferred Maintenance and Environmental Escrow Account amounts to permit such
Borrower to pay (or to reimburse such Borrower) for reasonable costs and
expenses incurred in order to correct Deferred Maintenance Conditions; provided
that:
(i) Such Borrower shall deliver to Lender invoices
evidencing that the costs for which such disbursements are requested are
due and payable;
(ii) Such Borrower shall deliver to Lender an Officer's
Certificate confirming that all such costs have been previously paid by
Borrower or will be paid from the proceeds of the requested disbursement;
(iii) Lender may condition the making of a requested
disbursement on (1) reasonable evidence establishing that each Borrower has
applied any amounts previously received by it in accordance with this
Section for the expenses to which specific draws made hereunder relate, (2)
a reasonably satisfactory site inspection, and (3) receipt of lien releases
and waivers from any contractors, subcontractors and others with respect to
such amounts; and
(iv) as to any Deferred Maintenance Condition, the
applicable Borrower shall only be entitled to a disbursement of the amount
which equals the cost for such Deferred Maintenance Condition.
Section 6.8. Net Proceeds Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of depositing any Net Proceeds (the "Net Proceeds Account") from the Properties.
(b) Provided no Event of Default has occurred, funds in the Net
Proceeds Account shall be applied in accordance with Section 5.3.
Section 6.9. Excess Cash Reserve Account.
(a) On or prior to the Closing Date, Borrowers shall establish
and thereafter maintain with the Cash Management Bank an account for the purpose
of depositing
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any amounts remaining in the Cash Management Account after the deposits required
by Section 6.2(c)(i) through (v) have been made (the "Excess Cash Reserve
Account").
(b) Provided no Event of Default exists, if there are
insufficient funds in the Cash Management Account for the deposits required
pursuant to Section 6.2(c)(i) through (v), the Cash Management Bank, at the
direction of Lender or Servicer, shall withdraw funds from the Excess Cash
Reserve Account in the amount of such insufficiency for payment of same in the
order and priority required by Section 6.2(c)(i) through (v). Provided no Event
of Default exists, any funds remaining in the Excess Cash Reserve Account shall
be released upon the expiration of the Cash Management Period as follows : (i)
if no Mezzanine Cash Management Period exists, to the Borrowers or (ii) if a
Mezzanine Cash Management Period exists, to the Mezzanine Cash Management
Account.
Section 6.10. Intentionally deleted.
Section 6.11. Account Collateral.
(a) Each Borrower hereby grants a perfected first-priority
security interest in favor of Lender in and to the Account Collateral (other
than the Collection Account) as security for the Debt, together with all rights
of a secured party with respect thereto. Each Collateral Account shall be an
Eligible Account under the sole dominion and control of Lender and shall be in
the name of Borrowers, as pledgors, and Lender, as pledgee. Each Borrower shall
have no right to make withdrawals from any of the Collateral Accounts. Funds in
the Collateral Accounts shall not be commingled with any other monies at any
time. Each Borrower shall execute any additional documents that Lender in its
reasonable discretion may require and shall provide all other evidence
reasonably requested by Lender to evidence or perfect its first-priority
security interest in the Account Collateral (other than the Collection Account).
(b) The insufficiency of amounts contained in the Collateral
Accounts shall not relieve any Borrower from its obligation to fulfill all
covenants contained in the Loan Documents.
(c) During the continuance of an Event of Default, Lender may, in
its sole discretion, apply funds in the Collateral Accounts, and funds resulting
from the liquidation of Permitted Investments contained in the Collateral
Accounts, toward the payment of the Debt and/or toward the payment of Basic
Carrying Costs, Operating Expenses or Capital Expenditures in such sequence as
Lender shall elect in its sole discretion.
Section 6.12. Permitted Investments.
(a) So long as no Event of Default shall be continuing, Borrowers
shall be permitted to direct the investment of the funds from time to time held
in the Collateral Accounts (other than the Collection Account) in Permitted
Investments and to sell or liquidate such Permitted Investments and reinvest
proceeds from such sale or liquidation in other Permitted Investments (but
Lender shall have no liability whatsoever in respect of any failure by the Cash
Management Bank to do so), with all such proceeds and reinvestments to be held
in the applicable Collateral Account; provided, however, that the maturity of an
adequate portion of the Permitted Investments on deposit in the Collateral
Accounts shall be no later than the Business
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Day immediately preceding the date on which such funds are required to be
withdrawn therefrom pursuant to this Agreement, and provided further that
Borrowers shall remit into the applicable Collateral Account an amount equal to
any losses realized on Permitted Investments contained therein within five (5)
Business Days of the date of such loss. Funds in the Collection Account shall
not be invested. No Permitted Investment shall be liquidated at a loss at the
direction of any Borrower except to the extent necessary to make a required
payment to Lender on a Payment Date.
(b) All income and gains from the investment of funds in the
Collateral Accounts shall be retained in the Collateral Accounts from which they
were derived. As between Borrowers and Lender, Borrowers shall treat all income,
gains and losses from the investment of amounts in the Collateral Accounts as
its income or loss for federal, state and local income tax purposes.
(c) After the Debt has been paid in full, the Collateral Accounts
shall be closed and the balances therein, if any, shall be paid to Borrowers.
Section 6.13. Bankruptcy.
Each Borrower and Lender acknowledge and agree that upon the filing of
a bankruptcy petition by or against any Borrower under the Bankruptcy Code, the
Account Collateral and the Operating Income (whether then already in the
Collateral Accounts, or then due or becoming due thereafter) shall be deemed not
to be property of such Borrower's bankruptcy estate within the meaning of
Section 541 of the Bankruptcy Code. However, if a court of competent
jurisdiction determines that, notwithstanding the foregoing characterization of
the Account Collateral and the Operating Income by any Borrower and Lender, the
Account Collateral and/or the Operating Income do constitute property of such
Borrower's bankruptcy estate, then Borrowers and Lender further acknowledge and
agree that all such Operating Income, whether due and payable before or after
the filing of the petition, are and shall be cash collateral of Lender. Each
Borrower acknowledges that Lender does not consent to any Borrower's use of such
cash collateral and that, in the event Lender elects (in its sole discretion) to
give such consent, such consent shall only be effective if given in writing
signed by Lender. Except as provided in the immediately preceding sentence, each
Borrower shall not have the right to use or apply or require the use or
application of such cash collateral (i) unless the applicable Borrower shall
have received a court order authorizing the use of the same, and (ii) the
applicable Borrower shall have provided such adequate protection to Lender as
shall be required by the bankruptcy court in accordance with the Bankruptcy
Code.
SECTION 6.14. Letters of Credit.
(a) In lieu of making the payments to any of the Collateral
Accounts (other than the Debt Service, Operating Expense Reserve Account or
Excess Cash Reserve Account), Borrowers may deliver to Lender a Letter of Credit
in accordance with the provisions of this Section. Additionally, Borrowers may
deliver to Lender a Letter of Credit in accordance with the provisions of this
Section in lieu of deposits previously made to the Collateral Accounts (other
than the Debt Service, Operating Expense Reserve Account or Excess Cash Reserve
Account). The aggregate amount of any Letter of Credit and cash on deposit with
respect to any
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of such Collateral Accounts shall at all times be at least equal to the
aggregate amount which each Borrower is required to have on deposit in such
Collateral Account pursuant to this Agreement through the end of the calendar
year in which the Letter of Credit is delivered, as reasonably estimated by
Lender (and in the case of Taxes and Insurance Premiums in no event less than an
amount equal to one year of Insurance Premiums and estimated Taxes for the
Properties). In determining the aggregate amount of any Letter of Credit and
cash required to be delivered to Lender in respect of the Capital Expenditure
Reserve Account, such aggregate amounts shall equal all amounts required to be
deposited hereunder through the end of the calendar year in which the Letter of
Credit is delivered, less amounts expended by any Borrower for Capital
Expenditures for which any Borrower has satisfied the conditions to withdrawal
from the Capital Expenditure Reserve Account. In the event that a Letter of
Credit is delivered in lieu of any deposits to the Tax and Insurance Reserve
Account, Borrowers shall be responsible for the payment of Taxes or Insurance
Premiums for the Properties, as applicable, and Lender shall not be responsible
therefor.
(b) Borrowers shall give Lender no less than thirty (30) days
notice of a Borrower's election to deliver a Letter of Credit and Borrowers
shall pay to Lender all of Lender's reasonable out-of-pocket costs and expenses
in connection therewith. Each Borrower shall not be entitled to draw from any
such Letter of Credit. Upon thirty (30) days notice to Lender, a Borrower may
replace a Letter of Credit with a cash deposit to the applicable Collateral
Account if a Letter of Credit has been outstanding for more than six (6) months.
Prior to the return of a Letter of Credit, Borrowers shall deposit an amount
equal to the amount that would have accumulated in the applicable Collateral
Account and not been disbursed in accordance with this Agreement if such Letter
of Credit had not been delivered.
(c) Each Borrower shall provide Lender with notice of any
increases in the annual payments for Taxes, Insurance Premiums or Capital
Expenditures for any of the Properties thirty (30) days prior to the effective
date of any such increase and any applicable Letter of Credit shall be increased
by such increased amount at least ten (10) days prior to the effective date of
such increase.
Section 6.15. Provisions Regarding Letters of Credit.
6.15.1. Security for Debt. Each Letter of Credit delivered under this
Agreement shall be additional security for the payment of the Debt. Upon the
occurrence of a Default or an Event of Default, Lender shall have the right, at
its option, to draw on any Letter of Credit and to apply all or any part thereof
to the payment of the items for which such Letter of Credit was established or
to apply each such Letter of Credit to payment of the Debt in such order,
proportion or priority as Lender may determine. Any such application to the Debt
shall be subject to the Spread Maintenance Premium.
6.15.2. Additional Rights of Lender. In addition to any other right
Lender may have to draw upon a Letter of Credit pursuant to the terms and
conditions of this Agreement, Lender shall have the additional rights to draw in
full any Letter of Credit: (a) if Lender has received a notice from the issuing
bank that the Letter of Credit will not be renewed and a substitute Letter of
Credit is not provided at least thirty (30) days prior to the date on which the
outstanding Letter of Credit is scheduled to expire; (b) upon receipt of notice
from the issuing
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bank that the Letter of Credit will be terminated (except if the termination of
such Letter of Credit is permitted pursuant to the terms and conditions of this
Agreement or a substitute Letter of Credit is provided); or (c) if the bank
issuing the Letter of Credit shall cease to be an Eligible Institution and any
Borrower fails to deliver a replacement Letter of Credit within ten (10) days of
the date that the issuing bank is no longer an Eligible Institution.
Notwithstanding anything to the contrary contained in the above, Lender is not
obligated to draw any Letter of Credit upon the happening of an event specified
in (a), (b) or (c) above and shall not be liable for any losses sustained by any
Borrower due to the insolvency of the bank issuing the Letter of Credit if
Lender has not drawn the Letter of Credit.
ARTICLE VII. PROPERTY MANAGEMENT
Section 7.1. The Management Agreement.
Each Borrower shall cause Manager to manage the Properties in
accordance in all material respects with the Management Agreements. Each
Borrower shall (i) diligently perform and observe in all material respects all
of the terms, covenants and conditions of the Management Agreements on the part
of any Borrower to be performed and observed (ii) promptly notify Lender of any
default by Manager under the provisions of the Management Agreements and (iii)
promptly notify Lender of any notice to any Borrower of any default by any
Borrower in the performance or observance of any of the terms, covenants or
conditions of the Management Agreements on the part of any Borrower to be
performed and observed. If any Borrower shall default in the performance or
observance of any material term, covenant or condition of any Management
Agreement on the part of any Borrower to be performed or observed, then, without
limiting Lender's other rights or remedies under this Agreement or the other
Loan Documents, and without waiving or releasing any Borrower from any of its
obligations hereunder or under such Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material terms, covenants and conditions
of such Management Agreement on the part of any Borrower to be performed or
observed.
Section 7.2. Prohibition Against Termination or Modification.
Each Borrower shall not surrender, terminate, cancel, amend, modify,
renew or extend any Management Agreement, or enter into any other agreement
relating to the management or operation of any Property with any Manager or any
other Person, or consent to the assignment by any Manager of its interest under
the relevant Management Agreement, in each case without the express consent of
Lender, which consent may be granted or denied in Lender's sole discretion;
provided, however, with respect to a new manager such consent may be conditioned
upon Borrowers delivering a Rating Agency Confirmation as to such new manager
and management agreement. If at any time Lender consents to the appointment of a
new manager, such new manager and Borrowers shall, as a condition of Lender's
consent, execute a subordination of management agreement in the form then used
by Lender. The management fees and other fees reserved under the Management
Agreements shall not exceed in the aggregate the prevailing rate for properties
of comparable size, quality and tenant mix in the market in which the Properties
are located. In no event shall such fees exceed seven percent (7%) of the
Operating Income.
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Section 7.3. Replacement of Manager.
Lender shall have the right to require any Borrower to terminate any
Management Agreement and to replace any Manager with a Person chosen by a
Borrower and approved by Lender, upon the occurrence of any one or more of the
following events: (i) at any time following the occurrence of an Event of
Default, (ii) if a Manager shall be in default under the relevant Management
Agreement or the relevant Assignment of Management Agreement beyond any
applicable notice and cure period, (iii) if at any time a Manager has engaged in
gross negligence, malfeasance, fraud or willful misconduct and (iv) if the Debt
Service Coverage Ratio is less than 1.25:1.00.
ARTICLE VIII. TRANSFERS
Section 8.1. Transfer of the Properties.
Each Borrower may not transfer all of the Properties to another party
(i) unless Lender shall have consented in writing to such transfer which consent
may be granted or denied in Lender's sole discretion, (ii) after a
Securitization has occurred, Rating Agency Confirmation is obtained, (iii)
acceptable opinions relating to such transfer shall have been delivered by
Borrowers to Lender and to the Rating Agencies (including without limitation tax
and non-consolidation opinions), (iv) 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,
(v) Borrowers pay an assumption fee equal to one half of one percent (.5%) of
the Loan Amount and (vi) Borrowers pay all reasonable expenses incurred by
Lender in connection with such transfer.
Section 8.2. Transfer of Equity Interests.
(a) ny transfer of any direct or indirect equity interests in any
Borrower shall be prohibited unless (i) Lender shall have consented in writing
to such transfer or transfers which may be granted or denied in Lender's sole
discretion, (ii) Rating Agency Confirmation is obtained, (iii) acceptable
opinions relating to such transfer or transfers shall have been delivered by
Borrowers to Lender and the Rating Agencies (including, without limitation, tax
and non-consolidation opinions), and (iv) Borrowers pay all reasonable expenses
incurred by Lender in connection with such transfer or transfers.
(b) Notwithstanding the foregoing clause (a): (i) if the equity
owners of the Parent desire to cause a Change of Control (as defined in the
Master Guaranty) in the Parent after a Securitization has occurred, subject to
the terms of the Master Guaranty, transfers of equity interests in the Parent to
a Qualified Equity Transferee shall be permitted and (ii) transfers of equity
interests in the Parent which do not constitute a Change of Control (as defined
in the Master Guaranty), to the extent permitted under the Master Guaranty,
shall be permitted..
Section 8.3. Lender's Consent Rights.
Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default hereunder in order to declare the
Debt immediately due and payable upon a Transfer without Lender's consent. This
provision shall apply to every Transfer,
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other than any Transfer permitted pursuant to Sections 8.1 and 8.2, regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous Transfer.
ARTICLE IX. Sale and Securitization of Mortgage
Section 9.1. Sale of Mortgages and Securitization.
(a) Lender shall have the right (i) to sell or otherwise transfer
the Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transaction
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as "Secondary Market Transactions" and the transactions referred to
in clause (iii) shall hereinafter be referred to as a "Securitization." Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as "Securities").
(b) If requested by Lender, each Borrower shall assist Lender in
satisfying the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any Secondary Market Transactions, including, without
limitation, to:
(i) (A) provide updated financial and other information with
respect to the Properties, the business operated at the Properties, each
Borrower and the Managers, (B) provide updated budgets relating to the
Properties and (C) provide updated appraisals, market studies,
environmental assessments (Phase I's and, if appropriate, Phase II's),
property condition reports and other due diligence investigations of the
Properties (the "Updated Information"), together, if customary, with
appropriate verification of the Updated Information through letters of
auditors or opinions of counsel acceptable to Lender and the Rating
Agencies;
(ii) provide opinions of counsel, which may be relied upon
by Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation or any other opinion customary in
Secondary Market Transactions or required by the Rating Agencies with
respect to the Properties and Borrowers and Affiliates, which counsel and
opinions shall be satisfactory to Lender and the Rating Agencies;
(iii) provide updated, as of the closing date of the
Secondary Market Transaction, representations and warranties made in the
Loan Documents and such additional representations and warranties as the
Rating Agencies may require; and
(iv) execute amendments to the Loan Documents and any
Borrower's organizational documents reasonably requested by Lender;
provided, however, that such Borrower shall not be required to modify or
amend any Loan Document if such modification or amendment would (A) change
the interest rate, the stated maturity or the amortization of principal as
set forth herein or in the Note, or (B) modify or amend any other material
economic term of the Loan.
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(c) Each Borrower acknowledges that the Loan may be further
divided into two or more separate notes (or components) that correspond to one
or more tranches of certificates created in a Securitization and each Borrower
agrees to cooperate with Lender in connection therewith. Such notes or note
components may be assigned different interest rates, so long as the weighted
average of such interest rates equals the applicable Interest Rate; provided,
that each Borrower recognizes that, in the case of partial prepayments
associated with principal reduction funded from Net Proceeds, the application of
amounts to principal following an Event of Default under the Loan, or any other
prepayment of a portion of the Loan by any Borrower, the weighted average
interest rate of the Loan may increase because principal may be applied
sequentially, starting with the most senior tranche of certificates. In
addition, each Borrower acknowledges and agrees that Lender shall have the right
to split the Note into an "A" note and a "B" note and each Borrower agrees to
cooperate with Lender in connection therewith in connection with the foregoing
so long as the weighted average interest rate of the "A" note and the "B" note
equals the applicable Interest Rate; provided, that each Borrower recognizes
that, in the case of partial prepayments associated with principal reduction
funded from Net Proceeds, the application of amounts to principal following an
Event of Default under the Loan, or any other prepayment of a portion of the
Loan by any Borrower, the weighted average interest rate of the Loan may
increase because in certain circumstances principal may be applied sequentially
to the "A" and the "B" note.
(d) If, pursuant to this Section, any interest in this Agreement
or the Note is transferred to any transferee that is not a U.S. Person, the
Lender shall cause such transferee, concurrently with the effectiveness of such
transfer, to furnish to the Lender and Borrowers either Form W-8BEN or Form
W-8ECI or any other form in order to establish an exemption from, or reduction
in the rate of, U.S. withholding tax on all interest payments hereunder, and to
agree (for the benefit of Lender and Borrowers) to provide the Lender a new Form
W-8BEN or Form W-8ECI or any forms reasonably requested in order to establish an
exemption, or reduction in the rate of, U.S. withholding tax upon the expiration
or obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
Section 9.2. Securitization Indemnification.
(a) Each Borrower understands that information provided to Lender
by any Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, an "Disclosure Document")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.
(b) Upon request, each Borrower shall provide in connection with
each of (i) a preliminary and a final private placement memorandum or (ii) a
preliminary and final
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prospectus or prospectus supplement, as applicable, an agreement (A) certifying
that each Borrower has examined such Disclosure Documents specified by Lender
and that each such Disclosure Document, as it relates to each Borrower, Borrower
Affiliates, the Properties, Manager and all other aspects of the Loan (the
"Relevant Material"), does 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,
(B) indemnifying Lender (and for purposes of this Section 9.2, Lender hereunder
shall include its officers and directors and each Person that controls Lender
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, collectively, the "Ventas Group"), the party that has filed the
registration statement relating to the Securitization (the "Registration
Statement"), each of its directors, each of its officers who have signed the
Registration Statement and each Person that controls such party within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "Underwriter Group") for any losses, claims, damages or
liabilities (collectively, the "Liabilities") to which Lender, Ventas Group or
the Underwriter Group may become subject insofar as the Liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Relevant Material or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated in the Relevant Material or necessary in order to make the
statements in the Relevant Material, in light of the circumstances under which
they were made, not misleading and (C) agreeing to reimburse Lender, the Ventas
Group and/or the Underwriter Group for any legal or other expenses reasonably
incurred by Lender, the Ventas Group and the Underwriter Group in connection
with investigating or defending the Liabilities; provided, however, that each
Borrower will be liable in any such case under clauses (B) or (C) above only to
the extent that any such loss claim, damage or liability arises out of or is
based upon any such untrue statement or omission made therein in reliance upon
and in conformity with information furnished to Lender by or on behalf of any
Borrower in connection with the preparation of the Disclosure Document or in
connection with the underwriting or closing of the Loan, including, without
limitation, financial statements of any Borrower, operating statements, rent
rolls, appraisals, market studies, environmental site assessment reports and
property condition reports with respect to the Properties. This indemnity will
be in addition to any liability which any Borrower may otherwise have.
(c) In connection with Exchange Act Filings, each Borrower shall
(i) indemnify Lender, the Ventas Group and the Underwriter Group for Liabilities
to which Lender, the Ventas Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading and (ii) reimburse Lender, the Ventas Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Ventas
Group or the Underwriter Group in connection with defending or investigating the
Liabilities.
(d) Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the
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indemnifying party may have to any indemnified party hereunder except to the
extent that failure to notify causes prejudice to the indemnifying party. In the
event that any action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled, jointly with any other indemnifying party, to participate therein
and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party under this Section 9.2, such indemnified party shall
pay for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to another indemnified party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be indemnifiable under
Section 9.2(b) or (c), the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses, claims,
damages or liabilities (or action in respect thereof); provided, however, that
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the applicable indemnified party's
and each Borrower's relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Lender and each Borrower hereby
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
(f) The liabilities and obligations of both Borrowers and Lender
under this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.
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ARTICLE X. DEFAULTS
Section 10.1. Event of Default.
(a) Each of the following events shall constitute an event of
default hereunder (an "Event of Default"):
(i) if any portion of the Debt is not paid when due or if
any Borrower fails to pay any other amount payable pursuant to this
Agreement (including, without limitation, any deposits or payments to the
Collateral Accounts) or any other Loan Document when due and payable in
accordance with the provisions hereof or thereof, as the case may be;
(ii) subject to Borrowers' right to contest Taxes and Other
Charges pursuant to Section 4.1.2 and provided Borrower is complying with
the terms of such Section, if any of the Taxes or Other Charges are not
paid when due;
(iii) if the Policies are not kept in full force and effect;
(iv) if any Borrower breaches or permits or suffers a breach
of Article 6 of any Mortgage;
(v) if any representation or warranty made by any Borrower
herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material respect as of
the date the representation or warranty was made;
(vi) if any Borrower shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be
appointed for any Borrower or if any Borrower shall be adjudicated a
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,
any Borrower, or if any proceeding for the dissolution or liquidation of
any Borrower shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to
by any Borrower, upon the same not being discharged, stayed or dismissed
within thirty (30) days;
(viii) if any Borrower attempts to assign its rights under
this Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if any of the assumptions contained in the Insolvency
Opinion, or in any other non-consolidation opinion delivered to Lender in
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connection with the Loan, or in any other non-consolidation delivered
subsequent to the closing of the Loan, is or shall become untrue in any
material respect;
(x) if any Borrower breaches any representation, warranty or
covenant contained in Section 3.1.24 hereof or if any Borrower is not a
Single-Purpose Entity or if any provision of any organizational document of
any Borrower is amended or modified in any respect without the prior
written consent of Lender;
(xi) if any Borrower shall continue to be in Default under
any of the other terms, covenants or conditions of this Agreement not
specified in subsections (i) to (x) above, for ten (10) days after notice
to any Borrower from Lender, in the case of any Default which can be cured
by the payment of a sum of money, or for thirty (30) days after notice from
Lender in the case of any other Default; provided, however, that if such
non-monetary Default is susceptible of cure but cannot reasonably be cured
within such 30-day period and provided further that a Borrower shall have
commenced to cure such Default within such 30-day period and thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period
shall be extended for such time as is reasonably necessary for such
Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed sixty (60) days; (xii) if there shall be
default under any of the other Loan Documents beyond any applicable cure
periods contained in such Loan Documents, whether as to any Borrower or any
of the Properties, or if any other such event shall occur or condition
shall exist, if the effect of such event or condition is to accelerate the
maturity of any portion of the Debt or to permit Lender to accelerate the
maturity of all or any portion of the Debt;
(xiii) if any Guarantor breaches any covenant, warranty or
representation contained in any Loan Document to which it is a party,
including, but not limited to, the Master Guaranty and Master Guaranty
Pledge which is not remedied within any grace period; or
(xiv) if Borrowers shall fail to maintain an Acceptable
Interest Rate Cap Agreement collaterally assigned to Lender pursuant to the
Collateral Assignment of Interest Rate Cap or is in default of its
obligations under any interest rate cap agreement delivered in connection
with the Loan beyond any applicable notice and cure period, or if any such
interest rate cap agreement shall be void or unenforceable; or
(xv) if a final unappealable determination shall have been
made by any applicable Governmental Authority of any Borrower's
non-compliance with material Legal Requirements applicable to any Property,
or of the revocation of any material license, permit or approval required
for the lawful operation of any Property, or any other circumstances under
which any Borrower is required by a final unappealable determination of any
such Governmental Authority to cease operations of such Property as a
Nursing Facility, Assisted Living Facility or Specialty Hospital, in each
case as
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described on the attached Schedule III (as such Schedule may be amended to
show any change of use of any Property);
(xvi) if an "Event of Default" occurs under any Operating
Lease;
(xvii) if there is a reduction in the number of licensed
beds or a change in the type of licensed beds for any Property in violation
of the requirements of this Agreement; or
(xviii) if any 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 any Property and such
agency commences either of the following actions:
(1) a termination of any Medicare contract, Medicaid
contract or Regulatory Permit;
(2) a ban on new admissions generally or on admission of
patients otherwise qualifying for Medicaid or Medicare
coverage which ban is not lifted within sixty (60) days or
as to which a Borrower fails to file a plan of correction
within ten (10) days of such ban;
(xix) if any Property is assessed material fines or
penalties by any state or any Medicare, Medicaid, health, reimbursement,
licensing or similar agency having jurisdiction over any Borrower or any
Property;
(xx) except as may be permitted pursuant to this Agreement,
as to each Property, if any Borrower ceases to operate, or changes the use
of, such Property as or from a Nursing Facility, Assisted Living Facility
or Rehabilitation Hospital in each case as described on the attached
Schedule III (as such Schedule may be amended to show any change of use of
any Property) or terminates such business for any reason whatsoever (other
than a temporary cessation in connection with any renovations); or
(xxi) if, with respect to any Property, any Governmental
Authority (a) makes a substandard quality of care determination regarding
such Property which determination is not corrected in sixty (60) days (or
if incapable of being cured within such sixty (60) days period, within one
hundred twenty (120) days provided Borrowers are taking all appropriate
actions to correct such determination); (b) makes a determination that such
Property is not in substantial compliance with any applicable regulatory
requirements which determination is not corrected in sixty (60) days (or if
incapable of being cured within such sixty (60) days period, within one
hundred twenty (120) days, provided Borrowers are taking all appropriate
actions to correct such determination); (c) designates any portion of such
Property or the entirety of such Property as part of a "poor performing
chain"; (d) cites deficiencies at the scope or
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severity of "G", "H" or higher with respect to such Property and for which
no plan of correction is in place within ten (10) days of receipt of such
deficiency statement; (e) cites deficiencies at the scope and severity of
"G", "H" or higher with respect to such Property for which a plan of
correction has been filed but not approved by such Governmental Authority,
with such designation, determination or action continuing unremedied for a
period of sixty (60) days (or if incapable of being cured within such sixty
(60) days period, within one hundred twenty (120) days, provided Borrowers
are taking all appropriate actions to correct such determination) (or ten
(10) days for immediate jeopardy deficiencies) following any Borrower's
first receipt of notice of such designation, determination or action; or
(f) takes adverse regulatory action with respect to such Property,
including, without limitation, the imposing of civil money penalties, with
such designation, determination or action continuing unremedied for a
period of sixty (60) days (or if incapable of being cured within such sixty
(60) days period, within one hundred twenty (120) days, provided Borrowers
are taking all appropriate actions to correct such determination) (ten (10)
days for immediate jeopardy deficiencies) following any Borrower's receipt
of notice of such designation, determination or action.
(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vi), (vii) or (viii) above) and at any
time thereafter Lender may, in addition to any other rights or remedies
available to it pursuant to this Agreement and the other Loan Documents or at
law or in equity, take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against any Borrower and in and to
any or all of the Properties, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against any Borrower
and any or all of the Properties, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vi), (vii) or (viii) above, the Debt and all other obligations of
each Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and each
Borrower hereby expressly waives any such notice or demand, anything contained
herein or in any other Loan Document to the contrary notwithstanding.
Section 10.2. Remedies.
(a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against any Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, any
Borrower or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt 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 or all of the Properties. 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 sole 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. Without limiting the generality of the
foregoing, if an Event of
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Default is continuing (i) Lender is not subject to any "one action" or "election
of remedies" law or rule to the face extent allowed by applicable law, and (ii)
all liens and other rights, remedies or privileges provided to Lender shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Properties and each Mortgage has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full.
(b) Upon the occurrence and during the continuance of an
Event of Default, Lender shall have the right from time to time to partially
foreclose the Mortgages in any manner and for any amounts secured by the
Mortgages then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event any
Borrower defaults beyond any applicable grace period in the payment of one or
more scheduled payments of principal and interest, Lender may foreclose one or
more of the Mortgages to recover such delinquent payments, or (ii) in the event
Lender elects to accelerate less than the entire outstanding principal balance
of the Loan, Lender may foreclose one or more the Mortgages to recover so much
of the principal balance of the Loan as Lender may accelerate and such other
sums secured by one or more of the Mortgages as Lender may elect.
Notwithstanding one or more partial foreclosures, the Properties shall remain
subject to the Mortgages to secure payment of sums secured by the Mortgages and
not previously recovered.
(c) Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the "Severed Loan Documents") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Each Borrower shall
execute and deliver to Lender from time to time, promptly after the request of
Lender, a severance agreement and such other documents as Lender shall request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Lender. Each Borrower hereby
absolutely and irrevocably appoints Lender as its true and lawful attorney,
coupled with an interest, in its name and stead to make and execute all
documents necessary or desirable to effect the aforesaid severance, each
Borrower ratifying all that its said attorney shall do by virtue thereof;
provided, however, Lender shall not make or execute any such documents under
such power until three (3) days after notice has been given to any Borrower by
Lender of Lender's intent to exercise its rights under such power. Except as may
be required in connection with a Securitization pursuant to Section 9.1 hereof,
(i) each Borrower shall not be obligated to pay any costs or expenses incurred
in connection with the preparation, execution, recording or filing of the
Severed Loan Documents, and (ii) the Severed Loan Documents shall not contain
any representations, warranties or covenants not contained in the Loan Documents
and any such representations and warranties contained in the Severed Loan
Documents will be given by each Borrower only as of the Closing Date.
(d) Any amounts recovered from the Properties or any other
collateral for the Loan after an Event of Default may be applied by Lender
toward the payment of any interest and/or principal of the Loan and/or any other
amounts due under the Loan Documents in such order, priority and proportions as
Lender in its sole discretion shall determine.
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Section 10.3. 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 any Borrower pursuant to this Agreement or the other Loan
Documents, 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 sole 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 one Default or
Event of Default with respect to any Borrower shall not be construed to be a
waiver of any subsequent Default or Event of Default by any Borrower or to
impair any remedy, right or power consequent thereon.
ARTICLE XI. MISCELLANEOUS
Section 11.1. Successors and Assigns.
All covenants, promises and agreements in this Agreement, by or on
behalf of any Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.
Section 11.2. Lender's Discretion.
Whenever pursuant to this Agreement Lender exercises any right given
to it to approve or disapprove, or any arrangement or term is to be satisfactory
to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive. Prior to a Securitization, whenever pursuant to
this Agreement the Rating Agencies are given any right to approve or disapprove,
or any arrangement or term is to be satisfactory to the Rating Agencies, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory, based upon Lender's determination of
Rating Agency criteria, shall be substituted therefore.
Section 11.3. Governing Law.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, 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 PERFORMED IN SUCH
STATE (WITHOUT
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REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER. 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 SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN XXX XXXX XX XXX XXXX, XXXXXX XX XXX
XXXX, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS 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:
CT CORPORATION SYSTEM
000 XXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
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 IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
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 IN THE STATE OF NEW YORK. 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
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
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AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.
Section 11.4. Modification, Waiver in Writing.
No modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by any 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 any Borrower,
shall entitle any Borrower to any other or future notice or demand in the same,
similar or other circumstances.
Section 11.5. 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 any other
Loan Document, 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 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 or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Section 11.6. Notices.
All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a "Notice") required, permitted, or
desired to be given hereunder shall be in writing sent by telefax (with answer
back acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this Section 11.6. Notice to any Borrower shall be deemed notice
as to all Borrowers and the Lender shall not be required to deliver any Notice
to all Borrowers as long as such Notice is delivered to any one Borrower. Any
Notice shall be deemed to have been received: (a) three (3) days after the date
such Notice is mailed, (b) on the date of sending by telefax if sent during
business hours on a Business Day (otherwise on the next Business Day), (c) on
the date of delivery by hand if delivered during business hours on a Business
Day (otherwise on the next Business Day), and (d) on the next Business Day if
sent by an overnight commercial courier, in each case addressed to the parties
as follows:
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If to Lender: Ventas Realty, Limited Partnership
c/o Ventas, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No. (000)-000-0000
with a copy to: Ventas Realty, Limited Partnership
c/o Ventas, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No. (000)-000-0000
with a copy to: Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No. (000) 000-0000
If to a Borrower: c/o Trans Healthcare, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No. (000) 000-0000
with a copy to: Xxxxxx Xxxxx & Xxxx, P.C.
0000 Xxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Facsimile No. (000) 000-0000
Section 11.7. Waiver of Right to Trial by Jury.
BORROWER AND LENDER EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY
TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO
THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.
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Section 11.8. Headings.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and are not to
be construed as defining or limiting the scope or intent of the provisions
hereof.
Section 11.9. 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 11.10. Preferences.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by any Borrower to any portion of the
obligations of any Borrower hereunder. To the extent any Borrower makes a
payment or payments to Lender, 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 11.11. Waiver of Notice.
To the extent permitted by applicable law, each 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 a Borrower and except
with respect to matters for which any Borrower is not, pursuant to applicable
Legal Requirements, permitted to waive the giving of notice to the full extent
permitted by applicable law. Each 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 do not specifically and expressly provide
for the giving of notice by Lender to a Borrower.
Section 11.12. Remedies of Borrower.
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
neither Lender nor its agents shall be liable for any monetary damages, and a
Borrower's sole remedy shall be limited to commencing an action seeking
injunctive relief or declaratory judgment. Any action or proceeding to determine
whether Lender has acted reasonably shall be determined by an action seeking
declaratory
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judgment. Any expedited procedure legally available with such a declaratory
judgment action or action for injunctive relief may be utilized to the extent
possible.
Section 11.13. Expenses; Indemnity.
(a) Each Borrower shall pay or, if any Borrower fails to pay,
reimburse Lender upon receipt of notice from Lender, for all reasonable costs
and expenses (including reasonable attorneys' fees and disbursements) incurred
by Lender in connection with (i) any Borrower's ongoing performance of and
compliance with any Borrower's agreements and covenants contained in this
Agreement, the Cooperation Agreement and the other Loan Documents on its part to
be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(ii) Lender's ongoing performance of and compliance with all agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by any Borrower; (iv) the filing
and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred, in creating and perfecting the Liens in favor
of Lender pursuant to this Agreement and the other Loan Documents; (v) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting any Borrower, this Agreement, the other Loan
Documents, the Properties, or any other security given for the Loan; (vi) the
Re-sizing and (vii) enforcing any obligations of or collecting any payments due
from any Borrower under this Agreement, the other Loan Documents or with respect
to the Properties or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a "work-out"
or of any insolvency or bankruptcy proceedings; provided, however, that each
Borrower shall not be liable for the payment of any such costs and expenses to
the extent the same arise by reason of the gross negligence, illegal acts, fraud
or willful misconduct of Lender. Any costs due and payable to Lender may be paid
to Lender pursuant to the Cash Management Agreement.
(b) Each Borrower shall indemnify, defend and hold harmless
Lender and its officers, directors, agents and employees (and the successors and
assigns of the foregoing (the "Lender Indemnitees")) from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for Lender Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by, or asserted against Lender Indemnitees in any manner relating to or
arising out of (i) any breach by any Borrower of its obligations under, or any
material misrepresentation by any Borrower contained in, this Agreement or the
other Loan Documents, or (ii) the use or intended use of the proceeds of the
Loan (collectively, the "Indemnified Liabilities"); provided, however, that each
Borrower shall not have any obligation to Lender Indemnitees hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender Indemnitees. To the extent
that the undertaking to indemnify, defend and hold harmless set forth in the
preceding sentence
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may be unenforceable because it violates any law or public policy, Borrowers
shall pay the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Lender Indemnitees.
Section 11.14. Schedules Incorporated.
The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
Section 11.15. Offsets, Counterclaims and Defenses.
Any assignee of Lender's interest in and to this Agreement and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which any
Borrower may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by any
Borrower in any action or proceeding brought by any such assignee upon such
documents 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 each Borrower.
Section 11.16. No Joint Venture or Partnership; No Third Party
Beneficiaries.
(a) Each Borrower and Lender intend that the relationships
created hereunder and under the other Loan Documents be solely that of borrower
and lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between any
Borrower and Lender nor to grant Lender any interest in the Properties other
than that of mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for
the benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 11.17. Publicity.
All news releases, publicity or advertising by any Borrower or its
Affiliates through any media intended to reach the general public which refers
to the Loan Documents or the financing evidenced by the Loan Documents, to
Lender or any of its Affiliates shall be subject to the prior approval of
Lender.
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Section 11.18. Waiver of Marshalling of Assets.
To the fullest extent permitted by law, each Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
any Borrower, any Borrower's partners and others with interests in any Borrower,
and of the Properties, and shall not 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 the Properties for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Properties in preference to
every other claimant whatsoever.
Section 11.19. Waiver of Offsets/Defenses/Counterclaims.
To the extent permitted by applicable law, each Borrower hereby waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents or otherwise to offset any obligations to make the payments required by
the Loan Documents. No failure by Lender to perform any of its obligations
hereunder shall be a valid defense to, or result in any offset against, any
payments which any Borrower is obligated to make under any of the Loan
Documents.
Section 11.20. Conflict; Construction of Documents; Reliance.
In the event of any conflict or inconsistency between the provisions
of this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Each Borrower acknowledges that, with respect to the Loan, each
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in any Borrower, and each Borrower hereby irrevocably waives
the right to raise any defense or take any action on the basis of the foregoing
with respect to Lender's exercise of any such rights or remedies. Each Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of any Borrower or its Affiliates.
Section 11.21. Brokers and Financial Advisors.
Each Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Each Borrower
shall indemnify, defend and hold Lender Indemnitees harmless from and against
any and all claims, liabilities, costs and expenses of any
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kind (including attorneys' fees and expenses) in any way relating to or arising
from a claim by any Person that such Person acted on behalf of any Borrower or
Lender Indemnitees in connection with the transactions contemplated herein. The
provisions of this Section 11.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.
Section 11.22. Exculpation.
Subject to the qualifications below, Lender shall not enforce the
liability and obligation of any Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgages or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against any
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgages and the other Loan Documents, or in the Properties, the Rents, or
any other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrowers only to the extent
of Borrowers' interest in the Properties, in the Rents and in any other
collateral given to Lender, and Lender, by accepting the Note, this Agreement,
the Mortgages and the other Loan Documents, shall not xxx for, seek or demand
any deficiency judgment against any Borrower in any such action or proceeding
under or by reason of or under or in connection with the Note, this Agreement,
the Mortgages or the other Loan Documents. The provisions of this Section shall
not, however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name any Borrower as a party defendant in any action or suit for
foreclosure and sale under any of the Mortgages; (c) affect the validity or
enforceability of any guaranty made in connection with the Loan, the Mezzanine
Loan, the Sale/Leaseback Transaction or any of the rights and remedies of Lender
thereunder; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of any of the Assignments of Leases; (f)
constitute a prohibition against Lender to seek a deficiency judgment against
any Borrower in order to fully realize the security granted by each of the
Mortgages or to commence any other appropriate action or proceeding in order for
Lender to exercise its remedies against all of the Properties; or (g) constitute
a waiver of the right of Lender to enforce the liability and obligation of any
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following:
(i) fraud or intentional misrepresentation by any Borrower
or any guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of any
Borrower;
(iii) the breach of any representation, warranty, covenant
or indemnification provision in the Environmental Indemnity concerning
environmental laws, hazardous substances and asbestos and any
indemnification of Lender with respect thereto contained in the
Environmental Indemnity;
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(iv) the removal or disposal of any portion of the
Properties after an Event of Default;
(v) the misapplication or conversion by any Borrower of (A)
any insurance proceeds paid by reason of any loss, damage or destruction to
the Properties, (B) any Awards or other amounts received in connection with
the Condemnation of all or a portion of the Properties, or (C) any Rents
following an Event of Default;
(vi) failure to pay charges for labor or materials or other
charges that can create Liens on any portion of the Properties;
(vii) any security deposits, advance deposits or any other
deposits collected with respect to the Properties which are not delivered
to Lender upon a foreclosure of the Properties or action in lieu thereof,
except to the extent any such security deposits were applied in accordance
with the terms and conditions of any of the Leases prior to the occurrence
of the Event of Default that gave rise to such foreclosure or action in
lieu thereof;
(viii) each Borrower's indemnification of Lender set forth
in Section 9.2 hereof; and
(ix) the failure to deposit all Rents into the Cash
Management Account in accordance with the provisions hereof.
Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be
fully recourse to each Borrower (1) prior to a Securitization and (2) in the
event that: (i) any Borrower fails to permit on-site inspections of the
Properties, fails to provide financial information, fails to maintain its status
as a Single-Purpose Entity or fails to appoint a new property manager upon the
request of Lender after an Event of Default or other event that would give rise
to the right of Lender to request any Borrower to appoint a new property
manager, each as required by, and in accordance with the terms and provisions
of, this Agreement and the other Loan Documents; (iii) any Borrower fails to
obtain Lender's prior consent to any subordinate financing, mezzanine financing
or other voluntary Lien encumbering the Properties; (iv) any Borrower fails to
obtain Lender's prior consent to any Transfer to the extent such consent is
required herein or in the Mortgages; (v) any Borrower files a voluntary petition
under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (vi) an Affiliate, officer, director, or representative which controls,
directly or indirectly, any Borrower files, or joins in the filing of, an
involuntary petition against any Borrower under the Bankruptcy Code or any other
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Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against any
Borrower from any Person; (vii) any Borrower files an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or solicits or causes to be solicited petitioning
creditors for any involuntary petition from any Person; (viii) any Affiliate,
officer, director, or representative which controls any Borrower consents to or
acquiesces in or joins in an application for the appointment of a custodian,
receiver, trustee, or examiner for any Borrower or any portion of the
Properties; or (ix) any Borrower makes an assignment for the benefit of
creditors, or admits, in writing or in any legal proceeding, its insolvency or
inability to pay its debts as they become due.
Section 11.23. Prior Agreements.
This Agreement and the other Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including, without limitation, the loan
commitment dated October 2, 2002, and all attachments thereto including, but not
limited to, the term sheet between Borrowers and Lender, are superseded by the
terms of this Agreement and the other Loan Documents.
Section 11.24. Servicer.
At the option of Lender, the Loan may be serviced by a servicer
including, but not limited to any sub-servicers or master servicer (the
"Servicer") selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the "Servicing Agreement") between
Lender and Servicer. Borrowers shall be responsible for any reasonable set-up
fees or any other initial costs relating to or arising under the Servicing
Agreement; provided, however, that Borrowers shall not be responsible for
payment of the monthly servicing fee due to the Servicer under the Servicing
Agreement.
Section 11.25. Duplicate Originals; Counterparts.
This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts
shall be deemed an original instrument and all of which together shall
constitute a single Agreement. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.
Section 11.26. Cross Collateralization.
Without limitation to any other right or remedy provided to Lender in
this Agreement or any of the other Loan Documents, each 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 any of the collateral for the Loan 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 of the collateral
for the Loan will not impede Lender from subsequently or
92
simultaneously exercising remedies against other collateral for the Loan, (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 for the Loan and all of the collateral for the Loan has been
foreclosed, sold and/or otherwise realized upon and (v) all of the Properties
shall be security for the performance of all of each Borrower's obligations
hereunder.
Section 11.27. Joint and Several Liability.
If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.
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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:
VENTAS REALTY, LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Ventas, Inc.
a Delaware corporation,
its sole general partner
By: /s/ T. XXXXXXX XXXXX
-----------------------------------------------
Name: T. Xxxxxxx Xxxxx
Title: Executive Vice President/General Counsel
[Signatures continue on following page]
BORROWER:
THI OF OHIO REAL ESTATE HOLDING COMPANY, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT COLUMBUS, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT VALLEY VIEW, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT NORTHWESTERN, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT OAK GROVE, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT PARADISE OAKS, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT SOMERSET, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT XXXXXXX, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT HILLCREST, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT MAPLE VIEW, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT WINTERSONG VILLAGE, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT WOODLAND, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT GREENBRIAR SOUTH, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF OHIO AT GOLDEN YEARS, LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXX
--------------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice-President
THI OF MARYLAND REAL ESTATE HOLDING CO., LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND AT BEL PRE, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND AT LIBERTY HEIGHTS, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND AT MARLEY NECK, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
THI OF MARYLAND AT NORTHWEST, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice-President
