LOAN AGREEMENT (Maryland Acquisition Loan) BETWEEN OHI ASSET III (PA) TRUST, as Lender and BEL PRE LEASING CO., LLC RIDGE (MD) LEASING CO, LLC MARLBORO LEASING CO., LLC FAYETTE LEASING CO., LLC LIBERTY LEASING CO., LLC HOWARD LEASING CO., LLC PALL...
(Maryland
Acquisition Loan)
BETWEEN
OHI
ASSET III (PA) TRUST, as Lender
and
BEL
PRE LEASING CO., LLC
RIDGE
(MD) LEASING CO, LLC
MARLBORO
LEASING CO., LLC
FAYETTE
LEASING CO., LLC
LIBERTY
LEASING CO., LLC
XXXXXX
LEASING CO., LLC
PALL
MALL LEASING CO., LLC
WASHINGTON
(MD) LEASING CO., LLC
MARYLAND
NH ASSET, LLC
as
Borrowers
and
OMG
RE HOLDINGS, LLC
OMG
RE LEASING CO., LLC
OMG
ASSET OWNERSHIP, LLC
HEALTH
CARE FACILITY MANAGEMENT, LLC
RESIDENT
CARE CONSULTING, LLC
as
Parent Guarantors
Dated: April
____, 2008
TABLE
OF CONTENTS
ARTICLE
I -
|
DEFINITIONS
|
3
|
|
1.1
|
DEFINITIONS
|
3
|
|
ARTICLE
II -
|
TERMS
OF THE LOAN TRANSACTION
|
18
|
|
2.1
|
THE
LOAN
|
18
|
|
2.2
|
UNCONDITIONAL
OBLIGATIONS
|
18
|
|
2.3
|
NO
PREPAYMENT
|
18
|
|
2.4
|
BORROWERS
TO PAY EXPENSES
|
19
|
|
2.5
|
USE
OF LOAN PROCEEDS
|
20
|
|
2.6
|
FURTHER
ASSURANCES
|
20
|
|
2.7
|
EXTENSION
OF MATURITY DATE
|
20
|
|
2.8
|
ESCROWED
CAPITAL IMPROVEMENTS FUNDS
|
21
|
|
ARTICLE
III –
|
SECURITY
|
23
|
|
3.1
|
SECURITY
|
23
|
|
3.2
|
OBLIGATIONS
SECURED
|
24
|
|
3.3
|
RELEASE
OF CERTAIN FACILITIES DURING FIRST THREE YEARS
|
24
|
|
3.4
|
RELEASE
OF CERTAIN FACILITIES AFTER SEVEN YEARS
|
25
|
|
ARTICLE
IV -
|
CONDITIONS
TO THE OBLIGATION OF LENDER TO CLOSE
|
27
|
|
4.1
|
BORROWERS’
COMPLIANCE
|
27
|
|
4.2
|
EXECUTION
AND DELIVERY OF DOCUMENTS
|
27
|
|
4.3
|
RECORDING
AND PAYMENT OF CHARGES
|
27
|
|
4.4
|
TITLE
COMMITMENTS
|
27
|
|
4.5
|
INSURANCE
|
28
|
|
4.6
|
NO
DAMAGES
|
28
|
|
4.7
|
NO
OFFSETS OR CLAIMS
|
28
|
|
4.8
|
REPRESENTATIONS
AND WARRANTIES
|
28
|
|
4.9
|
CORPORATE
PROCEEDINGS
|
28
|
|
4.10
|
OPINION
OF COUNSEL
|
28
|
|
4.11
|
FINANCIAL
STATEMENTS
|
28
|
|
4.12
|
LICENSES
|
29
|
|
4.13
|
SURVEYS
|
29
|
|
4.14
|
COMPLIANCE
|
29
|
|
4.15
|
ENVIRONMENTAL
ASSESSMENTS
|
30
|
|
4.16
|
DUE
DILIGENCE
|
30
|
|
4.17
|
APPROVAL
OF OCCUPANCY AGREEMENTS
|
30
|
|
4.18
|
REHABILITATION
PLAN
|
30
|
|
4.19
|
SECURITY
DEPOSIT
|
30
|
|
ARTICLE
V -
|
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE BORROWERS AND THE
GUARANTOR
|
30
|
|
5.1
|
ORGANIZATION
OF BORROWERS AND PARENT GUARANTORS
|
31
|
|
5.2
|
PARENT
GUARANTORS’ FINANCIAL CONDITION
|
31
|
|
5.3
|
FINANCIAL
CONDITION BORROWERS/FACILITIES
|
31
|
|
5.4
|
TAXES. EACH
PARENT
|
32
|
|
5.5
|
LICENSES
|
32
|
|
5.6
|
THE
FACILITIES
|
32
|
|
5.7
|
LITIGATION
|
33
|
|
5.8
|
ERISA. NONE
OF BORROWERS HAVE, OR HAS HAD, ANY EMPLOYEES OR ANY PLANS.
|
33
|
|
5.9
|
PERSONAL
PROPERTY; SECURITY INTERESTS
|
33
|
|
5.10
|
REPORTS
BY BORROWERS
|
34
|
|
5.11
|
DEFECTS
|
34
|
|
5.12
|
NO
ENCROACHMENTS
|
34
|
|
5.13
|
NO
CONDEMNATION
|
34
|
|
5.14
|
INSURANCE
POLICIES
|
34
|
|
5.15
|
NO
OTHER DEFAULTS
|
34
|
|
5.16
|
NO
ASSESSMENTS
|
34
|
|
5.17
|
FOREIGN
PERSON STATUS
|
35
|
|
5.18
|
HAZARDOUS
SUBSTANCES
|
35
|
|
5.19
|
NO
BROKERS
|
35
|
|
5.20
|
GOVERNMENT
AUTHORIZATIONS; EXISTING LEASES AND MANAGEMENT AGREEMENTS; TRANSFER OF
LICENSES
|
35
|
|
5.21
|
INTENTIONALLY
OMITTED.
|
35
|
|
5.22
|
FACILITIES
|
35
|
|
5.23
|
NO
INVESTMENT COMPANY
|
36
|
|
5.24
|
NO
EVENT OF DEFAULT
|
36
|
|
5.25
|
NO
MISLEADING STATEMENTS
|
36
|
|
ARTICLE
VI -
|
SPECIAL
COVENANTS OF BORROWERS AND PARENT GUARANTORS
|
36
|
|
6.1
|
EXISTENCE;
NO FUNDAMENTAL CHANGE.
|
36
|
|
6.2
|
PERSONAL
PROPERTY
|
37
|
|
6.3
|
USE
OF FACILITIES
|
37
|
|
6.4
|
COMPLIANCE
WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS, ETC
|
38
|
|
6.5
|
LEGAL
REQUIREMENT COVENANTS
|
38
|
|
6.6
|
MINIMUM
CAPITAL EXPENDITURES
|
39
|
|
6.7
|
MANAGEMENT
AGREEMENTS; RELATED PARTY DEBTS
|
39
|
|
6.8
|
LENDER’S
RIGHT TO CURE BORROWERS’ DEFAULT
|
39
|
|
6.9
|
TAX
RETURNS
|
40
|
|
6.10
|
OFFICER’S
CERTIFICATES AND FINANCIAL STATEMENTS
|
40
|
|
6.11
|
PUBLIC
OFFERING INFORMATION
|
41
|
|
6.12
|
LENDER’S
RIGHT TO INSPECT
|
42
|
|
6.13
|
NO
INVESTMENTS. WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER,
N
|
42
|
|
6.14
|
INVESTMENT
COMPANY
|
42
|
|
6.15
|
OFF-BALANCE
SHEET LIABILITIES
|
42
|
|
6.16
|
CERTAIN
FINANCIAL COVENANTS
|
42
|
|
6.17
|
WORKING
CAPITAL LOAN
|
44
|
|
6.18
|
BANK
ACCOUNTS
|
44
|
|
6.19
|
OTHER
FACILITIES
|
45
|
|
6.20
|
NO
OTHER BUSINESS
|
45
|
|
6.22
|
DEED
OF TRUST COVENANTS
|
45
|
|
6.23
|
ENVIRONMENTAL
COVENANTS
|
59
|
|
6.24
|
ESTOPPEL
CERTIFICATES
|
63
|
|
ARTICLE
VII -
|
DEFAULT
AND RIGHTS TO ACCELERATE; SECURITY DEPOSIT
|
63
|
|
7.1
|
EVENTS
OF DEFAULT
|
63
|
|
7.2
|
REMEDIES
|
66
|
|
7.3
|
LENDER’S
OTHER COLLECTION REMEDIES
|
66
|
|
7.4
|
SECURITY
DEPOSIT
|
66
|
|
ARTICLE
VIII -
|
MISCELLANEOUS
|
67
|
|
8.1
|
ARBITRATION
|
67
|
|
8.2
|
BORROWERS
TO PAY REASONABLE EXPENSES
|
67
|
|
8.3
|
MUTUAL
WAIVER OF RIGHT TO JURY TRIAL
|
68
|
|
8.4
|
ASSIGNMENT
|
68
|
|
8.5
|
THIRD
PARTIES
|
68
|
|
8.6
|
NO
PUBLIC ANNOUNCEMENTS
|
68
|
|
8.7
|
DELIVERY
OF EXHIBITS
|
68
|
|
8.8
|
FURTHER
ASSURANCES
|
68
|
|
8.9
|
NOTICES
|
69
|
|
8.10
|
OHIO
LAW
|
70
|
|
8.11
|
COUNTERPARTS
|
70
|
|
8.12
|
CAPTIONS
|
70
|
|
8.13
|
INTEGRATION;
WAIVER
|
70
|
|
8.14
|
TIME
OF THE ESSENCE
|
70
|
(Maryland
Acquisition Loan)
This
Loan Agreement (“Agreement”)
is dated as of April ___, 2008, and is by and among OHI ASSET III (PA)
TRUST, a Maryland business trust (“Lender”),
and BEL PRE LEASING CO., LLC, an Ohio limited liability company, RIDGE (MD)
LEASING CO., LLC, an Ohio limited liability company, MARLBORO LEASING CO., LLC,
an Ohio limited liability company, FAYETTE LEASING CO., LLC, an Ohio limited
liability company, LIBERTY LEASING CO., LLC, an Ohio limited liability company,
XXXXXX LEASING CO., LLC, an Ohio limited liability company, PALL MALL LEASING
CO., LLC, an Ohio limited liability company, WASHINGTON
(MD) LEASING CO., LLC, an Ohio limited liability company, and MARYLAND NH ASSET,
LLC, an Ohio limited liability company (each a “Borrower”,
and collectively, as the “Borrowers”)
and OMG RE HOLDINGS, LLC, an Ohio limited liability company (“RE
Holdings”), OMG RE LEASING CO, LLC, an Ohio limited liability company
(“RE
Leasing”), and OMG ASSET OWNERSHIP, LLC, an Ohio limited liability
company (“AO”),
HEALTH CARE FACILITY MANAGEMENT, LLC, an Ohio limited liability company (“HCFM”),
and RESIDENT CARE CONSULTING, LLC, an Ohio limited liability company (“RCC”,
and together with RE Holdings, RE Leasing, AO, and HCFM each a “Parent
Guarantor” and collectively, the “Parent
Guarantors”).
RECITALS:
A. Capitalized
terms used but not otherwise defined in this Agreement shall have the respective
meanings given them in Article I below.
B. Each
of Borrowers listed below is the owner or operator of the Facility and related
operations set forth next to its name (each, a “Facility”,
and collectively, the “Facilities”):
Facility
|
Owner
|
Operator
|
Bel
Pre Health & Rehabilitation Center
0000
Xxx Xxx Xxxx
Xxxxxx
Xxxxxx XX 00000
|
Maryland
NH Asset, LLC
|
Bel
Pre Leasing Co., LLC
|
Ellicott
City Health & Rehabilitation Center
0000
X. Xxxxx Xxxx
Xxxxxxxx
Xxxx XX 00000
|
Maryland
NH Asset, LLC
|
Ridge
(MD) Leasing Co., LLC
|
Forestville
Health & Rehabilitation Center
0000
Xxxxxxxx Xxxx
Xxxxxxxxxxx
XX 00000
|
Maryland
NH Asset, LLC
|
Marlboro
Leasing Co., LLC
|
Franklin
Square Health & Rehabilitation Center
0000
X. Xxxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
|
Maryland
NH Asset, LLC
|
Fayette
Leasing Co., LLC
|
Liberty
Heights Health & Rehabilitation Center
0000
Xxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
|
Maryland
NH Asset, LLC
|
Liberty
Leasing Co., LLC
|
Marley
Neck Health & Rehabilitation Center
0000
X. Xxxxxx Xxxx
Xxxx
Xxxxxx XX 00000
|
Maryland
NH Asset, LLC
|
Xxxxxx
Leasing Co., LLC
|
Northwest
Health & Rehabilitation Center
0000
Xxxx Xxxx Xxxxx
Xxxxxxxxx
XX 00000
|
Maryland
NH Asset, LLC
|
Pall
Mall Leasing Co., LLC
|
South
River Health & Rehabilitation Center
000
Xxxxxxxxxx Xxxx
Xxxxxxxxx
XX 00000
|
Maryland
NH Asset, LLC
|
Washington
(MD) Leasing Co., LLC
|
-1-
C. RE
Holdings owns 100% of the outstanding equity interests in RE Leasing and
AO.
D. RE
Leasing owns 100% of the outstanding equity interests in each of the
Operators.
E. AO
owns 100% of the outstanding equity interests in Owner.
F. HCFM
owns 100% of the outstanding equity interests in each of the
Managers.
G. Lender
has agreed, subject to and upon the terms and conditions contained herein, to
make the Loan to Borrowers, each of which shall be liable, jointly and
severally, for repayment of the Loan. The Loan will be evidenced by
the Note and will be secured by, among other things, the liens and security
interests created by the Deeds of Trust, the Security Agreements and the other
Loan Documents.
H. Lender
and Borrowers desire to fully set forth in writing their respective agreements
and obligations concerning such borrowings as more particularly set forth
below.
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
-2-
ARTICLE
I - DEFINITIONS
1.1 Definitions. For
all purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, (a) the terms defined in this article have the
respective meanings assigned to them in this article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with GAAP as at the time
applicable, (c) all references in this Agreement to designated “articles”,
“sections” and other subdivisions are to the designated articles, sections and
other subdivisions of this Agreement, (d) the words “herein,” “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular article, section or other subdivision, and (e) any
capitalized terms used in this Agreement and not defined in this Agreement shall
have the meanings for such terms set forth in the Deeds of
Trust.
Affiliate: When
used with respect to any Person, the term “Affiliate” shall mean any Person who
or which, directly or indirectly, controls or is controlled by or is under
common control with such Person. For the purposes of this definition
“control” (including the correlative meanings of the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests or other equity
interests. The term “Person” shall mean any natural person, trust,
partnership, corporation, joint venture or other legal
entity.
Appraisals: Independent
appraisals as to the value of the Facilities prepared by an
Appraiser. The Appraisals shall meet the standards of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989.
Appraised
Value: The value of each Facility determined by the applicable
Appraisal.
Appraiser: An
appraiser approved by Lender.
Approval
Threshold: One Hundred Thousand Dollars ($100,000).
Assessment: Any
assessment on any Facility or any part thereof for public improvements or
benefits, whether or not commenced or completed prior to the date hereof and
whether or not to be completed during the Term.
Award:
means all compensation, sums or anything of value awarded, paid or received on a
total or partial condemnation.
Borrower
Affiliates Subordination Agreement: means the Subordination Agreement
(Borrower Affiliates) from Borrowers, Guarantors and their Affiliates in favor
of Lender.
-3-
Business
Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which national banks in the City of New York, New York are
authorized or obligated, by law or executive order, to
close.
Capitalized
Leases: Leases that in accordance with GAAP are required to be
capitalized for financial reporting purposes.
Cash
Flow: For any period, an amount equal to (a) Net Income of
Borrowers’ arising solely from the operation of the Facilities for the
applicable period; plus (b) the amounts deducted in computing Borrowers’ Net
Income for the period for (i) depreciation, (ii) amortization, (iii)
interest (including payments in the nature of interest under
Capitalized Leases and interest on any Purchase Money Financing), (v) income
taxes (or, if greater, income tax actually paid during the period) and (vi)
actual management fees paid; less (c) an imputed management fee equal to 5% of
net revenues.
Cash
Flow Coverage Ratio: For any fiscal period, the ratio of (i) Cash Flow to
(ii) Debt Service.
Change
in Control: means:
(i) HCREH
shall cease to own, free and clear of all liens or other encumbrances other than
liens in favor of Lender, 90% of the outstanding equity interests in RE
Holdings;
(ii) RE
Holdings shall cease to own, free and clear of all liens or other encumbrances
other than liens in favor of Lender, 90% of the outstanding equity interests in
RE Leasing and AO;
(iii) RE
Leasing shall cease to own, free and clear of all liens or other encumbrances
other than liens in favor of Lender, 100% of the outstanding equity interests in
the Operators;
(iv) AO
shall cease to own, free and clear of all liens or other encumbrances other than
liens in favor of Lender, 100% of the outstanding equity interests in the
Owners;
(v) the
Xxxxxxx Rosedale family shall cease to beneficially own, free and clear of all
liens or other encumbrances other than liens in favor of Lender, if any, a
controlling interest in each of the Guarantors, Borrowers, Managers and
Consultants; or
-4-
(vi) a
change in the individuals holding the Executive Officer’s position of Borrowers,
Guarantors, Managers, or Consultants; provided, however, that the occurrence of
(vi) shall not constitute a Change in Control if such new Executive
Officer:
(A) either:
(1) has
previously held for a period of at least two years a similar position with a
comparably sized (or larger) operator of skilled nursing facilities which
operator has a good reputation in the industry, or has reasonably comparable
experience in the health care industry; or
(2) has
worked previously as an employee of Borrowers, Guarantors, Managers or
Consultants in a capacity such that a promotion to an Executive Officer position
would be reasonably consistent with the career experiences and within the
abilities of the individual; and
(B) has
not, or was not affiliated with any entity which (1) failed to perform in full
its obligations under a lease, loan agreement or other credit extension with
Lender or any of its Affiliates, or (2) had a license, permit or certificate of
need rescinded or revoked and not reinstated.
Clean-Up: The
investigation, removal, restoration, remediation and/or elimination of, or other
response to, Contamination, in each case to the satisfaction of all governmental
agencies having jurisdiction over the applicable Facility and in compliance with
or as may be required by Environmental Laws.
City
View Borrowers: means the “Borrowers”,
as defined in the City View Loan Agreement.
City
View Debt Service: means Debt Service (as defined in the Cityview Loan
Agreement) for the City View Borrowers.
City
View EBITDA: means EBITDA (as defined in the Cityview Loan Agreement) for
the City View Borrowers.
City
View Loan Agreement: The Loan Agreement dated November 1,
2004, as amended by a First Amendment to Loan Agreement dated as of March 1,
2005, an Assumption and Joinder Agreement and Second Amendment to Loan Agreement
dated as of June 30, 2006, a Third Amendment to Loan Agreement dated as of
February 1, 2007, and a Fourth Amendment to Loan Agreement dated as of the date
of this Agreement, among OHI Asset (OH) Lender, LLC, a Delaware limited
liability company, as lender, RE Holdings, City View Nursing & Rehab, LLC,
an Ohio limited liability company, Cleveland NH Asset, LLC, an Ohio limited
liability company, RCC, and HCFM.
-5-
City
View Loan Documents: means the “Loan Documents” as defined in the City
View Loan Agreement.
Closing: The
consummation of the Loan Closing contemplated by this
Agreement.
CPI: The
United States Department of Labor, Bureau of Labor Statistics Revised Consumer
Price Index for All Urban Consumers (1982-84=100), U.S. City Average, All Items,
or, if such Index is not available for the United States, an index available for
the geographical area in the United States which most closely corresponds to the
entire United States, published by such bureau or its successor, or, if none, by
any other instrumentality of the United States.
Code: The
United States Internal Revenue Code of 1986, as amended.
Collateral
Assignment of OTA: means the Collateral Assignment of OTA among Lender
and Borrowers dated as of the date of this Agreement.
Combined
Cash Flow Coverage Ratio: For any fiscal period, the ratio of (i) Cash
Flow plus Cash Flow (as defined in the Master Lease) plus City View EBITDA to
(ii) Debt Service plus Base Rent (as defined in the Master Lease) plus City View
Debt Service.
Combined
Transaction Documents: means the Loan Documents, the City View Loan
Documents, and the Master Lease Documents.
Condemnation:
means (1) the exercise of any governmental power, whether by legal proceedings
or otherwise, by a Condemnor, and (2) a voluntary sale or transfer by a Borrower
to any Condemnor, either under threat of condemnation or while legal proceedings
for condemnation are pending.
Condemnor:
means any public or quasi public authority, or private corporation or
individual, having the power of condemnation.
Consultants:
means RCC.
Contamination.
The presence, Release or threatened Release of any Hazardous Substance at a
Facility in violation of any Environmental Law, or in a quantity that would give
rise to any affirmative Clean-Up obligation under an Environmental Law,
including, but not limited to, the existence of any injury or potential injury
to public health, safety, natural resources or the environment associated
therewith.
-6-
Cross
Default and Cross Collateralization Agreement: means the Second Amended
and Restated Cross Default and Cross Collateralization Agreement dated as of the
same date as this Agreement by Borrowers, Guarantors, the Lessee (as defined
under the Master Lease), and the Sublessees (as defined under the Master Lease),
and the City View Borrowers in favor of Lender and the Lessor (as defined under
the Master Lease).
Date
of Taking: means the date the Condemnor has the right to possession of
the Facility being condemned.
Debt
Service: means, with respect to any entity during the applicable period,
the sum of all principal and interest payments coming due during such period on
all borrowed money, including payments in the nature of interest under
Capitalized Leases and interest on any Purchase Money
Financing.
Deed
of Trust or Deeds
of Trust: The Deeds of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing from Owner to Lender.
Distribution:
Any payment or distribution of cash or any assets of a Borrower to one or more
equity owners of a Borrower (if any), to any Affiliate of Borrowers, or to or
for any third party for any charitable or benevolent purpose, whether in the
form of a dividend, a fee for management in excess of the fee required by the
terms of a management agreement approved by Lender (but in any event not to
exceed five percent (5%) of net revenues of the Facilities), a payment for
services rendered, a reimbursement for expenditures or overhead incurred on
behalf of a Borrower or a payment on any debt required by this Agreement or the
other Loan Documents to be subordinated to the rights of
Lender.
Escrowed
Capex Funds: is defined in Section 2.8.
Endorsements: The
endorsements required by Lender for each of the Title Policies, including,
without limitation, a Form 3.1 (completed structure) zoning endorsement, a usury
endorsement, a survey endorsement and such other endorsements as may be
reasonably required by Lender under the circumstances relating to each Facility,
provided that the endorsements are available under the laws of the jurisdiction
in which the Facility in question is located.
Environmental
Assessments: The Phase I Environmental Reports/Surveys to be
prepared by an environmental engineer approved by Lender.
Environmental
Audit: As defined in Section 6.23.5 below.
-7-
Environmental
Documents: Documents received by Borrowers or any Affiliate
from, or submitted by Borrowers or any Affiliate to, the United States
Environmental Protection Agency and/or any other federal, state, county or
municipal agency responsible for enforcing or implementing Environmental Laws
with respect to the condition of the Facilities, or operations at the
Facilities; and written reviews, audits, reports or other documents pertaining
to environmental conditions, including, but not limited to, the presence or
absence of Contamination, at, in or under or with respect to the Facilities that
have been prepared by, for or on behalf of Borrowers.
Environmental
Laws: All federal, state and local laws (including, without
limitation, common law), statutes, codes, ordinances, regulations, rules,
orders, permits or decrees from time to time in effect and relating to (a) the
introduction, emission, discharge or release of Hazardous Substances
into the indoor or outdoor environment (including, without limitation, air,
surface water, groundwater, land or soil); or (b) the manufacture, processing,
distribution, use, treatment, storage, transportation or disposal of Hazardous
Substances; or (c) the Clean-Up of Contamination.
Environmental
Report: The Environmental Assessments heretofore provided by
Borrowers to Lender.
ERISA:
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any rule or regulation issued thereunder.
Executive
Officer: The President, the Chief Executive Officer, the Chief
Operating Officer, and the Chief Financial Officer (or the holder of the
responsibilities ordinarily held by such the persons holding such titles) of
Lessee, Manager, Consultant or Guarantor.
Facility
or Facilities: The
skilled nursing facilities referred to in Recital B above, each of which is
located on a parcel of real property described in Deeds of
Trust.
Financial
Statement:
(a) For
each quarter during Borrowers’ and Parent Guarantor’s fiscal year, on a
consolidated basis for Borrowers, (i) a statement of earnings for the current
period and fiscal year to the end of such period, with a comparison to the
corresponding figures for the corresponding period in the preceding fiscal year
from the beginning of the fiscal year to the end of such period, and (ii) a
balance sheet as of the end of the period, and after the first year after the
Closing, with a comparison to the corresponding figures for the corresponding
period in the preceding fiscal year from the beginning of the fiscal year to the
end of such period; and
-8-
(b) For
Borrowers’, and Guarantor’s fiscal year, a compilation financial report on a
consolidated basis, prepared by an accounting firm or any other firm of
independent certified public accountants reasonably acceptable to Lender,
containing Borrowers’ and Guarantor’s balance sheet as of the end of that year,
its related profit and loss, a statement of owner’s equity for that year, a
statement of cash flows for that year, any management letter prepared by the
certified public accountants, such comments and financial details as customarily
are included in reports of like character.
(c) For
HCREH’s fiscal year, a financial report on a consolidated basis, prepared and
reviewed by an accounting firm or any other firm of independent certified public
accountants reasonably acceptable to Lender, containing HCREH’s balance sheet as
of the end of that year, its related profit and loss, a statement of owner’s
equity for that year, a statement of cash flows for that year, any management
letter prepared by the certified public accountants, such comments and financial
details as customarily are included in reports of like
character.
(d) Lender
may, at its own expense, cause any Financial Statement to be audited by a
certified public accountant selected by Lender and reasonably acceptable to
Borrowers. Lender consents to the use of the firm of Cummins, Krasik
& Xxxx Co. (Columbus, Ohio) to prepare such reports.
GAAP: Generally
Accepted Accounting Principles.
Government
Authorizations: The Government Authorizations described in
Section 5.20(b) hereof.
Guaranty
or Guaranties: means
one, more than one, or all of (i) the Guaranty executed by Parent Guarantors,
Managers, and Consultants, (ii) the Guaranty executed by the Lessee and
Sublessees (as defined in the Master Lease), and (iii) the Guaranty executed by
the City View Borrowers, in each case guarantying, among other things, the
obligations of Borrowers under this Agreement, the Note, the Deeds of Trust and
the other Loan Documents.
Guarantor
or Guarantors:
means one, more than one, or all of Parent Guarantors and each other party whom
guarantees the obligations of Borrowers under this Agreement, the Note, the
Deeds of Trust and the other Loan Documents.
Hazardous
Substances: Any and all toxic or hazardous material,
substance, pollutant, contaminant, chemical, waste (including medical waste) or
substance, including petroleum products, asbestos and PCB’s, regulated,
restricted or prohibited under any Environmental Law.
HCREH:
means HC Real Estate Holdings, LLC, an Ohio limited liability
company.
-9-
Impositions: Collectively,
all taxes, all ad valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes; assessments (including
Assessments); rents and charges due under all leases pertaining to the Personal
Property or the Facilities; water, sewer or other rents and charges; excises;
tax levies; fees (including, without limitation, license, permit, inspection,
authorization and similar fees); other governmental charges; and all other
encumbrances, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Facilities or the business conducted thereon, which at any time prior to, during
or in respect of the Term may be assessed or imposed on or in respect of or be a
lien upon (a) Lender or Lender’s interest in the Facilities, (b) the Facilities
or any part thereof or any estate, right, title or interest therein, or (c) any
occupancy, operation, use or possession of, or sales from, or activity conducted
on or in connection with the Facilities or the use of the Facilities or any part
thereof; provided, however, “Impositions” shall not include any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Lender generally and not specifically arising in connection with the
Facilities.
Indebtedness:
of a Person means such Person’s (i) obligations for borrowed money, (ii)
obligations representing the deferred purchase price of property or services
(other than accounts payable arising in the ordinary course of such Person’s
business payable on terms customary in the trade), (iii) obligations, whether or
not assumed, secured by liens or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, (iv) obligations
which are evidenced by notes, acceptances, or other instruments, (v) obligations
of such Person to purchase securities or other property arising out of or in
connection with the sale of the same or substantially similar securities or
property, (vi) Capitalized Lease Obligations, and (vii) any other obligation for
borrowed money or other financial accommodation which in accordance with GAAP
would be shown as a liability on the consolidated balance sheet of such
Person.
Indemnity
Agreement: The Indemnity Agreement from HC RE Holdings, LLC,
an Ohio limited liability company, in favor of Lender.
Insurance
Requirements: Policies of insurance issued by such insurers
and in such amounts as required by this Agreement and the other Loan
Documents.
Intangible
Assets: The amount of (a) unamortized debt discounts and expenses,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, organizational and developmental expenses, unamortized
operating rights, unamortized licenses, unamortized leasehold rights, computer
software development costs, start-up costs, pre-opening costs, prepaid pension
costs and other intangible assets, including (a) any write-up resulting from a
reversal of a reserve for bad debts or depreciation and any write-up resulting
from a change in methods of accounting or inventory and (b) the amount of any
investment in any Affiliate.
-10-
Intercompany
Master Lease: means the Master Lease among Owners, as lessors, and
Operators, as lessees, pursuant to which Operators lease the Facilities from
Owners.
Interest
Rate: means the annual rate of eleven percent (11%), as such rate may be
increased pursuant to Section 2.7.
Investigations: Soil
and chemical tests or any other environmental investigations, examinations or
analyses.
Investments:
of a Person means any loan, advance (other than commission, travel and similar
advances to officers and employees made in the ordinary course of business),
extension of credit (other than accounts receivable arising in the ordinary
course of business on terms customary in the trade) or contribution of capital
by such Person; stocks, bonds, mutual funds, partnership interests, notes,
debentures or other securities owned by such Person; and structured notes,
derivative financial instruments and other similar instruments or contracts
owned by such Person.
Legal
Requirements: As to any Facility, all applicable federal,
state, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions affecting either the
Facility or the construction, use or alteration thereof, whether now or
hereafter enacted and in force, including any which may (a) require repairs,
modifications or alterations in or to the Facility or (b) in any way adversely
affect the use and enjoyment thereof, and all permits, licenses and
authorizations and regulations relating thereto including, but not limited to,
those relating to existing health care licenses, those authorizing the current
number of licensed beds and the level of services delivered from the Facility,
and all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to any of Borrowers, at any time in force
affecting the Facility.
Lessee
Purchase Option: The option to purchase the skilled nursing
facilities listed below granted by Lender to Affiliates of Borrowers pursuant to
the Master Lease. The skilled nursing facilities covered by the
Lessee Purchase Option are:
Northwestern
Center
000
Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxx
XX 00000
|
Golden
Years Healthcare Center
0000
Xxxxx Xxxxxx
Xxxxxxxxxx
XX 00000
|
Columbus
Center
0000
Xxxxx Xxxx, Xxxxx
Xxxxxxxx
XX 00000
|
Oak
Grove Center
000
Xxxx Xxxxx Xxxxxx
Xxxxxxx
XX 00000
|
Letter
of Credit Agreement: means the Letter of Credit Agreement dated as of the
same date as this Agreement among Borrowers and Lender.
-11-
Letter
of Credit Facility: means a credit facility established for the sole
purpose of providing the letters of credit constituting the Security Deposit,
and the Liquidity Reserve (as defined in the City View Loan
Agreement.
Loan: The
loan from Lender to Borrowers in the original principal amount of SEVENTY FOUR
MILLION NINE HUNDRED TWENTY SEVEN THOUSAND SEVEN HUNDRED FIFTY ONE AND NO/100
($74,927,751) DOLLARS, plus all other obligations owing from Borrowers and their
Affiliates to Lender and its Affiliates under this Agreement and the other Loan
Documents.
Loan
Closing Date: On or before [April 1, 2008], or such other date
as shall be agreed upon by the parties for the completion of the loan
transaction pursuant to this Agreement.
Loan
Documents: This Agreement, the Note, the Guaranties, the
Security Agreements, the Deeds of Trust, the Borrower Affiliate Subordination
Agreement, the Subordination Agreement, the Pledge Agreement, the Subordination
of Management Agreement, the Collateral Assignment of OTA, the Letter of Credit
Agreement, the Indemnity Agreement, the Operator Guaranty, and all other
documents, instruments, certificates, opinions and financing statements required
or permitted by the foregoing documents (including all documents set forth in
Section 3.1.1), and any security agreements, pledge
agreements, letter of credit agreements, guarantees, notes or other documents
which evidence, secure or otherwise relate to this Agreement, the Note, the
Guaranty or the Loan, or the transactions contemplated by this Agreement; and
any and all amendments, modifications, extensions and renewals of any of the
foregoing documents.
Loan
Proceeds: The principal amount of the Loan less Lender’s
expenses which Borrowers are required to pay pursuant to this Agreement and the
Escrowed Capex Amount.
Managers:
means Bel Pre Mgmt. Co., LLC, Ridge (MD) Mgmt. Co., LLC, Marlboro Mgmt. Co.,
LLC, Fayette Mgmt. Co., LLC, Liberty Mgmt. Co., LLC, Xxxxxx Mgmt. Co., LLC, Pall
Mall Mgmt. Co., LLC, and Washington (MD) Mgmt. Co., LLC, each an Ohio limited
liability company.
Master
Lease: means the Second Consolidated Amended and Restated Master Lease
dated as of the date of this Agreement among Lender, as lessor, and OMG MSTR
LSCO, LLC, an Ohio limited liability company, and OMG LS Leasing Co.,
LLC, an Ohio limited liability company, as lessees, as such lease is amended,
restated, modified, extended, renewed and replaced.
Master
Lease Documents: means the Transaction Documents as defined in the Master
Lease.
-12-
Maturity
Date: means April 30, 2018, as extended pursuant to Section
2.7.
Maximum
Principal Amount: means Thirty Five Million Dollars
($35,000,000).
Net
Income: For any period, Borrowers’ net income (or loss) for
such period attributable to the operation of the Facilities, determined in
accordance with GAAP; provided, however, that Borrowers’ Net Income shall not
include any extraordinary gains (or losses) or nonrecurring gains (or
losses).
Northwest
Allocation
Funds:
all or any portion of the $1,400,000 of unallocated purchase price for the
Northwest Facility that are repaid to Lender or Borrower if the Northwest
Facility is not acquired by Borrower.
Northwest
Closing: means the acquisition of the Northwest Facility by
Owner.
Northwest
Escrow Agreement: As defined in the Sixth
Amendment.
Northwest
Funds: is defined in Section 2.9.
Northwest
Facility: means the Facility commonly known as Northwest
Health & Rehabilitation Center, 0000 Xxxx Xxxx Xxxxx, Xxxxxxxxx XX
00000.
Note
or Notes: The
Secured Deed of Trust Note, in the original principal amount of the Loan, to be
executed by Owner, as such Note may be amended, modified, extended and restated,
and any other promissory note executed by Owner or any Borrower pursuant to the
terms of this Agreement or any of the other Loan Documents.
Off-Balance
Sheet Liability: of a Person means (i) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (ii) any liability under any Sale and Leaseback Transaction which
is not a Capitalized Lease, (iii) any liability under any so-called “synthetic
lease” transaction entered into by such Person, or (iv) any obligation arising
with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person.
OHI
Facilities: means, as the context may require or permit, one, some or all
of the Facilities, the “Facilities” as defined in the Master Lease and the
“Facility” as defined in the City View Loan Agreement.
Operator
or Operators:
means Borrowers listed as “Operators” in Recital B.
Operator
Guaranty: means the Guaranty from the Operators in favor of
Lender.
-13-
Option
to Purchase: means the Option to Purchase from Borrowers in favor of
Lender set forth in the Master Lease.
Other
Permitted Indebtedness: means the Letter of Credit Facility and the
indebtedness and contingent obligations listed on Exhibit
B, together with renewals, refinancings and replacements of such
indebtedness and contingent obligations by indebtedness or contingent
obligations of like kind and of equal or lesser amount of credit
exposure.
Owner:
means Borrower listed as “Owner” in Recital B.
Partial
Taking: A taking of less than the entire fee of a
Facility.
Permitted
Encumbrances: Collectively, (a) liens, if any, for taxes,
Assessments and governmental charges not yet past due and payable or delinquent,
(b) the Permitted Encumbrances as defined in the Deeds of Trust, (c) the
Permitted Leases, and (c) a security interest in the accounts receivable and
related collateral of Operators granted pursuant to the Working Capital Loan
Documents to secure the Working Capital Loan as and to the extent permitted
under Section 6.17.
Personal
Property: As to each Facility, all Personal Property, such as
furniture, fixtures, equipment, rugs, carpeting, drapes, linen and the like, now
or hereafter used in connection with the operation of the Facility, and owned or
leased by a Borrower and located in and upon the Real Property on which the
Facility is located, excluding therefrom any goodwill or interest in the
business of Borrowers.
Plan:
means an employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code as to
which a Borrower or Guarantor may have any liability.
Pledge
Agreements: means the Pledge Agreements from Parent Guarantors in favor
of Lender.
Primary
Intended Use: With respect to a Facility, the operation of the Facility
as a licensed skilled nursing facility.
Permitted
Leases: means the leases and subleases set forth on Exhibit
A.
Purchase
Money Financing: Any financing provided by a Person to a
Borrower in connection with the acquisition of Personal Property used in
connection with the operation of a Facility, whether by way of installment sale
or otherwise.
-14-
Qualified
Capital Expenditures: Expenditures capitalized on the books of
Borrowers for any of the following: Replacement of furniture, fixtures and
equipment, including refrigerators, ranges, major appliances, bathroom fixtures,
doors (exterior and interior), central air conditioning and heating systems
(including cooling towers, water chilling units, furnaces, boilers and fuel
storage tanks) and major replacement of siding; major roof replacements,
including major replacements of gutters, downspouts, xxxxx and soffits; major
repairs and replacements of plumbing and sanitary systems; overhaul of elevator
systems; major repaving, resurfacing and sealcoating of sidewalks, parking lots
and driveways; repainting of entire building exterior; but excluding major
alterations, renovations, additions, normal maintenance and
repairs.
Real
Property: The parcels of real estate upon which the Facilities
is located, as more particularly described in the Deeds of
Trust.
Regulatory
Actions: Any claim, demand, action or proceeding brought or
instigated by any governmental authority in connection with any Environmental
Law, including, without limitation, civil, criminal and/or administrative
proceedings, and whether or not seeking costs, damages, penalties or
expenses.
Release: The
intentional or unintentional spilling, leaking, dumping, pouring, emptying,
seeping, disposing, discharging, emitting, depositing, injecting, leaching,
escaping, abandoning, or any other release or threatened release, however
defined, of any Hazardous Substance.
Remediation
Costs: as defined in the Sixth Amendment.
Reportable
Event: means a reportable event as defined in Section 4043 of ERISA and
the regulations issued under such section, with respect to a
Plan.
Sale
and Leaseback Transaction: means any sale or other transfer of real or
personal property by any Person with the intent to lease such property as
lessee.
Scheduled
Improvements: means the capital improvements to the Facilities set forth
on Exhibit
C.
Security
Agreements: Any Security Agreement between Lender, as secured
party, and a Borrower and/or Guarantor, as debtor.
Security
Deposit: The “Security Deposit” delivered by Lessee to
Lender, as lessor under the Master Lease. Borrowers and Lender agree
that the Security Deposit under this Agreement and the “Security Deposit” under
the Maryland Loan Agreement are the same deposit (i.e., there are not separate
security deposits under each agreement).
-00-
Xxxxx
Xxxxxxxxx to THI PA: means the Sixth Amendment to Purchase and Sale
Agreement dated as of the date of this Agreement among OHI
Acquisition Co 1, LLC, a Delaware limited liability company, THI of Maryland
Real Estate Holdings, LLC, a Delaware limited liability company, THI of Ohio
Real Estate Holdings, LLC, a Delaware limited liability company, THI of Maryland
at Bel Pre, LLC, a Delaware limited liability company , THI of Maryland at Fort
Washington, LLC, a Delaware limited liability company, THI of Maryland at
Franklin Square, LLC, a Delaware limited liability company, THI of Maryland at
Liberty Heights, LLC, a Delaware limited liability company, THI of Maryland at
Marley Neck, LLC, a Delaware limited liability company, THI of Maryland at
Northwest, LLC, a Delaware limited liability company, THI of Ohio at Berea, LLC,
a Delaware limited liability company, THI of Ohio at Kent, LLC, a Delaware
limited liability company, THI of Ohio at Northwestern, LLC, a Delaware limited
liability company, THI of Ohio at Columbus, LLC, a Delaware limited liability
company, THI of Ohio at Golden Years, LLC, a Delaware limited liability company,
THI of Ohio at Oak Grove, LLC, a Delaware limited liability
company, Millennium Health and Rehabilitation Center of Ellicott
City, LLC, a Maryland limited liability company, Millennium Health and
Rehabilitation Center of Forestville, LLC, a Maryland limited liability company,
THI of Maryland at South River, LLC, a Delaware limited liability company, THI
of Ohio at Chardon, LLC, a Delaware limited liability company, THI of Ohio ALFs
at The Commons, LLC, a Delaware limited liability company, THI of Ohio at
Greenbriar North, LLC, a Delaware limited liability company, Trans Healthcare of
Ohio, Inc., a Delaware corporation, PATHCare, Inc., a Delaware corporation, and
Trans Healthcare, Inc., a Delaware corporation.
SNDA
or SNDAs:
means the Subordination, Non-Disturbance and Attornment Agreements requested at
or after Closing by Lender with respect to the Permitted
Leases.
Subordination
of Management Agreement: means the Subordination of Management Agreement
from any manager or consultant of the Facilities and one or more Borrowers in
favor of Lender.
Subsidiary:
of a Person means (i) any corporation more than 50% of the outstanding
securities having ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references
herein to a “Subsidiary” shall mean a Subsidiary of a Borrower or Parent
Guarantor or HCREH.
Surveys: Those
certain ALTA/ACSM surveys of the Facilities performed by an independent surveyor
and delivered in connection with the issuance of the Title
Policies. The Surveys shall each contain an ALTA/ACSM certification
in favor of Lender, the Borrower that owns the Real Property and the Title
Company.
-16-
Taking: As
to any Facility, a taking or voluntary conveyance during the Term hereof of all
or part of such Facility, or any interest therein or right accruing thereto or
use thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding affecting such Facility, whether or not the same shall
have actually been commenced.
Tangible
Net Worth: At any date, the net worth of a Person as determined in
conformity with GAAP, less Intangible Assets, as determined as of such
date.
Term: The
period of time during which any indebtedness from Borrowers to Lender arising
under or evidenced by the Loan Documents remains
outstanding.
Third
Party Claims: Any claims, actions, demands or proceedings
(other than Regulatory Actions) howsoever based on (including without limitation
those based on negligence, trespass, strict liability, nuisance, toxic tort or
detriment to health welfare or property) due to claimed Contamination, and
whether or not seeking costs, damages, penalties or expenses, brought by any
person or entity other than a governmental agency.
Title
Commitments: The Title Insurance Commitment to issue ALTA
extended coverage lender’s policies of title insurance issued by the Title
Company for the Facilities.
Title
Company: First American Title Insurance Company.
Title
Policies: ALTA extended coverage lender’s policies of title
insurance issued pursuant to the Title Commitments, with the Endorsements and
without standard Schedule B exceptions, insuring the Deeds of Trust subject only
to Permitted Encumbrances.
Unavoidable
Delays: Delays due to strikes, lock-outs, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of a party
hereto.
Unfunded
Liabilities: means the amount (if any) by which the present value of all
vested and unvested accrued benefits under all Plans exceeds the fair market
value of all such Plan assets allocable to such benefits, all determined as of
the then most recent valuation date for such Plans using Pension Benefit
Guaranty Corporation (or any successor thereto) actuarial assumptions for single
employer plan terminations.
Unmatured
Event of Default: means the occurrence of an event which upon its
occurrence, or with the giving of notice, the passage of time, or both, would
constitute an Event of Default.
-17-
Unsuitable
for Its Primary Intended Use: A state or condition of a
Facility such that, by reason of damage or destruction, or a partial taking by
Condemnation, the Facility cannot be operated on a commercially practicable
basis for its Primary Intended Use, taking into account, among other relevant
factors, the number of usable beds, the amount of square footage and the
estimated revenue affected by such damage or destruction.
Working
Capital Loan: means a working capital line of credit from a third-party
(i.e., non-Affiliate) working capital lender permitted pursuant to the terms of
Section 6.17.
Working
Capital Loan Documents: means the documents which evidence, secure or
otherwise related to the Working Capital Loan.
ARTICLE
II - TERMS OF THE LOAN TRANSACTION
2.1 The
Loan. On the Loan Closing Date, and subject to the terms and
conditions set forth below, Lender agrees to make the Loan to
Owner. The Loan shall be evidenced and secured by the Note, the Deeds
of Trust, the Guaranties, the Operator Guaranty and the other Loan
Documents. The payment terms of the Loan, including, without
limitation the term and the manner, method and timing of the payments of
principal and interest, are all as set forth in this Agreement, the Note and in
the other Loan Documents.
2.2 Unconditional
Obligations. The obligations of (i) Owner to pay the Note,
(ii) of Operators to perform their obligations under the Operator Guaranty, and
(iii) of Borrowers to pay all fees, expenses and charges provided for in the
Note, in this Agreement and in any other Loan Documents shall be general
obligations of Borrowers, absolute and unconditional, and shall not be abated,
rebated, setoff, reduced, abrogated, waived, diminished or otherwise modified in
any manner or to any extent whatsoever, regardless of any rights of setoff,
recoupment or counterclaim that Borrowers may have against
Lender.
2.3 No
Prepayment. Borrowers’ rights and obligations with respect to
the prepayment of all or any portion of the principal balance of the Loan shall
be governed as expressly set forth in this Agreement, in the Note, and in the
Deeds of Trust, and, except for such rights, if any, as may be expressly set
forth in such documents, Borrowers shall have no right to prepay the
Loan. If the Loan is paid in whole or in part prior to stated
maturity for any reason (whether by acceleration or otherwise) other than
pursuant to Sections 2.9, 3.3, 3.4 and 6.22.9 of this Agreement, then Borrowers shall pay a
prepayment premium (the “Prepayment
Premium”) equal to the greater of (i) 3% of the principal amount then
outstanding, and (ii) the amount calculated as follows:
-18-
|
(a)
|
First,
the interest payments which would have become due on the Loan if the Loan
had not been prepaid shall be calculated. In calculating such
interest payments, it shall be assumed that Borrowers would have paid the
Loan on the scheduled maturity date without exercising any prepayment
right under this Agreement.
|
|
(b)
|
Second,
there shall be deducted from each interest payment that would have become
due under the Loan determined as set forth in clause (a) above the
interest that would become due to Lender on the date of each such interest
payment if the entire principal amount prepaid is reinvested by Lender on
the date of the prepayment in an instrument bearing interest at the
Reference Rate (as hereafter defined) payable on the first date of each
month following such reinvestment with a maturity on the Maturity
Date. Each such difference is hereinafter referred to as a
“Monthly
Payment Differential.”
|
|
(c)
|
Third,
each Monthly Payment Differential shall be discounted at an interest rate
equal to the Reference Rate to determine its present value from the date
that such Monthly Interest Differential would have occurred to the date of
the prepayment of this Loan, so as to determine the present value of the
Monthly Payment Differential as of the date of
prepayment.
|
|
(d)
|
Fourth,
the Prepayment Premium shall be calculated by adding together the present
value of each Monthly Payment Differential determined as set forth in
clause (c).
|
The
“Reference
Rate” shall be equal to the current yield, on the date five (5) days
prior to prepayment, of the U.S. Treasury security closest in maturity to the
remaining term of the loan. If there is more than one (1) U.S.
Treasury security with such a maturity date, the selection shall be at the sole
option of Lender. There shall be no discount if the Reference Rate
exceeds the Interest Rate.
The
Prepayment Premium required to prepay the Loan following a prepayment is
intended to preserve the yield on the Loan, and to serve as liquidated damages,
because the costs, expenses and losses caused by a prepayment are difficult or
impossible to estimate.
2.4 Borrowers
to Pay Expenses. Except as limited below, all costs and
expenses of the Loan transactions as contemplated by this Agreement and the
other Loan Documents shall be paid for by Borrowers, including, but not limited
to:
(a) all
taxes, including, without limitation, documentary transfer taxes, documentary
stamp taxes, sales and similar taxes, applicable to the transactions
contemplated herein, together with interest and penalties, if any,
thereon;
(b) all
recording costs, fees and charges;
-19-
(c) all
costs relating to the Title Commitments and the Title
Policies;
(d) all
costs relating to the Surveys;
(e) all
costs relating to the Environmental Assessments;
(f) the
reasonable legal fees of legal counsel to Lender, and reasonable disbursements
of such legal counsel;
(g) Lender’s
reasonable physical inspection costs, including travel and authorized
out-of-pocket expenses; and
(h) any
prepayment penalty fees or charges, recording fees or charges, legal fees,
reconveyance fees or charges, or other costs associated with the discharge and
payment of any existing secured debt recorded against any of the
Facilities.
2.5 Use
of Loan Proceeds. Owner shall use the Loan Proceeds to acquire
the Personal Property and Real Property comprising the Facilities, to complete
the Escrowed Improvements and to pay the Remediation Costs.
2.6 Further
Assurances. Borrowers agrees that each of them will execute
and deliver such other instruments and take all such actions as may reasonably
be required by Lender in order to effectuate the purpose and to carry out the
terms of this Agreement and the other Loan Documents.
2.7 Extension
of Maturity Date. Borrowers are hereby granted two (2)
successive options to extend the Maturity Date (each an “Option
to Extend”). The Options to Extend shall be for a period of
ten (10) years each, such that if the first Option to Extend is exercised, the
Maturity Date would be April 30, 2028 and if the first and second Options to
Extend are exercised, the Maturity Date would be April 30,
2038. Borrowers’ exercise of the first and second Options to Extend
are subject to the following terms and conditions (which conditions may be
waived by Lender in its sole discretion):
(a) An
Option to Extend is exercisable only by Notice to Lender at least one hundred
and eighty (180) days, and not more than three hundred sixty (360) days, prior
to the Maturity Date;
(b) No
Event of Default or Unmatured Event of Default shall have occurred and be
continuing either at the time an option to extend is exercised or at the
commencement of the extension period;
-20-
(c) As
set forth in the Note, the Interest Rate during the period from April 1, 2018
thru April 30, 2028 will be 13.75%, and the Interest Rate during the period from
May 1, 2028 thru April 30, 2038 will be 16.75%;
(d) All
of the terms and conditions of this Agreement, the Note, the Deeds of Trust and
the other Loan Documents shall remain in full force and effect;
and
(e) Borrowers
may only exercise their Options to Extend if the option to renew for a
corresponding period of years under the Master Lease (the “Master
Lease”) is also exercised with respect to all (and no fewer than all) of
the Leased Properties (as defined in the Master Lease) such that the Expiration
Date (as defined in the Master Lease) and the Maturity Date are the same
date.
2.8 Escrowed
Capital Improvements Funds. At Closing, Lender and
Borrowers shall escrow with the Title Company a portion of the Loan equal to Two
Million Three Hundred Seventy Five Thousand Dollars ($2,375,000) (the “Escrowed
Capex Funds”) pursuant to an escrow agreement in form and substance
acceptable to Borrowers and Lender. Borrowers shall propose the
specific Escrow Improvements for Lender’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed. After receipt of
approval as to any specific Escrowed Improvement, the Borrowers shall promptly
undertake, and complete each such Scheduled Improvement on or before December
31, 2009. Upon written certification from Borrowers to Lender
that a Scheduled Improvement has been completed, in whole or in part, and upon
compliance with the procedures set forth below, so long as no Event of Default
or Unmatured Event of Default has occurred and is continuing, Borrowers may
withdraw an amount of Escrowed Capex Funds equal to the amount set forth on
Schedule
2.8
for such Scheduled Improvement. Any amounts so paid to Borrowers by
Lender shall be used first to pay the costs of the Scheduled
Improvements. To the extent the actual cost of a Scheduled
Improvement exceeds the amount set forth on Schedule
2.8
for such Scheduled Improvement, then Borrowers shall pay such cost
themselves.
(a) Borrowers
may not request disbursement of the Escrowed Capex Funds more than once per
month;
(b) With
each request for disbursement, Borrowers shall deliver a certification from an
officer of Borrowers that no Event of Default or UnMatured Event of Default
exists;
(c) The
Scheduled Improvements shall be done pursuant to plans and specifications and a
cost statement approved by Lender;
(d) After
the first disbursement to Borrowers, sworn statements and lien waivers in an
amount at least equal to the amount of funds previously paid to Borrowers (or
lien subordination agreements pursuant to Maryland law) or such other adequate
evidence of payment shall be delivered to Lender and the Title Company from all
contractors, subcontractors and material suppliers covering all labor and
materials invoiced prior to the date of the previous
disbursement;
-21-
(e) Borrowers
shall deliver to Lender such other evidence as Lender reasonably may request,
from time to time during the course of the work on the Scheduled Improvements,
of compliance with the approved plans and specifications, of the cost of work
and of the total amount needed to complete the Scheduled Improvements, and
showing that there are no liens against the Facilities arising in connection
with the work with respect to which the cost statement delivered to, and
approved by, Lender does not provide for their payment; and
(f) At
the election of Lender, the funds may be disbursed by the Title Company to
Borrowers or to the persons entitled to receive payment thereof from
Borrowers.
2.9 Northwest. On
the Loan Closing Date, Lender shall escrow a portion of the Loan equal to Four
Million Nine Hundred Thousand Dollars ($4,900,000) plus certain closing costs
(the “Northwest
Funds”) with the Title Company pursuant to the terms of the Northwest
Escrow Agreement. Notwithstanding anything in this Agreement or
the Note to the contrary, Borrowers shall not pay interest on the Northwest
Funds until the earlier of (i) the release of the Northwest Funds to Sellers (as
defined in the Northwest Escrow Agreement) or (ii) the date that is ninety (90)
days after the Loan Closing Date; provided, however, that all interest earned on
the Northwest Funds shall be paid over to Lender during such ninety (90)
period. If Owner does not acquire the Northwest Facility, then
Borrowers shall repay to Lender an amount equal to the Northwest Funds plus any
portion of the Northwest Allocation received from Sellers. If the
Northwest Funds or any portion of the Northwest Allocation Funds are returned to
Lender, then, provided no Event of Default has occurred and is continuing, the
Northwest Funds and/or the Northwest Allocation Funds shall be applied to the
outstanding principal balance of the Loan and no Prepayment Premium shall be due
in connection with such return and the difference between $1,449,518 less that
portion of the Northwest Allocation Funds actually received shall be reallocated
among the remaining Facilities in proportion to the number of licensed beds at
each remaining Facility bears to the total number of licensed beds at all
Facilities, which reallocation shall also increase the Third Year Release
Payment and the Seventh Year Release Payment in the amount reallocated to such
Facilities. In addition, Borrowers shall pay all Remediation
Costs. If the Northwest Facility is not acquired by Owner, then the
Northwest Facility shall be removed from Section 3.4 and the Seventh Year Release Payment shall be
reduced by $7,952,560.56. If the Northwest Facility is
acquired by Owner, Owner shall grant equivalent liens and security interests
covering the Northwest Facility as cover all other
Facilities.
-22-
ARTICLE III -
SECURITY
3.1 Security.
3.1.1 Loan
Documents. To secure the Note and Loan and the performance of
Borrowers’ obligations hereunder, Borrowers and Parent Guarantors shall deliver,
or cause to be delivered, to Lender, at Closing, the
following:
(a) The
Note;
(b) The
Deeds of Trust;
(c) The
Assignment of Leases;
(d) The
Security Agreements;
(e) The
Guaranties;
(f) The
Operator Guaranty;
(g) The
Cross Default and Cross Collateralization Agreement;
(h) The
Borrower Affiliates Subordination Agreement;
(i) The
Pledge Agreement;
(j) Subordination
of Management Agreement;
(k) The
Indemnification Agreement;
(l) The
Option to Purchase;
(m) The
Intercompany Master Lease;
(n) UCC-1
financing statements with respect to the security interest in favor of Lender;
and
(o) Such
other documents, certificates or instruments as may be contemplated by the
above-referenced documents, together with such other documents as Lender
reasonably require in order to perfect the liens and security interest
contemplated in this Agreement and in the other Loan
Documents.
-23-
After
the Closing, Borrowers shall use commercially reasonable best efforts to cause
the SNDA’s to be delivered within sixty (60) days after the Closing, or as soon
thereafter as is reasonably possible.
Notwithstanding
the foregoing, the Deed of Trust and the Assignment of Leases covering the
Northwest Facility shall not be delivered unless and until the Northwest Closing
occurs.
3.1.2 Cross
Collateralization. The obligations of Borrowers and their
Affiliates to Lender under the Loan Documents or otherwise are secured by all
security interests, liens, assignments and encumbrances granted previously, now
or in the future by a Borrower, Guarantor or any Affiliate of a Borrower or
Guarantor to Lender or any Affiliate of Lender, including, but not limited to,
the security interests and liens granted pursuant to the Combined Transaction
Documents.
3.2 Obligations
Secured. The Loan Documents shall secure (a) the due and
punctual payment of (i) the Loan (including principal, interest, additional
interest, default interest and all other sums required by the Note to be paid),
and (ii) all of Borrowers’ and Guarantors other present and future indebtedness
to Lender or its Affiliates, whether or not arising under this Agreement,
evidenced by the Note, or otherwise, and (b) the due and punctual observance and
performance of all of the other obligations under the Loan Documents of the
mortgagors, debtors and others granting security interests under any of the Loan
Documents. An Event of Default under this Agreement or any of the other Loan
Documents shall be an Event of Default under this Agreement and all of the other
Loan Documents, and shall entitle Lender to pursue any and all remedies
available under this Agreement, or under any of the other Loan Documents, or at
law or in equity.
3.3 Release
of Certain Facilities during First Three Years.
(a) On
or before the third anniversary of the Closing, provided that (i) no Event of
Default has occurred and is continuing under the Loan Documents, (ii) no
Unmatured Event of Default has occurred and is continuing, and (iii) Borrowers
are selling the Facility or Facilities to an unrelated third party, upon the
payment to Lender of the applicable release payment set forth below (each a
“Three
Years Release Payment”), Lender would agree to release the applicable
Facility listed below (each a “Three
Years Facility”) from the lien of the Loan Documents. No
Prepayment Premium would be payable in connection with such prepayment and
release. The initial release prices (to be increased by any
reallocations as discussed below or any funded capex under Section 2.8) are:
-24-
Facility
Name
|
Initial
Release Payment
|
Liberty
Heights Health & Rehabilitation Center
0000
Xxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
|
$7,843,630.47
|
Northwest
Health & Rehabilitation Center
0000
Xxxx Xxxx Xxxxx
Xxxxxxxxx
XX 00000
|
$6,690,212.73
|
Franklin
Square Health & Rehabilitation Center
0000
X. Xxxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
|
$11,761,358.12
|
Each
Third Year Release Payment will increase 2.5% per year (compounding) on each
anniversary of the Closing and pursuant to subparagraph (b) below.
(b) If,
after exercising reasonable efforts to sell any Three Years Facility, Borrowers
are unable to find a buyer willing to pay an amount sufficient to satisfy the
applicable Three Years Release Payment, then Lender will accept as a Three Years
Release Payment a lower release payment provided that: (i) the release payment
is no less than 50% of the otherwise applicable Third Year Release Payment, and
(ii) after giving effect to the sale of the Facility and the pay down of the
Loan, the Borrowers remain in compliance with the Cash Flow Coverage Ratio and
Combined Cash Flow Coverage Ratio required as of the date of the
payment. The difference between the actual release payment and
the Three Years Release Payment shall be reallocated among the remaining
Facilities in proportion to the number of licensed beds at each remaining
Facility bears to the total number of licensed beds at all Facilities, which
reallocation shall also increase the Third Year Release Payment under this
Section and the Seventh Year Release Payment under Section 3.4 in the amount reallocated to such
Facilities.
(c) Borrowers
must sell the Facilities to unrelated third parties in order for the Facilities
to be released from the lien of the Loan Documents pursuant to this
Section.
(d) Upon
payment of the applicable Third Year Release Payment, the amount of the Security
Deposit required under this Agreement and the Master Lease will be reduced by an
amount equal to (i) the amount of the applicable Third Year Release Payment
actually paid to Lender multiplied
by (ii) the Interest Rate divided
by (iii) four (4).
(e) Upon
payment of the applicable Third Year Release Payment, Lender shall release the
applicable Facility from the Option to Purchase.
3.4 Release
of Certain Facilities after Seven Years.
-25-
(a) During
the one year period commencing on the seventh anniversary of the Closing,
provided that (i) no Event of Default has occurred and is continuing under the
loan documents, (ii) no Unmatured Event of Default has occurred and is
continuing, (iii) the prepayment is made concurrently with respect to all such
Facilities (to the extent they have not previously been released as provided for
in Section 3.3), and (iv) the Lessee Purchase
Option is closed concurrently, upon the payment to Seller of
$47,541,642.86 (as such amount may be increased or reduced pursuant
to Sections 3.3(b) and 3.4(b), the “Seventh
Year Release Payment”), Seller will release the Facilities listed below
from the lien of the Loan Documents. No Prepayment Premium would be
payable in connection with such prepayment and release. Borrowers
would not be obligated to sell the Facilities in connection with such prepayment
and release. The Facilities covered by this Section are as
follows:
Bel
Pre Health & Rehabilitation Center
0000
Xxx Xxx Xxxx
Xxxxxx
Xxxxxx XX 00000
|
Liberty
Heights Health & Rehabilitation Center
0000
Xxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
|
Marley
Neck Health & Rehabilitation Center
0000
X. Xxxxxx Xxxx
Xxxx
Xxxxxx XX 00000
|
Northwest
Health & Rehabilitation Center
0000
Xxxx Xxxx Xxxxx
Xxxxxxxxx
XX 00000
|
Franklin
Square Health & Rehabilitation Center
0000
X. Xxxxxxx Xxxxxx
Xxxxxxxxx
XX 00000
|
(b) The
Seventh Year Release Payment will be reduced by the amount any Third Year
Release Payment paid in connection with any of the Seventh Year Facilities which
are also Third Year Facilities.
(c) If
Borrowers do not sell or otherwise transfer the Facilities to third parties, but
instead continue to own and operate them, then upon payment of the Seventh Year
Release Payment and release of the Seventh Year Facilities from the lien of the
Loan Documents, the ownership of the applicable Borrowers which own or operate
such Facilities shall be transferred such that HCREH and the Parent Guarantors
no longer own or control such Borrowers. Upon such transfer, Lender
will release such Borrowers from their obligations arising under the Loan
Document and their guaranty of the Master Lease and the City View
Loan.
-26-
(d) Upon
payment of the Seventh Year Release Payment, the amount of the Security Deposit
required under this Agreement and the Master Lease will be reduced by an amount
equal to (i) the amount of the Seventh Year Release Payment actually paid to
Lender multiplied
by (ii) the Interest Rate divided
by (iii) four (4).
(e) Upon
payment of the Seventh Year Release Payment, Lender shall release the Facilities
covered by this Section from the Option to Purchase.
ARTICLE
IV - CONDITIONS TO THE OBLIGATION OF LENDER TO
CLOSE
The
obligations of Lender hereunder are subject to the following
conditions. Should any condition not be fulfilled to the reasonable
satisfaction of Lender on the Loan Closing Date, or if Lender does not waive
such condition in writing, then Lender shall, at its option, but without waiving
any rights (but subject to the limitations of Section 9.2 hereof), be relieved
of all obligations under this Agreement.
4.1 Borrowers’
Compliance. Borrowers shall fully comply with all provisions
of this Agreement.
4.2 Execution
and Delivery of Documents. This Agreement, the Note, the Deeds
of Trust, the Security Agreements, the Guaranty and all other Loan Documents to
be executed by Borrowers, the Guarantors, the Consultants and Manager shall have
been duly authorized, validly executed and delivered by Borrowers, the
Guarantors, the Consultants, and Managers to Lender.
4.3 Recording
and Payment of Charges. Borrowers shall have (a) made
arrangements for the Deeds of Trust and UCC-1 Financing Statements to be duly
recorded or filed for recordation in each county in which a Facility is located
and with the appropriate governmental office or offices concurrent with the
Closing in the manner required by the laws of the jurisdiction in which the
Facility is located and (b) paid, or arranged to be paid, all costs and fees to
be paid by Borrowers pursuant to this Agreement, and such arrangements shall be
reasonably satisfactory to Lender and its counsel.
4.4 Title
Commitments. Lender shall have received the Title Commitments,
issued by the Title Company, committing to issue the Title Policies to be dated
as of the Loan Closing Date and insuring Lender’s first lien security position
against the Facilities. The Title Policies shall: (a)
insure, to the extent such insurance is available in the states in which the
Facilities are located (i) that any conditions, covenants and restrictions
affecting the respective Facility has not been violated and that a future
violation thereof will not result in forfeiture or reversion of title, (ii)
access, (iii) affirmatively any easements required for ingress and egress or
otherwise required for operation of any Facility, and (iv) over and against all
parties in possession except any individuals currently receiving health care
services; (b) be in an amount equal in the original principal amount of the Loan
for the Facilities; (c) include the Endorsements; and (d) be delivered to Lender
at the Closing. The Title Commitments shall be accompanied by copies
of all documents affecting the Facilities as disclosed by the Title
Commitments. Title to the Facilities shall be subject only to the
Permitted Encumbrances. Borrowers shall cause all liens relating to
existing secured debt recorded against the Facilities to be discharged at the
Closing.
-27-
4.5 Insurance. Lender
shall have received certificates of insurance fulfilling the insurance
requirements set forth in this Agreement, together with proof that the premiums
for such insurance have been paid.
4.6 No
Damages. There shall have been no material damage to the
buildings and improvements constituting the Facilities and no condemnation or
eminent domain proceedings shall be pending with respect
thereto.
4.7 No
Offsets or Claims. On the Loan Closing Date, there shall exist
no offset, defense or claim with respect to any sums to be paid by Borrowers
under this Agreement or any of the other Loan Documents.
4.8 Representations
and Warranties. The representations and warranties made by
Borrowers in this Agreement, in any of the other Loan Documents, and in any
certificates delivered pursuant hereto shall be true and correct in all material
respects on and as of the Loan Closing Date.
4.9 Corporate
Proceedings. All corporate and other proceedings of Borrowers
in connection with the transactions contemplated herein and all documents and
certificates incident thereto shall be reasonably satisfactory in form and
substance to Lender and its counsel. Lender shall have received such
other documents and certificates incident to the transaction as Lender or its
counsel shall reasonably request.
4.10 Opinion
of Counsel. Lender shall have received an opinion of counsel
for Borrowers and the Guarantors, dated as of the Loan Closing Date, addressed
to Lender, as to the due organization, existence and good standing of Borrowers,
due authorization, execution and delivery of all of the Loan Documents; and
dealing with such other matters as counsel to Lender may reasonably
request.
4.11 Financial
Statements. Lender shall have received and approved
financial statements for the RCC and HCFM for the years ended December 31, 2006
and December 31, 2007, and for the calendar year 2008 to February 29, 2008, in
form and substance reasonably satisfactory to Lender.
-28-
4.12 Licenses. Borrowers
shall have (i) applied for all necessary certificates of need
approvals/exemptions and license and certification approvals with respect to the
operation of the Facilities for their Primary Intended Use, subject to the
approval of Lender and its counsel, and no adverse action by any governmental
agency or authority shall be pending with respect thereto, and (ii) shall have
either received new licenses to operate the Facilities for their Primary
Intended Use.
4.13 Surveys. Borrowers
shall deliver to Lender final ALTA/ACSM, “as-built” surveys of the Facilities,
showing each such Facility in reasonable detail, with all encroachments,
setbacks, utilities, and easements shown, including a Surveyor’s Certificate in
favor of Lender, Borrowers and the Title Company, in form and substance
reasonably acceptable to Lender and its counsel. If the legal
descriptions of the Facilities differ from the legal description contained in
the Title Commitments, Borrowers shall cause the Title Company to insure the
legal descriptions set forth in the Surveys.
4.14 Compliance. Lender
shall have received from Borrowers evidence satisfactory to Lender, in its
reasonable discretion, of the following:
(a) Verification
of Borrowers’ ownership of or leasehold rights with respect to all of the
Personal Property, free and clear of all liens and encumbrances (other than the
Permitted Encumbrances and existing secured debt, all of which shall be paid off
and discharged at the Closing with the proceeds of the
Loan);
(b) Verification
that all licenses, permits, franchises, approvals and agreements for the
continued operation of the Facilities as licensed nursing facilities has been
obtained and are and will continue to be in full force and
effect;
(c) Verification
that there are no outstanding violations of any laws, codes, rules or
regulations, the existence of which would have a material adverse affect on any
Facility or the current operation thereof as a licensed nursing home facility;
or if any such violations exists, a detailed explanation of each such violation,
together with a plan of correction for each such violation that shall, among
other things, be subject to Lender’s reasonable satisfaction and prior written
approval in its reasonable discretion. Any such plan(s) of correction
shall, at Lender’s option, include such security as Lender may reasonably
require to assure it that neither the licenses for the operation of the
Facilities as licensed nursing facilities nor the operations of any Facility as
a nursing home shall be suspended or revoked during the correction of such
violations, and that, notwithstanding any such suspension or revocation, all
amounts shall be timely paid as and when the same shall become due under the
Note; and
-29-
(d) Verification
of the current zoning of the Facilities and that all necessary utility services
are available in sufficient capacity at the Facilities as currently operated
(and that all such utilities enter the Facilities from public rights-of-way or
from uninterrupted private utility company easements).
4.15 Environmental
Assessments. Lender shall have received independent Phase I
and Phase II Environmental Assessments from an environmental engineer, in form
and substance satisfactory to Lender in its sole
discretion. Borrowers shall have abated any hazardous materials
conditions set forth in the Environmental Assessments and/or alternatively
entered into an Indemnification Agreement in form and substance satisfactory to
Lender in its sole discretion.
4.16 Due
Diligence. Lender shall have completed its due diligence
review of the Facilities, including Lender’s inspection and approval of the
Facilities as to their physical condition, by a structural engineer or other
construction professional or professionals approved by
Lender.
4.17 Approval
of Occupancy Agreements. Approval of all agreements affecting
the occupancy of the Facilities, to the extent such agreements are not
cancelable on no more than 30 days notice.
4.18 Rehabilitation
Plan. Lender’s approval of the preliminary plan for
rehabilitation and capital improvements (including necessary expenditures for
Code compliance) for the Facilities, based upon Lender’s inspection of the
Facilities.
4.19 Security
Deposit. At Closing, Borrowers shall deliver to Lender the
Security Deposit in accordance with, and subject to, the terms and conditions
of, this Agreement, the Master Lease and the Letter of Credit
Agreement. Throughout the Term, the Security Deposit shall be in the
exclusive possession and control of Lender. Lender may draw upon the
Security Deposit under the circumstances set forth in the Letter of Credit
Agreement, the Master Lease and Section 7.4
below. Upon payment in full of all of Borrowers’ and its Affiliates
present and future indebtedness to Lender, whether evidenced by the Note, the
Master Lease or otherwise, Lender shall deliver the Security Deposit, less any
portion thereof applied as provided in the Letter of Credit Agreement, the
Master Lease or Section 7.4, to
Borrowers.
ARTICLE
V - REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWERS
AND THE GUARANTOR
To
induce Lender to enter into this Agreement and to make the Loan to Borrowers,
each of Borrowers and Parent Guarantors, jointly and severally, represent,
warrant and covenant to Lender as of the date hereof, as follows:
-30-
5.1 Organization
of Borrowers and Parent Guarantors. Each of Borrowers and
Parent Guarantors is a limited liability company duly organized and valid
existing under the laws of the State of Ohio. RE Holdings owns all of
the issued and outstanding equity interests of RE Leasing and AO. RE
Leasing owns all of the issued and outstanding equity interests of each of the
Operators. AO owns all of the issued and outstanding equity interests
of each of the Owners. HCFM owns all of the issued and outstanding
equity interests of each of the Consultants. RCC owns all of the
issued and outstanding equity interests of each of the
Managers. Borrowers are Affiliates of Parent Guarantors, the Managers
and the Consultants. The authorized and issued capital (including all
equity securities, options, warrants, general or limited partnership interests,
membership interests or other equivalents of or in a corporation, partnership,
limited partnership, limited liability company or equivalent entity) of
Borrowers, Parent Guarantors, the Managers and the Consultants and the
registered holders of such capital are as set forth in Schedule
5.1
(together with a corporate chart) and all of the issued and outstanding shares
and securities are issued and outstanding as fully-paid and non-assessable and
no Person has any option or right to acquire any shares in the capital of any
Borrower, Parent Guarantors, the Consultants or Managers except as
set forth in such Schedule. Except as set forth on Schedule
5.1, none of Borrowers, HCREH, RE Holdings, RE Leasing, and AO own
securities of any other corporation or beneficial interests in any other
Person. All of the issued and outstanding shares of capital
stock or other ownership interests of Borrowers have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non assessable.
5.2 Parent
Guarantors’ Financial Condition. No material adverse change
has occurred in the any Parent Guarantor’s finances, business, operations or
affairs, following the Financial Statements dated, and for the period ended,
February 29, 2008. The Financial Statements of each Parent
Guarantor: (a) are prepared in accordance with the books and records
of such Parent Guarantor; (b) are the statements of the financial conditions and
results of operations of such Parent Guarantor as at and for the periods therein
specified, all prepared in accordance with GAAP; and (c) contain and reflect all
adjustments so as to present a fair and accurate statement of the results of
operations and financial conditions for the periods covered by said Financial
Statements on the basis of the applicable methods of
accounting.
5.3 Financial
Condition - Borrowers/Facilities. No material adverse change
has occurred in the finances, business, operations or affairs, and no material
adverse change has occurred in the operation, physical condition, licensing, or
financial results of any Borrower or Facilities since the date of the Financial
Statements delivered to Lender pursuant to the terms of this
Agreement. The Financial Statements of the Facilities delivered to
Lender pursuant to this Agreement: (a) are prepared in accordance
with the books and records of the Facilities reported on; (b) are true and
complete statements of the financial conditions and results of operations of
such Facilities reported on, as at and for the periods therein specified, all
prepared in accordance with GAAP; (c) contain and reflect all adjustments so as
to present a fair and accurate statement of the results of operations and
financial conditions for the periods covered by said Financial Statements on the
basis of the applicable methods of accounting. No Borrower has
contingent obligations not provided for or disclosed in the Financial Statements
delivered pursuant to Section 4.11.
-31-
5.4 Taxes. Each
Parent Guarantor has filed all United States federal tax returns and all other
tax returns which are required to be filed and have paid all taxes due pursuant
to said returns or pursuant to any assessment received by a Parent Guarantor,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with GAAP and as to which no
lien, security interest or encumbrance exists. Borrowers were
organized on or after December 1, 2007, have not engaged in any business
activities prior to the transactions contemplated by this Agreement and the
Purchase Documents, and have not been required to file, and have not filed, any
federal or state tax returns. The United States income tax returns of
each Parent Guarantor have never been audited by the Internal Revenue
Service. No tax liens have been filed and no claims are being
asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Borrowers and Parent Guarantors in respect of any taxes
or other governmental charges are adequate.
5.5 Licenses. The
Facilities are duly licensed nursing facility with the number
of licensed beds set forth on Schedule
5.5. The
number of licensed beds at the Facilities shall not be reduced during the
Term. The Facilities are fully-equipped with all necessary equipment,
is properly licensed, and is in material compliance with all appropriate laws,
ordinances, rules and regulations, and operates as a Medicare and Medicaid
provider under a valid Participation Agreement therefor. Borrowers
know of no facts, circumstances, or reasons that would cause the State of
Maryland to deny their application for all necessary certificates of need
approvals/exemptions and license and certification approvals with respect to the
operation of the Facilities for their Primary Intended Use. Effective
as of the Closing Date, Borrowers have acquired new licenses issued to Operators
and Operators are legally entitled to occupy the Facilities and to operate them
for their Primary Intended Use.
5.6 The
Facilities.
(a) The
buildings and improvements comprising the Facilities have been constructed in
compliance with the requirements of all laws, ordinances, rules, regulations and
restrictions of record applicable thereto, and all bills for labor and materials
in connection with the construction thereof have been paid in full or provided
for.
(b) All
public utilities, including, but not limited to, water, sewer, gas and
electricity, to the extent necessary for the operation of the Facilities, have
been connected to the Facilities, and are adequate for the intended use of the
Facilities.
-32-
(c) Means
of ingress and egress, streets, parking and drainage facilities are available to
service each Facility and are adequate for the intended use of each
Facility.
(d) All
permits, licenses, conditional use permits and other certificates (including, if
issued in the applicable jurisdiction, permanent, unconditional certificates of
occupancy) and certificates of need or any other governmental approvals or
authorizations, which are necessary to permit the use of the Facilities in
accordance with the provisions of this Agreement and the other Loan Documents,
have been obtained and are in full force and effect. Borrowers have
not received any notice of any default under any such permits and
licenses. Except as set forth on Schedule
5.6(d),
there are no unresolved citations from any local public health, Medicare or
Medicaid agencies, and there are no temporary or permanent waivers as to any
condition or fact respecting any of the Facilities under the laws or regulations
of the foregoing.
(e) Under
applicable zoning and use laws, ordinances, rules and regulations, each Facility
may be used for its Primary Intended Use and all necessary subdivision approvals
have been obtained.
(f) The
Permitted Encumbrances will not materially interfere with the Primary Intended
Use of the Facilities by Borrowers or any lessee of the
Facilities.
(g) Except
as set forth on Schedule
5.6(g), no
actions, suits, claims or proceedings have been instituted or, to the knowledge
of Borrowers or the Guarantor, threatened against or affecting the Facilities at
law or in equity or before any federal, state or municipal governmental
department or agency or instrumentality thereof.
5.7 Litigation. No
actions, suits, claims or proceedings have been instituted or, to the knowledge
of Borrowers or Parent Guarantors, threatened against or affecting Borrowers,
Parent Guarantors, Consultants or Managers at law or in equity or before any
federal, state or municipal governmental department or agency or instrumentality
thereof.
5.8 ERISA. None
of Borrowers have, or has had, any employees or any Plans. No
Unfunded Liabilities exists for any Plans. No Guarantor has incurred,
or is reasonably expected to incur, any withdrawal liability to any Plans
(whether single employer or multi-employer). Each Plan complies in
all material respects with all applicable requirements of law and regulations,
no Reportable Event has occurred with respect to any Plan, no Guarantor has
withdrawn from any Plan or initiated steps to do so, and no steps have been
taken to reorganize or terminate any Plan.
5.9 Personal
Property; Security Interests. As of the Loan Closing Date,
Borrowers will have good, valid and marketable title to all Personal Property,
subject only to the Permitted Encumbrances. As of the Loan Closing
Date and at all times during the Term, except as may be permitted under Section
6.17, Lender shall have first priority security
interests in the Personal Property (other than the Personal Property that is
leased by a Borrower, as lessee), free and clear of all liens, encumbrances,
pledges or leases, other than the Permitted Encumbrances. None of the
moveable equipment or other moveable Personal Property shall be removed from any
Facility except in compliance with Section 6.22.11(d) below.
-33-
5.10 Reports
by Borrowers. Borrowers shall file or cause to be filed all
reports and disclose such information with respect to the Facilities and/or the
business being carried on at the Facilities as may be required or requested by
any regulatory body or agency having jurisdiction thereof.
5.11 Defects. There
is no latent or patent defect or deficiency with regard to the structures,
roofs, soils, furniture, fixtures, equipment, plumbing, electrical, mechanical
or other system of any Facility which would impair the use or value of such
Facility, and the same are in good working order and
condition.
5.12 No
Encroachments. There exists no encroachment onto the
Facilities or by the improvements onto any adjoining property, other than as
reflected in the Survey.
5.13 No
Condemnation. None of Borrowers or Parent Guarantor know of
any pending, contemplated or threatened Condemnation of the Facilities or any
part thereof.
5.14 Insurance
Policies. Borrowers have delivered to Lender a schedule of all
insurance policies in effect as of the date of this Agreement and covering the
Facilities. If Lender requests, Borrowers shall provide loss/claims
histories.
5.15 No
Other Defaults. The transactions contemplated by this
Agreement and the other Loan Documents will not constitute or result in any
default or event that, with a notice or lapse of time, or both, would be a
default, breach or violation of any lease, mortgage, covenant or other
agreement, instrument or arrangement by which any Facility or any Borrower or
Guarantor will be bound as of the date hereof except for those approvals and
consents required hereunder which will be obtained on or before the Loan Closing
Date. No consent or joinder by any governmental agency or any other
Person is required for the execution of this Agreement and the other Loan
Documents by Borrowers or the Guarantors, for the performance of Borrowers’ and
the Guarantors’ obligations as contemplated herein or in the other Loan
Documents or for the enjoyment of the benefits of same by
Lender.
5.16 No
Assessments. No assessments for public improvements have been
made or, to the knowledge of Borrowers or Parent Guarantors, threatened against
any Facility which are not of record and which remain unpaid, including, without
limitation, those for extension and/or continuation of sewer and water lines and
mains, retaining walls, streets, sidewalks and curbs.
-34-
5.17 Foreign
Person Status. None of Borrowers is a “foreign person” as that
term is defined in Section 1445 of the Code.
5.18 Hazardous
Substances. To Borrowers’ and Parent Guarantors’ knowledge,
the land on which the Facilities is located has not been used as a landfill, and
no Hazardous Substances have been released, discharged or deposited on, under or
about the Facilities, except for Hazardous Substances legally used in connection
with the operation of the Facilities and disposed of in accordance with all
applicable laws and regulations. To Borrowers’ and Parent Guarantors’
knowledge, no Hazardous Substances have been used, generated, transported,
treated, constructed, deposited, stored, disposed, placed or located on or under
the Facilities except in strict compliance with Legal
Requirements.
5.19 No
Brokers. None of Borrowers or Guarantors have used the
services of any broker or finder in connection with the transactions
contemplated in this Agreement.
5.20 Government
Authorizations; Existing Leases and Management Agreements; Transfer of
Licenses.
(a) Promptly
upon written request by Lender, Borrowers shall deliver to Lender copies of all
reports, surveys, audits, notices and statements with respect to the Government
Authorizations for Lender’s inspection.
(b) None
of Borrowers has been made subject to any condition upon any Government
Authorization which in any way restricts or limits the right and ability of
Borrowers to operate all beds contained in the Facilities as nursing home beds
that are certified to provide licensed nursing care facility services, as
appropriate, and to receive payment therefor under the Medicare and applicable
state Medicaid programs (the “Government
Authorizations”).
(c) Neither
any Borrower nor any Guarantor has received any notice of any claim of violation
or breach of any law, rule, regulation, order, writ, injunction, decree,
certificate, agreement, or condition for participation related to any of the
Government Authorizations which would have material adverse affect on the
Facilities or the operation of the Facilities for their Primary Intended Use,
except those that have been cured or were given formal waivers at the time of
the claim. If any Facility was resurveyed for Medicare and Medicaid
certification, the Facility, equipment and operations of such Facility would
satisfy all requirements for participation in such programs.
5.21 Intentionally
omitted.
5.22 Facilities. As
of the Loan Closing Date, fee simple title to the Facilities will be owned by
Owner and, so long as the indebtedness evidenced by the Note and other Loan
Documents is outstanding, will continue to be owned by Owner. No
other Person will have any right, title, interest, claim or lien therein,
thereon or thereto, other than the Permitted
Encumbrances. Except for the Permitted Encumbrances (other than
any Permitted Lease with respect to which Lender has requested an SNDA), the
liens granted to Lender under the Deeds of Trust shall be first and prior with
respect to real property and fixtures comprising the
Facilities.
-35-
5.23 No
Investment Company. None of Borrowers is an “investment
company” or a company “controlled” by an investment company within the meaning
of the Investment Company Act of 1940, as amended.
5.24 No
Event of Default. No event has occurred and no condition
exists which would ripen into an Event of Default under the Loan Documents
either with or without notice or lapse of time, or both.
5.25 No
Misleading Statements. No warranty or representation by
Borrowers, Parent Guarantor or any of their Affiliates contained in this
Agreement, any other Loan Document or in any certificate or other document
furnished by Borrowers or Parent Guarantor or their Affiliates pursuant to this
Agreement and the other Loan Documents contains any untrue statement of material
fact or omits to state a material fact necessary to make such warranty or
representation not misleading in light of the circumstances under which it was
made.
The
representations, warranties and covenants contained in or to be made pursuant to
this Agreement and the other Loan Documents shall be deemed to be continuing and
shall survive the Closing. If Lender discovers after the Closing any
violation of any of the foregoing representations, warranties or covenants, such
violation shall be an Event of Default.
ARTICLE
VI - SPECIAL COVENANTS OF BORROWERS AND PARENT
GUARANTORS
6.1 Existence;
No Fundamental Change. Borrowers and Parent Guarantors shall
preserve and maintain their legal existence and such of their rights, licenses
and privileges as are material to their business and operations; and qualify and
remain qualified to do business in each jurisdiction in which such qualification
is material to their business and operations or the ownership of their
properties. Except with the prior written approval of Lender, which
may be withheld in Lender’s sole and absolute discretion, none of Borrowers,
HCREH, RE Holdings, RE Leasing, and AO will fundamentally change the nature of
its business, enter into any amalgamation, merger, consolidation, reorganization
or recapitalization, or reclassify its capital stock or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
assign, lease, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or substantially all of its business, property or assets,
whether now owned or hereafter acquired, or acquire by purchase or otherwise all
or substantially all the business, property or assets, of any Person or any
shares of stock or other equity securities of any Person.
-36-
6.2 Personal
Property.
(a) At
all times, Borrowers shall provide and maintain, or shall cause to be provided
or maintained, all Personal Property as shall be necessary and appropriate in
order to operate each Facility for its Primary Intended Use, in material
compliance with all licensure and certification requirements, in material
compliance with all applicable Legal Requirements and Insurance Requirements and
otherwise in accordance with customary practice in the industry for the Primary
Intended Use. Except as permitted under Section 6.17, Borrowers shall not permit or suffer the Personal
Property to be subject to any lien, charge, encumbrance, financing statement or
contract of sale or the like.
(b) At
the Closing, Borrowers will grant to Lender first priority security interests in
the Personal Property, and certain other personal property used or useful in
connection with the Facilities, as more particularly described in the Security
Agreements.
6.3 Use
of Facilities.
(a) Borrowers
shall obtain and, at all times, maintain, or cause to be obtained and
maintained, all approvals needed to use and operate each Facility under
applicable local, state and federal law, including, but not limited to,
licensure as a licensed nursing home, and Medicare or Medicaid
certification.
(b) Borrowers
shall at all times use (or cause to be used) the Facilities for the Primary
Intended Use and for such other uses as may be necessary or incidental to such
use. Borrowers shall not use the Facilities, or any portion thereof, or permit
the Facilities or any portion of them to be used, for any other use without the
prior written consent of Lender. Borrowers covenant and agree that
the Facilities shall not be used for any unlawful purpose. No use
shall be made or permitted to be made of any Facility, and no acts shall be
done, which will cause the cancellation of any insurance policy covering any
Facility or any part thereof, nor shall Borrowers sell or otherwise provide to
residents or patients therein, or permit to be kept, used or sold in or about
any Facility, any article which may be prohibited by law or by the standard form
of fire insurance policies, or any other insurance policies required to be
carried under the Deeds of Trust or other Insurance
Requirements.
(c) Borrowers
covenant and agree that Borrowers will continuously operate the Facilities, or
cause such Facilities to be continuously operated, as providers of health care
services in accordance with its Primary Intended Use, and to maintain, or cause
to be maintained, its certifications for reimbursement and licensure and its
accreditation.
-37-
(d) Borrowers
shall not commit or suffer to be committed any waste on the Facilities, nor
shall Borrowers cause or permit any nuisance thereon.
(e) Borrowers
shall neither suffer nor permit any Facility or any portion thereof, or the
Personal Property, to be used in such a manner as (i) would reasonably tend to
impair Borrowers’ title thereto or to any portion thereof, or (ii) may
reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of any Facility or
any portion thereof.
(f) Borrowers
shall comply with and perform all terms, conditions and obligations under all
leases affecting Borrowers’ interests in and use of any of the Facilities, and
shall not suffer or permit any default to exist thereunder.
(g) The
Operators shall at all times during the Term lease the Facilities from the
Owners pursuant to the Intercompany Master Lease; provided, however, that if a
Facility is released from the lien of the Loan Documents pursuant to Sections 3.3or 3.4, then the
Intercompany Master Lease shall be terminated as to such
Facility.
6.4 Compliance
with Legal and Insurance Requirements, Instruments,
etc. Subject to Section 6.22.14
relating to permitted contests, Borrowers, at their expense, will promptly (a)
comply or cause to be complied, in all material respects, with all applicable
Legal Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Facilities and the Personal Property,
whether or not compliance therewith shall require structural changes in any of
the Facilities (any such structural changes, nevertheless, being subject to
Lender’s prior written approval) or interfere with the use and enjoyment of any
Facility, including such expenditures as are required to conform the Facilities
to such standards as may from time to time be required by Federal Medicare or
Medicaid Licensed Care Nursing Programs, if applicable, or any other applicable
programs or legislation, or capital improvements required by any other
governmental agency having jurisdiction over the Facilities or the business
being operated on the Facilities as a condition to the continued operation of
any Facility, or approval for Medicare, Medicaid or similar programs, pursuant
to present or future laws or governmental regulation; and (b) procure, maintain
and comply in all material respects with all licenses, certificates of need,
provider agreements and other authorizations required for any use of the
Facilities and the Personal Property then being made, and for the proper
erection, installation, operation and maintenance of the Facilities or any part
thereof.
6.5 Legal
Requirement Covenants. Borrowers shall acquire and maintain,
or cause to be obtained and maintained, all licenses, certificates, permits,
provider agreements and other authorizations and approvals needed to operate the
Facilities in their customary manner for the Primary Intended Use and any other
use conducted on the Facilities as may be permitted from time to time
hereunder. The judgment of any court of competent jurisdiction or the
admission of Borrowers in any action or proceeding against Borrowers, whether
Lender be a party thereto or not, that Borrowers have violated any such Legal
Requirements or Insurance Requirements shall be conclusive of that fact as
between and among the parties to this Agreement. Without
limiting the generality of the foregoing, Borrowers will maintain in effect all
licenses, permits, certificates of need, Section 1122 approvals, facility
certifications, provider agreements, consents and other authorizations from all
federal, state, municipal and other governmental agencies or authorities as are
necessary to lawfully operate all beds contained in the Facilities as nursing
home beds, that are duly certified to provide licensed nursing services, and to
receive payment therefor under the Government
Authorizations.
-38-
6.6 Minimum
Capital Expenditures. At all times for each calendar year
while any obligations owed to Lender by Borrowers or Guarantor remains
outstanding, Borrowers shall expend, or cause to be expended, a Minimum Annual
Capital Expenditure of Four Hundred Dollars ($400) (increased annually to
reflect increases in the CPI) per bed on Qualified Capital Expenditures with
respect to the Facilities.
6.7 Management
Agreements; Related Party Debts. At all times Lender shall
have the right to approve, in its sole discretion, the terms of any management
agreement between a Borrower or its Affiliate and any other entity affecting the
operational control of the Facilities. Such manager or consultant
shall subordinate its right to receive any management fee from the Facilities to
Lender’s rights under this Agreement, the Note and the other Loan
Documents. The maximum aggregate management and consulting fees
payable to a manager or consultant as to any Facility shall not exceed the five
percent (5%) of such Facility’s gross revenues, without the written consent of
Lender. Management fees, and the payment by Borrowers of any debts to
an Affiliate, shall be subordinated to the Loan, including any and all charges
of any nature payable to Lender pursuant to this Agreement or any of the other
Loan Documents. Borrowers will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower’s or such Subsidiary’s
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction.
6.8 Lender’s
Right to Cure Borrowers’ Default. If Borrowers shall fail to
make any payment or to perform any act required to be made or performed under
this Agreement, and to cure the same within the relevant time periods, if any,
provided in ARTICLE VII, Lender, without further
notice to or demand upon Borrowers or the Guarantors, and without waiving or
releasing any obligation of Borrowers or the Guarantors, and without waiving or
releasing any obligation or default, may (but shall be under no obligation to)
at any time thereafter make such payment or perform such act for the account and
at the expense of Borrowers, and may, to the extent permitted by law, enter upon
the Facilities for such purpose and take all such action thereon as, in Lender’s
opinion exercised in good faith, may be necessary or appropriate
therefor. However, if Lender reasonably determines that the giving of
such notice, if any, as is provided for in ARTICLE
VII would risk loss to any Facility or cause damage to Lender, then Lender
shall give such notice as is practical under the circumstances. No
such entry shall be deemed an eviction of Borrowers. All sums so paid
by Lender and all costs and expenses (including, without limitation, reasonable
attorneys fees and expenses, in each case to the extent permitted by law) so
incurred, together with a late charge thereon (to the extent permitted by law)
and interest thereon at the Default Interest Rate (as defined in the Note, and
to the extent permitted by law) from the date on which such sums or expenses are
paid or incurred by Lender, shall be paid by Borrowers to Lender on
demand. The obligations of Borrowers and rights of Lender contained
in this Section shall survive the payment of the indebtedness secured evidenced
by the Note or the discharge of the Deeds of Trust.
-39-
6.9 Tax
Returns. Borrowers shall cause to be timely filed all required
tax returns for the operation and/or ownership of the Facilities, including but
not limited to, employee withholding taxes, before any penalty or interest for
failure to file arises.
6.10 Officer’s
Certificates and Financial Statements. Borrowers will furnish,
or cause to be furnished, the following statements to
Lender:
(a) within
one hundred twenty (120) days after the end of the fiscal year for each
Borrower, a copy of that Borrower’s Financial Statements, and separate operating
statements for the Facilities owned by such Borrower, in each case certified by
an executive officer of the pertinent Borrower;
(b) within
one hundred twenty (120) days after the end of the fiscal year for each Parent
Guarantor and HCREH, a copy of that Person’s Financial Statements, in each case
certified by an executive officer of the pertinent Person;
(c) within
one hundred twenty (120) days after the end of the fiscal year for each
Borrower, and together with the financial statements furnished in accordance
with clause (a) and (b), an Officer’s Certificate of Borrowers, Parent
Guarantors and HCREH stating that none Borrower, Parent Guarantor or HCREH is in
default in the performance or observance of any of the terms of this Agreement
and the other Loan Documents, or if a Borrower, Parent Guarantor or HCREH shall
be in default, specifying all such defaults, the nature thereof, and the steps
being taken to remedy the same;
(d) within
forty-five (45) days after the end of each month, monthly financial reports for
each Facility, including detailed statements of income and
expense;
(e) upon
Lender’s request, complete copies of each cost report filed with the appropriate
governmental agency for each Facility and any and all amendments filed with
respect to such reports, and all responses, audit reports and inquiries with
respect to each such report;
-40-
(f) upon
Lender’s request, copies of surveys performed by the appropriate governmental
agencies for licensing or certification purposes, and without the need for
request by Lender, any plan of correction thereto for any
Facility;
(g) Borrowers
will give Lender immediate notice of any action, proposal or investigation by
any agency or entity, or complaint to such agency or entity, known to any of
Borrowers, the result of which could be to (i) revoke or suspend or terminate or
modify in a way adverse to a Borrower, or fail to renew or fully continue in
effect, any license or certificate or operating authority pursuant to which
Borrowers carries on any part of the Primary Intended Use of any Facility, or
(ii) suspend, terminate, adversely modify, or fail to renew or fully continue in
effect any cost reimbursement or cost sharing program by any state or federal
governmental agency, including but not limited to Medicaid or Medicare or any
successor or substitute therefor, or seek return of or reimbursement for any
funds previously advanced or paid pursuant to any such program, or (iii) impose
any bed hold, limitation on patient admission, or similar restriction on any
Facility;
(h) as
soon as it is prepared in each year, a capital budget for each Facility for that
and the following year;
(i) with
reasonable promptness, such other information respecting the financial condition
and affairs of Borrowers and each Facility as Lender may reasonably request from
time to time including, without limitation, any such other information as may be
available to the administration of each Facility; and
(j) at
times reasonably required by Lender, and upon request as appropriate, audited
year-end information and unaudited quarterly financial information concerning
the Facilities and the Guarantors, as Lender shall require for its on-going
filings with the Securities and Exchange Commission, under both the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
including, but not limited to 10-Q Quarterly Reports, 10-K Annual Reports and
registration statements to be filed by Lender during the Term of this
Agreement.
6.11 Public
Offering Information. Borrowers specifically agree that Lender
may include financial information and such information concerning the operation
of the Facilities which does not violate the confidentiality of the
Facility-patient relationship and the physician-patient privilege under
applicable laws, in offering memoranda, prospectuses, or similar publications in
connection with syndications or public offerings of the Lender’s securities or
interests, and any other reporting requirements under applicable Federal and
State Laws, including those of any successor to Lender. Borrowers
agrees to provide such other reasonable information necessary with respect to
Borrowers and the Facilities to facilitate a public offering or to satisfy SEC
or regulatory disclosure requirements.
-41-
6.12 Lender’s
Right to Inspect. Upon reasonable notice, Borrowers shall
permit Lender and its authorized representatives to inspect the Facilities
during usual business hours, subject to any security, health, safety or
confidentiality requirements of any governmental agency or insurance requirement
relating to the Facilities or imposed by law or applicable
regulations.
6.13 No
Investments. Except as set forth on Schedule
6.13,
without the prior written consent of Lender, none of Borrowers, HCREH, RE
Holdings, RE Leasing and AO will, or will they permit any Subsidiary to, make or
suffer to exist any Investments (including without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in any partnership
or joint venture, or to make any Acquisition of any Person.
6.14 Investment
Company. None of Borrowers is, and during the term of the Loan
will not be, an “investment company” or a company “controlled” by an investment
company within the meaning of the Investment Company Act of 1940, as
amended.
6.15 Off-Balance
Sheet Liabilities. Borrowers, Parent Guarantors and HCREH will
not, nor will it permit any Subsidiary to, enter into or suffer to exist any (i)
Sale and Leaseback Transaction or (ii) any other transaction pursuant to which
it incurs or has incurred Off-Balance Sheet Liabilities.
6.16 Certain
Financial Covenants.
6.16.1 Tangible
Net Worth. At all times during the Term, Lessee One (as
defined in the Master Lease and RE Holdings shall maintain a combined minimum
Tangible Net Worth of Three Million Dollars ($3,000,000), and if at any time
Borrowers’ and Guarantors’ combined Tangible Net Worth is less than such amount,
within thirty (30) days Borrowers and Guarantors shall cause their equity owners
to contribute to Borrowers and Guarantors sufficient equity capital in the form
of cash to cause Borrowers’ and Guarantors’ combined Tangible Net Worth to
exceed such amount.
6.16.2 Borrowers
Cash Flow Coverage Ratio. Commencing with the quarter ending
September 30, 2008, Borrowers on a consolidated basis shall maintain a Cash Flow
Coverage Ratio as determined quarterly on a cumulative basis for the preceding
four (4) calendar quarters as follows:
-42-
Period
|
Requirement
|
During
the period of July 1, 2008 thru June 30, 2009
|
1.10
|
During
the period of July 1, 2009 thru June 30, 2010
|
1.20
|
Thereafter
|
1.25
|
For
purposes of clarification, this Section 6.16.2 applies to RE Leasing and it's
subsidiaries, except for City View Nursing and Rehab, LLC, and AO and it's
subsidiaries, except for Cleveland NH Asset, LLC.
6.16.3 Combined
Cash Flow Coverage Ratio. Commencing with the quarter ending September
30, 2009 and continuing thereafter, Borrowers, Lessee (as defined in the Master
Lease) and the City View Borrowers on a consolidated basis shall maintain a
Combined Cash Flow Coverage Ratio as determined quarterly on a cumulative basis
for the preceding four (4) calendar quarters of 1.25 or more. As
illustration of the foregoing, the calculation of Combined Cash Flow to Rent
Ratio shall at the end of the fifth quarter (which tests the second thru fifth
quarters after the date of this Agreement, i.e., October 1, 2008 thru September
30, 2009), exclude the Net Income and Base Rent attributable to the OHI THI
Facilities prior to July 1, 2009, but include the period of July 1, 2009 thru
September 30, 2009 for the OHI THI Facilities. For purposes of
clarification, this Section 6.16.3 applies to RE Holdings and it's subsidiaries,
and OMG MSTR LSCO, LLC, and its subsidiaries.
6.16.4 Limitation
of Distributions. No Borrower, HCREH or Guarantor shall make
any Distributions to the holders of its equity securities (if any), any
Affiliate or for any charitable purposes, unless and until, as of the date of
such Distribution and upon giving effect to such Distribution, no Event of
Default or Unmatured Event of Default has occurred and is
continuing.
6.16.5 Guarantees
Prohibited. Except for guaranties in favor of Lender or its
Affiliates, guarantying Other Permitted Indebtedness or guarantying the Working
Capital Loan, none of Borrowers, HCREH, RE Holdings, RE Leasing and AO shall
guarantee any indebtedness of any Affiliate or other third
party.
6.16.6 Equipment
Financing.
The aggregate amount of principal, interest and lease payments due from
Borrowers on any equipment financing shall not exceed Ffity Thousand Dollars
($50,000) annually per Facility.
6.16.7 Indebtedness. Borrowers,
HCREH, RE Holdings, RE Leasing and AO will not, nor will they permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness,
except:
(a) The
Loan;
(b) The
Working Capital Loan;
-43-
(c) The
equipment financing permitted under Section 6.16.6;
and
(d) The
Other Permitted Indebtedness.
6.16.8 Loans
from Affiliates. None of Guarantors and Borrowers shall borrow money from
any Affiliate unless the obligations of such Guarantor or such Borrower and the
rights of its Affiliates with respect to any such loan are subordinated to the
rights of Lender pursuant to a written subordination agreement in form and
substance acceptable to Lender.
6.17 Working
Capital Loan. Operators may obtain a Working Capital Loan from
a third-party working capital lender provided that:
(a) The
working capital lender executes and delivers to Lender an intercreditor
agreement in form and substance reasonably satisfactory to
Lender;
(b) Operators
use the Working Capital Loan for the sole purpose of financing the working
capital at the OHI Facilities;
(c) The
maximum principal amount available for advances under the Working Capital Loan
does not exceed the Maximum Principal Amount;
(d) The
Lender would agree in the intercreditor agreement to subordinate its lien in
accounts receivable and related collateral from the Facilities to the lien of
the working capital lender therein only to the extent of amounts advanced from
time to time by the working capital lender to Operators with respect to the OHI
Facilities and only up to the Maximum Principal Amount, plus interest, penalties
and other charges under the Working Capital Loan Documents with respect to
principal amounts advanced;
(e) The
Working Capital Loan is not secured by any collateral other than accounts
receivable and related collateral, which Lender agrees may secure the Working
Capital Loan; and
(f) As
of the date of entry by Lender into the intercreditor agreement, no Event of
Default or Unmatured Event of Default has occurred and is
continuing.
6.18 Bank
Accounts. Borrowers shall maintain separate bank accounts from
any other Person. None of Borrowers shall permit its or their assets,
including cash, cash equivalents, and the cash proceeds arising out of the
operation of the Facilities, to be commingled with the assets of any Person
(other than another Borrower); provided, however, that the personal allowance
accounts of the residents of the Facilities need not be maintained separately
and may be commingled so long as Borrowers maintain adequate written records
with respect to such personal allowance accounts.
-44-
6.19 Other
Facilities. No Borrower nor any Affiliate shall own, operate
or manage any nursing home, rest home, assisted living facility, subacute
facility, retirement center or similar health care facility within a ten mile
radius of the Facilities.
6.20 No
Other Business. Borrowers shall not engage in any business
other than the operation of the Facilities.
6.21 Liens. Subject
to the provisions of Section 6.22.14 relating to
permitted contests, Borrowers, HCREH, RE Holdings, RE Leasing and AO shall not
directly or indirectly create or allow to remain, and shall promptly discharge
at their expense, any lien, encumbrance, attachment, title retention agreement
or claim upon any assets of Borrowers, HCREH, RE Holdings, RE Leasing and AO,
excluding, however, (a) the liens and security interests in favor of Lender, (b)
the Permitted Encumbrances, (c) liens for Impositions or for sums resulting from
noncompliance with Legal Requirements so long as (i) the same are not yet
payable, or (ii) such liens are in the process of being contested as permitted
by Section 6.22.14, (d) reserved, (e) liens of
mechanics, laborers, materialmen, suppliers or vendors for sums either disputed
or not yet due, provided that any such liens are in the process of being
contested as permitted by Section 6.22.14, (f) liens
permitted under Section 6.17 of this Agreement, and
(g) liens or security interests in assets (not including assets subject to the
lien of the Pledge Agreements) of HCREH, RE Holdings, RE Leasing and AO which
secure Other Permitted Indebtedness.
6.22 Deed
of Trust Covenants. Borrowers make the following covenants and
agreements with respect to the Facilities and the properties encumbered by the
Deeds of Trust, which covenants and agreements shall be incorporated into and
shall be considered part of the covenants and agreements in the Deeds of
Trust.
6.22.1 Payment
of Impositions and Other Obligations.
(a) Borrowers
will pay, or cause to be paid, all Impositions before any fine, penalty,
interest or cost may be added for non-payment, such payments to be made directly
to the taxing authorities, and shall promptly furnish to Lender copies of
official receipts or other satisfactory proof evidencing such
payments. If any such Imposition may, at the option of the taxpayer,
lawfully be paid in installments (whether or not interest shall accrue on the
unpaid balance of such Imposition), then, as long as no Event of Default or
Unmatured Event of Default exists hereunder, Borrowers may exercise the option
to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof (subject to Borrowers’ right of contest as provided in
this Agreement) as the same respectively become due and before any fine,
penalty, premium, further interest or cost may be added thereto. If
any refund shall be due from any taxing authority in respect of any Imposition
paid by Borrowers, the same shall be paid over to or retained by Borrowers if no
Event of Default or Unmatured Event of Default shall have occurred hereunder and
be continuing. Any such funds retained by Lender due to an Event of
Default shall be applied against the indebtedness in any manner or priority
elected by Lender.
-45-
(b) In
the event governmental authorities classify any property covered by the Loan
Documents as personal property, Borrowers shall pay all taxes against such
personal property before any fine, penalty, interest or cost may be added for
non-payment and shall file all personal property tax returns in such
jurisdictions. Borrowers shall promptly furnish Lender copies of
official receipts or other satisfactory proof evidencing such
payments. As long as Borrowers have paid all Impositions in
accordance with this Section 6.22.1 and as long as
no Event of Default or Unmatured Event of Default exists hereunder, Borrowers
may, upon notice to and with the prior written consent of Lender, which consent
will not be unreasonably withheld, at Borrowers’ sole cost and expense, protest,
appeal, or institute such other proceedings as Borrowers may deem appropriate to
effect a reduction of real estate or personal property
assessments.
(c) Notwithstanding
anything contained in this Section 6.22.1 to the
contrary, upon the occurrence of an Event of Default, Lender, in its sole
discretion, shall be entitled to require Borrowers to deposit monthly with
Lender a pro rata portion of such Impositions, and when such Impositions become
due and payable, Lender shall pay the same to the extent of the amounts
deposited for such purpose upon notice from Borrowers requesting such
payment. If sufficient funds have not been deposited as aforesaid to
cover the amount of such Impositions prior to the time when the same become due
and payable, Borrowers shall forthwith upon request by Lender pay such balance
to Lender. Lender shall not be required to pay Borrowers any interest
or earnings whatever on the funds held by Lender for the payment of such
Impositions and pursuant to this Section or for the payment of insurance
premiums under Section 6.22.2 hereof, or on any
other funds deposited with Lender in connection with this Agreement or any of
the other Loan Documents. Upon the occurrence of an Event of Default,
any of such monies then remaining on deposit with Lender may be applied against
the indebtedness hereby secured in any manner or priority elected by Lender
immediately upon or at any time after such Event of Default, and without notice
to Borrowers. Further, Lender may make payments from any of such
monies on deposit with Lender for Impositions on or with respect to the
Facilities notwithstanding that subsequent owners of the Facilities may benefit
thereby.
6.22.2 Borrowers’
Insurance Covenants.
(a) Insurance
- General. During the Term, Borrowers shall at all times keep
the Facilities, and all property located in or on such Facilities, including but
not limited to all Personal Property owned by Borrowers and located on or used
in connection with such Facilities, insured with the kinds and amounts of
insurance described below. This insurance shall be written by
companies authorized to do insurance business in the State of
Ohio. All such policies provided and maintained during the Term shall
be written by companies acceptable to Lender. Losses shall be payable
to Lender and Borrowers as hereinafter provided in this
Agreement. Each of said policies and renewals thereof shall be held
by, and pledged to, Lender, (unless Lender shall direct or permit otherwise) as
additional security hereunder, and shall provide that all loss or losses under
such policies shall be payable to Lender and Borrowers, or their successors or
assigns, as their interests may appear. The policies on each
Facility, including all improvements, fixtures and personal property located
thereon, shall insure against the following risks:
-46-
(i) Loss
or damage by fire, vandalism and malicious mischief, earthquake, extended
coverage perils commonly known as “Special Risk,” and all physical loss perils
normally included in such Special Risk insurance, including but not limited to
sprinkler leakage, in an amount not less than the then full replacement cost
thereof (as defined below in Section 6.22.2(b)), and
including a replacement cost endorsement;
(ii) Loss
or damage by explosion of steam boilers, pressure vessels or similar apparatus,
now or hereafter installed in any Facility;
(iii) Loss
of income under a business interruption insurance policy covering risk of loss
during reconstruction necessitated by the occurrence of any of the hazards
described in subparagraphs (i) or (ii) (but in no event for a period of less
than twelve (12) months), in an amount sufficient to prevent Lender and
Borrowers from becoming a co-insurer;
(iv) Claims
for personal injury or property damage under a policy of commercial general
liability insurance with a combined single limit per occurrence in respect of
bodily injury and death and property damage of One Million Dollars
($1,000,000.00), and an aggregate limitation of Seven Million Dollars
($7,000,000), which insurance shall include contractual liability
insurance;
(v) Claims
arising out of professional malpractice in an amount not less than One Million
Dollars ($1,000,000.00) for each person and for each occurrence, and an
aggregate limitation of Five Million Five Hundred Thousand Dollars
($5,500,000);
(vi) Flood
(when a Facility is located in whole or in part within a designated flood plain
area) and such other hazards and in such amounts as may be customary for
comparable properties in the area of the affected Facility;
-47-
(vii) During
such time as a Borrower or its lessee shall be constructing any improvements,
such Borrower, at its sole cost and expense, shall carry, or cause to be carried
(A) worker’s compensation insurance and employers’ liability insurance covering
all persons employed in connection with the improvements in statutory limits,
(B) a completed operations endorsement to the commercial general liability and
property damage insurance policies referred to above, and (C) builder’s risk
insurance, completed value form, covering all physical loss, in an amount and
subject to policy conditions reasonably satisfactory to
Lender;
(viii) Borrowers
shall procure, and at all times during the Term of this Agreement shall
maintain, a policy of primary automobile liability insurance with limits of One
Million Dollars ($1,000,000) per occurrence each for owned and non-owned and
hired vehicles;
(ix) Borrowers
shall further at all times maintain or cause to be maintained adequate worker’s
compensation insurance coverage for all persons employed at each Facility, to
the extent required under and in accordance with applicable law;
and
(x) If
Borrowers choose to carry umbrella liability coverage to obtain the limits of
liability required under this Agreement, all such policies shall cover in the
same manner as the primary commercial general liability policy and shall contain
no additional exclusions or limitations materially different from those of the
primary policy.
(b) Replacement
Cost. The term “full
replacement cost,” as used herein, shall mean, as to each Facility, the
actual replacement cost of such Facility, and any fixtures or personal property
situated thereon, including an increased cost of construction endorsement, less
exclusions provided in the standard form of fire insurance policy. In
all events, full replacement cost shall be an amount sufficient so that neither
Borrowers nor Lender is deemed a coinsurer of any Facility. If Lender
believes in good faith that full replacement cost (the then replacement cost
less such exclusions) of any Facility has increased at any time during the Term,
it shall have the right to have such full replacement cost reasonably
redetermined by an impartial appraiser selected by Lender and reasonably
acceptable to Borrowers. The determination of such impartial
appraiser shall be final and binding on the parties hereto, and Borrowers shall
forthwith adjust the amount of the insurance carried pursuant to this Section 6.22.2, as the case may be, to the amount so determined
by the impartial appraiser. Borrowers shall pay the fee, if any, of
the impartial appraiser.
(c) Waiver
of Subrogation. Lender shall have no liability to Borrowers,
and, provided Borrowers shall carry the insurance required of them by this
Agreement, Borrowers shall have no liability to Lender, regardless of the cause,
for any loss or expense resulting from or in connection with damage to or the
destruction or other loss of any Facility or Borrowers’ Personal Property, and
no party will have any right or claim against the other for any such loss or
expense by way of subrogation. All insurance policies carried by any
party covering the Facilities, the fixtures, or Borrowers’ Personal Property,
including without limitation, contents, fire and casualty insurance, shall
expressly waive any right of subrogation on the part of the insurer, if such
waiver is commercially available. Borrowers shall pay any reasonable
additional costs or changes for obtaining such waivers.
-48-
(d) Form
Satisfactory, Etc. All of the policies of insurance referred
to in this Section 6.22.2 shall be the standard
forms issued by insurance companies meeting the specific requirements of this
Agreement. If Borrowers obtain and maintain the professional
malpractice insurance described in Section 6.22.2(a)(v) above on a “claims-made” basis, Borrowers shall
provide continuous liability coverage for claims arising during the Term either
by obtaining an endorsement providing for an extended reporting period
reasonably acceptable to Lender in the event such policy is canceled or not
renewed for any reason whatsoever, or by obtaining “tail” insurance coverage
converting the policies to “occurrence” basis policies providing coverage for a
period of at least three (3) years beyond the expiration of the
Term. Borrowers shall pay when due all of the premiums for all
insurance policies that they are required to maintain, and shall deliver such
policies or certificates thereof to Lender prior to their effective date (and,
with respect to any renewal policy, not less than twenty (20) days prior to the
expiration of the existing policy, Borrowers shall furnish a new policy or
binder to Lender), and in the event of the failure of Borrowers either to effect
such insurance as herein called for or to pay the premiums therefor, or to
deliver such policies or certificates thereof to Lender at the times required,
Lender shall be entitled, but shall have no obligation, to effect such insurance
and pay the premiums therefor when due, which premiums shall be repayable to
Lender immediately upon written demand therefor, and failure to repay the same
shall constitute an Event of Default. All public liability and property damage
insurance shall contain a provision that Lender, although named as an insured,
shall nevertheless be entitled to recovery under said policies for any loss,
damage, or injury to Lender, its servants, agents, and employees by reason of
the negligence of Borrowers or Lender. Each insurer providing
coverage required by this Agreement shall agree, by endorsement on the policy or
policies issued by it, or by independent instrument furnished to Lender, that it
will give to Lender at least thirty (30) days’ written notice before the policy
or policies in question shall be materially altered or
canceled.
(e) Increase
in Limits. If from time to time Lender shall determine, in the
exercise of its reasonable business judgment, that the limits of the personal
injury or property damage/public liability insurance then carried are
insufficient, Lender may give Borrowers notice of acceptable limits for such
insurance to be carried, which limits shall be reasonable in light of the limits
required by Lender of other of its borrowers and Borrowers with respect to
similar portfolios at such time; and Borrowers shall then obtain and maintain
such insurance with limits prescribed by Lender until further increase pursuant
to the provisions of this Section.
-49-
(f) Blanket
Policy. Notwithstanding anything to the contrary contained in
this Section 6.22.2, Borrowers’ obligations to carry
the insurance provided for herein may be brought within the coverage of a
so-called blanket policy or policies of insurance carried and maintained by
Borrowers; provided, however, that the coverage afforded Lender will not be
reduced or diminished or otherwise be materially different from that which would
exist under a separate policy meeting all other requirements of this Agreement
by reason of the use of the blanket policy; and provided further that the
requirements of this Section 6.22.2 are otherwise
satisfied and that Borrowers maintain specific allocations acceptable to
Lender.
(g) Concurrent
or Contributing Insurance. Borrowers shall not, on Borrowers’
own initiative or pursuant to the request or requirement of any third party,
take out separate insurance concurrent in form or contributing in the event of
loss with that required in this Section 6.22.2, to
be furnished by, or which may reasonably be required to be furnished by,
Borrowers, or increase the amount of any then existing insurance by securing an
additional policy or additional policies, unless all parties having an insurable
interest in the subject matter of the insurance, including in all cases Lender,
are included therein as additional insureds, and the loss is payable under said
insurance in the same manner as losses are payable under this
Agreement.
(h) Additional
Rights of Borrowers. Nothing herein shall prohibit Borrowers
from (i) securing insurance required to be carried hereby with higher limits of
liability than required in this Agreement, (ii) securing Umbrella Policies or
(iii) insuring against risks not required to be insured pursuant to this
Agreement, and as to such insurance, Lender need not be included therein as
additional insured, nor must the loss thereunder be payable in the same manner
as losses are payable under this Agreement. Borrowers shall
immediately notify Lender of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing
insurance.
(i) Insurance
Escrow. Notwithstanding anything contained herein to the
contrary, upon the occurrence of an Event of Default, Lender, in its sole
discretion, shall be entitled to require Borrowers to pay monthly in advance to
Lender the equivalent of one-twelfth (1/12th) of the estimated annual premiums
due on the insurance required under this Section 6.22.2. If Lender requires Borrowers to make
a monthly deposit for insurance premiums hereunder and if sufficient funds have
not been deposited with Lender to pay the insurance premium at least thirty (30)
days prior to the time when the same become due and payable, Borrowers shall
forthwith upon request pay the balance to Lender.
-50-
6.22.3 Insurance
Proceeds. All proceeds, net of costs incurred by Lender in
obtaining the proceeds (“Net
Proceeds”), payable under any risk policy of insurance required by this
Agreement, whether or not paid directly to Lender and/or Borrowers, shall
promptly be paid to Lender and held, disbursed, applied or retained by Lender as
provided in this Agreement. If the Net Proceeds are equal to or less than the
Approval Threshold, and if no Event of Default or Unmatured Event of Default has
occurred and is continuing, the Net Proceeds shall be paid to Borrowers promptly
upon Borrowers’ completion of any restoration or repair, as the case may be, of
any damage to or destruction of the Facility(ies) or any portion
thereof. If the Net Proceeds exceed the Approval Threshold, and if no
Event of Default or Unmatured Event of Default has occurred and is continuing,
the Net Proceeds shall be made available for restoration or repair, as the case
may be, of any damage to or destruction of the applicable Facility or any
portion thereof as provided in Section 6.22.7.
6.22.4 Restoration
in the Event of Damage or Destruction.
(a) If
a Facility is totally or partially damaged or destroyed, and thereby rendered
Unsuitable for its Primary Intended Use, Borrowers shall give Lender notice of
such damage or destruction within five (5) Business Days of the occurrence
thereof. Within thirty (30) days of such occurrence, Borrowers shall
commence and thereafter diligently proceed to complete the restoration of the
damaged or destroyed Facility to substantially the same (or better) condition as
that which existed immediately prior to such damage or
destruction.
(b) If
a Facility is totally or partially damaged or destroyed, but not thereby
rendered Unsuitable for its Primary Intended Use, Borrowers shall give Lender
notice of such damage or destruction within five (5) Business Days of the
occurrence thereof, and, within thirty (30) days of the occurrence, Borrowers
shall commence and thereafter diligently proceed to restore the Facility within
a period of three hundred sixty five (365) days following the date of damage or
destruction, subject to extension to the extent required by Unavoidable Delays
(the “Reconstruction
Period”) to substantially the same (or better) condition as that which
existed immediately prior to such damage or destruction.
(c) No
such damage or destruction shall terminate this Agreement or any of the other
Loan Documents as to the affected Facility.
6.22.5 Restoration
of Borrowers’ Property. If Borrowers are required to restore a
Facility as provided in this Agreement, Borrowers shall also restore or replace
all alterations and improvements made by Borrowers and all of the Personal
Property, to the extent required to maintain the then current license of the
applicable Facility.
-51-
6.22.6 Intentionally
omitted.
6.22.7 Procedure
for Disbursement of Insurance Proceeds Greater Than The Approval
Threshold. If Borrowers restore or repair a damaged Facility
pursuant to any subsection of this Agreement, and if the Net Proceeds exceed the
Approval Threshold, the restoration or repair shall be performed in accordance
with the following procedures:
(a) The
restoration or repair work shall be done pursuant to plans and specifications
approved by Lender (not to be unreasonably withheld or delayed), and Borrowers
shall cause to be prepared and presented to Lender a certified construction
statement, reasonably acceptable to Lender, showing the total estimated cost of
the restoration or repair.
(b) The
Net Proceeds shall be made available to Borrowers as the restoration and repair
work progresses pursuant to certificates of an architect selected by Borrowers
that in the reasonable judgment of Lender is qualified in the design and
construction of health care facilities, or of the type of property for which the
repair work is being done.
(c) There
shall be delivered to Lender, with such certificates, sworn statements and lien
waivers from the general contractor and subcontractors, in the form customary
for the applicable State, in an amount at least equal to the amount of Net
Proceeds to be paid out to Borrowers pursuant to each architect’s certificate
and dated as of the date of the disbursement to which they
relate.
(d) There
shall be delivered to Lender such other evidence as Lender may reasonably
request, from time to time, during the restoration and repair, as to the
progress of the work, compliance with the approved plans and specifications, the
cost of restoration and repair and the total amount needed to complete the
restoration and repair.
(e) There
shall be delivered to Lender such other evidence as Lender may reasonably
request, from time to time, showing that there are no liens against the
applicable Facility arising in connection with the restoration and repair and
that the cost of the restoration and repair at least equals the total amount of
Net Proceeds then disbursed to Borrowers hereunder.
(f) If
the Net Proceeds are at any time determined by Lender to be inadequate for
payment in full of all labor and materials for the restoration and repair,
Borrowers immediately shall pay the amount of the deficiency to Lender to be
held and disbursed as Net Proceeds prior to the disbursement of any other Net
Proceeds then held by Lender.
-52-
(g) The
Net Proceeds may be disbursed by Lender to Borrowers or, at Borrowers’
direction, to the persons entitled to receive payment thereof from Borrowers,
and such disbursement in either case may, at Lender’s discretion, be made
directly or through a third party escrow agent, such as, but not limited to, a
title insurance company, or its agent. Provided no Event of Default
or Unmatured Event of Default has occurred and is continuing, any excess Net
Proceeds shall, at Lender’s sole option, either be paid to Borrowers or applied
against the Loan, upon completion of the restoration or
repair.
(h) If
Borrowers at any time fail to promptly and fully perform the conditions and
covenants set out in subparagraphs (a) through (g) above, and the failure is not
corrected within thirty (30) days of written notice thereof, or if during the
restoration or repair an Event of Default occurs hereunder, Lender may, at its
option, immediately cease making any further payments to Borrowers for the
restoration and repair.
(i) Lender
may reimburse itself out of the Net Proceeds for its reasonable expenses of
consultants, attorneys and its employee-inspectors incurred in administering the
Net Proceeds as hereinbefore provided.
6.22.8 Failure
to Pay for Impositions, Insurance and Repairs. Should default
be made in the payment of any of the Impositions required to be paid pursuant to
this Agreement or in procuring and maintaining the insurance required under this
Agreement, or in making necessary repairs to the Facilities, Lender, in addition
to and not in limitation of any other right or remedy provided Lender under the
Loan Documents or allowed by law or equity, may pay such Impositions, obtain
such insurance and make such repairs, and the monies so paid by it shall be a
further obligation of Borrowers to Lender and a lien on the Facilities, payable
forthwith, with interest at the Default Interest Rate. Lender may
make advances pursuant to this Section or as otherwise provided in this
Agreement without curing Borrowers’ default and without waiving Lender’s right
of foreclosure or any other right or remedy of Lender under this
Agreement. The exercise of the right to make advances pursuant to
this Section shall be optional with Lender and not obligatory, and Lender shall
not be liable in any case for failure to exercise such right or for failure to
continue exercising such right once having exercised it. Borrowers’
failure to pay Impositions assessed against the Facilities, or any installment
thereof, or any insurance premium upon policies covering the Facilities or any
part thereof, shall constitute waste (although the meaning of the term “waste”
shall not necessarily be limited to such nonpayment), and shall entitle Lender
to all remedies provided for under this Agreement, the other Loan Documents and
at law or in equity. Borrowers further agree to and do hereby consent
to the appointment of a receiver, should Lender elect to seek such relief
thereunder.
-53-
6.22.9 Condemnation.
(a) Parties’
Rights and Obligations. If during the Term there is any taking
of all or any part of a Facility by Condemnation, the rights and obligations of
the parties shall be determined by this Section 6.22.9.
(b) Total
Taking. If title to the fee of the whole of the Real Estate
comprising a Facility shall be acquired by any Condemnor as the result of a
Condemnation, the Due Date of the Loan (as defined in the Note) shall be
accelerated to, and shall coincide with, the Date of Taking.
(c) Allocation
of Portion of Award. The Award made with respect to the
Condemnation of all or any portion of the Real Estate shall be the property of
and payable to Lender up to the sum of (i) all costs and expenses reasonably
incurred and documented by Lender in connection with the Condemnation, and (ii)
the total indebtedness outstanding under the Loan on the Date of
Taking.
(d) Partial
Taking. In the event of a Partial Taking of the Real Estate
comprising the Facilities, Borrowers shall commence and diligently proceed to
restore the untaken portion of the Facility on the applicable Real Estate so
that such Facility shall constitute a complete architectural unit (if
applicable) of the same general character and condition (as nearly as may be
possible under the circumstances) as the Facility existing immediately prior to
such Partial Taking. If (i) no Event of Default or Unmatured Event of
Default is then continuing, and (ii) the Award is equal to or less than the
Approval Threshold, then Lender shall make the Award, net of the costs incurred
by Lender in pursuing the award, available to Borrowers prior to the
commencement of the restoration. If (i) no Event of Default or
Unmatured Event of Default is then continuing, and (ii) the Award is more than
the Approval Threshold, then Lender shall make the Award available to Borrowers
in the manner provided in Section 6.22.7 for
insurance proceeds in excess of the Approval Threshold.
(e) Temporary
Taking. In the event of a temporary Condemnation of a Facility
or any part thereof that is for a period of less than six (6) months, this
Agreement shall not terminate, and the entire amount of any Award therefor shall
be paid to Borrowers. Upon the cessation of any such Condemnation of
less than six (6) months, Borrowers shall restore the Facility as nearly as may
be reasonably possible to the condition existing immediately prior to such
Condemnation. If any such Condemnation continues for six (6) months
or more, such Condemnation shall be considered a total taking under paragraph
(e), and the parties shall have the rights provided
thereunder.
-54-
6.22.10 Construction
of Alterations and Additions to the Facilities. Borrowers
shall not make or permit to be made any alterations, improvements or additions
of or to any Facility or any part thereof, unless and until Borrowers shall have
caused plans and specifications therefor to have been prepared, at Borrowers’
expense, by a licensed architect and submitted to Lender at least 30 days (90
days if such alterations, improvements or additions are reasonably expected to
cost more than the Approval Threshold) in advance of the commencement of
construction and shall have obtained Lender’s written approval
thereof. Lender shall have the right to require that, prior to the
commencement of construction of any alterations, improvements or additions as to
which its approval is required hereunder, Borrowers also provide Lender with
reasonable assurance of the payment of the cost thereof and, if the cost thereof
is in excess of the Approval Threshold, Borrowers shall comply with Lender’s
requirements with respect to the periodic delivery of lien waivers and evidence
of payment for such cost. If such approvals are granted, Borrowers
shall cause the work described in such approved plans and specifications to be
performed, at their expense, promptly, and in a good, workmanlike, manner by
licensed contractors and in compliance with all applicable governmental and
Insurance Requirements and Legal Requirements and the standards set forth in
this Agreement, which improvements shall in any event constitute a complete
architectural unit (if applicable) in keeping with the character of the affected
Facility and the area in which the affected Facility is located and which will
not diminish the value of the affected Facility or change the Primary Intended
Use of the affected Facility. Borrowers shall be responsible for the
completion of such improvements in accordance with the plans and specifications
approved by Lender, and shall promptly correct any failure with respect
thereto. Each and every such improvement, alteration or addition
shall immediately become a part of the Facility and shall belong to Borrowers
subject to the terms and conditions of this Agreement. With Lender’s
consent, expenditures made by Borrowers pursuant to this Section 6.22.10 may be included as capital expenditures for
purposes of inclusion in the capital expenditures budget for the applicable
Facility and for measuring compliance with the obligations of Borrowers set
forth in Section 6.6 of this
Agreement. In connection with any alteration which involves the
removal, demolition or disturbance of any asbestos containing material,
Borrowers shall cause to be prepared at their expense a full asbestos assessment
applicable to such alteration, and shall carry out such asbestos monitoring and
maintenance program as shall reasonably be required thereafter in light of the
results of such assessment.
6.22.11 Maintenance
and Repair to Facilities.
(a) Borrowers,
at their expense, will keep, or cause to be kept, the Facilities and all
fixtures thereon and all landscaping, private roadways, sidewalks and curbs
appurtenant thereto and which are under the control of any Borrower and the
Personal Property in good order and repair (whether or not the need for such
repairs occurs as a result of Borrowers’ use, any prior use, the elements or the
age of the Facilities, or any portion thereof or any cause whatever, with
reasonable promptness, make all necessary and appropriate repairs thereto of
every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition whether or not existing prior to the date hereof
(concealed or otherwise).
-55-
(b) Borrowers
shall do or cause others to do all shoring of the Facilities or adjoining
property (whether or not owned by Borrowers) or of the foundations and walls of
the improvements located thereon, and every other act necessary or appropriate
for the preservation and safety thereof, by reason of or in connection with any
subsidence, settling or excavation or other building operation upon any of the
Facilities or adjoining property, whether or not Borrowers shall, by any Legal
Requirements, be required to take such action or be liable for the failure to do
so; provided, however, that such shoring and any other material acts shall be
subject to Lender’s prior written consent, which Lender will not unreasonably
withhold or delay. All repairs shall, to the extent reasonably
achievable, be at least equivalent in quality to the original work, and, where
by reason of age or condition such repairs cannot be made to the quality of the
original work, the property to be repaired shall be
replaced.
(c) Nothing
contained in this Agreement and no action or inaction by Lender shall be
construed as (i) constituting the consent or request of Lender, expressed or
implied, to any contractor, subcontractor, laborer, materialman or vendor to or
for the performance of any labor or services or the furnishing of any materials
or other property for the construction, alteration, addition, repair or
demolition of or to any Facility or any part thereof, or (ii) giving Borrowers
any right, power or permission to contract for or permit the performance of any
labor or services or the furnishing of any materials or other property in such
fashion as would permit the making of any claim against Lender in respect
thereof or to make any agreement that may create, or in any way be the basis for
any right, title, interest, lien, claim or other encumbrance upon the estate of
Lender in any Facility, or any portion thereof. If a claim of lien is
filed of record against any of the Facilities, Borrowers shall immediately cause
such lien to be removed by payment or transferred to substitute security in the
manner provided by law.
(d) Borrowers
shall, from time to time as and when needed, replace with other operational
equipment or parts or property (the “Replacement
Property”) any of the fixtures or Personal Property (the “Replaced
Property”) which shall have (i) become worn out, obsolete or unusable for
the purpose for which it is intended (if such fixtures or personal property
continues to be necessary), (ii) been taken by Condemnation, in which event
Borrowers shall be entitled to that portion of any award made therefor, or (iii)
been lost, stolen, damaged or destroyed; provided, however, that the Replacement
Property shall (A) be in good operating condition, (B) have a useful life at
least equal to the estimated useful life of the Replaced Property, (C) be of a
quality reasonably equivalent to that of the Replaced Property and (D) be
suitable for a use which is the same or similar to that of the Replaced
Property. Borrowers shall repair at their sole cost and expense all
damage to any Facility caused by the removal of Replaced Property or other
Personal Property of Borrowers or the installation of Replacement
Property.
-56-
(e) Except
in the case of Permitted Encumbrances, if any of the improvements shall, at any
time, encroach upon any property, street or right-of-way adjacent to the
Facilities, or shall materially violate the agreements or conditions contained
in any lawful restrictive covenant or other agreement affecting the Facilities,
or any part thereof, or shall materially impair the rights of others under any
easement or right-of-way to which any Facility is subject, then, promptly upon
the request of Lender or at the behest of any person affected by any such
encroachment, violation or impairment, Borrowers shall, at their expense,
subject to their right to contest the existence of any encroachment, violation
or impairment as provided in this Agreement and in such case, in the event of an
adverse final determination, either (i) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
encroachment, violation or impairment, or (ii) make such changes in the
improvements, and take such other actions as are reasonably practicable, to
remove such encroachment and to end such violation or impairment, including, if
necessary, the alteration of any of the improvements, and in any event take all
such actions as may be necessary in order to be able to continue the operation
of the improvements for the Primary Intended Use substantially in the manner and
to the extent the improvements were operated prior to the assertion of such
violation, impairment or encroachment.
6.22.12 Indemnification. Notwithstanding
the existence of any insurance provided for in this Agreement, and without
regard to the policy limits of any such insurance or self-insurance, Borrowers
will protect, indemnify, save harmless and defend Lender, its principals,
officers, directors and agents and employees from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses), to the
extent permitted by law, imposed upon or incurred by or asserted against Lender
by reason of: (i) any accident, injury to or death of persons or loss
of or damage to property occurring on or about any Facility or adjoining
sidewalks, including without limitation any claims of malpractice, (ii) any use,
misuse, non-use, condition, maintenance or repair by Borrowers of any Facility,
(iii) the failure to pay any Impositions which are the obligations of Borrowers
pursuant to the applicable provisions of this Agreement, (iv) any failure on the
part of Borrowers or their Affiliates to perform or comply with any of the terms
of this Agreement and the other Loan Documents, (v) the untruth of any of the
representations and breach of the warranties of Borrowers or their Affiliates in
this Agreement or any of the other Loan Documents, and (vi) the material
nonperformance of any contractual obligation, express or implied, assumed or
undertaken by Borrowers, or any party in privity with Borrowers, with respect to
any Facility, or any business or other activity carried on with respect to any
Facility during the Term or thereafter during any time in which Borrowers or any
such other party is in possession of the Facility or thereafter to the extent
that any conduct by Borrowers or any such person (or failure of such conduct if
the same should have been undertaken during such time of possession and leads to
such damage or loss) causes such loss or claim. Any amounts which
become payable by Borrowers under this Section shall be paid upon demand by
Lender, and if not timely paid, shall bear a late charge (to the extent
permitted by law) at the Default Interest Rate from the date of such
determination to the date of payment. Nothing herein shall be
construed as indemnifying Lender against its own grossly negligent acts or
omissions or willful misconduct. Borrowers’ obligations and liability
under the provisions of this Section arising during the Term hereof shall
survive any discharge or termination of this Agreement or the payment of the
Note.
-57-
6.22.13 Intentionally
omitted.
6.22.14 Permitted
Contests. Borrowers, on their own and at Borrowers’ sole cost
and expense, may contest, by appropriate legal proceedings conducted in good
faith and with due diligence, the amount or validity of any Imposition, Legal
Requirement or Insurance Requirement or any lien, attachment, levy, encumbrance,
charge or claim not otherwise permitted pursuant to this Agreement
(collectively, “Claims”),
but this shall not be deemed or construed in any way as relieving, modifying or
extending Borrowers’ covenants to pay or to cause to be paid any such charges at
the time and in the manner as provided in this Agreement, nor shall such legal
proceedings operate to relieve Borrowers from their obligations hereunder or
cause the sale of any Facility, or any part thereof, to satisfy the same or
cause Lender or Borrowers to be in default under any encumbrance or in violation
of any Legal Requirements or Insurance Requirements upon any Facility or any
interest therein. Upon request of Lender, if the Claim exceeds the
Approval Threshold, Borrowers shall either (a) provide a bond, letter of credit
or other assurance reasonably satisfactory to Lender that all Claims, together
with interest and penalties, if any, thereon, will be paid, or (b) deposit
within the time otherwise required for payment with a bank or trust company
selected by Lender, as trustee, as security for the payment of such Claims,
money in an amount sufficient to pay the same, together with interest and
penalties in connection therewith, and all Claims which may be assessed against
or become a Claim on any Facility, or any part thereof, in said legal
proceedings. Borrowers shall furnish Lender and any other party
entitled to assert or enforce any Legal Requirements or Insurance Requirements
with evidence of such deposit within five (5) days of the
same. Borrowers covenant to indemnify, defend and save harmless
Lender from all such costs, damages, losses and/or expenses (including
reasonable attorneys’ fees incurred in any arbitration proceeding, trial, appeal
and post-judgment enforcement proceedings), arising out of or related in any way
to the exercise by Lender of any right under this Section 6.22.14. Borrowers shall be entitled to any
refund of any Claims and such charges and penalties or interest thereon which
have been paid by Borrowers or paid by Lender and for which Lender has been
fully reimbursed. If Borrowers fail to pay or satisfy the
requirements or conditions of any Claims when finally determined to be due or to
provide the security therefor as provided in this Section and to diligently
prosecute any contest of the same, Lender may pay such charges or satisfy such
Claims, together with any interest and penalties, and the same (or the cost
thereof) shall be immediately repayable by Borrowers to Lender upon written
demand therefor, together with interest thereon at the Default Interest Rate (as
defined in the Note) until paid.
-58-
6.23 Environmental
Covenants.
6.23.1 Prohibition
Against Use of Hazardous Substances. Borrowers shall not
permit, conduct or allow on any of the Facilities the generation, introduction,
presence, maintenance, use, receipt, acceptance, treatment, manufacture,
production, installation, management, storage, disposal or release of any
Hazardous Substance, except for those types and quantities of Hazardous
Substances ordinarily associated with the operation of the Facilities as they
are being conducted on the date of this Agreement for their Primary Intended Use
and except in strict compliance with Environmental Laws.
6.23.2 Notice
of Environmental Claims, Actions or Contaminations. Borrowers
and the Guarantor will notify Lender, in writing, promptly upon learning of any
existing, pending or threatened: (i) Regulatory Actions, (ii) Contamination of
any Facility, (iii) Third Party Claims or (iv) violation of Environmental
Law.
6.23.3 Costs
of Remedial Actions with Respect to Environmental Matters. If
any investigation and/or Clean-Up of any Hazardous Substance or other
environmental condition on, under, about or with respect to any Facility is
required by any Environmental Law, then Borrowers shall complete, at their own
expense, such investigation and/or Clean-Up or cause each person responsible for
any of the foregoing to conduct such investigation and/or
Clean-Up.
6.23.4 Delivery
of Environmental Documents. If and to the extent not delivered
to Lender prior to the date of this Agreement, Borrowers shall deliver to Lender
complete copies of any and all Environmental Documents that may now be in, or at
any time hereafter come into, the possession of Borrowers.
6.23.5 Environmental
Audit. Borrowers shall from time to time provide to Lender an
Environmental Audit with respect to the Facilities. All tests and
samplings in connection with an Environmental Audit shall be conducted using
generally accepted and scientifically valid technology and
methodologies. Borrowers shall give the engineer or environmental
consultant conducting the Environmental Audit reasonable access to the
applicable Facility and to all records in the possession of Borrowers that may
indicate the presence (whether current or past) or a Release or threatened
Release of any Hazardous Substances on, in, under or about the applicable
Facility. Borrowers shall also provide the engineer or environmental
consultant an opportunity to interview such persons employed in connection with
the applicable Facility as the engineer or consultant deems
appropriate. However, Lender shall not be entitled to request such
Environmental Audit from Borrowers unless (i) there have been any material
changes, modifications or additions to any Environmental Laws as applied to or
affecting the applicable Facility; (ii) a significant change in the condition of
the applicable Facility has occurred; or (iii) Lender has another reasonable
basis for requesting such Environmental Audits. If an Environmental
Audit discloses the presence of Contamination at, or any noncompliance with
Environmental Laws by, any Facility, Borrowers shall immediately perform all of
Borrowers’ obligations hereunder with respect to such Hazardous Substances or
noncompliance.
-59-
6.23.6 Entry
onto Facilities for Environmental Matters. If Borrowers fails
to provide to Lender an Environmental Audit as contemplated by 6.23.5 hereof, Borrowers shall permit Lender from time
to time, by its employees, agents, contractors or representatives, to enter upon
the applicable Facility for the purposes of conducting such investigations as
Lender may desire. Lender and its employees, agents, contractors,
consultants and/or representatives shall conduct any such investigation in a
manner which does not unreasonably interfere with Borrowers’ use of and
operations on the applicable Facility (however, reasonable temporary
interference with such use and operations is permissible if the investigation
cannot otherwise be reasonably and inexpensively conducted). Other
than in an emergency, Lender shall provide Borrowers with prior notice before
entering the applicable Facility to conduct such Investigation, and shall
provide copies of any reports or results to Borrowers, and Borrowers shall
cooperate fully in such investigation.
6.23.7 Compliance
with Environmental Laws. Borrowers shall comply with, and
cause their agents, servants and employees to comply with, all Environmental
Laws applicable to the respective Facility. Specifically, but without
limitation:
(i) Maintenance
of Licenses and Permits. Borrowers shall obtain and maintain
all permits, certificates, licenses and other consents and approvals required by
any applicable Environmental Law from time to time with respect to Borrowers and
the Facilities;
(ii) Contamination. Borrowers
shall not cause, suffer or permit any Contamination in, on, under or about any
Facility;
(iii) Clean-Up. If
Contamination occurs in, on, under or about any Facility during the Term,
Borrowers promptly shall cause the Clean-Up and the removal of any Hazardous
Substance, and in any such case such Clean-Up and removal of the Hazardous
Substance shall be effected in strict compliance with and in accordance with the
provisions of the applicable Environmental Laws;
(iv) Discharge
of Lien. Except as may otherwise be permitted under Section 6.22.14, within twenty (20) days of the date any lien
is imposed against the Facility or any part thereof under any Environmental Law,
Borrowers shall cause such lien to be discharged (by payment, by bond or
otherwise to Lender’s absolute satisfaction);
-60-
(v) Notification
of Lender. Borrowers and the Guarantor shall notify Lender in
writing promptly upon receipt by Borrowers or the Guarantor of notice of any
breach or violation of any environmental covenant or agreement;
and
(vi) Requests,
Orders and Notices. Promptly upon receipt of any written
request, order or other notice relating to any declaratory action,
Contamination, Third Party Claims under any Environmental Law concerning a
Facility, Borrowers shall forward a copy thereof to Lender.
6.23.8 Environmental
Related Remedies. If Borrowers fail to perform any of their
covenants with respect to environmental matters and if such breach is not cured
within any applicable notice and/or grace period, Lender may do any one or more
of the following (the exercise of one right or remedy hereunder not precluding
the simultaneous or subsequent taking of any other right
hereunder):
(i) Cause
a Clean-Up. Cause the Clean-Up of any Contamination on or
under the applicable Facility at Borrowers’ cost and expense;
or
(ii) Payment
of Regulatory Damages. Pay, on behalf of Borrowers, any
damages, costs, fines or penalties imposed on Borrowers as a result of any
final, non-appealable Regulatory Actions; or
(iii) Payments
to Discharge Liens. Make any payment on behalf of Borrowers or
perform any other act or cause any act to be performed which will prevent a lien
in favor of any federal, state or local governmental authority from attaching to
the applicable Facility or which will cause the discharge of any lien then
attached to the applicable Facility; or
(iv) Payment
of Third Party Damages. Pay, on behalf of Borrowers, any
damages, cost, fines or penalties imposed on Borrowers as a result of any Third
Party Claims; or
(v) Demand
of Payment. Demand that Borrowers make immediate payment of
all of the costs of such Clean-Up and/or exercise of the remedies set forth in
this Agreement incurred by Lender and not theretofore paid by Borrowers as of
the date of such demand, whether or not any court has ordered the Clean-Up, and
payment of said costs shall become immediately due, without
notice.
6.23.9 Environmental
Indemnification. Borrowers and Parent Guarantors shall
indemnify, defend and hold harmless Lender, its principals, officers, directors,
agents and employees (each an “Indemnitee”)
from and against each and every incurred and potential claim, cause of action,
demand or proceeding, obligation, fine, laboratory fee, liability, loss,
penalty, imposition, settlement, xxxx, xxxx removal, litigation, judgment,
disbursement, expense and/or cost (including without limitation the cost of each
and every Clean-Up and including, but not limited to, reasonable attorneys’
fees, consultants’ fees, experts’ fees and related expenses, capital, operating
and maintenance costs, incurred in connection with any investigation or
monitoring of site conditions at any Facility, the presence of any
asbestos-containing materials in, on, under or about any Facility and any
Clean-Up required or performed by any federal, state or local governmental
entity or performed by any other entity or person because of the presence of any
Hazardous Substance, Release, threatened Release or any Contamination on, in,
under or about any Facility) which may be asserted against, imposed on, or
suffered or incurred by each and every Indemnitee arising out of or in any way
related to, or allegedly arising out of or due to any environmental matter,
including, but not limited to, any one or more of the
following:
-61-
(i) Release
Damage or Liability. The presence of Contamination in, on, at,
under or near any Facility or migrating to any Facility from another
location;
(ii) Injuries. All
injuries to health or safety (including wrongful death), or to the environment,
by reason of environmental matters relating to the condition of or activities,
past or present, on, at, in or under any Facility;
(iii) Violations
of Law. All violations, and alleged violations, of any
Environmental Law by Borrowers relating to any Facility or any activity on, in,
at, under or near any Facility;
(iv) Misrepresentation. All
material misrepresentations relating to environmental matters in any documents
or materials furnished by Borrowers to Lender and/or its representatives in
connection with this Agreement;
(v) Event
of Default. Each and every Event of Default hereunder relating
to environmental matters;
(vi) Lawsuits. Any
and all lawsuits brought or threatened against any one or more of the
Indemnitees, settlements reached and governmental orders relating to any
Hazardous Substances at, on, in, under or near any Facility, and all demands or
requirements of governmental authorities, in each case based upon or in any way
related to any Hazardous Substances at, on, in or under any Facility;
and
(vii) Presence
of Liens. All liens imposed upon any Facility and charges
imposed on any Indemnitee in favor of any governmental entity or any person as a
result of the presence, disposal, release or threat of release of Hazardous
Substances at, on, in, from or under any Facility.
Nothing
herein shall be construed as indemnifying Lender against its own grossly
negligent acts or omissions or willful misconduct. Borrowers’ and
Parent Guarantors’ obligations and liability under the provisions of this
Section arising during the Term hereof shall survive any discharge or
termination of this Agreement or the payment of the Note.
-62-
6.23.10 Rights
Cumulative and Survival. The rights granted Lender under this
Section are in addition to and not in limitation of any other rights or remedies
available to Lender hereunder or allowed at law or in equity. The
obligations of Borrowers and Parent Guarantors to defend, indemnify and hold the
Indemnitees harmless, as set forth in this Section, arising as a result of an
act, omission, condition or other matter occurring or existing during the Term,
whether or not the act, omission, condition or matter as to which such
obligations relate is discovered during the Term, shall survive the expiration
or earlier termination of the Term of this Agreement.
6.24 Estoppel
Certificates. After request by Lender, Borrowers shall within
ten (10) Business Days furnish Lender with a statement, duly acknowledged and
certified, setting forth (i) the amount of the original principal amount of the
Note, (ii) the rate of interest on the Note, (iii) the unpaid principal amount
of the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, if any, and (vi)
that the Note, this Agreement, the Deeds of Trust and the other Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification.
ARTICLE
VII - DEFAULT AND RIGHTS TO ACCELERATE; SECURITY
DEPOSIT
7.1 Events
of Default. The occurrence of any of the following shall be an
“Event
of Default”:
(a) If
Borrowers fail to make or cause to be made payment of interest and/or principal
under the Note, or any other payment under this Agreement or any of the other
Loan Documents when the same becomes due and payable and such failure is not
cured within three (3) days of the date such payment first became due and
payable;
(b) If
any Borrower or Guarantor (i) admits in writing its inability to pay its debts
generally as they become due, (ii) files a petition in bankruptcy or a petition
to take advantage of any insolvency law, (iii) makes a general assignment for
the benefit of its creditors, (iv) consents to the appointment of a receiver of
itself or of the whole or any substantial part of its property, or (v) files a
petition or answer seeking reorganization or arrangement under the Federal
Bankruptcy Laws or any other applicable law or statute of the United States of
America or any state thereof; or
(c) If
any Guarantor or any Borrower, on a petition in bankruptcy filed against it, is
adjudicated a bankrupt or has an order for relief thereunder entered against it,
or a court of competent jurisdiction enters an order or decree appointing a
receiver of any Guarantor or any Borrower, or of the whole or substantially all
of the property of any Guarantor or a Borrower, or approving a petition filed
against any Guarantor or any Borrower seeking reorganization or arrangement of
any Guarantor or any Borrower under the Federal Bankruptcy Laws or any other
applicable law or statute of the United States of America or any state thereof,
and such judgment, order or decree is not vacated or set aside or stayed within
sixty (60) days from the date of the entry thereof; or
-63-
(d) If
any Guarantor or any Borrower is liquidated or dissolved, or begins proceedings
toward liquidation or dissolution, or has filed against it a petition or other
proceeding to cause it to be liquidated or dissolved, and the proceeding is not
dismissed within sixty (60) days thereafter, or in any manner permits the sale
or divestiture of substantially all of its assets except in connection with a
dissolution or liquidation following or related to a merger or transfer of all
or substantially all of the assets and liabilities of a Borrower with or to an
Affiliate; or
(e) If
the estate or interest of any Borrower in the Facilities or any part thereof is
levied upon or attached in any proceeding and the same is not vacated or
discharged within thirty (30) days after commencement thereof (unless Borrowers
are in the process of contesting such lien or attachment in good faith in
accordance with this Agreement); or
(f) If
any Borrower ceases operation of a Facility except upon prior written notice to,
and the express prior written consent of Lender (which consent Lender may
withhold in its absolute discretion), or as the unavoidable consequence of
damage or destruction as a result of a casualty, or a Taking or Partial Taking;
or
(g) If
the license to operate any Facility as a provider of health care services in
accordance with its Primary Intended Use is revoked, or allowed to lapse, or,
without Lender’s prior written consent, transferred to a facility that is not
one of the Facilities, or an order is imposed with respect to a Facility
suspending the right to operate or accept patients, and the pertinent Borrower
does not promptly take reasonable steps to cure the condition or conditions
leading to such revocation or order and cause such license and right to operate
and accept patients to be reinstated within sixty (60) days;
or
(h) If
any obligation of any Borrower or Guarantor to repay any indebtedness for
borrowed money in excess of One Hundred Thousand Dollars ($100,000) is
accelerated by the creditor after default; or
(i) If
any Borrower fails to observe or perform or cause to be observed or performed
any other term, covenant or condition of this Agreement and such failure is not
cured within a period of thirty (30) days after notice thereof from Lender;
or
-64-
(j) If
any representation or warranty made by Borrowers or Guarantors in this Agreement
or any of the other Loan Documents proves to be untrue when made in any material
respect; or
(k) If
a default occurs under any Guaranty given to Lender to secure performance of any
term or provision of this Agreement or any of the other Loan Documents and is
not cured within any applicable grace or cure period set forth therein;
or
(l) If
any Borrower transfers the operational control or management of a Facility
without the prior written consent of Lender (Lender consents to the transfer of
management of the Facilities to Managers); or
(m) Any
Change in Control shall occur; or
(n) If
a default occurs under any contract with aggregate obligations in excess of One
Hundred Thousand Dollars ($100,000) affecting a Facility or any Borrower (other
than the Medicaid and Medicare provider agreements and third party reimbursement
contracts with respect to patients in the Facility), and the default is not
cured within any applicable grace or cure period contained
therein;
(o) One
or more of the Medicaid or Medicare provider agreements pursuant to which
Borrowers are reimbursed for resident care provided at any Facility are
terminated and not replaced by a new provider agreement within ten (10) days of
such termination, such that Borrowers are no longer contractually entitled to
Medicare or Medicaid reimbursement for resident care at such
Facility;
(p) If
a default occurs under the Working Capital Loan Documents, and the default is
not cured within any applicable grace or cure period contained in such document;
or
(q) An
Event of Default under any other Loan Document that has not been cured after
delivery of any notice required under, or within any applicable period provided
for in, such other Loan Document; or
(r) An
Event of Default under the Master Lease that has not been cured after delivery
of any notice required under, or within any applicable period provided for in,
such document; or
(s) An
Event of Default under any City View Loan Document that has not been cured after
delivery of any notice required under, or within any applicable period provided
for in, such document; or
-65-
(t) An
Event of Default under any Combined Transaction Document that has not been cured
after delivery of any notice required under, or within any applicable period
provided for in, such document.
7.2 Remedies. Upon
any Event of Default, Lender may, at its option, (a) exercise any of the rights
or remedies provided in this Agreement or available to Lender under any of the
other Loan Documents; (b) exercise any right or remedy available under law or in
equity; and/or (c) without notice or demand declare the Note to be due and
payable, whereupon the Note shall immediately become due and
payable.
7.3 Lender’s
Other Collection Remedies. Borrowers shall pay to Lender, on
demand, any and all reasonable expenses, including actual and reasonable
attorneys fees and legal costs and expenses, incurred or paid by Lender in (a)
collecting any of the indebtedness secured by the Deeds of Trust and (b) in
protecting or enforcing Lender’s rights in any of the collateral given by any
Borrower as security for such indebtedness.
7.4 Security
Deposit. The Security Deposit shall be increased as set forth
in the Master Lease. Upon the occurrence of an Event of Default
under this Agreement, Lender shall be entitled, without notice to Borrowers or
the Guarantor, to apply the Security Deposit toward payment of the outstanding
principal balance and all then accrued and unpaid interest due under the Note,
if applicable, or to any other amount owing to Lender by
Borrowers. If the Security Deposit is at any time a Letter of Credit
(defined in Section 4.19 above), Lender may, at its
option, present the Letter of Credit to the issuer for payment, (a) upon the
occurrence of an Event of Default under this Agreement or (b) at any time within
the last thirty (30) Business Days prior to the expiration of the Letter of
Credit, regardless of whether an Event of Default has then occurred, or whether
there exists any condition, fact or circumstance which, with notice, or the
passage of time, or both, might constitute an Event of Default. If
Lender presents the Letter of Credit to the issuer for payment in accordance
with clause (b) of the preceding sentence, Lender shall, at its option, either
hold the cash proceeds as the Security Deposit or apply the cash proceeds toward
payment of the outstanding principal balance and all then accrued and unpaid
interest due under the Note, if applicable, or any other amounts owed Lender by
Borrowers or their Affiliates under the Master Lease or
otherwise. Provided there is no then existing Event of Default or
Unmatured Event of Default under this Agreement, Borrowers shall have the right,
at any time and from time to time, to substitute a new Letter of Credit in the
amount of the Security Deposit, issued by a commercial bank approved by the
Lender and otherwise reasonably satisfactory in form and substance to Lender, in
place of the Letter of Credit previously delivered by Borrowers to
Lender. Whenever, and as often as, Lender has applied any portion of
the Security Deposit to cure Borrowers’ default under this Agreement, the Note,
the Master Lease, any other Combined Transaction Document or under any agreement
with which this Agreement is cross-defaulted, Borrowers shall, within ten (10)
days after Notice from Lender, deliver a new letter of credit meeting the
requirements of the Letter of Credit Agreement to Lender (or, at Lender’s
option, deposit additional money with Lender) sufficient to restore the Security
Deposit to the full amount then required to be deposited with Lender pursuant to
the Master Lease, and Borrowers’ failure to do so shall constitute an Event of
Default without any further notice.
-66-
ARTICLE
VIII - MISCELLANEOUS
8.1 Arbitration. Except
with respect to the payment of all sums payable under the Note and the exercise
by Lender of its remedies after an Event of Default, in case any controversy
shall arise between the parties hereto as to any of the requirements of this
Agreement or the performance thereof, which the parties shall be unable to
settle by agreement or as otherwise provided herein, such controversy shall be
determined by arbitration. Such arbitration shall be conducted by
three arbitrators selected in accordance with the procedures of the American
Arbitration Association and in accordance with its rules and
procedures. The decision of the arbitrators shall be final and
binding, and enforceable in any court of competent jurisdiction. Such
decision shall set forth in writing the basis for the decision, and in rendering
such decision and award, the arbitrators shall not add to, subtract from or
otherwise modify the provisions of this Agreement. The expense of the
arbitration shall be divided between Lender and Borrowers unless otherwise
specified in the award. The arbitration shall be conducted in
Baltimore, Maryland. In any such arbitration, the parties shall be
entitled to conduct discovery in the same manner as permitted under Federal
Rules of Civil Procedure 26 through 37. No provision in this Section
shall limit the right of any party to this Agreement to obtain provisional or
ancillary remedies from a court of competent jurisdiction before, after, or
during the pendency of any arbitration. The exercise of such a remedy
does not waive the right of any party to arbitration.
8.2 Borrowers
to Pay Reasonable Expenses. Borrowers shall pay or reimburse
Lender for all reasonable costs and expenses incurred by Lender in connection
with or relating in any way to the administration of the Loan, including without
limitation, search costs, audit fees, appraisal fees, attorneys’ fees, and other
costs paid or incurred by Lender in the analysis, administration and enforcement
of the Loan and the Loan Documents, the protection and defense of the rights of
Lender granted in this Agreement and the other Loan Documents, or as otherwise
referred to in this Agreement or in the other Loan Documents, and all costs and
expenses relating to extensions, amendments, waivers, or consents requested by
Borrowers, pursuant to this Agreement or any other Loan Document or any
agreements with other parties or termination of this Agreement (collectively,
“Reasonable
Expenses”). All such Reasonable Expenses shall be due on
demand; provided, however, that so long as no Event of Default or Unmatured
Event of Default has occurred hereunder, Reasonable Expenses incurred after the
date of this Agreement which are unrelated to the closing shall be paid on or
before the earlier of (i) 30 days following written notice thereof to Borrowers
or (ii) the due date of the Loan. Any Reasonable Expenses not paid
when due shall bear interest at the Default Interest Rate set forth in the
Note.
-67-
8.3 MUTUAL
WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT, OR ANY OF THE
LOAN DOCUMENTS; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT
BETWEEN OR AMONG THEM; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF ANY PARTY
HERETO OR ANY OF THEIR DIRECTORS, TRUSTEES, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH THEM; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
8.4 Assignment. Lender
may at any time and without the consent of Borrowers, Guarantor or any other
party obligated with respect to the Loan assign to one or more Persons all or
any part of its rights and obligations under this Agreement, the Note or any of
the other Loan Documents. None of Borrowers or Guarantor may assign
or delegate any of its or their rights, duties or obligations arising under this
Agreement, the Note or the other Loan Documents without the express prior
written consent of Lender. All the terms and provisions of this
Agreement and the other Loan Documents shall be binding upon and inure to the
benefit of and be enforceable by Lender and its respective permitted successors
and assigns.
8.5 Third
Parties. Nothing in this Agreement, whether express or
implied, including Section 6.22.11(e), is intended
to confer any rights or remedies under or by reason of this Agreement on any
persons other than Lender and its respective permitted successors and assigns;
nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provisions give any third persons any right of subrogation or action
over or against any party to this Agreement.
8.6 No
Public Announcements. Any public announcement concerning this
Agreement before the Loan Closing Date or any of the terms hereof shall be made
only with the prior approval of Lender and Borrowers.
8.7 Delivery
of Exhibits. The parties shall deliver to each other all
exhibits, cash, schedules, lists, documents and papers which they are required
by the terms of this Agreement and the other Loan Documents to deliver, on or
before execution of this Agreement, except where another date is required for
such delivery. All exhibits, schedules, and documents referred to in
or attached to this Agreement are integral parts of this Agreement as if fully
set forth herein.
8.8 Further
Assurances. The parties shall give further assurances and
execute such further documents as are necessary or desirable to effectuate the
purpose of this Agreement and the other Loan Documents.
-68-
8.9 Notices. All
notices required or permitted to be given hereunder shall be personally served
or mailed (by registered or certified mail, return receipt requested and postage
prepaid), or delivered by a national overnight delivery service such as Federal
Express or DHL or by facsimile transmission, in each case directed or addressed
as follows:
To
Borrowers
or CommuniCare
Family of Companies
Parent
Guarantors: c/o
CommuniCare Health Services
0000
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Rosedale
Telephone No.: (513) 489 - 7100
Facsimile No.: (000) 000-0000
With
copy
to Benesch,
Friedlander, Xxxxxx & Aronoff LLP
(which
shall
not 2300
BP Tower
constitute
notice): 000
Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxx
X. Xxxxx
Phone:
(000) 000-0000
Fax:
(000) 000-0000
To
Lessor: OHI
ASSET III (PA) TRUST
c/o Omega Healthcare Investors, Inc.
0000
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attn.:
Xxxxxx X. Xxxxx
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
And
with copy
to Xxxxx
Derwent, PLLC
(which
shall not
|
000
Xxxxxx Xxx., X.X., Xxxxx 000
|
|
constitute
notice):
|
Xxxxx
Xxxxxx, Xxxxxxxx 00000
|
|
Attn:
Xxxx X. Derwent
|
Telephone
No.: (000) 000-0000
Facsimile
No.: (000) 000-0000
or
to such other address as either party may hereafter designate. Notice shall be
deemed to have been given on the date of delivery if such delivery is made on a
Business Day, or if not, on the first Business Day after delivery. If delivery
is refused, Notice shall be deemed to have been given on the date delivery was
first attempted. Notice sent by facsimile transmission shall be deemed given
upon confirmation that such Notice was received at the number specified above or
in a Notice to the sender.
-69-
8.10 Ohio
Law. This Agreement and the other Loan Documents shall be
construed and enforced in accordance with the laws of the State of
Ohio. If any provision of this Agreement is in conflict with a
statute or rule of law of the State of Ohio, or is otherwise unenforceable for
any reason whatsoever, then such provision shall be deemed null and void to the
extent of such conflict or unenforceability, but shall be deemed separable from
and shall not invalidate any other provisions of this
Agreement.
8.11 Counterparts. This
Agreement and the other Loan Documents may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.12 Captions. The
captions of sections and subsections of this Agreement have been inserted solely
for convenience and reference, and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
8.13 Integration;
Waiver. This Agreement and the other Loan Documents, and the
exhibits and schedules hereto and thereto, constitute the entire agreement
between and among Lender, Borrowers and the Guarantor pertaining to the subject
matter contained in it and supersede all prior agreements, representations and
all understandings of the parties. No supplement, modification or
amendment of this Agreement shall be binding unless expressed as such and
executed in writing by Lender, Borrowers and the Guarantor. No waiver
of any of the provisions of this Agreement shall be deemed or constitute a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless
expressed as such in a document executed by the party making the
waiver.
8.14 Time
of the Essence. Time is of the essence with respect to all
provisions of this Agreement and the other Loan Documents of which time is an
element.
[SIGNATURES
APPEAR ON FOLLOWING PAGES]
-70-
Signature
Page to
LOAN
AGREEMENT
(Maryland
Acquisition Loan)
LENDER:
OHI
ASSET III (PA) TRUST
|
By:
|
OHI
Asset (PA), LLC, a Delaware limited liability company, its sole
trustee
|
By: Omega Healthcare
Investors, a Maryland
corporation,
its sole member
By: /s/ Xxxxxx X.
Xxxxx
Name: Xxxxxx X.
Xxxxx
Title: Chief
Operating Officer
THE
STATE OF
MARYLAND )
)
COUNTY
OF BALTIMORE )
This
instrument was acknowledged before me on the ______ day of ___________, 2008, by
Xxxxxx X. Xxxxx, the Chief Operating Officer of Omega Healthcare Investors,
Inc., a Maryland corporation, the sole member of OHI Asset (PA), LLC, a Delaware
limited liability company, the sole trustee of OHI Asset III (PA) Trust, a
Maryland business trust, on behalf of said business trust.
______________________________________
Notary
Public, __________ County, ______
My
commission expires:
Page
S 1- of S-3
Signature
Page to
LOAN
AGREEMENT
(Maryland
Acquisition Loan)
BORROWERS:
BEL
PRE LEASING CO., LLC
RIDGE
(MD) LEASING CO., LLC
MARLBORO
LEASING CO., LLC
FAYETTE
LEASING CO., LLC
LIBERTY
LEASING CO., LLC
XXXXXX
LEASING CO., LLC
PALL
MALL LEASING CO., LLC
WASHINGTON
(MD) LEASING CO., LLC
MARYLAND
NH ASSET, LLC
By: /s/ Xxxxxxx X.
Xxxxxx
Name: Xxxxxxx
X. Xxxxxx
Title: CFO
and Treasurer
PARENT GUARANTORS:
OMG RE HOLDINGS, LLC
OMG
RE LEASING CO., LLC
OMG
ASSET OWNERSHIP, LLC
HEALTH
CARE FACILITY MANAGEMENT, LLC
RESIDENT
CARE CONSULTING, LLC
By: /s/ Xxxxxxx X.
Xxxxxx
Name: Xxxxxxx
X. Xxxxxx
Title: CFO
and Treasurer
Page
S 2- of S-3
Signature
Page to
LOAN
AGREEMENT
(Maryland
Acquisition Loan)
STATE
OF
____________ )
)
ss.
COUNTY
OF
_________ )
The
foregoing instrument was acknowledged before me this ___ day of April, 2008, by
Xxxxxxx X. Xxxxxx, who is the CFO and Treasurer of the limited liability
companies listed above, on behalf of all such limited liability
companies.
______________________________________
Notary
Public, __________ County, ______
My
commission expires:
Page
S 3- of S-3
EXHIBITS
A Permitted
Leases
B Other
Permitted Indebtedness
C Scheduled
Improvements
DISCLOSURE
SCHEDULES
Schedule 5.1 Organization
Schedule 5.5 Licensed
Beds
Schedule 5.6(d) Unresolved
Citations
Schedule 5.6(g) Facility
Litigation and Proceedings
Schedule 6.13 Permitted
Investments
EXHIBIT
A
Permitted
Leases
1.
Sublease Agreement by and between Milennium Health and Rehabilitation Center of
Ellicott City, LLC and Ellicott City Dialysis Center LLC, dated May 1,
2007.
Exhibit
A – Page 1 of 2
EXHIBIT
B
OTHER
PERMITTED INDEBTEDNESS
Health
Care Holdings, LLC
Borrowings/Guarantee
Schedule
1.
|
Fifth
Third Bank – Guaranty of outstanding debt of Value Care Pharmacy -
$4,400,000
|
2.
|
Cuyahoga
County – Guaranty of outstanding debt of Value Care Pharmacy -
$200,000
|
3.
|
Xxx
Xxxx, Inc. – Guaranty of lease (Value Care) – total maximum exposure
approx $700,000
|
4.
|
Fifth
Third Bank – Borrower on Letter of Credit in favor of Omega -
$4,310,000
|
5.
|
Fifth
Third Bank – Borrower on Letter of Credit in favor of Lasalle Bank (St.
Louis Facilities) - $700,000
|
6.
|
Commerce
Bank – guaranty of depository relationship for returned
checks
|
7.
|
Commissioner
– Ohio Bureau of Worker’s Compensation – guaranty of claims obligations of
Health Care Facilities Staffing, LLC (in connection with self insured
worker’s compensation relationship in
Ohio)
|
8.
|
Fifth
Third Bank – Borrower on Letter of Credit (to be issued in Apr 2008) in
favor of Omega (LTACH) - $152,500
|
9.
|
Fifth
Third Bank – Borrower on Letter of Credit (to be issued in 2008 or 2009)
in favor of DMH-Dayton, Inc. (Dayton Facilities) of
$550,000
|
10.
|
Fifth
Third Bank – Guaranty of outstanding debt of CommuniCare of Xxxxxxx, Inc.
- $1,000,000
|
11.
|
Lasalle
Bank – “Bad Boy” guarantee in connection with the St. Louis
Facilities
|
12.
|
Omega
Healthcare Investors – “Bad Boy” guarantee in connection with leased and
owned centers.
|
HC
Real Estate Holdings, LLC
Borrowings/Guarantee
Schedule
1.
|
Fifth
Third Bank – Borrower on Letter of Credit in favor of Omega -
$1,100,000
|
2.
|
Fifth
Third Bank – Borrower on yet to be issued LC’s in favor of Omega (to be
issued in 2008 and 2009)-
$2,200,000
|
3.
|
Fifth
Third Bank – Borrower on Letter of Credit in favor of Fort Washington
Partners - $157,250
|
4.
|
Omega
Healthcare Investors – “Bad Boy” guarantee in connection with leased and
owned centers.
|
Exhibit
B – Page 1 of 1
EXHIBIT
C
SCHEDULED
IMPROVEMENTS
Facility
|
Address
|
City
|
ST
|
Allocation
of $3.0M CAP-EX (1)
|
|||
Bel
Pre Health & Rehabilitation Center
|
2601
Bel Pre Road
|
Silver
Spring
|
MD
|
350,000.00 | |||
Ellicott
City Health & Rehabilitation Center
|
0000
X. Xxxxx Xxxx
|
Ellicott
City
|
MD
|
300,000.00 | |||
Forestville
Health & Rehabilitation Center
|
0000
Xxxxxxxx Xxxx
|
Xxxxxxxxxxx
|
XX
|
425,000.00 | |||
Franklin
Square Health & Rehabilitation Center (Fayette)
|
0000
X. Xxxxxxx Xxxxxx
|
Xxxxxxxxx
|
XX
|
400,000.00 | |||
Liberty
Heights Health & Rehabilitation Center
|
0000
Xxxxxxx Xxxxxxx Xxxxxx
|
Xxxxxxxxx
|
XX
|
300,000.00 | |||
Marley
Neck Health & Rehabilitation Center
|
0000
X. Xxxxxx Xxxx
|
Glen
Burnie
|
MD
|
350,000.00 | |||
Northwest
Health & Rehabilitation Center
|
0000
Xxxx Xxxx Xxxxx
|
Xxxxxxxxx
|
XX
|
- | |||
South
River Health & Rehabilitation Center
|
000
Xxxxxxxxxx Xxxx
|
Xxxxxxxxx
|
XX
|
250,000.00 | |||
Total
|
$ | 2,375,000 |
Specific
improvements, budgets, and plans must be approved prior to the commencement of
any improvement.
Exhibit
C – Page 1 of 1
![](https://www.sec.gov/Archives/edgar/data/888491/000088849108000023/orgchart.jpg)
Schedule
5.1 - Page 1 of 2
![](https://www.sec.gov/Archives/edgar/data/888491/000088849108000023/orgchart1.jpg)
Schedule 5.1
- Page 2 of 2
Schedule
5.5
Licensed
Beds
#
of Lic. Beds
|
Facility
|
Address
|
City
|
ST
|
||
100 |
Bel
Pre Health & Rehabilitation Center
|
2601
Bel Pre Road
|
Silver
Spring
|
MD
|
||
182 |
Ellicott
City Health & Rehabilitation Center
|
0000
X. Xxxxx Xxxx
|
Ellicott
City
|
MD
|
||
160 |
Forestville
Health & Rehabilitation Center
|
0000
Xxxxxxxx Xxxx
|
Xxxxxxxxxxx
|
XX
|
||
000 |
Xxxx
Xxxxxxxxxx Health & Rehabilitation Center
|
00000
Xxxxxxxxxx Xxxx
|
Xx.
Washington
|
MD
|
||
000 |
Xxxxxxxx
Xxxxxx Health & Rehabilitation Center (Fayette)
|
0000
X. Xxxxxxx Xxxxxx
|
Xxxxxxxxx
|
MD
|
||
106 |
Liberty
Heights Health & Rehabilitation Center
|
0000
Xxxxxxx Xxxxxxx Xxxxxx
|
Xxxxxxxxx
|
XX
|
||
99 |
Marley
Neck Health & Rehabilitation Center
|
0000
X. Xxxxxx Xxxx
|
Glen
Burnie
|
MD
|
||
91 |
Northwest
Health & Rehabilitation Center
|
0000
Xxxx Xxxx Xxxxx
|
Xxxxxxxxx
|
XX
|
||
120 |
South
River Health & Rehabilitation Center
|
000
Xxxxxxxxxx Xxxx
|
Xxxxxxxxx
|
XX
|
Schedule
5.5 – Page 1 of 1
Schedule
5.6(d)
Unresolved
Citations
The
Citations disclosed by the Sellers under the (i) that certain Purchase and Sale
Agreement dated as of February 6, 2008 among OHI Acquisition Co. I, LLC, a
Delaware limited liability company, and Trans Healthcare, Inc., a Delaware
corporation, and certain of its Affiliates, as sellers, and (ii) that certain
Purchase and Sale Agreement dated as of February 6, 2008 between OHI Acquisition
Co. I, LLC, a Delaware limited liability company and Ventas Realty, Limited
Partnership, a Delaware limited partnership.
Schedule
5.6 – Page 1 of 1
Schedule
5.6(g)
Facility
Litigation and Proceedings
The
litigation matters disclosed by the Sellers under the (i) that certain Purchase
and Sale Agreement dated as of February 6, 2008 among OHI Acquisition Co. I,
LLC, a Delaware limited liability company, and Trans Healthcare, Inc., a
Delaware corporation, and certain of its Affiliates, as sellers, and (ii) that
certain Purchase and Sale Agreement dated as of February 6, 2008 between OHI
Acquisition Co. I, LLC, a Delaware limited liability company and Ventas Realty,
Limited Partnership, a Delaware limited partnership.
Schedule
5.6(g) – Page 1 of 1
Schedule
6.13
PERMITTED
INVESTMENTS
The
ownership and operation of:
Green
Park Nursing Home
Green
Park Resident Center
Park
Terrace Resident Center
Northgate
Park Nursing Home
(all
located in the St. Louis, Missouri area)
by
the following Subsidiaries of HC Real Estate Holdings, LLC, an Ohio limited
liability company:
LaSalle
RE Assets, LLC, an Ohio limited liability company
LaSalle
Holdings, LLC, an Ohio limited liability company
Green
Park Leasing Co., LLC, an Ohio limited liability company
Flo-GP
Leasing Co., LLC, an Ohio limited liability company
Health
Care Holdings, LLC, an Ohio limited liability company
The
leasing and operation of:
Fort
Washington Health & Rehabilitation Center
Berea
Center for Specialized Care
by
the following Subsidiaries of HC Real Estate Holdings, LLC, an Ohio limited
liability company:
Health
Care Lease Facilities, LLC
Xxxxxxxxxx
Leasing Co, LLC
Xxxxxxx
Leasing Co, LLC
In
connection with the foregoing Permitted Investments, HCREH may make loans or
advance funds to such Subsidiaries provided that (i) no Event of Default or
Unmatured Event of Default has occurred and is continuing, and (ii) such loans
or advances are made from unencumbered funds otherwise available for
distribution to the equity owners of HCH.
Schedule
6.13 – Page 1 of 1