Exhibit 10.50
dated as of December 30, 2004
among
Tandem Health Care of Ohio, Inc.,
as Lessee
SELCO Service Corporation,
as Lessor,
Key Corporate Capital Inc.,
as Purchaser,
Key Corporate Capital Inc.,
as Administrative Agent
Table of Contents
|
|
|
|
|
Section
Heading |
|
Page |
|
PARTIES |
|
|
1 |
|
RECITALS |
|
|
1 |
|
ARTICLE I DEFINITIONS; INTERPRETATION |
|
|
1 |
|
ARTICLE II [INTENTIONALLY RESERVED] |
|
|
2 |
|
ARTICLE III FUNDING OF ADVANCE |
|
|
2 |
|
Section 3.1. Advance |
|
|
2 |
|
Section 3.2. Lessor’s Commitments |
|
|
2 |
|
Section 3.3. Purchasers’ Commitments |
|
|
2 |
|
Section 3.4. Procedures for Advance |
|
|
2 |
|
ARTICLE IV YIELD; RETURN; FEES |
|
|
3 |
|
Section 4.1. Yield |
|
|
3 |
|
Section 4.2. Return on Capital Payments |
|
|
3 |
|
Section 4.3. Prepayments |
|
|
4 |
|
Section 4.4. Fees |
|
|
4 |
|
Section 4.5. Place and Manner of Payments |
|
|
4 |
|
Section 4.6. Pro Rata Treatment |
|
|
5 |
|
Section 4.7. Sharing of Payments |
|
|
5 |
|
ARTICLE V CERTAIN INTENTIONS OF THE PARTIES |
|
|
6 |
|
Section 5.1. Nature of Transaction |
|
|
6 |
|
Section 5.2. Amounts Due Under the Lease |
|
|
6 |
|
ARTICLE VI CONDITIONS PRECEDENT |
|
|
7 |
|
Section 6.1. Acquisition Date |
|
|
7 |
|
ARTICLE VII DISTRIBUTIONS |
|
|
11 |
|
Section 7.1. Basic Rent |
|
|
11 |
|
Section 7.2. Purchase Payments by the Lessee |
|
|
11 |
|
Section 7.3. Payment of Maximum Recourse Amounts |
|
|
12 |
|
Section 7.4. Sales Proceeds of Remarketing of the Properties |
|
|
12 |
|
Section 7.5. Supplemental Rent; Excepted Payments |
|
|
12 |
|
Section 7.6. Distribution of Payments after Lease Default or Lease Event of Default |
|
|
12 |
|
|
|
|
|
|
Section
Heading |
|
Page |
|
Section 7.7. Casualty and Condemnation Amounts |
|
|
14 |
|
Section 7.8. Other Payments |
|
|
14 |
|
Section 7.9. Order of Application |
|
|
14 |
|
Section 7.10. Payments to Account |
|
|
15 |
|
ARTICLE VIII REPRESENTATIONS |
|
|
15 |
|
Section 8.1. Representations of the Participants |
|
|
15 |
|
Section 8.2. Representations of the Lessee and the Guarantor |
|
|
15 |
|
Section 8.3. Representations of the Lessor |
|
|
21 |
|
ARTICLE IX PAYMENT OF CERTAIN EXPENSES |
|
|
22 |
|
Section 9.1. Transaction Expenses |
|
|
22 |
|
Section 9.2. Brokers’ Fees and Stamp Taxes |
|
|
23 |
|
Section 9.3. Receivables Purchase Agreement and Related Obligations |
|
|
23 |
|
ARTICLE X COVENANTS OF THE LESSEE AND THE GUARANTOR |
|
|
23 |
|
Section 10.1. Corporate Existence, Etc |
|
|
23 |
|
Section 10.2. Insurance |
|
|
23 |
|
Section 10.3. Taxes, Claims for Labor and Materials; Compliance with Laws |
|
|
23 |
|
Section 10.4. Nature of Business |
|
|
24 |
|
Section 10.5. Visitation Rights |
|
|
24 |
|
Section 10.6. Financial Information |
|
|
24 |
|
Section .10.7. Responsible Officer’s Certificate |
|
|
26 |
|
Section 10.8. Occupancy |
|
|
26 |
|
Section 10.9. Lessee CR |
|
|
27 |
|
Section 10.10. Guarantor DSCR |
|
|
27 |
|
Section 10.11. Lessee Merger, etc. |
|
|
27 |
|
Section 10.12. Guarantor Merger, etc. |
|
|
27 |
|
Section 10.13. Change in Ownership of Lessee and Sublessees |
|
|
27 |
|
Section 10.14. Amendments to Agreements |
|
|
28 |
|
Section 10.15. Restricted Payments |
|
|
28 |
|
Section 10.16. Supplemental Collateral |
|
|
28 |
|
ARTICLE XI OTHER COVENANTS AND AGREEMENTS |
|
|
28 |
|
Section 11.1. Cooperation with the Lessee |
|
|
28 |
|
Section 11.2. Covenants of the Lessor |
|
|
28 |
|
Section 11.3. SELCO Status |
|
|
29 |
|
-ii-
|
|
|
|
|
Section
Heading |
|
page |
|
ARTICLE XII TRANSFERS OF PARTICIPANTS’ INTERESTS |
|
|
29 |
|
Section 12.1 Assignments |
|
|
29 |
|
Section 12.2. Participations |
|
|
30 |
|
Section 12.3. Withholding Taxes; Disclosure of Information; Pledge Under
Regulation A |
|
|
30 |
|
ARTICLE XIII INDEMNIFICATION |
|
|
31 |
|
Section 13.1. General Indemnification |
|
|
31 |
|
Section 13.2. End of Term Indemnity |
|
|
33 |
|
Section 13.3. Environmental Indemnity |
|
|
34 |
|
Section 13.4. Proceedings in Respect of Claims |
|
|
35 |
|
Section 13.5. General Tax Indemnity |
|
|
37 |
|
Section 13.6. Indemnity Payments in Addition to Lease Obligations |
|
|
40 |
|
Section 13.7. Eurodollar Rate Unlawful |
|
|
40 |
|
Section 13.8. Deposits Unavailable |
|
|
40 |
|
Section 13.9. Increased Costs, etc |
|
|
41 |
|
Section 13.10. Funding Losses; Break Costs |
|
|
42 |
|
Section 13.11. Capital Adequacy |
|
|
42 |
|
ARTICLE XIV [INTENTIONALLY RESERVED] |
|
|
43 |
|
ARTICLE XV MISCELLANEOUS |
|
|
44 |
|
Section 15.1. Survival of Agreements |
|
|
44 |
|
Section 15.2. No Broker, Etc |
|
|
44 |
|
Section 15.3. Notices |
|
|
44 |
|
Section 15.4. Counterparts |
|
|
44 |
|
Section 15.5. Amendments, Etc |
|
|
45 |
|
Section 15.6. Headings, Etc. |
|
|
46 |
|
Section 15.7. Parties in Interest |
|
|
46 |
|
Section 15.8. Governing Law; Waiver of Jury Trial |
|
|
46 |
|
Section 15.9. Severability |
|
|
46 |
|
Section 15.10. Liability Limited |
|
|
46 |
|
Section 15.11. Further Assurances |
|
|
47 |
|
Section 15.12. Submission to Jurisdiction |
|
|
47 |
|
Section 15.13. Setoff |
|
|
47 |
|
Section 15.14. No Participant Responsible for Other Participants |
|
|
47 |
|
-iii-
|
|
|
|
|
Section
Heading |
|
Page |
|
Section 15.15. Special Provisions Re: Sale of Receivables |
|
|
48 |
|
Section 15.16. Confidentiality |
|
|
49 |
|
Section 15.17. Supplemental Collateral |
|
|
50 |
|
Section 15.18. Patriot Act |
|
|
50 |
|
-iv-
|
|
|
|
|
Appendix A
|
|
—
|
|
Definitions |
Schedule I
|
|
—
|
|
Commitments |
Schedule II
|
|
—
|
|
Notice Information, Wire Instructions and Funding Offices |
Schedule III
|
|
—
|
|
Available Beds |
Schedule IV
|
|
—
|
|
Property Costs |
Schedule V
|
|
—
|
|
OFAC/Patriot Act |
Schedule VI
|
|
—
|
|
Fixed Rent |
|
Exhibit A
|
|
—
|
|
Form of Legal Opinion of Counsel to Lessee and Guarantor |
Exhibit B
|
|
—
|
|
Form of Funding Request |
Exhibit C
|
|
—
|
|
Form of Assignment Agreement |
Exhibit D
|
|
—
|
|
Form of Master Lease |
Exhibit E
|
|
—
|
|
Form of Guaranty |
Exhibit F
|
|
—
|
|
Form of Receivables Purchase Agreement |
Exhibit G
|
|
—
|
|
[Intentionally Reserved] |
Exhibit H
|
|
—
|
|
Form of Assignment of Lease and Rent |
Exhibit I
|
|
—
|
|
Form of Security Agreement |
Exhibit J
|
|
—
|
|
Form of Lessee Stock Pledge |
Exhibit K
|
|
—
|
|
[Intentionally Reserved] |
Exhibit L
|
|
—
|
|
Form of Assignment of Certificates of Deposit |
Exhibit M
|
|
—
|
|
[Intentionally Reserved] |
Exhibit N
|
|
—
|
|
Form of Mortgage |
Exhibit O
|
|
—
|
|
Form of Sublessee Stock Pledge |
Exhibit P
|
|
—
|
|
Form of Sublessee Security Agreement |
-v-
This
Participation Agreement (this
“Participation
Agreement”), dated as of December
30, 2004, is entered into by and among
Tandem Health Care of Ohio, Inc., an
Ohio
corporation, as the Lessee (the
“Lessee”);
Tandem Health Care,
Inc. a
Pennsylvania corporation, as Guarantor (the
“Guarantor”); SELCO
Service Corporation, an
Ohio corporation, as Lessor (together with any permitted successors and assigns thereof, the
“Lessor”); KEY CORPORATE CAPITAL INC., a Michigan corporation (together with any permitted
successors and assigns thereof, each a
“Purchaser” and collectively the
“Purchasers”);
Key
Corporate
Capital Inc., as Administrative Agent (in such capacity, together with any
permitted successors and assigns, the
“Administrative Agent”).
Article I
Unless the context shall otherwise require, capitalized terms used and not defined herein
shall have the meanings assigned thereto in Appendix A hereto for all purposes hereof (as such
Appendix A may be amended, supplemented, amended and restated or otherwise modified from time to
time,
“Appendix A to this Participation Agreement”); and the rules of interpretation set forth in
Appendix A to this
Participation Agreement shall apply to this
Participation Agreement.
Article II
[Intentionally Reserved]
Article III
Section 3.1. Advance. Subject to the conditions and terms hereof, on the Acquisition
Date the Lessor shall take the following actions:
(a) the Lessor shall make an Advance (out of funds provided by itself and out of the
proceeds of the sale of the Purchased Interests) for the purpose of financing the
acquisition of the Properties and the payment of Transaction Expenses incurred in connection
with the foregoing, and the proceeds of such Advance shall be made to such parties
designated in writing by the Lessee to the Lessor;
(b) the Lessor shall acquire the Properties (using funds provided by itself and out of
the proceeds of the sale of the Purchased Interests); and
(c) the Lessor shall lease the Properties to the Lessee under the Master Lease and the
respective Lease Supplements.
Notwithstanding any other provision hereof, (i) the Acquisition Date shall occur no later than
December 31, 2004, and (ii) the aggregate principal amount of the Capital and Lessor Amounts shall
not exceed $37,525,000.
Section 3.2. Lessor’s Commitments. Subject to the conditions and terms hereof, the Lessor
shall make available to the Administrative Agent on the Acquisition Date an amount (a
“Lessor
Amount”) in immediately available funds equal to the Lessor’s Commitment Percentage of the amount
of the Advance. Notwithstanding any other provision hereof, the Lessor shall not be obligated to
make available its Lessor Amount in excess of its Lessor Commitment.
Section 3.3. Purchasers’ Commitments. Subject to the conditions and terms hereof and of the
Receivables Purchase Agreement, on the Acquisition Date each Purchaser shall purchase an undivided
percentage ownership interest in the Purchased Interests from the Lessor at the written request of
the Lessee in an aggregate amount in immediately available funds equal to such Purchaser’s Pro
Rata Share of such undivided percentage ownership interests. Notwithstanding any other provision
hereof, no Purchaser shall be obligated to make any such purchase if, after giving effect to such
purchase, the outstanding amount of such Purchaser’s Capital would exceed such Purchaser’s
Commitment.
Section 3.4. Procedures for Advance. (a) The Lessee shall give the Lessor and the
Administrative Agent prior written notice of the Acquisition Date pursuant to a Funding Request
substantially in the form of Exhibit B (a
“Funding Request”), which Funding Request shall be
delivered not later than 11:00 a.m. (Cleveland,
Ohio time), one (1) Business Day prior to the
-2-
proposed Acquisition Date, specifying: (i) the proposed Acquisition Date, (ii) the amount of
Advance requested, (iii) the Properties to be acquired, (iv) the Property Cost for each such
Property and (v) the Transaction Expenses to be funded by the Advance. The Administrative Agent
shall promptly forward a copy of such Funding Request to each Participant. Subject to timely
delivery of a Funding Request and the other terms and conditions of the Operative Documents, each
Participant shall make its Commitment Percentage of the Advance available to the Administrative
Agent for the account of the Lessor in immediately available funds by wire transfer to the
Administrative Agent for the account of the Lessor by 1:00 p.m. (Cleveland,
Ohio time) on the
Acquisition Date.
(b) Except as the Participants may otherwise agree in writing, the Advance shall be made
solely to provide the Lessor with funds with which to pay for the cost of the acquisition of the
Properties and the other Lessee Collateral and Transaction Expenses.
Article IV
Section 4.1. Yield. (a) The amount of the Lessor Amounts outstanding from time to time shall
accrue yield
(“Yield”) at the Yield Rate, calculated using the actual number of days elapsed and,
when the Yield Rate is based on the Adjusted Eurodollar Rate, a 360-day year basis and, if
calculated at the Base Rate, a 360-day year basis. If all or any portion of the Lessor Amounts,
any Yield payable thereon or any other amount payable hereunder shall not be paid when due
(whether at stated maturity, acceleration thereof or otherwise), such overdue amount shall bear
interest at a rate per annum which is equal to the Overdue Rate. Upon the occurrence, and during
the continuance of a Lease Event of Default, the principal of and, to the extent permitted by law.
Yield on the Lessor Amounts and any other amounts owing hereunder or under the other Operative
Documents shall bear interest at the Overdue Rate. Amounts accruing pursuant to the two preceding
sentences shall be payable from time to time on demand. The Administrative Agent shall, as soon as
practicable, but in no event later than 12:00 (noon), Cleveland,
Ohio time, one (1) Business Day
before the effectiveness of each Adjusted Eurodollar Rate, cause to be determined such Adjusted
Eurodollar Rate, the resulting Yield and Basic Rent, and notify the Lessee and the Lessor thereof.
(b) The Administrative Agent shall distribute, in accordance with Article VII, the
Lessor Basic Rent and all other amounts due with respect to the Lessor Amounts paid to the
Administrative Agent by the Lessee under the Lease from time to time.
(c) During the Lease Term, Yield on outstanding Lessor Amounts made shall be due
and payable in cash on each Scheduled Payment Date.
(d) If not repaid sooner, the outstanding aggregate Lessor Amounts shall be repaid in
full on the Maturity Date, subject to the provisions of Article XX of the Master Lease.
-3-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
shall become due and payable at the dates and times provided under the Receivables Purchase
Agreement.
(b) The Administrative Agent shall distribute, in accordance with Article VII, the
Purchaser Basic Rent and all other amounts due with respect to the Capital paid to the
Administrative Agent by the Lessee under the Lease from time to time.
(a)
Voluntary Prepayments. The Lessee shall have the right, at any time (subject to
subsection (c) below) on a Scheduled Payment Date, to prepay an amount equal to the aggregate
outstanding Lease Balance in whole, but not in part, pursuant to, and subject to, the exercise of
the Purchase Option permitted under the Lease, without premium or penalty (other than any Break
Costs).
(b)
Mandatory Prepayments. All amounts payable by the Lessee pursuant to Article
III, XIV, XV, XVI, XVIII or XX of the Master Lease shall be applied to the Capital and the Lessor
Amounts in the manner set forth in Article VII hereof.
(c)
Notice. The Lessee will provide notice to the Administrative Agent of any voluntary
prepayment by 10:00 A.M. (Cleveland, Ohio time) at least three (3) Business Days prior to the
date of such voluntary prepayment.
Section 4.4. Fees. The Lessee agrees to pay to the Arranger and the Administrative
Agent, for its respective own account on the Acquisition Date and thereafter, such arrangement,
structuring, underwriting, administrative and other fees as have heretofore been agreed to by the
Lessee, the Arranger and the Administrative Agent as set forth in the Fee Letter.
Section 4.5. Place and Manner of Payments. Except as otherwise specifically provided herein,
all payments by the Lessee hereunder, under the Master Lease or under any other Operative
Document shall be made to the Administrative Agent in Dollars in immediately available funds,
without offset, deduction, counterclaim or withholding of any kind, to the Account in Cleveland,
Ohio not later than 12:00 p.m. (Noon) (Cleveland, Ohio time) on the date when due. Payments
received after such time shall be deemed to have been received on the next succeeding Business
Day. The Lessee shall, at the time it makes any payment under any Operative Document, specify to
the Administrative Agent the Basic Rent, Property Cost, Fees, Supplemental Rent or other amounts
payable by the Lessee hereunder to which such payment is to be applied (and in the event that it
fails so to specify, or if such application would be inconsistent with the terms hereof, the
Administrative Agent shall distribute such payment to the Purchasers and the Lessor in such
manner as the Administrative Agent may determine to be appropriate in respect of obligations
owing by Lessee subject to the terms of Section 4.6). The Administrative Agent will distribute
such payments to such and the Lessor in accordance with Article VII, if any such payment is
received prior to 2:00 p.m. (Cleveland, Ohio time) on a Business Day in like funds as received
prior to such time, and otherwise the Administrative Agent will distribute such payment to such
Purchasers and the Lessor on the next succeeding Business Day. Whenever any payment hereunder
shall be stated to be due on a day which is not
-4-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
a Business Day, the due date thereof shall be extended to the next Business Day (subject to
accrual of interest and fees for the period of such extension), except that in the case of
Eurodollar Capital/Lessor Amounts, if the extension would cause the
payment to be made in the next
following calendar month, then such payment shall instead be made on the next preceding Business
Day.
Section 4.6. Pro Rata Treatment. Except to the extent otherwise provided herein, each payment
or repayment of Capital and each payment of ROC shall be allocated
pro rata among the relevant
Purchasers, in accordance with the respective Pro Rata Shares.
Section 4.7. Sharing of Payments. The Participants agree among themselves that, in the event
that any Participant shall obtain payment in respect of any Capital or Lessor Amount or any other
obligation owing to such Participant under the Operative Documents through the exercise of a right
of setoff, banker’s lien or counterclaim, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Participant under any applicable bankruptcy, insolvency or other
similar law or otherwise, or by any other means, in excess of its
pro rata share of such payment
as provided for in this Participation Agreement, such Participant shall promptly make such
adjustments, from time to time, as shall be equitable to the end that all Participants shall share
such payment in accordance with their respective ratable shares as provided for in this
Participation Agreement. The Participants further agree among themselves that if payment to a
Participant obtained by such Participant through the exercise of a right of setoff, banker’s lien,
counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each
Participant which shall have shared the benefit of such payment shall return its share of that
benefit (together with its share of any accrued ROC or Yield payable with respect thereto) to each
Participant whose payment shall have been rescinded or otherwise restored. The Lessee agrees that
any Participant may, to the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker’s lien or counterclaim, as fully as if such Participant were a holder of
such Capital or Lessor Amount or other obligation. Except as otherwise expressly provided herein,
if any Participant or the Administrative Agent shall fail to remit to the Administrative Agent or
any Participant an amount payable by such party to the Administrative Agent or such Participant
pursuant to the Operative Documents on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such Participant at a rate per annum equal to
the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other similar law, any
Participant receives a secured claim in lieu of a setoff to which this Section 4.7 applies, such
Participant shall, to the extent practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Participants under this Section 4.7 to share in the
benefits of any recovery on such secured claim.
Notwithstanding the foregoing, each Participant acknowledges that the Supplemental Collateral
is not subject to, and is specifically excluded from, the terms and operation of this Section 4.7.
-5-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Article V
Section 5.1. Nature of Transaction. (a) The parties hereto intend that (i) for
financial accounting purposes with respect to the Lessee, the Lessor will be treated as the owner
and the lessor of the Properties and the Lessee will be treated as the lessee of the Properties
and (ii) for federal and all state and local income tax purposes, state real estate and
commercial law and bankruptcy purposes,
(A) the Lease will be treated as a secured financing arrangement between the
Lessor and the Lessee, and
(B) the Lessee will be treated as the owner of the Properties and will be
entitled to all tax benefits ordinarily available to an owner of properties like the
Properties for such tax purposes. Nevertheless, the Lessee acknowledges and
agrees that neither the Administrative Agent, the arranger nor the Lessor or any
Purchaser has made any representations or warranties to the Lessee concerning the tax,
accounting or legal characteristics of the Operative Documents and that the lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Documents as it deems appropriate.
(b) Specifically, without limiting the generality of clause (a) of this Section 5.1,
the parties hereto intend and agree that with respect to the nature of the transactions evidenced
by the Lease in the context of the exercise of remedies under the Operative Documents, including,
without limitation, in the event of any insolvency or receivership proceedings or a petition under
the United States bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any state or commonwealth thereof affecting the Lessee, the Guarantor, the
Lessor or the Purchasers or any enforcement or collection actions, the transactions evidenced by
the Operative Documents shall be regarded as financing made by the Lessor as an unrelated third
party to the Lessee, secured by the Properties, the other Lessee Collateral and the Lessor
Collateral.
Section 5.2. Amounts Due Under the Lease. Anything herein or elsewhere to the contrary
notwithstanding, it is the intention of the parties hereto that: (i) the amount and timing of
installments of Basic Rent due and payable from time to time from the Lessee under the Lease shall
be equal to the aggregate payments due and payable as ROC on the Capital and Yield on the Lessor
Amounts and, to the extent Fixed Rent is paid, as a return of outstanding Capital and a reduction
of outstanding Lessor Amounts, on each Scheduled Payment Date; (ii) if the Lessee elects the
Purchase Option or the Lessee becomes obligated to purchase the Properties under the Lease, the
Capital, the Lessor Amounts, and all ROC, Yield and all other obligations of the Lessee owing to
the Administrative Agent, the Lessor and the Purchasers shall be due and payable in full by the
Lessee on the date set forth in the Lease; (iii) if the Lessee properly elects the Remarketing
Option, the Lessee shall only be required to pay to the Administrative Agent from the proceeds of
the sale of each Property that portion of the Purchaser Balance and any
-6-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
amounts due pursuant to Article XIII hereof and Section 20.2 of the Master Lease (which aggregate
amounts may be less than the Lease Balance, with any amount in excess of the Lease Balance being
payable to the Lessee); (iv) if the Lessee terminates the Lease with respect to a Property as a
result of an Event of Loss the amounts then due and payable by the Lessee under the Lease shall
include all amounts necessary to pay the Property Cost of the affected Property, all accrued and
unpaid ROC and Yield related thereto and all other obligations of the Lessee then due and owing to
the Administrative Agent and the Participants; and (v) upon an Event of Default resulting in an
acceleration of the Lessee’s obligation to purchase each Property under the Lease, the amounts
then due and payable by the Lessee under the Lease shall include all amounts necessary to pay in
full the Lease Balance, plus all other amounts then due from the Lessee to the Participants and
the Administrative Agent under the Operative Documents.
Article VI
Section 6.1. Acquisition Date. The closing date with respect to the acquisition of the
Properties (the
“Acquisition Date”) shall occur on the date on which all the conditions precedent
thereto set forth in this Section 6.1 shall have been satisfied or waived by the applicable
parties. The obligation of the Lessor to acquire the Properties on the Acquisition Date, the
obligation of the Lessor to make available its Lessor Amount on the Acquisition Date and the
obligation of each Purchaser to purchase its undivided percentage ownership interest in the
Purchased Interests on the Acquisition Date, are subject to satisfaction or waiver of the
following conditions precedent:
(a)
Funding Request. The Administrative Agent shall have received a fully executed
counterpart of the Funding Request in accordance with Section 3.4.
(b)
Operative Documents. This Agreement and the other Operative
Documents shall have been duly authorized, executed and delivered by the respective parties
thereto, shall be in full force and effect on the Acquisition Date and the Administrative
Agent and each Participant shall have received a fully executed counterpart thereof;
provided that the original Certificates shall be delivered only to the respective holder
thereof and the original copies of the Master Lease and each Lease
Supplement shall be delivered to the Administrative Agent.
(c)
Representations and Warranties. On the Acquisition Date, the
representations and warranties of the Lessee and the Guarantor in this Participation
Agreement and in each of the other Operative Documents shall be true and correct in all
material respects as though made on and as of such date, except to the extent such
representations or warranties relate solely to an earlier date, in which case such
representations and warranties shall have been true and correct in all material respects on
and as of such earlier date;
provided that a failure of any party’s representation or
warranty to be true and correct on the Acquisition Date shall not be a condition precedent
to such party’s performance of its obligations under the Operative Documents.
-7-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(d)
Appraisal. At least ten (10) Business Days prior to the Acquisition Date, each
Participant and the Administrative Agent shall have received an Appraisal of each Property
in form and substance satisfactory to the Administrative Agent and each Participant.
(e)
Governmental Approvals. All necessary Governmental Actions required by any
Requirement of Law for the purpose of authorizing (i) the Lessor to acquire the Properties,
and (ii) the Lessee, the Guarantor, Lessor, the Administrative Agent and each Participant to
enter into the Operative Documents, shall have been obtained or made and be in full force
and effect.
(f)
Responsible Officer’s Certificate. Each Participant and the Administrative Agent
shall have received a Responsible Officer’s Certificate of the Lessee and the Guarantor
addressed to the Administrative Agent, each Purchaser and Lessor and dated as of the
Acquisition Date, stating that (w) the representations and warranties of the Lessee and the
Guarantor contained in the Participation Agreement and each other Operative Document to
which it is a party are true and correct on and as of the Acquisition Date except to the
extent such representations or warranties relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct on and as of such
earlier date; (x) no Default or Event of Default has occurred and is continuing under any
Operative Document to which it is a party with respect to the Lessee and the Guarantor; (y)
each Operative Document to which the Lessee and the Guarantor is a party is in full force
and effect with respect to it; and (z) each of the Lessee and the Guarantor has duly
performed and complied with all conditions contained herein or in any other Operative
Document required to be performed and complied with by it on or prior to the Acquisition
Date.
(g)
Evidence of Property Insurance. Each Participant and the Administrative Agent
shall have received evidence that the insurance maintained by the Lessee with respect to
each Property satisfies the requirements set forth in Article XIII of the Master Lease,
setting forth the respective coverage, limits of liability, carrier, policy number and
period of coverage.
(h)
Property Condition Report; Health Surveys. At least ten (10) Business Days prior
to the Acquisition Date, the Lessor and the Administrative Agent shall have received (i) a
Property Condition Report, each with respect to each Property, and (ii) copies of the most
recent Department of Health Surveys, including follow-up revisits, plans of corrective
actions and letters indicating that the Properties are in substantial compliance with the
requirements of the Ohio Department of Health, each in form and substance reasonably
satisfactory to the Participants and the Administrative Agent.
(i)
Deed. The Lessor shall have received at least one (1) Business Day prior to the
Acquisition Date a copy of the proposed Deed with respect to each Property and on or prior
to the Acquisition Date, such Deed shall have been duly executed conveying fee simple title
to such Property to the Lessor and containing all customary seller’s warranties and subject
only to Permitted Property Liens. The legal description, tax lot
-8-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
designation and zoning of the Land shall be reasonably acceptable to the Administrative
Agent.
(j)
Xxxx of Sale. On or prior to the Acquisition Date, the Lessor shall have received
a xxxx of sale (a
“Xxxx of Sale”), conveying title to the Lessor in any Equipment
comprising part of the relevant Property.
(k)
Corporate Documents. The Administrative Agent and each Participant shall have
received evidence reasonably satisfactory to them as to the existence and good standing of
the Lessee, the Guarantor and the Lessor in their respective jurisdictions of organization
(and in the State of Ohio in the case of the Lessee) and as to the due authorization of the
Operative Documents to which each such Person is a party and the incumbency of officers
executing documents.
(1)
Fees; Transaction Expenses. The Lessee shall have paid all fees due and payable on
the Acquisition Date pursuant to Section 4.4 and all Transaction Expenses for which Lessee
receives an invoice at least one (1) Business Day prior to the Acquisition Date.
(m)
Sublessees. On or prior to the Acquisition Date, each Sublessee shall have
executed and delivered a Permitted Sublease and a Sublessee Security Agreement, and the
original counterpart of each such Permitted Sublease shall be delivered to the
Administrative Agent.
(n)
Financing Statements. On or prior to the Acquisition Date, the Lessee, the
Guarantor, the Sublessees and the Lessor shall have delivered all Financing Statements
relating to the Properties, the other Lessee Collateral, the Lessor Collateral, the
Sublessee Security Agreement, the Lessee Stock Pledge and the Supplemental Collateral as
the Administrative Agent or any Participant may reasonably request in order to protect and
perfect the Liens and interests intended to be created therein under the Operative
Documents.
(o)
Recordation of Documents; Search Results. Each of the Participants shall have
received (x) evidence reasonably satisfactory to it that each of the Lease Supplements, the
Mortgages, the Assignment of Lease and Rent and the Financing Statements have been recorded
in all jurisdictions where such filing is necessary to perfect the interests intended to be
created thereby and (y) copies of file search reports from the Uniform Commercial Code
filing officer in the jurisdiction (i) in which each Property is located or (ii) in which
is located a place of business or the chief executive office of the Lessee setting forth
the results of such Uniform Commercial Code file searches.
(p)
Survey. On or prior to January 30, 2005, the Lessee shall have delivered to each
of the Participants and the Administrative Agent a survey of each Property reasonably
acceptable to the Administrative Agent and the Participants.
-9-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(q)
Title Insurance. On or prior to the Acquisition Date, the Lessee shall have
delivered to the Administrative Agent and the Lessor a commitment to deliver an ALTA
owners and ALTA lenders title insurance policy covering each Property in favor of the
Lessor and the Administrative Agent, respectively, such policy to be in the amount not
less than the sum of the related Property Cost, all to be reasonably satisfactory to the
Participants with such customary endorsements and affirmative assurances issued by the
title company as a routine matter. The Administrative Agent and the Participants shall
also receive such reinsurance agreements as they may reasonably request.
(r)
No Default. There shall not have occurred and be continuing any Default or Event
of Default under any of the Operative Documents, and no Default or Event of Default under
any of the Operative Documents will have occurred after giving effect to the acquisition of
the Properties. No Casualty or Condemnation shall have occurred.
(s)
Opinions of Counsel and of Local Counsel to the Lessee. The Administrative Agent
and each Participant shall have received opinions of Xxxxxxxx Xxxxxxxxx Professional
Corporation, counsel for the Lessee, the Guarantor and the Sublessees and as special Ohio
counsel to the Lessee, the Guarantor and the Sublessees, covering the matters specified in
Exhibit A, in form and substance satisfactory to the Administrative Agent and the
Participants.
(t)
Supplemental Collateral. On the Acquisition Date, the Lessee shall have delivered
the Supplemental Collateral to the Lessor, and the Supplemental Collateral shall be
satisfactory to the Lessor in all respects.
(u)
Management Contracts. At least ten Business Days’ prior to the Acquisition Date,
the Lessee shall have delivered to the Administrative Agent and each Participant the forms
of the Management Contracts. The Management Contracts shall be in form and substance
satisfactory to the Administrative Agent and each Participant. Executed copies of the
Management Contracts and the Consulting Contracts shall be delivered to the Administrative
Agent and each Participant on the Acquisition Date.
(v)
Lessee Stock; Sublessee Stock. The Guarantor shall have delivered to the
Administrative Agent certificates representing all outstanding shares of stock of the
Lessee, accompanied by stock powers endorsed in blank. The Lessee shall have delivered to
the Administrative Agent certificates representing all outstanding shares of stock of each
Sublessee, accompanied by stock powers endorsed in blank.
(w)
Residual Value Insurance. The Lessor shall have received residual value insurance
in form and substance satisfactory to the Lessor with respect to the Properties.
(x)
Consents. All consents necessary in connection with the granting of the Liens on
the Lessee Collateral and to the execution and delivery of the Sublessee Security Agreement
shall have been obtained and copies thereof shall have been delivered to the Administrative
Agent and each Participant.
-10-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(y)
Documents; Licenses; Etc. The Administrative Agent and each Participant shall
have received originals or copies, as appropriate. of all instruments, permits, licenses
and other documents included in the Lessee Collateral.
(z)
Proceedings Satisfactory, Etc. All proceedings taken in connection with the
Acquisition Date and all documents relating thereto shall be reasonably satisfactory to
the Administrative Agent, each Participant and their respective counsel, and each such
Person shall have received copies of such documents as they may reasonably request in
connection therewith, all in form and substance reasonably satisfactory to each such
Person.
All documents and instruments required to be delivered pursuant to this Section 6.1 shall be
delivered at the offices of Xxxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or
at such other location as may be determined by the Administrative Agent and the Lessee.
Article VII
Section 7.1. Basic Rent. Each payment of Basic Rent (and any payment of interest on
overdue installments of Basic Rent) received by the Administrative Agent shall be distributed by
the Administrative Agent
first to the Purchasers and the Lessor
pro rata, without priority of one
over the other for application to, the Purchaser Basic Rent and Lessor Basic Rent, respectively
then due, and
second, to the Purchasers and the Lessor
pro rata without priority of one over the
other for application to any overdue ROC or Yield (to the extent permitted by Applicable Law).
(a) the purchase of all of the Properties in connection with the exercise of the
Purchase Option under Section 18.1 of the Master Lease, or compliance with the obligation
to purchase (or cause its designee to purchase) all of the Properties in accordance with
Section 18.2 or 18.3 of the Master Lease, or
(b) compliance with the obligation to purchase all of the Properties in accordance
with Section 16.2(f) of the Master Lease, or
(c) failure to fulfill one or more of the conditions to exercise of the Remarketing
Option with respect to any Property pursuant to Section 20.1 of the Master Lease and the
receipt by the Lessor of the Lease Balance pursuant to the last paragraph of Section 20.2
of the Master Lease, or
(d) the payment of the Property Balance with respect to any Property in accordance
with Article XV or XVIII of the Master Lease,
-11-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
shall be distributed by the Administrative Agent to the Participants pro rata without priority of
one over the other, in the proportion that the Participant Balance of each bears to the aggregate
of all of the Participant Balances.
Section 7.3. Payment of Maximum Recourse Amounts. In accordance with Section 20.2(f) of the
Master Lease upon the exercise of the Remarketing Option, the payment of the Maximum Recourse
Amount to the Administrative Agent shall be distributed to the Purchasers in accordance with
their respective Pro Rata Shares of the Capital for application to the Capital.
Section 7.4. Sales Proceeds of Remarketing of the Properties. Any payments received by the
Administrative Agent as proceeds from the sale of the Properties pursuant to the exercise of the
Remarketing Option pursuant to Article XX of the Master Lease, together with any payment made by
the Lessee as a result of an appraisal pursuant to Section 13.2, shall be distributed by the
Administrative Agent in the funds so received in the following order of priority:
first, to the Purchasers in an amount equal to the aggregate amount of the Capital for
application to the Participant Balance of each Purchaser, pro rata among the Purchasers
without priority of one over the other in the proportion that the Participant Balance of
each such Purchaser bears to the aggregate Participant Balances of all Purchaser and, in
the case where the amounts so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among the Purchasers without priority of one over the other in the
proportion that the Participant Balance of each such Purchaser bears to the aggregate
Participant Balances of all Purchasers;
second, to the extent not previously paid as required by Section 7.3 hereof, an
amount equal to the Maximum Recourse Amount shall be distributed to the Purchasers as set
forth in Section 7.3;
third, an amount equal to the Lessor Balance shall be distributed to the Lessor for
application to pay in full the Participant Balance of the Lessor,
fourth, the balance, if any, shall be promptly paid to the Lessee.
Section 7.5. Supplemental Rent; Excepted Payments. All payments of Supplemental Rent received
by the Administrative Agent (excluding any amounts payable pursuant to the preceding provisions of
this Article VII) and all Excepted Payments shall be distributed promptly by the Administrative
Agent upon receipt thereof to the Persons entitled thereto pursuant to the Operative Documents.
-12-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Administrative
Agent without reduction, set-off or counterclaim, and shall be distributed by the
Administrative Agent in the following order of priority:
first, so much of such payment or amount as shall be required to pay or reimburse the
Administrative Agent and the Lessor for any tax, fees, expense, indemnification or other
loss incurred by the Administrative Agent or the Lessor (to the extent incurred in
connection with any duties as the Administrative Agent or Lessor, as the case may be),
shall be distributed to the Administrative Agent and the Lessor without priority of one
over the other for their own accounts in accordance with the amount of such payment or
amount payable to such Person;
second, so much of such payments or amounts as shall be required to pay the then
existing Participants the amounts payable to them pursuant to any expense reimbursement or
indemnification provisions of the Operative Documents shall be distributed to each such
Participant without priority of one over the other in accordance with the amount of such
payment or payments payable to each such Person;
third, to the Purchasers, an amount equal to the aggregate Purchaser Balance then
outstanding for application to the outstanding Purchaser Balance of each such Purchaser, in
accordance with their respective Pro Rata Shares of Purchaser Balance without priority of
one over the other and, in the case where the amounts so distributed shall be insufficient
to pay in full as aforesaid, then pro rata among the Purchasers without priority of one
over the other in accordance with their Pro Rata Shares;
fourth, an amount equal to the aggregate Lessor Balance shall be distributed to the
Lessor for application to pay in full the Participant Balance of Lessor;
fifth, to the Participants and the Administrative Agent for any other amounts payable
to them under the Operative Documents, pro rata based on the amounts payable; and
sixth, the balance, if any, of such payment or amounts remaining thereafter shall be
promptly distributed to the Lessee, its successors and assigns, or to such other Person
lawfully entitled thereto.
(b) All payments received and amounts realized by the Administrative Agent in connection with
any Casualty or Condemnation during the continuance of a Lease Default or Lease Event of Default
shall be distributed by the Administrative Agent as follows:
(i) in the event that the Lessor and the Administrative Agent elect to pay all or a
portion of such amounts to the Lessee for the repair of damage caused by such Casualty or
Condemnation in accordance with Section 14.2 of the Master Lease, then such amounts shall
be distributed to the Lessee, and
(ii) in the event that the Lessor and the Administrative Agent elect to apply all or a
portion of such amounts to the purchase price of the related Property in accordance
-13-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
with Section 14.2 and Article XV of the Master Lease, then such amounts shall be distributed
in accordance with clause (a).
Section 7.7. Casualty and Condemnation Amounts. Subject to Section 7.6(b), any amounts
payable to the Administrative Agent as a result of a Casualty or Condemnation pursuant to Section
14.2 of the Master Lease and the Assignment of Lease and Rent shall be distributed as follows:
(a) all amounts payable to the Lessee for the repair of damage caused by such Casualty
or Condemnation in accordance with Section 14.2(a) of the Master Lease and any excess
amounts remaining after satisfaction of the Lessee’s obligations in respect of such Casualty
or Condemnation shall be distributed to the Lessee, and
(b) all amounts that are to be applied to the Property Cost of the related Property in
accordance with Section 14.2(a) and Article XV of the Master Lease shall be distributed by
the Administrative Agent to the Purchasers and the Lessor pro rata without priority of one
over the other, in the proportion that the Participant Balance of each bears to the
aggregate of all of the Participant Balances.
Section 7.8.
Other Payments. (a) Except as otherwise provided in Sections 7.1, 7.2, 7.6 and
clause (b) below, any payment received by the Administrative Agent for which no provision as to
the application thereof is made in the Operative Documents or elsewhere in this Article VII
(including any balance remaining after the application in full of amounts to satisfy any expressed
provision) shall be distributed
pro rata among the Purchasers and the Lessor without priority of
one over the other, in the proportion that the Participant Balance of each bears to the aggregate
of all the Participant Balances;
provided that if there is any shortfall in a payment, the
Purchasers shall be paid prior to the Lessor.
(b) Except as otherwise provided in Sections 7.1, 7.2 and 7.6, all payments received and
amounts realized by the Administrative Agent or the Lessor under the Master Lease or otherwise with
respect to the Properties to the extent received or realized at any time after the indefeasible
payment in full of the Participant Balances of all of the Purchasers and the Lessor and any other
amounts due and owing to the Purchasers or the Lessor, shall be distributed forthwith by the
Administrative Agent or the Lessor, as the case may be, in the order of priority set forth in
Section 7.6(a).
(c) Except as otherwise provided in Sections 7.1 and 7.2, any payment received by the
Administrative Agent or the Lessor for which provisions as to the application thereof is made in an
Operative Document but not elsewhere in this Article VII shall be distributed forthwith by the
Lessor or the Administrative Agent to the Person and for the purpose for which such payment was
made in accordance with the terms of such Operative Document.
Section 7.9. Order of Application. To the extent any payment made to the Lessor pursuant to
Sections 7.2, 7.3, 7.4, 7.6, 7.7 or 7.8 is insufficient to pay in full the Lessor Balance, then
each such payment shall first be applied to accrued Yield and then to principal on the Lessor
Amounts.
-14-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Article VIII
(b)
Status. Such Participant meets at least one of the definitions (other than as a
“Lessor” or a “Purchaser”) of the term “Eligible Assignee.”
(c)
Securities. Each Participant is participating in the Transactions for its own
account and not with a view toward redistribution;
provided that disposition of its rights
hereunder shall remain in its control and the foregoing shall not affect the ability of any
Participant to assign or sell participations in its rights in accordance with the Operative
Documents.
(a)
Lessee and Guarantor Organization; Powers. The Lessee and Guarantor each (i) is a
corporation duly organized, validly existing and in good standing under the laws of the
State of Ohio (in the case of the Lessee) and the State of Pennsylvania (in the case of the
Guarantor), (ii) has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (iii) is qualified
to do business in each jurisdiction where the Properties are located and in each other
jurisdiction where the failure so to qualify would reasonably be likely to have a Material
Adverse Effect, (iv) has the corporate power and authority to execute, deliver and perform
its obligations under each of the Operative Documents and each other agreement or
instrument, if any, contemplated thereby to which it is or will be a party hereunder, and
(v) has its chief executive office located at 000 Xxxxxxxxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxx 00000. Each Sublessee is a wholly-owned Subsidiary of the Lessee.
(b)
Authorization. The execution, delivery and performance by Lessee and the
Guarantor of each of the Operative Documents to which it is a party (i) have been duly
authorized by all requisite corporate and, if required, stockholder action and (ii) will
-15-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
not (A) violate (x) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or bylaws of
Lessee or the Guarantor, (y) any order, writ, ruling, injunction or decree of any
Governmental Authority binding on it or (z) any provision of any indenture, agreement or
other instrument to which Lessee or the Guarantor is a party or by which either of such,
or any of their property is or may be bound except for violations which, in the case of
clauses (y) and (z), would not have a Material Adverse Effect, (B) be in conflict with,
result in a breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument except for breaches or
defaults which would not have a Material Adverse Effect or (C) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon or with respect to any
property or assets now owned or hereafter acquired by Lessee or the Guarantor except
pursuant to the Operative Documents.
(c)
Enforceability. (i) This Participation Agreement and each other Operative Document
to which the Lessee or the Guarantor is a party has been duly executed and delivered by the
Lessee and the Guarantor, as the case may be, and assuming the due authorization, execution
and delivery thereof on the part of each other party thereto, each such Operative Document
constitutes a legal, valid and binding obligation of Lessee or the Guarantor enforceable
against such in accordance with its terms, except as such enforceability may be limited by
(A) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and (B) general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or
at law).
(ii) If the transactions are treated as creating a secured loan to Lessee, as is the
intent of the parties hereto, each of the Financing Statements and the Mortgages creates,
or upon their execution, recordation and filing will create valid security interests in and
mortgage liens on the Properties purported to be covered thereby, which security interests
and mortgage liens are, and will remain to the extent appropriate UCC continuation filings
are made, perfected security interests and mortgage liens, prior to all Liens other than
Permitted Property Liens.
(d)
Governmental
and Other Approvals. No action, consent or approval of, registration
or filing with or any other action by any Governmental Authority having jurisdiction over
the Guarantor, the Lessee or any Sublessee or any Property is required in connection with
the activities of Lessee, the Guarantor and the Sublessees pursuant to the Transactions or
the enforceability of any Operative Document against either Lessee or Guarantor to which
Lessee or any Guarantor is a party, except for the filing or recording of the Operative
Documents referred to in Section 6.1(o) hereof and the Financing Statements with the
appropriate Governmental Authorities and except such as have been made or obtained and are
in full force and effect.
(e)
Financial
Information. (i) The audited consolidated balance sheet of the Guarantor
and its Subsidiaries at December 31, 2003 and the related consolidated statements of income
and cash flows for the fiscal year then ended, reported on by Ernst
-16-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
&
Young LLP, copies of which have been delivered to each Participant, fairly present, in
all material respects, in conformity with GAAP, the consolidated financial position of
Guarantor and its Subsidiaries at such date and their consolidated results of operations
and cash flows for such fiscal year.
(ii) The unaudited consolidated balance sheet of Guarantor and its Subsidiaries at
September 30, 2004 and the related unaudited consolidated statements of income and cash
flows for the three months then ended, copies of which have been delivered to each
Participant, fairly present, in all material respects, in conformity with GAAP applied on a
basis substantially consistent with the financial statement referred to in paragraph (i) of
this Section, the consolidated financial position of Guarantor and its Subsidiaries at such
date and their consolidated results of operations and cash flows for such three-month
period (subject to normal year-end adjustments and the absence of footnotes).
(iii) Since December 31, 2003 there has been no material adverse change in the
business, financial position, results of operations or prospects of Guarantor and its
Subsidiaries, considered as a whole.
(f)
Compliance with Laws; Permits. The Lessee is the lawful owner of all permits
necessary for the proper and lawful operation of the Properties under applicable
Requirements of Law. As of the Acquisition Date, the Lessee is in compliance and at all
times will remain in compliance with the applicable provisions of skilled nursing facility,
residential care, personal care, adult care, boarding home and/or assisted living facility
laws, rules, regulations and published interpretations to which each Property is subject. No
waivers of any laws, rules, regulations or requirements (including, but not limited to
minimum square foot requirements per bed) are required for the Properties to operate in
compliance with applicable Requirements of Law.
(g)
Title to Properties. The Guarantor and each of its Subsidiaries, including Lessee,
has good and indefeasible title to its respective real properties (other than properties
which it leases) and good title to all of its other respective properties and assets,
including the properties and assets reflected in the most recent audited balance sheet
referred to in Section 8.2(e) (other than properties and assets disposed of in the ordinary
course of business), subject, in each case, to Permitted Property Liens.
(h)
Registrations, etc. The execution, delivery and performance by Administrative
Agent and each Participant of the Operative Documents to which it is a party, and the
consummation by such Persons of the transactions contemplated thereby, do not and will not
require any registration, filing, license, qualification or permit with, consent or
approval of, or notice or obligation to, or any other action to, with or by any federal,
state or governmental authority or regulatory body having jurisdiction over the ownership,
licensing, permitting or operation of the Properties.
(i)
Litigation; Compliance with Laws. There is no action, suit, investigation or
proceeding pending or, to the knowledge of their Lessee or the Guarantor, threatened
-17-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
against the Lessee or their Guarantor or any of their Subsidiaries, or any properties or
rights of the Lessee or the Guarantor or any of their Subsidiaries, by or before any
court, arbitrator or administrative or governmental body that could be reasonably expected
to result in a Material Adverse Effect.
(j)
Federal Reserve Regulations. (i) Neither the Lessee nor the Guarantor is engaged
in the business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(ii) No part of the proceeds of the Advance will be used by the Lessee, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (A) to the
purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing
or carrying Margin Stock or to refund indebtedness originally incurred for such purpose, or
(B) for any purpose which entails a violation of, or which is inconsistent with the
provisions of the Regulations of the F.R.S. Board, including Regulation G, U or X.
(k)
Governmental Regulation. Neither Lessee nor the Guarantor is an “investment
company” or a company “controlled” by an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (ii) subject to regulation under
the Public Utility Holding Company Act of 1935.
(l)
Use of Proceeds. The proceeds of the Advance will be used only for the purpose of
financing the acquisition of the Properties and the payment of Transaction Expenses
incurred in connection therewith.
(m)
Tax Returns. The Lessee, the Guarantor and each of their Subsidiaries has filed
all federal, state and other income tax returns which are required to be filed or have
obtained extensions for the filing of such returns, and each has paid all taxes as shown on
such returns and on all assessments received by it to the extent that such taxes have
become due, except such taxes (i) as are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with GAAP or
(ii) the non-payment of which (a) could not be reasonably expected to have a Material
Adverse Effect, and (b) does not result in the creation of any Lien on any Property or
other Lessee Collateral other than Permitted Property Liens.
(n)
No Misstatements. Neither the Operative Documents nor any other document,
certificate or statement furnished to the Participants by or on behalf of the Lessee or
the Guarantor in connection herewith contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements contained herein
and therein not Materially misleading.
(o)
ERISA. No accumulated funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with respect to any Plan (other
than a Multiemployer Plan). No liability to the PBGC has been or is expected by the
Guarantor or any ERISA Affiliate to be incurred with respect to any Plan (other
-18-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
than a Multiemployer Plan) by the Guarantor, any Subsidiary or any ERISA Affiliate which
would have a Material Adverse Effect. Neither the Guarantor, any Subsidiary nor any ERISA
Affiliate has incurred or presently expects to incur any withdrawal liability under Title
IV of ERISA with respect to any Multiemployer Plan which is or would be materially adverse
to the business, property or assets, condition (financial or otherwise) or operations of
the Guarantor and its Subsidiaries taken as a whole. The execution and delivery of the
Operative Documents and the consummation of the Transactions will be exempt from or will
not involve any transaction which is subject to the prohibitions of section 406 of ERISA
and will not involve any transaction in connection with which a penalty could be imposed
under Section 502(i) of ERISA or a tax could he imposed pursuant to section 4975 of the
Code.
(p)
Environmental Compliance. (i) The Lessee, the Guarantor and the Subsidiaries and
all of their respective properties and facilities have complied (or upon knowledge of a
violation, have taken such steps as are necessary to comply) at all times and in all
respects with all applicable federal, state, local and regional statutes, laws, ordinances
and judicial or administrative orders, judgments, rulings and regulations relating to
protection of the environment except, in any such case, where failure to so comply could
not reasonably be expected to result in a Material Adverse Effect.
(ii) (A) No violation of any Environmental Law has been committed or is about to be
committed by the Lessee or at any Property, including without limitation, a violation
relating to Releases, to air, surface water, land or groundwater, or to the withdrawal or
use of groundwater, (B) no administrative or judicial complaint or order has been filed or
is about to be filed against the Lessee or the Guarantor alleging violations of any
Environmental Law or requiring the Lessee or the Guarantor to take any action in connection
with the Release of any Hazardous Material into the environment at, to or from any
Property, (C) no notice from a Federal, state, or local governmental agency or private
party has been received by the Lessee or the Guarantor alleging that the Lessee or the
Guarantor is or may be liable or responsible for costs associated with a response to or
cleanup of a Release of any Hazardous Material into the environment at, to or from any
Property or any damages caused thereby, (D) the Lessee and the Guarantor have not received
any notice that the Lessee or the Guarantor is subject to Federal, state or local inquiry
or investigation evaluating whether any removal or remedial action is needed to respond to
the Release of any Hazardous Materials into the environment at, to or from any Property,
(E) neither the Lessee nor the Guarantor has any knowledge of any past ownership or use of
any Property, after all appropriate inquiry consistent with good commercial and customary
practice in an effort to minimize liability which takes into account the “innocent
landowner” provision set forth at 42 U.S.C. §9601(35), that resulted in a Release of
Hazardous Materials onto such Property, (F) all permits, licenses and approvals necessary
for operating each Property have been obtained and are in good standing, and (G) no
environmental health or safety condition exists at any Property or any other property which
could have a Material Adverse Effect.
(q)
Offer of Securities, etc. Neither Lessee, the Guarantor nor any Person
authorized to act on their behalf has, directly or indirectly, offered any interest in the
-19-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Properties or any other interest similar thereto (the sale or offer of which would be
integrated with the sale or offer of such interest in the
Properties), for sale to, or
solicited any offer to acquire any of the same from, any Person other than each Participant
and the Administrative Agent and other “accredited investors” (as defined in Regulation D
of the Securities and Exchange Commission).
(r)
Property. The Properties and the contemplated use thereof by the Lessee and its
agents, assignees, employees, lessees, sublessees, licensees, tenants and subtenants shall
be in material compliance with all Requirements of Law (including, without limitation, all
zoning and land use laws and Environmental Laws) and Insurance Requirements. There is no
action, suit or proceeding (including any proceeding in condemnation or eminent domain or
under any Environmental Law) pending or threatened, to the best of Lessee’s and Guarantor’s
knowledge, with respect to it, or the Properties which adversely affects the title to, or
the use, operation or value of, the Properties.
(s)
Utilities, etc. All utilities required to adequately service each Property for
such Property’s intended use are available pursuant to adequate permits (including any that
may be required under applicable Environmental Laws). No undisclosed casualty has had a
Material Adverse Effect on any Property. Each Property has available all Material services
of public facilities and other utilities necessary for use and operation of such Property
for its intended purpose including, without limitation, adequate water and electricity. All
utilities serving each Property or proposed to serve such Property are located in, and
vehicular access to such Property is provided by, either public rights-of-way abutting such
Property or Appurtenant Rights. The Lessee has obtained (or will obtain prior to the
Acquisition Date) all appropriate Governmental Action, and has and will keep in full force
and effect, all material operating permits necessary to allow for the Properties to be
operated in accordance with their intended use.
(t)
Deed; Liens. The Deeds will be sufficient to convey good and marketable title to
the Properties (subject to the Permitted Property Liens) to the Lessor. On the Acquisition
Date, the Lessor will have good and marketable title to each Property, subject only to
Permitted Property Liens. The other Lessee Collateral and the collateral under the Lessee
Stock Pledge are free and clear of all Liens other than Permitted Property Liens.
(u)
Insurance. Lessee will, on or before the Acquisition Date, have obtained insurance
coverage covering the Properties which meets the requirements of the Master Lease, and such
coverage is in full force and effect.
(v)
Flood Hazard Areas. Except as otherwise identified on the applicable survey, plat
or map delivered pursuant to Section 6.1(p), no portion of any Property will be located
within an area identified as a special flood hazardous area by the Federal Emergency
Management Agency.
(w)
Solvency. The Guarantor, the Lessee and each Sublessee are Solvent.
-20-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(x) Filings. As of the Acquisition Date, all filings necessary or desirable to
perfect the right, title and interest of the Lessor in and to the Properties, the other
Lessee Collateral and the Supplemental Collateral as against creditors of and purchasers
from the Lessee will have been made. As of the Acquisition Date, all filings necessary or
desirable to perfect the Lien of the Administrative Agent in and to the Lessor Collateral
as against creditors of and purchasers from the Lessee and the Lessor
will have been made.
(y)
OFAC; Patriot Act. Neither Guarantor, Lessee nor any Subsidiary thereof is (or
will be) a person with whom the Administrative Agent, the Lessor or any Participant is
restricted from doing business under OFAC (including those Persons named on OFAC’s
Specially Designated and Blocked Persons list) or under any statute, executive order
(including the September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or other
Governmental Action and is not and shall not engage in any dealings or transactions or
otherwise be associated with such persons.
(a) The Lessor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio and has all requisite corporate power and authority to
execute, deliver, and perform its obligations under the Operative Documents to which it is a
party.
(b) The Operative Documents to which it is, or will be, a party have been duly
authorized by all requisite corporate action, have been duly executed and delivered by the
Lessor, and constitute, and each other Operative Document to which the Lessor is a party
when executed and delivered by the Lessor will constitute, the valid and binding obligations
of the Lessor enforceable against the Lessor in accordance with the respective terms
thereof, except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(c) Neither the execution and delivery of the Operative Documents, the consummation of
the transactions contemplated thereby nor the fulfillment of or compliance with the
provisions thereof will require consent, approval, authorization, filing, registration or
qualification under or conflict with or violate any Applicable Law applicable to the Lessor
or any of its property, except as contemplated by the Operative Documents. The execution,
delivery and performance of its obligations under the Operative Documents to which it is a
party do not violate any provisions of the Lessor’s articles of incorporation or
regulations.
(d) There are no Lessor Liens attributable to the Lessor on the Collateral, the
Property or any part thereof.
-21-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(e) The Lessor is not and will not be funding its Lessor Amounts hereunder with the
assets of an “employee benefit plan” (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA, or “plan” (as defined in
Section 4975(c)(1) of the Code).
(f) The Lessor is participating in the Transactions for its own account and not with a
view toward redistribution; provided that disposition of its rights hereunder shall remain
in its control and the foregoing shall not affect the ability of the Lessor to assign,
transfer or sell participations in its rights in accordance with the Operative Documents.
(g) There are no actions or proceedings pending, or to the knowledge of the Lessor,
threatened, against or affecting the Lessor in or before any Governmental Authority which,
if adversely determined, would materially and adversely affect the ability of the Lessor to
enter into or perform the Operative Documents to which it is a party.
(h) The Lessor is Solvent.
Article IX
The Lessee agrees, for the benefit of the Arranger, the Lessor, the Administrative
Agent, and the Purchasers, that:
Section 9.1.
Transaction Expenses. (a) The Lessee shall pay, or cause to be paid, all
Transaction Expenses in respect of the transactions on the Acquisition Date (which may be included
in the Advance to the extent set forth in the Funding Request delivered pursuant to Section 3.4);
provided, however, that, if the Lessee has not received written invoices therefor at least two (2)
Business Days prior to such date, such Transaction Expenses shall be paid within thirty (30) days
after the Lessee has received written invoices therefor.
(b) The Lessee shall pay or cause to be paid (i) all reasonable costs and out-of-pocket
expenses (including fees and expenses of counsel) incurred by the Lessor, the Administrative Agent
or the Arranger in entering into any future amendments or supplements with respect to any of the
Operative Documents, whether or not such amendments or supplements are ultimately entered into, or
giving or withholding of waivers or consents hereto or thereto or incurred in connection with the
insolvency or bankruptcy of the Lessee, the Guarantor or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the other Operative
Documents, including financial advisors’ fees and counsel fees, (ii) all reasonable costs and
out-of-pocket expenses (including fees and expenses of counsel) incurred by the Arranger, the
Administrative Agent, the Lessor or the Purchasers in connection with the purchase of any Property
by Lessee or other Person pursuant to Articles XVIII and XXI of the Master Lease and (iii) after
the occurrence and during the continuance of a Lease Event of Default, all reasonable costs and
expenses (including fees and expenses of counsel) incurred by any of the Participants the
Administrative Agent or the Arranger in respect of enforcement of
-22-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
any of their rights or remedies against the Lessee or the Guarantor in respect of the Operative
Documents.
Section 9.2. Brokers’ Fees and Stamp Taxes. The Lessee shall pay or cause to be paid any
brokers’ fees and any and all stamp, transfer and other similar taxes, fees and excise, if any,
including any interest and penalties, which are payable in connection with the transactions
contemplated by this Participation Agreement and the other Operative Documents.
Section 9.3. Receivables Purchase Agreement and Related Obligations. If a Lease Event of
Default has occurred and is continuing, the Lessee shall pay, without duplication of any other
obligation of the Lessee to pay any such amount under the Operative Documents, before the due date
thereof, all costs, expenses and other amounts (other than Capital and ROC which are payable to
the extent otherwise required by the Operative Documents) required to be paid by the Lessor, the
Administrative Agent or any of the Purchasers under the Receivables Purchase Agreement and the
Assignment of Lease and Rent.
Article X
The Lessee and the Guarantor covenant and agree with the Arranger, the Lessor, the
Administrative Agent and the Purchasers that, so long as this Participation Agreement and the
Master Lease shall remain in effect or any amounts, fees or any other expenses or amounts payable
under any Operative Document shall be unpaid unless the Required Participants shall otherwise
consent in writing:
Section 10.1. Corporate Existence, Etc. The Lessee and the Guarantor will preserve and keep
in full force and effect, and will cause each of its Subsidiaries to preserve and keep in full
force and effect, its corporate existence and all licenses and permits necessary to the proper
conduct of its business where the failure to do so could reasonably be expected to have a Material
Adverse Effect,
provided that the foregoing shall not prevent any transaction permitted by Section
10.12.
Section 10.2. Insurance. The Lessee and the Guarantor will maintain, and will cause each of
its Subsidiaries to maintain, insurance coverage by financially sound and reputable insurers and
in such forms and amounts and against such risks as are consistent with the Guarantor’s insurance
practices existing on the Acquisition Date.
Section 10.3. Taxes, Claims for Labor and Materials; Compliance with Laws The Lessee and the
Guarantor will (i) promptly pay and discharge, and will cause each of its Subsidiaries promptly to
pay and discharge, all lawful taxes, assessments and governmental charges or levies imposed upon it
or such Subsidiary, respectively, or upon or in respect of all or any part of its property or
business or of such Subsidiary, all trade accounts payable in accordance with usual and customary
business terms, and all claims for work, labor or materials, which if unpaid might become a Lien
upon any of its property or such Subsidiary;
provided it or such Subsidiary shall not be required
to pay any such tax, assessment, charge levy, account
-23-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
payable or claim if (1) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or sale of any of
its property or such Subsidiary or any material interference with the use thereof by it or such
Subsidiary, and (2) it or such Subsidiary shall set aside on its books, reserves deemed by it to
be adequate with respect thereto; and (ii) promptly comply, and will cause each of its
Subsidiaries to promptly comply, in all material respects, with all Requirements of Law (including
all Environmental Laws).
Section 10.4. Nature of Business. Neither Lessee, the Guarantor nor any of their respective
Subsidiaries will engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by Lessee, the Guarantor and their
Subsidiaries would be Materially changed from the general nature of the business engaged in by
Lessee, the Guarantor and their Subsidiaries on the date hereof.
Section 10.5. Visitation Rights. At any reasonable time and from time to time upon reasonable
prior notice, the Lessee and the Guarantor will permit the Purchasers and Lessor or any agents or
representatives thereof, to examine and make copies of and abstracts from the records and books of
account of, and visit the properties of the Lessee, the Guarantor and any of their Subsidiaries,
and to discuss the affairs, finances and accounts of the Lessee, the Guarantor and any of their
subsidiaries with any of their respective officers or directors. Any such visitation shall be at
the expense of the applicable Purchaser or Lessor so long as no Event of Default shall have
occurred and be continuing, and thereafter at the expense of the Lessee.
(a) Quarterly Statements — within 45 days after the end of each quarterly fiscal
period in each fiscal year of the Lessee and the Guarantor (other than the last quarterly
fiscal period of each such fiscal year), copies of:
(i) consolidated balance sheets of the Guarantor and its Subsidiaries as at
the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders’ equity and
cash flows of the Lessee and the Guarantor for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a Responsible
Officer as fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments;
-24-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(b) Annual Statements — within 120 days after the end of each fiscal year of the Lessee
and the Guarantor, copies of,
(i) consolidated and consolidating balance sheets of the Lessee and the
Guarantor, as at the end of such year, and
(ii) consolidated and consolidating statements of income, changes in
shareholders’ equity and cash flows of the Lessee and the Guarantor, for such
year,
setting forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion
thereon of independent certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances;
(c) Property Statements — within 45 days after the end of each quarterly fiscal period
in each fiscal year of the Lessee, copies of Lessee’s internally prepared financial
statements for each Property, including statements of income and expenses, utilization
reports (including number of bed days available and actual patient days incurred for such
quarterly period), quarterly census information of each Property as of the end of such
quarterly period in sufficient detail to show patient-mix, occupancy, payor mix and per
diems (private pay, Medicare, Medicaid and other), setting forth in each case in comparative
form the figures for the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Responsible Officer as fairly presenting, in all
material respects, the financial position of the operations at each Property being reported
on and their results of operations and cash flows;
(d) SEC and Other Reports — promptly upon their becoming available, one copy (if any)
of (i) each financial statement, report, notice or proxy statement sent by the Lessee or the
Guarantor to public securities holders generally, and (ii) each regular or periodic report,
each registration statement that shall have become effective (without exhibits except as
expressly requested by such holder), and each final prospectus and all amendments thereto
filed by the Lessee or the Guarantor with the Securities and Exchange Commission;
(e) Notice of Default or Event of Default — promptly, and in any event within five days
after a Responsible Officer becoming aware of the existence of any Lease Default or Lease
Event of Default, a written notice specifying the nature and period of existence thereof and
what action the Lessee is taking or proposes to take with respect thereto;
-25-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(f) Cost Reports — within 60 days of receipt thereof, copies of all Medicare and
Medicaid cost reports with respect to the Properties;
(g) Surveys — within 60 days after the survey date thereof, copies of all Ohio
Department of Health Surveys with respect to the Properties, including follow-up revisits,
plans of corrective actions and letters indicating that the Properties are in substantial
compliance with the requirements of the Ohio Department of Health;
(h)
Medicare/Medicaid Certification — promptly, and in any event within five days of
receipt thereof, notice of receipt by the Lessee or any Sublessee from the State of Ohio or
the Health Care Financing Administration of a possible termination or impending termination
of any Medicare or Medicaid certification; and
(i) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition, assets or
properties of the Lessee or the Guarantor or relating to the ability of the Lessee or the
Guarantor to perform its obligations under the Operative Documents as from time to time may
be reasonably requested by any such Person.
Section 10.7. Responsible Officer’s Certificate. Each set of financial statements delivered
pursuant to Section 10.6(a) or Section 10.6(b) hereof shall be accompanied by a certificate of a
Responsible Officer of the Lessee or the Guarantor, as applicable, setting forth:
(a) Covenant Compliance — the information (including detailed calculations) required
in order to establish whether the Lessee was in compliance with the requirements of
Sections 10.8 and 10.9 hereof and the Guarantor was in compliance with the requirements of
Section 10.10 hereof during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default — a statement that such Responsible Officer has reviewed the
relevant terms of the Operative Documents and has made a review of the transactions and
conditions of the Lessee or the Guarantor, as the case may be, from the beginning of the
quarterly or annual period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Lease Default or a Lease Event of Default or,
if any such condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Lessee or the Guarantor shall have taken or proposes
to take with respect thereto.
Section 10.8. Occupancy. The Lessee shall maintain on an aggregate basis as to all Properties
for each fiscal quarter of the Lessee an occupancy level of not less
than 85% of the Available
Beds;
provided that if the Lessee increases the number of Available Beds at any Property, the
Lessee and the Participants shall consult in good faith as to any adjustment to the
-26-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
foregoing requirement for such Property to account for an appropriate stabilization period (if
any) for such additional Available Beds.
Section 10.9. Lessee CR. The Lessee will not permit the Lessee Coverage Ratio to be less
than 1.40 to 1 for the trailing twelve months measured at the end of each calendar quarter
beginning with the calendar quarter ended December 31, 2004.
Section 10.10. Guarantor DSCR. The Guarantor will not permit the Guarantor Debt Service
Coverage Ratio to be less than 1.00 to 1 for the period of four consecutive fiscal quarters
ending at the end of each fiscal quarter of the Guarantor.
Section 10.11. Lessee Merger, etc. The Lessee shall not consolidate with or merge with or
into any other corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person.
Section 10.12. Guarantor Merger, etc. The Guarantor shall not consolidate with or merge
with any other corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer or lease substantially all of the assets of
the Guarantor as an entirety, as the case may be, shall be a solvent corporation organized
and existing under the laws of the United States or any State thereof (including the
District of Columbia), and, if the Guarantor is not such corporation, such corporation shall
have executed and delivered to the Administrative Agent and the Participants (i) its
assumption of the due and punctual performance and observance of each covenant and condition
of the Guarantor under the Operative Documents, in form and substance satisfactory to such
Persons and (ii) shall have caused to be delivered to the Administrative Agent and
the Participants an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required Participants, to the
effect that all agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof; and
(b) immediately after giving effect to such transaction, (i) no Lease Default or Lease
Event of Default shall have occurred and be continuing, and (ii) such corporation shall have
a tangible net worth (determined in accordance with GAAP) at least equal to the tangible net
worth of the Guarantor immediately prior to such transaction.
No such conveyance, transfer or lease of substantially all of the assets of the Guarantor shall
have the effect of releasing the Guarantor or any successor corporation that shall theretofore
have become such in the manner prescribed in this Section 10.12 from its liability under the
Operative Documents.
-27-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(and any securities convertible at any time and from time to time into capital stock) of Lessee
free and clear of all Liens other than the Lien of the Lessee Stock Pledge. The Lessee will at
all times that any Sublessee subleases any Property own, directly or indirectly, not less than
100% of all of the issued and outstanding stock (and any securities convertible at any time and
from time to time into capital stock) of such Sublessee free and clear of all Liens other than
the Lien of the Sublessee Stock Pledge.
Section 10.14.
Amendments to Agreements. The Lessee will not, and will not permit any
Sublessee to, without the prior written consent of the Administrative Agent (acting at the
direction of the Required Participants), amend, modify or waive any provision of the Subleases,
the Management Contracts, or any other agreement or instrument included within the Lessee
Collateral.
Section 10.15. Restricted Payments. The Lessee will not, and will not permit any Subsidiary
to, declare or pay any dividends on, or purchase, redeem or retire, or make any other payment or
distribution in respect of, any shares of its capital stock
(“Restricted Payments”); provided that
the Lessee or any such Subsidiary may make Restricted Payments so long as no Material Default
exists, as of the time such Restricted Payment is made.
Section 10.16. Supplemental Collateral. The Lessee shall at all times cause the Supplemental
Collateral to be maintained, subject at all times to a perfected lien in favor of the
Administrative Agent, in an amount not less than the Lessor Amount in effect on the Acquisition
Date and in a duration satisfactory to the Lessor.
Article XI
Section 11.1. Cooperation with the Lessee. The Lessor, the Participants and the
Administrative Agent shall, to the extent reasonably requested by the Lessee (but without assuming
additional liabilities, duties or other obligations on account thereof), at the Lessee’s expense,
cooperate with the Lessee in connection with its covenants contained herein including, without
limitation, at any time and from time to time, upon the request of the Lessee, to promptly and
duly execute and deliver any and all such further instruments, documents and financing statements
(and continuation statements related thereto) as the Lessee may reasonably request in order to
perform such covenants.
Section 11.2. Covenants of the Lessor. The Lessor hereby agrees that so long as this
Participation Agreement is in effect the Lessor will not create or permit to exist at any time, and
will, at its own cost and expense, promptly take such action as may be necessary duly to discharge,
or to cause to be discharged, all Lessor Liens on the Properties attributable to it;
provided,
however, that the Lessor shall not be required to so discharge any such Lessor Lien while the same
is being contested in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not involve any material danger of impairment of the Liens of the Master Lease or
the Operative Documents or of the sale, forfeiture or loss of, and shall not
-28-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
interfere with the use or disposition of, the Properties or title thereto or any interest therein
or the payment of Rent.
Section 11.3. SELCO Status. Upon the reasonable written request of the Lessee or Guarantor
made not more than one (1) time in a calendar year, the Lessor will deliver a letter addressed to
the Lessee or Guarantor of the same tenor as that certain letter dated on or about the Acquisition
Date from the Lessor to the Lessee (the
“Lessor Letter”); provided that if there have been any
changes to the factual matters set forth in the Lessor Letter (other than SELCO Service
Corporation being a wholly-owned consolidated subsidiary of KeyBank National Association) or the
financial accounting standards referenced therein that bear on the conclusions set forth therein,
such letter shall set forth the analysis based on such changed factual matters or accounting
standards. The Lessee may make such request via electronic mail.
Article
XII
Section 12.1 Assignments (a) Upon surrender of any Certificate to the Administrative
Agent for registration of transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the
Purchaser of such Certificate or its attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Certificate or part thereof), the Lessor shall
execute and deliver, at the Lessor’s expense (except as provided below), one or more new
Certificates (as requested by the Purchaser thereof) in exchange therefor, in an aggregate
principal amount equal to the Purchaser Balance of the surrendered Certificate. Each such new
Certificate shall name such new Person as such Purchaser may request and shall be substantially in
the form of the Certificate originally issued hereunder or under any Receivables Purchase
Agreement. The Lessor may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Purchased Interests. Certificates
shall not be transferred in denominations of less than $5,000,000,
provided that if necessary to
enable the registration of transfer by a Purchaser of its entire Purchased Interest, one
Certificate may be in a denomination of less than $5,000,000.
(b) The Lessor may assign all of its rights and obligations hereunder pursuant to an
assignment agreement in form and substance reasonably satisfactory to the Lessee and the
Administrative Agent (provided that the Lessee’s approval shall not be required during the
continuance of a Lease Event of Default) to (i) an Eligible Lessor Assignee or (ii) to any other
Person, with the prior written consent of the Lessee and the Administrative Agent (which consents
shall not be unreasonably withheld or delayed; and provided that the Lessee’s consent shall not be
required during the continuance of a Lease Event of Default). Any assignment hereunder shall be
effective upon the later of (x) delivery to the Administrative Agent and the Lessee of written
notice of the assignment and (y) the date on which all required consents thereto shall have been
given (or, if applicable, deemed given). The Lessor will deliver written notice to the
Administrative Agent and the Lessee of any such proposed assignment at least ten (10) Business Days
prior to the proposed date of such assignment, which notice shall contain the name of the proposed
assignee and financial information with respect thereto sufficient to
-29-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
determine whether such transferee is an Eligible Lessor Assignee (any such notice, a “Notice of
Proposed Assignment”). To the extent any consents to an
assignment are required hereunder, such
consents shall be deemed to have been given if the party entitled to consent thereto does not
object to the proposed transferee within five (5) Business Days of its receipt of the applicable
Notice of Proposed Assignment. The Lessor shall make such filings and give such notices as shall
be necessary to evidence such assignment in all public offices where filings have been made under
the Operative Documents, and the Lessee and the Administrative Agent shall cooperate with the
Lessor in effecting such filings and notices. Upon the effectiveness of any such assignment, the
assignee shall become the “Lessor” for all purposes of the Operative Documents and the assignor
shall be relieved of its obligations hereunder. In connection with any assignment pursuant to this
Section 12.1(b), the Lessee and the Administrative Agent will, promptly upon the request of the
Lessor, execute and deliver an acknowledgment of such assignment and the succession of the
transferee to all rights and obligations of the transferor Lessor under the Operative Documents in
such form as the transferee may reasonably request.
Section 12.2. Participations. Each Participant may sell, transfer, grant or assign
participations in all or any part of such Participant’s interests and obligations hereunder;
provided that (i) such selling Participant shall remain a
“Purchaser” or the
“Lessor”, as the case
may be, for all purposes under the Operative Documents (such selling Participant’s obligations
under the Operative Documents remaining unchanged) and the sub-participant shall not constitute a
Participant hereunder, (ii) no such sub-participant shall have, or be granted, rights to approve
any amendment or waiver relating to the Operative Documents except to the extent any such
amendment or waiver would (A) reduce the amount of or rate of ROC on or fees in respect of any
Capital or Lessor Amounts in which the sub-participant is participating, (B) postpone the date
fixed for any payment (including extension of the Expiration Date or the date of any mandatory
prepayment of any amounts in which the sub-participant is participating, or (C) release all or
substantially all of the collateral or guarantees (except as expressly provided in the Operative
Documents) supporting any of the Capital or Lessor Amounts or Commitments in which the
sub-participant is participating, (iii) sub-sub-participations by the sub-participant (except to
an Affiliate, parent company or Affiliate of a parent company of the sub-participant) shall be
prohibited, and (iv) written notice of each such participation is given to the Lessee. In the case
of any such participation, the sub-participant shall not have any rights under the Operative
Documents (the sub-participant’s rights against the selling Participant in respect of such
participation to be those set forth in the participation agreement with such Participant creating
such participation) and all amounts payable by the Lessee hereunder shall be determined as if such
Participant had not sold such participation;
provided, however, that (x) such sub-participant
shall be entitled to receive additional amounts under Sections 13.5, 13.10 and 13.11 on the same
basis as if it were a Participant (but only to the extent that the Participant would have been
entitled to receive such additional amounts with respect to the interest participated had it not
sold such participation), and (y) any such sub-participant shall be bound by the provisions of
Section 15.16.
-30-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
laws of the United States of America (or any jurisdiction thereof) or (iii) not an estate or
trust that is subject to federal income taxation regardless of the source of its income (each, a
“Non-U.S. Transferee”), then such Non-U.S. Transferee shall deliver (or cause to be delivered)
upon the request of the Lessee to each of the Administrative Agent and the Lessee one of the
following properly completed and signed U.S. tax forms: (i) a form
W-8ECI or (ii) a form W-8BEN
claiming a valid exemption under an applicable U.S. tax treaty for all income payable to such
Non-U.S. Transferee under the Operative Documents.
(b) If the assignee of any Participant pursuant to Section 12.1 or the subparticipant of any
Participant pursuant to Section 12.2 is not a Non-U.S. Transferee (each, a “U.S.
Transferee”), then such U.S. Transferee shall deliver (or cause to be delivered) to each of the
Administrative Agent and the Lessee a properly completed and signed U.S. Form W-9.
(c) Any Participant may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Article XII, disclose to such assignee or participant
or proposed assignee or participant, any information relating to Lessee, the Guarantor or the
Transactions, subject to appropriate confidentiality requirements relating to such information.
(d) Anything in this Article XII to the contrary notwithstanding, any Purchaser may without
the consent of the Lessee, the Administrative Agent or the Lessor, assign and pledge all or any
portion of the Certificates held by it to any Federal Reserve Bank, the United States Treasury or
to any other financial institution as collateral security pursuant to Regulation A of the F.R.S.
Board and any operating circular issued by the Federal Reserve System and/or the Federal Reserve
Bank or otherwise; provided, any payment by the Lessee or the Guarantor for the benefit of the
assigning or pledging Participant shall be deemed to satisfy the Lessee’s or the Guarantor’s
obligations with respect thereto.
Article XIII
Section 13.1. General Indemnification. The Lessee agrees to assume liability for, and to
indemnify, protect, defend, save and keep harmless each Indemnitee, on an After Tax Basis, from
and against any and all Claims that may be imposed on, incurred by or asserted against such
Indemnitee (whether because of action or omission by such Indemnitee or otherwise), whether or not
such Indemnitee shall also be indemnified as to any such Claim by any other Person and whether or
not such Claim arises or accrues prior to the Acquisition Date or after the Expiration Date, in
any way relating to or arising out of:
(i) any of the Operative Documents or any of the transactions contemplated
thereby, and any amendment, modification or waiver in respect thereof;
(ii) the Properties or any part thereof or interest therein;
-31-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(iii) the purchase, design, construction, preparation, installation, inspection,
delivery, nondelivery, acceptance, rejection, ownership, management, possession, operation,
rental, lease, sublease, repossession, maintenance, repair, alteration, modification,
addition or substitution, storage, transfer of title, redelivery, use, financing or
refinancing by the Lessee, disposition, operation, condition, sale (including without
limitation, any sale pursuant to Section 16.2(d) or 16.2(f) of the Master Lease or any sale
pursuant to Article XV, XVIII or XX of the Master Lease), return or other disposition of
all or any part or any interest in the Properties or the imposition of any Lien except
Lessor Liens and Liens in favor of the Purchasers or the Lessor (or incurring of any
liability to refund or pay over any amount as a result of any such Lien) thereon,
including, without limitation: (1) Claims or penalties arising from any violation of law or
in tort (on the basis of strict liability or otherwise), (2) latent or other defects,
whether or not discoverable, (3) any Claim based upon a violation or alleged violation of
the terms of any restriction, easement, condition or covenant or other matter affecting
title to any Property, (4) the making of any Modifications in violation of any standards
imposed by any insurance policies required to be maintained by Lessee pursuant to the Lease
which are in effect at any time with respect to any Property or any
part thereof, (5) any
Claim for patent, trademark or copyright infringement with respect to any Property, and (6)
Claims arising from any public improvements with respect to any Property resulting in any
change or special assessments being levied against such Properly or any plans to widen,
modify or realign any street or highway adjacent to such Property, or any Claim for utility
“tap-in” fees;
(iv) the breach by Lessee or the Guarantor of any covenant, representation or warranty
made by it in any Operative Document or any certificate required to be delivered by it by
any Operative Document;
(v) the retaining or employment of any broker, finder or financial advisor by any
Lessee to act on its behalf in connection with this Participation Agreement or any other
Operative Document;
(vi) the existence of any Lien on or with respect to the Properties, any Basic Rent or
Supplemental Rent, title thereto, or any interest therein including any Liens which arise
out of the possession, use, occupancy, construction, repair or rebuilding of any Property
or by reason of labor or materials furnished or claimed to have been furnished to the
Lessee, or any of its contractors or agents or by reason of the financing of any personalty
or equipment purchased or leased by the Lessee or Modifications constructed by the Lessee,
except Lessor Liens and Liens in favor of the Purchasers or the Lessor; and
(vii) subject to the accuracy of any Participant’s representation set forth in Section
8.1 (a), as to such Participant, the transactions contemplated by the Lease or by any other
Operative Document, in respect of the application of Parts 4 and 5 of Subtitle B of Title I
of ERISA and any prohibited transaction described in Section 4975(c) of the Code;
-32-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
provided, however, that the Lessee shall not be required to indemnify any Indemnitee under this
Section 13.1 for any of the following: (1) any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee (it being understood that the Lessee shall be
required to indemnify an Indemnitee even if the ordinary (but not gross) negligence of such
Indemnitee caused or contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any Claim resulting from
Lessor Liens attributable to such Indemnitee, (3) any Claim arising from a breach or alleged
breach by such Indemnitee of any Operative Document or any agreement entered into in connection
with the assignment or participation of any Purchased Interest or Lessor Amount, and (4) any Claim
arising in respect to any Property to the extent attributable to acts or events occurring in the
period after the Lessee ceases to lease such Property from the Lessor, provided that the facts
supporting such Claim occur after such period. It is expressly understood and agreed that the
indemnity provided for herein shall survive the expiration or termination of and shall be separate
and independent from any remedy under the Lease or any other Operative Document. Without limiting
the express rights of any Indemnitee under this Section 13.1, this Section 13.1 shall be construed
as an indemnity only and not a guaranty of residual value of the Properties or as a guaranty of
the Lessor Amounts.
Section 13.2.
End of Term Indemnity. (a) If the Lessee elects the Remarketing Option and
there would, after giving effect to the proposed remarketing transaction, be a Shortfall Amount,
then prior to the Expiration Date and as a condition to the Lessee’s right to complete the
remarketing of the Properties pursuant to Article XX of the Master Lease, the Lessee shall cause
to be delivered to the Administrative Agent and the Lessor at least sixty (60) days prior to the
Expiration Date, at the Lessee’s sole cost and expense, a report from the Appraiser in form and
substance satisfactory to the Lessor, the Administrative Agent and the Purchasers (the
“End of the
Term Report”) which shall state the appraiser’s conclusions as to the reason for any decline in
the Fair Market Sales Value of any Property from that anticipated for such date in the Appraisal
delivered with respect to such Property.
(b) On or prior to the Expiration Date the Lessee shall pay to the Administrative Agent and
Lessor for the account of each of the Lessor and Purchasers an amount (not to exceed the Shortfall
Amount) equal to the portion of the Shortfall Amount that the End of the Term Report demonstrates
was the result of a decline in the Fair Market Sales Value of any Property due to:
(i) extraordinary use; failure to maintain, repair, restore, rebuild or replace;
failure to comply with all Applicable Law; failure to use; workmanship; method of
installation or removal or maintenance, repair, rebuilding or replacement (excepting in
each case ordinary wear and tear and except as otherwise provided in the Lease); or
(ii) any Modification made to, or any rebuilding of, such Property or any part thereof
by the Lessee or any sublessee, in each case not in compliance with the Operative Documents
or;
(iii) contamination at such Property resulting from any Hazardous Activity, Hazardous
Materials or Environmental Violations, or
-33-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(iv) any restoration or rebuilding carried out by the Lessee, or
(v) any condemnation of any portion of such Property pursuant to Article XIV of
the Master Lease, or
(vi) any use of such Property or any part thereof by the Lessee other than for its
intended purposes as contemplated by the Appraisal, or
(vii) any grant, release, dedication, transfer, annexation or amendment made
pursuant to Section 11.2 of the Master Lease, or
(viii) the failure of the Lessor to have good and marketable title to such
Property free and clear of all Liens (other than Permitted Property Liens), or
(ix) the existence of any sublease relating to the Properties that shall survive
the Expiration Date.
The indemnity set forth in this Section 13.2 is not a guaranty of the residual value or Lessor
Amounts with respect to any Property.
Section 13.3. Environmental Indemnity. Without limitation of the other provisions of this
Article XIII, the Lessee and the Guarantor hereby agree to indemnify, hold harmless and defend
each Indemnitee from and against any and all claims (including, without limitation, third party
claims for personal injury or real or personal property damage), losses, damages, liabilities,
fines, penalties, charges, administrative and judicial proceedings, judgments, remedial actions,
requirements, enforcement actions of any kind, and all reasonable and documented costs and
expenses incurred in connection therewith (including but not limited to reasonable and documented
attorneys’ and/or paralegals’ fees and expenses and costs incurred in connection with any
investigation or monitoring of site conditions or any clean-up, remedial, removal or restoration
work with respect to any Property undertaken or required by any federal, state or local
Governmental Authority), arising or asserted under any Environmental Laws, and arising in whole or
in part, out of:
(a) the presence on or under any Property of any Hazardous Materials, or any Releases
of any Hazardous Materials on, under, from or at any Property;
(b) any activity, including, without limitation, construction, carried on or
undertaken on or off any Property, whether by the Lessee (or any predecessor in title) or
any employees, agents, contractors or subcontractors of the Lessee (or any predecessor in
title), or in connection with the handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Materials that at any time are located or
present on or under or that at any time migrate, flow, percolate, diffuse or in any way
move onto or off any Property;
(c) with respect to any Hazardous Materials at any Property, loss of or damage to any
property or the environment (including, without limitation, clean-up costs,
-34-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
response costs, remediation and removal costs, costs of corrective action, costs of
financial assurance, fines and penalties and natural resource damages), or death or injury
to any Person, and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by or under
Environmental Laws; or
(d) any noncompliance with Environmental Laws, or any act or omission causing an
environmental condition at any Property that requires remediation or causing any
Governmental Authority to record a Lien pursuant to Environmental Laws on the land record of
such Property; or
(e) any residual contamination on or under any Property, including any contamination
affecting any natural resources, and any contamination of any property or natural resources
arising in connection with the generation, use, handling, storage, transport or disposal of
any Hazardous Material associated with such Property, and irrespective of whether any of
such activities were or will be undertaken in accordance with applicable laws, regulations,
codes and ordinances;
provided, however, that the Lessee and the Guarantor shall not be required to indemnify any
Indemnitee under this Section 13.3 for any Claim to the extent resulting from the willful
misconduct or gross negligence of such Indemnitee or arising in respect to any Property to the
extent attributable to acts or events occurring in the period after the Lessee ceases to lease
such Property from the Lessor under the related Lease Supplement, provided that the facts
supporting such Claim occur after such period. It is expressly understood and agreed that the
indemnity provided for herein shall survive the expiration or termination of the Lease Term with
respect to any Claim based on facts or circumstances arising prior to or during the Lease Term,
and shall be separate and independent from any remedy under the Lease or any other Operative
Document.
Section 13.4. Proceedings in Respect of Claims. With respect to any amount that the Lessee is
requested by an Indemnitee to pay by reason of Section 13.1 or 13.3, such Indemnitee shall, if so
requested by the Lessee, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to substantiate properly the
requested payment. In case any action, suit or proceeding shall be brought against any Indemnitee
in respect of Claims indemnifiable under Sections 13.1 or 13.3, such Indemnitee shall notify the
Lessee of the commencement thereof, and the Lessee shall be entitled, at the Lessee’s expense, to
participate in, and, to the extent that the Lessee desires to, assume and control the defense
thereof;
provided, however, that the Lessee shall have acknowledged in writing its obligation to
fully indemnify such Indemnitee in respect of such action, suit or proceeding, and the Lessee shall
keep such Indemnitee fully apprised of the status of such action, suit or proceeding and shall
provide such Indemnitee with all information with respect to such action, suit or proceeding as
such Indemnitee shall reasonably request, and
provided, further, that the Lessee shall not be
entitled to assume and control the defense of any such action, suit or proceeding if and to the
extent that, (A) in the reasonable opinion of such Indemnitee, (x) such action, suit or proceeding
involves any risk of imposition of criminal liability or material civil liability on such
Indemnitee or will involve a material risk of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Property Lien) on the Properties or any other Lessee
-35-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Collateral or any part thereof unless, in the case of civil liability only, the Lessee
shall have agreed in writing to be responsible for such risk or shall have posted a bond or other
security against such risk satisfactory to such Indemnitee, or (y) the control of such action,
suit or proceeding would involve an actual or potential conflict of interest, (B) such proceeding
involves Claims not fully indemnified by the Lessee which the Lessee and the Indemnitee have been
unable to sever from the indemnified claim(s), or (C) an Event of Default under the Lease has
occurred and is continuing. The Indemnitee will join in the Lessee’s efforts to sever such action.
The Indemnitee may participate at its own expense and with its own counsel in any proceeding
conducted by the Lessee in accordance with the foregoing. The Lessee shall not enter into any
settlement or other compromise with respect to any Claim which is entitled to be indemnified under
Section 13.1 or 13.3 without prior written consent of the
Indemnitee, which consent shall not be
unreasonably withheld in the case of a money settlement not involving an admission of liability of
such Indemnitee.
Each Indemnitee shall at the expense of the Lessee cooperate with and supply the Lessee with
such information and documents reasonably requested by the Lessee as are necessary or advisable
for the Lessee to participate in any action, suit or proceeding to the extent permitted by Section
13.1 or 13.3. Unless a Lease Event of Default shall have occurred and be continuing and provided
that the Lessee shall have acknowledged in writing its obligation to fully indemnify such
Indemnitee with respect thereto, no Indemnitee shall enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under Section 13.1 or 13.3 without
the prior written consent of the Lessee, which consent shall not be unreasonably withheld, unless
such Indemnitee waives its right to be indemnified under Section 13.1 or 13.3 with respect to such
Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section 13.1 or 13.3 to or on
behalf of an Indemnitee, the Lessee, without any further action, shall be subrogated to any and all
claims that such Indemnitee may have relating thereto (other than claims in respect of insurance
policies maintained by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and such other documents,
instruments and agreements as may be necessary to preserve any such claims and otherwise cooperate
with the Lessee and give such further assurances as are necessary or advisable to enable the Lessee
vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3 shall be paid to such
Indemnitee promptly upon receipt of a written demand therefor from such Indemnitee, accompanied by
a written statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
-36-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Section 13.5. General Tax Indemnity, (a)
Indemnification. Without limitation of the rights
of any Tax Indemnitee under any other indemnification provision of this Article XIII, the Lessee
shall pay and assume liability for, and does hereby agree to indemnify, protect and defend the
applicable Property and all Tax Indemnitees, and hold them harmless against, all Impositions on
an After Tax Basis.
(b) Contests. If any claim shall be made against any Tax Indemnitee or if any proceeding
shall be commenced against any Tax Indemnitee (including a written notice of such proceeding) for
any Imposition as to which the Lessee may have an indemnity obligation pursuant to this Section
13.5, or if any Tax Indemnitee shall determine that any Imposition to which the Lessee may have an
indemnity obligation pursuant to this Section 13.5 may be payable, such Tax Indemnitee shall
promptly (and in any event, within thirty (30) days) notify the Lessee in writing (provided that
failure to so notify the Lessee within thirty (30) days shall not alter such Tax Indemnitee’s
rights under this Section 13.5 except to the extent such failure precludes or materially adversely
affects the ability to conduct a contest of any Impositions) and shall not take any action with
respect to such claim, proceeding or Imposition without the written consent of the Lessee (such
consent not to be unreasonably withheld or unreasonably delayed) for thirty (30) days after the
receipt of such notice by the Lessee; provided, however, that in the case of any such claim or
proceeding, if such Tax Indemnitee shall be required by law or regulation to take action prior to
the end of such thirty (30) day period, such Tax Indemnitee shall in such notice to the Lessee, so
inform the Lessee and such Tax Indemnitee shall not take any action with respect to such claim,
proceeding or Imposition without the consent of the Lessee (such consent not to be unreasonably
withheld or unreasonably delayed) for 10 days after the receipt of such notice by the Lessee
unless such Tax Indemnitee shall be required by law or regulation to take action prior to the end
of such ten (10) day period.
The Lessee shall be entitled for a period of thirty (30) days from receipt of such notice from
such Tax Indemnitee (or such shorter period as such Tax Indemnitee has notified the Lessee is
required by law or regulation for such Tax Indemnitee to commence such contest), to request in
writing that such Tax Indemnitee contest the imposition of such Tax, at the Lessee’s expense. If
(x) such contest can be pursued in the name of the Lessee and independently from any other
proceeding involving a Tax liability of such Tax Indemnitee for which the Lessee has not agreed to
indemnify such Tax Indemnitee, (y) such contest must be pursued in the name of such Tax Indemnitee,
but can be pursued independently from any other proceeding involving a Tax liability of such Tax
Indemnitee for which the Lessee has not agreed to indemnify such Tax Indemnitee or (z) such Tax
Indemnitee so requests, then the Lessee shall be permitted to control the contest of such claim,
provided that in the case of a contest described in clause (y), if such Tax Indemnitee determines
reasonably and in good faith that such contest by the Lessee could have a material adverse impact
on the business or operations of such Tax Indemnitee and provides a written explanation to the
Lessee of such determination, such Tax Indemnitee may elect to control or reassert control of the
contest, and provided that by taking control of the contest, the Lessee acknowledges that it is
responsible for the Imposition ultimately determined to be due by reason of such claim, and
provided, further, that in determining the application of clauses (x) and (y) above, each Tax
Indemnitee shall take any and all reasonable steps to segregate claims for any Taxes for which the
Lessee indemnifies hereunder from Taxes for which the Lessee is not obligated to indemnify
hereunder, so that the Lessee can control the
-37-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
contest of the former. In all other claims requested to be contested by the Lessee, such Tax
Indemnitee shall control the contest of such claim, acting through counsel reasonably acceptable
to the Lessee. In no event shall the Lessee be permitted to contest (or such Tax Indemnitee
required to contest) any claim, (A) if such Tax Indemnitee provides the Lessee with a legal
opinion of counsel reasonably acceptable to the Lessee that such action suit or proceeding
involves a risk of imposition of criminal liability or material civil liability on such Tax
Indemnitee or will involve a material risk of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Property Lien) on the Properties or any other Lessee Collateral
or any part thereof unless, with respect to civil liability only, the Lessee shall have agreed in
writing to be responsible for such risk or shall have posted a bond or other security against such
risk satisfactory to such Indemnitee, (B) if an Event of Default under the Lease has occurred and
is continuing, (C) unless the Lessee shall have agreed to pay and shall pay, to such Tax
Indemnitee on demand all reasonable out-of-pocket costs, losses and expenses that such Tax
Indemnitee may incur in connection with contesting such Imposition including all reasonable legal,
accounting and investigatory fees and disbursements, or (D) if such contest shall involve the
payment of the Tax prior to the contest, unless the Lessee shall provide to such Tax Indemnitee an
interest-free advance in an amount equal to the Imposition that the Indemnitee is required to pay
(with no additional net after-tax costs to such Tax Indemnitee). In addition for Tax Indemnitee
controlled contests and claims contested in the name of such Tax Indemnitee in a public forum, no
contest shall be required: (A) unless the amount of the potential indemnity (taking into account
all similar or logically related claims that have been or could be raised in any audit involving
any or all such Tax Indemnitees with respect to any period for which the Lessee may be liable to
pay an indemnity under this Section 13.5(b)) exceeds $100,000 and (B) unless, if requested by such
Tax Indemnitee, the Lessee shall have provided to such Tax Indemnitee an opinion of counsel
selected by the Lessee (which may be in-house counsel) that a reasonable basis exists to contest
such claim. In no event shall a Tax Indemnitee be required to appeal an adverse judicial
determination to the United States Supreme Court.
The party conducting the contest shall consult in good faith with the other party and its
counsel with respect to the contest of such claim for Taxes (or claim for refund) but the
decisions regarding what actions are to be taken shall be made by the controlling party in its
sole judgment, provided, however, that if such Tax Indemnitee is the controlling party and the
Lessee recommends the acceptance of a settlement offer made by the relevant Governmental Authority
and such Tax Indemnitee rejects such settlement offer then the amount for which the Lessee will be
required to indemnify such Tax Indemnitee with respect to the Taxes subject to such offer shall
not exceed the amount which it would have owed if such settlement offer had been accepted. In
addition, the controlling party shall keep the non-controlling party reasonably informed as to the
progress of the contest, and shall provide the noncontrolling party with a copy of (or appropriate
excerpts from) and reports or claims issued by the relevant auditing agents or taxing authority to
the controlling party thereof, in connection with such claim or the contest thereof.
Each Tax Indemnitee shall, at the Lessee’s expense, cooperate with and supply the Lessee with
such information and documents reasonably requested by the Lessee as are necessary or advisable for
the Lessee to participate in any action, suit or proceeding to the extent permitted by this Section
13.5(b). Notwithstanding anything in this Section 13.5(b) to the
-38-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
contrary, no Tax Indemnitee shall enter into any settlement or other compromise or fail to appeal
an adverse ruling with respect to any claim which is entitled to be indemnified under this
Section 13.5 (and with respect to which contest is required under this Section 13.5(b)) without
the prior written consent of the Lessee, unless such Tax Indemnitee waives its right to be
indemnified under this Section 13.5 with respect to such claim pursuant to the next paragraph.
Notwithstanding anything contained herein to the contrary, a Tax Indemnitee will not be
required to contest or continue to contest (and the Lessee shall not be permitted to contest or
continue to contest) a claim with respect to the imposition of any Tax if such Tax Indemnitee
shall waive its right to indemnification under this Section 13.5 with respect to such claim (and
any claim with respect to such year or any other taxable year the contest of which is materially
adversely affected as a result of such waiver) and returns to the Lessee all amounts previously
advanced to the Indemnitee with respect to the contest of such claim.
(c) [Intentionally omitted]
(e) Reports. In the case of any report, return or statement required to be filed with
respect to any Taxes that are subject to indemnification under this Section 13.5 and of which the
Lessee has knowledge, the Lessee shall promptly notify such Tax Indemnitee of such requirement and,
at the Lessee’s expense (i) if the Lessee is permitted by Applicable Law, timely file such report,
return or statement in its own name or (ii) if such report, return or statement is required to be
in the name of or filed by such Tax Indemnitee, prepare and finish such statement for filing by
such Tax Indemnitee in such manner as shall be satisfactory to such Tax Indemnitee and send the
same to such Tax Indemnitee for filing no later than fifteen (15) days prior to the due date
therefor. In any case in which such Tax Indemnitee will file any such report, return or statement,
the Lessee shall, upon written request of such Tax Indemnitee, provide such Tax Indemnitee with
such information as is reasonably necessary to allow such Tax Indemnitee to file such report,
return or statement.
-39-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(f) [Intentionally omitted]
Section 13.6, Indemnity Payments in Addition to Lease Obligations. The Lessee acknowledges
and agrees that the Lessee’s obligations to make indemnity payments under this Article XIII are
separate from, in addition to, and do not reduce, the Lessee’s obligations to pay any amounts
owing from time to time under the Lease or the other Operative Documents.
Section 13.7. Eurodollar Rate Unlawful. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or application
thereof occurring after the Acquisition Date shall make it unlawful, unavailable or
unascertainable for any Participant to make, continue or maintain Eurodollar Capital/Lessor Amounts
as contemplated by the Operative Documents, (i) such Participant shall promptly give written
notice of such circumstances to the Lessee and the Administrative Agent (which notice shall be
withdrawn whenever such circumstances no longer exist), (ii) the commitment of such Participant
hereunder to make, continue or maintain Eurodollar Capital/Lessor Amounts shall forthwith be
canceled and, until such time as it shall no longer be unlawful for
such Participant to make,
continue or maintain Eurodollar Capital/Lessor Amounts (or until such Eurodollar Capital/Lessor
Amounts become available or ascertainable), such Participant shall then have a commitment only to
make or maintain Base Rate Capital or Lessor Amounts when Eurodollar Capital/Lessor Amounts are
requested and (c) such Participant’s Capital or Lessor Amounts then outstanding as Eurodollar
Capital/Lessor Amounts, if any, shall be converted automatically to Base Rate Capital or Lessor
Amounts on the respective last days of the then current Rent Periods with respect to such Capital
or Lessor Amounts or within such earlier period as required by law. If any such conversion of
Eurodollar Capital/Lessor Amounts occurs on a day which is not the last day of the then current
Rent Period with respect thereto, the Lessee shall pay to such Participant such amounts, if any,
as may be required pursuant to Section 13.10.
(i) Dollar deposits in the relevant amount and for the relevant Rent Period are
not available to such Participant in its relevant market; or
(ii) by reason of circumstances affecting such Participant’s relevant market,
adequate and reasonable means do not exist for ascertaining the ROC or Yield, as the case
may be, applicable to such Participant’s Eurodollar Capital/Lessor Amounts;
then, upon notice from such Participant to the Lessee, the Administrative Agent, the Lessor and the
other Participants, (x) the obligations of such Participant to make or continue any Eurodollar
Capital/Lessor Amounts shall be suspended, and (y) each outstanding Eurodollar Capital/Lessor
-40-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Amount held by such participant shall automatically convert into a Base Rate Capital/Lessor
Amount on the last day of the current Rent Period applicable thereto.
Section 13.9. Increased Costs, etc. (a) If the adoption of or any change in a Requirement of
Law or in the interpretation or application thereof applicable to any Participant, or compliance
by any Participant with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority, in each case made subsequent to the Acquisition Date
(or, if later, the date on which such Participant becomes a Participant):
(i) shall subject such Participant to any tax of any kind whatsoever with respect to
any Eurodollar Capital/Lessor Amounts made, continued or maintained by it or its obligation
to make, continue or maintain Eurodollar Capital/Lessor Amounts, or change the basis of
taxation of payments to such Participant in respect thereof (except for excluded
Impositions, any changes in taxes measured by or imposed upon the overall gross or net
income, franchise or other taxes (imposed in lieu of such net income tax), of such
Participant or its applicable funding office, branch, or any affiliate thereof); or
(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by, or deposits or other liabilities in or
for the account of, Capital, Lessor Amounts, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Participant which is not otherwise
included in the determination of the Adjusted Eurodollar Rate hereunder; or
(iii) shall impose on such Participant any other condition (excluding any Tax of any
kind) whatsoever in connection with the Operative Documents;
and the result of any of the foregoing is to increase the cost to such Participant, by a material
amount, of making, continuing or maintaining Eurodollar Capital/Lessor Amounts or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Lessee
from such Participant, through the Administrative Agent, in accordance herewith, the Lessee shall
pay such Participant any additional amounts necessary to compensate such Participant for such
increased cost or reduced amount receivable; provided that, in any such case, the Lessee may elect
to convert the Eurodollar Capital/Lessor Amounts made by such Participant hereunder to Base Rate
Amounts by giving the Administrative Agent at least one (1) Business Day’s notice of such election,
in which case the Lessee shall promptly pay to such Participant, upon demand, without duplication,
such amounts, if any, as may be required pursuant to Section 13.10. All payments required by this
Section 13.9(a) shall be made by the Lessee within ten (10) Business Days after demand by the
affected Participant. The Lessee shall not be obligated to reimburse any Participant for any
increased cost or reduced return incurred more than one hundred eighty (180) days after the date
that such Participant receives actual notice of such increased cost or reduced return unless such
Participant gives notice thereof to the Lessee in accordance with this Section 13.9 during such one
hundred eighty (180) day period. If any Participant becomes entitled to claim any additional
amounts pursuant to this subsection, it shall provide prompt notice thereof to the Lessee, through
the Administrative Agent, certifying (x) that one of the events described in this clause (a) has
occurred and describing in reasonable detail the nature of such event, (y) as to the increased cost
or reduced amount resulting from such
-41-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
event and (z) as to the additional amount demanded by such Participant and a reasonably detailed
explanation of the calculation thereof (including the method by which such Participant allocated
such amounts to the Lessee). Such a certificate as to any additional amounts payable pursuant to
this clause submitted by such Participant, through the Administrative Agent, to the Lessee shall
be conclusive in the absence of manifest error. This covenant shall survive the termination of
this Participation Agreement and the payment of the Capital and Lessor Amounts and all other
amounts payable hereunder.
(b) Each Participant shall use its reasonable efforts to reduce or eliminate any unlawfulness
or claim for compensation pursuant to Sections 13.7, 13.8 or 13.9(a), including, without
limitation, a change in the office of such Participant at which its obligations related to this
Participation Agreement are maintained if such change will cure the unlawfulness or avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such
Participant, be otherwise disadvantageous to it. If any such claim of unlawfulness or for
compensation shall not be eliminated or waived, the Lessee shall have the right to replace the
affected Participant with a new financial institution that shall succeed to the rights of such
Participant under this Participation Agreement; provided, however, that such Participant shall not
be replaced hereunder until it has been paid in full such claim and all other amounts owed to it
hereunder.
Section 13.10. Funding Losses; Break Costs. (a) The Lessee agrees to indemnify each
Indemnitee and to hold each Indemnitee harmless from any loss or expense which such Indemnitee may
sustain or incur as a consequence of (i) default in making a sale of the undivided percentage
ownership interests in the Purchased Interests or borrowing of Lessor Amounts which are Eurodollar
Capital/Lessor Amounts after Lessee has given a notice requesting the same in accordance with the
provisions of this Participation Agreement, (ii) default by the Lessee in making any prepayment of
any Capital or Lessor Amount which is a Eurodollar Capital/Lessor Amount after the Lessee has
given a notice thereof in accordance with the provisions of this Participation Agreement or (iii)
the making of a payment or prepayment of Capital or Lessor Amounts which are Eurodollar
Capital/Lessor Amounts on a day which is not the last day of a Rent Period with respect thereto.
This covenant shall survive the termination of this Participation Agreement or any other Operative
Document and the payment of the Capital, Lessor Amounts and all other amounts payable under the
Operative Documents.
(b) The Lessee shall, upon receipt from the Administrative Agent or any Participant of a
statement of the amount of any loss, cost or expense constituting Break Costs prepared in good
faith and in reasonable detail (which statement shall be binding absent manifest error), pay the
amount of such Break Costs to the requesting Person.
Section 13.11. Capital Adequacy. (a) If the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Participant with any
request or directive regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, in each case made subsequent to the Acquisition
Date has or will have the effect of reducing the rate of return on any Participant’s or
-42-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
its parent company’s capital by a material amount, as a consequence of its commitments or
obligations hereunder to a level below that which such Participant or its parent company could
have achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Participant’s or its parent company’s policies with respect to capital
adequacy), then, upon notice from such Participant, the Lessee shall pay to such Participant such
additional amount or amounts as will compensate such Participant and its parent company for such
reduction (it being understood that such parent company shall not be reimbursed to the extent its
subsidiary Participant is reimbursed by the Lessee in connection with the same or a similar law,
rule, regulation, change, request or directive applicable to such Participant). All payments
required by this Section 13.11 shall be made by the Lessee within ten (10) Business Days after
demand by the affected Participant. The Lessee shall not be obligated to reimburse any Participant
for any reduced return incurred more than one hundred eighty (180) days after the date that such
Participant receives actual notice of such reduced return unless such Participant gives notice
thereof to the Lessee in accordance with this Section 13.11 during such one hundred eighty (180)
day period. If any Participant becomes entitled to claim any additional amounts pursuant to this
clause, it shall provide prompt written notice thereof to the Lessee, through the Administrative
Agent, certifying (x) that one of the events described in this clause (a) has occurred and
describing in reasonable detail the nature of such event, (y) as to the increased cost or reduced
amount resulting from such event and (z) as to the additional amount demanded by such Participant
and a reasonably detailed explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this clause submitted by such Participant, through the
Administrative Agent, to the Lessee shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Participation Agreement and the other Operative
Documents and the payment of the Capital and Lessor Amounts and all other amounts payable
hereunder and thereunder.
(b) Each Participant shall use its commercially reasonable efforts to reduce or eliminate, any
claim for compensation pursuant to this Section 13.11, including, without limitation, a change in
the office of such Participant at which its obligations related to the Operative Documents are
maintained if such change will avoid the need for, or reduce the amount of, such compensation and
will not, in the reasonable judgment of such Participant, be otherwise disadvantageous to it. If
any such claim for compensation shall not be eliminated or waived, the Lessee shall have the right
to replace the affected Participant with a new financial institution that shall succeed to the
rights of such Participant under the Operative Documents; provided, however, that such Participant
shall not be replaced hereunder until it has been paid in full such claim and all other amounts
owed to it hereunder.
Article XIV
[Intentionally Reserved]
-43-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Article XV
Section 15.1. Survival of Agreements. The representations, warranties, covenants,
indemnities and agreements of the parties provided for in the Operative Documents, and the
parties’ obligations under any and all thereof, shall survive the execution and delivery of this
Participation Agreement, the transfer of any Property to the Lessor, any disposition of any
interest of the Lessor, or any Participant in any Property and the payment of the Capital and
Lessor Amounts and any disposition thereof, and shall be and continue in effect to the extent set
forth in such Operative Documents notwithstanding any investigation made by any party and the fact
that any party may waive compliance with any of the other terms, provisions or conditions of any
of the Operative Documents. Except as otherwise expressly set forth herein or in the other
Operative Documents, the indemnities of the parties provided for in the Operative Documents shall
survive the expiration or termination of any thereof.
Section 15.2. No Broker, Etc. Except for Lessee’s dealing with Lease Advisory Services, as
Arranger, each of the parties hereto represents to the others that it has not retained or employed
any broker, finder or financial adviser to act on its behalf in connection with this Participation
Agreement or the transactions contemplated herein or in the other Operative Documents nor has it
authorized any broker, finder or financial adviser retained or employed by any other Person so to
act. In the event that any party retains any other broker, finder or financial advisor, such party
will promptly notify the other parties in writing of such broker, finder or financial advisor. Any
party which is in breach of this representation shall indemnify and hold the other parties
harmless from and against any liability arising out of such breach of this representation.
Section 15.3. Notices. Unless otherwise specifically provided herein, all notices, consents,
directions, approvals, instructions, requests and other communications required or permitted by
the terms hereof to be given to any Person shall be given in writing by United States mail, by
nationally recognized courier service, by hand or by facsimile, and any such notice shall become
effective (i) if delivered by United States mail, five (5) Business Days after being deposited in
the mail, certified or registered with appropriate postage prepaid, (ii) if delivered by a
nationally recognized courier service, upon delivery to the intended recipient, (iii) if delivered
by hand, when received or (iv) if delivered by facsimile, when transmitted (upon electronic
confirmation thereof) provided that any facsimile transmitted after 5:00 P.M. (recipient time)
shall be deemed to have been received on the next Business Day, and shall be directed to the
address or facsimile number of such Person as indicated on Schedule II. From time to time any
party may designate a new address or facsimile number for purposes of notice hereunder by written
notice to each of the other parties hereto in accordance with this Section.
Section 15.4. Counterparts. This Participation Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the same instrument.
-44-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Section 15.5. Amendments, Etc. Neither any Operative Document nor any of the terms thereof may
be terminated (except upon payment in full of the Lease Balance or effective exercise and
consummation of the Remarketing Option in accordance with Article XX of the Master Lease and
payment in full of all amounts due in accordance therewith), amended, supplemented, waived or
modified without the written agreement or consent of each party thereto and, regardless of whether
the Purchasers and the Lessor are parties thereto, the Required Participants; provided, however,
that no such termination, amendment, supplement, waiver or modification shall without written
agreement or consent of each Participant:
(i) modify any of the provisions of this Section 15.5, change the definition
of “Required Participants” or modify or waive any provision of any Operative
Document requiring action by the foregoing;
(ii) amend, modify, waive or supplement any of the provisions of Section 2.5
or 2.7 of the Receivables Purchase Agreement;
(iii) reduce, modify, amend or waive any fees or indemnities in favor of any
Participant, including without limitation amounts payable pursuant to Article XIII
(except that any Person may consent to any reduction, modification, amendment or
waiver of any indemnity payable to it);
(iv) modify, postpone, reduce or forgive, in whole or in part, any payment of
Rent (other than pursuant to the terms of any Operative Document), any Capital or
Lessor Amount, the Lease Balance, the Purchaser Balance and any other fee payable
hereunder, amounts due pursuant to Section 20.2 of the Master Lease, ROC or Yield
(except that any Person may consent to any modification, postponement, reduction or
forgiveness of any payment of any fee payable to it) or, subject to subclause (iii)
above, any other amount payable under the Lease or this Participation Agreement, or
modify the definition or method of calculation of Rent (other than pursuant to the
terms of any Operative Document), Capital or Lessor Amounts, Lease Balance,
Purchaser Balance, Shortfall Amount, Participant Balance, or any other definition
which would affect the amounts to be advanced or which are payable under the
Operative Documents;
(v) consent to any assignment of the Master Lease or any Lease Supplement by
the Lessee, release Lessee from its obligations in respect of the payments of Rent,
Purchaser Balance or Lease Balance or the Guarantor from its obligations under the
Guaranty or change the absolute and unconditional character of such obligations;
(vi) changes the Maximum Recourse Amount, or extends the Lease Term or the
Maturity Date;
(vii) adversely changes Article XX of the Master Lease; or
-45-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(viii) materially and adversely affects the Insurance Requirements of any
insurance policy that names the Participants as additional insureds.
Section 15.6. Headings, Etc. The Table of Contents and headings of the various Articles and
Sections of this Participation Agreement are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof.
Section 15.7. Parties in Interest. Except as expressly provided herein, none of the
provisions of this Participation Agreement is intended for the benefit of any Person. Neither the
Lessee nor the Guarantor shall assign or transfer any of its rights or obligations under the
Operative Documents except in accordance with the terms and conditions thereof.
Section 15.8. Governing Law; Waiver of Jury Trial. (a) This Participation
Agreement and the other Operative Documents (except as otherwise provided in any Operative
Document) and the rights and obligations of the parties hereunder and thereunder shall be
construed in accordance with and be governed by the law of the State of Ohio, excluding any choice
of law or conflict of law rules which would require the application of the law of any other
jurisdiction,
(b) Each party hereto hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to the Operative Documents or the transactions
contemplated thereby.
Section 15.9. Severability. Any provision of this Participation Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 15.10. Liability Limited. (a) The parties hereto agree that except as specifically set
forth herein or in any other Operative Document, the Lessor shall not have any personal liability
whatsoever to any Participant or their respective successors and assigns for any claim based on or
in respect hereof or any of the other Operative Documents or arising in any way from the
transactions contemplated hereby or thereby and recourse, if any, shall be solely had against the
Collateral, including the Property but excluding the Excepted Payments and Supplemental Collateral;
provided, however, that the Lessor shall be liable in its individual capacity (a) for its own
willful misconduct or gross negligence, (b) breach of any of its representations, warranties or
covenants under the Operative Documents, (c) for any Tax based on or measured by any fees,
commission or compensation received by the Lessor for acting as the Lessor as contemplated by the
Operative Documents, or (d) any Lessor Liens attributable to it. It is understood and agreed that,
except as provided in the preceding sentence: (i) the Lessor shall not have any personal liability
under any of the Operative Documents as a result of acting pursuant to and consistent with any of
the Operative Documents; and (ii) all such personal liability of the Lessor is expressly waived and
released as a condition of, and as consideration for, the execution and delivery of the Operative
Documents by the Lessor.
-46-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(b) No Participant shall have any obligation to any other Participant or to the Gurantor or
the Lessee, with respect to transactions contemplated by the Operative Documents, except those
obligations of such Participant expressly set forth in the Operative Documents or except as set
forth in the instruments delivered in connection therewith, and no Participant shall be liable
for performance by any other party hereto of such other party’s obligations under the Operative
Documents except as otherwise so set forth.
Section 15.11. Further Assurances. The parties hereto shall promptly cause to be taken,
executed, acknowledged or delivered, at the sole expense of the Lessee, all such further acts,
conveyances, documents and assurances as the other parties may from time to time reasonably
request in order to carry out and preserve the security interests and liens (and the priority
thereof) intended to be created pursuant to this Participation Agreement, the other Operative
Documents, and the transactions thereunder (including, without limitation, the preparation,
execution and filing of any and all Uniform Commercial Code financing statements and other filings
or registrations which the parties hereto may from time to time request to be filed or effected).
The Lessee, at its own expense and upon prior request from any other party, shall take such action
as may be reasonably necessary (including any action specified in the preceding sentence), or as
so requested, in order to maintain and protect all security interests provided for hereunder or
under any other Operative Document.
Section 15.12.
Submission to Jurisdiction. Each party hereto hereby submits to the
nonexclusive jurisdiction of the United States District Court for the District of Ohio for
purposes of all legal proceedings arising out of or relating to this Participation Agreement or
any of the other Operative Documents or the transactions contemplated hereby. Each party hereto
irrevocably waives, to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an inconvenient
forum.
Section 15.13. Setoff. The Purchasers and the Lessor shall, upon the occurrence of any
Lease Event of Default, have the right to appropriate and, subject to Section 4.7, apply to the
payment of Lessee’s obligations under the Lease and the other Operative Documents as security for
the payment of such obligations, any and all balances, credits, deposits, accounts or moneys of
Lessee then or thereafter maintained with any Purchaser or the Lessor. The rights of the
Purchasers and the Lessor under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such Person may have.
Section 15.14. No Participant Responsible for Other Participants. The obligations of each
Participant under this Participation Agreement and the other Operative Documents are several and
not joint; and, in the event of a failure by a Participant to perform any of its obligations
hereunder or under any other Operative Document, neither the Administrative Agent nor any
Participant (other than the defaulting Participant) shall have any liability as a consequence
thereof.
-47-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
Section 15.15. Special Provisions Re: Sale of Receivables. Notwithstanding anything else to
the contrary in any of the Operative Agreements, the following provisions shall apply with
respect to the Purchased Interests:
(a) All purchases hereunder (and under the Receivables Purchase Agreement) shall be made
without recourse, but shall be made pursuant to, and in reliance upon, the representations,
warranties and covenants of the Lessor set forth in this Participation Agreement and each other
Operative Document. No obligation or liability to the Lessee on any Purchased Interest is
intended to be assumed by the Purchaser hereunder, and any such assumption is expressly disclaimed.
The Lessor will not claim any ownership interest in the Purchased Interests and each Purchaser is
assuming all risks of credit loss associated with the Purchased Interests.
(b) It is the express intent of the parties hereto that the transfers of the Purchased
Interests by the Lessor to the Purchasers, as contemplated by this Participation Agreement and the
Receivables Purchase Agreement be, and be treated as, sales and not as loans secured by the
Purchased Interests. If, however, notwithstanding the intent of the parties, such transactions are
deemed to be loans, Lessor hereby grants to the Administrative Agent (for the benefit of each
Purchaser) a first priority security interest in all of such Lessor’s right, title and interest in
and to the Purchased Interests now existing and hereafter created by the Lessor, all Purchaser
Basic Rent, all Supplemental Rent owing to any Purchaser and all amounts received with respect
thereto, and all proceeds thereof, to secure all of such Lessor’s obligations hereunder.
(c) The Purchasers shall have no obligation to account for, to replace, to substitute or to
return any Purchased Interest (or portion thereof) to the Lessor. Subject to Applicable Law the
Purchasers shall have the unrestricted right to further assign, transfer, deliver, hypothecate,
subdivide or otherwise deal with the Purchased Interests on whatever terms such Purchaser shall
determine.
(d) Each sale made by the Lessor pursuant to this Participation Agreement and the Receivables
Purchase Agreement shall constitute a valid sale, transfer, and assignment of Purchased Interests
to the Purchasers, enforceable against creditors of, and purchasers from, the Lessor and each such
sale shall have been made for “reasonably equivalent value” (as such term is used under Section 548
of the Bankruptcy Code) and not for or on account of “antecedent debt” (as such term is used under
Section 547 of the Bankruptcy Code) owed by the Lessor to any Purchaser; and this Participation
Agreement constitutes, and each other Operative Document to be signed by the Lessor, when duly
executed and delivered, will constitute, a legal, valid and binding obligation of the Lessor,
enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) The Lessor shall also maintain and implement administrative and operating procedures
(including an ability to recreate records evidencing Purchased Interests and Lease in the event of
the destruction of the originals thereof), and keep and maintain (or cause the Administrative Agent
to keep and maintain) all documents, books, records and other information reasonably necessary or
advisable for the identification and collection of all Purchased Interests.
-48-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
(f) The Lessor shall, at its expense, take, and shall cause to be taken, all action necessary
or desirable in the reasonable determination of the Purchasers to establish and maintain a valid
and enforceable ownership interest in the Purchased Interests with respect thereto, in favor of
Purchaser, including taking such action to perfect, protect or more fully evidence the interest of
the Purchaser as the Purchaser may reasonably request.
(g) At its expense, the Lessor shall xxxx its records relating to both the Purchased Interests
and the Lease, including with the following legend, or such other marking reasonably acceptable to
the Purchasers evidencing that the ownership interests with regard to such Purchased Interests and
the Lease have been sold in accordance with the Receivables Purchase Agreement: “AN UNDIVIDED,
FRACTIONAL OWNERSHIP INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD
BY SELCO SERVICE CORPORATION TO [NAME OF APPLICABLE PURCHASER(S)] PURSUANT TO A RECEIVABLES
PURCHASE AGREEMENT, DATED AS OF DECEMBER 30, 2004, AS AMENDED, AMONG SELCO SERVICE CORPORATION, KEY
CORPORATE CAPITAL INC., AS ADMINISTRATIVE AGENT AND KEY CORPORATE CAPITAL INC., AS PURCHASER.”
Section 15.16. Confidentiality. For the purposes of this Section 15.16, “Confidential
Information” means information delivered to the Administrative Agent or any Participant by or on
behalf of the Lessee, the Guarantor or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to the Operative Documents that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified when received by any such
Person as being confidential information of the Lessee, the Guarantor or such Subsidiary, provided
that such term does not include information that (a) was publicly known or otherwise known to such
Person prior to the time of such disclosure, (b) subsequently becomes publicly known through no act
or omission by such Person or any person acting on its behalf, (c) otherwise becomes known to such
Person other than through disclosure by the Lessee, the Guarantor or any Subsidiary or (d)
constitutes financial statements delivered under Section 10.6 that are otherwise publicly
available. Each of the Administrative Agent and each Participant agree to maintain the
confidentiality of such Confidential Information in accordance with procedures adopted by such
Person in good faith to protect confidential information of third parties delivered to it, provided
that any such Person may deliver or disclose Confidential Information to (i) its directors,
officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the transactions contemplated by the Operative Documents), (ii)
its financial advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this Section 15.16, (iii)
any Participant or other party hereto, (iv) any transferee or potential transferee to which it
shall sell or offer to sell its interest in the Operative Documents or any part thereof or any
participation therein, provided that such transferee or potential transferee has accepted such
information subject to a confidentiality agreement substantially similar to this Section 15.16, (v)
any Person from which it offers to purchase any security of the Lessee or the Guarantor (if such
Person has agreed in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 15.16), (vi) any federal or state regulatory authority having
jurisdiction over it, (vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that
-49-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Participation Agreement |
requires access to information about its investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law,
rule, regulation or order applicable to it, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which it is a party or (z) if a Lease Event of
Default has occurred and is continuing, to the extent you may reasonably determine such delivery
and disclosure to be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under the Operative Documents. Each Participant, by its acceptance of a
Certificate, will be deemed to have agreed to be bound by and to be entitled to the benefits of
this Section 15.16 as though it were a party to this Agreement. On reasonable request by the
Lessee in connection with the delivery to any Participant of information required to be delivered
under this Agreement or requested by a Participant (other than a Participant that is a party to
this Agreement or its nominee or which has entered into an assignment agreement substantially in
the form of Exhibit C), such Participant will enter into an agreement with the Lessee embodying
the provisions of this Section 15.16.
Section 15.17. Supplemental Collateral. Each party hereto acknowledges that the Supplemental
Collateral is solely for the benefit of the Lessor and none of the Purchasers or the
Administrative Agent shall have any interest therein.
Section 15.18. Patriot Act. Each of the Guarantor and the Lessee hereby agrees to provide to
the Administrative Agent and each Participant with any additional information that any such Person
deems necessary from time to time in order to ensure compliance with all Applicable Laws concerning
money laundering and similar activities, including OFAC including, without limitation completion of
the form attached hereto as Schedule V.
-50-
In
Witness Whereof, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly authorized as of the day
and year first above written.
|
|
|
|
|
|
|
Tandem Health Care of Ohio, Inc., as Lessee |
|
|
|
|
|
|
|
By
|
|
/s/ Xxxxxxxx X. Xxxxxxx |
|
|
|
|
|
|
|
|
|
Xxxxxxxx X. Xxxxxxx |
|
|
|
|
Its Chairman and CEO |
|
|
|
|
|
|
|
Tandem Health Care, Inc., as Guarantor |
|
|
|
|
|
|
|
By
|
|
/s/ Xxxxxxxx X. Xxxxxxx |
|
|
|
|
|
|
|
|
|
Xxxxxxxx X. Xxxxxxx |
|
|
|
|
Its Chairman and CEO |
|
|
|
|
|
|
|
SELCO Service Corporation, as Lessor |
|
|
|
|
|
|
|
By |
|
/s/ Xxxxxx X. Xxxxx |
|
|
|
|
|
|
|
|
|
Xxxxxx X. Xxxxx |
|
|
|
|
Its Vice President |
|
|
|
|
|
|
|
Key Corporate Capital Inc., as Administrative Agent and as a Purchaser |
|
|
|
|
|
|
|
By |
|
/s/ Xxxxxxxxxx Xxxxxxxxx |
|
|
|
|
|
|
|
|
|
Xxxxxxxxxx Xxxxxxxxx |
|
|
|
|
Its Vice President |
(Participation Agreement)
APPENDIX A
TO PARTICIPATION
AGREEMENT
A. Interpretation. In each Operative Document, unless a clear contrary intention
appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by the Operative Documents,
and reference to a Person in a particular capacity excludes such Person in any other
capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument (including any Operative
Document) means such agreement, document or instrument as amended or modified and in effect
from time to time in accordance with the terms thereof and, if applicable, the terms of the
other Operative Documents, and reference to any promissory note includes any promissory
note which is an extension or renewal thereof or a substitute or replacement therefor;
(v) reference to any Requirement of Law means such Requirement of Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder, and reference to any section
or other provision of any Requirement of Law means that provision of such Requirement of
Law from time to time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(vi) reference in any Operative Document to any Article, Section, Appendix, Schedule
or Exhibit means such Article or Section thereof or Appendix, Schedule or Exhibit thereto;
(vii) “hereunder,” “hereof, “hereto” and words of similar import shall be deemed
references to an Operative Document as a whole and not to any particular Article, Section
or other provision thereof;
(viii) “including” (and with correlative meaning “include”) means including
without limiting the generality of any description preceding such term; and
(ix) with respect to any rights and obligations of the parties under the Operative
Documents, all such rights and obligations shall be construed to the extent permitted by
Applicable Law.
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
B. Computation of Time Periods. Unless otherwise specified in any Operative Document, for
purposes of computation of periods of time under the Operative Documents, the word “from” means
“from and including” and the words “to” and “until” each mean “to but excluding.”
C. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting
terms used therein shall be interpreted, all accounting determinations thereunder shall be made,
and all financial statements required to be delivered thereunder shall be prepared in accordance
with GAAP as in effect from time to time.
D. Conflict in Operative Documents. If there is any conflict between any Operative
Documents, such Operative Documents shall be interpreted and construed, if possible, so as to avoid
or minimize such conflict but, to the extent (and only to the extent) of such conflict, the
Participation Agreement shall prevail and control.
E. Legal Representation of the Parties. The Operative Documents were negotiated by the parties
with the benefit of legal representation and any rule of construction or interpretation otherwise
requiring the Operative Documents to be construed or interpreted against any party shall not apply
to any construction or interpretation hereof or thereof.
F. Defined Terms. Unless a clear contrary intention appears, terms defined herein have the
respective indicated meanings when used in each Operative Document.
“Account” means the account identified by the Administrative Agent in a writing delivered to
Lessee into which all payments by the Lessee under the Operative Documents shall be made, which
shall initially be the account of the Administrative Agent specified on Schedule II to the
Participation Agreement.
“Acquisition Date” is defined in Section 6.1 of the Participation Agreement.
“Adjusted Eurodollar Rate” means, as applicable to any Rent Period for Capital or Lessor
Amounts, (x) a rate per annum determined for such Rent Period equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100th of 1%) by
dividing (i) the applicable
London Interbank Offered Rate for such Rent Period by (ii) 1.00 minus the Eurodollar Reserve
Percentage, plus (y) in the case of Capital, the Purchaser Margin applicable to the Adjusted
Eurodollar Rate and, in the case of Lessor Amounts, the Lessor Margin. The Adjusted Eurodollar
Rate shall be adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
“Administrative Agent” means Key Corporate Capital Inc. in its capacity as Administrative
Agent, and any successors or assigns thereto in such capacity.
“Advance”
means the advance of funds by the Purchasers to the Lessor and the Lessor making
funds available to acquire the Properties and pay Transaction Expenses and Fees pursuant to Article
III of the Participation Agreement.
-2-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Affected Property” is defined in Section 15.1 of the Master Lease.
“Affiliate”
means, as to any Person any other Person which directly or indirectly is in
control of, is controlled by, or is under common control with, such Person. A Person shall be
deemed to control another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such other Person,
whether through the ownership of voting securities, membership interests, by contract, or
otherwise.
“After
Tax Basis” means, with respect to any payment to be received, the amount of such
payment increased so that, after deduction of the amount of all taxes required to be paid by the
recipient calculated at the then maximum marginal rates generally applicable to Persons of the
same type as the recipient (less any tax savings realized and the present value of any tax savings
projected to be realized by the recipient as a result of the payment of the indemnified amount)
with respect to the receipt by the recipient of such amounts, such increased payment (as so
reduced) is equal to the payment otherwise required to be made.
“Applicable Law” means all Federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the
Properties or the demolition, construction, use or alteration thereof, whether now or hereafter
enacted and in force, including any that require repairs, modifications or alterations in or to
any Property or in any way limited the use and enjoyment thereof (including all building, zoning
and fire codes and the Americans with Disabilities Act of 1990, 42
U.S.C. §§ 1201 et seq. and any
other similar federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any that may relate to environmental requirements (including all Environmental
Laws), and all permits, certificates of occupancy, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any
instruments which are either of record or known to the Guarantor or the Lessee affecting any
Property, the Appurtenant Rights and any easements, licenses or other agreements entered into
pursuant to Section 11.2 of the Master Lease.
“Appraisal” means, with respect to any Property, an appraisal of the Fair Market Sales Value
of such Property, which Appraisal complies in all material respects with all of the provisions of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and
regulations adopted pursuant thereto, and all other applicable Requirements of Law, and is
addressed to the Administrative Agent, each Participant and the Lessee. Each Appraisal shall be
prepared by an Appraiser selected by the Administrative Agent, and such Appraiser shall be
reasonably acceptable to the Lessee.
“Appraised
Value” means, with respect to any Property, the Fair Market Sales Value of such
Property as set forth in the Appraisal therefor.
“Appraiser”
means the appraiser which prepared an Appraisal of the Properties or such other
Person selected by the Administrative Agent.
-3-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Appurtenant
Rights” means, with respect to any Land, (i) all agreements, easements, rights
of way or use, rights of ingress or egress, privileges, appurtenances, tenements, and other rights
and benefits at any time belonging or pertaining to such Land or the Improvements thereon,
including, without limitation, the use of any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to such Land and (ii) all permits, licenses and
rights, whether or not of record, appurtenant to such Land.
“Arranger” means Lease Advisory Services, in its capacity as
arranger.
“Assigned
Lease” is defined in Section 2(a) of the Assignment of Lease and Rent.
“Assignment
of Certificates of Deposit” means each Assignment of Certificates of Deposit
dated as of December 30, 2004 from the Lessee to the Lessor, substantially in the form of Exhibit
L to the Participation Agreement.
“Assignment
of Lease and Rent” means the Assignment of Lease and Rent dated as of December
30, 2004, from the Lessor, as assignor, to the Administrative Agent, as assignee, as the same may
be amended, supplemented, amended and restated or otherwise modified from time to time.
“Available
Beds” means the beds at each of the Properties, as shown on Schedule III to the
Participation Agreement, as such beds may be increased by the Lessee at any Property during the
Lease Term.
“Bankruptcy
Code” means Title 11 of the United States Code entitled “Bankruptcy” as now or
hereafter in effect or any successor thereto.
“Base Rate” means, for any day, the greater of (a) the Prime Rate as in effect on such day,
with any change in the Base Rate resulting from a change in said prime commercial rate to be
effective as of the date of the relevant change in said prime commercial rate; or (b) the Federal
Funds Rate plus 1%.
“Base Rate Lessor Amount” means a Lessor Amount bearing interest at the Base Rate.
“Basic Rent” means the sum of (i) the Purchaser Basic Rent and (ii) the Lessor Basic Rent,
calculated as of the applicable date on which Basic Rent is due.
“Xxxx
of Sale” is defined in Section 6.1(j) of the Participation Agreement.
“Break
Costs” means an amount equal to the amount, if any, required to compensate any
Participant for any additional losses (including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or redeployment of deposits or funds acquired by such
Participant to fund its obligations under the Operative Documents) it may incur with respect to
Eurodollar Capital/Lessor Amounts as a result of (w) the Lessee’s payment of Rent other than on a
Scheduled Payment Date (except for Rent not due on a Scheduled Payment Date), (x) the Advance not
being made on the date specified therefor in the Funding Request, (y) the
-4-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
Guarantor’s or the Lessee’s payment of the Lease Balance on any date other than a Basic Rent
Payment Date, or (z) as a result of any conversion of the London Interbank Offered Rate in
accordance with Section 13.7 or 13.8 of the Participation Agreement. A statement as to the amount
of such loss, cost or expense, prepared in good faith and in reasonable detail and submitted by
such Participant to the Administrative Agent and the Lessee, shall be correct and binding on the
Administrative Agent and the Lessee absent manifest error.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial
banks in Cleveland, Ohio or Pittsburgh, Pennsylvania are authorized or required by law to close,
except that, when used in connection with a Eurodollar Capital/Lessor Amount, such day shall also
be a day on which dealings between banks are carried on in U.S. dollar deposits in London,
England.
“Capital” means the amount paid to the Lessor by the Purchasers in respect of the Purchased
Interests pursuant to the Participation Agreement and the Receivables
Purchase Agreement.
“Casualty” means any damage or destruction of all or any portion of any Property as a result
of a fire, flood, earthquake or other casualty.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, 42 U.S.C. §§ 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of
1986.
“Certificate of Deposit” is defined in the Assignment of Certificate of Deposit.
“Certificates” means the certificates issued to each Purchaser substantially in the form of
Exhibit A to the Receivables Purchase Agreement evidencing such Purchaser’s share of the undivided
percentage ownership interest in the Purchased Interests and the amount of Capital attributable
thereto.
“Certifying Party” is defined in Section 22.1 of the Master Lease.
“Claims” means any and all obligations, liabilities, losses, actions, suits, judgments,
penalties, fines, claims, demands, settlements, costs and expenses (including, without limitation,
reasonable legal fees and expenses) of any nature whatsoever.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and regulations
promulgated thereunder, or any successor statute thereto.
“Collateral”
means all collateral pledged by the Lessee, the Guarantor, the Sublessees and the
Lessor pursuant to the Security Documents.
“Commitment” means (i) as to any Purchaser, its Purchaser Commitment, and (ii) as to the
Lessor, the Lessor Commitment.
-5-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Commitment Percentage” means, with respect to any Participant, the percentage set forth
opposite such Participant’s name under the heading
“Commitment Percentage” on Schedule I to the
Participation Agreement.
“Condemnation” means any condemnation, requisition, confiscation, seizure or other taking or
sale of the use, access, occupancy, easement rights or title to any Property or any part thereof,
wholly or partially (temporarily or permanently), by or on account of any actual or threatened
eminent domain, proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of, or widen the
streets adjacent to, such Property or alter the pedestrian or vehicular traffic flow to such
Property so as to result in change in access to such Property, or by or on account of an eviction
by paramount title or any transfer made in lieu of any such proceeding or action. A “Condemnation”
shall be deemed to have occurred on the earliest of the dates that use, occupancy or title vests
in the condemning authority.
“Consulting Contracts” means the Consulting Agreements, each dated as of March 1, 2000,
between the Guarantor and LTC Management Services, Inc. relating to the Guarantor’s performance of
certain consulting services on behalf of LTC Management Services to Oak Hill Manor Care Center,
Inc. and X’Xxxxx Management, LLC (relating to Altercare of Millersburg, Inc.).
“Contract Rents” is defined in Section 2(b) of the Assignment of Lease and Rent.
“Contracts” is defined in Section 2(b) of the Assignment of Lease and Rent.
“Contractual Obligation” means, as to any Person, any provision of any security issued by
such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or
other instrument, document or agreement to which such Person is a party or by which it or any of
its property is bound.
“Deed” means a grant deed with respect to the real property comprising any Property, in
conformity with Applicable Law and appropriate for recording with the applicable Governmental
Authorities, conveying fee simple title to such real property to the Lessor, subject only to
Permitted Property Liens.
“Default” means any Event of Default or any condition, occurrence or event which, after
notice or lapse of time or both, would constitute an Event of Default.
“Dollars
” and “$” mean dollars in lawful currency of the United States of America.
“Eligible Assignee” means an Eligible Lessor Assignee or an Eligible Purchaser Assignee, as
the case may be.
“Eligible
Lessor Assignee” means, with respect to any assignment by the Lessor pursuant to
Section 12.1(b) of the Participation Agreement, any Person that meets all of the following
requirements: (i) such Person is (x) a leasing company, bank, bank subsidiary or bank Affiliate,
-6-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
insurance company or other institutional investor with a net worth or, in the case of a bank or
lending institution, combined capital and surplus on a consolidated basis at the time of transfer
of at least $15,000,000 determined in accordance with GAAP or (y) a Person described in clause (x)
that is an Affiliate of a financial institution meeting such net worth or capital and surplus
standard and (ii) such assignment to such Person would not cause such Person or the Property to be
consolidated onto the balance sheet of the Lessee or Guarantor.
“Eligible Purchaser Assignee” means any Purchaser or any Affiliate or Subsidiary of a
Purchaser or any commercial bank, financial institution or “accredited investor” (as defined in
Regulation D of the SEC) with a net worth or combined capital and surplus, as the case may be, in
excess of $50,000,000.
“End of the Term Report” is defined in Section 13.2(a) of the Participation Agreement.
“Environmental Audit” means a Phase One environmental site assessment (the scope and
performance of which meets or exceeds the then most current ASTM Standard Practice El527-93
Standard Practice for Environmental Site Assessments: Phase One Environmental Site Assessment
Process) of each Property.
“Environmental Laws” means any and all applicable federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees or other legal requirement
regulating, relating to or imposing liability or standards of conduct concerning protection of
human health or the environment or the use, storage, recycling, handling, disposal, discharge,
transport, treatment or generation of Hazardous Materials, as now or may at any time be in effect
during the Lease Term, including CERCLA, RCRA, the Clean Air Act, 42 USC §7401 et seq., the Toxic
Substances Control Act 15 USC §2601 et seq. and any rules and regulations promulgated thereunder.
“Environmental
Violation” means, with respect to any Property, any activity, occurrence or
condition that violates or results in non-compliance with any Environmental Law.
“Equipment” means equipment, apparatus, fittings and personal property of every kind and
nature whatsoever purchased, leased or otherwise acquired by the Lessor using the proceeds of the
Capital and/or the Lessor Amounts and now or subsequently attached to, contained in or used or
usable in any way in connection with any operation or letting of any Property.
“ERISA” means the Employee Retirement Income Security Act of 1974 and regulations
promulgated thereunder, as the same may be amended from time to time or any successor federal
statute.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common
control of the Guarantor within the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
-7-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Eurodollar Capital/Lessor Amount” means Capital or Lessor Amounts as the case may be bearing
ROC or Yield at the Adjusted Eurodollar Rate.
“Eurodollar Reserve Percentage” means for any day, that percentage (expressed as a decimal)
which is in effect on such day, as prescribed by the F.R.S. Board for determining the maximum
reserve requirement for a member bank of the Federal Reserve System in respect of “Eurocurrency
liabilities” (or in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Capital/Lessor Amounts is determined or any
category of extensions of credit or other assets which includes loans
by a non-United States office
of any bank to United States residents).
“Event of Default” means a Lease Event of Default, a Receivables Purchase Agreement Event of
Default or any “Event of Default” described in any other Operative Document.
“Event of Loss” means any Significant Casualty or any Significant Condemnation.
“Excepted Payments” means:
(a) all indemnity payments (including indemnity payments made pursuant to Article XIII
of the Participation Agreement) to which the Administrative Agent, the Arranger, the Lessor,
any Purchaser or any of their respective Affiliates, agents, officers, directors or
employees is entitled;
(b) any amounts (other than Basic Rent or amounts payable by Lessee pursuant to Section
15.2 of the Master Lease or Articles XVI, XVIII or XX of the Master Lease) payable under any
Operative Document to reimburse the Administrative Agent, the Arranger, the Lessor, any
Purchaser or any of their respective Affiliates (including the reasonable expenses of the
Administrative Agent, the Arranger, the Lessor, any Purchaser or such Affiliates incurred in
connection with any such payment) for performing or complying with any of the obligations of
Lessee under and as permitted by any Operative Document;
(c) any insurance proceeds (or payments with respect to risks self-insured or policy
deductibles) under liability policies;
(d) any insurance proceeds under policies maintained by any Participant;
(e) Transaction Expenses or other amounts or expenses paid or payable to or for the
benefit of the Administrative Agent, the Lessor, the Arranger, or any Purchaser; and
(f) any payments in respect to interest to the extent attributable to payments
referred to in clauses (a) through (e) above.
“Excess Casualty/Condemnation Proceeds” means the excess, if any, of (x) the aggregate of all
awards, compensation or insurance proceeds payable in connection with a Casualty or
-8-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
Condemnation relating to any Property minus (y) the Property Balance for such Property paid by the
Lessee pursuant to Article XV of the Master Lease with respect to such Casualty or Condemnation.
“Excess Sales Proceeds” means the excess, if any, of (x) the aggregate of all proceeds
received by the Lessor in connection with any sale of any Property pursuant to the Lessor’s
exercise of remedies under Section 16.2 of the Master Lease or the Lessee’s exercise of the
Remarketing Option under Article XX of the Master Lease (in either case, less all fees, costs and
expenses of the Lessor in connection with the exercise of its rights and remedies thereunder),
minus (y) the Lease Balance, and minus (z) all accrued and unpaid Basic Rent and Supplemental Rent
and all other amounts then due and owing to the Participants and the Administrative Agent under
the Operative Documents (not included in the Lease Balance).
“Exchange Act” means the Securities Exchange Act of 1934 and regulations promulgated
thereunder.
“Expiration
Date” means, with respect to the Master Lease, the earlier of the date the
Master Lease shall have been terminated in accordance with the provisions of the Master Lease or
any of the other Operative Documents and the Maturity Date; provided, however, with respect to
Article XX of the Master Lease, the Expiration Date shall be the later of (i) the Maturity Date
and (ii) the Extended Expiration Date.
“Expiration Date Purchase Obligation” means the Lessee’s obligation, pursuant to Section 18.2
of the Master Lease, to purchase all (but not less than all) of the Properties on the Expiration
Date.
“Extended Expiration Date” is defined in Section 20.3(a) of the Master Lease.
“Fair Market Sales Value” means, with respect to any Property, the amount, which in any
event shall not be less than zero, that would be paid in cash in an arm’s-length transaction
between an informed and willing purchaser and an informed and willing seller, neither of whom is
under any compulsion to purchase or sell, respectively, for the ownership of such Property. The
Fair Market Sales Value of each Property shall be determined based on the assumption that, except
for purposes of Article XVI of the Master Lease and Section 13.2 of the Participation Agreement,
such Property is in the condition and state of repair required under Section 9.1 of the Master
Lease and the Lessee is in compliance with the other requirements of the Operative Documents
relating to the condition of such Property.
“Federal Funds Rate” means, for any day or period, as applicable, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) at which Federal funds in the amount equal to
the principal amount of the related Capital or Lessor Amounts are offered in the interbank market
to the Administrative Agent as of 10:00 A.M., Cleveland, Ohio time, on such day for such day or for
such period, as applicable.
“Fee Letter” means that certain letter agreement dated December 6, 2004 between the Lessee and
the Administrative Agent.
-9-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Financing Statements” means UCC financing statements appropriately completed and
executed for filing in the applicable jurisdiction in order to protect and perfect the
Liens created under the Security Documents.
“Fixed Rent” means the amounts designated as “Fixed Rent”, if any, for the Capital
advanced in connection with the Master Lease, as set forth on Schedule VI to the
Participation Agreement (which amounts are intended to reduce the outstanding amount of
the Capital).
“Fixed Rent Payment Date” means each date set forth under the heading “Fixed Rent
Payment Dates” in Schedule VI to the Participation Agreement or, if any such day is not
a Business Day, the next succeeding Business Day.
“F.R.S, Board” means the Board of Governors of the Federal Reserve System or any
successor thereto.
“Funding Office” means the office of each Participant identified on Schedule II to
the Participation Agreement as its funding office.
“Funding Request” is defined in Section 3.4 of the Participation Agreement.
“GAAP” means generally accepted accounting principles set forth from time to time
in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession).
“Governmental Action” means all permits, authorizations, registrations, consents,
approvals, waivers, exceptions, variances, orders, judgments, written interpretations,
decrees, licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any Applicable Law, and
shall include, without limitation, all environmental and operating permits and licenses
that are required for the full use, occupancy, zoning and operation of any Property.
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
“Gross Remarketing Proceeds” is defined in Section 20.2(h) of the Master
Lease.
“Guaranteed Obligations” is defined in Section 2.1(a) of the Guaranty.
“Guaranteed Parties” means the Lessor, the Purchasers and the Administrative
Agent, together with their respective successors and assigns.
-10-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Guarantor Debt Service Coverage Ratio” means for any period, the ratio of (i) the net
income before taxes of the Guarantor and its consolidated Subsidiaries for such period, all as
determined in accordance with GAAP, plus, to the extent deducted in determining such net income,
the sum of (1) interest, (2) depreciation, and (3) amortization, less, to the extent not deducted
as an expense in determining such net income, a $250 per bed (based on all beds in facilities
owned or leased by the Guarantor) annual repair and replacement reserve, to (ii) principal
payments due on the Guarantor’s long-term indebtedness during the period measured, plus the
Guarantor’s interest expense, plus the Guarantor’s lease expense, in each case determined in
accordance with GAAP.
“Guaranty” means the Guaranty dated as of December 30, 2004, made by the Guarantor in favor
of each of the Guaranteed Parties, as the same may be amended, supplemented, amended and restated
or otherwise modified from time to time.
“Hazardous Activity” means any activity, process, procedure or undertaking that directly or
indirectly (i) produces, generates or creates any Hazardous Material; (ii) causes or results in
(or threatens to cause or result in) the Release of any Hazardous Material into the environment
(including air, water vapor, surface water, groundwater, drinking water, land (including surface
or subsurface), plant, aquatic and animal life); (iii) involves the containment or storage of any
Hazardous Material; or (iv) would be regulated as hazardous waste treatment, storage or disposal
within the meaning of any Environmental Law.
“Hazardous Materials” means any hazardous or toxic materials, substances, chemicals, wastes
or pollutants that from time to time are defined by or pursuant to or are regulated under any
Environmental Laws, including asbestos, polychlorinated biphenyls, petroleum, petroleum
derivatives or by-products, other hydrocarbons, urea formaldehyde and any material, substance,
pollutant or waste that is defined as a hazardous waste under RCRA or defined as a hazardous
substance under CERCLA.
“Impositions” means, except to the extent described in the following sentence, any and all
liabilities, losses, expenses and costs of any kind whatsoever for fees, taxes, levies, imposts,
duties, charges, assessments or withholdings of any nature whatsoever (all of the foregoing being
defined as “Taxes”) (including, without limitation, (i) real and personal property taxes, including
personal property taxes on any property covered by the Master Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem taxes in the nature of
property taxes; (ii) sales taxes, use taxes and other similar taxes (including rent taxes and
intangibles taxes); (iii) any excise taxes; (iv) real estate transfer taxes, conveyance taxes,
mortgage taxes, intangible taxes, stamp taxes and documentary recording taxes and fees; (v) taxes
that are or are in the nature of franchise, income, value added, gross receipts, privilege and
doing business taxes, license and registration fees; and (vi) assessments on any Property,
including all assessments for public improvements or benefits (whether or not such improvements are
commenced or completed within the Lease Term)), and in each case all interest, additions to tax and
penalties thereon, which at any time prior to, during or with respect to the Lease Term or in
respect of any period for which the Lessee shall be obligated to pay
-11-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
Supplemental Rent, may accrue or be levied, assessed or imposed by any Governmental Authority
upon or with respect to (a) any Tax Indemnitee, any Property or any part thereof or interest
therein, or the Lessee or any sublessee or user of any Property; (b)the financing, refinancing,
demolition, construction, substitution, subleasing, assignment, control, condition, occupancy,
servicing, maintenance, repair, ownership, possession, purchase, rental, lease, activity conducted
on, delivery, insuring, use, operation, improvement, transfer, return or other disposition of any
Property or any part thereof or interest therein; (c) the Certificates or other indebtedness with
respect to any Property or any part thereof or interest therein or transfer thereof; (d) the
rentals, receipts or earnings arising from any Property or any part thereof or interest therein;
(e) the Operative Documents or any payment made or accrued pursuant thereto; (f) the income or
other proceeds received with respect to any Property or any part thereof or interest therein upon
the sale or disposition thereof; (g) any contract relating to the construction, acquisition or
delivery of the Improvements or any part thereof or interest therein; (h) the issuance of the
Certificates; or (i) otherwise in connection with the transactions contemplated by the Operative
Documents.
Notwithstanding anything in the first paragraph of this definition (except as provided
in the final paragraph of this definition) the term “Imposition” shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are in the nature of,
sales, use, rental, transfer or property taxes) that are imposed on an Indemnitee by
any Governmental Authority and that are based upon or measured by or with respect to
the net income (including, without limitation, any minimum taxes, income or capital
gains taxes, withholding taxes, items of tax preference or franchise taxes) of such
Person and any interest, additions to tax, penalties or other charges in respect
thereof; provided that this clause (i) shall not be interpreted to prevent a payment
from being made on an After Tax Basis if such payment is otherwise required to be so
made;
(ii) any Tax or imposition for so long as, but only for so long as, it is being
contested in accordance with the provisions of Section 13.5(b) of the Participation
Agreement, provided that the foregoing shall not limit the Lessee’s obligation under
clause (D) of the second paragraph of Section 13.5(b) of the Participation Agreement
to advance to such Tax Indemnitee amounts with respect to Taxes that are being
contested in accordance with Section 13.5(b) of the Participation Agreement or any
expenses incurred by such Tax Indemnitee in connection with such contest;
(iii) Taxes imposed on or with respect to or payable by a Tax Indemnitee
resulting from, or that would not have been imposed but for the existence of, any
Lessor Lien created by or through such Tax Indemnitee or an affiliate thereof and
not caused by acts or omissions of the Lessee;
(iv) any tax imposed by its express terms in lieu of or in substitution for a
Tax not subject to indemnity pursuant to the provisions of Section 13.5 of the
Participation Agreement;
-12-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
(v) any Tax or imposition to the extent, but only to such extent, it relates to any
act, event or omission that occurs after the termination of the Master Lease and
redelivery or sale of all of the Properties in accordance with the terms of the Master
Lease (but not any Tax or imposition that relates to any period prior to such termination
and redelivery); and
(vi) any Taxes which are imposed on an Indemnitee as a result of the gross negligence
or willful misconduct of such Indemnitee itself (as opposed to gross negligence or willful
misconduct imputed to such Indemnitee), but not Taxes imposed as a result of ordinary
negligence of such Indemnitee.
Notwithstanding the foregoing, no exclusion from the definition of Impositions set forth
above shall apply to any Taxes or any increase in Taxes imposed on a Tax Indemnitee net of any
decrease in taxes realized by such Tax Indemnitee, to the extent that such tax increase or
decrease would not have occurred if on the Acquisition Date the Purchasers and the Lessor had
advanced funds to the Lessee in the form of a loan secured by each Property in an amount equal to
the Property Cost funded on the Acquisition Date, with debt service for such loan equal to the
Basic Rent payable on each Rent Payment Date and a principal balance at the maturity of such loan
in an amount equal to the then outstanding amount of the Advance at the end of the term of the
Master Lease, as determined by such Tax Indemnitee, which determination shall be binding absent
manifest error.
“Improvements” means all buildings, structures, fixtures, Equipment and other improvements of
every kind existing on the Acquisition Date at any time and from time to time on or under the Land
or any parcel of Land to be acquired pursuant to the terms of the Operative Documents, together
with any and all appurtenances to such buildings, structures or improvements, including sidewalks,
utility pipes, conduits and lines, parking areas and roadways, and including all Modifications and
other additions to or changes in the Improvements at any time.
“Indemnitee” means the Lessor, each Purchaser and the Administrative Agent.
“Insurance
Requirements” means all terms and conditions of any insurance policy either
required by the Master Lease to be maintained by the Lessee, and all requirements of the issuer of
any such policy.
“Key” means Key Corporate Capital Inc., a Michigan corporation.
“Land” means each individual fee interest in real property described on Schedule I to each
Lease Supplement, and includes all Appurtenant Rights attached thereto.
“Lease” means, collectively, the Master Lease and each Lease Supplement.
“Lease
Balance” means, as of any date of determination, an amount equal to the sum of the
Purchaser Balance and the Lessor Balance and all other amounts owing by the Guarantor or
-13-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
the Lessee under the Operative Documents (including without limitation, accrued and unpaid Basic
Rent and Supplemental Rent, if any).
“Lease Default” means any event or condition which, with the lapse of time or the giving of
notice, or both, would constitute a Lease Event of Default.
“Lease Event of Default” is defined in Section 16.1 of the Master Lease.
“Lease Receivables” means all payments under the Operative Documents in respect of (i) the
Purchaser Basic Rent, (ii) the Maximum Recourse Amount, (iii) the Purchaser Balance and (iv) any
purchase by the Lessee of the Properly up to the amount of the Capital then outstanding.
“Lease Rents” is defined in Section 2(a)(i) of the Assignment of Lease and Rent.
“Lease Supplement” means each Lease Supplement substantially in the form of Exhibit A to the
Master Lease, executed by the Lessee and the Lessor, dated as of the Acquisition Date and covering
the Property described therein, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time.
“Lease Term” is defined in Section 2.3 of the Master Lease.
“Lessee” means Tandem Health Care of Ohio, Inc., an Ohio corporation.
“Lessee Collateral” shall mean all of the Lessee’s and each Sublessee’s right, title and
interest in and to each of the following, however arising and whether now existing or hereafter
acquired or arising:
(a) the Properties;
(b) any Permitted Sublease, assignment or Residency Agreement relating to any Property;
(c) all business assets, including furniture, fixtures and equipment, inventory
and all other personal assets associated with the Properties; provided that there shall be
excluded from Lessee Collateral any equipment or personal property acquired after the
Acquisition Date and used at the Properties subject to leasing arrangements with finance
companies so long as (x) such equipment or personal property are not integral building
systems or fixed equipment and (y) the cost of the property so leased does not exceed
$750,000;
(d) all rents generated by the Lessee Collateral described in clauses (b) and (c) above;
(e) all certificates of need, licenses, permits, provider agreements, Medicare
and Medicaid contracts and other instruments relating to the Properties;
-14-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
(f) the Consulting Contracts and any Management Contracts;
(g) all books, manuals, logs, records and other information directly relating to
the maintenance, insurance or operation of the Properties;
(h) the stock of the Sublessees pledged pursuant to the Sublessee Stock Pledge;
(i) any other Collateral not described above which is now or hereafter pledged by the
Lessee or any Sublessee to the Administrative Agent pursuant to any Security Document; and
(j) all proceeds of and from any and all of the foregoing collateral (including
proceeds which constitute property of the types described in clauses (a) through (g) above
and, to the extent not otherwise included, all payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the foregoing
collateral.
“Lessee Debt Service Coverage Ratio” means, for any period, the ratio of (i) the net income
before taxes of the Lessee and its consolidated Subsidiaries for such period, all as determined in
accordance with GAAP, plus, to the extent deducted in determining such net income, the sum of (1)
interest expenses, (2) depreciation, (3) amortization, (4) management fee expense and (5) lease
expense, less, all cash interest expense, all principal payments, all management fee expense in an
amount up to 5% of net revenues, and to the extent not deducted as an expense in determining such
net income, a $250 per Available Bed annual repair and replacement reserve, in each case for the
Lessee and its consolidated Subsidiaries for each period determined in accordance with GAAP, to
(ii) principal payments due on long term indebtedness during the period measured, plus interest
expense, plus the net obligations (or net benefit) with respect to any interest rate swaps,
currency swaps and similar obligations lease expense in each case for the Lessee and its
consolidated Subsidiaries for such period determined in accordance with GAAP.
“Lessee Stock Pledge” means the Stock Pledge Agreement dated as of December 30, 2004 from the
Guarantor to the Administrative Agent, substantially in the form of Exhibit J to the Participation
Agreement.
“Lessor” means SELCO Service Corporation, an Ohio corporation.
“Lessor Amount”
is defined in Section 3.2 of the Participation Agreement.
“Lessor Balance” means, as of any date of determination, an amount equal to the outstanding
Lessor Amounts together with all accrued and unpaid Yield thereon and all other amounts due and
payable to the Lessor under the Operative Documents.
-15-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Lessor Basic Rent” means the amount of accrued Yield due on the Lessor Amount, determined
in accordance with Section 4.1 of the Participation Agreement as of any Payment Date and
excluding (i) any interest at the applicable Overdue Rate on any installment of Lessor Basic Rent
not paid when due and (ii) any fine, penalty, interest or cost assessed or added under any
agreement with a third party for nonpayment or late payment of Lessor Basic Rent.
“Lessor Collateral” means the collateral described in Section 2 of the Assignment of Lease
and Rent.
“Lessor Commitment” means the Commitment of the Lessor in the amount set forth on Schedule I
of the Participation Agreement.
“Lessor Margin” means, with respect to any Lessor Amount which is a Eurodollar Lessor Amount,
2% per annum.
“Lessor Lien” means any Lien, true lease or sublease or disposition of title arising as a
result of (a) any claim against the Lessor not resulting from the transactions contemplated by the
Operative Documents, (b) any act or omission of the Lessor which is not required or permitted by
the Operative Documents or is in violation of any of the terms of the Operative Documents, (c) any
claim against the Lessor, with respect to Taxes or Transaction Expenses against which Lessee is
not required to indemnify the Lessor, pursuant to Article IX of the Participation Agreement, or
(d) any claim against the Lessor arising out of any transfer by the Lessor of all or any portion
of the interest of the Lessor in a Property or the Operative Documents other than the transfer of
title to or possession of such Property by the Lessor pursuant to and in accordance with the
Master Lease, the Receivables Purchase Agreement or the Participation Agreement or pursuant to the
exercise of the remedies set forth in Section 16.2 of the Master Lease.
“Lien” shall mean any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on the common law,
statute or contract, and including but not limited to the security interest and lien arising from
a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances (including, with respect to stock, stockholder agreements,
voting trust agreements, buy-back agreements and all similar arrangements) affecting property.
“London Interbank Offered Rate” means, as applicable to any Eurodollar Capital/Lessor Amount,
for any Interest Period of such Eurodollar Capital/Lessor Amount, the quotient (rounded upwards, if
necessary, to the nearest one sixteenth of one percent (1/16 of 1%)) of (x) the per annum rate of
interest, determined by the Administrative Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately 11:00 a.m. (London
time) one Business Day prior to the Acquisition Date and prior to each Payment Date occurring
thereafter, appearing on Page 3750 of the Telerate Service (or any successor or substitute page of
such service, or any successor to or substitute for such service providing rate quotations
comparable to those currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing
-16-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
quotations of interest rates applicable to dollar deposits in the London interbank market) as the
rate in the London interbank market for dollar deposits in immediately available funds with a
maturity comparable to the Interest Period divided by (y) a number equal to 1.00 minus the
Eurodollar Reserve Percentage. In the event that such rate quotation is not available for any
reason, then the rate (for purposes of clause (x) hereof) shall be the rate, determined by the
Administrative Agent, as applicable, as of approximately 11:00 a.m. (London time) one (1) Business
Day prior to the beginning of such Interest Period, to be the average (rounded upwards, if
necessary, to the nearest one sixteenth of one percent (1/16 of 1%)) of the per annum rates at
which dollar deposits in immediately available funds in an amount comparable to the then
outstanding Eurodollar Capital/Lessor Amounts and with a maturity of one (1) month is offered to
the prime banks by leading banks in the London interbank market. The London Interbank Offered Rate
shall be adjusted automatically on and as of the effective date of any change in the Eurodollar
Reserve Percentage.
“Management Contracts” means (i) the Long Term Care Facility Management Agreements each dated
as of March 1, 2000 between each Sublessee and the Manager and (ii) any successor or other
agreements entered into by the Lessee or any Sublessee providing for the operation or management
of the Properties.
“Manager” means the Guarantor, in its capacity as Manager under the Management Contracts and
any successor Manager appointed under the Management Contracts.
“Margin Stock” has the meaning given such term under Regulation U of the F.R.S. Board.
“Marketing Period” means the period commencing on the date six (6) months prior to the
Expiration Date and ending on the Expiration Date.
“Master Lease” means the Master Lease, dated as of December 30, 2004, between the Lessor and
the Lessee as the same may be amended, supplemented, amended and restated or otherwise modified
from time to time.
“Material” and “Materially” mean material to (i) the ability of the Lessee or the Guarantor
to perform its obligations under the Operative Documents to which it is a party, or (ii) the value
or condition of any Property.
“Material Adverse Effect” means (a) a material impairment of the ability of any Lessee or the
Guarantor to perform any of its obligations under any Operative Document to which it is or will be
a party or (b) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Guarantor or the Lessee of any Operative Document or (c) a material
adverse effect on the value or condition of any Property.
“Material Default” means any Event of Default or any Lease Default under Section 16.1 (a), (b)
or (i) of the Master Lease.
-17-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Maturity Date” means with respect to the Capital and the Lessor Amounts, December 30, 2009,
as such date may be accelerated pursuant to the Operative Documents.
“Maximum Recourse Amount” means, with respect to each Property, 70.86% of the Property Cost
of such Property.
“Medicaid” means that certain program of medical assistance, funded jointly by the federal
government and the states for impoverished individuals who are aged, blind and/or disabled, and
for members of families with dependent children, which program is more fully described in Title
XIX of the Social Security Act (42 U.S.C. §§1396 et seq.) and the regulations promulgated
thereunder.
“Medicare” means that certain federal program providing health insurance for eligible elderly
and other individuals, under which physicians, hospitals, skilled nursing homes, home health care
and other providers are reimbursed for certain covered services they provide to the beneficiaries
of such program, which program is more fully described in Title XVIII of the Social Security Act
(42 U.S.C. §§1395 et seq.) and the regulations promulgated thereunder.
“Modifications” is defined in Section 10.1 of the Master Lease.
“Monthly Payment Date” means the first day of each calendar month (other than January 1,
2005) during the Lease Term or, if any such day is not a Business Day, the next succeeding
Business Day.
“Mortgage” means that certain Open-End Mortgage, Assignment of Leases and Rents and Security
Agreement dated as of December 30, 2004 from the Lessee and the Lessor to the Administrative Agent
relating to the Properties, substantially in the form of Exhibit N to the Participation Agreement.
“Mortgage Foreclosure Act” is defined in Section 16.4 of the Master Lease.
“Multiemployer Plan” means any Plan which is a “multiemployer plan” (as such term is defined
in section 4001(a)(3) of ERISA).
“Net Proceeds” means all amounts received by the Administrative Agent, the Lessor or any
Participant in connection with any Casualty or Condemnation or any sale of the Property pursuant to
the Administrative Agent’s or Lessor’s exercise of remedies under Section 16.2 of the Master Lease
or the Lessee’s exercise of the Remarketing Option under Article XX of the Master Lease and all
interest earned thereon, less the expense of claiming and collecting such amounts, including all
costs and expenses in connection therewith for which the Administrative Agent or any Participant is
entitled to be reimbursed pursuant to the Lease.
“Obligations” means all obligations (monetary or otherwise) of the Lessee, the Guarantor or
any Sublessee arising under or in connection with any of the Operative Documents.
-18-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Operative Documents” means the following:
|
(a) |
|
the Participation Agreement; |
|
|
(b) |
|
the Master Lease; |
|
|
(c) |
|
each Lease Supplement; |
|
|
(d) |
|
the Receivables Purchase Agreement; |
|
|
(e) |
|
each Certificate; |
|
|
(f) |
|
the Assignment of Lease and Rent; |
|
|
(g) |
|
each Deed and Xxxx of Sale; |
|
|
(h) |
|
the Security Agreement; |
|
|
(i) |
|
the Financing Statements;
|
|
|
(j) |
|
the Lessee Stock Pledge; |
|
|
(k) |
|
the Assignment of Certificates of Deposit (and the
Certificate(s) of Deposit); |
|
|
(l) |
|
the Mortgage; |
|
|
(m) |
|
the Guaranty; |
|
|
(n) |
|
the Sublessee Stock Pledge; and |
|
|
(o) |
|
the Sublessee Security Agreement. |
“Original Executed Counterpart” is defined in Section 26.9 of the Master Lease.
“Overdue Rate” means, with respect to any Capital or Lessor Amount, the ROC or Yield Rate
then in effect for such Capital or Lessor Amount, as the case may be, plus two percent (2%).
“Partial Termination Xxxx” is defined in Section 15.2 of the Master Lease.
“Partial Termination Notice” is defined in Section 15.1 of the Master Lease.
“Participant Balance” means, with respect to any Participant as of any date of determination:
(i) with respect to any Purchaser, an amount equal to the aggregate outstanding Capital of such
Purchaser, together with all accrued and unpaid ROC thereon and all other amounts owed to such
Purchaser under the Operative Documents or (ii) with respect to the
-19-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
Lessor, an amount equal to the aggregate outstanding Lessor Amounts, together with all amounts of
accrued and unpaid Yield thereon and all other amounts owed to the Lessor under the Operative
Documents.
“Participants” means, collectively, each Purchaser and the Lessor, and their successors and
assigns.
“Participation Agreement” means the Participation Agreement dated as of December 30, 2004,
among the Lessee, the Guarantor, the Lessor, the Purchasers and the Administrative Agent as the
same may be amended, supplemented, amended and restated or otherwise modified from time to time.
“Payment Date” means (a) each Scheduled Payment Date and (b) each date on which Basic Rent
is required to be paid by the Lessee.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA.
“Permitted Property Liens” means, (a) with respect to any Property, any of the following:
(i) the respective rights and interests of the parties to the Operative Documents as
provided in the Operative Documents;
(ii) the rights of any sublessee under a Permitted Sublease;
(iii) Liens for Taxes that either are not yet subject to interest or penalties or are
being contested in accordance with the provisions of Section 12.1 of the Master Lease;
(iv) Liens arising by operation of law, materialmen’s, mechanics’, workers’,
repairmen’s, employees’, carriers’, warehousemen’s and other like Liens in connection with
any Modifications or arising in the ordinary course of business for amounts that either
are not more than sixty (60) days past due or are being diligently contested in good faith
by appropriate proceedings, so long as such proceedings satisfy the conditions for the
continuation of proceedings to contest Taxes set forth in Section 12.1 of the Master
Lease;
(v) Liens of any of the types referred to in clause (iv) above that have been bonded
for not less than the full amount in dispute (or as to which other security arrangements
satisfactory to the Administrative Agent have been made), which bonding (or arrangements)
shall comply with applicable Requirements of Law, and has effectively stayed any execution
or enforcement of such Liens;
(vi) Liens arising out of judgments or awards with respect to which appeals or other
proceedings for review are being prosecuted in good faith and for the payment of which
adequate reserves have been provided as required by GAAP or other appropriate provisions
have been made, so long as such proceedings have the effect of staying the
-20-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
execution of such judgments or awards and satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 12.1 of the Master Lease;
(vii) easements, rights of way and other encumbrances on title to real property
pursuant to Section 11.2 of the Master Lease;
(viii) Lessor Liens;
(ix) Liens created by the Lessee with the consent of the Required Participants;
(x) Liens described on the title insurance policies delivered with respect to such
Property pursuant to Section 6.1(q) of the Participation Agreement, other than Liens
described in clause (iv) or (vi) above that are not removed within forty (40) days of their
discovery by the Lessee;
(xi) all encumbrances, exceptions, restrictions, easements, rights of way, servitudes,
encroachments and irregularities in title, other than Liens which, in the reasonable
assessment of the Administrative Agent, materially impair the value, use or marketability
of such Property or the use of such Property for its intended purpose; and
(xii) Liens created by leasing arrangements permitted by the proviso to clause (d) of
the definition of Lessee Collateral; and
(b) with respect to any Collateral, Liens described in clauses (i), (iii), (vi), (viii) and
(ix) above.
“Permitted Sales Costs” means, with respect to each Property, all reasonable costs of sale of
such Property incurred by the Lessee pursuant to Section 20.1 of the Master Lease which costs are
of a type customarily paid by sellers of properties comparable to the applicable Property in the
market where such Property is being sold; provided that “Permitted Sales Costs” shall not include
any costs of repairs, alterations or modifications (including Required Modifications) desired by
the purchaser of any Property or required to cause any Property to comply with the requirements of
the Master Lease.
“Permitted Sublease” means a sublease of a Property to a Sublessee in form and substance
satisfactory to the Administrative Agent.
“Person” shall mean an individual, partnership, limited liability company, corporation, trust
or unincorporated organization, and a government or agency or political subdivision thereof.
“Plan” shall mean any employee pension benefit plan (as such term is defined in Section 3 of
ERISA) which is or has been established or maintained, or to which contributions are or have been
made, by the Guarantor or any ERISA Affiliate.
“Prime Rate” means the rate of interest announced by Key Bank National Association from time
to time as its prime commercial rate, or equivalent.
-21-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Property” means each skilled nursing facility or other convalescent facility, title to
which is held by the Lessor and leased to the Lessee under the Lease, including (i) the Lessor’s
interest in each parcel of Land, as owner in fee simple thereof, (ii) all of the Improvements at
any time located on or under such Land, and (iii) the Equipment at any time located on or under
such Land.
“Property Balance” means, with respect to any Property, an amount equal to the outstanding
amount of the Capital and Lessor Amounts relating to such Property, plus all accrued and unpaid
ROC and Yield thereon, plus any Supplemental Rent related to such Property or allocable to such
Property plus any other amounts due and owing to the Participants with respect to such Property or
allocable to such Property.
“Property Condition Report” means, with respect to any Property, an inspection report in form
and substance satisfactory to the Administrative Agent and each Participant from an engineer or
consultant satisfactory to the Administrative Agent and each Participant with respect to the
physical condition of such Property and its major components and physical plant, repairs necessary
and projected to be necessary during the useful life thereof and such other matters as the
Administrative Agent or any such Participant may request.
“Property Cost” means, with respect to any Property, the amount of the Advance made under the
Participation Agreement with respect to such Property, as set forth on Schedule V to the
Participation Agreement.
“Pro Rata Share” means with respect to a Purchaser, a percentage equal to such Purchaser’s
pro rata share of the Purchase Commitment.
“Purchased Interests” means, at any time, the undivided percentage ownership interests in (i)
the Lease Receivables, (ii) all Collateral pledged to the Administrative Agent under the Operative
Documents securing Lessor’s obligations with respect to the sale of the Lease Receivables, and
(iii) all payments with respect to, and other proceeds of, such Lease Receivables and Collateral.
“Purchaser Balance” means, as of any date of determination, an amount equal to the sum of the
outstanding Capital together with all accrued and unpaid ROC thereon pursuant to the Receivables
Purchase Agreement and all other amounts due and payable to the Purchasers under the Operative
Documents and all other amounts due and payable to the Purchasers under the Operative Documents.
“Purchaser Basic Rent” means, as determined as of any Payment Date, the sum of (a) ROC due on
the Capital, determined in accordance with Section 2.5 of the Receivables Purchase Agreement and
excluding (i) any return at the applicable Overdue Rate on any installment of Purchaser Basic Rent
not paid when due and (ii) any fine, penalty, interest or cost assessed or added under any
agreement with a third party for nonpayment or late payment of Purchaser Basic Rent; and (b) the
Fixed Rent due under Schedule VI of the Participation Agreement with respect to the Capital after
giving effect to any prepayment of Fixed Rent.
-22-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Purchaser Commitment” means the Commitment of each Purchaser in the amount set forth on
Schedule I to the Participation Agreement or on any assignment pursuant to which such Purchaser
becomes a party hereto.
“Purchaser Margin” means (a) with respect to Base Rate Advances 0.75%, and (b) with respect
to Eurocurrency Rate Advances, 3.00%.
“Purchase Notice” means an irrevocable written notice by the Lessee delivered to the Lessor
pursuant to Section 18.1 of the Master Lease, notifying the Lessor of the Lessee’s intention to
exercise its option pursuant to such Section, and identifying the proposed purchase date therefor.
“Purchase Option” is defined in Section 18.1 of the Master Lease.
“Purchase Option Price” is defined in Section 18.1 of the Master Lease.
“Purchasers” means Key Corporate Capital Inc. and each other purchaser of an undivided
percentage ownership interest in the Purchased Interests.
“Purchasers” means, collectively, the various financial institutions that are or may from
time to time become parties to the Loan Agreement as Lenders.
“RCRA” means the Resource Conservation and Recovery Act of 1976, as amended by the Solid and
Hazardous Waste Amendments of 1984, 42 U.S.C. §§6901 et seq.
“Receivables Documents” means the Receivables Purchase Agreement and the Certificate.
“Receivables Purchase Agreement” means the Receivables Purchase Agreement, dated as of
December 31, 2005, among the Lessor, the Purchasers, and the Administrative Agent, as the same may
be amended, supplemented, amended and restated or otherwise modified from time to time.
“Receivables Purchase Agreement Default” means any event, act or condition which with notice
or lapse of time, or both, would constitute a Receivables Purchase Agreement Event of Default.
“Receivables Purchase Agreement Event of Default” is defined in Section 5.1 of the
Receivables Purchase Agreement.
“Release” means any release, pumping, pouring, emptying, injecting, escaping, leaching,
dumping, seepage, spill, leak, flow, discharge, disposal or emission of a Hazardous Material.
“Remarketing
Option” is defined in Section 20.1 of the Master Lease.
-23-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Rent” means, collectively, the Basic Rent and the Supplemental Rent, in each case payable
under the Master Lease.
“Rents” is defined in Section 2(b) of the Assignment of Lease and Rent.
“Rent Period” shall mean (x) with respect to any Capital or Lessor Amounts bearing ROC or
Yield at the Base Rate, the calendar month immediately preceding a Scheduled Payment Date, or a
portion of such calendar month during which the Capital or Lessor Amounts bear ROC or Yield by
reference to the Base Rate and (y) with respect to any Capital or Lessor Amounts bearing ROC or
Yield at the applicable Adjusted Eurodollar Rate that are funded on the Acquisition Date,
initially the period commencing on (and including) the Acquisition Date and ending on (but
excluding) the Scheduled Payment Date occurring on February 1, 2005, and thereafter each period
commencing on (and including) a Scheduled Payment Date and ending on (but excluding) the Scheduled
Payment Date one (1) month thereafter.
“Reportable
Event” means any of the events described in Section 4043(c) of ERISA other than
any such event for which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
“Requesting Party” is defined in Section 22.1 of the Master Lease.
“Required
Modification” is defined in Section 10.1 of the Master Lease.
“Required Participants” means at any time, Participants representing at least 66-2/3% of the
aggregate principal amount of Capital and Lessor Amounts outstanding; provided that if there are
fewer than three Purchasers, then any action by the Required Participants shall require all of the
Purchasers; and, if there are three or more Purchasers, then any action by the Required
Participants shall required at least two of the Purchasers.
“Required Purchasers” means, at any time, (a) if there are fewer than 3 Purchasers,
Purchasers representing all of the aggregate principal amount of Capital outstanding and (b) if
there are three or more Purchasers, at least two Purchasers holding at least 66-2/3% of the
aggregate principal amount of Capital outstanding.
“Requirement of Law” means, as to any Person (a) the partnership agreement, certificate of
incorporation, bylaws, operating agreement or other organizational or governing documents of such
Person, and (b) all Federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions affecting the Properties or the
demolition, construction, use or alteration thereof, whether now or hereafter enacted and in force,
including any that require repairs, modifications or alterations in or to the Properties or in any
way limit the use and enjoyment thereof (including all building, zoning and fire codes and the
Americans with Disabilities Act of 1990, 42 U.S.C. §§ 1201 et seq, and any other similar federal,
state or local laws or ordinances and the regulations promulgated thereunder) and any that may
relate to environmental requirements (including all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any instruments which are
-24-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
either of record or known to the Lessee affecting the Properties, the Appurtenant Rights and any
easements, licenses or other agreements entered into pursuant to Section 11.2 of the Master Lease.
“Residency Agreement” means a residential lease or occupancy agreement between Manager (as
agent for the Lessee or any Sublessee), as lessor, and a resident, as lessee, pursuant to which a
resident agrees to lease a room or apartment at a Property.
“Responsible Officer” of any Person means the chief executive officer, chief operating
officer, chief financial officer, treasurer or chief accounting officer of such Person or any
other officer of such Person involved principally in its financial administration or its
controllership function.
“Responsible Officer’s Certificate” means a certificate signed by any Responsible Officer,
which certificate shall certify as true and correct the subject matter being certified to in such
certificate.
“ROC” is defined in Section 2.5(a) of the Receivables Purchase Agreement.
“Scheduled Payment Date” means during the Lease Term;
(i) as to any Eurodollar Capital/Lessor Amount, the last day of each applicable Rent
Period and the Maturity Date; provided, however, that if any such day is not a Business
Day, then the “Scheduled Payment Date” shall be the immediately succeeding Business Day
(except as otherwise required by clause (ii) of the provision in the definition of “Rent
Period” with respect to Eurodollar Capital/Lessor Amounts);
(ii) as to Capital and any Lessor Amount accruing at Base Rate, each Monthly Payment
Date and the Maturity Date; and
(iii) as to Fixed Rent, on each Fixed Rent Payment Date.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding
to any of its principal functions.
“Securities Act” means the Securities Act of 1933, as amended from time to time.
“Security Agreement” means the Security Agreement dated as of December 30, 2004 from the
Lessee to the Administrative Agent, substantially in the form of Exhibit I to the Participation
Agreement.
“Security Documents” means the Lease, the Mortgage, the Security Agreement, the Lessee Stock
Pledge, the Assignment of Lease and Rent, the Sublessee Security Agreement and the Sublessee Stock
Pledge.
“Shared Rights” is defined in Section 2(a) of the Assignment of Lease and Rent.
-25-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Shortfall Amount” means for each Property, as of the Expiration Date, an amount
equal to (i) the Property Balance, minus (ii) the aggregate Maximum Recourse Amount
received by the Lessor from the Lessee pursuant to Section 20.2(f) of the Master Lease,
minus (iii) the aggregate amount of the highest, binding, written, unconditional,
irrevocable cash offer to purchase such Property obtained by the Lessee pursuant to
Section 20.2(c) of the Master Lease; provided, however, that if the sale of a Property to
the Person or Persons submitting such offer or offers is not consummated on or prior to
the Expiration Date, then the term “Shortfall Amount” shall mean an amount equal to (i)
such Property Balance, minus (ii) the Maximum Recourse Amount received by the Lessor
pursuant to Section 20.2(f) of the Master Lease.
“Significant Casualty” means, as to any Property, (i) a Casualty that results in an
insurance settlement on the basis of a total loss, or a constructive or compromised total
loss, (ii) a Casualty that in the reasonable, good faith judgment of the Administrative
Agent, determined after consultation in good faith with the Lessee and giving special
consideration to the Lessee’s or any Sublessee’s provision of care to residents,
compliance with Applicable Law and prudent standards of care with respect to the
operation of the affected Property, either (a) renders such Property unsuitable for
continued use as a skilled nursing facility or (b) is so substantial in nature that
restoration of such Property to substantially its condition as existed immediately prior
to such Casualty would be impracticable or impossible.
“Significant Condemnation” means, with respect to a Property, (i) a Condemnation
that involves a taking of the Lessor’s entire title to the related Land, (ii) a
Condemnation that results in loss of possession of such Property by the Lessee for a
period in excess of one hundred eighty (180) consecutive days, or (iii) a Condemnation
that in the reasonable, good faith judgment of the Administrative Agent, determined after
consultation in good faith with the Lessee and giving special consideration to the
Lessee’s or any Sublessee’s provision of care to residents, compliance with Applicable
Law and prudent standards of care with respect to the operation of the affected Property,
either (a) renders such Property unsuitable for continued use as a skilled nursing
facility or (b) is such that restoration of such Property to substantially its condition
as existed immediately prior to such Condemnation would be impracticable or impossible.
“Significant Event” means (i) a Significant Casualty, (ii) a Significant
Condemnation or (iii) the occurrence of an Environmental Violation where the costs to
clean up or remediate the same are reasonably estimated by the Lessee to exceed
$1,000,000.
“Solvent” means with respect to any Person on a particular date, that on such date
(i) the fair value of the property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities of such Person, (ii)
the present fair saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (iii) such Person is able to realize upon its assets and pay
its debts and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person’s ability to pay as
such debts and liabilities mature, and (v) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which such
Person’s property would constitute unreasonably small capital after giving due
consideration to the
-26-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
prevailing practice in the industry in which such Person is engaged. In computing the amount
of contingent liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured
liability taking into account any subrogation and contribution rights.
“Subject Improvements” is defined in each Lease Supplement.
“Subject Land” is defined in each Lease Supplement.
“Subject
Property” is defined in each Lease Supplement.
“Sublessee Collateral” means all collateral pledged by the Sublessees pursuant to the
Sublessee Security Agreement.
“Sublessee Security Agreement” means the Security Agreement dated as of December 30,
2004 from the Sublessees to the Administrative Agent, substantially in the form of Exhibit P
to the Participation Agreement.
“Sublessee Stock Pledge” means the Stock Pledge dated as of December 30, 2004 from the
Lessee to the Administrative Agent, substantially in the form of
Exhibit O to the
Participation Agreement.
“Subsidiary” means as to any particular parent corporation any corporation of which
more than 50% (by number of votes) of the Voting Stock shall be beneficially owned, directly
or indirectly, by such parent corporation.
“Supplemental Collateral” means one or more Certificates of Deposit in an aggregate
principal amount equal to 100% of the Lessor Amounts as of the Acquisition Date issued by a
bank or banks satisfactory to the Lessor and to be held and applied pursuant to the
Assignment of Certificates of Deposit.
“Supplemental Rent” means all amounts, liabilities and obligations (other than Basic
Rent) which the Lessee assumes or agrees to pay to the Lessor, the Administrative Agent, any
Purchaser or any other Person under the Master Lease, or under any of the other Operative
Documents, including, without limitation, Break Costs, Maximum Recourse Amounts, the
Shortfall Amount, amounts due pursuant to Section 13.2 of the Participation Agreement and
payments pursuant to Sections 15.2 of the Master Lease and Articles XVIII and XX of the
Master Lease.
“Tax Indemnitee” means each Purchaser, the Lessor and the Administrative Agent.
“Taxes” is defined in the definition of Impositions.
-27-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Transaction Expenses” means all costs and expenses incurred in connection with the
preparation, execution and delivery of the Operative Documents and the transactions
contemplated by the Operative Documents including without limitation:
(a) the reasonable fees, out-of-pocket expenses and disbursements of Xxxxxx
Xxxxxx LLP, special counsel for the Administrative Agent and the Participants, and
such reasonable fees, expenses and disbursements of counsel for the Lessee and the
Guarantor, in documenting and negotiating the terms of the Operative Documents and the other
transaction documents, preparing for the closing under, and rendering opinions in connection with, such transactions and in rendering other services customary for
counsel representing parties to transactions of the types involved in the transactions
contemplated by the Operative Documents;
(b) any other reasonable fees, out-of-pocket expenses and disbursements of
special counsel for the Administrative Agent, Arranger and the Participants in
connection with the transactions contemplated to occur on the Acquisition Date;
(c) any and all search costs and Taxes and fees incurred in recording,
registering or filing any Operative Document or any other transaction document,
any deed, declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency required by the Operative Documents
in connection with the transactions contemplated by the Operative Documents;
(d) all reasonable out-of-pocket expenses, disbursements and costs of the Administrative Agent and the Participants paid or incurred in connection with the
transactions contemplated by the Operative Documents (including without limitation
the transactions contemplated to occur on the Acquisition Date);
(e) all title fees, premiums and escrow costs and other expenses relating to title insurance and the closing contemplated by the Operative Documents;
(f) all expenses relating to Environmental Audits required to be delivered pursuant to Section 6.1(h) of the Participation Agreement;
(g) all fees and other expenses relating to Appraisals required to be delivered pursuant to Section 6.1(d) of the Participation Agreement; and
(h) the fees payable by the Lessee pursuant to Section 4.4 of the
Participation Agreement.
“Transactions” shall mean the transactions contemplated under the Participation
Agreement and each of the other Operative Documents.
“Transferee” is defined in Section 12.3 of the Participation Agreement.
-28-
|
|
|
Tandem Health Care of Ohio, Inc.
|
|
Definitions |
“Uniform Commercial Code” and “UCC” means the Uniform Commercial Code as in effect
in any applicable jurisdiction.
“Unmatured Event of Default” means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
“U.S. Dollars” and “$” each means the lawful currency of the United States of America.
“Voting Stock” means securities of any class or classes of a corporation, the
holders of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the board of directors of such corporation.
“Yield” is defined in Section 4.1 (a) of the Participation Agreement.
“Yield Rate” means the sum of Adjusted Eurodollar Rate plus the Lessor Margin
(subject to the provisions of Section 13.8 of the Participation Agreement).
-29-