FORM OF CONSTRUCTION LOAN COMMITMENT LETTER
___________________________, 1998
[Genesis Sub]
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
Attn: _____________________________
Re: Construction Loan
Dear ___________________:
ElderTrust Operating Limited Partnership (the "Operating
Partnership") is pleased to offer its commitment to provide a $_____________
secured construction loan (the "Loan"), to [Genesis Sub.] (the "Borrower"), as
contemplated by, and upon and subject to the terms and conditions of this letter
agreement (the "Letter Agreement") and the Summary of Terms and Conditions
(herein so called) attached hereto as Exhibit A. All capitalized terms used
herein but not defined will have the meanings set forth in the Summary of Terms
and Conditions.
If the Borrower accepts this offer as hereinafter provided,
the closing of the Loan will be conditioned upon (i) the preparation,
negotiation, execution and delivery of definitive loan documentation in form and
substance satisfactory to the Operating Partnership and its counsel reflecting
the Summary of Terms and Conditions and containing such other terms and
conditions as are usual and customary for transactions of this nature, (ii) the
absence of a material adverse change in the financial condition, business
operations, properties or prospects of Borrower, or Genesis Health Ventures,
Inc. (the "Guarantor") since the date of this Letter Agreement, (iii) the
absence of a material adverse change in the financial condition, business
operations, properties or prospects of the Operating Partnership, as determined
by the Operating Partnership in its sole discretion, (iv) the payment by the
Borrower of the fees in accordance with the Summary of Terms and Conditions and
(v) satisfaction of each of the conditions precedent set forth in the Summary of
Terms and Conditions and other usual and customary conditions precedent in
transactions of this nature.
By acceptance of this offer, Xxxxxxxx agrees to pay the costs
and expenses, including reasonable attorneys' fees and expenses and expenses of
due diligence incurred before and after the date hereof by the Operating
Partnership in connection with the Loan, whether or not the Loan is ever closed
or a funding ever occurs under the Loan.
January___, 1998
Page 2
In addition, Xxxxxxxx agrees to indemnify and hold harmless
the Operating Partnership and its affiliates, officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, fees and disbursements of counsel) which may be incurred by or
asserted or awarded against any Indemnified Party (other than a claim made in
good faith by Borrower against an Indemnified Party under the Loan), in each
case arising out of or in connection with or by reason of, or in connection with
the preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with the Loan, including, without
limitation, any transaction in which the proceeds of any borrowing under the
Loan are or are to be applied, whether or not an Indemnified Party is a party
thereto and whether or not the liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. Borrower
will not settle or consent to judgment with respect to any such investigation,
litigation or proceeding without the prior written consent of the Operating
Partnership, as applicable, unless such settlement or consent includes an
unconditional release of each Indemnified Party.
You acknowledge and agree that the Operating Partnership may
share with any of its affiliates any information relating to the Loan, the
Borrower, the Guarantor, any affiliate of the Borrower or the Guarantor, or any
of the business operations thereof.
By acceptance of this Letter Agreement, Borrower represents
and warrants to the Operating Partnership that all historical financial
statements and other information regarding the Borrower, the Guarantor or any
affiliate thereof heretofore delivered to the Operating Partnership in
connection with the Loan are true, correct and not misleading in any material
respect and that any projections heretofore delivered to the Operating
Partnership in connection with the Loan have been prepared in good faith and
based on information believed to be true, correct and not misleading in any
material respect.
Neither this offer nor the undertaking and commitment
contained herein may be disclosed to any other person or entity other than your
accountants, attorneys and other advisors and potential equity investors,
without the prior written consent of the Operating Partnership, except that
following your acceptance hereof you may make disclosure hereof to the extent
required by law. No party other than Borrower may rely upon this Letter
Agreement.
January___, 1998
Page 3
This offer will automatically expire at 5:00 p.m.,
Philadelphia time, on ________________, 1998, unless Borrower executes this
Letter Agreement and returns it to the Operating Partnership prior to that time,
whereupon this Letter Agreement shall become a binding commitment. Thereafter,
the commitment of the Operating Partnership will automatically expire at 5:00
p.m., Philadelphia time, on _______________________, 1998 unless definitive loan
documentation is executed and delivered prior to that time.
This Letter Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania (but without regard to the choice of laws rules
thereof). This Letter Agreement may be modified or amended only in writing.
THIS LETTER AGREEMENT (WHICH INCLUDES THE SUMMARY OF TERMS AND
CONDITIONS) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
January___, 1998
Page 4
If you are in agreement with the foregoing, please execute
duplicate originals of this Letter Agreement and return one original to the
undersigned.
ELDERTRUST OPERATING LIMITED
PARTNERSHIP
By: ElderTrust Realty Group, Inc.,
General Partner
__________________________________
By:
Its:
Accepted and Agreed To:
[GENESIS SUB]
___________________________________
By:
Its:
Date of Return to the Operating Partnership:_______________________
EXHIBIT A
ATTACHED HERETO
January___, 1998
Page 7
BRANDYWINE COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : Geriatric and Medical Services, Inc.
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $5,355,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the
first day of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon the payment of a 0.5% extension fee,
to extend the loan term for up to two (2) one (1) year extension
periods with interest to be reset at a fixed rate equal to 3-year
T-Bills plus 350 basis points as of the first day of each
extension period.
SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the property on or before
the maturity of the Construction Loan (as extended at the option
of Borrower) at a price (the "Purchase Price") to be determined
based upon a valuation formula as follows:
(i) If the facility has reached 90% average monthly occupancy for
three consecutive months ("Stabilized Occupancy"), the price
equals Projected Operating Cash Flow divided by a return factor
equal to the ten year T-Note rate as of the date on which the
Operating Partnership purchases the property (the "Purchase Date")
plus 525 basis points.
Projected Operating Cash Flow is defined as the operating income
from the facility for the prior three months assuming a 5%
management fee and adjusting revenue to reflect an occupancy level
of 92% (using weighted average per diem rates for the prior three
months) and adjusting operating expenses to reflect ongoing
expense levels for marketing, staffing and other costs assuming a
long-term occupancy level of 92%.
January___, 1998
Page 8
(ii) If the facility has not reached Stabilized Occupancy before
the maturity of the Construction Loan (as extended at the option
of Borrower), the Operating Partnership shall purchase the
facility as of such maturity date at a price equal to the actual
operating income from the facility for the prior three months
multiplied by four and adjusted to reflect an assumed management
fee of 5% of facility revenues, divided by a return factor equal
to the ten year T-Note rate (as of the Purchase Date) plus 525
basis points.
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Date for two (2) years; all other
representations will survive for one (1) year.
(ii) Limit on liability will be 20% of sales price.
January___, 1998
Page 9
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
facility by the Operating Partnership during the term (as
extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
January___, 1998
Page 10
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of beds at the facility during the lease
term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the facility lease.
January___, 1998
Page 11
LACEY COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : Geriatric and Medical Services, Inc.
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $4,590,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the
first day of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon the payment of a 0.5% extension fee,
to extend the loan term for up to two (2) one (1) year extension
periods, with interest to be reset at a fixed rate equal to 3-year
T-Bills plus 350 basis points as of the first day of each
extension period.
SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the property on or before
the maturity of the Construction Loan (as extended at the option
of Borrower) at a price (the "Purchase Price") to be determined
based upon a valuation formula as follows:
(i) If the facility has reached 90% average monthly occupancy for
three consecutive months ("Stabilized Occupancy"), the price
equals Projected Operating Cash Flow divided by a return factor
equal to the ten year T-Note rate as of the date on which the
Operating Partnership purchases the property (the "Purchase Date")
plus 525 basis points.
January___, 1998
Page 12
Projected Operating Cash Flow is defined as the operating income
from the facility for the prior three months assuming a 5%
management fee and adjusting revenue to reflect an occupancy level
of 92% (using weighted average per diem rates for the prior three
months) and adjusting operating expenses to reflect ongoing
expense levels for marketing, staffing and other costs assuming a
long-term occupancy level of 92%.
(ii) If the facility has not reached Stabilized Occupancy before
the maturity of the Construction Loan (as extended at the option
of Borrower), the Operating Partnership shall purchase the
facility as of such maturity date at a price equal to the actual
operating income from the facility for the prior three months
multiplied by four and adjusted to reflect an assumed management
fee of 5% of facility revenues, divided by a return factor equal
to the ten year T-Note rate (as of the Purchase Date) plus 525
basis points.
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Date for two (2) years; all other
representations will survive for one (1) year.
(ii) Limit on liability will be 20% of sales price.
January___, 1998
Page 13
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
facility by the Operating Partnership during the term (as
extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
January___, 1998
Page 14
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of beds at the facility during the lease
term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the facility lease.
January___, 1998
Page 15
BRAKELY PARK (PHILLIPSBURG) COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : Northwest Total Care Centers Associates, L.P.
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $5,184,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the
first day of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon the payment of a 0.5% extension fee,
to extend the loan term for up to two (2) one (1) year extension
periods with interest to be reset at a fixed rate equal to 3-year
T-Bills plus 350 basis points as of the first day of each
extension period.
II. SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the property on or before
the maturity of the Construction Loan (as extended at the option
of Borrower) at a price (the "Purchase Price") to be determined
based upon a valuation formula as follows:
(i) If the facility has reached 90% average monthly occupancy for
three consecutive months ("Stabilized Occupancy"), the price
equals Projected Operating Cash Flow divided by a return factor
equal to the ten year T-Note rate as of the date on which the
Operating Partnership purchases the property (the "Purchase Date")
plus 525 basis points.
January___, 1998
Page 16
Projected Operating Cash Flow is defined as the operating income
from the facility for the prior three months assuming a 5%
management fee and adjusting revenue to reflect an occupancy level
of 92% (using weighted average per diem rates for the prior three
months) and adjusting operating expenses to reflect ongoing
expense levels for marketing, staffing and other costs assuming a
long-term occupancy level of 92%.
(ii) If the facility has not reached Stabilized Occupancy before
the maturity of the Construction Loan (as extended at the option
of Borrower), the Operating Partnership shall purchase the
facility as of such maturity date at a price equal to the actual
operating income from the facility for the prior three months
multiplied by four and adjusted to reflect an assumed management
fee of 5% of facility revenues, divided by a return factor equal
to the ten year T-Note rate (as of the Purchase Date) plus 525
basis points.
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Date for two (2) years; all other
representations will survive for one (1) year.
January___, 1998
Page 17
(ii) Limit on liability will be 20% of sales price.
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
facility by the Operating Partnership during the term (as
extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
January___, 1998
Page 18
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of beds at the facility during the lease
term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the facility lease.
January___, 1998
Page 19
LONGWOOD COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : [Genesis Sub]
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $4,929,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the
first day of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon the payment of a 0.5% extension fee,
to extend the loan term for up to two (2) one (1) year extension
periods with interest to be reset at a fixed rate equal to 3-year
T-Bills plus 350 basis points as of the first day of each
extension period.
II. SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the property on or before
the maturity of the Construction Loan (as extended at the option
of Borrower) at a price (the "Purchase Price") to be determined
based upon a valuation formula as follows:
(i) If the facility has reached 90% average monthly occupancy for
three consecutive months ("Stabilized Occupancy"), the price
equals Projected Operating Cash Flow divided by a return factor
equal to the ten year T-Note rate as of the date on which the
Operating Partnership purchases the property (the "Purchase Date")
plus 525 basis points.
January___, 1998
Page 20
Projected Operating Cash Flow is defined as the operating income
from the facility for the prior three months assuming a 5%
management fee and adjusting revenue to reflect an occupancy level
of 92% (using weighted average per diem rates for the prior three
months) and adjusting operating expenses to reflect ongoing
expense levels for marketing, staffing and other costs assuming a
long-term occupancy level of 92%.
(ii) If the facility has not reached Stabilized Occupancy before
the maturity of the Construction Loan (as extended at the option
of Borrower), the Operating Partnership shall purchase the
facility as of such maturity date at a price equal to the actual
operating income from the facility for the prior three months
multiplied by four and adjusted to reflect an assumed management
fee of 5% of facility revenues, divided by a return factor equal
to the ten year T-Note rate (as of the Purchase Date) plus 525
basis points.
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Date for two (2) years; all other
representations will survive for one (1) year.
(ii) Limit on liability will be 20% of sales price.
January___, 1998
Page 21
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
facility by the Operating Partnership during the term (as
extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
January___, 1998
Page 22
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of beds at the facility during the lease
term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the facility lease.
January____, 1998
Page 23
LAKELAND COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : Polk Meridian Limited Partnership
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $4,909,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the
first day of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon payment of a 0.5% extension fee, to
extend the loan term for up to two (2) one (1) year extension
periods with interest to be reset at a fixed rate equal to 3-year
T-Bills plus 350 basis points as of the first day of each
extension period.
II. SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the property on or before
the maturity of the Construction Loan (as extended at the option
of Borrower) at a price (the "Purchase Price") to be determined
based upon a valuation formula as follows:
(i) If the facility has reached 90% average monthly occupancy for
three consecutive months ("Stabilized Occupancy"), the price
equals Projected Operating Cash Flow divided by a return factor
equal to the ten year T-Note rate as of the date on which the
Operating Partnership purchases the property (the "Purchase Date")
plus 525 basis points.
January___, 1998
Page 24
Projected Operating Cash Flow is defined as the operating income
from the facility for the prior three months assuming a 5%
management fee and adjusting revenue to reflect an occupancy level
of 92% (using weighted average per diem rates for the prior three
months) and adjusting operating expenses to reflect ongoing
expense levels for marketing, staffing and other costs assuming a
long-term occupancy level of 92%.
(ii) If the facility has not reached Stabilized Occupancy before
the maturity of the Construction Loan (as extended at the option
of Borrower), the Operating Partnership shall purchase the
facility as of such maturity date at a price equal to the actual
operating income from the facility for the prior three months
multiplied by four and adjusted to reflect an assumed management
fee of 5% of facility revenues, divided by a return factor equal
to the ten year T-Note rate (as of the Purchase Date) plus 525
basis points.
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Date for two (2) years; all other
representations will survive for one (1) year.
(ii) Limit on liability will be 20% of sales price.
January___, 1998
Page 25
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
facility by the Operating Partnership during the term (as
extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
January___, 1998
Page 26
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of beds at the facility during the lease
term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the facility lease.
January___, 1998
Page 27
CONCORD COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : [Genesis/Concord Joint Venture]
B. GUARANTOR : [Genesis Health Ventures, Inc. ("Genesis")]
C. LENDER : Operating Partnership
D. AMOUNT : $4,926,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the first day
of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon payment of a 0.5% extension fee, to
extend the loan term for up to two (2) one (1) year extension
periods with interest to be reset at a fixed rate equal to 3-year
T-Bills plus 400 basis points as of the first day of each
extension period.
II. SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the property on or before
the maturity of the Construction Loan (as extended at the option
of Genesis) at a price (the "Purchase Price") to be determined
based upon a valuation formula as follows:
(i) If the facility has reached 90% average monthly occupancy for
three consecutive months ("Stabilized Occupancy"), the price
equals Projected Operating Cash Flow divided by a return factor
equal to the ten year T-Note rate as of the date on which the
Operating Partnership purchases the property (the "Purchase Date")
plus 525 basis points.
January___, 1998
Page 28
Projected Operating Cash Flow is defined as the operating income
from the facility for the prior three months assuming a 5%
management fee and adjusting revenue to reflect an occupancy level
of 92% (using weighted average per diem rates for the prior three
months) and adjusting operating expenses to reflect ongoing
expense levels for marketing, staffing and other costs assuming a
long-term occupancy level of 92%.
(ii) If the facility has not reached Stabilized Occupancy before
the maturity of the Construction Loan (as extended at the option
of Borrower), the Operating Partnership shall purchase the
facility as of such maturity date at a price equal to the actual
operating income from the facility for the prior three months
multiplied by four and adjusted to reflect an assumed management
fee of 5% of facility revenues, divided by a return factor equal
to the ten year T-Note rate (as of the Purchase Date) plus 525
basis points.
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Date for two (2) years; all other
representations will survive for one (1) year.
January___, 1998
Page 29
(ii) Limit on liability will be 20% of sales price.
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
facility by the Operating Partnership during the term (as
extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
January___, 1998
Page 30
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of beds at the facility during the lease
term.
J. GUARANTEE : Genesis will guarantee the obligations of the lessee
under the facility lease.
January___, 1998
Page 32
XXXXXXXXXXX SNF RENOVATION COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : [Genesis Sub]
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $5,580,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-Bills as of the first day
of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon the payment of a 0.5% extension fee,
to extend the loan term for up to two (2) one (1) year extensions
with interest to be reset at a fixed rate equal to 3-year T-Bills
plus 350 basis points as of the first day of the extension period.
II. SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the constructed
improvements on or before the maturity of the Construction Loan
(as extended at the option of Borrower) at a price (the "Purchase
Price") which will result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten year T-Note
rate as of the date on which the Operating Partnership purchases
the property (the "Purchase Date") plus 525 basis points.
January___, 1998
Page 33
B. REPRESENTATIONS AND
WARRANTIES : (i) Liability for representations regarding environmental concerns
will survive the Purchase Price for two (2) years; all other
representations will survive for one (1) year.
(ii) Limit on liability will be 20% of sales price.
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
skilled nursing units at the facility by the Operating Partnership
during the term (as extended) and for one year thereafter.
G. MINIMUM RENT : For the first lease year Minimum Rent shall be based upon the
Operating Partnership realizing an annual yield on the Purchase
Price equal to the ten year T-Note rate as of the Commencement
Date of the lease plus 350 basis ---- points; thereafter annual
escalations shall equal the lesser of (i) 5% of the increase in
gross revenues for the facility during the immediately preceding
year, or (ii) one-half of the increase on the Consumer Price Index
during the immediately preceding year.
January___, 1998
Page 34
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to two (2) months Minimum
Rent. The Operating Partnership will pay interest on the security
deposit quarterly in arrears at a rate equal to the 90-day T-Bill
rate as of the last day of each quarter.
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to the sum of $3,000
multiplied by the number of skilled nursing beds at the facility
during the lease term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the skilled nursing facility lease.
January___, 1998
Page 35
XXXXXXXXXXX XXX ADDITION COMMITMENT LETTER
CONSTRUCTION LOAN
I. LOAN TERMS
X. XXXXXXXX : [Genesis Sub]
B. GUARANTOR : Genesis Health Ventures, Inc. ("Genesis")
C. LENDER : Operating Partnership
D. AMOUNT : $1,800,000
E. INTEREST RATE : Fixed at 350 basis points over 3 year T-bill as of the first day
of the term.
F. TERM : Three years
G. EXTENSION RIGHTS : Borrower has the right, upon the payment of a 0.5% extension fee,
to extend the loan term for up to two (2) one (1) year extension
periods with interest to be reset at a fixed rate equal to 3-year
T-bills plus 350 basis points as of the first day of the extension
period.
II. SALE/LEASEBACK TERMS
A. PURCHASE OBLIGATION/
PRICE : The Operating Partnership must purchase the constructed
improvements on or before the maturity of the Construction Loan
(as extended at the option of Borrower) at a price (the "Purchase
Price") which will result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten year T-Note
rate as of the date on which the Operating Partnership purchases
the property (the "Purchase Date") plus 525 basis points.
January___, 1998
Page 36
B. REPRESENTATIONS AND
WARRANTIES :
(i) Liability for representations regarding environmental concerns
will survive the closing of the purchase for two (2) years, all
other representations will survive for one (1) year.
(ii) Limit on liability will be 20% of sales price.
C. OTHER TERMS AND
CONDITIONS : Receipt of all necessary governmental and third party licenses,
permits, regulatory approvals and consents.
D. LEASE TERM : Ten years; lessee has an option to extend for two consecutive
five-year periods.
E. LEASE TYPE : triple-net
F. RIGHT OF
FIRST REFUSAL : Xxxxxx has a right of first refusal on sale or lease of the
assisted living units at the facility by the Operating Partnership
during the term (as extended) and for one year thereafter.
G. PERCENTAGE RENT : A percentage of gross revenues, paid on an estimated basis monthly
in advance based on the gross revenues for the immediately
preceding quarter, with quarterly and annual reconciliations,
which percentage (the "Percentage Rent Percentage") shall be
determined as follows:
(i) If the facility has reached Stabilized Occupancy as of the
Purchase Date, the Percentage Rent Percentage shall equal that
percentage of the deemed annual gross revenues for the facility
(based upon the gross revenues for the facility for the prior
January___, 1998
Page 37
three (3) months, as adjusted to reflect an occupancy level of 92%
using weighted average per diem rates for the prior three (3)
months) which would result in the Operating Partnership realizing
an annual yield on the Purchase Price equal to the ten-year T-Note
rate (as of the Purchase Date) plus 525 basis points; or
(ii) In the event that the facility has not reached Stabilized
Occupancy as of the Purchase Date, the Percentage Rent Percentage
shall equal that percentage of the product of four (4) times the
actual gross revenues for the facility for the three (3) months
ended immediately prior to the Purchase Date which would result in
the Operating Partnership realizing an annual yield on the
Purchase Price equal to the ten-year T-Note rate (as of the
Purchase Date) plus 525 basis points.
Percentage Rent during any extension period will be the fair
market rental rate as of the beginning of any such extension
period based on an appraisal at such time.
H. SECURITY DEPOSIT : Lessee will deposit an amount equal to one-sixth of the estimated
Percentage Rent payable with respect to the first year based on
the opening budget for such year. The Operating Partnership will
pay interest on the security deposit quarterly in arrears at a
rate equal to the 90-day T-Bill rate as of the last day of each
quarter for which interest is being paid.
January___, 1998
Page 38
I. CAPITAL
EXPENDITURES : During the last four years of the term (as extended), lessee is
required to make capital expenditures equal to $3,000 multiplied
by the number of beds at the facility during the lease term.
J. GUARANTEE : Genesis will guarantee the obligations of lessee under
the facility lease.
