Loan No. 70004093
GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of the 23rd day of June, 2003, is
made by OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation ("Guarantor"),
for the benefit of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation,
in its capacity as Agent for the Lenders (as Agent and Lenders are defined in
the Loan Agreement as defined below).
RECITALS
A. Financial Accommodations. OHI ASSET, LLC, OHI ASSET (FL), LLC, OHI ASSET
(IN), LLC, OHI ASSET (LA), LLC, OHI ASSET (TX), LLC, OHI ASSET (ID), LLC, OHI
ASSET (MI/NC), LLC, OHI ASSET (OH), LLC, OHI ASSET (MO), LLC, OHI ASSET (CA),
LLC, DELTA INVESTORS I, LLC, DELTA INVESTORS II, LLC, NRS VENTURES, LLC, OHI
(ILLINOIS), INC., OHI (INDIANA), INC. and STERLING ACQUISITION CORP.
(collectively, "Borrowers"), Agent and Lenders are concurrently herewith
entering into that certain Loan Agreement (the "Loan Agreement") dated as of
even date herewith pursuant to which Lenders shall extend financial
accommodations to Borrowers.
B. Inducement. To induce Lenders to extend to Borrowers the financial
accommodations set forth in the Loan Agreement, Guarantor is willing to execute
and deliver this Guaranty.
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby agrees as follows:
1. DEFINED TERMS
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Loan Agreement.
2. THE GUARANTY
2.1 Guaranty of Obligations. Guarantor unconditionally and absolutely
guarantees to Agent and Lenders the full and prompt payment and performance when
due, whether at maturity or earlier, by reason of acceleration or otherwise, and
at all times thereafter, of the indebtedness, liabilities and obligations of
every kind and nature of Borrowers to Agent and/or Lenders arising under or in
any way relating to the Loan Agreement or any of the other Loan Documents,
howsoever created, incurred or evidenced, whether direct or indirect, absolute
or contingent, now or hereafter existing, due or to become due, and howsoever
owned, held or acquired by Agent and/or Lenders (collectively, the
"Obligations"), subject to and in accordance with the terms and conditions of
the Loan Agreement and the other Loan Documents. Without limitation to the
foregoing, the Obligations shall include (a) all reasonable attorneys' and
paralegals' fees, including the cost of inside attorneys and paralegals, costs
and expenses and all court costs and costs of appeal incurred by Agent and/or
Lenders in collecting any amount due Agent and/or Lenders under this Guaranty or
in prosecuting any action against any Borrower or Guarantor with respect to all
or any part of the Obligations, and (b) all interest, fees and the reasonable
costs and expenses due Agent and/or Lenders after the filing of a bankruptcy
petition by or against any Borrower regardless of whether such amounts can be
collected during the pendency of the bankruptcy proceedings.
2.2 Continuing Guaranty; Guaranty of Payment. This Guaranty is a continuing
guaranty of the Obligations until terminated in accordance with Section 7.17
below, and Guarantor agrees that the obligations of Guarantor to Agent and/or
Lenders hereunder shall be primary obligations, shall not be subject to any
counterclaim, set-off, abatement, deferment or defense based upon any claim that
Guarantor may have against Agent and/or any Lender, any Borrower or any other
person or entity.
2.3 Liability of Guarantor Not Affected. Until terminated in accordance
with Section 7.17 below, this Guaranty shall remain in full force and effect
without regard to, and shall not be released, discharged or affected in any way
by, any circumstances or condition, including, without limitation:
(a) the attempt or the absence of any attempt by Agent and/or Lenders to obtain
payment or performance by Borrowers or any other guarantor (this being a
guaranty of payment and performance and not of collection);
(b) Agent's and/or Lenders' delay in enforcing Guarantor's obligations
hereunder or of any other party under the Loan Documents, or any prior
partial exercise by Agent and/or Lenders of any right or remedy hereunder
or under any of the other Loan Documents;
(c) any renewal, extension, substitution, modification, replacement of or
indulgence with respect to, the Obligations, all of which Agent and/or
Lenders is hereby authorized to make;
(d) the fact that Borrowers are not liable for the payment or performance of
the Obligations, or any portion thereof, for any reason whatsoever (except
as a result of actual payment by Borrowers and receipt thereof by Agent),
Guarantor being liable for the Obligations notwithstanding that Borrowers
may not be;
(e) any sale, exchange, release, surrender or other disposition of, or
realization upon, any collateral securing the Obligations, or any
settlement or compromise of any guaranties of the Obligations, or any other
obligation of any person or entity with respect to the Loan Documents;
(f) the acceptance by Agent and/or Lenders of any additional security for the
Obligations;
(g) the lack of validity or enforceability of, or Agent's and/or Lenders'
waiver or consent with respect to, any provision of any instrument
evidencing, securing or otherwise relating to the Obligations, or any part
thereof, including, without limitation, the Loan Documents;
(h) the failure by Agent and/or Lenders to take any steps to perfect, maintain,
or enforce its security interests or remedies under the Loan Documents, or
to preserve its rights to or protect any security or collateral, for the
Obligations;
(i) any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors,
composition, receivership, liquidation, marshalling of assets and
liabilities or similar event or proceedings with respect to any Borrower or
Guarantor, as applicable, or any of their respective properties (each, an
"Insolvency Proceeding"), or any action taken by Agent and/or Lenders, any
trustee or receiver or by any court in any such proceeding;
(j) the failure by Agent and/or Lenders to file or enforce a claim against the
estate (either in an Insolvency Proceeding or other proceeding) of any
Borrower or Guarantor;
(k) in any proceeding under Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended (the "Bankruptcy Code"): (i) any election
by Agent and/or Lenders under Section 1111(b)(2) of the Bankruptcy Code,
(ii) any borrowing or grant of a security interest by any Borrower as
debtor-in-possession under Section 364 of the Bankruptcy Code, (iii) the
inability of Agent and/or Lenders to enforce the Obligations against any
Borrower by application of the automatic stay provisions of Section 362 of
the Bankruptcy Code, or (iv) the disallowance, under Section 502 of the
Bankruptcy Code, of all or any portion of Agent's and/or Lenders' claim(s)
against any Borrower for repayment of the Obligations;
(l) the failure of Guarantor to receive notice of any intended disposition of
the collateral for the Obligations;
(m) any merger or consolidation of any Borrower into or with any other entity,
or any sale, lease or transfer of any of the assets of any Borrower or
Guarantor to any other person or entity;
(n) any change in the ownership of any Borrower, or any change in the
relationship between any Borrower and Guarantor or any termination of any
such relationship;
(o) the dissolution or other change in status of any Borrower or Guarantor;
(p) the making of additional loans to Borrowers, the increase or reduction of
the maximum principal amount of the Obligations, the increase or reduction
in the interest rate provided in the Notes, or any other modification,
amendment, release or waiver of the terms of the Loan Documents;
(q) the absence, impairment or loss of any right of reimbursement or
subrogation or other right or remedy of Guarantor; and
(r) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of any Borrower, Guarantor or any other
guarantor.
Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts, omissions,
agreements, waivers or matters, whether or not Guarantor had notice or knowledge
of same. It is the purpose and intent of this Guaranty that the obligations of
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
2.4 Rights of Agent and/or Lenders. Agent and/or Lenders are hereby
authorized, without notice to or demand of Guarantor and without affecting the
liability of Guarantor hereunder, to take any of the following actions from time
to time in accordance with the terms and conditions of the Loan Agreement, to
the extent applicable: (a) increase or decrease the amount of, or renew, extend,
accelerate or otherwise change the time for payment of, or other terms relating
to, the Obligations, or otherwise modify, amend or change the terms of any
promissory note or other agreement evidencing, securing or otherwise relating to
any of the Obligations, including, without limitation, the making of additional
advances thereunder; (b) accept and apply any payments on or recoveries against
the Obligations from any source, and any proceeds of any security therefor, to
the Obligations in such manner, order and priority as Agent and/or Lenders may
elect in their sole discretion; (c) take, hold, sell, release or otherwise
dispose of all or any security for the Obligations or the payment of this
Guaranty; (d) settle, release, compromise, collect or otherwise liquidate the
Obligations or any portion thereof; (e) accept, hold, substitute, add or release
any other guaranty or endorsements of the Obligations; and (f) at any time after
maturity of the Obligations, appropriate and apply toward payment of the
Obligations (i) any indebtedness due or to become due from Agent and/or Lenders
to Guarantor, and (ii) any moneys, credits, or other property belonging to
Guarantor at any time held by or coming into the possession of Agent and/or
Lenders or any affiliates thereof, whether for deposit or otherwise.
Without limiting the generality, scope or meaning of any of the foregoing
or any other provision of this Guaranty, Guarantor:
(a) acknowledges that Section 2856 of the California Civil Code authorizes and
validates waivers of a guarantor's rights of subrogation and reimbursement
and certain other rights and defenses available to Guarantor under
California law;
(b) waives all rights of subrogation, reimbursement, indemnification, and
contribution and all other rights and defenses that are or may become
available by reason of Sections 2787 to 2855, inclusive, of the California
Civil Code;
(c) waives all rights and defenses arising out of an election of remedies by
Agent and/or Lenders, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed Guarantor's rights of subrogation and
reimbursement against Borrowers by the operation of Section 580d of the
California Code of Civil Procedure or otherwise;
(d) waives all rights and defenses that Guarantor may have because the
Borrowers' debt is secured by real property. This means, among other
things:
(i) Agent and Lenders may collect from Guarantor without first foreclosing
on any real or personal property Collateral pledged by Borrowers;
(ii) If Agent or Lenders foreclose on any real property Collateral pledged
by any Borrower:
(1) the amount of the debt may be reduced only by the price for which
that Collateral is sold at the foreclosure sale, even if the
Collateral is worth more than the sale price; and
(2) Agent and Lenders may collect from Guarantor even if Agent and
Lenders, by foreclosing on the real property Collateral, has
destroyed any right Guarantor may have to collect from Borrowers.
(e) waives all rights and defenses, if any, now or hereafter arising under the
laws of the State of Illinois and all other states where a Property is
located, which are the same as or similar to the rights and defenses waived
as described above.
This is an unconditional and irrevocable waiver of any rights and defenses
Guarantor may have because Borrowers' debt is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Sections 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure.
2.5 Subordination. All indebtedness now or hereafter owing by Borrowers to
Guarantor for borrowed money or otherwise is hereby subordinated to the payment
of the Obligations, and, (a) during the continuation of a default hereunder or
under any of the other Loan Documents, Guarantor shall not accept any principal
payment with respect to such subordinated indebtedness until satisfaction in
full of the Obligations, and (b) during the continuation of an Event of Default
hereunder or under any of the other Loan Documents, Guarantor shall not accept
payment of all or any portion of such subordinated indebtedness until
satisfaction in full of the Obligations. All security interests, liens and
encumbrances which Guarantor now or hereafter may have upon any of the assets of
Borrowers, or any one of them, are hereby subordinated to all security
interests, liens and encumbrances heretofore, now or hereafter granted to Agent
and/or Lenders pursuant to the Loan Documents.
3. GUARANTOR'S WAIVERS
3.1 Statutes of Limitation. Guarantor irrevocably waives all statutes of
limitation as a defense to any action or proceeding brought against Guarantor by
Agent and/or Lenders, to the fullest extent permitted by law.
3.2 Election of Remedies. Guarantor irrevocably waives any defense based
upon an election of remedies made by Agent and/or Lenders or any other election
afforded to Agent and/or Lenders pursuant to applicable law, including, without
limitation, (a) any election to proceed by judicial or nonjudicial foreclosure
or by UCC sale or by deed or assignment in lieu thereof, or any election of
remedies which destroys or otherwise impairs the subrogation rights of the
Guarantor or the rights of the Guarantor to proceed against any Borrower for
reimbursement, or both, (b) the waiver by Agent and/or Lenders, either by action
or inaction of Agent and/or Lenders or by operation of law, of a deficiency
judgment against any Borrower, and (c) any election pursuant to an Insolvency
Proceeding.
3.3 Rights of Subrogation and Other Rights. Guarantor irrevocably waives
(a) all rights at law or in equity to seek subrogation, contribution,
indemnification or any other form of reimbursement or repayment from any
Borrower or any other person or entity now or hereafter primarily or secondarily
liable for any of the Obligations for any disbursements made by any Guarantor
under or in connection with this Guaranty, (b) all claims of any kind or type
against any Borrower as a result of any payment made by Guarantor to Agent
and/or Lenders, and (c) any right to participate in any security now or
hereafter held by Agent and/or Lenders. In furtherance, and not in limitation,
of the foregoing, Guarantor agrees that any payment to Agent and/or Lenders
pursuant to this Guaranty shall be deemed a contribution to the capital of
Borrowers or other obligated party and shall not constitute Guarantor a creditor
of Borrowers or such other party. Guarantor further agrees that to the extent
the waiver of its rights of subrogation as set forth herein is found by a court
of competent jurisdiction to be void or voidable for any reason, any rights of
subrogation Guarantor may have against Borrowers or against any collateral or
security for any of the Obligations shall be junior and subordinate to any
rights Agent and/or Lenders may have against Borrowers and to all right, title
and interest Agent and/or Lenders may have in such collateral or security.
3.4 Demands and Notices. Guarantor irrevocably waives all presentments,
demands for performance, protests, notices of protest, notices of dishonor,
notices of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Obligations, notices of defaults or Events of
Default by Borrowers or any other person liable for the Obligations and demands
and notices of every kind that may be required to be given by any statute or
rule or law.
3.5 Borrowers Information. Guarantor irrevocably waives (a) any duty of
Agent and/or Lenders to advise Guarantor of any information known to Agent
and/or Lenders regarding the financial condition of Borrowers (it being the
obligation of Guarantor to keep informed regarding such condition), and (b) any
defense based on any claim that Guarantor's obligations exceed or are more
burdensome than those of Borrowers.
3.6 Limitation of Liability. Guarantor irrevocably waives any impairment,
modification, change, release or limitation of the liability of, or stay of
actions or lien enforcement proceedings against, Borrowers or Guarantor, their
property, or their estate in bankruptcy, resulting from the operation of any
provision of the state or federal bankruptcy laws, or from the decision of any
court.
3.7 Lack of Diligence. Guarantor irrevocably waives any and all claims or
defenses based upon lack of diligence in: (a) collection of any Obligations; (b)
protection of any collateral or other security for the Indebtedness or
Obligations; or (c) realization upon the other Loan Documents.
3.8 Other Defenses. Guarantor irrevocably waives any other defenses,
set-offs or counterclaims which may be available to Borrowers and any and all
other defenses now or at any time hereafter available to Guarantor (including
without limitation those given to sureties) at law or in equity, except for the
defense that payment has actually been made and received by Agent.
4. REPRESENTATIONS AND WARRANTIES
Guarantor represents and warrants to Agent and Lenders as follows:
4.1 Guarantor Existence; Authority. Guarantor is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Maryland with its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000. Guarantor is qualified to do business in those
jurisdictions in which the character of the properties owned by it or in which
the transaction of its business makes its qualification necessary. Guarantor is
the sole member of each LLC Borrower and owns one hundred percent (100%) of the
membership interests in each LLC Borrower, free and clear of all liens, claims,
and encumbrances, except as otherwise created under the Loan Documents.
Guarantor is the sole stockholder of each Corporate Borrower and owns one
hundred percent (100%) of the outstanding stock in each Corporate Borrower, free
and clear of all liens, claims, and encumbrances, except as otherwise created
under the Loan Documents. Guarantor has full right, power and authority to
execute this Guaranty and the Loan Documents on its own behalf and on behalf of
each Borrower.
4.2 Enforcement. This Guaranty has been duly authorized, executed and
delivered and constitutes the duly authorized, legally valid and binding
obligation of Guarantor, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in effect,
relating to or affecting the enforcement of creditors' rights generally and
except that the remedy of specific performance and other equitable remedies are
subject to judicial discretion.
4.3 Guarantor's Organizational Documents. A true and complete copy of the
articles of incorporation and by-laws of Guarantor and all other material
documents creating and governing Guarantor (collectively, the "Guarantor
Incorporation Documents") have been furnished to Agent. There are no other
material agreements, oral or written, among any of the shareholders of Guarantor
relating to Guarantor. The Guarantor Incorporation Documents were duly executed
and delivered, are in full force and effect, and binding upon and enforceable in
accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally and except that the remedy of specific performance
and other equitable remedies are subject to judicial discretion. No breach
exists under the Guarantor Incorporation Documents and no act has occurred and
no condition exists which, with the giving of notice or the passage of time or
both, would constitute a breach under the Guarantor Incorporation Documents.
4.4 Financial Statements. All financial statements and other financial
information of Guarantor furnished or to be furnished to Agent and/or Lenders
(a) are or will be true and correct in all material respects and do or will
represent fairly in all material respects the financial condition of Guarantor
(including all contingent liabilities) as of the respective dates in question
and the results of operations for the respective periods indicated, and (b) were
or will be prepared in accordance with generally accepted accounting principles,
or such other accounting principles as may be reasonably acceptable to Agent at
the time of their preparation, consistently applied. There has been no material
adverse change since March 31, 2003 in Guarantor's structure, business
operations, credit, prospects or financial condition.
4.5 No Defaults. There is no existing event of default, and no event has
occurred which with the passage of time and/or the giving of notice or both will
constitute an event of default, under any agreement to which Guarantor is a
party, which event of default could reasonably be expected to create a Material
Adverse Effect. Neither the execution and delivery of this Guaranty nor
compliance with the terms and provisions hereof will (a) violate any presently
existing applicable law, regulation, order, writ, injunction or decree of any
court or governmental department, commission, board, bureau, agency or
instrumentality, or (b) conflict or be inconsistent with, or result in any
default (with due notice or lapse of time or both) under, any agreement to which
Guarantor is bound, except for any conflict, inconsistency or default which
would not reasonably be expected to have a Material Adverse Effect.
4.6 No Litigation. Except as set forth on Exhibit 4.6 hereto, there are no
actions, suits or proceedings pending or, to Guarantor's knowledge, threatened
against Guarantor before any court or any governmental, administrative,
regulatory, adjudicatory or arbitrational body or agency of any kind which, if
decided adversely, would reasonably be expected to have a Material Adverse
Effect.
4.7 Accuracy. Neither this Guaranty nor any document, financial statement,
credit information, certificate or statement heretofore furnished or required
herein to be furnished to Agent and/or Lenders by Guarantor contains any
materially untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading as of the date such statement was made; provided, however, that any
representation in respect of any furnished document, financial statement or
information that was received by Guarantor from any third party which is not an
Affiliate of any Borrower or Guarantor in respect of any Project or any of the
Health Care Facilities is limited in all respects to Guarantor's knowledge.
4.8 Foreign Ownership. Guarantor is not and will not be, and no legal or
beneficial interest of an Affiliate of Guarantor is or will be held, directly or
indirectly, by a "foreign corporation", "foreign partnership", "foreign trust",
"foreign estate", "foreign person", "affiliate" of a "foreign person" or a
"United States intermediary" of a "foreign person" within the meaning of
Sections 897 and 1445 of the Internal Revenue Code of 1986, as amended ("IRC"),
the Foreign Investments in Real Property Tax Act of 1980, the International
Foreign Investment Survey Act of 1976, the Agricultural Foreign Investment
Disclosure Act of 1978, or the regulations promulgated pursuant to such Acts set
forth above in this Section 4.8 or any amendments to such Acts.
4.9 Solvency. Guarantor is solvent and there has been no: (a) assignment
made for the benefit of the creditors of Guarantor; (b) appointment of a
receiver for Guarantor or for the property of Guarantor; or (c) bankruptcy,
reorganization, or liquidation proceeding instituted by or against Guarantor.
4.10 Public Debt. The execution and delivery of the applicable Loan
Documents by Borrowers and Guarantor will not violate the terms of or cause a
breach or default under any outstanding indebtedness of Guarantor, including,
without limitation, the 6.95% Notes due August 2007 (the "Public Debt").
Guarantor has delivered to Agent a complete and correct copy of all material
documents evidencing the Public Debt.
4.11 Government Regulations. Guarantor is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. Guarantor is not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loan by Lenders to Borrowers, the
application of the proceeds thereof and repayment thereof will not violate any
provision of any such statute or any rule, regulation or order issued by the
Securities and Exchange Commission.
4.12 Margin Regulations. Guarantor is not engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
"Margin Stock"). Guarantor does not own any Margin Stock, and none of the
proceeds of the Loan or other extensions of credit under the Loan Agreement will
be used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause the Loan or other extensions of credit under the Loan
Agreement to be considered a "purpose credit" within the meaning of Regulations
T, U or X of the Federal Reserve Board. Guarantor will not take or permit to be
taken any action that might cause any Loan Document to violate any regulation of
the Federal Reserve Board.
4.13 Taxes. All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by Guarantor have
been filed with the appropriate Governmental Authority and, except to the extent
that appropriate reserves therefor have been made and are disclosed on
Guarantor's balance sheet, all charges have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid). Exhibit 4.13 hereto sets forth as of the Closing Date those taxable years
for which Guarantor's tax returns are currently being audited by the Internal
Revenue Service (the "IRS") or any other applicable Governmental Authority, and
any assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described on Exhibit 4.13 hereto,
Guarantor has not executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any taxes.
4.14 ERISA.
4.14.1. Exhibit 4.14 hereto lists (a) all ERISA Affiliates and (b) all
Plans and separately identifies all Pension Plans, including Title IV Plans,
Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest
IRS/DOL 5500-series form for each such Plan, have been delivered to Agent.
Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and, to Guarantor's knowledge, nothing has
occurred that would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23. Neither
Guarantor nor any ERISA Affiliate has failed to make any contribution or pay any
amount due as required by either Section 412 of the IRC or Section 302 of ERISA
or the terms of any such Plan. Neither Guarantor nor any ERISA Affiliate has
engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan, that would subject
Guarantor to a material tax on prohibited transactions imposed by Section 502(i)
of ERISA or Section 4975 of the IRC.
4.14.2. Except as set forth on Exhibit 4.14 hereto: (a) no Title IV Plan
has any Unfunded Pension Liability; (b) no ERISA Event or event described in
Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (c) there are no pending or, to the knowledge of
Guarantor, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan
or any Person as fiduciary or sponsor of any Plan; (d) neither Guarantor nor any
ERISA Affiliate has incurred or reasonably expects to incur any liability as a
result of a complete or partial withdrawal from a Multiemployer Plan; (e) within
the last five (5) years no Title IV Plan of Guarantor or any ERISA Affiliate has
been terminated, whether or not in a "standard termination" as that term is used
in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of Guarantor or any
ERISA Affiliate (determined at any time within the last five (5) years) with
Unfunded Pension Liabilities been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of Guarantor or any ERISA
Affiliate (determined at such time); (f) except in the case of any ESOP, stock
or membership interests of Guarantor and its ERISA Affiliates makes up, in the
aggregate, no more than ten percent (10%) of fair market value of the assets of
any Plan measured on the basis of fair market value as of the latest valuation
date of any Plan; and (g) no liability under any Title IV Plan has been
satisfied with the purchase of a contract from an insurance company that is not
rated AAA by the Standard & Poor's Corporation or an equivalent rating by
another nationally recognized rating agency.
4.15 Guarantor's Knowledge. Any representation and warranty made in this
Guaranty which is explicitly limited "to Guarantor's knowledge", shall mean that
such representation and warranty is made to the actual knowledge (without
inquiry) of any of the following people or their respective successors: (a) X.
Xxxxxx Xxxxxxx, Chief Executive Officer of Guarantor, (b) Xxxxxx X. Xxxxx, Chief
Operating Officer of Guarantor, (c) Xxxxxx Xxxxxxxxxx, Chief Financial Officer
of Guarantor, or (d) R. Xxx Xxxxxxx, Xx., Senior Vice President of Operations of
Guarantor.
5. EVENTS OF DEFAULT
Upon the occurrence of any of the following events and during the
continuance thereof, at the option of Agent or at the direction of Requisite
Lenders, Agent and/or Lenders may, upon written notice to Borrowers or
Guarantor, declare any or all of the Obligations, whether or not then due,
immediately due and payable by Guarantor under this Guaranty, and Agent and/or
Lenders shall be entitled to enforce the obligations of Guarantor hereunder.
5.1 Loan Agreement Event of Default. The occurrence of any Event of Default
under the Loan Agreement.
5.2 Failure to Pay or Perform. Guarantor fails to pay or perform, within
five (5) days after written notice thereof from Agent to Guarantor, any of the
Obligations under this Guaranty.
5.3 Guarantor Financial Covenants. The breach of any covenant set forth in
Section 6.1, 6.2, 6.3, 6.4 or 6.5 below.
5.4 Other Guarantor Covenants and Representations. The breach of any
covenant (other than matters referenced elsewhere in this Article 5),
representation or warranty which is not cured within thirty (30) days after
written notice thereof from Agent to Guarantor; provided, however, if such
breach cannot by its nature be cured within thirty (30) days, and Guarantor
diligently pursues the curing thereof (and then in all events cures such failure
within ninety (90) days after the original notice thereof), Guarantor shall not
be in default hereunder; provided, further, that such cure period shall not
apply to the breach of any representation or warranty which, by its nature, is
not curable.
5.5 Revocation or Termination of Guaranty. This Guaranty is revoked or
terminated by Guarantor.
5.6 Dissolution. Guarantor dissolves or liquidates, or the business of
Guarantor is suspended or terminated for any reason.
6. COVENANTS
6.1 Leverage Ratio. Guarantor's Leverage Ratio shall not exceed the
following amounts for the following periods:
------------------------------- --------------------------------
Periods Maximum Leverage Ratio
------------------------------- --------------------------------
Periods ending September 30, 6.00:1.00
2003 through June 30, 2004
------------------------------- --------------------------------
Periods ending September 30, 5.75:1.00
2004 through June 30, 2005
------------------------------- --------------------------------
Periods ending September 30, 5.50:1.00
2005 through June 30, 2006
------------------------------- --------------------------------
Periods after June 30, 2006 5.00:1.00
------------------------------- --------------------------------
Guarantor's "Leverage Ratio" shall mean (a) Guarantor's total consolidated
indebtedness for borrowed money divided by (b) Guarantor's Adjusted Consolidated
Net Income (as defined below) over the previous twelve (12) month period.
Guarantor's Leverage Ratio shall be calculated on a quarterly basis, beginning
September 30, 2003.
"Guarantor's Adjusted Consolidated Net Income" means Guarantor's
consolidated net income as set forth on its income statement, over the previous
twelve (12) month period, calculated in accordance with generally accepted
accounting principles consistent with standards utilized by Agent in connection
with its underwriting of the Loan, excluding (a) interest, (b) taxes, (c)
depreciation, (d) amortization, (e) in aggregate over the entire Term of the
Loan, up to $35,000,000 for certain one time, non-cash loss or impairment
charges related to certain investments and termination of certain third party
leases satisfactory to Agent, (f) in aggregate over the entire Term of the Loan,
$5,000,000 of costs associated with collections of and reserves taken against
account receivables associated with formerly owned and operated Health Care
Facilities, (g) in aggregate over the entire Term of the Loan, $5,000,000 of
litigation settlement charges, and (h) non-cash charges resulting from changes
in generally accepted accounting principles or the application thereof with
respect to financial derivatives such as interest rate swaps or caps; provided,
that calculation of Guarantor's Adjusted Consolidated Net Income shall not
include those one time charges and costs made or incurred by Guarantor in the
quarterly periods ending December 31, 2002, March 31, 2003 and June 30, 2003
which are listed on Exhibit 6.1 hereto, nor shall such one time charges and
costs listed on Exhibit 6.1 hereto be subject to or count against the
limitations to the exclusions over the Term of the Loan described in clauses
(e), (f), (g) or (h) above.
6.2 Fixed Charge Coverage Ratio. Guarantor's Fixed Charge Coverage Ratio
shall be greater than 1.75:1.00 at all times during the Term. Guarantor's "Fixed
Charge Coverage Ratio" shall mean the ratio of (a) Guarantor's Adjusted
Consolidated Net Income over the previous twelve (12) month period, to (b)
payments of interest and principal due on any indebtedness of Guarantor on a
consolidated basis during the same period; provided, that all principal payments
made (i) on or prior to the Closing Date, (ii) in respect of the Revolving Loan
or the Swing Line Loan, (iii) as non-regularly scheduled prepayments of the Term
Loan, (iv) in respect of any of the IRBs and (v) in respect of Guarantor's
Public Debt (but only to the extent such Public Debt is refinanced other than
through proceeds of borrowings under the Loan Agreement), shall be excluded from
any calculation of Guarantor's Fixed Charge Coverage Ratio. Guarantor's Fixed
Charge Coverage Ratio shall be calculated on a quarterly basis, beginning
September 30, 2003.
6.3 Net Worth. Guarantor's consolidated net worth as set forth on its
balance sheet shall be equal to or greater than $270,000,000 at all times during
the Term. Guarantor's net worth shall be calculated in accordance with generally
accepted accounting principles consistent with standards utilized by Agent in
connection with its underwriting of the Loan and shall be calculated on a
quarterly basis, beginning September 30, 2003.
6.4 Recourse Indebtedness. Guarantor shall not incur additional
indebtedness for Borrowed Money which is recourse to Guarantor in an amount
greater than $50,000,000 in the aggregate (excluding indebtedness set forth on
Guarantor's most recent balance sheet delivered to Agent and excluding the Loan
and this Guaranty). "Borrowed Money" shall mean (a) all indebtedness for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily made, (c)
that portion of obligations with respect to capital leases that is properly
classified as a liability on a balance sheet in conformity with GAAP, (d) any
obligations issued or assumed as the deferred purchase price of property or
services purchased, (e) all Borrowed Money of others secured by (or for which
the holder of such Borrowed Money has an existing right, contingent or
otherwise, to be secured by) any lien on, or payable out of the proceeds of
production from, any property or asset owned, held or acquired, (f) all guaranty
obligations of Guarantor in respect of any Borrowed Money of any other person or
entity, (g) the maximum amount of all standby letters of credit issued or
bankers' acceptances facilities created for the account of Guarantor and,
without duplication, all drafts drawn thereunder (to the extent unreimbursed),
and (h) the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance sheet
financing product plus any accrued interest thereon.
6.5 Dividend Payouts. Guarantor shall not make any distributions of
dividends except for (a) accrued preferred dividends as of the Closing Date and
(b) no more than ninety-five percent (95%) of Guarantor's "Funds from
Operations", as defined in the White Paper on Funds from Operations approved by
the Board of Governors of the National Association of Real Estate Investment
Trusts.
6.6 Guarantor Incorporation Documents. Guarantor shall not amend, modify or
terminate, or permit the amendment, modification or termination of the Guarantor
Incorporation Documents in any material respect without Agent's prior written
consent, which consent shall not be unreasonably withheld or delayed.
6.7 Determination of Compliance By Agent. Agent shall determine, in its
reasonable discretion, whether Guarantor has complied with each of the foregoing
covenants in this Article 6.
7. MISCELLANEOUS
7.1 Revival and Reinstatement. If at any time all or any part of any
payment theretofore applied by Agent and/or Lenders to any of the Obligations is
or must be rescinded or returned by Agent and/or Lenders for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of any Borrower), such Obligations shall, for the purposes of
this Guaranty, to the extent such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
Agent and/or Lenders, and this Guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Obligations, and Guarantor shall be
fully liable therefore, all as though such application by Agent and/or Lenders
had not been made.
7.2 No Marshaling. Agent and Lenders have no obligation to marshal any
assets in favor of Guarantor, or against or in payment of (a) any of the
Obligations, or (b) any other obligation owed to Agent and/or Lenders by
Guarantor, any Borrower or any other person.
7.3 No Modification, Waiver or Release Without Writing. Except as may
otherwise be expressly set forth herein, this Guaranty may not be modified,
amended, revised, revoked, terminated, changed or varied in any way whatsoever,
nor shall any waiver of any of the provisions of this Guaranty be binding upon
Agent or Lenders, except as expressly set forth in a writing duly executed by
Agent and Lenders. No waiver by Agent or Lenders of any default shall operate as
a waiver of any other default or the same default on a future occasion, and no
action by Agent or Lenders permitted hereunder shall in any way affect or impair
Agent's or Lenders' rights or the obligations of Guarantor under this Guaranty.
7.4 Assignment; Successors and Assigns. Guarantor may not assign
Guarantor's obligations or liability under this Guaranty. Subject to the
preceding sentence, this Guaranty shall be binding upon the parties hereto and
their respective heirs, executors, successors, representatives and assigns and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Agent and/or Lenders may, without notice to anyone, sell or assign
the Obligations, the Notes or other Loan Documents or any part thereof, or grant
participations therein, and in any such event each and every assignee or holder
of, or participant in, all or any of the Obligations shall have the right to
enforce this Guaranty, by suit or otherwise for the benefit of such assignee,
holder, or participant, as fully as if herein by name specifically given such
right, but Agent and/or Lenders shall have an unimpaired right, prior and
superior to that of any such assignee, holder or participant, to enforce this
Guaranty for the benefit of Agent and/or Lenders.
7.5 Integration. This Guaranty is the entire agreement of Guarantor with
respect to the subject matter of this Guaranty, provided that this Guaranty
shall not in any way limit or abrogate the obligations of Guarantor under the
other Loan Documents, including, without limitation, the Environmental Indemnity
of even date herewith.
7.6 Rights Cumulative. All of Agent's and/or Lenders' rights under this
Guaranty and the other Loan Documents are cumulative. The exercise of any one
right does not exclude the exercise of any other right given in this Guaranty or
the other Loan Documents or any other right of Agent and/or Lenders not set
forth in this Guaranty or the other Loan Documents. If there is more than one
Guarantor hereunder, Agent and/or Lenders may exercise their rights and remedies
against any one or more of such Guarantors and the failure of Agent and/or
Lenders to proceed against one or more of such Guarantors shall not affect the
liability of the Guarantor under this Guaranty.
7.7 Severability. Whenever possible each provision of this Guaranty shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
7.8 Material Inducement; Consideration. Guarantor acknowledges and agrees
that Agent and Lenders are specifically relying upon the representations,
warranties, agreements and waivers contained herein and that such
representations, warranties, agreements and waivers constitute a material
inducement to Agent and Lenders to accept this Guaranty and to enter into the
Loan Agreement and the transaction contemplated therein. Guarantor further
acknowledges that it expects to benefit from Lenders' extension of financing
accommodations to Borrowers because of its relationship to Borrowers, and that
it is executing this Guaranty in consideration of that anticipated benefit.
7.9 Indemnification. Guarantor agrees to indemnify, pay and hold Agent and
Lenders and their respective officers, directors, employees, agents, and
attorneys (collectively, the "Indemnitees") harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not any such Indemnitees shall be
designated a party thereto) that may be imposed on, incurred by, or asserted
against such Indemnitees, in any manner relating to or arising out of this
Guaranty or the exercise of any right or remedy of Agent or Lenders hereunder or
under the other documents pertaining to the Obligations (collectively, the
"Indemnified Liabilities"); provided, that Guarantor shall have no obligation to
any Indemnitees under this Section 7.9 with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of any Indemnitees. Upon
written request by any Indemnitees, Guarantor will undertake, at its own cost
and expense, on behalf of such Indemnitees, using counsel reasonably
satisfactory to such Indemnitees, the defense of any legal action or proceeding
whether or not such Indemnified Person shall be a party and for which such
Indemnified Person is entitled to be indemnified pursuant to this Section 7.9.
At Agent's or Requisite Lenders' option and upon prior written notice to
Guarantor, Agent may, at Guarantor's expense, prosecute or defend any third
party claim or action involving the validity or enforceability of this Guaranty.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in this Section 7.9 may be unenforceable because it is violative of any law or
public policy, Guarantor shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
7.10 Counterparts. This Guaranty may be executed in counterparts, each of
which shall be deemed an original, but all of which, when taken together, shall
be deemed one and the same agreement.
7.11 Governing Law. This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without regard to
conflicts of law provisions.
7.12 Joint and Several Obligations. If this Guaranty is executed by more
than one Guarantor then all of the covenants, obligations, agreements,
indemnities, representations and warranties of the Guarantors contained herein
shall be joint and several.
7.13 VENUE. GUARANTOR, AND BY THEIR ACCEPTANCE OF THIS GUARANTY, AGENT AND
LENDERS, HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY AGREE THAT,
SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS GUARANTY SHALL BE LITIGATED IN SUCH COURTS. GUARANTOR, AND BY
THEIR ACCEPTANCE OF THIS GUARANTY, AGENT AND LENDERS, EXPRESSLY SUBMIT AND
CONSENT TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF
FORUM NON CONVENIENS. GUARANTOR, AND BY THEIR ACCEPTANCE OF THIS GUARANTY, AGENT
AND LENDERS, HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREE THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON GUARANTOR, AGENT AND LENDERS BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO GUARANTOR,
AGENT AND LENDERS, AT THE ADDRESSES SET FORTH IN SECTION 9.8 OF THE LOAN
AGREEMENT.
7.14 WAIVER OF JURY TRIAL. GUARANTOR, AND BY THEIR ACCEPTANCE OF THIS
GUARANTY, AGENT AND LENDERS, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS GUARANTY AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS
WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTOR, AND BY
THEIR ACCEPTANCE OF THIS GUARANTY, AGENT AND LENDERS. AGENT, LENDERS AND
GUARANTOR ACKNOWLEDGE THAT NEITHER AGENT, LENDERS OR GUARANTOR NOR ANY PERSON
ACTING ON BEHALF OF AGENT, LENDERS OR GUARANTOR HAS MADE ANY REPRESENTATIONS OF
FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT.
7.15 WAIVERS UNDER THIS GUARANTY. THE WAIVERS SET FORTH IN THIS GUARANTY
(INCLUDING, WITHOUT LIMITATION, SECTIONS 7.13 AND 7.14 ABOVE) ARE KNOWINGLY,
INTENTIONALLY, AND VOLUNTARILY MADE BY GUARANTOR, AGENT AND LENDERS, AND
GUARANTOR, AGENT AND LENDERS ACKNOWLEDGE THAT NEITHER GUARANTOR, AGENT, LENDERS
NOR ANY PERSON ACTING ON BEHALF OF ANY OF THEM, HAS MADE ANY REPRESENTATIONS OF
FACT TO INDUCE THESE WAIVERS OR IN ANY WAY TO MODIFY OR NULLIFY THEIR EFFECT.
GUARANTOR, AGENT AND LENDERS FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
(OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OR ACCEPTING OF
THIS GUARANTY AND IN THE MAKING OF THESE WAIVERS BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO
DISCUSS THESE WAIVERS WITH COUNSEL.
7.16 Disclosure of Information. Agent and/or Lenders shall have the right
(but shall be under no obligation) to make available to any party for the
purpose of granting participations in or selling, transferring, assigning or
conveying all or any part of the Loan (including any governmental agency or
authority and any prospective bidder at any foreclosure sale of any Project) any
and all information which Agent and/or Lenders may have with respect to any
Project and Borrowers, whether provided by Borrowers, Guarantor or any third
party or obtained as a result of any environmental assessments. Guarantor agrees
that Agent and Lenders shall have no liability whatsoever as a result of
delivering any such information to any third party, and Guarantor, on behalf of
itself, its Affiliates and its successors and assigns, hereby releases and
discharges Agent and Lenders from any and all liability, claims, damages, or
causes of action, arising out of, connected with or incidental to the delivery
of any such information to any third party.
7.17 Termination of Guaranty. This Guaranty shall terminate upon the
indefeasible payment in full of the Obligations and the termination of any
further obligations of Lenders to extend any credit to the Borrowers under the
Loan Documents.
[SIGNATURE PAGE FOLLOWS]
The undersigned has duly executed this Guaranty as of the date and year
first above written.
OMEGA HEALTHCARE INVESTORS, INC.,
a Maryland corporation
By: /S/ XXXXXX X. XXXXX
----------------------------
Name: Xxxxxx X. Xxxxx
Its: Chief Operating Officer
