UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2009
OR
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-15319
SENIOR HOUSING PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its Charter)
Maryland |
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04-3445278 |
(State or Other
Jurisdiction of Incorporation or
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(IRS Employer Identification No.) |
400 Centre Street, Newton, Massachusetts 02458
(Address of Principal Executive Offices) (Zip Code)
617-796-8350
(Registrants Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check One):
Large Accelerated Filer x |
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Accelerated Filer o |
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Non Accelerated Filer o |
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Smaller reporting company o |
(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Number of registrants common shares outstanding as of August 10, 2009: 120,464,198.
SENIOR HOUSING PROPERTIES TRUST
FORM 10-Q
June 30, 2009
In this Quarterly Report on Form 10-Q, the terms SNH, Senior Housing, the Company, we, us and our refer to Senior Housing Properties Trust and its consolidated subsidiaries, unless otherwise noted.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)
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June 30, |
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December 31, |
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2009 |
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2008 |
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ASSETS |
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Real estate properties, at cost: |
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Land |
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$ |
339,511 |
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$ |
319,591 |
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Buildings and improvements |
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2,557,223 |
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2,487,665 |
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2,896,734 |
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2,807,256 |
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Less accumulated depreciation |
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416,697 |
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381,339 |
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2,480,037 |
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2,425,917 |
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Cash and cash equivalents |
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5,373 |
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5,990 |
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Restricted cash |
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4,589 |
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4,344 |
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Deferred financing fees, net |
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6,340 |
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5,068 |
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Acquired real estate leases, net |
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31,834 |
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30,546 |
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Other assets |
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32,025 |
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25,009 |
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Total assets |
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$ |
2,560,198 |
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$ |
2,496,874 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Unsecured revolving credit facility |
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$ |
235,000 |
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$ |
257,000 |
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Senior unsecured notes due 2012 and 2015, net of discount |
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322,089 |
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322,017 |
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Secured debt and capital leases |
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149,931 |
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151,416 |
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Accrued interest |
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10,866 |
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11,121 |
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Acquired real estate lease obligations, net |
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8,509 |
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7,974 |
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Other liabilities |
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24,230 |
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15,988 |
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Total liabilities |
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750,625 |
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765,516 |
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Commitments and contingencies |
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Shareholders equity: |
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Common shares of beneficial interest, $0.01 par value: 149,700,000 shares authorized, 120,464,198 and 114,542,584 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively |
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1,205 |
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1,145 |
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Additional paid-in capital |
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2,098,521 |
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2,000,865 |
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Cumulative net income |
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592,362 |
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530,318 |
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Cumulative distributions |
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(879,888 |
) |
(797,639 |
) |
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Unrealized gain on investments |
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(2,627 |
) |
(3,331 |
) |
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Total shareholders equity |
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1,809,573 |
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1,731,358 |
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Total liabilities and shareholders equity |
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$ |
2,560,198 |
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$ |
2,496,874 |
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See accompanying notes.
1
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
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Three Months Ended
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Six Months Ended
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2009 |
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2008 |
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2009 |
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2008 |
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Revenues: |
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Rental income |
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$ |
69,399 |
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$ |
52,708 |
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$ |
137,776 |
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$ |
101,747 |
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Interest and other income |
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186 |
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682 |
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394 |
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1,196 |
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Total revenues |
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69,585 |
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53,390 |
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138,170 |
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102,943 |
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Expenses: |
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Property operating expenses |
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3,219 |
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100 |
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6,174 |
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100 |
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Interest |
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10,707 |
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9,810 |
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21,483 |
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19,328 |
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Depreciation |
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18,635 |
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14,327 |
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37,024 |
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27,376 |
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Acquisition costs |
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1,282 |
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1,394 |
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General and administrative |
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5,231 |
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4,533 |
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10,051 |
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8,203 |
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Impairment of assets |
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2,940 |
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2,940 |
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Total expenses |
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39,074 |
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31,710 |
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76,126 |
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57,947 |
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Net income |
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$ |
30,511 |
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$ |
21,680 |
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$ |
62,044 |
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$ |
44,996 |
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Weighted average shares outstanding |
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120,455 |
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100,302 |
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119,161 |
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95,691 |
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Earnings per share: |
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Net income |
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$ |
0.25 |
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$ |
0.22 |
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$ |
0.52 |
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$ |
0.47 |
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See accompanying notes .
2
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
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Six Months Ended
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2009 |
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2008 |
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Cash flows from operating activities: |
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Net income |
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$ |
62,044 |
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$ |
44,996 |
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Adjustments to reconcile net income to cash provided by operating activities: |
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Depreciation |
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37,024 |
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27,376 |
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Amortization |
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1,487 |
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963 |
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Impairment of assets |
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2,940 |
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Equity in losses of Affiliates Insurance Company |
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109 |
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Change in assets and liabilities: |
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Restricted cash |
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(245 |
) |
87 |
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Other assets |
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(1,461 |
) |
1,166 |
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Accrued interest |
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(255 |
) |
(154 |
) |
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Other liabilities |
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9,217 |
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5,984 |
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Cash provided by operating activities |
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107,920 |
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83,358 |
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Cash flows from investing activities: |
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Acquisitions |
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(95,257 |
) |
(386,356 |
) |
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Investment in Affiliates Insurance Company |
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(5,074 |
) |
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Proceeds from sale of real estate |
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3,090 |
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Cash used for investing activities |
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(97,241 |
) |
(386,356 |
) |
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Cash flows from financing activities: |
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Proceeds from issuance of common shares, net |
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96,717 |
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523,138 |
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Proceeds from borrowings on revolving credit facility |
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119,000 |
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210,000 |
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Repayments of borrowings on revolving credit facility |
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(141,000 |
) |
(210,000 |
) |
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Repayment of other debt |
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(1,485 |
) |
(13,464 |
) |
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Deferred financing fees |
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(2,279 |
) |
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Distributions to shareholders |
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(82,249 |
) |
(64,257 |
) |
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Cash (used for) provided by financing activities |
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(11,296 |
) |
445,417 |
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(Decrease) increase in cash and cash equivalents |
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(617 |
) |
142,419 |
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Cash and cash equivalents at beginning of period |
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5,990 |
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43,521 |
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Cash and cash equivalents at end of period |
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$ |
5,373 |
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$ |
185,940 |
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Supplemental cash flow information: |
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Interest paid |
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$ |
20,659 |
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$ |
19,482 |
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Non-cash financing activities: |
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Issuance of common shares pursuant to our incentive share award plan |
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$ |
1,002 |
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$ |
974 |
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See accompanying notes.
3
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
Note 1. Basis of Presentation
The accompanying condensed consolidated financial statements of Senior Housing Properties Trust and its subsidiaries, or the Company, have been prepared without audit. Certain information and disclosures required by accounting principles generally accepted in the United States for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2008. In the opinion of our management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included. All intercompany transactions and balances between us and our consolidated subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years financial statements to conform to the current years presentation. These reclassifications had no effect on net income or shareholders equity. In preparing these condensed consolidated financial statements, we evaluated events that occurred through August 10, 2009 for potential recognition or disclosure.
In May 2009, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 165, Subsequent Events, or SFAS No. 165. SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. SFAS No. 165 is effective for interim and annual fiscal periods ending after June 15, 2009. We have adopted SFAS No. 165 effective April 1, 2009.
In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, or SFAS No. 168, or the Codification, and, in doing so, authorized the Codification as the sole source for authoritative U.S. Generally Accepted Accounting Principles, or GAAP. SFAS No. 168 will be effective for financial statements issued for reporting periods that end after September 15, 2009. Once its effective, it will supersede all accounting standards in U.S. GAAP, aside from those issued by the Securities and Exchange Commission, or SEC. SFAS No. 168 replaces SFAS No. 162 to establish a new hierarchy of GAAP sources for non-governmental entities under the Codification. We have evaluated the effect of SFAS No. 168 and have concluded that it will have no material effect on our financial position or results of operations.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), Business Combinations, or SFAS No. 141(R). SFAS No. 141(R) establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS No. 141(R) does affect our consolidated financial statements, principally by requiring us to expense acquisition costs.
On January 1, 2008, we adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or SFAS No. 157, for our financial assets and liabilities, primarily investments in available for sale securities and senior notes (see Note 7). The provisions of SFAS No. 157 relating to non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis was delayed in February 2008 with the issuance of Financial Accounting Standards Board Staff Position No. 157-2, Effective Date of FASB Statement No. 157, or FSP FASB No. 157-2. Fair value measurements identified in FSP FASB No. 157-2 were effective for our fiscal year beginning January 1, 2009. The adoption of FSP FASB No. 157-2 primarily resulted in additional disclosures in our consolidated financial statements with respect to our properties classified as held for sale.
4
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
In April 2009, the FASB issued FASB Staff Position No. FAS 157-4 Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, or FSP FAS 157-4, FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, or FSP FAS 115-2 and FAS 124-2, and FASB Staff Position No. FAS 107-1 and APB 28-1 Interim Disclosures about Fair Value of Financial Instruments, or FSP FAS 107-1 and APB 28-1. FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157, when the volume and level of activity for the assets or liabilities have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 115-2 and FAS 124-2 amend the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities. FSP FAS 107-2 and APB 28-1 amend FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements, and also amend APB Opinion No. 28, Interim Financial Reporting to require those disclosures in summarized financial information at interim reporting periods. Each of these FSPs is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of these FSPs does not result in any significant changes to our disclosures in our consolidated financial statements.
Note 2. Real Estate Properties
At June 30, 2009, we owned 273 properties located in 34 states and Washington, D.C.
In May 2008, we entered into a series of agreements to acquire 48 medical office, clinic and biotech laboratory buildings, or MOBs, from HRPT Properties Trust, or HRP, for an aggregate purchase price of approximately $565,000. In January 2009, we acquired one of these MOBs containing 50,000 square feet for $19,250, plus closing costs. In May 2009, we acquired two of these MOBs from HRP containing 192,000 square feet for $50,800, plus closing costs. We recorded intangible lease assets of $4,100 and intangible lease liabilities of $1,100 for these MOBs acquired during the six months ended June 30, 2009. At the request of a tenant for a property subject to a multi-property lease, in May 2009 we sold one of our MOB properties classified as held for sale to an unaffiliated party for approximately $3,090 which was its approximate net book value. On August 6, 2009, we acquired three of these MOBs from HRP containing 164,000 square feet for $115,700, plus closing costs. We now own 42 of these properties containing 1.9 million square feet for an aggregate purchase price of approximately $527,600, plus closing costs. One of the remaining buildings with an allocated value of $3,000 is no longer subject to our purchase agreement and one of the MOBs we acquired from HRP which was subject to a multi-property lease was sold at the tenants request. We expect the closing of the purchase of the remaining four pending MOBs to occur by February 2010. We and HRP may mutually agree to accelerate the closings of these acquisitions. We funded these acquisitions using cash on hand, proceeds from mortgage financing, proceeds from equity issuances, borrowings under our revolving credit facility and by assuming three mortgage loans on two properties totaling $10,800 with a weighted average interest rate of 7.1% per annum and a weighted average maturity in 2018. Our obligations to complete the pending purchase of the remaining four MOBs from HRP are subject to various conditions typical of commercial real estate purchases. We can provide no assurance that we will purchase any or all of these buildings or that the remaining purchases will be completed in 2010 or sooner. As of June 30, 2009, the MOBs that we acquired from HRP and which remain subject to our purchase agreements were 98% leased to approximately 210 tenants for an average lease term of 7.6 years. HRP was formerly our parent company, and both we and HRP are managed by Reit Management & Research LLC, or RMR. Because we and HRP are both managed by RMR, the terms of these transactions were negotiated by special
5
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
committees of our and HRPs boards of trustees composed of trustees who were not also trustees of both companies. For more information about our dealings with HRP and RMR and their affiliates and about the risks which may arise as a result of these related person transactions, please see our Annual Report on Form 10-K for the year ended December 31, 2008, or the Annual Report, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, or the First Quarter Report, the other Items in this Quarterly Report on Form 10-Q, and our other filings made with the SEC, and in particular, the section captioned Risk Factors in the Annual Report, the sections captioned Managements Discussion and Analysis of Financial Condition and Results of Operations Related Person Transactions in the Annual Report, First Quarter Report and this Quarterly Report on Form 10-Q and the section captioned Related Person Transactions and Company Review of Such Transactions in our Proxy Statement dated March 30, 2009 relating to our 2009 Annual Shareholders Meeting.
As of June 30, 2009, four of our properties are classified as held for sale. These four properties are included in real estate properties on our condensed consolidated balance sheets and have a net carrying value of approximately $5,550 at June 30, 2009. For the three and six months ended June 30, 2008, we recognized an impairment of assets charge of $2,940 related to one of these properties. These properties are currently leased to Five Star Quality Care, Inc., or Five Star.
During the six months ended June 30, 2009, pursuant to the terms of our existing leases with Five Star, we purchased $24,240 of improvements made to our properties leased to Five Star, and, as a result, the annual rent payable to us by Five Star was increased by approximately $1,940.
Note 3. Net Unrealized Loss on Investments
On June 30, 2009, we owned 1,000,000 common shares of HRP and 35,000 common shares of Five Star, which are carried at fair market value in other assets on our condensed consolidated balance sheets. The net unrealized loss on investments shown on our condensed consolidated balance sheets represents the difference between the quoted market prices of such shares on June 30, 2009 ($4.06 and $1.91 per share, respectively) and our costs on the dates we acquired these shares ($6.50 and $7.26 per share, respectively).
Note 4. Comprehensive Income
The following is a reconciliation of net income to comprehensive income for the three and six months ended June 30, 2009 and 2008:
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Three Months Ended
|
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Six Months Ended
|
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|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
||||
Net income |
|
$ |
30,511 |
|
$ |
21,680 |
|
$ |
62,044 |
|
$ |
44,996 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
||||
Change in net unrealized gain / loss on investments |
|
900 |
|
(17 |
) |
704 |
|
(1,085 |
) |
||||
Comprehensive income |
|
$ |
31,411 |
|
$ |
21,663 |
|
$ |
62,748 |
|
$ |
43,911 |
|
Note 5. Indebtedness
We have an unsecured revolving credit facility that matures in December 2010. Our revolving credit facility permits borrowings up to $550,000. The annual interest payable for amounts drawn under the facility is LIBOR plus a premium. The weighted average interest rate payable on borrowings under this revolving credit facility was 1.3% and 3.3% at June 30, 2009 and 2008, respectively. In addition to interest we pay certain fees to maintain this credit facility and we amortize certain set up costs. Our revolving credit facility is available for acquisitions, working capital and general business purposes. As of June 30, 2009 and 2008, we had $235,000 and zero amounts outstanding under this credit facility, respectively, and $315,000 and $550,000 available under this credit facility, respectively. Subject to certain conditions, this credit facilitys maturity date can be extended at our option to December 31, 2011 upon payment of a fee.
6
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
Note 6. Shareholders Equity
Under the terms of our business management agreement with RMR, on April 8, 2009, we issued 55,814 common shares in payment of an incentive fee of approximately $789 for services rendered by RMR during 2008. We issued these shares pursuant to an exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act.
On May 15, 2009, we paid a $0.35 per share, or $42,160, distribution to our common shareholders for the quarter ended March 31, 2009. On July 1, 2009, we declared a distribution of $0.36 per share, or $43,360, to be paid to common shareholders of record on July 10, 2009, with respect to our results for the quarter ended June 30, 2009. We expect to pay this distribution on or about August 14, 2009.
On May 18, 2009, we granted 2,000 common shares of beneficial interest, par value $0.01 per share, valued at $15.45 per share, the closing price of our common shares on the New York Stock Exchange on that day, to each of our five trustees. We made these grants pursuant to an exemption from registration contained in Section 4(2) of the Securities Act.
Note 7. Fair Value of Assets and Liabilities
The table below presents certain of our assets and liabilities measured at fair value at June 30, 2009 categorized by the level of inputs used in the valuation of each asset or liability, in accordance with SFAS No. 157.
Description |
|
Total |
|
Quoted Prices in Active
|
|
Significant Other
|
|
Significant
|
|
||||
|
|
|
|
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|
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|
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|
||||
Assets held for sale (1) |
|
$ |
5,548 |
|
$ |
|
|
$ |
5,548 |
|
$ |
|
|
Investments in available for sale securities (2) |
|
4,127 |
|
4,127 |
|
|
|
|
|
||||
Senior notes (3) |
|
309,536 |
|
|
|
309,536 |
|
|
|
||||
(1) Assets held for sale consist of four of our properties that we expect to sell that are reported at fair value. We used offers to purchase the properties made by third parties or comparable sales transactions (level 2 inputs) to determine fair value of these properties. As of June 30, 2009, the net carrying value of these properties was approximately $5,550. We have recorded impairments to these properties subsequent to their acquisition by us of approximately $8,330 in order to reduce their carrying value to fair value.
(2) Our investments in available for sale securities include our 1,000,000 common shares of HRP and 35,000 common shares of Five Star. The fair values of these shares are based on quoted prices in active markets (level 1 inputs). We have evaluated the near-term prospects of HRP and Five Star in relation to the severity and duration of the decline in fair value of their common shares. Based on that evaluation and our ability and intent to hold these investments for a reasonable period of time sufficient for a recovery of fair value, we do not consider these investments to be other-than-temporarily impaired at June 30, 2009.
(3) We estimate the fair values of our senior notes using as average of the bid and ask price of our two issues of senior notes at the balance sheet date (level 2 inputs). As of June 30, 2009, the book value carrying amount of our senior notes was $322,089.
In addition to the assets and liabilities described in the above table, our additional financial instruments include rents receivable, cash and cash equivalents, restricted cash, secured and unsecured debt and other liabilities. The fair values of these additional financial instruments approximate their carrying value at June 30, 2009 based upon their liquidity, short term maturity, variable rate pricing or our estimate of fair value using discounted cash flows analyses and prevailing interest rates.
7
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
Note 8. Segment Reporting
We have two reportable operating segments: (i) short term and long term residential care facilities that offer dining for residents and (ii) properties where medical related services are offered but where residential overnight stays or dining services are not provided, or MOBs. Properties in the short term and long term residential care facilities segment include independent living facilities, assisted living facilities, skilled nursing facilities and rehabilitation hospitals. Properties in the MOB segment include medical office, clinic and biotech laboratory buildings. The All Other category in the following table includes amounts related to corporate business activities and the operating results of certain properties that offer fitness, wellness and spa services to members. Prior to June 2008, our only operating segments were short term and long term residential care facilities that offer dining for residents and properties that offer fitness, wellness and spa services to members included in the All Other category.
|
|
For the Three Months Ended June 30, 2009 |
|
||||||||||
|
|
Short and
|
|
MOB |
|
All Other |
|
Consolidated |
|
||||
Rental income |
|
$ |
54,484 |
|
$ |
11,004 |
|
$ |
3,911 |
|
$ |
69,399 |
|
Interest and other income |
|
|
|
|
|
186 |
|
186 |
|
||||
Total revenues |
|
54,484 |
|
11,004 |
|
4,097 |
|
69,585 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
3,219 |
|
|
|
3,219 |
|
||||
Interest expense |
|
2,039 |
|
190 |
|
8,478 |
|
10,707 |
|
||||
Depreciation expense |
|
14,983 |
|
2,730 |
|
922 |
|
18,635 |
|
||||
Acquisition costs |
|
|
|
1,282 |
|
|
|
1,282 |
|
||||
General and administrative |
|
|
|
|
|
5,231 |
|
5,231 |
|
||||
Total expenses |
|
17,022 |
|
7,421 |
|
14,631 |
|
39,074 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
37,462 |
|
$ |
3,583 |
|
$ |
(10,534 |
) |
$ |
30,511 |
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,881,050 |
|
$ |
439,545 |
|
$ |
239,603 |
|
$ |
2,560,198 |
|
8
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
|
|
For the Three Months Ended June 30, 2008 |
|
||||||||||
|
|
Short and
|
|
MOB |
|
All Other |
|
Consolidated |
|
||||
Rental income |
|
$ |
50,844 |
|
$ |
232 |
|
$ |
1,632 |
|
$ |
52,708 |
|
Interest and other income |
|
|
|
|
|
682 |
|
682 |
|
||||
Total revenues |
|
50,844 |
|
232 |
|
2,314 |
|
53,390 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
100 |
|
|
|
100 |
|
||||
Interest expense |
|
1,220 |
|
|
|
8,590 |
|
9,810 |
|
||||
Depreciation expense |
|
13,876 |
|
94 |
|
357 |
|
14,327 |
|
||||
General and administrative |
|
|
|
|
|
4,533 |
|
4,533 |
|
||||
Impairment of assets |
|
2,940 |
|
|
|
|
|
2,940 |
|
||||
Total expenses |
|
18,036 |
|
194 |
|
13,480 |
|
31,710 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
32,808 |
|
$ |
38 |
|
$ |
(11,166 |
) |
$ |
21,680 |
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,827,693 |
|
$ |
74,942 |
|
$ |
296,430 |
|
$ |
2,199,065 |
|
|
|
For the Six Months Ended June 30, 2009 |
|
||||||||||
|
|
Short and
|
|
MOB |
|
All Other |
|
Consolidated |
|
||||
Rental income |
|
$ |
108,520 |
|
$ |
21,451 |
|
$ |
7,805 |
|
$ |
137,776 |
|
Interest and other income |
|
|
|
12 |
|
382 |
|
394 |
|
||||
Total revenues |
|
108,520 |
|
21,463 |
|
8,187 |
|
138,170 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
6,174 |
|
|
|
6,174 |
|
||||
Interest expense |
|
4,069 |
|
374 |
|
17,040 |
|
21,483 |
|
||||
Depreciation expense |
|
29,855 |
|
5,324 |
|
1,845 |
|
37,024 |
|
||||
Acquisition costs |
|
|
|
1,394 |
|
|
|
1,394 |
|
||||
General and administrative |
|
|
|
|
|
10,051 |
|
10,051 |
|
||||
Total expenses |
|
33,924 |
|
13,266 |
|
28,936 |
|
76,126 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
74,596 |
|
$ |
8,197 |
|
$ |
(20,749 |
) |
$ |
62,044 |
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,881,050 |
|
$ |
439,545 |
|
$ |
239,603 |
|
$ |
2,560,198 |
|
9
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
|
|
For the Six Months Ended June 30, 2008 |
|
||||||||||
|
|
Short and
|
|
MOB |
|
All Other |
|
Consolidated |
|
||||
Rental income |
|
$ |
98,135 |
|
$ |
232 |
|
$ |
3,380 |
|
$ |
101,747 |
|
Interest and other income |
|
|
|
|
|
1,196 |
|
1,196 |
|
||||
Total revenues |
|
98,135 |
|
232 |
|
4,576 |
|
102,943 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
100 |
|
|
|
100 |
|
||||
Interest expense |
|
2,668 |
|
|
|
16,660 |
|
19,328 |
|
||||
Depreciation expense |
|
26,542 |
|
94 |
|
740 |
|
27,376 |
|
||||
General and administrative |
|
|
|
|
|
8,203 |
|
8,203 |
|
||||
Impairment of assets |
|
2,940 |
|
|
|
|
|
2,940 |
|
||||
Total expenses |
|
32,150 |
|
194 |
|
25,603 |
|
57,947 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
65,985 |
|
$ |
38 |
|
$ |
(21,027 |
) |
$ |
44,996 |
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,827,693 |
|
$ |
74,942 |
|
$ |
296,430 |
|
$ |
2,199,065 |
|
10
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
Note 9. Significant Tenant
Five Star is the lessee of 65% of our investments, at cost, as of June 30, 2009. The following tables present summary financial information for Five Star for the three and six months ended June 30, 2009 and 2008, as reported in its Quarterly Report on Form 10-Q.
Summary Financial Information of Five Star Quality Care, Inc.
|
|
For the Three Months Ended June 30, |
|
||||
Operations |
|
2009 |
|
2008 |
|
||
Total revenues |
|
$ |
297,127 |
|
$ |
270,454 |
|
Operating income |
|
4,071 |
|
6,145 |
|
||
Income from continuing operations |
|
9,047 |
|
4,307 |
|
||
Net income |
|
8,578 |
|
3,489 |
|
||
|
|
For the Six Months Ended
|
|
||||
|
|
2009 |
|
2008 |
|
||
Total revenues |
|
$ |
591,507 |
|
$ |
528,520 |
|
Operating income |
|
7,465 |
|
13,495 |
|
||
Income from continuing operations |
|
34,044 |
|
8,721 |
|
||
Net income |
|
33,950 |
|
5,106 |
|
||
|
|
|
|
|
|
||
Cash Flows |
|
|
|
|
|
||
Cash provided by operating activities |
|
23,544 |
|
22,294 |
|
||
Net cash provided by (used in) discontinued operations |
|
1,028 |
|
(463 |
) |
||
Cash used in investing activities |
|
(10,552 |
) |
(6,829 |
) |
||
Cash used in financing activities |
|
(8,409 |
) |
(117 |
) |
||
Change in cash and cash equivalents |
|
5,611 |
|
14,885 |
|
||
Cash and cash equivalents at beginning of period |
|
16,138 |
|
30,999 |
|
||
Cash and cash equivalents at end of period |
|
21,749 |
|
45,884 |
|
||
|
|
As of June 30, |
|
||||
Financial Position |
|
2009 |
|
2008 |
|
||
Current assets |
|
$ |
188,049 |
|
$ |
137,455 |
|
Non-current assets |
|
227,337 |
|
243,390 |
|
||
Total indebtedness |
|
119,545 |
|
142,393 |
|
||
Current liabilities |
|
174,121 |
|
116,315 |
|
||
Non-current liabilities |
|
117,032 |
|
172,980 |
|
||
Total shareholders equity |
|
124,233 |
|
91,550 |
|
||
The summary financial information of Five Star is presented to comply with applicable accounting regulations of the SEC. References in these financial statements to the Quarterly Report on Form 10-Q for Five Star are included as textual references only, and the information in Five Stars Quarterly Report is not incorporated by reference into these financial statements.
Five Star is our former subsidiary and both we and Five Star have management contracts with RMR. For information about our dealings with Five Star and about the risks which may arise as a result of these related person transactions, please see our Annual Report on Form 10-K for the year ended December 31, 2008, especially the section titled Risk Factors.
11
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
Note 10. Pro Forma Information
During the three months ended June 30, 2009, we purchased two MOBs for approximately $50,800 and sold one MOB for $3,090. Also, during this three month period, pursuant to the terms of our existing leases with Five Star, we purchased $11,506 of improvements made to our properties leased to Five Star. During the six months ended June 30, 2009, we purchased three MOBs for approximately $70,000, sold one MOB for $3,090 and, pursuant to the terms of our existing leases with Five Star, we purchased $24,240 of improvements made to our properties leased to Five Star. During 2008: we purchased 30 senior living properties, four wellness centers and 38 MOBs for an aggregate of $842,900; we purchased $69,400 of improvements made to our properties leased to Five Star; we repaid in full a mortgage loan on one of our properties for $12,600 in April 2008; we assumed $61,300 of mortgage debt in conjunction with our 2008 acquisitions; we recorded an impairment charge on four of our properties for $8,380; and we sold three assisted living facilities to Five Star for $21,350 and realized a gain on sale of approximately $266 in July 2008. During 2009 and 2008, we also issued 5,853 and 25,759 of our common shares, respectively. The following table presents our pro forma results of operations as if all of these acquisitions, dispositions and financing transactions were completed on January 1, 2008. This pro forma data is not necessarily indicative of what actual results of operations would have been for the periods presented, nor does it represent the results of operations for any future period. Differences could result from, but are not limited to, additional property sales or investments, changes in interest rates and changes in our debt or equity capital structure.
|
|
Pro Forma Results |
|
||||||||||
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
||||||||
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
||||
Total revenues |
|
$ |
70,608 |
|
$ |
70,784 |
|
$ |
141,222 |
|
$ |
141,424 |
|
Income before gain on sale of properties |
|
$ |
30,891 |
|
$ |
23,350 |
|
$ |
63,206 |
|
$ |
56,864 |
|
Net income |
|
$ |
30,891 |
|
$ |
23,616 |
|
$ |
63,206 |
|
$ |
57,130 |
|
|
|
|
|
|
|
|
|
|
|
||||
Per common share data: |
|
|
|
|
|
|
|
|
|
||||
Income before gain on sale of properties |
|
$ |
0.26 |
|
$ |
0.19 |
|
$ |
0.52 |
|
$ |
0.47 |
|
Net income |
|
$ |
0.26 |
|
$ |
0.20 |
|
$ |
0.52 |
|
$ |
0.47 |
|
Note 11. Affiliates Insurance Company
As of June 30, 2009, we have invested $5,074 in Affiliates Insurance Company, or AIC, an insurance company, that is also owned by RMR and other companies to which RMR provides management services. We own 16.67% of the common shares of AIC which has a current carrying value of $4,964. This investment is included in other assets on our condensed consolidated balance sheets. Although we own less than 20% of AIC, we use the equity method to account for our investment in AIC because we believe that we have significant influence over AIC since each of our trustees is a director of AIC and since we expect to procure some of our insurance from AIC. Under the equity method, we record our percentage share of net earnings from AIC in our consolidated statements of income included in general and administrative expenses. If we determine there is an other than temporary decline in the fair value of this investment, we would record a charge to earnings. In evaluating the fair value of this investment, we have considered, among other things, the individual assets and liabilities held by AIC, AICs overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally. Subsequent to June 30, 2009, we invested an additional $35 in order to fund our share of formation and licensing costs for AIC.
12
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(dollar amounts in thousands, except per share data or as otherwise stated)
Note 12. Subsequent Events
On August 4, 2009, a special purpose subsidiary of ours closed a $512,900 mortgage financing with the Federal National Mortgage Association, or FNMA. This mortgage loan is secured by first liens on 28 senior living properties that we own and lease to Five Star with 5,618 living units / beds located in 16 states. We used a portion of the proceeds from this mortgage financing to repay amounts outstanding under our revolving credit facility and to purchase three MOBs from HRP. We intend to use the balance of the proceeds to fund investments, including possibly accelerating the remaining MOB acquisitions from HRP, and for general business purposes. In connection with the FNMA transaction, we realigned our four leases with Five Star. Lease no. 1 (which is comprised of four separate leases) now includes 80 properties, including independent living communities, assisted living communities and skilled nursing facilities, and expires in 2024. Lease no. 2 now includes 50 properties, including independent living communities, assisted living communities, skilled nursing facilities and two rehabilitation hospitals, and expires in 2026. Lease no. 3 now includes the 28 FNMA financed properties, including independent living communities and assisted living communities, and expires in 2028. Lease no. 4 now includes 25 properties, including independent living communities, assisted living communities and skilled nursing facilities, and expires in 2017. In connection with the lease realignment and the FNMA financing, we entered into a lease realignment agreement with Five Star, or the Realignment Agreement. Pursuant to the terms of the Realignment Agreement, (1) the four leases, or the Leases, were reconfigured as described above, (2) we acquired certain personal property located at 28 properties in 16 states , or the Properties, from subsidiaries of Five Star and pledged that property to FNMA, (3) we purchased 3,200,000 shares, or the Shares, of common stock, $.01 par value per share, which represent approximately 9% of the total common stock outstanding of Five Star, (4) Five Star agreed to undertake certain reporting and other operating obligations required by FNMA and (5) subsidiaries of Five Star pledged certain tangible and intangible personal property, such as accounts receivable and contract rights, located at, or arising from the operations of, the Properties to secure their obligations under the Lease under which the Properties are leased and certain of their obligations relating to the $512,900 secured term loan. To compensate Five Star for the sale of its personal property, the sale of the Shares, the pledge of intangible assets and for the services and obligations that Five Star has assumed, (1) we reduced the annual rent payable to us under one of the Leases, but not the lease under which the Properties are leased, by $2,000 per year for the term of that Lease, which will expire in 2026; (2) we paid Five Star a total of $18,600; and (3) we agreed to reimburse Five Star for its out of pocket expenses incurred in connection with the negotiation and closing of this transaction. Five Star has granted certain registration rights to us with regard to the Shares. For more information about this FNMA financing and the agreement we entered with Five Star to facilitate this financing please see Part II, Item 5 of this Quarterly Report on Form 10-Q.
In July 2009, we agreed to purchase, from an unaffiliated party, one senior living property for approximately $21,000. We intend to lease this property to Five Star. We expect to fund this acquisition using cash on hand and borrowings under our revolving credit facility, if needed. The purchase of this property is contingent upon completion of our diligence and other customary closing conditions. We can provide no assurance that we will purchase this property.
13
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included in this quarterly report and our Annual Report on Form 10-K for the year ended December 31, 2008.
PORTFOLIO OVERVIEW
The following tables present an overview of our portfolio (dollars in thousands except per unit/square foot):
As of June 30, 2009
|
|
Number of
|
|
Number of
|
|
Investment Carrying
|
|
% of
|
|
Annualized
|
|
% of Annualized
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Facility Type |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Independent living communities (2) |
|
43 |
|
11,524 |
|
$ |
1,108,572 |
|
38.3% |
|
$ |
109,631 |
|
37.6% |
|
Assisted living facilities (2) |
|
120 |
|
8,472 |
|
909,430 |
|
31.4% |
|
84,353 |
|
28.9% |
|
||
Skilled nursing facilities (2) |
|
58 |
|
5,844 |
|
230,192 |
|
7.9% |
|
20,355 |
|
6.9% |
|
||
Rehabilitation hospitals |
|
2 |
|
364 |
|
60,175 |
|
2.1% |
|
11,580 |
|
4.0% |
|
||
Wellness centers |
|
10 |
|
812,000 |
|
180,017 |
|
6.2% |
|
17,069 |
|
5.9% |
|
||
MOBs |
|
40 |
|
1,831,082 |
|
408,348 |
|
14.1% |
|
48,748 |
|
16.7% |
|
||
Total |
|
273 |
|
|
|
$ |
2,896,734 |
|
100.0% |
|
$ |
291,736 |
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Tenant / Operator |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Five Star (Lease No. 1) (3) |
|
80 |
|
5,919 |
|
$ |
534,517 |
|
18.5% |
|
$ |
45,195 |
|
15.4% |
|
Five Star (Lease No. 2) (3) |
|
50 |
|
6,106 |
|
501,699 |
|
17.3% |
|
51,072 |
|
17.5% |
|
||
Five Star (Lease No. 3) (3) |
|
28 |
|
5,618 |
|
607,337 |
|
21.0% |
|
61,181 |
|
21.0% |
|
||
Five Star (Lease No. 4) (3) |
|
25 |
|
2,461 |
|
229,435 |
|
7.9% |
|
21,057 |
|
7.2% |
|
||
Sunrise / Marriott (4) |
|
14 |
|
4,091 |
|
325,165 |
|
11.2% |
|
32,416 |
|
11.1% |
|
||
Brookdale |
|
18 |
|
894 |
|
61,122 |
|
2.1% |
|
8,114 |
|
2.8% |
|
||
6 private companies (combined) |
|
8 |
|
1,115 |
|
49,094 |
|
1.7% |
|
6,884 |
|
2.4% |
|
||
Wellness centers |
|
10 |
|
812,000 |
|
180,017 |
|
6.2% |
|
17,069 |
|
5.9% |
|
||
Multi-tenant MOBs |
|
40 |
|
1,831,082 |
|
408,348 |
|
14.1% |
|
48,748 |
|
16.7% |
|
||
Total |
|
273 |
|
|
|
$ |
2,896,734 |
|
100.0% |
|
$ |
291,736 |
|
100.0% |
|
Tenant Operating Statistics (Quarter Ended March 31, 2009) (5)
|
|
Rent Coverage |
|
Occupancy |
|
Annualized Rental Income per Living
|
|
||||||||
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Five Star (Lease No. 1) (3) |
|
1.23x |
|
1.22x |
|
87% |
|
85% |
|
$ |
7,636 |
|
$ |
7,103 |
|
Five Star (Lease No. 2) (3) (7) |
|
1.20x |
|
1.41x |
|
83% |
|
85% |
|
$ |
6,878 |
|
$ |
6,344 |
|
Five Star (Lease No. 3) (3) |
|
1.63x |
|
1.63x |
|
90% |
|
92% |
|
$ |
10,890 |
|
$ |
10,605 |
|
Five Star (Lease No. 4) (3) |
|
1.12x |
|
1.45x |
|
86% |
|
86% |
|
$ |
8,556 |
|
$ |
7,890 |
|
Sunrise / Marriott (4) |
|
1.45x |
|
1.61x |
|
91% |
|
91% |
|
$ |
7,924 |
|
$ |
7,760 |
|
Brookdale |
|
2.22x |
|
2.23x |
|
92% |
|
91% |
|
$ |
9,076 |
|
$ |
8,806 |
|
6 private companies (combined) |
|
1.83x |
|
2.24x |
|
82% |
|
87% |
|
$ |
6,174 |
|
$ |
5,991 |
|
Wellness centers (8) |
|
2.27x |
|
2.19x |
|
100% |
|
100% |
|
NA |
|
NA |
|
||
Multi-tenant MOBs (9) |
|
NA |
|
NA |
|
99% |
|
NA |
|
$ |
27 |
|
$ |
20 |
|
14
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Tenant Operating Statistics (Quarter Ended March 31, 2009) (5)
|
|
Short and Long Term Residential Care Facilities |
|
||||||||||
|
|
Percentage of Operating Revenue Sources |
|
||||||||||
|
|
Private Pay (10) |
|
Medicare |
|
Medicaid |
|
||||||
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five Star (Lease No. 1) (3) |
|
60% |
|
51% |
|
14% |
|
18% |
|
25% |
|
31% |
|
Five Star (Lease No. 2) (3) |
|
52% |
|
50% |
|
32% |
|
34% |
|
15% |
|
16% |
|
Five Star (Lease No. 3) (3) |
|
86% |
|
88% |
|
13% |
|
12% |
|
1% |
|
|
|
Five Star (Lease No. 4) (3) |
|
67% |
|
69% |
|
14% |
|
14% |
|
19% |
|
17% |
|
Sunrise / Marriott (4) |
|
68% |
|
79% |
|
28% |
|
18% |
|
4% |
|
3% |
|
Brookdale |
|
100% |
|
99% |
|
|
|
|
|
|
|
1% |
|
6 private companies (combined) |
|
24% |
|
29% |
|
25% |
|
24% |
|
51% |
|
47% |
|
(1) Amounts are before depreciation, but after impairment write downs, if any.
(2) Properties are categorized by the type of living units / beds which constitute a majority of the living units / beds at the property.
(3) On August 4, 2009, in connection with the Federal National Mortgage Association, or FNMA, transaction, we realigned our four leases with Five Star Quality Care, Inc., or Five Star. The data presented reflects this realignment.
(4) Marriott International, Inc. guarantees this lease.
(5) All tenant operating data presented are based upon the operating results provided by our tenants for the indicated quarterly periods, or the most recent prior period for which tenant operating results are available to us from our tenants. Rent coverage is calculated as operating cash flow from our tenants operations of our properties, before subordinated charges, divided by minimum rents payable to us. We have not independently verified our tenants operating data. Excludes data for periods prior to our ownership of some of these properties.
(6) Represents annualized rent by lease divided by the number of living units, beds or square feet leased at June 30, 2009 and 2008.
(7) Annualized rental income per living unit, bed or square foot excludes the two rehabilitation hospitals as these properties have extensive clinic space for services to both overnight patients and patients who receive treatment and do not stay overnight, and these properties are not comparable to residential senior living properties.
(8) Annualized rental income per living unit, bed or square foot excludes the wellness centers as these properties have extensive indoor and outdoor recreation space not comparable to properties where rent is based on interior space only.
(9) Our medical office, clinic and biotech laboratory building, or MOB, leases include both triple net leases where, in addition to paying fixed rents, the tenants assume the obligation to operate and maintain the properties at their expense and net and modified leases where we are responsible to operate and maintain the properties and we charge tenants for some or all of the property operating costs. A small percentage of our MOB leases are so-called full-service leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.
(10) Private pay is revenues excluding Medicare and Medicaid revenues.
15
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
The following tables set forth information regarding lease expirations as of June 30, 2009 (dollars in thousands):
|
|
Annualized Rent |
|
Percent of
|
|
Cumulative
|
|
||||||||||
Year |
|
Short and Long
|
|
MOBs |
|
Wellness
|
|
Total |
|
Annualized
|
|
Current
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
2009 |
|
$ |
|
|
$ |
1,608 |
|
$ |
|
|
$ |
1,608 |
|
0.6% |
|
0.6% |
|
2010 |
|
1,333 |
|
2,558 |
|
|
|
3,891 |
|
1.3% |
|
1.9% |
|
||||
2011 |
|
|
|
1,989 |
|
|
|
1,989 |
|
0.7% |
|
2.6% |
|
||||
2012 |
|
|
|
5,737 |
|
|
|
5,737 |
|
2.0% |
|
4.6% |
|
||||
2013 |
|
32,416 |
|
3,596 |
|
|
|
36,012 |
|
12.3% |
|
16.9% |
|
||||
2014 |
|
|
|
5,744 |
|
|
|
5,744 |
|
2.0% |
|
18.9% |
|
||||
2015 |
|
2,072 |
|
5,320 |
|
|
|
7,392 |
|
2.5% |
|
21.4% |
|
||||
2016 |
|
2,875 |
|
3,847 |
|
|
|
6,722 |
|
2.3% |
|
23.7% |
|
||||
2017 |
|
29,171 |
|
1,299 |
|
|
|
30,470 |
|
10.4% |
|
34.1% |
|
||||
2018 |
|
|
|
1,793 |
|
|
|
1,793 |
|
0.6% |
|
34.7% |
|
||||
2019 and after |
|
158,052 |
|
15,257 |
|
17,069 |
|
190,378 |
|
65.3% |
|
100.0% |
|
||||
Total |
|
$ |
225,919 |
|
$ |
48,748 |
|
$ |
17,069 |
|
$ |
291,736 |
|
100.0% |
|
|
|
Average remaining lease term for all properties (weighted by rent) 13.1 years
|
|
Number of Tenants |
|
|
|
Cumulative |
|
||||||
Year |
|
Short and
|
|
MOBs |
|
Wellness
|
|
Total |
|
Percent of
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
19 |
|
|
|
19 |
|
8.8% |
|
8.8% |
|
2010 |
|
1 |
|
27 |
|
|
|
28 |
|
12.9% |
|
21.7% |
|
2011 |
|
|
|
22 |
|
|
|
22 |
|
10.1% |
|
31.8% |
|
2012 |
|
|
|
36 |
|
|
|
36 |
|
16.6% |
|
48.4% |
|
2013 |
|
1 |
|
20 |
|
|
|
21 |
|
9.7% |
|
58.1% |
|
2014 |
|
|
|
19 |
|
|
|
19 |
|
8.8% |
|
66.9% |
|
2015 |
|
2 |
|
18 |
|
|
|
20 |
|
9.2% |
|
76.1% |
|
2016 |
|
2 |
|
15 |
|
|
|
17 |
|
7.8% |
|
83.9% |
|
2017 |
|
2 |
|
12 |
|
|
|
14 |
|
6.5% |
|
90.4% |
|
2018 |
|
|
|
5 |
|
|
|
5 |
|
2.3% |
|
92.7% |
|
2019 and after |
|
4 |
|
10 |
|
2 |
|
16 |
|
7.3% |
|
100.0% |
|
Total |
|
12 |
|
203 |
|
2 |
|
217 |
|
100.0% |
|
|
|
16
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Number of Living Units or Beds or Square Feet with Leases Expiring
Year |
|
Short and
|
|
Percent of
|
|
MOBs
|
|
Wellness
|
|
Total Square
|
|
Percent of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
0.0% |
|
45,328 |
|
|
|
45,328 |
|
1.7% |
|
2010 |
|
140 |
|
0.5% |
|
81,416 |
|
|
|
81,416 |
|
3.1% |
|
2011 |
|
|
|
0.0% |
|
61,618 |
|
|
|
61,618 |
|
2.4% |
|
2012 |
|
|
|
0.0% |
|
289,628 |
|
|
|
289,628 |
|
11.1% |
|
2013 |
|
4,091 |
|
15.6% |
|
141,719 |
|
|
|
141,719 |
|
5.4% |
|
2014 |
|
|
|
0.0% |
|
148,963 |
|
|
|
148,963 |
|
5.7% |
|
2015 |
|
283 |
|
1.1% |
|
232,520 |
|
|
|
232,520 |
|
8.9% |
|
2016 |
|
517 |
|
2.0% |
|
114,227 |
|
|
|
114,227 |
|
4.4% |
|
2017 |
|
3,355 |
|
12.8% |
|
32,895 |
|
|
|
32,895 |
|
1.3% |
|
2018 |
|
|
|
0.0% |
|
48,174 |
|
|
|
48,174 |
|
1.8% |
|
2019 and after |
|
17,818 |
|
68.0% |
|
607,205 |
|
812,000 |
|
1,419,205 |
|
54.2% |
|
Total |
|
26,204 |
|
100.0% |
|
1,803,693 |
|
812,000 |
|
2,615,693 |
|
100.0% |
|
RESULTS OF OPERATIONS
|
|
2009 |
|
2008 |
|
Change |
|
% Change |
|
|||
|
|
(dollars in thousands, except per share amounts) |
|
|
|
|||||||
Rental income |
|
$ |
69,399 |
|
$ |
52,708 |
|
$ |
16,691 |
|
31.7% |
|
Interest and other income |
|
186 |
|
682 |
|
(496 |
) |
(72.7)% |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Property operating expenses |
|
3,219 |
|
100 |
|
3,119 |
|
3,119.0% |
|
|||
Interest expense |
|
10,707 |
|
9,810 |
|
897 |
|
9.1% |
|
|||
Depreciation expense |
|
18,635 |
|
14,327 |
|
4,308 |
|
30.1% |
|
|||
Acquisition costs |
|
1,282 |
|
|
|
1,282 |
|
|
|
|||
General and administrative |
|
5,231 |
|
4,533 |
|
698 |
|
15.4% |
|
|||
Impairment of assets |
|
|
|
2,940 |
|
(2,940 |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
30,511 |
|
$ |
21,680 |
|
$ |
8,831 |
|
40.7% |
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average shares outstanding |
|
120,455 |
|
100,302 |
|
20,153 |
|
20.1% |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income per share |
|
$ |
0.25 |
|
$ |
0.22 |
|
$ |
0.03 |
|
13.6% |
|
17
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Rental income increased because of rents earned from our real estate acquisitions since July 1, 2008, including $11.0 million of rental income in the second quarter of 2009 due to our acquisition of MOBs since June 2008, partially offset by a reduction in rental income resulting from the sale of three properties during the third quarter of 2008. Interest and other income decreased as a result of lower levels of investable cash and lower interest rates.
The increase in property operating expenses for the quarter ended June 30, 2009 is the result of our acquisition of MOBs since June 2008 and principally includes expenses related to real estate taxes, utilities, cleaning costs and property management fees paid to Reit Management & Research LLC, or RMR.
Interest expense increased because of greater amounts outstanding under our revolving credit facility offset by lower interest rates. Our weighted average balance outstanding and interest rate under our revolving credit facility was $200.1 million and 1.3%, and $87.6 million and 3.6%, for the three months ended June 30, 2009 and 2008, respectively. Interest expense also increased due to $61.3 million of debt assumed as part of our third quarter 2008 acquisitions.
Depreciation expense for the second quarter of 2009 increased because of acquisitions since July 1, 2008. Acquisition costs represent the closing costs associated with our acquisitions that are required to be expensed under U.S. Generally Accepted Accounting Principles, or GAAP, effective on January 1, 2009. General and administrative expenses increased in 2009 principally due to our acquisitions since July 1, 2008, higher legal fees, taxes and a loss on an equity investment.
Net income per share increased because of the changes in revenues and expenses described above offset by the effect of an increase in the weighted average number of shares outstanding resulting from our issuance of common shares in June 2008 and February 2009.
|
|
2009 |
|
2008 |
|
Change |
|
% Change |
|
|||
|
|
(in thousands, except per share amounts) |
|
|
|
|||||||
Rental income |
|
$ |
137,776 |
|
$ |
101,747 |
|
$ |
36,029 |
|
35.4% |
|
Interest and other income |
|
394 |
|
1,196 |
|
(802 |
) |
(67.1)% |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Property operating expenses |
|
6,174 |
|
100 |
|
6,074 |
|
6,074.0% |
|
|||
Interest expense |
|
21,483 |
|
19,328 |
|
2,155 |
|
11.1% |
|
|||
Depreciation expense |
|
37,024 |
|
27,376 |
|
9,648 |
|
35.2% |
|
|||
Acquisition costs |
|
1,394 |
|
|
|
1,394 |
|
|
|
|||
General and administrative |
|
10,051 |
|
8,203 |
|
1,848 |
|
22.5% |
|
|||
Impairment of assets |
|
|
|
2,940 |
|
(2,940 |
) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
62,044 |
|
$ |
44,996 |
|
$ |
17,048 |
|
37.9% |
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average shares outstanding |
|
119,161 |
|
95,691 |
|
23,470 |
|
24.5% |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income per share |
|
$ |
0.52 |
|
$ |
0.47 |
|
$ |
0.05 |
|
10.6% |
|
18
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Rental income increased because of rents earned from our real estate acquisitions since July 1, 2008, including $21.5 million of rental income in the six months ended June 30, 2009 due to our acquisition of MOBs since June 2008, partially offset by a reduction in rental income resulting from the sale of three properties during the third quarter of 2008. Interest and other income decreased as a result of lower levels of investable cash and lower interest rates.
The increase in property operating expenses for the six months ended June 30, 2009 is the result of our acquisition of MOBs since June 2008 and principally includes expenses related to real estate taxes, utilities, cleaning costs and property management fees paid to RMR.
Interest expense increased because of greater amounts outstanding under our revolving credit facility partially offset by lower interest rates. Our weighted average balance outstanding and interest rate under our revolving credit facility was $209.3 million and 1.3%, and $56.3 million and 3.8%, for the six months ended June 30, 2009 and 2008, respectively. Interest expense also increased due to $61.3 million of debt assumed as part of our third quarter 2008 acquisitions offset by our prepayment of a mortgage of $12.6 million on April 1, 2008.
Depreciation expense for the six months ended June 30, 2009 increased because of acquisitions since July 1, 2008. Acquisition costs represent the closing costs associated with our acquisitions that are required to be expensed under GAAP, effective on January 1, 2009. General and administrative expenses increased in 2009 principally due to our acquisitions since July 1, 2008, higher legal fees, state taxes and a loss on an equity investment.
Net income per share increased because of the changes in revenues and expenses described above offset by the effect of an increase in the weighted average number of shares outstanding resulting from our issuance of common shares in February and June 2008 and February 2009.
LIQUIDITY AND CAPITAL RESOURCES
Our principal source of funds to pay operating expenses, debt service and distributions to shareholders is rental income from our properties. We believe that our operating cash flow will be sufficient to meet our operating expenses, debt service and distributions on our shares for the foreseeable future. Our future cash flows from operating activities will depend primarily upon our ability to:
· maintain or improve the occupancy of, and the current rent rates at, our properties;
· control operating cost increases at our properties; and
· purchase additional properties which produce positive cash flows from operations.
Our Operating Liquidity and Resources
We generally receive minimum rents monthly or quarterly from our tenants and we receive percentage rents monthly, quarterly or annually. During the six months ended June 30, 2009, we generated $107.9 million of cash from operations and at June 30, 2009, we had $5.4 million of cash and cash equivalents.
19
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Our Investment and Financing Liquidity and Resources
In order to fund acquisitions and to accommodate cash needs that may result from timing differences between our receipts of rents and our need or desire to pay operating expenses and distributions to our shareholders, we maintain a revolving credit facility with a group of institutional lenders. This revolving credit facility permits us to borrow up to $550.0 million. Borrowings under our revolving credit facility are unsecured. We may borrow, repay and reborrow funds until maturity. No principal repayment is due until maturity. We pay interest on borrowings under the revolving credit facility at LIBOR plus a premium. This facility matures in December 2010. Subject to certain conditions, this credit facilitys maturity date can be extended at our option to December 31, 2011 upon payment of a fee.
In May 2008, we entered into a series of agreements to acquire 48 MOBs from HRPT Properties Trust, or HRP, for a total purchase price of $565.0 million. Through August 10, 2009, we own 42 of these properties for a total purchase price of approximately $527.6 million and one property with a value of approximately $3.0 million was removed from this contract. We have agreed to purchase the remaining four properties for approximately $28.9 million by February 2010; but we and HRP may agree to accelerate these closings. For more information concerning these purchases please see Note 2 to our Condensed Consolidated Financial Statements above and the subsection titled Related Persons Transactions below.
In February 2009, we issued 5.9 million common shares in a public offering, raising net proceeds of approximately $96.8 million. We used the net proceeds from this offering to repay borrowings outstanding on our revolving credit facility, to fund the real estate acquisitions described above and for general business purposes.
During the six months ended June 30, 2009, we purchased $24.2 million of improvements made to our properties that are leased to Five Star. We used cash on hand and borrowings under our revolving credit facility to fund these purchases. As a result of this purchase, the annual rent payable to us by Five Star increased by approximately $1.9 million.
At June 30, 2009, we had $5.4 million of cash and cash equivalents and $315.0 million available under our revolving credit facility. As a result of our completion of the FNMA financing on August 4, 2009, on August 10, 2009, we had approximately $154.7 million cash on hand, zero amounts outstanding under our revolving credit facility and the full $550.0 million available for drawing. We expect to use cash balances, borrowings under our revolving credit facility and net proceeds of offerings of equity or debt securities to fund future working capital requirements, property acquisitions and expenditures related to the repair, maintenance or renovation of our properties.
When significant amounts are outstanding under our revolving credit facility or as the maturity dates of our revolving credit facility and term debts approach, we will explore alternatives for the repayment of amounts due. Such alternatives may include incurring additional debt and issuing new equity securities. We have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities.
Recent capital markets conditions have been challenging. The availability and cost of credit have been and may continue to be adversely affected by illiquid debt markets and wide credit rate spreads, and equity markets have been extremely volatile. While we believe we will have access to various types of financings, including debt or equity, to fund our future acquisitions and to pay our debts and other obligations, there can be no assurance that we will be able to complete any debt or equity offerings or that our cost of any future financings will be reasonable. If current market conditions continue or worsen, one or more lenders under our revolving credit facility may be unable or unwilling to fund advances which we request, our lenders may be unable or unwilling to renew our credit facilities and we may not be able to access additional capital. Our ability to continue to access capital could be impacted by various factors, including general market conditions and the continuing recession in the U.S. economy, interest rates, credit ratings on our securities, the market price of our capital stock and the financial performance of our tenants. Also, the current market conditions have led to materially increased credit spreads which, if they continue, may result in material increases in the interest costs under our floating rate debts and our fixed rate debts when we refinance or when we incur new debt. These interest cost increases could have a material and adverse impact on our results of operations and financial conditions.
20
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
On February 13, 2009, we paid a $0.35 per common share, or $40.1 million, quarterly distribution to our common shareholders for the quarter ended December 31, 2008. On May 15, 2009, we paid a $0.35 per common share, or $42.2 million, quarterly distribution to our common shareholders for the quarter ended March 31, 2009. On July 1, 2009, we declared a quarterly distribution of $0.36 per common share, or $43.4 million, to be paid to our common shareholders of record on July 10, 2009 with respect to our results for the quarter ended June 30, 2009. We expect to pay this quarterly distribution on or about August 14, 2009, using cash on hand and, if necessary, borrowings under our revolving credit facility.
On August 4, 2009, we closed a $512.9 million mortgage financing with FNMA. This mortgage loan is secured by first liens on 28 senior living properties leased to Five Star. We used a portion of the proceeds from this mortgage financing to repay amounts outstanding under our revolving credit facility and to purchase three MOBs from HRP. We intend to use the balance of the proceeds to fund investments, including possibly accelerating the remaining MOB acquisitions from HRP, and for general business purposes. In connection with the FNMA transaction, we realigned our leases with Five Star, we purchased property and securities from Five Star and we reduced the rent payable by Five Star to us and Five Star assumed certain obligations to FNMA. For more information about the changes in our relationship with Five Star resulting from the FNMA transaction, please see Note 12 to our Condensed Consolidated Financial Statements above and the subsection titled Related Persons Transactions below.
In July 2009, we agreed to purchase, from an unaffiliated party, one senior living property for approximately $21.0 million. We intend to lease this property to Five Star. We expect to fund this acquisition using cash on hand and borrowings under our revolving credit facility, if needed. The purchase of this property is contingent upon completion of our diligence and other customary closing conditions. We can provide no assurance that we will purchase this property.
As of August 10, 2009, we have no off balance sheet arrangements, commercial paper, derivatives, swaps, hedges, joint ventures or partnerships.
Our principal debt obligations at June 30, 2009, were our unsecured revolving credit facility, two public issues of unsecured senior notes totaling $322.5 million and $134.9 million of mortgages secured by 33 of our properties. Our senior notes are governed by an indenture. The indenture for our unsecured senior notes and related supplements and our revolving credit facility contain a number of covenants which restrict our ability to incur debts, including debts secured by mortgages on our properties in excess of calculated amounts, require us to maintain a minimum net worth, restrict our ability to make distributions under certain circumstances and generally require us to maintain certain other financial ratios. As of June 30, 2009, we believe we were in compliance with all of the covenants under our indenture and related supplements, our revolving credit facility and our other debt obligations.
None of our indentures and related supplements, our revolving credit facility or our other debt obligations contains provisions for acceleration which could be triggered by our debt ratings. However, in certain circumstances, our revolving credit facility uses our senior debt rating to determine the fees and the interest rate payable.
21
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Our public debt indenture and related supplements contain cross default provisions to any other debts of $10.0 million or more. Similarly, our revolving credit facility contains a cross default provision to any other debts of $25.0 million or more that are recourse debts and to any other debts of $75.0 million or more that are non-recourse debts.
Related Persons Transactions
In May 2008, we entered into a series of agreements to acquire 48 MOBs from HRP for an aggregate purchase price of approximately $565.0 million. In January 2009, we acquired one of these MOBs containing 50,000 square feet for $19.3 million, plus closing costs. In May 2009, we acquired two of these MOBs from HRP containing 192,000 square feet for $50.8 million, plus closing costs. We recorded intangible lease assets of $4.1 million and intangible lease liabilities of $1.1 million for these MOBs acquired during the six months ended June 30, 2009. At the request of a tenant for a property subject to a multi-property lease, in May 2009 we sold one of our MOB properties classified as held for sale to an unaffiliated party for approximately $3.1 million which was its approximate net book value. On August 6, 2009, we acquired three of these MOBs from HRP containing 164,000 square feet for $115.7 million, plus closing costs. We now own 42 of these properties containing 1.9 million square feet for an aggregate purchase price of approximately $527.6 million, plus closing costs. One of the remaining buildings with an allocated value of $3.0 million is no longer subject to our purchase agreement and one of the MOBs we acquired from HRP which was subject to a multi-property lease was sold at the tenants request. We expect the closing of the purchase of the remaining four pending MOBs to occur by February 2010. We and HRP may mutually agree to accelerate the closings of these acquisitions. We funded these acquisitions using cash on hand, proceeds from mortgage financing, proceeds from equity issuances, borrowings under our revolving credit facility and by assuming three mortgage loans on two properties totaling $10.8 million with a weighted average interest rate of 7.1% per annum and a weighted average maturity in 2018. Our obligations to complete the pending purchase of the remaining four MOBs from HRP are subject to various conditions typical of commercial real estate purchases. We can provide no assurance that we will purchase any or all of these buildings or that the remaining purchases will be completed in 2010 or sooner. As of June 30, 2009, the MOBs that we acquired from HRP and which remain subject to our purchase agreements were 98% leased to approximately 210 tenants for an average lease term of 7.6 years. HRP was formerly our parent company, and both we and HRP are managed by RMR. Because we and HRP are both managed by RMR, the terms of these transactions were negotiated by special committees of our and HRPs boards of trustees composed of trustees who were not also trustees of both companies.
HRP was formerly our parent. We were spun off to HRPs shareholders in 1999 and, at the time of this spin off, we and HRP entered into a transaction agreement which, among other things, prohibited us from purchasing MOBs. Concurrently with the execution and delivery of the purchase agreements described above, we and HRP entered into an amendment to that transaction agreement, or the first amendment agreement, to permit us, rather than HRP, to invest in medical office, clinic and biomedical, pharmaceutical and laboratory buildings. The first amendment agreement is subject, in the case of mixed use buildings, to HRPs retaining the right to invest in any mixed use building for which the rentable square footage is less than 50% medical office, clinic and biomedical, pharmaceutical and laboratory use. Also, concurrently with the execution and delivery of the purchase agreements, we entered into a right of first refusal agreement under which we were granted a right of first refusal to purchase up to 45 additional identified other properties (containing approximately 4.6 million square feet of rental space) HRP owns which are leased to tenants in medical related businesses in the event HRP determines to sell such properties or in the event of an indirect sale as a result of HRPs change of control or a change of control of HRPs subsidiary which owns such properties.
22
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
Both we and HRP are managed by RMR, Barry Portnoy and Adam Portnoy own RMR and are Managing Trustees of both us and HRP and Frederick Zeytoonjian is an Independent Trustee of both us and HRP. Because of these relationships, the terms of our agreements entered in 2008 with HRP were negotiated and approved by special committees of our and HRPs boards composed of trustees of each company who are not trustees of both companies. For more information about the terms of the purchase agreements, the first amendment agreement and the right of first refusal agreement between us and HRP, please read these agreements, copies of which are filed as exhibits to our Current Report on Form 8-K dated May 9, 2008, copies of which are available at the SEC website: www.sec.gov.
Five Star is our largest tenant. Five Star is our former subsidiary. In addition to being our manager, RMR also provides management services to Five Star. One of our trustees, Barry Portnoy, is currently a Managing Director of Five Star. Because of these and other relationships we and Five Star may be considered related persons. As of June 30, 2009, we leased 181 senior living communities and two rehabilitation hospitals to Five Star for total annual minimum rent of $178.5 million. Because of the relationships between us and Five Star, all of our transactions with Five Star are separately approved by our Independent Trustees and Five Stars independent directors.
During the six months ended June 30, 2009, pursuant to the terms of our existing leases with Five Star, we purchased $24.2 million of improvements made to our properties leased to Five Star, and, as a result, the annual rent payable to us by Five Star was increased by approximately $1.9 million.
On August 4, 2009, we closed a $512.9 million mortgage financing with FNMA. This mortgage loan is secured by first liens on 28 senior living properties that we own and lease to Five Star with 5,618 living units / beds located in 16 states. We used a portion of the proceeds from this mortgage financing to repay amounts outstanding under our revolving credit facility and to purchase three MOBs from HRP. We intend to use the balance of the proceeds to fund investments, including possibly accelerating the remaining MOB acquisitions from HRP, and for general business purposes. In connection with the FNMA transaction, we realigned our four leases with Five Star. Lease no. 1 (which is comprised of four separate leases) now includes 80 properties, including independent living communities, assisted living communities and skilled nursing facilities, and expires in 2024. Lease no. 2 now includes 50 properties, including independent living communities, assisted living communities, skilled nursing facilities and two rehabilitation hospitals, and expires in 2026. Lease no. 3 now includes the 28 FNMA financed properties, including independent living communities and assisted living communities, and expires in 2028. Lease no. 4 now includes 25 properties, including independent living communities, assisted living communities and skilled nursing facilities, and expires in 2017. In connection with the lease realignment and the FNMA financing, we entered into a lease realignment agreement with Five Star, or the Realignment Agreement. Pursuant to the terms of the Realignment Agreement, (1) the four leases, or the Leases, were reconfigured as described above, (2) we acquired certain personal property located at 28 properties in 16 states , or the Properties, from subsidiaries of Five Star and pledged that property to FNMA, (3) we purchased 3,200,000 shares, or the Shares, of common stock, $.01 par value per share, which represent approximately 9% of the total common stock outstanding of Five Star, (4) Five Star agreed to undertake certain reporting and other operating obligations required by FNMA and (5) subsidiaries of Five Star pledged certain tangible and intangible personal property, such as accounts receivable and contract rights, located at, or arising from the operations of, the Properties to secure their obligations under the Lease under which the Properties are leased and certain of their obligations relating to the $512.9 million secured term loan, or the Loan. To compensate Five Star for the sale of its personal property, the sale of the Shares, the pledge of intangible assets and for the services and obligations that Five Star has assumed, (1) we reduced the annual rent payable to us under one of the Leases, but not the lease under which the Properties are leased, by $2.0 million per year for the term of that Lease, which will expire in 2026; (2) we paid Five Star a total of $18.6 million; and (3) we agreed to reimburse Five Star for its out of pocket expenses incurred in connection with the negotiation and closing of this transaction. Five Star has granted certain registration rights to us with regard to the Shares. For more information about this FNMA financing and the agreement we entered with Five Star to facilitate this financing please see Part II, Item 5 of this Quarterly Report on Form 10-Q.
23
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (continued)
In July 2009, we agreed to purchase, from an unaffiliated party, one senior living property for approximately $21.0 million. We intend to lease this property to Five Star. We expect to fund this acquisition using cash on hand and borrowings under our revolving credit facility, if needed. The purchase of this property is contingent upon completion of our diligence and other customary closing conditions. We can provide no assurance that we will purchase this property.
Under the terms of our business management agreement with RMR, on April 8, 2009 we issued 55,814 common shares in payment of an incentive fee of approximately $789,000 for services rendered by RMR during 2008.
As of June 30, 2009, we have invested $5.1 million in Affiliates Insurance Company, or AIC, an insurance company, that is also owned by RMR and other companies to which RMR provides management services. We own 16.67% of the common shares of AIC which has a current carrying value of $5.0 million. Subsequent to June 30, 2009, we invested an additional $35,630 in order to fund our share of formation and licensing costs.
For more information about our dealings with our managing trustees, RMR, Five Star, HRP and their affiliates and our investments in AIC and about the risks which may arise as a result of these related person transactions , please see our Annual Report on Form 10-K for the year ended December 31, 2008, or the Annual Report, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, or the First Quarter Report, the other Items in this Quarterly Report on Form 10-Q, and our other filings made with the SEC, and in particular, the section captioned Risk Factors in the Annual Report, the sections captioned Managements Discussion and Analysis of Financial Condition and Results of Operations Related Person Transactions in the Annual Report, First Quarter Report and this Quarterly Report on Form 10-Q and the section captioned Related Person Transactions and Company Review of Such Transactions in our Proxy Statement dated March 30, 2009, or our Proxy Statement, relating to our 2009 Annual Shareholders Meeting.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates is unchanged since December 31, 2008. Other than as described below, we do not foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the future.
At June 30, 2009, our outstanding fixed rate debt included the following (dollars in thousands):
Debt |
|
Principal
|
|
Annual
|
|
Annual
|
|
Maturity |
|
Interest
|
|
||
Unsecured senior notes |
|
$ |
225,000 |
|
8.625% |
|
$ |
19,406 |
|
2012 |
|
Semi-Annually |
|
Unsecured senior notes |
|
97,500 |
|
7.875% |
|
7,678 |
|
2015 |
|
Semi-Annually |
|
||
Mortgages |
|
49,778 |
|
6.54% |
|
3,255 |
|
2017 |
|
Monthly |
|
||
Mortgages |
|
33,435 |
|
6.97% |
|
2,330 |
|
2012 |
|
Monthly |
|
||
Mortgage |
|
14,896 |
|
6.91% |
|
1,029 |
|
2013 |
|
Monthly |
|
||
Mortgages |
|
11,593 |
|
6.11% |
|
708 |
|
2013 |
|
Monthly |
|
||
Mortgage |
|
4,421 |
|
6.50% |
|
287 |
|
2013 |
|
Monthly |
|
||
Mortgage |
|
4,054 |
|
7.31% |
|
296 |
|
2022 |
|
Monthly |
|
||
Mortgage |
|
1,980 |
|
7.85% |
|
155 |
|
2022 |
|
Monthly |
|
||
Bonds |
|
14,700 |
|
5.875% |
|
864 |
|
2027 |
|
Semi-Annually |
|
||
|
|
$ |
457,357 |
|
|
|
$ |
36,008 |
|
|
|
|
|
24
Item 3. Quantitative and Qualitative Disclosures About Market Risk (continued)
No principal payments are due under our unsecured notes or bonds until maturity. Our mortgages require principal and interest payments through maturity pursuant to amortization schedules. Because these debts bear interest at a fixed rate, changes in market interest rates during the term of these debts will not affect our operating results. If these debts are refinanced at interest rates which are 10% higher or lower than shown above, our per annum interest cost would increase or decrease by approximately $2.7 million. Changes in market interest rates also affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at June 30, 2009, and discounted cash flow analysis through the maturity date of our fixed rate debt obligations, a hypothetical immediate 10% change in interest rates would change the fair value of those obligations by approximately $12.5 million.
We are allowed to make prepayments of our unsecured senior notes, in whole or in part, at par plus a premium, as defined. Our mortgages contain provisions that allow us to make repayment at par plus premiums which is generally designed to preserve a stated yield to the mortgage holder. Also, we occasionally have the opportunity to purchase our outstanding debt by open market purchases. These prepayment rights may afford us the opportunity to mitigate the risk of refinancing at maturity.
Our unsecured revolving credit facility accrues interest at floating rates and matures in December 2010. Subject to certain conditions, this credit facilitys maturity date can be extended at our option to December 31, 2011 upon payment of a fee. At June 30, 2009, we had $235.0 million outstanding and $315.0 million available for borrowing under our revolving credit facility. At August 10, 2009, we had no amounts outstanding and $550.0 million available for borrowing under our revolving credit facility. We may make repayments and drawings under our revolving credit facility at any time without penalty. We borrow in U.S. dollars and borrowings under our revolving credit facility accrue interest at LIBOR plus a premium. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR. A change in interest rates would not affect the value of this floating rate debt but would affect our operating results. For example, the weighted average interest rate payable on our outstanding revolving indebtedness of $235.0 million at June 30, 2009 was 1.3% per annum. The following table presents the impact a 10% change in interest rates would have on our floating rate interest expense at June 30, 2009 (dollars in thousands):
|
|
Impact of Changes in Interest Rates |
|
||||||
|
|
Interest Rate
|
|
Outstanding
|
|
Total Interest
|
|
||
At June 30, 2009 |
|
1.30% |
|
$ |
235,000 |
|
$ |
3,055 |
|
10% reduction |
|
1.17% |
|
$ |
235,000 |
|
$ |
2,750 |
|
10% increase |
|
1.43% |
|
$ |
235,000 |
|
$ |
3,360 |
|
The foregoing table shows the impact of an immediate change in floating interest rates. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our revolving credit facility or other floating rate debt. The following table presents the impact a 10% change in interest rates would have on our floating rate interest expense at June 30, 2009 if we were fully drawn on our revolving credit facility (dollars in thousands):
|
|
Impact of Changes in Interest Rates |
|
||||||
|
|
Interest Rate
|
|
Outstanding
|
|
Total Interest
|
|
||
At June 30, 2009 |
|
1.30% |
|
$ |
550,000 |
|
$ |
7,150 |
|
10% reduction |
|
1.17% |
|
$ |
550,000 |
|
$ |
6,435 |
|
10% increase |
|
1.43% |
|
$ |
550,000 |
|
$ |
7,865 |
|
25
Item 3. Quantitative and Qualitative Disclosures About Market Risk (continued)
On August 4, 2009, we closed a FNMA mortgage financing for approximately $513.0 million. A part of this borrowing is at a fixed interest rate and a part is at a floating rate calculated as a spread above LIBOR. The impact that a change in interest rate will be the combined impact of that change upon the value of the fixed rate part of this loan and the change in interest expense we would incur on the floating rate part of this loan. For example, at the time we closed this FNMA mortgage loan, our effective weighted average annual interest rate payable on the full amount of this loan was 6.59%. If interest rates increase 10% of current rates, the impact upon us would be to change the value of this obligation and change our interest expense as set forth in the following table:
|
|
Impact of Changes in Interest Rates |
|
|||
|
|
Weighted Average
|
|
Annual Interest
|
|
|
At August 4, 2009 |
|
6.59% |
|
$ |
33,813 |
|
10% reduction |
|
6.34% |
|
$ |
32,496 |
|
10% increase |
|
6.85% |
|
$ |
35,129 |
|
(1) |
A portion of the loan requires interest at a fixed rate of 6.71% and a portion of the loan requires interest at a variable rate of 6.415%. This table assumes a 10% interest rate change on the variable portion of the loan. |
Also, we have arranged with FNMA to cap, or limit, the interest rate increases which will impact the interest expense we will pay on the floating rate part of this loan. The net effect of this cap arrangement is that the annual effective interest rate on the full amount of this loan we may be required to pay is 7.79%.
Changes in market interest rates also affect the fair value of our mortgage debt obligation; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the initial balance of the mortgage and discounted cash flow analyses, and using our current fixed rate interest rate of 6.71%, a hypothetical immediate 10% change in interest rates would change the fair value of the fixed rate portion of this mortgage debt obligation by approximately $14.1 million.
We also have the option to prepay our FNMA obligations in order to mitigate the risks of refinancing or for other reasons. The fixed rate portion of this loan may be prepaid during the first 114 months of the loan term subject to our paying a standard make whole premium and thereafter for a fixed percent premium of the amount prepaid which is reduced to zero in the last six months of this ten year loan. The floating rate portion may be prepaid after one year for a fixed premium percent of the amount prepaid which is also reduced to zero in the last six months of this ten year loan.
Item 4. Controls and Procedures
As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, President and Chief Operating Officer and Treasurer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to the Securities Exchange Act of 1934, as amended, Rules 13a-15 and 15d-15. Based upon that evaluation, our Managing Trustees, President and Chief Operating Officer and Treasurer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
26
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL SECURITIES LAWS. WHENEVER WE USE WORDS SUCH AS BELIEVE, EXPECT, ANTICIPATE, INTEND, PLAN, ESTIMATE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:
· OUR RESPONSIBILITIES UNDER THE FNMA LOAN AND OUR EXPECTED USE OF THE PROCEEDS THEREOF;
· OUR ABILITY TO PURCHASE OR SELL PROPERTIES;
· OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL;
· OUR ABILITY TO PAY INTEREST AND DEBT PRINCIPAL AND MAKE DISTRIBUTIONS;
· OUR ABILITY TO RETAIN OUR EXISTING TENANTS AND MAINTAIN OR INCREASE CURRENT RENTAL RATES;
· OUR AGREEMENTS TO PURCHASE CERTAIN MOBS;
· OUR AGREEMENTS TO PURCHASE CERTAIN SENIOR LIVING PROPERTIES;
· OUR ENTRY INTO AGREEMENTS TO SELL PROPERTIES CLASSIFIED AS HELD FOR SALE ON OUR CONSOLIDATED BALANCE SHEET;
· OUR PARTICIPATING IN THE INSURANCE COMPANY BEING FORMED WITH RMR AND COMPANIES TO WHICH RMR PROVIDES MANAGEMENT SERVICES; AND
· OTHER MATTERS.
OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FUNDS FROM OPERATIONS, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:
· THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS, INCLUDING THE RECENT CHANGES IN THE CAPITAL MARKETS, ON US AND OUR TENANTS;
· ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR MANAGING TRUSTEES, FIVE STAR, RMR AND THEIR AFFILIATES;
· CHANGES IN FEDERAL, STATE AND LOCAL LEGISLATION, GOVERNMENTAL REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS; AND
· COMPETITION WITHIN THE REAL ESTATE INDUSTRY OR THOSE INDUSTRIES IN WHICH OUR TENANTS OPERATE.
27
FOR EXAMPLE:
· |
THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT THE FIXED RATE PORTION OF THE FNMA MORTGAGE LOAN MAY BE PREPAID SUBJECT TO STANDARD FNMA PREPAYMENT TERMS, THAT THE FLOATING RATE PORTION OF THE LOAN MAY BE PREPAID AT 101% OF PAR VALUE AFTER ONE YEAR AND THAT, SUBJECT TO CERTAIN CONDITIONS, COLLATERAL PROPERTIES MAY BE RELEASED FROM THE MORTGAGE LIEN AS THE LOAN IS PREPAID. THE IMPLICATION OF THESE STATEMENTS MAY BE THAT WE WILL PREPAY THIS MORTGAGE LOAN. IN FACT, WE HAVE NOT DECIDED WHETHER OR WHEN TO PREPAY THIS MORTGAGE AND THAT DECISION WILL BE MADE BASED UPON OUR CIRCUMSTANCES AND MARKET CONDITIONS IN THE FUTURE. THERE CAN BE NO ASSURANCE THAT THIS LOAN WILL BE PREPAID OR THAT ANY COLLATERAL WILL BE RELEASED; |
|
|
· |
THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT FIVE STAR HAS AGREED TO UNDERTAKE CERTAIN REPORTING AND OTHER REQUIREMENTS UNDER THE FNMA MORTGAGE LOAN TO US. AN IMPLICATION OF THIS STATEMENT MAY BE THAT WE HAVE BEEN RELEASED OF THESE OBLIGATIONS TO FNMA. IN FACT, WE REMAIN RESPONSIBLE TO FNMA FOR ALL REQUIREMENTS ARISING UNDER THE MORTGAGE AND LOAN DOCUMENTS AND WE WILL BE RESPONSIBLE TO PERFORM THE OBLIGATIONS WHICH FIVE STAR HAS ASSUMED IN THE EVENT FIVE STAR FAILS TO SATISFY THESE OBLIGATIONS. ALSO, CERTAIN OF THE OBLIGATIONS ARISING UNDER THE MORTGAGE DOCUMENTS RELATE TO FIVE STARS OPERATIONS OF THE MORTGAGED PROPERTIES WHICH MAY BE BEYOND OUR CAPACITY TO PERFORM; |
|
|
· |
THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE INTEND TO USE THE PROCEEDS OF THE FNMA MORTGAGE LOAN, AMONG OTHER PURPOSES, TO FUND INVESTMENTS AND POSSIBLY TO ACCELERATE THE REMAINING PURCHASE OF MOBS FROM HRP. WE ARE CURRENTLY CONSIDERING SEVERAL ACQUISITION OPPORTUNITIES; HOWEVER, THERE CAN BE NO ASSURANCE THAT WE WILL CONCLUDE ANY OF THESE ACQUISITIONS OR THAT ALTERNATIVE ACQUISITIONS WILL BE IDENTIFIED AND CLOSED. ALTHOUGH WE AND HRP HAVE PREVIOUSLY AGREED UPON TERMS FOR OUR PURCHASE OF CERTAIN MEDICAL OFFICE BUILDINGS, THE CLOSINGS OF THESE SALES REMAIN SUBJECT TO SATISFACTION OF CUSTOMARY REAL ESTATE CLOSING CONDITIONS AND WE DO NOT HAVE THE UNILATERAL RIGHT TO ACCELERATE THESE CLOSINGS WHICH ARE NOW SCHEDULED TO OCCUR BY FEBRUARY 2010. IN PARTICULAR, INVESTORS SHOULD NOTE THAT WE AND HRP ARE BOTH MANAGED BY RMR AND HAVE CERTAIN COMMON TRUSTEES; ACCORDINGLY, ANY CHANGE TO ACCELERATE THE CLOSINGS OF SALES BY HRP TO US WILL REQUIRE THE SEPARATE APPROVALS OF TRUSTEES OF US AND HRP, RESPECTIVELY, WHO ARE NOT ALSO TRUSTEES OF THE OTHER COMPANY; |
|
|
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THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT THE TERMS OF THE AGREEMENT BETWEEN US AND FIVE STAR ANNOUNCED IN THIS QUARTERLY REPORT ON FORM 10-Q WERE NEGOTIATED BY SPECIAL COMMITTEES OF THE BOARDS OF US AND FIVE STAR COMPOSED ONLY OF OUR TRUSTEES AND FIVE STAR DIRECTORS WHO ARE NOT ALSO TRUSTEES AND DIRECTORS OF THE OTHER COMPANY. THE IMPLICATION OF THIS STATEMENT MAY BE THAT THIS AGREEMENT WAS NEGOTIATED ON AN ARMS LENGTH BASIS AND MAY NOT BE LEGALLY CHALLENGED BECAUSE THIS AGREEMENT PROVIDES A FAIR EXCHANGE OF CONSIDERATION BETWEEN US AND FIVE STAR. IN FACT: (I) FIVE STAR WAS FORMERLY A 100% OWNED SUBSIDIARY OF US AND FIVE STAR BECAME A SEPARATELY OWNED PUBLIC COMPANY AS A RESULT OF A SPIN OFF TO OUR SHAREHOLDERS IN 2001; (II) RMR PROVIDES MANAGEMENT SERVICES TO BOTH US AND FIVE STAR; (III) THE OFFICERS OF BOTH US AND FIVE STAR ARE ALSO OFFICERS OF RMR; (IV) RMR AND ITS OFFICERS PROVIDED INFORMATION AND ASSISTANCE TO THE SPECIAL COMMITTEES OF BOTH US AND FIVE STAR; (V) THE MEMBERS OF THE SPECIAL COMMITTEES OF BOTH US AND FIVE STAR ALSO SERVE AS TRUSTEES OR DIRECTORS OF OTHER COMPANIES MANAGED BY RMR; AND (VI) WE AND FIVE STAR HAVE EXTENSIVE AND CONTINUING BUSINESS WITH EACH OTHER. ALTHOUGH WE BELIEVE THAT THIS AGREEMENT IS FAIR TO US, IN THE CIRCUMSTANCES OF THE MULTIPLE RELATIONSHIPS AMONG FIVE STAR AND US, IT IS POSSIBLE THAT LITIGATION MAY BE BROUGHT ALLEGING THAT THIS AGREEMENT IS UNFAIR TO US OR TO FIVE STAR. LITIGATION MAY BE EXPENSIVE AND DISTRACTING TO MANAGEMENT. WE CAN PROVIDE NO ASSURANCE THAT OUR ENTRY INTO THE AGREEMENT WITH FIVE STAR ANNOUNCED IN THIS QUARTERLY REPORT ON FORM 10-Q WILL NOT CAUSE US TO BECOME INVOLVED IN LITIGATION THAT CHALLENGES THE FAIRNESS OF THE CONSIDERATION WE HAVE EXCHANGED WITH FIVE STAR. SUCH ALLEGATIONS OR LITIGATION COULD CAUSE OUR SHARE TRADING PRICE TO DECLINE AND THE OUTCOME OF SUCH LITIGATION IS IMPOSSIBLE TO PREDICT; |
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OUR OBLIGATIONS TO COMPLETE THE CURRENTLY PENDING MOB PURCHASES ARE SUBJECT TO VARIOUS CONDITIONS TYPICAL OF LARGE COMMERCIAL REAL ESTATE PURCHASES. AS A RESULT OF ANY FAILURE OF THESE CONDITIONS, SOME OF THE PROPERTIES MAY NOT BE PURCHASED OR SOME OF THESE PURCHASES MAY BE ACCELERATED OR DELAYED; |
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THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE HAVE ENTERED INTO A PURCHASE AND SALE AGREEMENT TO ACQUIRE ONE PROPERTY FROM AN UNAFFILIATED PARTY. OUR OBLIGATION TO COMPLETE THIS PURCHASE IS SUBJECT TO VARIOUS CONDITIONS TYPICAL OF LARGE COMMERCIAL REAL ESTATE PURCHASES. AS A RESULT OF ANY FAILURE OF THESE CONDITIONS, THIS PROPERTY MAY NOT BE PURCHASED. ALSO, THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT IF THIS PROPERTY IS PURCHASED IT WILL BE LEASED TO FIVE STAR. THE FINAL TERMS OF OUR LEASE FOR THIS PROPERTY HAVE NOT YET BEEN AGREED AND, BECAUSE OF THE MULTIPLE RELATIONSHIPS AMOUNG US, FIVE STAR AND RMR, THESE TERMS WILL BE SUBJECT TO APPROVAL BY OUR TRUSTEES AND FIVE STARS DIRECTORS WHO ARE NOT ALSO TRUSTEES OR DIRECTORS OF THE OTHER COMPANIES. ACCORDINGLY, THIS LEASE MAY NOT BE ENTERED; |
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OUR PARTICIPATION IN THE INSURANCE BUSINESS WITH RMR AND ITS AFFILIATES INVOLVES POTENTIAL FINANCIAL RISKS AND REWARDS TYPICAL OF ANY START UP BUSINESS VENTURE AS WELL AS OTHER FINANCIAL RISKS AND REWARDS SPECIFIC TO INSURANCE COMPANIES. AMONG THE RISKS THAT ARE SPECIFIC TO INSURANCE COMPANIES IS THE RISK THAT AIC MAY NOT BE ABLE TO |
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ADEQUATELY PAY CLAIMS WHICH COULD LEAVE OUR COMPANY UNDERINSURED AND INCREASE ITS FUNDING EXPOSURE FOR CLAIMS THAT MIGHT OTHERWISE HAVE BEEN FUNDED IF INSURANCE WAS PURCHASED FROM FINANCIALLY MORE SECURE INSURERS. ACCORDINGLY, OUR EXPECTED FINANCIAL BENEFITS FROM OUR INITIAL OR FUTURE INVESTMENTS IN AIC MAY BE DELAYED OR MAY NOT OCCUR AND AIC MAY REQUIRE A LARGER INVESTMENT THAN WE EXPECT; |
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IF THE AVAILABILITY OF DEBT CAPITAL REMAINS RESTRICTED OR BECOMES MORE RESTRICTED, WE MAY BE UNABLE TO REFINANCE OR REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE OR ON TERMS WHICH ARE AS FAVORABLE AS WE NOW HAVE; |
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OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS DEPENDS UPON OUR FUTURE EARNINGS. WE MAY BE UNABLE TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS AND FUTURE DISTRIBUTIONS MAY BE SUSPENDED OR PAID AT A LESSER RATE THAN THE DISTRIBUTIONS WE NOW PAY; |
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OUR ABILITY TO GROW OUR BUSINESS AND PAY OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS WHICH EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES; |
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SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO LOCATE NEW TENANTS TO MAINTAIN THE HISTORICAL OCCUPANCY RATES OF OUR PROPERTIES; |
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RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE; AND |
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OUR TENANTS MAY EXPERIENCE LOSSES AND BECOME UNABLE TO PAY OUR RENTS. |
THESE RESULTS COULD OCCUR DUE TO MANY DIFFERENT REASONS, SOME OF WHICH, SUCH AS NATURAL DISASTERS OR CHANGES IN OUR TENANTS REVENUES OR COSTS, OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY, ARE BEYOND OUR CONTROL.
OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN OUR FORWARD LOOKING STATEMENTS ARE DESCRIBED MORE FULLY UNDER ITEM 1A. RISK FACTORS IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2008.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
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STATEMENT CONCERNING LIMITED LIABILITY
THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE DECLARATION OF TRUST ESTABLISHING SENIOR HOUSING PROPERTIES TRUST, DATED SEPTEMBER 20, 1999, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO, IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME SENIOR HOUSING PROPERTIES TRUST REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST, AS AMENDED AND SUPPLEMENTED, AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SENIOR HOUSING PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SENIOR HOUSING PROPERTIES TRUST. ALL PERSONS DEALING WITH SENIOR HOUSING PROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SENIOR HOUSING PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
As further described in our Annual Report on Form 10-K for the year ended December 31, 2008, RMR provides management services to us. Under the terms of our business management agreement with RMR, on April 8, 2009, we issued 55,814 common shares to RMR in payment of an incentive fee for services rendered by RMR during 2008. We issued these shares pursuant to an exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act.
On May 18, 2009, we granted 2,000 common shares of beneficial interest, par value $0.01 per share, valued at $15.45 per share, the closing price of our common shares on the New York Stock Exchange on that day, to each of our five trustees. We made these grants pursuant to an exemption from registration contained in Section 4(2) of the Securities Act.
Item 4. Submission of Matters to a Vote of Security Holders
At our regular annual meeting held on May 18, 2009, our shareholders re-elected Jeffrey P. Somers (106,516,997 shares voted for and 6,191,988 shares withheld) as one of our Independent Trustees and re-elected Barry M. Portnoy (100,465,063 shares voted for and 12,243,922 shares withheld) as one of our Managing Trustees. The term of office of Mr. Somers and Mr. Portnoy will extend until our annual meeting of shareholders in 2012. Messrs. John L. Harrington, Adam D. Portnoy and Frederick N. Zeytoonjian continue to serve as trustees with terms of office expiring in 2010, 2010 and 2011, respectively.
Entry into Term Loan
On August 4, 2009, one of our wholly-owned special purpose subsidiaries, or the Subsidiary, closed the Loan originated by Citibank, N.A. and assigned to FNMA. A portion of the Loan requires interest at a fixed rate and a portion of the Loan requires interest at a floating rate over LIBOR. The floating rate is capped so that the maximum interest rate payable during the term of the Loan on the full amount of the Loan is 7.79%. The current weighted average interest rate is 6.59% per annum. The Loan matures on September 1, 2019 and payments of principal and interest are based upon 30-year amortization. The fixed rate portion of the Loan may be prepaid at any time subject to standard FNMA prepayment terms. The floating rate portion of the Loan may be prepaid at any time after the first anniversary of the Loan (including a 1% prepayment premium) and, subject to certain conditions, collateral properties may be released from the mortgage lien upon partial prepayment of the Loan.
The Subsidiary, together with two other special purpose subsidiaries that guaranty the Loan, own the Properties, which are leased and subleased to certain subsidiaries of Five Star. The Loan is secured by mortgages on the Properties. The Loan is non-recourse to us and our subsidiaries, other than the Subsidiary and the two guarantor subsidiaries. We guaranty certain specific recourse obligations of the Subsidiary, including losses arising out of the misapplication of rents, and we agreed to indemnify FNMA against certain losses relating to risks relating to transfers of certain licenses and assets by Five Star or its subsidiaries or arising from certain misapplications of funds by the applicable Five Star subsidiaries.
We have agreed to comply with certain net worth and liquidity covenants until certain licenses and assets relating to the Properties are transferred by the existing Five Star subsidiary subtenants to new special purpose Five Star subsidiaries. Other affirmative and negative covenants apply to the Subsidiary and the two guarantor subsidiaries which generally restrict their ability to (among other things) incur debt or make distributions under certain circumstances. Additional covenants prohibit a change in control of us, the Subsidiary or either of the two guarantor subsidiaries.
The entire amount of the Loan was drawn on August 4, 2009. We used a portion of the amount drawn to repay amounts outstanding under our existing unsecured revolving credit facility and to purchase three MOBs from HRP. We intend to use the balance of the proceeds to fund investments, including possibly accelerating the closing of remaining MOB acquisitions from HRP, and for general business purposes.
Reconfiguration of Leases
Prior to this transaction, we leased 183 senior living communities to Five Star under the Leases. I n order to assist us in completing the Loan, on August 4, 2009, we entered into the Realignment Agreement. Pursuant to the terms of the Realignment Agreement, (1) the Leases were reconfigured as described below, (2) we acquired certain personal property located at the
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Properties from subsidiaries of Five Star and pledged that property to FNMA, (3) we purchased the Shares, $.01 par value per share, which represent approximately 9% of the total common stock outstanding of Five Star, (4) Five Star agreed to undertake certain reporting and other operating obligations required by FNMA and (5) subsidiaries of Five Star pledged certain tangible and intangible personal property, such as accounts receivable and contract rights, located at, or arising from the operations of, the Properties to secure their obligations under the Lease under which the Properties are leased and certain of their obligations relating to the Loan. To compensate Five Star for the sale of its personal property, the sale of the Shares, the pledge of intangible assets and for the services and obligations that Five Star has assumed, (1) we reduced the annual rent payable to us under one of the Leases, but not the lease under which the Properties are leased, by $2.0 million per year for the term of that Lease, which will expire in 2026; (2) we paid Five Star a total of $18.6 million; and (3) we agreed to reimburse Five Star for its out of pocket expenses incurred in connection with the negotiation and closing of this transaction. Five Star has granted certain registration rights to us with regard to the Shares.
As a result of this transaction, the Leases were reconfigured so that the Properties, which are mortgaged to FNMA, are all leased under a single Lease which includes independent living communities and assisted living communities and has an initial term that expires in 2028. Lease no. 1 (which is comprised of four separate leases) now includes 80 properties, including independent living communities, assisted living communities and skilled nursing facilities and has an initial term that expires in 2024. Lease no. 2 now includes 50 properties, including independent living communities, assisted living communities, skilled nursing facilities and two rehabilitation hospitals and has an initial term that expires in 2026. Lease no. 4 now includes 25 properties, including independent living communities, assisted living communities and skilled nursing facilities and has an initial term that expires in 2017.
The terms of the Realignment Agreement described above were negotiated and approved by special committees of our Independent Trustees and Five Stars independent directors, none of whom are trustees or directors of the other company. Each special committee was represented by separate counsel.
For more information about our dealings with our managing trustees, RMR, Five Star, HRP and their affiliates and about the risks which may arise as a result of these related person transactions, please see our Annual Report, our First Quarter Report, the other Items in this Quarterly Report on Form 10-Q, and our other filings made with SEC, and in particular, the section captioned Risk Factors in the Annual Report, the sections captioned Managements Discussion and Analysis of Financial Condition and Results of Operations Related Person Transactions in the Annual Report, First Quarter Report and this Quarterly Report on Form 10-Q and the section captioned Related Person Transactions and Company Review of Such Transactions in our Proxy Statement relating to our 2009 Annual Shareholders Meeting.
The descriptions above are qualified in their entirety by reference to the copies of the Master Credit Facility Agreement , the Realignment Agreement, the Leases and other documents filed as exhibits to this Quarterly Report on Form 10-Q and incorporated herein by reference.
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10.1 Summary of Trustee Compensation. (Incorporated by reference to the Companys Current Report on Form 8-K dated May 19, 2009)
10.2 Second Amendment to Purchase Agreement dated May 20, 2009 by and between Hub Properties Trust and Senior Housing Properties Trust (Amelia Building, Norfolk, Virginia). (Incorporated by reference to the Companys Current Report on Form 8-K dated July 7, 2009)
10.3 Second Amendment to Purchase Agreement dated May 20, 2009 by and between Hub Properties Trust and Senior Housing Properties Trust (1145 19 th Street, N.W., Washington, D.C.). (Incorporated by reference to the Companys Current Report on Form 8-K dated July 7, 2009)
10.4 Master Credit Facility Agreement, dated as of August 4, 2009, by and between SNH FM Financing LLC and Citibank, N.A., and acknowledged and agreed to by SNH FM Financing Trust and Ellicott City Land I, LLC. (Filed herewith)
10.5 Key Principal Guaranty and Indemnity Agreement, dated as of August 4, 2009, by Senior Housing Properties Trust for the benefit of Citibank, N.A. (Filed herewith)
10.6 Lease Realignment Agreement, dated as of August 4, 2009, by and among Senior Housing Properties Trust and certain of its affiliates, and Five Star Quality Care, Inc. and certain of its affiliates. (Filed herewith)
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10.7 Amended and Restated Master Lease Agreement (Lease no. 1), dated as of August 4, 2009, by and among certain affiliates of Senior Housing Properties Trust, as Landlord, and Five Star Quality Care Trust, as Tenant. (Filed herewith)
10.8 Amended and Restated Guaranty Agreement (Lease no. 1), dated as of August 4, 2009, made by Five Star Quality Care, Inc., as Guarantor, for the benefit of certain affiliates of Senior Housing Properties Trust. (Filed herewith)
10.9 Amended and Restated Master Lease Agreement (Lease no. 2), dated as of August 4, 2009, by and among certain affiliates of Senior Housing Properties Trust, as Landlord, and FS Commonwealth LLC, FS Patriot LLC, FS Tenant Holding Company Trust and Five Star Quality Care Trust, as Tenant. (Filed herewith)
10.10 Amended and Restated Guaranty Agreement (Lease no. 2), dated as of August 4, 2009, made by Five Star Quality Care, Inc., as Guarantor, for the benefit of certain affiliates of Senior Housing Properties Trust. (Filed herewith)
10.11 Amended and Restated Master Lease Agreement, dated as of August 4, 2009, by and among SNH FM Financing LLC, SNH FM Financing Trust and Ellicott City Land I, LLC, as Landlord, and FVE FM Financing, Inc., as Tenant. (Filed herewith)
10.12 Amendment No. 1 to Amended and Restated Master Lease Agreement, dated as of August 4, 2009, by and among SNH FM Financing LLC, SNH FM Financing Trust and Ellicott City Land I, LLC, as Landlord, and FVE FM Financing, Inc., as Tenant. (Filed herewith)
10.13 Amended and Restated Guaranty Agreement, dated as of August 4, 2009, made by Five Star Quality Care, Inc., as Guarantor, for the benefit of SNH FM Financing LLC, SNH FM Financing Trust and Ellicott City Land I, LLC. (Filed herewith)
10.14 Amended and Restated Master Lease Agreement (Lease no. 4), dated as of August 4, 2009, by and among certain affiliates of Senior Housing Properties Trust, as Landlord, and Five Star Quality Care Trust, Five Star Quality Care-NS Tenant, LLC and FS Tenant Holding Company Trust, as Tenant. (Filed herewith)
10.15 Amended and Restated Guaranty Agreement (Lease no. 4), dated as of August 4, 2009, made by Five Star Quality Care, Inc., as Guarantor, for the benefit of certain affiliates of Senior Housing Properties Trust. (Filed herewith)
10.16 Second Amendment to Purchase Agreement, dated as of August 6, 2009, between HUB Properties Trust, as Seller, and Senior Housing Properties Trust, as Purchaser (with respect to Torrey Pines, 3030-50 Science Park Road, San Diego, California). (Filed herewith)
12.1 Computation of Ratio of Earnings to Fixed Charges. (Filed herewith)
31.1 Rule 13a-14(a) Certification. (Filed herewith)
31.2 Rule 13a-14(a) Certification. (Filed herewith)
31.3 Rule 13a-14(a) Certification. (Filed herewith)
31.4 Rule 13a-14(a) Certification. (Filed herewith)
32.1 Section 1350 Certification. (Furnished herewith)
99.1 Registration Rights Agreement, dated as of August 4, 2009, between Five Star Quality Care, Inc. and Senior Housing Properties Trust. (Filed herewith)
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SENIOR HOUSING PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President and Chief Operating Officer |
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Dated: August 10, 2009 |
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By: |
/s/ Richard A. Doyle |
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Richard A. Doyle |
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Treasurer and Chief Financial Officer |
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(principal financial and accounting officer) |
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Dated: August 10, 2009 |
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Exhibit 10.4
MASTER CREDIT FACILITY AGREEMENT
BY AND BETWEEN
SNH FM FINANCING LLC,
AND
CITIBANK, N.A.
DATED AS OF
August 4, 2009
TABLE OF CONTENTS
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Page |
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ARTICLE 1 |
THE TERM LOAN |
2 |
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ARTICLE 2 |
ALLOCABLE LOAN AMOUNT/SUPPLEMENTAL LOANS |
2 |
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ARTICLE 3 |
VALUATIONS/COLLATERAL CHANGES |
4 |
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ARTICLE 4 |
RESERVED |
9 |
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ARTICLE 5 |
RESERVED |
9 |
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ARTICLE 6 |
CONDITIONS PRECEDENT TO ALL REQUESTS |
9 |
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ARTICLE 7 |
REPRESENTATIONS AND WARRANTIES |
17 |
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ARTICLE 8 |
AFFIRMATIVE COVENANTS OF BORROWER |
17 |
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ARTICLE 9 |
NEGATIVE COVENANTS OF BORROWER |
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ARTICLE 10 |
FEES |
37 |
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ARTICLE 11 |
EVENTS OF DEFAULT |
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ARTICLE 12 |
REMEDIES |
42 |
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ARTICLE 13 |
INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES |
44 |
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ARTICLE 14 |
LIMITS ON PERSONAL LIABILITY |
45 |
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ARTICLE 15 |
MISCELLANEOUS PROVISIONS |
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EXHIBITS |
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EXHIBIT A |
Schedule of Initial Mortgaged Properties, Initial Allocable Loan Amounts and Initial Valuations |
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EXHIBIT B |
Confirmation of Guaranty |
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EXHIBIT C |
Compliance Certificate |
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EXHIBIT D-1 |
Borrower Organizational Certificate |
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EXHIBIT D-2 |
Guarantor Organizational Certificate |
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EXHIBIT E |
Reserved |
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EXHIBIT F |
Reserved |
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EXHIBIT G |
Reserved |
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EXHIBIT H |
Reserved |
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EXHIBIT I |
Request |
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EXHIBIT J |
Confirmation of Obligations |
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EXHIBIT K |
Reserved |
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EXHIBIT L |
Reserved |
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EXHIBIT M |
Reserved |
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EXHIBIT N |
Reserved |
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EXHIBIT O |
Disclosure Schedule |
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EXHIBIT P |
Letter of Credit |
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EXHIBIT Q-1 |
Bank Legal Opinion (Foreign) |
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EXHIBIT Q-2 |
Bank Legal Opinion (Domestic) |
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EXHIBIT R |
Form of Rent Roll |
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EXHIBIT S |
Expansion Guaranty |
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EXHIBIT T |
Expansion Security Agreement |
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SCHEDULE 1 |
Minimum Rent Payments |
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APPENDIX I |
Definitions |
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MASTER CREDIT FACILITY AGREEMENT
THIS MASTER CREDIT FACILITY AGREEMENT is made as of the 4th day of August, 2009, by and between SNH FM FINANCING LLC, a Delaware limited liability company and CITIBANK, N.A., a national banking association.
RECITALS
A. Borrower owns one (1) or more Seniors Housing Facilities (unless otherwise defined or the context clearly indicates otherwise, capitalized terms shall have the meanings ascribed to such terms in Appendix I of this Agreement) as more particularly described in Exhibit A to this Agreement.
B. Borrower has requested that Lender make a loan in the amount of $512,934,000 to Borrower, comprised of a $205,174,000 Variable Loan, and a $307,760,000 Fixed Loan.
C. To secure the obligations of Borrower under this Agreement and the other Loan Documents issued in connection with the Term Loan, Borrower shall create a Collateral Pool in favor of Lender. The Collateral Pool shall be comprised of (i) the Seniors Housing Facilities listed on Exhibit A and (ii) any other collateral pledged to Lender from time to time by Borrower pursuant to this Agreement or any other Loan Documents.
D. Each Note and Security Document related to the Mortgaged Properties comprising the Collateral Pool shall be cross-defaulted ( i.e. , a default under any Note, Security Document relating to the Collateral Pool and under this Agreement, shall constitute a default under each Note, Security Document and this Agreement related to the Mortgaged Properties comprising the Collateral Pool) and cross-collateralized ( i.e. , each Security Instrument related to the Mortgaged Properties within the Collateral Pool shall secure all of Borrowers obligations under this Agreement and the other Loan Documents) and it is the intent of the parties to this Agreement that, after an Event of Default, Lender may accelerate any Note without needing to accelerate any other Note and that in the exercise of its rights and remedies under the Loan Documents, Lender may, except as provided in this Agreement, exercise and perfect any and all of its rights in and under the Loan Documents with regard to any Mortgaged Property without needing to exercise and perfect its rights and remedies with respect to any other Mortgaged Property and that any such exercise shall be without regard to the Allocable Loan Amount assigned to such Mortgaged Property and that Lender may recover an amount equal to the full amount outstanding in respect of any of the Notes in connection with such exercise and any such amount shall be applied as determined by Lender pursuant to the terms of this Agreement, the Notes and the other Loan Documents.
E. Subject to the terms, conditions and limitations of this Agreement, Lender has agreed to make a Term Loan.
NOW, THEREFORE, Borrower and Lender, in consideration of the mutual promises and agreements contained in this Agreement, hereby agree as follows:
Section 1.01. Term Loan.
Section 1.02. Notes.
The obligation of the Borrower to repay the Term Loan shall be evidenced by the following Notes: (i) a Fixed Facility Note in the principal amount of $307,760,000 and (ii) a Variable Facility Note in the principal amount of $205,174,000. The Notes shall be payable to the order of Lender and shall equal the aggregate original principal amount of the Term Loan to the Borrower.
Section 1.03. Maturity Date/Prepayment.
The maturity date of the Term Loan shall be September 1, 2019. The Term Loan shall amortize over the Amortization Period with the outstanding principal balance due and owing on the maturity date.
Section 1.04. Yield Maintenance/Prepayment.
The terms and conditions of yield maintenance and/or prepayment premiums as applicable, are contained in the Notes and such terms and conditions shall apply to the prepayment in part or whole of the Term Loan during the term of this Agreement.
Section 1.05. Interest Rate Execution.
In the event that the Term Loan made on the Initial Closing Date is solely a Fixed Loan, the provisions in this Agreement referencing the Variable Loan and Variable Facility Note shall be deemed to be of no further force and effect and be deemed to be eliminated from this Agreement.
Section 2.01. Determination of Allocable Loan Amount and Valuations.
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Section 2.02. Supplemental Loan.
After the First Anniversary, Borrower may participate in the Fannie Mae Supplemental Loan product, if the Supplemental Loan product is offered by Fannie Mae at the time and if no Targeted Entity is a Prohibited Person. Any such Supplemental Loan is subject to Lenders determination that, as a result of its annual valuation of the Collateral Pool, a Supplemental Loan may be made pursuant to Lenders Underwriting Requirements for Tier Four loans in effect at the time of the request. The Supplemental Loan will be documented with loan documents similar to the Loan Documents ( Supplemental Loan Documents ). Supplemental Loans will not be loans advanced under this Agreement. Any Supplemental Loan will be priced at market at the time of the loan and will be cross-defaulted with the Term Loan. To secure the obligations of Borrower under the Supplemental Loan Documents, Borrower shall grant, convey and assign to Lender a second Lien on each Mortgaged Property in the Collateral Pool and on any other collateral pledged to Lender from time to time pursuant to the Supplemental Loan Documents. On the closing date of the Supplemental Loan, Lender shall determine the portion of the
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Supplemental Loan allocated to a particular Mortgaged Property by Lender (the Supplemental Allocable Loan Amount ), which Supplemental Allocable Loan Amounts shall be set forth in a separate exhibit to this Agreement. Lender shall redetermine the Supplemental Allocable Loan Amounts in the same manner and at the same time as the redetermination of the Allocable Loan Amounts pursuant to Section 2.01(b) . Notwithstanding the foregoing, the Supplemental Loan shall be monitored pursuant to Section 2.01 of this Agreement and Lender shall include the Supplemental Loan upon calculating the Aggregate NOI Debt Service Coverage Ratio, the Aggregate Lease Payment Debt Service Coverage Ratio and the Aggregate Loan to Value Ratio, in connection with any Request. Borrower agrees to pay any fees (including legal fees) that may be charged in connection with a Supplemental Loan.
Section 3.01. Reserved.
Section 3.02. Reserved.
Section 3.03. Right to Obtain Releases of Collateral.
Subject to the terms and conditions of this Article 3, and the limitations set forth in Section 15.17, Borrower shall have the right after the First Anniversary, from time to time, to obtain a release of Collateral from the Collateral Pool.
Section 3.04. Procedure for Obtaining Releases of Collateral.
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(ii) In the event Borrower desires to release a Release Mortgaged Property on a date other than the last Business Day of the month, the Release Price or the remainder of the Release Price, if any, shall be held by Lender (or its appointed collateral agent) as substitute Collateral (Substitute Collateral), in accordance with a security agreement (if required by Lender) and other documents in form and substance acceptable to Lender. Any Substitute Collateral shall first be used to prepay the applicable Supplemental Loan and then the applicable Term Loan on the last Business Day of the month.
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Section 3.05. Right to Substitutions.
Subject to the terms and conditions of this Article 3 and the limitations set forth in Section 15.17 , Borrower shall have the right to obtain the release of the Mortgaged Property securing the Term Loan made to Borrower (the Release Mortgaged Property ) by replacing such Mortgaged Property with a Seniors Housing Facility that meets the requirements of this Agreement (the Substitute Mortgaged Property ) thereby effecting a Substitution of Collateral.
Section 3.06. Procedure for Substitutions.
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Section 3.07. Substitution Deposit.
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Section 6.01. Conditions Applicable to All Requests.
Borrowers right to close the transaction requested in a Request shall be subject to Lenders determination that all of the following general conditions precedent ( General Conditions ) have been satisfied, in addition to any other conditions precedent contained in this Agreement:
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Section 6.02. Conditions Precedent to Term Loan.
The obligation of Lender to make the Term Loan is subject to the following conditions precedent:
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Section 6.03. Reserved.
Section 6.04. Reserved.
Section 6.05. Conditions Precedent to Release of Property from the Collateral Pool.
The release of a Mortgaged Property from the Collateral Pool is subject to the satisfaction of the following conditions precedent on or before the Closing Date:
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Section 6.06. Conditions Precedent to Substitutions.
The obligation of Lender to make a requested Substitution is subject to Lenders determination that each of the following conditions precedent has been met:
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Section 6.07. Reserved.
Section 6.08. Reserved.
Section 6.09. Reserved.
Section 6.10. Delivery of Opinion Relating to Substitution Request.
With respect to the closing of a Substitution Request, it shall be a condition precedent that Lender receives favorable opinions of counsel (including local counsel, Master Tenants counsel, Operators counsel, as applicable) to Borrower, as to the due organization and qualification of Borrower, the due authorization, execution, delivery and enforceability of each Loan Document executed in connection with the Request and such other matters as Lender may reasonably require, each dated as of the Closing Date for the Request, in form and substance satisfactory to Lender in all respects.
Section 6.11. Delivery of Property-Related Documents.
With respect to each of the Initial Mortgaged Properties or a Substitute Mortgaged Property, it shall be a condition precedent that Lender receive from Borrower each of the documents and reports required by Lender pursuant to the Underwriting Requirements in connection with the addition of such Mortgaged Property to the Collateral Pool and, each of the following, each dated as of the applicable Closing Date for the Initial Mortgaged Property or a Substitute Mortgaged Property, as the case may be, in form and substance satisfactory to Lender in all respects:
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Section 6.12. Letters of Credit.
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Section 7.01. Representations and Warranties of Borrower.
The representations and warranties of the Borrower are contained in the Certificate of Borrower.
For purposes of the Loan Documents, where Borrower purports to have knowledge and without limiting the scope of the meaning of Borrowers having actual knowledge, Borrower will automatically and immediately be deemed to have actual knowledge:
(i) of written public disclosure; or
(ii) in the event that Key Principal or REIT Management Research LLC or its successors and assigns has actual knowledge.
Section 7.02. Representations and Warranties of Lender.
Lender hereby represents and warrants to Borrower as follows as of the date hereof:
Borrower agrees and covenants with Lender that, at all times during the Term of this Agreement:
Section 8.01. Compliance with Agreements.
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Section 8.02. Maintenance of Existence.
Section 8.03. Financial Statements; Accountants Reports; Other Information.
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For purposes of this paragraph an inspection report, survey, review or certification or related correspondence is material if: (i) it contains 8 or more deficiencies or items which need to be corrected or (ii) if it relates to assisted living units, it requires a plan of correction or otherwise imposes or threatens to impose sanctions or penalties of any kind or (iii) if it relates to skilled nursing units, cites any deficiency which has a scope and severity of F or higher or otherwise imposes or threatens to impose sanctions or penalties of any kind.
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Section 8.04. Access to Records; Discussions With Officers and Accountants.
To the extent permitted by law and in addition to the applicable requirements of the Security Instruments, Borrower shall permit Lender and shall cause the Operator to permit Lender to:
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Notwithstanding the foregoing, prior to an Event of Default and so long as no Potential Event of Default has occurred and is continuing and in the absence of an emergency, all inspections shall be conducted at reasonable times during normal business hours upon reasonable notice to Borrower.
Section 8.05. Certificate of Compliance.
Borrower shall deliver to Lender concurrently with the delivery of the financial statements and/or reports required by Section 8.03(a) and Section 8.03(b) a certificate signed by an authorized representative of Borrower reasonably acceptable to Lender (i) setting forth in reasonable detail the calculations required to establish whether Borrower and Key Principal were in compliance with the requirements of this Agreement on the date of such financial statements, and (ii) stating that, to the best knowledge of such individual following reasonable inquiry, no Event of Default or Potential Event of Default has occurred, or if an Event of Default or Potential Event of Default has occurred, specifying the nature thereof in reasonable detail and the action Borrower is taking or proposes to take. Any certificate required by this Section shall run directly to and be for the benefit of Lender and Fannie Mae.
Section 8.06. Maintain Licenses.
Borrower shall procure and maintain or cause the Operator to procure and maintain full force and effect all licenses, Permits, charters and registrations which are material to the conduct of its business and shall abide by and satisfy all terms and conditions of all such licenses, Permits, charters and registrations.
Section 8.07. Inform Lender of Material Events.
Borrower shall promptly inform Lender in writing of any of the following (and shall deliver to Lender copies of any related written communications, complaints, orders, judgments and other documents relating to the following) of which Borrower has actual knowledge:
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Section 8.08. Compliance with Applicable Law.
Borrower shall comply and shall cause the Operator to comply in all material respects with all Applicable Laws now or hereafter affecting any Mortgaged Property or any part of any Mortgaged Property or requiring any alterations, repairs or improvements to any Mortgaged Property. Borrower shall procure and continuously maintain or shall cause the Operator to procure and maintain in full force and effect, and shall abide by and satisfy or shall cause the Operator to abide by and satisfy all material terms and conditions of all Permits and shall comply with all written notices from Governmental Authorities. Borrower shall comply and shall cause the Operator to comply in all material respects with all requirements of insurance companies or similar organizations which have provided insurance with respect to Borrower or any Mortgaged Property, affecting the operation or use of any Mortgaged Property or the consummation of the transactions to be effected by this Agreement or any of the other Loan Documents.
Section 8.09. Alterations to the Mortgaged Properties.
Borrower shall have the right to undertake, or permit to be undertaken, any alteration, improvement, demolition, removal or construction (collectively, Alterations ) to the Mortgaged Properties without the prior consent of Lender; provided, however, that in any case, no such Alteration shall be made to any Mortgaged Property without the prior written consent of Lender if (i) such Alteration when completed could reasonably be expected to adversely affect the value of such Mortgaged Property or its operation as a Senior Housing Facility in substantially the same manner in which it is being operated on the date such property became Collateral, (ii) the construction of such Alteration could reasonably be expected to result in interference to the occupancy of tenants of such Mortgaged Property such that tenants in occupancy with respect to five percent (5%) or more of the Leases would be permitted to terminate their Leases or to abate the payment of all or any portion of their rent, or (iii) such Alteration will be completed in more than twelve (12) months from the date of commencement or in the last year of the Term of this Agreement. Lender acknowledges that Borrower may request consent to perform an Expansion (as defined in the Expansion Security Agreement) to the Mortgaged Property known as Heartsfield at Easton, pursuant to the terms of the Expansion Security Agreement. In the event such request is made and such consent is granted, Borrower agrees to execute and deliver the Expansion Security Agreement and to cause Key Principal to execute and deliver the Expansion Guaranty. Notwithstanding the foregoing, Borrower must obtain Lenders prior written consent to construct Alterations with respect to the Mortgaged Property costing in excess of, with respect to any Mortgaged Property, the number of units in such Mortgaged Property multiplied by $3,000, but in any event, costs in excess of $500,000 within a Calendar Year and Borrower must give prior written notice to Lender of its intent to construct Alterations with respect to such Mortgaged Property costing in excess of $250,000. For purposes of this Section 8.09, the defined term Alterations is not intended to include any (i) routine maintenance, routine repairs or routine
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capital expenditures or (ii) repairs or capital expenditures specified in the Completion Repair and Security Agreement or Replacement Reserve Agreement.
Section 8.10. Loan Document Taxes.
If any tax, assessment or Imposition (other than a franchise tax or excise tax imposed on or measured by, the net income or capital (including branch profits tax) of Lender (or any transferee or assignee thereof, including a participation holder)) ( Loan Document Taxes ) is levied, assessed or charged by the United States, or any State in the United States, or any political subdivision or taxing authority thereof or therein upon any of the Loan Documents or the obligations secured thereby, the interest of Lender in the Mortgaged Properties, or Lender by reason of or as holder of the Loan Documents, Borrower shall pay all such Loan Document Taxes to, for, or on account of Lender (or provide funds to Lender for such payment, as the case may be) within 30 days after written notice thereof by Lender and shall promptly furnish proof of such payment to Lender, as applicable. In the event of passage of any law or regulation permitting, authorizing or requiring such Loan Document Taxes to be levied, assessed or charged, which law or regulation in the opinion of counsel to Lender may prohibit Borrower from paying the Loan Document Taxes to or for Lender, Borrower shall enter into such further instruments as may be permitted by law to obligate Borrower to pay such Loan Document Taxes.
Section 8.11. Further Assurances.
Borrower, at the request of Lender, shall execute and deliver and, if necessary, file or record such statements, documents, agreements, UCC financing and continuation statements and such other instruments and take such further action as Lender from time to time may reasonably request as reasonably necessary, desirable or proper to carry out more effectively the purposes of this Agreement or any of the other Loan Documents or to subject the Collateral to the lien and security interests of the Loan Documents or to evidence, perfect or otherwise implement, to assure the lien and security interests intended by the terms of the Loan Documents or in order to exercise or enforce its rights under the Loan Documents. If Lender believes that an all-asset collateral description, as contemplated by Section 9-504(2) of the UCC, is appropriate as to any Collateral under any Loan Document, the Lender is irrevocably authorized to use such a collateral description, whether in one or more separate filings or as part of the collateral description in a filing that particularly describes the collateral.
Section 8.12. Transfer of Ownership Interests in Borrower.
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Section 8.13. Transfer of Ownership of Mortgaged Property.
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Section 8.14. Consent to Prohibited Transfers.
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Section 8.15. Date-Down Endorsements.
Before the release or substitution of a Mortgaged Property and at any time and from time to time that Lender has reason to believe that an additional lien may encumber a Mortgaged Property, Lender may obtain an endorsement to each Title Insurance Policy containing a revolving credit endorsement, amending the effective date of each such Title Insurance Policy to the date of the title search performed in connection with the endorsement. Borrower shall pay for the cost and expenses incurred by Lender to the Title Company in obtaining such endorsement, provided that, for each Title Insurance Policy, it shall not be liable to pay for more than one (1) such endorsement in any consecutive twelve (12) month period.
Section 8.16. Ownership of Mortgaged Properties.
Borrower or an IDOT Guarantor shall be the sole owner of each of the Mortgaged Properties free and clear of any Liens other than Permitted Liens.
Section 8.17. Compliance with Net Worth Test.
Until the date upon which all of the conditions set forth in Section 8.25 are satisfied, Key Principal shall at all times maintain its Net Worth so that it is not less than $515,000,000.
Section 8.18. Compliance with Liquidity Test.
Until the date upon which all of the conditions set forth in Section 8.25 are satisfied, Key Principal shall at all times ensure that the sum of (i) cash and Cash Equivalents maintained by it and (ii) the amount available to be drawn by it under its lines of credit (including, without limitation, under the Amended and Restated Credit Agreement dated as of July 29, 2005, as amended, with certain lenders and Wachovia Bank, National Association, as administrative Agent) is not less than $21,000,000.
Section 8.19. Master Tenant and Operator.
The Borrower shall not remove or permit or suffer the removal of the Master Tenant or the Operator without the prior written consent of the Lender and unless and until Lender has approved in writing a replacement Master Tenant or Operator as the case may be. If any Master Tenant and/or Operator is removed by Lender pursuant to the terms and conditions of the Loan Documents, Borrower agrees to use commercially reasonable efforts to enter into a new lease with a new Master Tenant and establish a new Operator on or prior to the effective date of termination unless otherwise directed by Lender. Any new Master Tenant or Operator must be approved in writing by Lender. Any operating lease or other similar agreement between the Borrower and a new Master Tenant and any Sub-Lease or management agreement with any new Operator must be approved in writing by Lender and the Borrower, new Master Tenant and each
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new Operator must execute and deliver to Lender a Subordination, Assignment and Security Agreement. The Borrower shall cause the Master Tenant and Operator to notify Lender in writing of any name change or any change in its place of incorporation. The Borrower agrees that the Lender shall have the right to remove the Master Tenant and the Operator at any time: (i) upon the occurrence of an Event of Default under (and as defined in) the Operating Lease or Sub-Lease and (ii) upon the occurrence of an Event of Default under (and as defined in) any Subordination, Assignment and Security Agreement.
Section 8.20. Borrower and Any Operating Lease.
Except in connection with a transaction permitted under Sections 8.12, 8.13, 8.14 or 8.19, Borrower shall not assign its rights under the Operating Lease and shall cause Master Tenant and Operator to not assign either of their rights under the Operating Lease or Sub-Lease, without the prior written consent of Lender. Within five days of Borrowers receipt, Borrower shall give Lender written notice of any notice or information that Borrower receives which indicates that either Borrower, Master Tenant or Operator is in default under the terms of any Operating Lease or Sub-Lease, Operator is terminating the Sub-Lease, Master Tenant is terminating the Operating Lease or that Operator is otherwise discontinuing its operation and management of the Mortgaged Property.
Section 8.21. Enforcement of Leases.
Borrower will comply with and shall (a) enforce the obligations of the Master Tenant under the Operating Lease, (b) cause the Master Tenant to perform its obligations under the Sub-Lease as sub-landlord and (c) cause the Operator to perform its obligations under the Sub-Lease. Borrower shall not and shall cause Master Tenant or Operator, as the case may be, not to make any material amendments or modifications to the Operating Lease or any Sub-Lease, terminate the Operating Lease or any Sub-Lease (except as provided in Section 8.19 ), or waive a default thereunder, without the prior written consent of the Lender. Material amendments or modifications include, without limitation, amendments or modifications that (i) reduce or change the rent or other payments required to be made by the Master Tenant or Operator, (ii) reduce or change the term, (iii) release any security for the obligations of the Master Tenant or Operator, (iv) change any provisions of the Operating Lease or Sub-Lease relating to facility mortgages and the rights of mortgagees, (v) grant options to purchase or (vi) adversely impact the rights or interests of Lender or Fannie Mae.
Section 8.22. Single Purpose Entity.
Borrower and the sole member of Borrower shall maintain itself as a Single Purpose entity. Borrower shall cause Master Tenant and each Operator (to which Licenses are transferred pursuant to Section 8.25 hereof) to maintain itself as a Single Purpose entity.
Section 8.23. ERISA.
Borrower shall at all times remain in compliance in all material respects with all applicable provisions of ERISA, if any, and shall not incur any liability to the PBGC on a Plan
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under Title IV of ERISA. Neither the Borrower, nor any member of the Controlled Group is or ever has been obligated to contribute to any Multiemployer Plan. The assets of the Borrower do not constitute plan assets within the meaning of Department of Labor Regulation §2510.3-101 of any employee benefit plan subject to Title I of ERISA.
Section 8.24. Consents or Approvals.
Borrower shall obtain any required consent or approval of any creditor of Borrower, any Governmental Authority or any other Person to perform its obligations under this Agreement and any other Loan Documents.
Section 8.25. Transfer of Licenses by Operator.
Within one (1) year of the Initial Closing Date, Borrower shall cause each existing Operator for each Mortgaged Property, to transfer its Licenses and all Licenses relating to the operation of the Mortgaged Property or cause such Licenses to be issued or re-issued to a separate Single-Purpose entity wholly owned by Five Star Quality Care Inc. for each such Mortgaged Property. The Organizational Documents of each Single Purpose entity shall be in form and substance satisfactory to Lender. Such Single-Purpose entity will (i) become a tenant under the Sub-Lease for such Mortgaged Property by assuming all obligations of the existing Operator with respect to such Mortgage Property, (ii) become an Operator under this Agreement, (iii) become a party to the applicable Subordination, Assignment and Security Agreement by assuming all of the obligations of the existing Operator with respect to such Mortgaged Property, (iv) hold in its name all Licenses pertaining to the operation of the Mortgaged Property operated by such entity which are required to be held in such entitys name under Applicable Law and (v) cooperate with Lender in effectuating these transactions including by delivery of customary corporate legal opinions satisfactory to Lender and by cooperating in the perfection of the collateral, including an all-asset collateral description in a UCC filing, as contemplated by Section 9-504(2) of the UCC, as is appropriate as to any Collateral under any Subordination Assignment and Security Agreement. The Lender is irrevocably authorized to use such a collateral description, whether in one or more separate filings or as part of the collateral description in a filing that particularly describes the collateral.
If Borrower fails to comply with the provisions of this Section 8.25, Borrower may release the specific Mortgaged Properties that are not operated by a Single Purpose entity in compliance with the requirements of this Section 8.25, so long as the release of the specific Mortgaged Property satisfies the requirements of Sections 3.04 and 6.05. Borrowers failure to release such Mortgaged Property pursuant to the requirements of Sections 3.04 and 6.05 within 30 days of the breach of this Section 8.25, will constitute an Event of Default under this Agreement.
Section 8.26. Indemnification.
The Borrower hereby releases Lender and Fannie Mae and their respective officers, directors, members, shareholders, officials, agents, independent contractors and employees from, and covenants and agrees to indemnify, hold harmless and defend Lender and Fannie Mae and
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their respective officers, members, directors, shareholders, officials, agents, independent contractors and employees and each of them (each an indemnified party ) from and against (a) any and all claims, joint or several, by or on behalf of any person arising from any cause whatsoever in connection with (i) a Master Tenant/Operator Bankruptcy Event prior to the transfer contemplated in Section 8.25 , or (ii) the transferring of any Licenses (or failure to transfer) to a Single-Purpose entity wholly owned by Five Star Quality Care as set forth in Section 8.25 or (iii) the multi-purpose nature of each existing Operator prior to the transfer contemplated in Section 8.25 . Borrower shall pay all reasonable costs, counsel fees, expenses or liabilities incurred in connection with any such claim or proceeding referred to in clauses (i) through (iii) above.
In the event that any action or proceeding is brought against any indemnified party with respect to which indemnity may be sought under this Section, the Borrower, upon written notice from the indemnified party, will assume the investigation and defense thereof, including the employment of counsel selected by the Borrower, but acceptable to the indemnified party, and must assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion, provided that such indemnified party has the right to review and approve or disapprove any such compromise or settlement.
Each indemnified party has the right, if such indemnified party concludes in good faith that a conflict of interest exists, to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrower must pay the reasonable fees and expenses of such separate counsel.
In the event that an indemnified party does not conclude that a conflict of interest exists and yet such party prefers to employ separate counsel in such action or proceeding, it may do so at its own cost and expense. If such separate counsel is employed as described above, the Borrower and any such indemnified party agree to cooperate as may reasonably be required in order to ensure the proper and adequate defense of any such action, suit or proceeding, including, but not limited to, making available to each other, and their counsel and accountants, all books and records relating to such action, suit or proceeding. If any such counsel reasonably determines that the rendering of such assistance will adversely affect the defense or interests of its client, such counsel is not required to comply with the terms of the immediately preceding sentence.
Notwithstanding any transfer of the Mortgaged Properties to another owner, the Borrower will remain obligated to indemnify each indemnified party pursuant to this Section with respect to acts occurring prior to the date of transfer of legal title to the Mortgaged Properties (irrespective of when a claim is actually made). All amounts due under this Section 8.26 are payable within 30 days after delivery of written notice from Lender to the Borrower unless judicial order requires that any such payments must be made on an earlier date in which case payment is made by such date on written demand therefor.
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Section 8.27. Operator Rent Security Deposits.
Borrower shall deposit any and all cash security deposits paid by Master Tenant in accordance with the Operating Lease or the Operator in accordance with the Sub-Lease into an account designated by Lender.
Section 8.28. Operator Guaranty.
Borrower shall remit and shall cause Operator and/or Master Tenant, as applicable, to remit any and all payments made under the Operator Guaranty to Lender. Borrower, Master Tenant and Operator will cause each Operator Guaranty to remain in full force and effect until the Term Loan under this Agreement is paid in full. Borrower will not suffer or permit a material non-payment default under the Operator Guaranty.
Section 8.29. Post-Closing Obligations.
Borrower shall use commercially reasonable efforts to deliver to Lender, at Borrowers sole cost and expense, no later than sixty (60) days from the Initial Closing Date (Estoppel Delivery Date) the estoppel certificates as described below in the form previously agreed upon with Lender. If Borrower uses commercially reasonable efforts but is unable to deliver the estoppels within the sixty day period, the obligation to do so will terminate. Borrower shall pay, or reimburse Lender for, all reasonable out-of-pocket third party legal fees and expenses incurred by Lender and by Fannie Mae in respect of the review and/or negotiation of such estoppel certificates.
a. In connection with the Coral Oaks, Coral Springs, Florida property: An Estoppel Certificate, in the form approved by Fannie Mae, that addresses the issues, restrictions, assessments, liens and obligations granted within that certain Declaration of Easements, Covenants and Restrictions recorded November 6, 1986, in Book 6355, page 1101 .
b. In connection with the Woodlands, Montgomery County, Texas property, an Estoppel Certificate from adjoining property owners, in the form approved by Fannie Mae, that addresses the issues, shared maintenance costs, liens and other obligations granted within that certain Lake Maintenance Agreement as Document No. 9649482 :
c. In connection with the Meadowmere-Northshore Mequon, Ozaukee County, Wisconsin property, an Estoppel Certificate in the form approved by Fannie Mae, that addresses the issues, shared maintenance costs, liens and other obligations granted within that certain Meadowmere-Northshore, Mequon, Wisconsin Maintenance Agreement, dated June 26, 1996, and recorded in Book 987, page 318 .
Borrower agrees and covenants with Lender that, at all times during the Term of this Agreement:
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Section 9.01. Other Activities.
Section 9.02. Liens.
Borrower shall not create, incur, assume or suffer to exist any Lien on Borrowers interest in any Mortgaged Property or any part of any Mortgaged Property, except the Permitted Liens.
Section 9.03. Indebtedness.
Borrower shall not incur or be obligated at any time with respect to any Indebtedness (other than the Term Loan). Neither Borrower nor any owner of Borrower shall incur any indebtedness, or issue any equity secured by a pledge of the membership interests in Borrower or any owner of Borrower ( i.e. , mezzanine debt) or by a pledge of the cash flow of Borrower or issue any preferred equity.
Section 9.04. Principal Place of Business.
Borrower shall not change its principal place of business, state of formation, legal name or the location of its books and records, each as set forth in the Certificate of Borrower, without first giving thirty (30) days prior written notice to Lender.
Section 9.05. Condominiums.
Borrower shall not submit any Mortgaged Property to a condominium regime during the Term of this Agreement.
Section 9.06. Restrictions on Distributions.
Borrower shall not make any distributions of any nature or kind whatsoever to the owners of its Ownership Interests as such if, at the time of such distribution, a Potential Event of Default or an Event of Default has occurred and remains uncured, provided, however, this provision shall not be construed so as to prevent Borrower, only to the extent that Key Principal does not have sufficient cash available from any other source and proof of same is remitted to Lender, from making such distributions from its Net Operating Income (after giving effect to the payment of all amounts due and owing to Lender) as are necessary to permit Key Principal to make
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distributions required to maintain Key Principals taxation as a real estate investment trust under the Internal Revenue Code.
Section 9.07. Confidentiality of Certain Information.
Borrower shall not disclose any terms, conditions, underwriting requirements or underwriting procedures of this Agreement or any of the Loan Documents; provided, however, that such confidential information may be disclosed (A) as required by law or pursuant to generally accepted accounting procedures, (B) to officers, directors, employees, agents, partners, attorneys, accountants, engineers and other consultants of Borrower who need to know such information, provided such Persons are instructed to treat such information confidentially, (C) to any regulatory authority having jurisdiction over Borrower, (D) in connection with any filings with the Securities and Exchange Commission or other Governmental Authorities, or (E) to any other Person to which such delivery or disclosure may be necessary or appropriate (1) in compliance with any law, rule, regulation or order applicable to Borrower, or (2) in response to any subpoena or other legal process or information investigative demand.
Section 9.08. Changes to Licenses, Permits.
Borrower shall not and shall cause the Operator not to, without the prior written consent of the Lender, amend, modify or otherwise change the Licenses or Permits to add Skilled Nursing Units at any Mortgaged Property. Borrower will comply with the Level of Care Diversity Requirements. Notwithstanding the foregoing, Lender may agree with Borrower to amend the Licenses and Permits to add Skilled Nursing Units at a Mortgaged Property or to modify the Level of Care Diversity Requirement, if the addition of Skilled Nursing Units or the change in acuity level improves the Collateral Pool based on factors that are consistent with Lenders Underwriting Requirements, are consistent with market demand and result in increased Net Operating Income or increased value of the Mortgaged Property.
Section 9.09. Medicare/ Medicaid.
Borrower further covenants and agrees that it shall not permit more than 20% of its effective gross income from the Mortgaged Property to be derived from units relying on Medicaid payments. If more than 20% of effective gross income from the Mortgaged Property becomes derived from units relying on Medicaid payments, the Borrower shall diligently and expeditiously take all reasonable steps necessary to bring the Mortgaged Property into compliance with the preceding sentence to the extent permissible by applicable law or regulation.
Section 9.10. No Change in Minimum Rent.
The allocation of Minimum Rent among the Mortgaged Properties as set forth in Schedule 1 hereto (as such Minimum Rent may be adjusted as provided in Section 3.1.1(c) of the Operating Lease) shall not be changed, modified and/or supplemented without the prior written consent of Lender.
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Section 9.11. Accounts.
Borrower and IDOT Guarantors agree not to (i) permit their own funds to be deposited into any account in which any Person has a security interest, pledge or lien; and (ii) allow or suffer any Operator from depositing its own funds generated from or relating to any Mortgaged Property into any account in which any Person has a security interest, pledge or lien.
Section 10.01. Origination Fees.
Origination Fee . Borrower shall pay to Lender on or before the Initial Closing Date an origination fee ( Initial Origination Fee ) equal to $2,564,670, 50 basis points ( .50 %) multiplied by the Term Loan and a Review Fee equal to $512,934, 10 basis points ( .10 %) multiplied by the Term Loan.
Section 10.02. Due Diligence Fees.
Section 10.03. Legal Fees and Expenses.
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Section 10.04. Failure to Close any Request.
If Borrower makes a Request and fails to close on the Request for any reason other than the default by Lender, then Borrower shall pay to Lender and Fannie Mae all damages incurred by Lender and Fannie Mae in connection with the failure to close.
Section 11.01. Events of Default.
Each of the following events shall constitute an Event of Default under this Agreement, whatever the reason for such event and whether it shall be voluntary or involuntary, or within or without the control of Borrower or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority:
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(ii) a case or other proceeding shall be commenced against any Targeted Entity in any court of competent jurisdiction seeking (A) relief under the Federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding upon or composition or adjustment of debts, or (B) the appointment of a trustee, receiver, custodian, liquidator or the like of any Targeted Entity or of all or a substantial part of the property, domestic or foreign, of any Targeted Entity and any such case or proceeding shall continue undismissed or unstayed for a period of sixty (60) consecutive calendar days, or any order granting the relief requested in any such case or proceeding against any Targeted Entity (including an order for relief under such Federal bankruptcy laws) shall be entered; or
(iii) any Targeted Entity files an involuntary petition against Borrower under any Chapter of the Bankruptcy Code or under any other bankruptcy, insolvency, reorganization, arrangement or readjustment of debt, dissolution, liquidation or similar proceeding relating to Borrower or IDOT Guarantor under the laws of any jurisdiction.
(f) both (i) an involuntary petition under any Chapter of the Bankruptcy Code is filed against Borrower or IDOT Guarantor or Borrower or IDOT Guarantor directly or indirectly becomes the subject of any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction, or in equity, and (ii) any Targeted Entity has acted in concert or conspired with such creditors of Borrower or IDOT Guarantor (other than Lender) to cause the filing thereof.
(g) if any provision of this Agreement or any other Loan Document or the lien and security interest purported to be created hereunder or under any Loan Document shall at any time for any reason cease to be valid and binding in accordance with its terms on Borrower or IDOT Guarantor or Key Principal, or shall be declared to be null and void, or the validity or
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enforceability hereof or thereof or the validity or priority of the lien and security interest created hereunder or under any other Loan Document shall be contested by any Targeted Entity seeking to establish the invalidity or unenforceability hereof or thereof, or Borrower or IDOT Guarantor or Key Principal (only with respect to the Guaranty) shall deny that it has any further liability or obligation hereunder or thereunder; or
(h) (i) the execution by Borrower or IDOT Guarantor of a chattel mortgage or other security agreement on any materials, fixtures or articles used in the construction or operation of the improvements located on any Mortgaged Property or on articles of personal property located therein (other than in connection with any Permitted Liens), or (ii) if any such materials, fixtures or articles are purchased pursuant to any conditional sales contract or other security agreement or otherwise so that the Ownership thereof will not vest unconditionally in Borrower or IDOT Guarantor free from encumbrances, or (iii) if Borrower or IDOT Guarantor does not furnish to Lender upon request the contracts, bills of sale, statements, receipted vouchers and agreements, or any of them, under which Borrower or IDOT Guarantor claim title to such materials, fixtures, or articles; or
(i) the failure by Borrower or IDOT Guarantor to comply with any requirement of any Governmental Authority by the shorter of (A) the time period required by such Governmental Authority and (B) within thirty (30) days after written notice of such requirement shall have been given to Borrower or IDOT Guarantor by such Governmental Authority; provided that, if action is commenced and diligently pursued by Borrower or IDOT Guarantor within such thirty (30) days, then Borrower or IDOT Guarantor shall have an additional thirty (30) days to comply with such requirement; or
(j) a dissolution or liquidation for any reason (whether voluntary or involuntary) of any Targeted Entity; or
(k) any judgment against Borrower or IDOT Guarantor, any attachment or other levy against any portion of Borrowers assets with respect to a claim or claims in an amount in excess of $250,000 in the aggregate remains unpaid, unstayed on appeal undischarged, unbonded, not fully insured or undismissed for a period of ninety (90) days; or any judgment against Key Principal, any attachment or other levy against any portion of Key Principal assets with respect to a claim or claims in an amount in excess of $1,000,000;
(l) the failure by Borrower, IDOT Guarantor or Key Principal to perform or observe any material term, covenant, condition or agreement hereunder, other than as contained in subsections (a) through (k) above, within thirty (30) days after receipt of notice from Lender identifying such failure, provided such period shall be extended for up to sixty (60) additional days if in Lenders judgment such default is susceptible to cure and Borrower, in the discretion of Lender, is diligently pursuing a cure of such default within sixty (60) days after receipt of notice from Lender; or
(m) the occurrence of a default under any Supplemental Loan beyond the cure period, if any, set forth therein or an event of default under and as defined in the Supplemental Loan Documents.
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Notwithstanding anything to the contrary herein or in the other Loan Documents, if an Event of Default shall occur hereunder or under another Loan Document because a representation, warranty, affirmative covenant, negative covenant or other provision hereunder or thereunder shall be breached or violated which in Lenders judgment is specifically and exclusively with respect to a particular Mortgaged Property, such Event of Default shall be deemed cured, upon Borrowers or IDOT Guarantors satisfaction of conditions, as the case may be, set forth in Sections 3.04 and 6.05 relating to the release of such Mortgaged Property from the Collateral Pool within 30 days of the Event of Default. The existence of such cure right by the Borrower or IDOT Guarantor, as the case may be, shall not in any way limit or restrict Lenders right to exercise any and all remedies set forth in Article 12; provided, however, if the Borrower releases such Mortgaged Property pursuant to Sections 3.04 and 6.05 as described in the preceding sentence and at the time of such release no other Event of Default has occurred and is continuing, Lender shall cease exercising its remedies and discontinue any proceedings it may have initiated and the parties shall be restored to their former positions and rights hereunder.
Section 11.02. Tenant-Triggered Defaults.
Except as provided in the next paragraph, notwithstanding anything herein or in any other Loan Document to the contrary, (i) an Event of Default by the Operator under the Sub-Lease or an Event of Default by the Master Tenant under the Operating Lease, (ii) an Event of Default by the Operator or Master Tenant under any Subordination Assignment and Security Agreement, or (iii) an Event of Default under any Loan Document directly caused solely on account of the action or inaction of the Operator or Master Tenant (a Tenant Triggered Default), will not be an Event of Default under any Loan Document provided that within seven (7) Business Days of Borrower having actual knowledge of such Tenant Triggered Default occurring Borrower presents a written plan of action (setting forth the cause of the default, the specific steps Borrower will take to remedy the default and the timetable for implementing such remedy) (the Plan) and Lender approves such Plan or a modified Plan within fifteen (15) Business Days of the presentation to it of such Plan or such default is otherwise cured prior to Lender responding to such Plan. A Plan may include the release or substitution of one or more Mortgaged Properties, so long as the requirements for a release or substitution set forth in this Agreement are satisfied. Lenders decision to accept or reject a Plan will not be made in an arbitrary and capricious manner. For purposes of this Section 11.02, without limiting the scope of the meaning of Borrowers having actual knowledge, Borrower will automatically and immediately be deemed to have actual knowledge:
(i) of written public disclosure;
(ii) of the breach by Operator or Master Tenant of any obligation which is scheduled to be performed by or on a particular date (such as the payment of rent); or
(iii) in the event that Key Principal or REIT Management Research LLC or its successors and assigns has actual knowledge.
The prior paragraph will not be applicable to any Event of Default under the Sub-Lease or Operating Lease or any Loan Document or Supplemental Loan or to any Event of Default by
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the Operator or Master Tenant under any Subordination Assignment and Security Agreement relating to (i) the failure to pay any obligations due and owing under any Loan Document; (ii) the failure to pay taxes or other Impositions, (iii) the failure to purchase and maintain required insurance coverage, (iv) the liquidation or dissolution of the Operator or Master Tenant, (v) the revocation or termination of any License necessary to the operation of any Mortgaged Property as a Seniors Housing Facility, (vi) the cancellation of any utility services, (vii) an assignment by Master Tenant of its right, title and interest under the Operating Lease or Sub-Lease, (viii) an assignment by the Operator of its right, title and interest under the Sub-Lease, (ix) a failure to use any Mortgaged Property as a Seniors Housing Facility and any uses incidental thereto, (x) the failure to transfer licenses as required under each Subordination Assignment and Security Agreement and Section 8.25 of this Agreement, or (xi) compliance with obligations under the Completion Repair and Security Agreement relating to the completion of immediate repairs. In the event Master Tenant or Operator breaches any obligation under the Sub-Lease, Operating Lease or Subordination Assignment and Security Agreement relating to the creation of any encumbrance or lien on (A) any collateral pledged by Master Tenant or Operator to Lender (B) any leasehold interest in the Mortgaged Property or (C) the Collateral, upon Borrower having actual knowledge of such breach, Borrower will, within 30 days cause such encumbrance or lien to be released of record, bonded or otherwise remedied to Lenders satisfaction and failure to do so will be an Event of Default.
If Lender consents to the Plan, an Event of Default will occur if Borrower fails to diligently implement the Plan in the judgment of Lender within the agreed-upon time period set forth in the Plan. If Lender does not respond to the Plan within fifteen (15) Business Days it will be deemed rejected. If Lender rejects the Plan, and if the Tenant Triggered Default is property specific and pertains to no more than five (5) Mortgaged Properties within any quarterly period, Borrower will have 3 Business Days from the date of rejection to inform Lender if it will release the impacted property from the Collateral Pool in a manner which complies with the release requirements set forth in Sections 3.03, 3.04 and 6.05 within thirty (30) days of the rejection. Thereafter, the Borrower may also substitute a property into the Collateral Pool in a manner which complies with the substitution requirements set forth in Section 3.05, 3.06, 3.07 and 6.06. If Borrower (i) fails to inform the Lender within such 3 Business Day period that it will release or substitute the impacted property; (ii) informs Lender it will not release or substitute the impacted property; or (iii) fails to release the impacted property within such thirty (30) day period in accordance with the requirements of this Section, an Event of Default under the Loan Documents will occur.
Section 12.01. Remedies; Waivers.
Upon the occurrence of an Event of Default, Lender may do any one or more of the following (without presentment, protest or notice of protest, all of which are expressly waived by Borrower):
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Section 12.02. Waivers; Rescission of Declaration.
Lender shall have the right, to be exercised in its complete discretion, to waive any breach hereunder (including the occurrence of an Event of Default), by a writing setting forth the terms, conditions, and extent of such waiver signed by Lender and delivered to Borrower. Unless such writing expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence which gave rise to the waiver and not to any other similar event or occurrence which occurs subsequent to the date of such waiver. This provision shall not be construed to permit the waiver of any condition to a Request otherwise provided for herein.
Section 12.03. Reserved.
Section 12.04. No Remedy Exclusive.
Unless otherwise expressly provided, no remedy herein conferred upon or reserved is intended to be exclusive of any other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under the Loan Documents or existing at law or in equity.
Section 12.05. No Waiver.
No delay or omission to exercise any right or power accruing under any Loan Document upon the happening of any Event of Default or Potential Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.
Section 12.06. No Notice.
To entitle Lender to exercise any remedy reserved to Lender in this Article, it shall not be necessary to give any notice, other than such notice as may be required under the applicable provisions of this Agreement or any of the other Loan Documents.
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Section 13.01. Insurance and Real Estate Taxes.
Borrower shall (unless waived by Lender by separate agreement) establish funds for taxes, insurance premiums and certain other charges for each Mortgaged Property in accordance with Section 7(a) of the Security Instrument for each Mortgaged Property.
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Section 13.02. Replacement Reserves.
Borrower shall execute a Replacement Reserve Agreement for the Mortgaged Properties and shall (unless waived by Lender) make all deposits for replacement reserves in accordance with the terms of the Replacement Reserve Agreement.
Section 13.03. Completion/Repair Reserves.
Borrower shall execute a Completion/Repair and Security Agreement for the Mortgaged Properties and shall (unless waived by Lender) make all deposits for reserves in accordance with the terms of the Completion/Repair and Security Agreement.
Section 14.01. Personal Liability to Borrower.
Except as otherwise provided in this Article 14, Borrower shall have no personal liability under the Loan Documents for the repayment of any Indebtedness or for the performance of any other Obligations of Borrower under the Loan Documents, and Lenders only recourse for the satisfaction of the Indebtedness and the performance of such Obligations shall be Lenders exercise of its rights and remedies with respect to the Mortgaged Properties and any other Collateral held by Lender as security for the Indebtedness.
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Section 14.02. Preferences, Fraudulent Conveyances, Etc.
If Lender is required to refund, or voluntarily refunds, any payment received from Borrower because such payment is or may be avoided, invalidated, declared fraudulent, set aside or determined to be void or voidable as a preference, fraudulent conveyance, impermissible setoff or a diversion of trust funds under the bankruptcy laws or for any similar reason, including without limitation any judgment, order or decree of any court or administrative body having jurisdiction over Borrower or any of its property, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of, or trustee or similar officer for, Borrower or any substantial part of its property, or otherwise, or any statement or compromise of any claim effected by Lender with Borrower or any other claimant (a Rescinded Payment ), then Borrowers liability to Lender shall continue in full force and effect, with the same effect and to the same extent as if the Rescinded Payment had not been received by Lender, notwithstanding the cancellation or termination of any of the Loan Documents, and regardless of whether Lender contested the order requiring the return of such payment. In addition, Borrower shall pay, or reimburse Lender for, all expenses (including all reasonable attorneys fees, court costs and related disbursements) incurred by Lender in the defense of any claim that a payment received by Lender in respect of all or any part of the Obligations must be refunded. The provisions of this Section 14.02 shall survive the termination of the Loan Documents and any satisfaction and discharge of Borrower by virtue of any payment, court order or any federal or state law.
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Section 15.01. Counterparts.
To facilitate execution, this Agreement may be executed in any number of counterparts. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, appear on one (1) or more counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto.
Section 15.02. Amendments, Changes and Modifications.
This Agreement may be amended, changed, modified, altered or terminated only by written instrument or written instruments signed by all of the parties hereto.
Section 15.03. Payment of Costs, Fees and Expenses.
In addition to the payments required by Section 10.03 of this Agreement, Borrower shall pay within 30 days after delivery of written notice from Lender, all reasonable third party out-of-pocket fees, costs, charges or expenses (including the reasonable fees and expenses of attorneys, accountants and other experts) incurred by Lender in connection with:
Borrower shall also pay within 30 days after written notice from Lender, any transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution, delivery, filing, recordation, performance or enforcement of any of the Loan Documents or the Term Loan. However, Borrower will not be obligated to pay any franchise, excise, estate, inheritance, income, excess profits or similar tax on Lender. Any attorneys fees and expenses payable by Borrower pursuant to this Section shall be recoverable separately from and in addition to any other amount included in such judgment, and such obligation is intended
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to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment. Any amounts payable by Borrower pursuant to this Section, with interest thereon if not paid when due, shall become additional indebtedness of Borrower secured by the Loan Documents. Such amounts shall bear interest from the date such amounts are due until paid in full at the weighted average, as determined by Lender, of the interest rates in effect from time to time for the Term Loan unless collection from Borrower of interest at such rate would be contrary to Applicable Law, in which event such amounts shall bear interest at the highest rate which may be collected from Borrower under Applicable Law. The provisions of this Section are cumulative with, and do not exclude the application and benefit to Lender of, any provision of any other Loan Document relating to any of the matters covered by this Section.
Section 15.04. Payment Procedure.
All payments to be made to Lender pursuant to this Agreement or any of the Loan Documents shall be made in lawful currency of the United States of America and in immediately available funds by wire transfer to an account designated by Lender before 1:00 p.m. (Eastern Standard Time) on the date when due.
Section 15.05. Payments on Business Days.
In any case in which the date of payment to Lender or the expiration of any time period hereunder occurs on a day which is not a Business Day, then such payment or expiration of such time period need not occur on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the day of maturity or expiration of such period, except that interest shall continue to accrue for the period after such date to the next Business Day.
Section 15.06. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.
NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF BORROWER UNDER THIS AGREEMENT AND THE NOTES AND BORROWER UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (i) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED, (ii) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE UNIFORM COMMERCIAL CODE IN EFFECT FOR THE
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JURISDICTION IN WHICH THE BORROWER IS ORGANIZED. BORROWER AGREES THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTES, THE SECURITY DOCUMENTS (OTHER THAN THE SECURITY INSTRUMENTS) OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN THE DISTRICT OF COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN THE DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY DOCUMENTS (OTHER THAN THE SECURITY INSTRUMENTS) OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. BORROWER IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST BORROWER AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE DISTRICT OF COLUMBIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY BORROWER TO PERSONAL JURISDICTION WITHIN THE DISTRICT OF COLUMBIA. BORROWER AND LENDER EACH (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDERS COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY BORROWERS FREE WILL.
Section 15.07. Severability.
In the event any provision of this Agreement or in any other Loan Document shall be held invalid, illegal or unenforceable in any jurisdiction, such provision will be severable from
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the remainder hereof as to such jurisdiction and the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired in any jurisdiction.
Section 15.08. Notices.
addressed to the parties as follows:
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Section 15.09. Further Assurances and Corrective Instruments.
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Section 15.10. Term of this Agreement.
This Agreement shall continue in effect until the Termination Date.
Section 15.11. Assignments; Third-Party Rights.
No Borrower shall assign this Agreement, or delegate any of its obligations hereunder, without the prior written consent of Lender. Lender may assign its rights and/or obligations under this Agreement separately or together, without Borrowers consent, only to Fannie Mae or other entity if such assignment is made with the intent that such entity will further assign such rights to Fannie Mae, but may not delegate its obligations under this Agreement unless it first receives Fannie Maes written approval. Lender shall first assign its rights under this Agreement separately or together, without Borrowers consent, to Fannie Mae. Upon assignment to Fannie Mae, Fannie Mae shall be permitted to further assign its rights under this Agreement separately or together, without Borrowers consent.
Section 15.12. Headings.
Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 15.13. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in Appendix I and elsewhere in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other genders; (ii) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (iii) references herein to Articles, Sections, subsections, paragraphs and other subdivisions without reference to a document are to designated Articles, Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (v) a reference to an Exhibit or a Schedule without a further reference to the document to which the Exhibit or Schedule is attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the words herein, hereof, hereunder and other words of similar import
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refer to this Agreement as a whole and not to any particular provision; and (vii) the word including means including, but not limited to.
Section 15.14. Interpretation.
The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement and the Loan Documents. Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not apply in the interpretation of this Agreement and the Loan Documents or any amendment or supplement or exhibit hereto or thereto.
Section 15.15. Standards for Decisions, Etc.
Unless otherwise provided herein, if Lenders approval is required for any matter hereunder, such approval may be granted or withheld in Lenders sole and absolute discretion. Unless otherwise provided herein, if Lenders designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such designation, determination, selection, estimate, action or decision shall be made in Lenders sole and absolute discretion.
Section 15.16. Decisions in Writing.
Any approval, designation, determination, selection, action or decision of Lender or Borrower must be in writing to be effective.
Section 15.17. Requests.
Borrower may submit up to a total of six (6) Requests per Calendar Year.
Section 15.18. Conflicts Between Agreements.
Any terms and conditions contained in this Agreement that may also be contained in another Loan Document are not, to the extent reasonably practicable, to be construed to be in conflict with each other but rather is construed as duplicative, confirming, additional, or cumulative provisions. To the extent that, in the interpretation of this Agreement, any ultimate conflict between the terms and conditions of this Agreement and those set forth in another Loan Document is determined to exist, the terms and conditions of this Agreement are to control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
(Signatures appear on following pages)
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BORROWER: |
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SNH FM Financing LLC
, a
Delaware limited
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By: |
/s/ David J. Hegarty |
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Name: |
David J. Hegarty |
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Title: |
President |
S-1
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LENDER: |
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Citibank, N.A. , a national banking association |
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By: |
/s/ Kathy Millhouse |
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Name: |
Kathy Millhouse |
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Title: |
Vice President |
S-2
ACKNOWLEDGED AND AGREED TO BY IDOT GUARANTOR
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SNH FM Financing Trust
, a
Maryland real estate
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By: |
/s/ David J. Hegarty |
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Name: |
David J. Hegarty |
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Title: |
President |
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ACKNOWLEDGED AND AGREED TO BY IDOT GUARANTOR
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Ellicott City Land I, LLC
, a
Delaware limited
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By: |
/s/ David J. Hegarty |
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Name: |
David J. Hegarty |
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Title: |
President |
S-4
EXHIBIT A
Schedule of Initial Mortgaged Properties, Initial Allocable
Loan Amounts and Initial Valuations
EXHIBIT B
Confirmation of Guaranty
EXHIBIT C
Compliance Certificate
EXHIBIT D-1
Borrower Organizational Certificate
EXHIBIT D-2
Guarantor Organizational Certificate
EXHIBIT E
Reserved
EXHIBIT F
Reserved
EXHIBIT G
Reserved
EXHIBIT H
Reserved
EXHIBIT I
Request
EXHIBIT J
Confirmation of Obligations
EXHIBIT K
Reserved
EXHIBIT L
Reserved
EXHIBIT M
Reserved
EXHIBIT N
Reserved
EXHIBIT O
Disclosure Schedule
EXHIBIT P
Letter of Credit
EXHIBIT Q-1
Bank Legal Opinion (Foreign)
EXHIBIT Q-2
Bank Legal Opinion (Domestic)
EXHIBIT R
Form of Rent Roll
EXHIBIT S
Expansion Guaranty
EXHIBIT T
Expansion Security Agreement
SCHEDULE 1
Minimum Rent Payments
Certain Schedules and Exhibits to this agreement have been omitted and will be furnished supplementally to the Securities and Exchange Commission upon request.
APPENDIX I
DEFINITIONS
For all purposes of the Agreement, the following terms shall have the respective meanings set forth below:
Acquiring Person means a person or group of persons within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.
Additional Collateral Due Diligence Fees means the due diligence fees paid by Borrower to Lender with respect to each Substitute Mortgaged Property, as set forth in Section 10.02(b) .
Adjustable Rate means in connection with the Variable Facility Note.
Affiliate means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, control (including with correlative meanings, the terms controlling, controlled by and under common control with), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management (other than property management) and policies of that Person, whether through the ownership of voting securities, partnership interests or by contract or otherwise.
Aggregate Lease Payment Debt Service Coverage Ratio means, for any specified date, the ratio (expressed as a percentage) of
(a) the aggregate of the Lease Payments for the Mortgaged Properties for the preceding number of months as determined pursuant to the Underwriting Requirements
to
(b) the Facility Debt Service on the specified date.
Aggregate Loan to Value Ratio means, for any specified date, the ratio (expressed as a percentage) of
(a) the amount of the Term Loan Outstanding and Supplemental Loan Outstanding on the specified date,
to
I-1
(b) the aggregate of the Valuations most recently obtained prior to the specified date for all of the Mortgaged Properties.
Aggregate NOI Debt Service Coverage Ratio means, for any specified date, the ratio (expressed as a percentage) of
(a) the aggregate of the Net Operating Income for the Mortgaged Properties for the preceding number of months as determined pursuant to the Underwriting Requirements
to
(b) the Facility Debt Service on the specified date.
Agreement means this Master Credit Facility Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, including all Recitals and Exhibits to the Agreement, each of which is hereby incorporated into the Agreement by this reference.
Allocable Loan Amount means the portion of the Term Loan allocated to a particular Mortgaged Property by Lender in accordance with the Agreement. The initial Allocable Loan Amount (Initial Allocable Loan Amount) for each of the Initial Mortgaged Properties is as set forth in Exhibit A to the Agreement.
Alzheimer/Dementia Units shall mean all such units that are licensed to and operate as Alzheimers or dementia care units in a Seniors Housing Facility.
Amortization Period means a period of thirty (30) years.
Applicable Law means (a) all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators, (b) all zoning, building, environmental and other laws, ordinances, rules, regulations and restrictions of any Governmental Authority affecting the ownership, management, use, operation, maintenance or repair of any Mortgaged Property, including the Americans with Disabilities Act (if applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials Laws (as defined in the Security Instrument), (c) any building permits or any conditions, easements, rights-of-way, covenants, restrictions of record or any recorded or unrecorded agreement affecting or concerning any Mortgaged Property including planned development permits, condominium declarations, and reciprocal easement and regulatory agreements with any Governmental Authority, (d) all laws, ordinances, rules and regulations, whether in the form of rent control, rent stabilization or otherwise, that limit or impose conditions on the amount of rent that may be collected from the units of any Mortgaged Property, and (e) requirements of insurance companies or similar organizations, affecting the operation or use of any Mortgaged Property or the consummation of the transactions to be effected by the Agreement or any of the other Loan Documents.
I-2
Appraisal means an appraisal of a Seniors Housing Facility conforming to the requirements of Lender for similar loans anticipated to be sold to Fannie Mae and accepted by Lender.
Appraised Value means the value set forth in an Appraisal.
Assignment of Lease Guaranty means that certain Assignment of Lease Guaranty dated the date hereof among Borrower, IDOT Guarantor, Lender and Five Star Quality Care, Inc.
Assignment of Leases and Rents means an Assignment of Leases and Rents, required by Lender and satisfying Lenders requirements, as the same may be amended, restated, modified or supplemented from time to time.
Assisted Living Units shall mean all such units that are licensed to and operate as Assisted Living care units in a Seniors Housing Facility.
Bankruptcy Code means Title 11 of the United States Code entitled Bankruptcy as now and hereafter in effect, or any successor statute.
Bankruptcy Event shall have the meaning set forth in Section 14.01(b) .
Borrower means SNH FM Financing LLC, a Delaware limited liability company, together with its permitted successors and assigns.
Business Day means a day on which Fannie Mae and Servicer is open for business.
Calendar Quarter means, with respect to any year, any of the following three month periods: (a) January-February-March; (b) April-May-June; (c) July-August-September; and (d) October-November-December.
Calendar Year means the 12-month period from the first day of January to and including the last day of December, and each 12-month period thereafter.
Capitalization Rate means, for each Mortgaged Property, a capitalization rate selected by Lender for use in determining the Valuations, which rate is determined as set forth in Section 2.01(b) .
Cash Equivalents means
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Certificate of Borrower means that certain Master Certificate of Borrower executed by the Borrower as of the date hereof, and which must be executed and delivered by the Borrower to Lender from time to time in accordance with the terms of this Agreement, the form of which certificate shall be the same or substantially similar to which the Borrower executes as of the date hereof.
Certificate of IDOT Guarantor means those certain Certificates of Guarantor executed by the IDOT Guarantor as of the date hereof, and which must be executed and delivered by the IDOT Guarantor to Lender from time to time in accordance with the terms of this Agreement, the form of which certificate shall be the same or substantially similar to which the IDOT Guarantor executes as of the date hereof.
Change of Control means the earliest to occur of: (a) the date on which an Acquiring Person becomes (by acquisition, consolidation, merger or otherwise), directly or indirectly, the beneficial owner of more than twenty five percent (25%) of the total ownership interest of any Targeted Entity then outstanding, or (b) the replacement (other than solely by reason of retirement at age sixty or older, death or disability) of more than fifty percent (50%) (or such lesser percentage as is required for decision-making by the board of directors or an equivalent governing body) of the members of the board of directors (or an equivalent governing body) of any Targeted Entity over a one-year period from the directors who constituted such board of directors at the beginning of such period and such replacement shall not have been approved by a vote of at least a majority of such board of directors of any Targeted Entity then still in office who either were members of such board of directors at the beginning of such one-year period or whose election as members of the board of directors was previously so approved (it being understood and agreed that in the case of any entity governed by a trustee, board of managers, or other similar governing body, the foregoing clause (b) shall apply thereto by substituting such governing body and the members thereof for the board of directors and members thereof, respectively) or (c) the board of trustees of Key Principal does not consist of at least two trustees that are directors, employees or officers of REIT Management & Research LLC or the business management agreement between Key Principal and REIT Management & Research LLC is terminated or (d) the board of directors or board of trustees of Borrower or any member of Borrower does not consist of at least a controlling majority of directors, employees or officers of REIT Management & Research LLC.
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Closing Date means the Initial Closing Date and each date after the Initial Closing Date on which the funding or other transaction requested in a Request is required to take place.
Collateral means the Mortgaged Properties and other collateral from time to time or at any time encumbered by the Security Instruments, or any other property securing Borrowers obligations under the Loan Documents.
Collateral Assignment of Guaranty Agreement shall mean that certain Collateral Assignment of Guaranty Agreement dated the date hereof among SNH FM Financing LLC, SNH FM Financing Trust, Ellicott City Land I, LLC and Citibank, N.A.
Collateral Pool means all of the Collateral.
Compliance Certificate means a certificate of Borrower substantially in the form of Exhibit C to the Agreement.
Completion/Repair and Security Agreement means a Master Completion/Repair and Security Agreement required by Lender and satisfying Lenders requirements, as the same may be amended, restated, modified or supplemented from time to time.
Confirmation of Guaranty means a confirmation of the Guaranty and the IDOT Guaranty executed by Guarantor and IDOT Guarantor, respectively, in connection with any Request after the Initial Closing, substantially in the form of Exhibit B to the Agreement.
Confirmation of Obligations means a Confirmation of Obligations delivered in connection with the addition of a Substitute Mortgaged Property to the Collateral Pool or a release of a Release Mortgaged Property from the Collateral Pool, dated as of the Closing Date for each such addition, signed by Borrower and Key Principal, pursuant to which Borrower and Key Principal confirm their obligations under the Loan Documents substantially in the form of Exhibit J to the Agreement.
Controlled (or any variation of such term) of one entity (the controlled entity ) by another (the controlling entity ) means that the controlling entity has the power and authority, directly or indirectly, to direct or cause the direction of the management and policies of the controlled entity, by contract or otherwise.
Controlled Group means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Internal Revenue Code.
Debt Service Amounts shall have the meaning set forth in Section 14.01(a) .
Disclosure Schedule means that certain Disclosure Schedule attached hereto as Exhibit O.
DUS Guide means the Fannie Mae Delegated Underwriting and Servicing Guide in its present form and as amended, modified, supplemented or reissued from time to time (all
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references to Parts, Chapters, Sections and other subdivisions of the DUS Guide shall be deemed references to (i) the Parts, Chapters, Sections and other subdivisions in effect on the date of the DUS Guide and (ii) any successor provisions to such Parts, Chapters, Sections and other subdivisions.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.
Event of Default means any event defined to be an Event of Default under Article 11 .
Event of Default has occurred and is continuing shall mean that an Event of Default has occurred which has not been cured to the satisfaction of Lender, provided however, that nothing shall be construed to require Lender to accept any cure, or grant any cure period not otherwise provided for in this Agreement.
Expansion Guaranty means that certain Expansion Guaranty, attached hereto as Exhibit S , as it may be amended, restated, supplemented or otherwise modified from time to time.
Expansion Security Agreement means that certain Expansion Security Agreement, attached hereto as Exhibit T , as it may be amended, restated, supplemented or otherwise modified from time to time.
Facility Debt Service means
For use in determining the Aggregate NOI Debt Service Coverage Ratio, for purposes of determining compliance with the Release Coverage and LTV Tests and the Substitution Coverage and LTV Tests, and for other ongoing monitoring purposes, and in connection with the underwriting of any substitution or release, the sum of:
(A) the Variable Loan shall be deemed to require level monthly payments of principal and interest at an interest rate equal to the Cap Rate (the Cap Rate is 9.415%, the maximum Adjustable Rate set forth in the Variable Facility Note) in an amount necessary to fully amortize the original principal amount of the Variable Loan over the Amortization Period, with such amortization to commence on the first day of the twelve (12) month period; and
(B) each variable rate Supplemental Loan shall be deemed to require level monthly payments of principal and interest at an interest rate equal to that
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rate which is calculated in accordance with the Underwriting Requirements then in effect; and
(C) the Fixed Loan and each fixed rate Supplemental Loan shall require level monthly payments of principal and interest (at the Interest Rate as set forth in the Fixed Facility Note or the interest rate as set forth in the note evidencing such Supplemental Loan) in an amount necessary to fully amortize the original principal amount of the Fixed Loan and Supplemental Loan over the Amortization Period, with such amortization to commence on the first day of the period determined pursuant to the Underwriting Requirements.
Fannie Mae means the body corporate duly organized under the Federal National Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq . and duly organized and existing under the laws of the United States.
Fees means Additional Collateral Due Diligence Fees, Initial Due Diligence Fees, Initial Origination Fee, Release Fee, Substitution Fee, LOC Fee and any and all other fees specified in the Agreement.
First Anniversary means the date that is one year after the Initial Closing Date.
Fixed Loan means the loan in the amount of $307,760,000 evidenced by the Fixed Facility Note.
Fixed Facility Note means a promissory note (together with all schedules, riders, allonges, addenda, renewals, extensions, amendments and modifications thereto) which will be issued by Borrower to Lender, concurrently with the funding of the Fixed Loan on the Initial Closing Date.
GAAP means generally accepted accounting principles in the United States in effect from time to time, consistently applied.
General Conditions shall have the meaning set forth in Article 6 .
Geographical Diversification Requirements shall mean that as the result of the release or substitution of a Mortgaged Property (i) the aggregate Allocable Loan Amount allocated to Mortgaged Properties in any one state does not increase by 5% or more from the percentages set forth below and (ii) the Allocable Loan Amount associated with the Mortgaged Properties located in any two states shall not exceed 40% of the Outstanding principal balance of the Term Loan:
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State |
|
Percentage of Allocable
|
|
CA |
|
14.87 |
% |
|
|
|
|
TX |
|
18.60 |
% |
|
|
|
|
KY |
|
6.06 |
% |
|
|
|
|
NM |
|
5.40 |
% |
|
|
|
|
OH |
|
3.76 |
% |
|
|
|
|
IN |
|
5.01 |
% |
|
|
|
|
FL |
|
7.77 |
% |
|
|
|
|
AZ |
|
6.56 |
% |
|
|
|
|
MA |
|
4.38 |
% |
|
|
|
|
KS |
|
4.12 |
% |
|
|
|
|
MD |
|
9.50 |
% |
|
|
|
|
DE |
|
1.50 |
% |
|
|
|
|
GA |
|
1.88 |
% |
|
|
|
|
VA |
|
8.01 |
% |
|
|
|
|
NC |
|
1.71 |
% |
|
|
|
|
WI |
|
0.87 |
% |
|
|
|
|
Total |
|
100.00 |
% |
Governmental Approval means an authorization, permit, consent, approval, license, registration or exemption from registration or filing with, or report to, any Governmental Authority.
Governmental Authority means any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.
Gross Revenues means, for any specified period, with respect to any Seniors Housing Facility, all income in respect of such Seniors Housing Facility as reflected on the certified operating statement for such specified period as adjusted to exclude unusual income (e.g. temporary or nonrecurring income), income not allowed by Lender for similar loans anticipated
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to be sold to Fannie Mae (e.g. interest income, furniture income, etc.), and the value of any unreflected concessions.
Guarantor means the Key Principal, IDOT Guarantor and any Person that becomes a guarantor and provides a Guaranty in connection with the Obligations under this Agreement.
Guaranty means the Guaranty executed by Key Principal guaranteeing the obligations set forth in Section 14.01(a)(vi), as the same may be amended, restated, modified or supplemented from time to time.
Hazardous Substance Activity means, with respect to any Mortgaged Property, any storage, holding, existence, release, spill, leaking, pumping, pouring, injection, escaping, deposit, disposal, dispersal, leaching, migration, use, treatment, emission, discharge, generation, processing, abatement, removal, disposition, handling or transportation of any Hazardous Materials (as defined in the Security Instrument) from, under, into or on such Mortgaged Property in violation of Hazardous Materials Laws (as defined in the Security Instrument), including the discharge of any Hazardous Materials emanating from such Mortgaged Property in violation of Hazardous Materials Laws through the air, soil, surface water, groundwater or property and also including the abandonment or disposal of any barrels, containers and other receptacles containing any Hazardous Materials from or on such Mortgaged Property in violation of Hazardous Materials Laws, in each case whether sudden or nonsudden, accidental or nonaccidental.
IDOT Guarantor means SNH FM Financing Trust, a Maryland real estate investment trust and Ellicott City Land I, LLC, a Delaware limited liability company.
IDOT Guaranty means each Guaranty executed by the IDOT Guarantor as the same may be amended, restated, modified or supplemented from time to time.
Impositions means, with respect to any Mortgaged Property, all (1) water and sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged Property, (2) premiums for fire and other hazard insurance, rent loss insurance and such other insurance as Lender may require under any Security Instrument, (3) Taxes, and (4) amounts for other charges and expenses which Lender at any time reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on the Mortgaged Property, or otherwise to protect Lenders interests.
Indebtedness means, with respect to any Person, as of any specified date, without duplication, all:
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Indemnification Agreement Regarding Taxes means that certain Indemnification Agreement Regarding Taxes executed by IDOT Guarantor, Borrower and Key Principal on the Initial Closing Date.
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Independent Living Units shall mean all such units that are licensed to and operate as Independent Living care units in a Seniors Housing Facility.
Initial Closing Date means the date of the Agreement.
Initial Due Diligence Fees shall have the meaning set forth in Section 10.02(a) .
Initial Mortgaged Properties means the Seniors Housing Facilities described on Exhibit A to the Agreement and which represent the Seniors Housing Facilities which are made part of the Collateral Pool on the Initial Closing Date.
Initial Origination Fee shall have the meaning set forth in Section 10.01(a) .
Initial Security Instruments means the Security Instruments covering the Initial Mortgaged Properties.
Initial Valuation means, when used with reference to specified Collateral, the Valuation initially performed for the Collateral as of the date on which the Collateral was added to the Collateral Pool. The Initial Valuation for each of the Initial Mortgaged Properties is as set forth in Exhibit A to the Agreement.
Insurance Policy means, with respect to a Mortgaged Property, the insurance coverage and insurance certificates evidencing such insurance required to be maintained pursuant to the Security Instrument encumbering the Mortgaged Property.
Internal Revenue Code means the Internal Revenue Code of 1986, as amended. Each reference to the Internal Revenue Code shall be deemed to include (a) any successor internal revenue law and (b) the applicable regulations whether final, temporary or proposed.
Key Principal means Senior Housing Properties Trust, a Maryland real estate investment trust.
Lease means any lease, any sublease or sub-sublease, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in any Mortgaged Property, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease or other agreement entered into in connection with such lease, sublease, sub-sublease or other agreement, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, any residency, occupancy, admission and care agreements pertaining to residents of the Mortgaged Property and any Operating Lease.
Lease Payment means for any specified period for any Mortgage Property, the rental payments (including but not limited to payments defined as Rent, Additional Rent and/or Minimum Rent in the Operating Lease but should not include payments that are reimbursed to landlord by tenant if even such amounts are treated as Rent, Additional Rent under an
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Operating Lease) made by Master Tenant as tenant/lessee to Borrower as landlord/lessor pursuant to the terms of the Operating Lease.
Lease Payment Debt Service Coverage Ratio means, for any Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of
(a) the Lease Payments for the subject Mortgaged Property for the preceding number of months as determined pursuant to the Underwriting Requirements
to
(b) the Facility Debt Service on the specified date, assuming, for the purpose of calculating the Facility Debt Service for this definition, that the amount of the Term Loan Outstanding shall be the Allocable Loan Amount and the amount of the Supplemental Loan Outstanding shall be the Supplemental Allocable Loan Amount, in each case for the subject Mortgaged Property.
Lender means Citibank, N.A. and, after the assignment to Fannie Mae, means Fannie Mae and its successors and assigns for all purposes of this Agreement except that Lender shall continue to mean Citibank, N.A. or any replacement Person designated by Fannie Mae in relation to all obligations under this Agreement including the obligation to make any Supplemental Loans.
Letter of Credit means a letter of credit issued by an LOC Bank satisfactory to Fannie Mae naming Fannie Mae as beneficiary, in form and substance as attached hereto as Exhibit P .
Level of Care Diversity Requirements means that the seniors housing units of the Mortgaged Properties shall conform on a Collateral Pool basis with the following percentage requirements:
Independent Living Units minimum 51%;
Assisted Living Units maximum 35%;
Alzheimer/Dementia Units maximum 10%; and
Skilled Nursing Units maximum 13%.
Licenses means any operating license, certificates of occupancy, health department licenses, food service licenses, certificates of need, business licenses, permits, registrations, certificates, authorizations, approvals, and similar documents required by applicable laws and regulations for the operation of the Mortgaged Property as a Seniors Housing Facility, including replacements and additions thereto.
Lien means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (including both consensual and non-consensual liens and encumbrances).
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Liquidity means, at any time, the amount of cash and Cash Equivalents owned by a Person.
Loan Document Taxes shall have the meaning set forth in Section 8.10 .
Loan Documents means the Agreement, the Notes, the Security Documents, the Guaranty, the IDOT Guaranty, the Certificate of IDOT Guarantor, the Indemnification Agreement Regarding Taxes, Collateral Assignment of Guaranty Agreement, Expansion Security Agreement, if any, Expansion Guaranty, if any and all documents executed by Borrower, IDOT Guarantor or Key Principal pursuant to the General Conditions set forth in Section 6.01 of the Agreement and any other documents executed by Borrower, IDOT Guarantor or Key Principal from time to time in connection with the Agreement or the transactions contemplated by the Agreement.
Loan to Value Ratio means, for a Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of
to
LOC Bank means any financial institution issuing the Letter of Credit and meeting the requirements set forth in Section 6.12(a) .
Margin has the definition set forth in the Variable Facility Note or the note evidencing a Supplemental Loan, as applicable.
Master Tenant means, FVE FM Financing, Inc., corporation organized under the laws of Maryland, and its successors and assigns or any other Master Tenant under the Operating Lease of all the Mortgaged Properties approved in writing by Lender.
Master Tenants Authorized Representative means those persons duly appointed and identified as such by the Master Tenant, which Authorized Representative shall initially be the President, any Vice President or the Treasurer of the Master Tenant (or such other officer of the Master Tenant as may be designated by any of them), each with the authority to act alone or with one or more persons, and those persons appointed and identified as such by the Master Tenant in a writing delivered to Borrower, each with the authority to act alone or with one or more persons.
Master Tenant/Operator Bankruptcy Event means any one or more of the following events:
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Material Adverse Effect means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, or circumstance or circumstances, whether or not related, a material adverse change in or a materially adverse effect upon any of (a) the business, operations, property or condition (financial or otherwise) of Borrower or Key Principal, as applicable, to the extent specifically referred to in the applicable provision of the applicable Loan Document, (b) the present or future ability of Borrower to perform the Obligations for which it is liable, or of Key Principal to perform its obligations under the Guaranty, as the case may be, to the extent specifically referred to in the applicable provision of the applicable Loan Document, (c) the validity, priority, perfection or enforceability of the Agreement or any other Loan Document or the rights or remedies of Lender under any Loan Document, or (d) the value of, or Lenders ability to have recourse against, any Mortgaged Property.
MBS means a mortgage-backed security issued by Fannie Mae which is backed by a Fixed Loan and has an interest in the Note and the Collateral Pool securing the Note, which interest permits the holder of the MBS to participate in the Note and the Collateral Pool to the extent of such Fixed Loan.
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Moodys means Moodys Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, and its successors and assigns, if such successors and assigns shall continue to perform the functions of a securities rating agency.
Mortgaged Properties means, collectively, the Substitute Mortgaged Properties, and the Initial Mortgaged Properties, but excluding each Release Mortgaged Property from and after the date of its release from the Collateral Pool.
Multiemployer Plan has the meaning set forth in Section 4001(a)(3) of ERISA.
Net Operating Income means, for any specified period, with respect to any Mortgaged Property, the aggregate net income during such period equal to Gross Revenues during such period less the aggregate Operating Expenses during such period. If a Mortgaged Property is not owned by a Borrower or an Affiliate of a Borrower for the entire specified period, the Net Operating Income for the Mortgaged Property for the time within the specified period during which the Mortgaged Property was owned by a Borrower or an Affiliate of a Borrower shall be the Mortgaged Propertys pro forma net operating income determined by Lender in accordance with the underwriting procedures set forth by Lender for similar loans anticipated to be sold to Fannie Mae.
Net Worth means, as of any specified date, for any Person, the excess of the Persons assets over the Persons liabilities, determined in accordance with GAAP on a consolidated basis, provided that all real property shall be valued on an undepreciated basis.
NOI Debt Service Coverage Ratio means, for any Mortgaged Property, for any specified date, the ratio (expressed as a percentage) of
(a) the Net Operating Income for the subject Mortgaged Property for the preceding number of months as determined pursuant to the Underwriting Requirements
to
(b) the Facility Debt Service on the specified date, assuming, for the purpose of calculating the Facility Debt Service for this definition, that the amount of the Term Loan Outstanding shall equal the Allocable Loan Amount and the amount of the Supplemental Loan Outstanding shall be the Supplemental Allocable Loan Amount, in each case for the subject Mortgaged Property.
Note means any Fixed Facility Note and/or any Variable Facility Note.
Obligations means the aggregate of the obligations of Borrower and Key Principal under the Agreement and the other Loan Documents.
Operating Expenses means, for any period, with respect to any Mortgaged Property, all expenses in respect of such Mortgaged Property, as determined by Lender based on the certified operating statement for such specified period as adjusted to provide for the following:
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(i) all appropriate types of expenses, including a management fee, deposits for the replacement reserves (whether funded or not), and deposits for completion/repair reserves are included in the total operating expense figure; (ii) upward adjustments to individual line item expenses to reflect market norms or actual costs and correct any unusually low expense items, which could not be replicated by a different owner or manager ( e.g. , a market rate management fee will be included regardless of whether or not a management fee is charged, market rate payroll will be included regardless of whether shared payroll provides for economies, etc.); and (iii) downward adjustments to individual line item expenses to reflect unique or aberrant costs ( e.g. , non-recurring capital costs, non-operating borrower expenses, etc.).
Operating Lease means the Amended and Restated Master Lease Agreement among SNH FM Financing LLC, SNH FM Financing Trust, Ellicott City Land I, LLC and FVE FM Financing, Inc. and each other Lease, if any, related to all the Mortgaged Properties executed by and between Borrower, as lessor, and Master Tenant, as lessee and approved in writing by Lender and any Sub-Lease thereunder.
Operator means, any Operator (including any tenant under a Sub-Lease) of all the Mortgaged Properties approved in writing by Lender.
Operator Guaranty means any and all guaranties of Operators and/or Master Tenants obligations under the Sub-Lease and/or Operating Lease, respectively.
Operators Authorized Representative means those persons duly appointed and identified as such by the Operator, which Authorized Representative shall initially be the President, any Vice President (including any Senior Vice President), the Treasurer, the Secretary or any Assistant Secretary of the Operator (or such other officer of the Operator as may be designated by any of them), each with the authority to act alone or with one or more persons, and those persons appointed and identified as such by the Operator in a writing delivered to Borrower, each with the authority to act alone or with one or more persons.
Organizational Certificate means, collectively, certificates from Borrower and Key Principal to Lender, in the form of Exhibits D-1 and D-2 to the Agreement, certifying as to certain organizational matters with respect to Borrower and Key Principal.
Organizational Documents means all certificates, instruments and other documents pursuant to which an organization is organized or operates, including but not limited to, (i) with respect to a corporation, its articles of incorporation and bylaws, (ii) with respect to a limited partnership, its limited partnership certificate and partnership agreement, (iii) with respect to a general partnership or joint venture, its partnership or joint venture agreement and (iv) with respect to a limited liability company, its articles of organization and operating agreement.
Outstanding or outstanding means, when used in connection with promissory notes, other debt instruments or the Term Loan or Supplemental Loan, for a specified date, promissory notes or other debt instruments which have been issued, to the extent not repaid in full as of the specified date.
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Ownership Interests means, with respect to any entity, any ownership interests in the entity and any economic rights (such as a right to distributions, net cash flow or net income) to which the owner of such ownership interests is entitled.
PBGC means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
Permits means all permits, or similar licenses or approvals issued and/or required by an applicable Governmental Authority or any Applicable Law in connection with the ownership, use, occupancy, leasing, management, operation, repair, maintenance or rehabilitation of any Mortgaged Property or Borrowers business.
Permitted Liens means, with respect to a Mortgaged Property, (i) the exceptions to title to the Mortgaged Property set forth in the Title Insurance Policy for the Mortgaged Property which are approved by Lender, (ii) the Security Instrument and the Subordination, Assignment and Security Agreement encumbering the Mortgaged Property, (iii) any other Liens approved by Lender or permitted under the terms of the Security Instrument, (iv) mechanics or materialmens liens or judgment liens provided the same is removed or bonded off to the satisfaction of Lender within thirty (30) days of notice of filing, (v) real estate taxes and water and sewer and other utility charges that are a lien but not yet due and payable or that are due and payable but not yet delinquent and (vi) leases and licenses otherwise permitted under this Agreement (including, without limitation, the Operating Lease and Sub-lease).
Person means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).
Plan means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other agreement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five (5) plan years made contributions.
Potential Event of Default means any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Default.
Potential Event of Default has occurred and is continuing shall mean that Potential Event of Default has occurred which has not been cured to the satisfaction of Lender, provided however, that nothing shall be construed to require Lender to accept any cure, or grant any cure period not otherwise provided for in this Agreement.
Prohibited Person means (i) a Person that is the subject of, whether voluntary or involuntary, any case, proceeding or other action against such Person under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, or (ii) any Person with whom Servicer or Fannie Mae is prohibited from doing business
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pursuant to any law, rule, regulation, judicial proceeding or administrative directive, or (iii) any Person identified on the federal Excluded Parties List System, the Specially Designated National and Blocked Persons List, the federal Office of Foreign Assets and Control list, the U.S. Department of Housing and Urban Developments Limited Denial of Participation, HUD Funding Disqualifications and Voluntary Abstentions List, or on Fannie Maes Multifamily Applicant Experience Check, each of which may be amended from time to time and any successor or replacement thereof, or (iv) a Person that Fannie Mae determines to be an unacceptable credit risk due to the aggregate amount of debt such Person owes to Fannie Mae, or (v) a Person that has caused any unsatisfactory experience of a material nature with Fannie Mae or Servicer, such as a default, fraud, intentional misrepresentation, litigation, arbitration or other similar act, or (vi) a Person that is, or whose senior management has ever been convicted of a felony or held liable for fraud in a civil or criminal action or (vii) a Person that does not meet the requirements of Section 61 of the Certificate of Borrower.
Property means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.
Rate Change Date , in connection with a Variable Loan, has the meaning set forth in the Variable Facility Note.
Release Coverage and LTV Tests mean, for any specified date, each of the following financial tests:
Release Documents mean instruments releasing the applicable Security Instrument and the applicable Subordination, Assignment and Security Agreement as a Lien on a Mortgaged Property, and UCC-3 Termination Statements terminating the UCC-1 Financing Statements, and such other documents and instruments to evidence the release of such Mortgaged Property from the Collateral Pool.
Release Fee means with respect to any Release effected in accordance with Section 3.04(c) , a fee in the amount of $10,000 per Release Mortgaged Property.
Release Mortgaged Property shall have the meaning set forth in Section 3.05.
Release Price shall have the meaning set forth in Section 3.04(c) .
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Release Request means a written request, substantially in the form of Exhibit T to the Agreement, to obtain a release of Collateral from the Collateral Pool pursuant to Section 3.04(a) .
Remaining Mortgaged Properties shall have the meaning set forth in Section 6.05(f) .
Rent Roll means, with respect to any Seniors Housing Facility, a rent roll prepared and certified by the Operator of the Seniors Housing Facility, on Fannie Mae Form 4243 or on another form approved by Lender and containing substantially the same information as Form 4243 requires, it being acknowledged that the forms attached hereto as Exhibit R are satisfactory to Lender.
Replacement Reserve Agreement means a Master Replacement Reserve and Security Agreement required by Lender, and satisfying Lenders requirements, as the same may be amended, modified or supplemented from time to time.
Request means a Release Request and a Substitution Request.
Required Escrow Payments has the meaning given that term in Section 13.01(a) of this Agreement.
Rescinded Payment has the meaning given that term in Section 14.02 of this Agreement.
S&P shall mean Standard & Poors Credit Markets Services, a division of The McGraw-Hill Companies, Inc., a New York corporation, and its successors and assigns, if such successors and assigns shall continue to perform the functions of a securities rating agency.
Security means a security as set forth in Section 2(1) of the Securities Act of 1933, as amended.
Security Documents means the Security Instruments, the Subordination, Assignment and Security Agreements, Assignment of Lease Guaranty, the Master Replacement Reserve Agreements, the Completion/Repair and Security Agreement and any other documents executed by Borrower or IDOT Guarantor from time to time to secure any of Borrowers obligations under the Loan Documents as the same may be amended, restated, modified or supplemented from time to time.
Security Instrument means, for each Mortgaged Property, a Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement given by a Borrower and each Indemnity Multifamily Deed of Trust, Assignment of Rent and Security Agreement given by IDOT Guarantor to or for the benefit of Lender to secure the obligations of Borrower under the Loan Documents. With respect to each Mortgaged Property owned by a Borrower or IDOT Guarantor, the Security Instrument shall be substantially in the form published by Fannie Mae for use in the state in which the Mortgaged Property is located. The amount secured by the Security Instrument shall be equal to the Term Loan amount.
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Senior Management means the President and/or Chief Financial Officer.
Seniors Housing Facility means a residential housing facility that qualifies as housing for older persons under the Fair Housing Amendments Act of 1988 and the Housing for Older Persons Act of 1995 comprised of independent living units, assisted living units and/or Alzheimers/dementia care units, or skilled nursing units, as applicable.
Servicer means a servicer approved by Fannie Mae, which initially shall be Citibank, N.A., and any permitted successor or assign.
Single-Purpose means, with respect to a Person that is any form of partnership, real estate investment trust or corporation or limited liability company, that such Person at all times since its formation:
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Skilled Nursing Units shall mean all such facilities, beds or units that are licensed to operate as Skilled Nursing facilities, beds or units in a Seniors Housing Facility.
Sub-Lease means each sub-lease entered into pursuant to the Operating Lease in which the Master Tenant is the landlord and the Operator of the Mortgaged Property is the tenant.
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Subordination, Assignment and Security Agreement means those certain Subordination, Assignment and Security Agreements, dated on the Initial Closing Date and any subsequent Closing Date, as the same may be amended, restated, modified and supplemented from time to time.
Substitute Collateral shall have the meaning set forth in Section 3.04(d)(ii).
Substitute Mortgaged Property shall have the meaning set forth in Section 3.05.
Substitution shall have the meaning set forth in Section 3.05(a) .
Substitution Coverage and LTV Tests mean, for any specified date, each of the following financial tests:
or
or
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Substitution Fee means with respect to any Substitution effected in accordance with Section 3.05 , a fee in the sum of: (i) 50 basis points of the Allocable Loan Amount for the Released Mortgaged Property and (ii) the Release Fee, per Mortgaged Property being released.
Substitution Request means the written request to add a Substitute Mortgaged Property to the Collateral Pool pursuant to Section 3.05, Section 3.06 and Section 3.07.
Supplemental Loan means such loan given in accordance with the Fannie Mae Supplemental Loan product.
Supplemental Loan Documents shall have the meaning set forth in Section 2.02.
Survey means the as-built survey of each Mortgaged Property prepared in accordance with Lenders requirements for similar loans that are anticipated to be sold to Fannie Mae.
Targeted Entity means individually and collectively, Key Principal, any direct or indirect Subsidiary of Key Principal that is an owner of Borrower, IDOT Guarantor and Borrower.
Taxes means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien, on the Mortgaged Properties.
Term Loan means the Fixed Loan and Variable Loan.
Term of this Agreement shall be determined as provided in Section 15.10 .
Termination Date means the maturity date for the Term Loan or at such time as the Term Loan is no longer Outstanding.
Tier Four Loan means such loans made pursuant to the Tier Four requirements and guidelines set forth in the DUS Guide. If the term Tier Four is no longer a term set forth in the DUS Guide or is defined by Fannie Mae in a document other than the DUS Guide, a loan underwritten to a requirement which is the lowest loan to value ratio and highest debt service coverage ratio categorized by Fannie Mae at the time.
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Title Company means the title company which provides title insurance for a Mortgaged Property.
Title Insurance Policies means the mortgagees policies of title insurance issued by the Title Company from time to time relating to each of the Security Instruments, conforming to Lenders requirements for similar loans anticipated to be sold to Fannie Mae, together with such endorsements, coinsurance, reinsurance and direct access agreements with respect to such policies as Lender may, from time to time, consider necessary or appropriate, including variable credit endorsements, if available, and tie-in endorsements, if available, and with a limit of liability under the policy (subject to the limitations contained in sections of the Stipulations and Conditions of the policy relating to a Determination and Extent of Liability) equal to the Term Loan amount.
Transfer means
(1) as used with respect to ownership interests in a Targeted Entity, (i) a sale, assignment, pledge, transfer or other disposition of any ownership interest in a Targeted Entity, or (ii) the issuance or other creation of new ownership interests in a Targeted Entity, or (iii) a merger or consolidation of Targeted Entity into another entity or of another entity into Targeted Entity as the case may be, or (iv) the reconstitution of Targeted Entity from one type of entity to another type of entity, or (v) the amendment, modification or any other change in the governing instrument or instruments of Targeted Entity which has the effect of changing the relative powers, rights, privileges, voting rights or economic interests of the ownership interests in such Targeted Entity.
(2) as used with respect to ownership interests in a Mortgaged Property, (i) a sale, assignment, lease, pledge, transfer or other disposition (whether voluntary or by operation of law) of, or the granting or creating of a lien, encumbrance or security interest in, any estate, rights, title or interest in a Mortgaged Property, or any portion thereof (other than a Permitted Lien). Transfer does not include a conveyance of a Mortgaged Property at a judicial or non-judicial foreclosure sale under any security instrument or the Mortgaged Property becoming part of a bankruptcy estate by operation of law under the Bankruptcy Code.
Underwriting Requirements means Lenders overall underwriting requirements for Seniors Housing Facilities in connection with loans anticipated to be sold to Fannie Mae, pursuant to Fannie Maes then current guidelines, including, without limitation, requirements relating to Appraisals, physical needs assessments, and environmental site assessments, as such requirements may be amended, modified, updated, superseded, supplemented or replaced from time to time.
Valuation means, for any specified date, with respect to a Seniors Housing Facility, (a) if an Appraisal of the Seniors Housing Facility was more recently obtained than a Capitalization Rate for the Seniors Housing Facility, the Appraised Value of such Seniors Housing Facility, or (b) if a Capitalization Rate for the Seniors Housing Facility was more recently obtained than an Appraisal of the Seniors Housing Facility, the value derived by dividing
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Notwithstanding the foregoing, any Valuation for a Seniors Housing Facility calculated for a date occurring before the first anniversary of the date on which the Seniors Housing Facility becomes a part of the Collateral Pool shall equal the Appraised Value of such Seniors Housing Facility, unless Lender determines that changed market or property conditions warrant that the value be determined as set forth in the preceding sentence.
Variable Loan means the loan in the principal amount of $205,174,000 evidenced by the Variable Facility Note.
Variable Facility Note means the Adjustable Rate Multifamily Note (together with all schedules, riders allonges, addenda, renewals, extensions, amendments and modifications thereto), which has been issued by Borrower to Lender to evidence Borrowers obligation to repay the Variable Loan.
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Exhibit 10.5
EXECUTION COPY
KEY PRINCIPAL GUARANTY AND INDEMNITY AGREEMENT
This Key Principal Guaranty and Indemnity Agreement (the Guaranty ) is made and entered into as of August 4, 2009, by Senior Housing Properties Trust, a Maryland real estate investment trust (the Guarantor ), for the benefit of Citibank, N.A., a national banking association (together with its successors and assigns, the Lender ).
RECITALS
A. Lender has agreed to enter into that certain Master Credit Facility Agreement dated as of August 4, 2009 (as amended, restated, modified or supplemented from time to time, the Master Agreement ), pursuant to which, inter alia , Lender has agreed, subject to the terms, conditions and limitations of the Master Agreement, to make a Term Loan (the Term Loan ) to SNH FM FINANCING LLC , a Delaware limited liability company, ( Borrower ) , which Term Loan is to be evidenced by, among other things, that certain Fixed Facility Note and that certain Variable Facility Note, each dated of even date herewith (collectively, the Note ).
B. The repayment of the Term Loan and all of the Obligations of Borrower under the Master Agreement or the other Loan Documents are guaranteed by this Guaranty to the extent of Borrowers personal liability as provided under Section 14.01(a)(v) and 14.01(a)(vi)of the Master Agreement.
C. Guarantor owns, directly or indirectly, an ownership interest in Borrower and will receive a direct and material benefit from the Term Loan made to Borrower.
D. Lender is willing to make the Term Loan to Borrower only if Guarantor agrees to enter into this Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Term Loan to Borrower, and in consideration thereof, Guarantor hereby agrees as follows:
Section 1. Definitions . All capitalized terms used but not defined in this Guaranty shall have the meanings ascribed to such terms in the Master Agreement. In addition, the following terms shall have the following meanings:
DUS Guide means the Fannie Mae Delegated Underwriting and Servicing Guide in its present form and as amended, modified, supplemented or reissued from time to time (all references to Parts, Chapters, Sections and other subdivisions of the DUS Guide shall be deemed references to (i) the Parts, Chapters, Sections and other subdivisions in effect on the date of the Master Agreement and (ii) any successor provisions to such Parts, Chapters, Sections and other subdivisions.
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Section 2. Obligations.
(a) Guaranty of Payment and Performance . Guarantor irrevocably, absolutely and unconditionally guarantees to Lender all of the following (collectively, the Guaranteed Obligations): the due and punctual payment when due, whether at maturity or earlier, by reason of acceleration or otherwise, at all times, of all amounts for which Borrower is personally liable under Section 14.01(a)(v) and 14.01(a)(vi) of the Master Agreement.
This Guaranty shall be an unconditional guaranty of payment and performance and not of collection, and is in no way conditioned upon any attempt by Lender to pursue or exhaust any remedy against Borrower. This Guaranty is a continuing guaranty which shall remain in full force and effect until terminated in accordance with Section 25.
(b) Indemnification . Guarantor hereby agrees to indemnify, hold harmless and defend Fannie Mae, Lender and their respective officers, members, directors, shareholders, officials, agents, independent contractors and employees and each of them (each an indemnified party) from and against any and all losses, claims, suits, liabilities, actions, debts, damages, costs, obligations, judgments, charges and expenses, including sums paid in settlement of claims and attorneys fees, of any nature whatsoever suffered or incurred by Fannie Mae or Lender in any manner as a direct or indirect result of:
(i). the failure of Master Tenant to pay all (a) reasonable operating expenses of Master Tenant, (b) amounts owing to Borrower under the Master Lease and (c) obligations under the Master Lease and each Subordination, Assignment and Security Agreement (collectively, Master Tenant Obligations) prior to making intercompany affiliate loans or distributing funds to its parent, except that such indemnity will not apply to intercompany affiliate loans made in the ordinary course of implementing parents cash management system and distributions in any Calendar Quarter if Master Tenant has paid all Master Tenant Obligations in such Calendar Quarter; or
(ii). the failure of each Operator to pay all (a) reasonable operating expenses of each Mortgaged Property, (b) amounts owing under each Sub-Lease to Master Tenant and (c) obligations of each Operator pursuant to each Sub-Lease and each Subordination, Assignment and Security Agreement (collectively, Operator Obligations) prior to making intercompany Affiliate loans or distributing funds to its parent, except that such indemnity will not apply to intercompany Affiliate loans made in the ordinary course of implementing parents cash management system and distributions in any Calendar Quarter if Master Tenant has paid all Operator Obligations in such Calendar Quarter.
The obligations under this Section 2(b) are herein referred to as the Indemnification Obligations. The Indemnification Obligations and the Guaranteed Obligations are herein referred to as the Guaranteed Obligations.
Section 3. Form of Payment . All payments under this Guaranty shall be made to Lender in immediately available funds, without reduction by any recoupment, set-off, counterclaim or cross-claim against Lender.
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Section 4. Guarantors Obligations are Absolute . The obligations of Guarantor under this Guaranty shall be absolute and unconditional, shall not be subject to any counterclaim, set-off, recoupment, deduction, or defense based upon any claim Guarantor may have against Lender or Borrower and shall remain in full force and effect without regard to, and shall not be released, discharged or terminated or in any other way affected by, any circumstance or condition (whether or not Guarantor shall have any knowledge or notice thereof), including, without limitation:
(a) any amendment or modification of, or extension of time for payment of any of the principal of, interest on or other amounts payable under the Loan Documents;
(b) any exercise or non-exercise by Lender of any right, power or remedy under or in respect of the Loan Documents, or any waiver, consent, forbearance, indulgence or other action, inaction or omission by Lender under or in respect of the Loan Documents;
(c) any assignment, sale or other transfer of Borrowers interest in all or any part of the real or personal property which at any time constitutes collateral for the payment of the Guaranteed Obligations, including, without limitation, a conveyance of such property by Borrower to Lender by deed in lieu of foreclosure;
(d) any bankruptcy, insolvency, reorganization, adjustment, dissolution, liquidation or other like proceeding involving or affecting Borrower or Lender or their respective properties or creditors, or any action taken with respect to the Loan Documents by any trustee or receiver of Borrower or Lender, or by any court, in any such proceeding;
(e) any invalidity or unenforceability, in whole or in part, of any term or provision of the Loan Documents or Borrowers incapacity or lack of authority to enter into the Loan Documents;
(f) any release, compromise, settlement or discharge (other than for payment) with respect to all or any portion of Borrowers Obligations under the Loan Documents;
(g) any acceptance of additional or substituted collateral for payment of the Guaranteed Obligations or any release or subordination of any collateral held at any time by Lender as security for the payment of the Guaranteed Obligations; or
(h) any resort to Guarantor for payment of all or any portion of the Guaranteed Obligations, whether or not Lender shall have resorted to any collateral securing the Guaranteed Obligations, if any, or shall have proceeded to pursue or exhaust its remedies against Borrower (or any other Person) primarily or secondarily liable for the Guaranteed Obligations.
No exercise, delay in exercise or non-exercise by Lender of any right hereby given it, no dealing by Lender with Borrower, Guarantor or any other Person, no change, impairment or suspension of any right or remedy of Lender, and no act or thing which, but for this provision, could act as a release or exoneration of the liabilities of Guarantor hereunder, shall in any way affect, decrease, diminish or impair any of the obligations of Guarantor hereunder or give Guarantor or any other Person any recourse or defense against Lender.
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Section 5. Waiver . Guarantor unconditionally waives the following:
(a) notice of acceptance of this Guaranty and notice of any of the matters referred to in Section 4 hereof;
(b) all notices which may be required by statute, rule of law or otherwise to preserve intact any rights which Lender may have against Guarantor under this Guaranty, including, without limitation, any demand, proof or notice of non-payment of any of the principal of, interest on or other amounts payable under the Loan Documents, and notice of any failure on the part of Borrower to perform and comply with any covenant, agreement, term or condition of the Loan Documents;
(c) any right to the enforcement, assertion or exercise of any right, power or remedy conferred upon Lender in the Loan Documents or otherwise;
(d) any requirement that Lender act with diligence in enforcing its rights under the Loan Documents or this Guaranty;
(e) any right to require Lender to proceed against or exhaust its recourse against Borrower or any security or collateral held by Lender, if any, at any time for the payment of the Guaranteed Obligations or to pursue any other remedy in its power before being entitled to payment from Guarantor under this Guaranty or before proceeding against Guarantor;
(f) any failure by Lender to file or enforce a claim against the estate (either in administration, bankruptcy or any other proceeding) of Borrower or any other Person;
(g) any defense based upon an election of remedies by Lender which destroys or otherwise impairs the subrogation rights of Guarantor or the right of Guarantor (after payment of the Guaranteed Obligations) to proceed against Borrower for reimbursement, or both;
(h) any defense based upon any taking, modification or release of any collateral for the Guaranteed Obligations, if any, or any failure to perfect any security interest in, or the taking of, or failure to take any other action with respect to, any collateral securing payment of the Guaranteed Obligations, if any;
(i) any defense based upon the addition, substitution or release, in whole or in part, of any Person(s), including, without limitation, another guarantor, primarily or secondarily liable for or in respect of the Guaranteed Obligations;
(j) any rights or defenses based upon an offset by Guarantor against any obligation now or hereafter owed to Guarantor by Borrower; and
(k) all other notices which may or might be lawfully waived by Guarantor;
it being the intention hereof that Guarantor shall remain liable as principal, to the extent set forth in this Guaranty, until the payment and performance in full of the Guaranteed Obligations, notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of Guarantor other than the payment and performance in full of the Guaranteed
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Obligations. No delay by Lender in exercising any rights and/or powers hereunder or in taking any action to enforce Borrowers obligations under the Loan Documents shall operate as a waiver as to such rights or powers or in any manner prejudice any and all of Lenders rights and powers hereunder against Guarantor. The intention of Guarantor under this Guaranty is that, so long as any of the Guaranteed Obligations remains unsatisfied, the obligations of Guarantor hereunder shall not be discharged except by payment or performance and then only to the extent of such payment or performance. Guarantor agrees that Guarantors obligations hereunder shall not be affected by any circumstances, whether or not referred to in this Guaranty, which might constitute a legal or equitable discharge of a surety or guarantor.
Section 6. Election of Remedies . This Guaranty may be enforced from time to time, as often as occasion therefor may arise, and without any requirement that Lender must first pursue or exhaust any remedies available to it against Borrower under the Loan Documents or against any other Person or resort to any collateral at any time held by it for performance of the Guaranteed Obligations, if any, or any other source or means of obtaining payment of any of the Guaranteed Obligations.
Section 7. Representations and Warranties of Guarantor . Guarantor hereby represents and warrants to Lender as follows:
(a) Due Organization; Qualification . Guarantor is qualified to transact business and is in good standing in the State in which it is organized and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability of Guarantor to perform the Guaranteed Obligations.
(b) Power and Authority . Guarantor has the requisite power and authority (i) to own its properties and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of the Guaranteed Obligations, and (ii) to execute and deliver this Guaranty and to carry out the transactions contemplated by this Guaranty.
(c) Due Authorization . The execution, delivery and performance of this Guaranty has been duly authorized by all necessary action and proceedings by or on behalf of Guarantor, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of Guarantor as a condition to the valid execution, delivery and performance by Guarantor of this Guaranty.
(d) Valid and Binding Obligations . This Guaranty has been duly executed and delivered by Guarantor and constitutes the legal, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors rights generally or by equitable principles or by the exercise of discretion by any court.
(e) Non-contravention: No Liens . Neither the execution and delivery of this Guaranty by Guarantor, nor the fulfillment of or compliance with the terms and conditions of this
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Guaranty by Guarantor nor the payment or performance of the Guaranteed Obligations by Guarantor, as applicable:
(i) does or will conflict with or result in any breach or violation of any Applicable Law enacted or issued by any Governmental Authority or other agency having jurisdiction over Guarantor, any of the Mortgaged Properties or any other portion of the Collateral or assets of Guarantor, or any judgment or order applicable to Guarantor or to which Guarantor is subject;
(ii) does or will conflict with or result in any material breach or violation of, or constitute a default under, any of the terms, conditions or provisions of Guarantors Organizational Documents, any indenture, existing agreement or other instrument to which Guarantor is a party or to which Guarantor, any of the Mortgaged Properties or any other portion of the Collateral or other assets of Guarantor is subject; or
(iii) does or will require the consent or approval of any creditor of Guarantor, any Governmental Authority or any other Person except such consents or approvals which have already been obtained.
(f) Pending Litigation or Other Proceedings . There is no pending or, to the knowledge of Guarantor, threatened action, suit, proceeding or investigation, at law or in equity, before any court, board, body or official of any Governmental Authority or arbitrator which, if decided adversely to Guarantor, would have, or may reasonably be expected to have a Material Adverse Effect.
(g) Solvency . Guarantor is not insolvent and will not be rendered insolvent by the transaction contemplated by this Guaranty and after giving effect to such transaction, Guarantor will not be left with an unreasonably small amount of capital with which to engage in its business or undertakings, nor will Guarantor have incurred, have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. Guarantor did not receive less than a reasonably equivalent value in exchange for incurrence of the Guaranteed Obligations. There (i) is no contemplated, pending or, to Guarantors knowledge, threatened bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting Guarantor and (ii) has been no assertion or exercise of jurisdiction over Guarantor by any court empowered to exercise bankruptcy powers.
(h) No Contractual Defaults . There are no defaults by Guarantor or, to the knowledge of Guarantor, by any other Person under any contract to which Guarantor is a party other than defaults which do not have, and are not reasonably be expected to have, a Material Adverse Effect. Neither Guarantor nor, to the knowledge of Guarantor, any other Person, has received notice or has any knowledge of any existing circumstances in respect of which it could receive any notice of default or breach in respect of any material contracts.
(i) Representations True and Correct . The representations and warranties made by Guarantor in this Guaranty are true, complete and correct in all material respects as of the Initial Closing Date and do not contain any untrue statement of material fact or omit to state a
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material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(j) ERISA . Guarantor is in compliance in all material respects with all applicable provisions of ERISA and has not incurred any liability to the PBGC on a Plan under Title IV of ERISA. None of the assets of Guarantor constitute plan assets (within the meaning of Department of Labor Regulation § 2510.3-101) of any employee benefit plan subject to Title I of ERISA.
(k) Financial Information . The financial statements of Guarantor which have been furnished to Lender are complete and accurate in all material respects and present fairly the financial condition of Guarantor, as of its date in accordance with GAAP, applied on a consistent basis, and since the date of the most recent of such financial statements no event has occurred which would have, or may reasonably be expected to have a Material Adverse Effect or a material adverse effect on the financial condition of Guarantor, and there has not been any material transaction entered into by Guarantor other than as disclosed in public filings. Guarantor has no material contingent obligations which are not otherwise required to be disclosed in accordance with GAAP in its most recent financial statements.
(l) Accuracy of Information . No information, statement or report furnished in writing to Lender by Guarantor in connection with this Guaranty or any other Loan Document or in connection with the consummation of the transactions contemplated hereby and thereby contains any material misstatement of fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading.
(m) No Conflicts of Interest . No member, officer, agent or employee of Lender has been or is in any manner interested, directly or indirectly, in that Persons own name, or in the name of any other Person, in the Guaranty, the Loan Documents, or any Mortgaged Property, in any contract for property or materials to be furnished or used in connection with such Mortgaged Property or in any aspect of the transactions contemplated by the Loan Documents.
(n) Governmental Approvals . No Governmental Approval not already obtained or made is required for the execution and delivery of this Guaranty or the performance of the terms and provisions hereof by Guarantor.
(o) Governmental Orders . Guarantor is not presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any Governmental Authority which would have the effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order.
(p) No Reliance . Guarantor acknowledges, represents and warrants that it understands the nature and structure of the transactions contemplated by this Guaranty and the other Loan Documents; that it is familiar with the provisions of all of the documents and instruments relating to such transactions; that it understands the risks inherent in such
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transactions, including the risk of loss of all or any of the Mortgaged Properties; and that it has not relied on Lender or Fannie Mae for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Guaranty or any other Loan Document or otherwise relied on Lender or Fannie Mae in any manner in connection with interpreting, entering into or otherwise in connection with this Guaranty, any other Loan Document or any of the matters contemplated hereby or thereby.
(q) Compliance with Applicable Law . Guarantor is in compliance with Applicable Law, including all Governmental Approvals, if any, except for such items of noncompliance that, singly or in the aggregate, have not had and are not reasonably expected to cause, a Material Adverse Effect.
(r) Contracts with Affiliates . Guarantor has not entered into and is not a party to any contract, lease or other agreement with any Affiliate of Guarantor for the provision of any service, materials or supplies relating to any Mortgaged Property.
(s) UCC Amendment . Guarantor represents and warrants that the entities listed on Schedule 1 attached hereto (the UCC Affiliates) are Affiliates of Guarantor and that the UCC Affiliates are the only Affiliates of Guarantor that are named as secured parties on UCC financing statements that name Operator, as debtor, and that pledge any of the Collateral under the Loan Documents or any UCC Collateral under the Subordination, Assignment and Security Agreement. Guarantor represents and warrants that it has the power and authority to authorize, on behalf of the UCC Affiliates, the filing of terminations and/or amendments, as applicable, relating to such UCC financing statements (the Affiliate UCC Amendments) with the appropriate Governmental Authorities. Guarantor hereby authorizes Lender to file the Affiliate UCC Amendments with the appropriate Governmental Authority.
Section 8. Affirmative Covenants of Guarantor . Guarantor agrees and covenants with Lender that, at all times during the Term of this Guaranty:
(a) Maintenance of Existence . Guarantor shall maintain its existence and continue to be a real estate investment trust organized under the laws of the state of its organization (other than as permitted under Section 8.12(b) of the Master Agreement). Guarantor shall continue to be duly qualified to do business in each jurisdiction in which such qualification is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability to perform, its obligations under this Guaranty.
(b) Financial Statements; Accountants Reports: Other Information . Guarantor shall keep and maintain at all times complete and accurate books of accounts and records in sufficient detail to correctly reflect all of Guarantors financial transactions and assets as required by GAAP. In addition, Guarantor shall furnish, or cause to be furnished, to Lender the financial statements required of Guarantor by Section 8.03(a) of the Master Agreement. In addition, Guarantor shall provide Lender with the following:
(i) Accountants Reports . Promptly upon receipt thereof, copies of any reports or management letters submitted to Guarantor by its independent certified public
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accountants in connection with the examination of its financial statements made by such accountants.
(ii) Other Reports . All schedules, financial statements or other similar reports reasonably requested by Lender with respect to Guarantors business affairs or condition (financial or otherwise).
(c) Maintain Licenses . Guarantor shall procure and maintain in full force and effect all licenses, Permits, charters and registrations which are material to the conduct of its business and shall abide by and satisfy all terms and conditions of all such licenses, Permits, charters and registrations.
(d) Access to Records and Discussions with Officers and Accountants . To the extent permitted by law, Guarantor shall permit Lender to:
(i) inspect, make copies and abstracts of, and have reviewed or (after an Event of Default) audited Guarantors books and records related to Borrower and the Mortgaged Properties;
(ii) discuss Guarantors affairs, finances and accounts with any of Guarantors officers, partners and employees and (provided that an officer of Guarantor has been given the opportunity by Lender to be a party to such discussion) Guarantors independent public accountants;
(iii) discuss the Mortgaged Properties conditions, operations or maintenance with the Operators of such Mortgaged Properties and the officers of Guarantor; and
(iv) receive any other information that Lender deems reasonably necessary or relevant in connection with the Guaranty, any Loan Document or the Guaranteed Obligations.
Notwithstanding the foregoing, prior to an Event of Default and so long as no Potential Event of Default has occurred and is continuing, all inspections shall be conducted at reasonable times during normal business hours and upon reasonable notice to Guarantor.
(e) Inform Lender of Material Events . Guarantor shall promptly, but in any event within five (5) Business Days, inform Lender in writing of any of the following (and shall deliver to Lender copies of any related written communications, complaints, orders, judgments and other documents relating to the following) of which Guarantor has actual knowledge:
(i) Defaults . The occurrence of any Event of Default or any Potential Event of Default under any Loan Document;
(ii) Regulatory Proceedings . The commencement of any rulemaking or disciplinary proceeding or the promulgation of any proposed or final rule which would have, or may reasonably be expected to have, a Material Adverse Effect;
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(iii) Legal Proceedings . The commencement or threat of, or amendment to, any proceedings by or against Guarantor in any Federal, state or local court or before any Governmental Authority, or before any arbitrator, which, if adversely determined, would have, or at the time of determination may reasonably be expected to have, a Material Adverse Effect;
(iv) Bankruptcy Proceedings . The commencement of any proceedings by or against Guarantor as debtor under any applicable bankruptcy, reorganization, liquidation, insolvency or other similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator, trustee or other similar official is sought to be appointed for it;
(v) Regulatory Supervision or Penalty . The receipt of notice from any Governmental Authority having jurisdiction over Guarantor that (A) Guarantor is being placed under regulatory supervision, (B) any license, Permit, charter, membership or registration material to the conduct of Guarantors business or the Mortgaged Properties has been or is to be suspended or revoked or (C) Guarantor is to cease and desist any practice, procedure or policy employed by Guarantor, as the case may be, in the conduct of its business, and such cessation would have, or may reasonably be expected to have, a Material Adverse Effect;
(vi) Material Adverse Effect . The occurrence of any act, omission, change or event which has a Material Adverse Effect subsequent to the date of the most recent audited financial statements delivered to Lender pursuant to Section 8.03 of the Master Agreement;
(vii) Restructuring of Guarantor . Any restructuring or reorganization of Guarantor;
(viii) Accounting Changes . Any material change in Guarantors accounting policies or financial reporting practices;
(ix) Legal and Regulatory Status . The occurrence of any material act, omission, change or event, including any Governmental Approval, the result of which is to change or alter in any way the legal or regulatory status of Guarantor; and
(x) Default on Indebtedness . The occurrence of any event that results in or, with the giving of notice, if applicable, or the passing of time, or both, would result in (i) any default in respect of any Indebtedness of Guarantor, (ii) the failure of Guarantor to pay when due or within any applicable grace period any Indebtedness of Guarantor, or (iii) any Indebtedness of Guarantor becoming due and payable before its normal maturity by reason of a default or event of default, however described, or any other event of default shall occur and continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness if any such event would, or reasonably could be expected to, result in a Material Adverse Effect.
(xi) Changes in Senior Management . Any change in the identity of the members of Senior Management.
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(f) ERISA . Guarantor shall at all times remain in compliance in all material respects with all applicable provisions of ERISA and similar requirements of the PBGC.
(g) Further Assurances . Guarantor, at the request of Lender, but without incurring any liability beyond the Guaranteed Obligations, shall execute and deliver and, if necessary, file or record such statements, documents, agreements and take such further action as Lender from time to time may request as reasonably necessary, desirable or proper to carry out more effectively the purposes of this Guaranty or any of the other Loan Documents or in order to exercise or enforce its rights under the Loan Documents.
(h) Monitoring Compliance . Upon the request of Lender, but without incurring any liability beyond the Guaranteed Obligations, from time to time, Guarantor shall promptly provide to Lender such documents, certificates and other information as may be deemed reasonably necessary to enable Lender to perform its functions under the DUS Guide as the same relates to Guarantor.
(i) Compliance with Net Worth Test . Until the date upon which all of the conditions set forth in Section 8.25 are satisfied in full , Guarantor shall at all times maintain its Net Worth so that it is not less than $515,000,000.
(j) Compliance with Liquidity Test . Until the date upon which all of the conditions set forth in Section 8.25 are satisfied in full , Guarantor shall at all times ensure that the sum of (i) cash and Cash Equivalents maintained by it and (ii) the amount available to be drawn by it under its lines of credit (including, without limitation, under the Amended and Restated Credit Agreement dated as of July 29, 2005, as amended, with certain lenders and Wachovia Bank, National Association, as administrative agent) is not less than $21,000,000.
Section 9. Negative Covenants of Guarantor .
(a) Other Activities . Guarantor shall not dissolve or liquidate in whole or in part.
(b) Material Adverse Effect . Guarantor shall not take or permit any action which could reasonably be expected to have any Material Adverse Effect.
(c) Principal Place of Business . Guarantor shall not change its principal place of business or the location of its books and records without first giving ten (10) days prior written notice to Lender.
(d) Transfer . Guarantor shall not, and shall cause Borrower not to cause or permit:
(i) any Transfer prohibited by Sections 8.12 and 8.13 of the Master Agreement; or
(ii) any Change of Control;
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except, in each case, as otherwise permitted pursuant to the provisions of Sections 8.12 , 8.13 and 8.14 of the Master Agreement.
Section 10. Expenses . Guarantor agrees to pay all reasonable out-of-pocket costs and expenses, including court costs and expenses and the reasonable fees and disbursements of legal counsel within thirty (30) days after demand by Lender, incurred by or on behalf of Lender in connection with the enforcement of Guarantors obligations under this Guaranty or the protection of Lenders rights under this Guaranty. The covenants contained in this Section shall survive the payment of the Guaranteed Obligations.
Section 11. Condition of Borrower . Guarantor is fully aware of the financial condition of Borrower and is executing and delivering this Guaranty based solely upon Guarantors own independent investigation of all matters pertinent hereto and is not relying in any manner upon any representation or statement made by Lender. Guarantor represents and warrants that Guarantor is in a position to obtain, and Guarantor hereby assumes full responsibility for obtaining, any additional information concerning Borrowers financial condition and any other matters pertinent hereto as Guarantor may desire and Guarantor is not relying upon or expecting Lender to furnish to Guarantor any information now or hereafter in Lenders possession concerning the same or any other matter. By executing this Guaranty, Guarantor knowingly accepts the full range of risks encompassed within a contract of this type, which risks Guarantor acknowledges.
Section 12. Further Assurances . Guarantor agrees at any time and from time to time upon request by Lender to take, or cause to be taken, any action and to execute and deliver any additional documents which, in the reasonable opinion of Lender, may be necessary in order to assure to Lender the full benefits of this Guaranty.
Section 13. Subordination . Guarantor hereby irrevocably and unconditionally agrees that any claims, direct or indirect, Guarantor may have by subrogation or other form of reimbursement , against Borrower or to any security or any interest therein, by virtue of this Guaranty or as a consequence of any payment made by Guarantor pursuant to this Guaranty, shall be fully subordinated in time and right of payment to the payment in full of the Guaranteed Obligations and all other obligations of Guarantor to Lender under this Guaranty.
Section 14. No Subrogation . Guarantor shall not have any right of subrogation against Borrower by reason of any payment by Guarantor under this Guaranty until such time as all of the Guaranteed Obligations have been satisfied in full. Nothing in the foregoing shall affect any claim which Guarantor has against Borrower under the terms of the Organizational Documents of Borrower.
Section 15. Insolvency and Liability of Borrower . So long as any of the Guaranteed Obligations is unpaid and this Guaranty is in effect, and to the extent not prohibited by the applicable bankruptcy court, Guarantor agrees to file all claims against Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in connection with Indebtedness owed by Borrower to Guarantor and to assign to Lender all rights of Guarantor thereunder up to the lesser of (i) the amount of such Indebtedness or (ii) the amount of the Guaranteed Obligations. In all such cases the Person or Persons authorized to pay such
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claims shall pay to Lender the full amount thereof to the full extent necessary to pay the Guaranteed Obligations, and Guarantor hereby assigns to Lender all of Guarantors rights to all such payments to which Guarantor would otherwise be entitled. Notwithstanding the foregoing, and except to the extent that any sums owed by Borrower to Lender under the Loan Documents shall have been fully satisfied thereby, the liability of Guarantor hereunder shall in no way be affected by
(a) the release or discharge of Borrower in any creditors, receivership, bankruptcy or other proceedings; or
(b) the impairment, limitation or modification of the liability of Borrower or the estate of Borrower in bankruptcy resulting from the operation of any present or future provisions of the Bankruptcy Code or other statute or from the decision in any court.
Section 16. Preferences, Fraudulent Conveyances, Etc . If Lender is required to refund, or voluntarily refunds, any payment received from Borrower because such payment is or may be avoided, invalidated, declared fraudulent, set aside or determined to be void or voidable as a preference, fraudulent conveyance, impermissible setoff or a diversion of trust funds under the bankruptcy laws or for any similar reason, including, without limitation, any judgment, order or decree of any court or administrative body having jurisdiction over Lender or any of its property, or any settlement or compromise of any claim effected by Lender with Borrower or other claimant (a Rescinded Payment ), then Guarantors liability to Lender shall continue in full force and effect, or Guarantors liability to Lender shall be reinstated, as the case may be, with the same effect and to the same extent as if the Rescinded Payment had not been received by Lender, notwithstanding the cancellation or termination of any Note or any of the other Loan Documents. In addition, Guarantor shall pay, or reimburse Lender for, all expenses (including all reasonable attorneys fees, court costs and related disbursements) incurred by Lender in the defense of any claim that a payment received by Lender in respect of all or any part of the Guaranteed Obligations from Guarantor must be refunded. The provisions of this Section shall survive the termination of this Guaranty and any satisfaction and discharge of Borrower by virtue of any payment, court order or any federal or state law.
Section 17. Waiver . Neither this Guaranty nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by Lender and Guarantor expressly referring to this Guaranty and to the provisions so changed or limited. No such waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of Lender in exercising any right under this Guaranty shall operate as a waiver thereof or otherwise by prejudice thereto.
Section 18. Notices . All notices or other communications hereunder shall be sufficiently given and shall be deemed given when sent in the manner prescribed by the Master Agreement addressed to the parties as follows:
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Section 19. Assignability by Lender . Lender may, without notice to Guarantor, assign or transfer the Term Loan and the Loan Documents, in whole or in part. In such event, each and every immediate and successive assignee, transferee or holder of all or any part of the Term Loan and the Loan Documents shall have the right to enforce this Guaranty, by legal action or otherwise, as fully as if such assignee, transferee, or holder were by name specifically given such right and power in this Guaranty. Lender shall have an unimpaired right to enforce this Guaranty for its benefit as to so much of the Term Loan and the Loan Documents as Lender has not sold, assigned or transferred.
Section 20. Guarantor Bound by Judgment Against Borrower . Guarantor shall be conclusively bound, in any jurisdiction, by the judgment in any action by Lender against Borrower in connection with the Loan Documents (wherever instituted) as if Guarantor were a party to such action even if not so joined as a party.
Section 21. Governing Law . The provisions of Section 15.06 of the Master Agreement (entitled Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial ) are hereby incorporated into this Agreement by this reference to the fullest extent as if the text of such Section were set forth in its entirety herein.
Section 22. Invalid Provisions . If any provision of this Guaranty or the application thereof to Guarantor or any circumstance in any jurisdiction whose laws govern this Guaranty shall, to any extent, be invalid or unenforceable under any applicable statute, regulation or rule of law, then such provision shall be deemed inoperative to the extent of such invalidity or unenforceability and shall be deemed modified to conform to such statute, regulation or rule or law. The remainder of this Guaranty and the application of any such invalid or unenforceable provision to parties, jurisdictions or circumstances other than those to whom or to which it is held invalid or unenforceable, shall not be affected by such invalidity or unenforceability nor shall such invalidity or unenforceability affect the validity or enforceability of any other provision of this Guaranty.
Section 23. General Provisions . This Guaranty shall be binding upon the respective successors and assigns of Guarantor, and shall inure to the benefit of Lender and its successors
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and assigns, including, without limitation, each successive holder of the Note. The descriptive headings of the Sections of the Guaranty have been inserted herein for convenience of reference only and shall not define or limit the provisions hereof.
Section 24. Obligations Joint and Several . The obligations of Guarantor hereunder shall be joint and several with the obligations of any other guarantors under this and any other guaranty and the obligations of Borrower under the Loan Documents.
Section 25. Term of Guaranty . Guarantors obligations under this Guaranty with respect to Section 14.01(a)(vi) of the Master Agreement shall remain in effect until all obligations set forth in Section 8.26 of the Master Agreement are satisfied in full. The Indemnification Obligations, the Guaranteed Obligations with respect to Section 14.01(a)(v) and all other obligations under this Guaranty shall remain in effect until all Obligations under the Master Agreement are satisfied in full.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of the day and year first above written.
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GUARANTOR: |
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Senior Housing Properties Trust,
a Maryland real estate
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By: |
/s/ David J. Hegarty |
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Name: |
David J. Hegarty |
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Title: |
President |
S-1
SCHEDULE 1
UCC Affiliates
CCC FINANCING I TRUST
CCC FINANCING LIMITED, L.P.
CCC INVESTMENTS I, L.L.C.
CCC OF KENTUCKY TRUST
CCC OHIO HEALTHCARE TRUST
CCC PUEBLO NORTE TRUST
CCC RETIREMENT COMMUNITIES II, L.P.
CCCP SENIOR LIVING LLC
CCDE SENIOR LIVING LLC
CCFL SENIOR LIVING LLC
CCOP SENIOR LIVING LLC
CCSL SENIOR LIVING LLC
ELLICOTT CITY LAND I LLC
ELLICOTT CITY LAND II LLC
HRES2 PROPERTIES TRUST
LEISURE PARK VENTURE LIMITED PARTNERSHIP
LTJ SENIOR COMMUNITIES LLC
PANTHER HOLDINGS LEVEL I, L.P.
SNH CHS PROPERTIES TRUST
SNH/LTA PROPERTIES TRUST
SNH/LTA PROPERTIES GA LLC
SPT-MICHIGAN TRUST
SPTMNR PROPERTIES TRUST
I-1
Exhibit 10.6
LEASE REALIGNMENT AGREEMENT
This Lease Realignment Agreement (this Agreement ) is made August 4, 2009, among Senior Housing Properties Trust ( SNH ) and its subsidiaries listed on the signature page to this Agreement (together with SNH, the SNH Parties ) and Five Star Quality Care, Inc. ( Five Star ) and its subsidiaries listed on the signature page to this Agreement (together with Five Star, the Five Star Parties and together with the SNH Parties, the Parties ).
RECITAL
Certain of the SNH Parties and certain of the Five Star Parties are, respectively, landlords and tenants under the leases listed on Schedule A (collectively, the Leases ) of skilled nursing, intermediate care, independent living, assisted living, special care and group home facilities, rehabilitation hospital, clinic or professional level health or medical services facilities, and other healthcare properties identified in the Leases (collectively, Leased Properties ).
To facilitate a term loan ( Term Loan ) to be made to SNH FM Financing LLC, a wholly owned subsidiary of SNH ( SNH Financing ), by Citibank, N.A. ( Citibank ), the Parties have agreed to (a) amend and restate the Leases numbered 1-4 on Schedule A (collectively, as amended and restated, the Amended and Restated Leases ) to, inter alia , change the pools of Leased Properties demised thereunder and to further amend (the First Amendment ) the Amended and Restated Lease under which the Leased Properties identified on Schedule B (the Mortgaged Properties ) will be leased (the Term Loan Lease ), (b) amend and restate the security agreements from the tenants under the Amended and Restated Leases (collectively, the Amended and Restated Security Agreements ), (c) amend and restate certain of the subleases under the Amended and Restated Leases, (collectively, the Amended and Restated Subleases ), (d) amend and restate the security agreements from the subtenants under the Amended and Restated Subleases (collectively, the Amended and Restated Subtenant Security Agreements ), (e) amend and restate the Five Star guarantees and the subtenants guarantees of the Amended and Restated Leases (collectively, the Amended and Restated Guarantys ), (f) terminate all pledges of equity interests of tenants and subtenants under the Leases and an assignment and security agreement with respect to reserves for furniture, fixtures and equipment thereunder (collectively, the Termination Agreements ), (g) the sale by certain of the Five Star Parties to the SNH Party that is the landlord under the Term Loan Lease of furniture, fixtures and equipment (the FF&E ) located at the Mortgaged Properties, (h) the pledge by certain of the Five Star Parties to Citibank of inventory and equipment used at the Mortgaged Properties and leases, rents, contracts and accounts receivable relating to or arising from operation of the Mortgaged Properties pursuant to Subordination, Assignment and Security Agreements (the SASAs ) and certain further amendments to the Term Loan Lease as provided therein, and (i) conform certain reporting and operational obligations of those Five Star Parties which are tenants and/or operators of the Mortgaged Properties to those required by the Term Loan.
In addition, to facilitate the Term Loan, certain of the Five Star Parties have been in negotiation with Citibank with respect to agreements and instruments to be executed and delivered by them in connection therewith and with Wachovia Bank, National Association ( Wachovia ) with respect to amendments to their credit facility with Wachovia.
In connection with all of the foregoing, the Parties have agreed to certain accommodations to facilitate the Term Loan.
Now, therefore, the Parties agree:
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(B) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the FVE Common Stock; and
(C) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment.
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if to any SNH Party:
Senior Housing Properties
Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: David J. Hegarty, President
Facsimile: (617) 796-8349
with a copy to (which shall not constitute notice):
Sullivan &
Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Richard Teller
Facsimile: (617) 338-2880
if to any Five Star Party:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Bruce J. Mackey, Jr.,
President
Facsimile: (617) 658-1751
with a copy to (which shall not constitute notice):
Skadden,
Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, M
assachusetts 02108
Attn.: Louis A. Goodman
Facsimile: (617) 573-4822
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Signatures appear on the pages to follow
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Executed under seal as of the date first above written.
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SENIOR HOUSING PROPERTIES TRUST |
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SNH FM FINANCING TRUST |
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ELLICOTT CITY LAND I, LLC |
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SNH SOMERFORD PROPERTIES TRUST |
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SPTMNR PROPERTIES TRUST |
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SNH/LTA PROPERTIES TRUST |
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SPTIHS PROPERTIES TRUST |
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SNH CHS PROPERTIES TRUST |
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SNH/LTA PROPERTIES GA LLC |
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SPTMNR PROPERTIES TRUST |
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SNH/LTA PROPERTIES GA LLC |
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SNH/LTA PROPERTIES TRUST |
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O.F.C. CORPORATION |
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SNH CHS PROPERTIES TRUST |
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CCC OF KENTUCKY TRUST |
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LEISURE PARK VENTURE LIMITED PARTNERSHIP |
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By: |
CC Leisure Park Corporation, |
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its General Partner |
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CCDE SENIOR LIVING LLC |
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CCOP SENIOR LIVING LLC |
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CCC PUEBLO NORTE TRUST |
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CCC RETIREMENT COMMUNITIES II, L.P. |
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By: |
Crestline Ventures LLC, |
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its General Partner |
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CCC INVESTMENTS I, L.L.C. |
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CCC FINANCING I TRUST |
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CCC FINANCING LIMITED, L.P. |
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By: |
CCC Retirement Trust, |
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its General Partner |
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SNH SOMERFORD PROPERTIES TRUST |
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HRES 1 PROPERTIES TRUST |
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SNH NS PROPERTIES TRUST |
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SNH/LTA PROPERTIES TRUST |
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SNH/LTA PROPERTIES GA LLC |
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CCOP SENIOR LIVING LLC |
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By: |
/s/ David J. Hegarty |
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Name: |
David J. Hegarty |
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Title: |
President |
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FIVE STAR QUALITY CARE, INC. |
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FVE FM FINANCING, INC. |
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FIVE STAR QUALITY CARE TRUST |
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FS TENANT HOLDING COMPANY TRUST |
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FS COMMONWEALTH LLC |
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FS PATRIOT LLC |
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FIVE STAR QUALITY CARE NS TENANT, |
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LLC |
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ANNAPOLIS HERITAGE PARTNERS, LLC |
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COLUMBIA HERITAGE PARTNERS, LLC |
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ENCINITAS HERITAGE PARTNERS, LLC |
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FIVE STAR QUALITY CARE-AZ, LLC |
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FIVE STAR QUALITY CARE-CA, LLC |
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FIVE STAR QUALITY CARE-COLORADO, LLC |
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FIVE STAR QUALITY CARE-FL, LLC |
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FIVE STAR QUALITY CARE-GA, LLC |
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FIVE STAR QUALITY CARE-GHV, LLC |
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FIVE STAR QUALITY CARE-IA, INC. |
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FIVE STAR QUALITY CARE-IA, LLC |
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FIVE STAR QUALITY CARE-MN, LLC |
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FIVE STAR QUALITY CARE-MO, LLC |
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FIVE STAR QUALITY CARE-MS, LLC |
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FIVE STAR QUALITY CARE-NE, INC. |
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FIVE STAR QUALITY CARE-NE, LLC |
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FIVE STAR QUALITY CARE-VA, LLC |
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FIVE STAR QUALITY CARE-WI, LLC |
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FIVE STAR QUALITY CARE-WY, LLC |
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FREDERICK HERITAGE PARTNERS, LLC |
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FRESNO HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP |
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By: Hamilton Place, LLC, its General Partner |
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HAGERSTOWN HERITAGE PARTNERS, LLC |
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MORNINGSIDE OF BELMONT, LLC |
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MORNINGSIDE OF COLUMBUS, L.P. |
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By: LifeTrust America, Inc., its General Partner |
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MORNINGSIDE OF DALTON, LIMITED PARTNERSHIP |
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By: LifeTrust America, Inc., its General Partner |
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MORNINGSIDE OF EVANS, LIMITED PARTNERSHIP |
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By: LifeTrust America, Inc., its General Partner |
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MORNINGSIDE OF GALLATIN, LLC |
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MORNINGSIDE OF KENTUCKY, LIMITED PARTNERSHIP |
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By: LifeTrust America, Inc., its General Partner |
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NEWARK HERITAGE PARTNERS I, LLC |
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NEWARK HERITAGE PARTNERS II, LLC |
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REDLANDS HERITAGE PARTNERS, LLC |
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ROSEVILLE HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP |
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By: Hamilton Place, LLC, its General Partner |
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FIVE STAR QUALITY CARE-CA II, LLC |
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FIVE STAR QUALITY CARE-IN, LLC |
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FIVE STAR QUALITY CARE-KS, LLC |
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FIVE STAR QUALITY CARE-MD, LLC |
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FIVE STAR QUALITY CARE-TX, LLC |
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FIVE STAR QUALITY CARE-WI, LLC |
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FS LAFAYETTE TENANT TRUST |
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FS LEISURE PARK TENANT TRUST |
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FS LEXINGTON TENANT TRUST |
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FS TENANT POOL I TRUST |
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FS TENANT POOL II TRUST |
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FS TENANT POOL III TRUST |
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FS TENANT POOL IV TRUST |
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FSQC-AL, LLC |
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MORNINGSIDE OF ANDERSON, L.P. |
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By: LifeTrust America, Inc., its General Partner |
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MORNINGSIDE OF ATHENS, LIMITED PARTNERSHIP |
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By: LifeTrust America, Inc., its General Partner |
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FIVE STAR QUALITY CARE-IL, LLC |
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FIVE STAR QUALITY CARE-KS, LLC |
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FIVE STAR QUALITY CARE-NJ, LLC |
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FIVE STAR QUALITY CARE-VA, LLC |
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MORNINGSIDE OF GREENWOOD, L.P. |
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MORNINGSIDE OF SKIPWITH-RICHMOND, |
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LLC |
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STOCKTON HERITAGE PARTNERS, LLC |
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FIVE STAR QUALITY CARE-MD, LLC |
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FIVE STAR QUALITY CARE-NC, LLC |
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FIVE STAR QUALITY CARE-SAVANNAH, LLC |
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MORNINGSIDE OF BELLGRADE, RICHMOND, |
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MORNINGSIDE OF CHARLOTTESVILLE, LLC |
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MORNINGSIDE OF NEWPORT NEWS, LLC |
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THE
HEARTLANDS RETIREMENT
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By: |
/s/ Bruce J. Mackey Jr. |
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Name: |
Bruce J. Mackey Jr. |
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Title: |
President |
17
SCHEDULE A
Leases
2
SCHEDULE B
Mortgaged Properties
Forum at Desert Harbor |
13840 North Desert Harbor Drive |
Peoria, AZ 85381 |
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Forum at Tucson |
2500 North Rosemont Blvd. |
Tucson, AZ 85712 |
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The Remington Club I |
16925 Hierba Drive |
San Diego, CA 92128 |
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The Remington Club II |
16916 Hierba Drive |
San Diego, CA 92128 |
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Rio Las Palmas |
877 East March Lane |
Stockton, CA 95207 |
|
Foulk Manor North |
1212 Foulk Road |
Wilmington, DE 19803 |
|
Park Summit at Coral Springs |
8500 Royal Palm Blvd. |
Coral Springs, FL 33065 |
|
Coral Oaks |
900 West Lake Road |
Palm Harbor, FL 34684 |
|
Savannah Square |
One Savannah Square Drive |
Savannah, GA 31406 |
|
Forum at the Crossing |
8505 Woodfield Crossing Blvd. |
Indianapolis, IN 46240 |
|
Forum at Overland Park |
3501 West 95th Street |
Overland Park, KS 66206 |
|
Forum at Brookside |
200 Brookside Drive |
Louisville, KY 40243 |
|
Gables at Winchester |
299 Cambridge Street |
Winchester, MA 01890 |
|
HeartFields at Easton |
700 Port Street |
Easton, MD 21601 |
Heartlands at Ellicott City |
3004 North Ridge Road |
Ellicott City, MD 21043 |
|
Heartlands at Severna Park |
715 Benfield Road |
Severna Park, MD 21146 |
|
Aspenwood |
14400 Homecrest Road |
Silver Springs, MD 20906 |
|
HeartFields at Cary |
1050 Crescent Green Drive |
Cary, NC 27511 |
|
Montebello |
10500 Academy Road |
Albuquerque, NM 87111 |
|
Forum at Knightsbridge |
4590 and 4625 Knightsbridge Blvd. |
Columbus, OH 43214 |
|
Forum at Memorial Woods |
777 North Post Oak Road |
Houston, TX 77024 |
|
Forum at Lincoln Heights |
311 West Nottingham Road |
San Antonio, TX 78209 |
|
Forum at Woodlands |
5055 W Panther Creek Drive |
Woodlands, TX 77381 |
|
Morningside of Charlottesville |
491 Crestwood Drive |
Charlottesville, VA 22903 |
|
HeartFields at Fredericksburg |
20 HeartFields Lane |
Fredericksburg, VA 22405 |
|
Morningside of Bellgrade |
2800 Polo Parkway |
Midlothian, VA 23113 |
|
Morningside of Newport News |
655 Denbigh Boulevard |
Newport News, VA 23608 |
|
Meadowmere - Northshore Assisted Living |
10803 North Port Washington Road |
Mequon, WI 53092 |
4
Exhibit 10.7
AMENDED
AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 1),
dated as of August 4, 2009,
by and among
CERTAIN AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,
AS LANDLORD,
AND
FIVE STAR QUALITY CARE TRUST,
AS TENANT
ARTICLE 1 |
DEFINITIONS |
1 |
1.1 |
AAA |
2 |
1.2 |
Additional Charges |
2 |
1.3 |
Additional Rent |
2 |
1.4 |
Affiliated Person |
2 |
1.5 |
Agreement |
2 |
1.6 |
Applicable Laws |
2 |
1.7 |
Arbitration Award |
3 |
1.8 |
Award |
3 |
1.9 |
Base Gross Revenues |
3 |
1.10 |
Business Day |
3 |
1.11 |
Capital Addition |
3 |
1.12 |
Capital Expenditure |
4 |
1.13 |
Change in Control |
4 |
1.14 |
Claim |
5 |
1.15 |
Code |
5 |
1.16 |
Commencement Date |
5 |
1.17 |
Condemnation |
5 |
1.18 |
Condemnor |
5 |
1.19 |
Consolidated Financials |
5 |
1.20 |
Date of Taking |
5 |
1.21 |
Default |
5 |
1.22 |
Disbursement Rate |
6 |
1.23 |
Disputes |
6 |
1.24 |
Easement Agreement |
6 |
1.25 |
Encumbrance |
6 |
1.26 |
Entity |
6 |
1.27 |
Environment |
6 |
1.28 |
Environmental Obligation |
6 |
1.29 |
Environmental Notice |
6 |
1.30 |
Event of Default |
6 |
1.31 |
Excess Gross Revenues |
6 |
1.32 |
Extended Term |
6 |
1.33 |
Facility |
7 |
1.34 |
Facility Mortgage |
7 |
1.35 |
Facility Mortgagee |
7 |
1.36 |
Financial Officers Certificate |
7 |
1.37 |
Fiscal Year |
7 |
1.38 |
Five Star |
7 |
1.39 |
Fixed Term |
7 |
1.40 |
Fixtures |
7 |
1.41 |
GAAP |
7 |
1.42 |
Government Agencies |
7 |
1.43 |
Gross Revenues |
8 |
1.44 |
Guarantor |
9 |
1.45 |
Guaranty |
9 |
1.46 |
Hazardous Substances |
9 |
1.47 |
Immediate Family |
10 |
1.48 |
Impositions |
10 |
1.49 |
Incidental Documents |
11 |
1.50 |
Indebtedness |
11 |
1.51 |
Insurance Requirements |
11 |
1.52 |
Interest Rate |
12 |
2
2.5 |
Limitations on Term |
21 |
ARTICLE 3 |
RENT |
21 |
3.1 |
Rent |
21 |
3.2 |
Late Payment of Rent, Etc. |
27 |
3.3 |
Net Lease |
28 |
3.4 |
No Termination, Abatement, Etc. |
28 |
ARTICLE 4 |
USE OF THE LEASED PROPERTY |
29 |
4.1 |
Permitted Use |
29 |
4.2 |
Compliance with Legal/Insurance Requirements, Etc. |
31 |
4.3 |
Compliance with Medicaid and Medicare Requirements |
31 |
4.4 |
Environmental Matters |
32 |
ARTICLE 5 |
MAINTENANCE AND REPAIRS |
34 |
5.1 |
Maintenance and Repair |
34 |
5.2 |
Tenants Personal Property |
36 |
5.3 |
Yield Up |
36 |
5.4 |
Management Agreement |
37 |
ARTICLE 6 |
IMPROVEMENTS, ETC. |
37 |
6.1 |
Improvements to the Leased Property |
37 |
6.2 |
Salvage |
38 |
ARTICLE 7 |
LIENS |
38 |
ARTICLE 8 |
PERMITTED CONTESTS |
39 |
ARTICLE 9 |
INSURANCE AND INDEMNIFICATION |
40 |
9.1 |
General Insurance Requirements |
40 |
9.2 |
Waiver of Subrogation |
40 |
9.3 |
Form Satisfactory, Etc. |
40 |
9.4 |
No Separate Insurance; Self-Insurance |
41 |
9.5 |
Indemnification of Landlord |
42 |
ARTICLE 10 |
CASUALTY |
42 |
10.1 |
Insurance Proceeds |
42 |
10.2 |
Damage or Destruction |
43 |
10.3 |
Damage Near End of Term |
45 |
10.4 |
Tenants Property |
45 |
10.5 |
Restoration of Tenants Property |
46 |
10.6 |
No Abatement of Rent |
46 |
10.7 |
Waiver |
46 |
ARTICLE 11 |
CONDEMNATION |
46 |
11.1 |
Total Condemnation, Etc. |
46 |
11.2 |
Partial Condemnation |
46 |
11.3 |
Abatement of Rent |
48 |
11.4 |
Temporary Condemnation |
48 |
11.5 |
Allocation of Award |
48 |
ARTICLE 12 |
DEFAULTS AND REMEDIES |
49 |
12.1 |
Events of Default |
49 |
12.2 |
Remedies |
51 |
12.3 |
Tenants Waiver |
53 |
12.4 |
Application of Funds |
53 |
12.5 |
Landlords Right to Cure Tenants Default |
54 |
3
ARTICLE 13 |
HOLDING OVER |
54 |
ARTICLE 14 |
LANDLORD DEFAULT |
54 |
ARTICLE 15 |
PURCHASE RIGHTS |
55 |
ARTICLE 16 |
SUBLETTING AND ASSIGNMENT |
56 |
16.1 |
Subletting and Assignment |
56 |
16.2 |
Required Sublease Provisions |
57 |
16.3 |
Permitted Sublease |
59 |
16.4 |
Sublease Limitation |
59 |
ARTICLE 17 |
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS |
60 |
17.1 |
Estoppel Certificates |
60 |
17.2 |
Financial Statements |
60 |
17.3 |
General Operations |
61 |
ARTICLE 18 |
LANDLORDS RIGHT TO INSPECT |
62 |
ARTICLE 19 |
EASEMENTS |
62 |
19.1 |
Grant of Easements |
62 |
19.2 |
Exercise of Rights by Tenant |
63 |
19.3 |
Permitted Encumbrances |
63 |
ARTICLE 20 |
FACILITY MORTGAGES |
63 |
20.1 |
Landlord May Grant Liens |
63 |
20.2 |
Subordination of Lease |
63 |
20.3 |
Notice to Mortgagee and Superior Landlord |
65 |
ARTICLE 21 |
ADDITIONAL COVENANTS OF TENANT |
66 |
21.1 |
Prompt Payment of Indebtedness |
66 |
21.2 |
Conduct of Business |
66 |
21.3 |
Maintenance of Accounts and Records |
66 |
21.4 |
Notice of Litigation, Etc. |
67 |
21.5 |
Prohibited Transactions |
67 |
ARTICLE 22 |
ARBITRATION |
67 |
22.1 |
Disputes |
67 |
22.2 |
Selection of Arbitrators |
68 |
22.3 |
Location of Arbitration |
68 |
22.4 |
Scope of Discovery |
68 |
22.5 |
Arbitration Award |
68 |
22.6 |
Costs |
69 |
22.7 |
Final Judgment |
69 |
22.8 |
Payment |
69 |
ARTICLE 23 |
MISCELLANEOUS |
69 |
23.1 |
Limitation on Payment of Rent |
69 |
23.2 |
No Waiver |
70 |
23.3 |
Remedies Cumulative |
70 |
23.4 |
Severability |
70 |
23.5 |
Acceptance of Surrender |
70 |
23.6 |
No Merger of Title |
71 |
23.7 |
Conveyance by Landlord |
71 |
23.8 |
Quiet Enjoyment |
71 |
23.9 |
No Recordation |
71 |
23.10 |
Notices |
72 |
23.11 |
Construction |
73 |
23.12 |
Counterparts; Headings |
73 |
23.13 |
Applicable Law, Etc. |
73 |
4
23.14 |
Right to Make Agreement |
74 |
23.15 |
Attorneys Fees |
74 |
23.16 |
Nonliability of Trustees |
74 |
23.17 |
Addition of LTA GMAC Properties and RMI Properties |
74 |
23.18 |
Original Leases |
75 |
5
AMENDED
AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 1)
THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT is entered into as of August 4, 2009 by and among each of the parties identified on the signature pages hereof as a landlord, (collectively, Landlord ), and FIVE STAR QUALITY CARE TRUST , as tenant ( Tenant ).
W I T N E S S E T H :
WHEREAS, Landlord and Tenant are parties to certain Amended and Restated Master Lease Agreements, dated as of June 30, 2008 (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, Landlord and Tenant and the landlords and tenants under the Original Leases wish to amend and restate the Original Leases into separate leases and to make certain other modifications thereto as are set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, the Original Leases are hereby amended and restated but only with respect to the Leased Property (as hereinafter defined), as follows:
For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated Articles, Sections and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on January 1, 2025 and expire on December 31, 2039 and the second Extended Term shall commence on January 1, 2040 and expire on December 31, 2054. All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond December 31, 2054. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than December 31, 2022, and if Tenant shall elect to exercise its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than December 31, 2037, it being understood and agreed that time shall be of the essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlords option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.
Notwithstanding the foregoing, Tenant shall have no right to extend the Term for either Extended Term with respect to any Properties located in the State of California. If Tenant shall extend the Term, the definition of Leased Property shall exclude any Properties located in the State of California during the Extended Term(s), Minimum Rent shall be reduced by the Minimum
20
Rent allocated thereto by the parties, and Tenant shall surrender such Properties to Landlord at the expiration of the Fixed Term in the condition required by Section 5.3 and shall comply with all of its other obligations relating to such Properties as if the Term had expired at the end of the Fixed Term.
21
22
If the annual Additional Rent for such preceding Lease Year as set forth in Tenants statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.
23
24
Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.
25
Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided , however , that Landlords failure to give any such notice shall in no way diminish Tenants obligation hereunder to pay such Impositions.
Reference is made to that certain Development Agreement, dated as of 2003, between the City of Rogers, Minnesota (the City of Rogers ) and SNH CHS Properties Trust, as successor by assignment from Dignified Assisted Living, Inc. (the Development Agreement ). Notwithstanding anything contained in this Agreement to the contrary, the Impositions payable by Tenant hereunder shall not include any of the Tax Increments described in the Development Agreement. So long as the Development Agreement remains outstanding, (i) SNH CHS Properties Trust shall pay all of the Tax Increments directly to the City of
26
Rogers under the Development Agreement; (ii) SNH CHS Properties Trust shall be entitled to receive any portion of the Reimbursement Amount (as described in the Development Agreement) paid by the City of Rogers under the Development Agreement, and (iii) Tenant shall pay to Landlord the fixed amount of $15,000 per year.
27
In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent.
28
29
30
31
If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property, subject to Tenants right to contest the same in accordance with Article 8 , Tenant shall take (and shall cause to be taken) all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Laws, (x) to clean up and remove from and about such Property all Hazardous Substances thereon, (y) to
32
contain and prevent any further release or threat of release of Hazardous Substances on or about such Property and (z) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.
Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.4 , which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.
33
34
35
Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlords estate in the Leased Property or any part thereof to liability under any mechanics lien law of any State in any way, it being expressly understood Landlords estate shall not be subject to any such liability.
In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlords sole cost and expense, use its good faith efforts to transfer (or cause to be
36
transferred) to and cooperate with Landlord or Landlords nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility as then operated. If requested by Landlord, Tenant shall continue to manage one or more of the Facilities after the expiration of the Term for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.
37
Subject to Article 8 , Tenant shall use its best efforts not, directly or indirectly, to create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenants leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16 , (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Article 8 , (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8 , (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of Article 20 and (h) Landlord Liens and any other voluntary liens created by Landlord.
38
Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, Claims ) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenants obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this Article 8 ) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.
39
40
41
42
43
44
Landlords obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.
Tenants obligation to restore the applicable Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).
45
46
Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors estimates, (d) architects certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlords obligation under this Section 11.2 to
47
disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenants obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.
48
49
50
then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement with respect to any or all of the Leased Property by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate with respect to all or the designated portion of the Leased Property and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenants breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenants Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenants Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.
51
At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlords election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the applicable Commencement Date for any Property, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or
52
insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlords option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof, as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.
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Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.
If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenants obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable
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Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a Landlord Default by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenants invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlords Notice of dispute, either may submit the matter for resolution in accordance with Article 22 .
Landlord shall have the option to purchase Tenants Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which Tenants Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlords rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenants Personal Property in accordance with this
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Article 15 shall be applied first to Tenants current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the applicable State and any balance shall be paid to Tenant.
For purposes of this Section 16.1 , an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of Tenant.
If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1 , the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.
Any assignment or transfer of Tenants interest under this Agreement shall be subject to such assignees or transferees
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delivery to Landlord of (a) a Guaranty, which Guaranty shall be in form and substance satisfactory to Landlord in its sole discretion and which Guaranty shall constitute an Incidental Document hereunder; (b) a pledge of the stock, partnership, membership or other ownership interests of such assignee or other transferee to secure Tenants obligations under this Agreement and the Incidental Documents, which pledge shall be in form and substance satisfactory to Landlord in its sole discretion and which pledge shall constitute an Incidental Document hereunder; (c) a security agreement granting Landlord a security interest in all of such assignees or transferees right, title and interest in and to any personal property, intangibles and fixtures (other than accounts receivable) with respect to any Property which is subject to any such assignment or transfer to secure Tenants obligations under this Agreement and the Incidental Documents, which security agreement shall be in form and substance satisfactory to Landlord in its sole discretion and which security agreement shall constitute an Incidental Document hereunder; and (d) in the case of a sublease, an assignment which assigns all of such subtenants right, title and interest in such sublease to Landlord to secure Tenants obligations under this Agreement and the Incidental Documents, which assignment shall be in form and substance satisfactory to Landlord in its sole discretion and which assignment shall constitute an Incidental Document hereunder.
No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1 . No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenants interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlords option.
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The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1 .
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Landlord may at any time, and from time to time, provide any Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.
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Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenants use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.
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If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, Successor Landlord ), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenants landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee)
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shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlords interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlords obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenants agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenants possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2 . Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b) , (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b) .
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if to Landlord:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]
if to Tenant to:
c/o Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
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IN WITNESS WHEREOF , the parties have executed this Agreement as a sealed instrument as of the date above first written.
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LANDLORD: |
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SNH SOMERFORD PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SPTMNR PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH/LTA PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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SPTIHS PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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SNH CHS PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH/LTA PROPERTIES GA LLC |
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/s/ David J. Hegarty |
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TENANT: |
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FIVE STAR QUALITY CARE TRUST |
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/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
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SCHEDULE 1
Schedule omitted.
EXHIBITS A-1 THROUGH A-53
LAND
Certain Schedules and Exhibits to this agreement have been omitted and will be furnished supplementally to the Securities and Exchange Commission upon request.
Exhibit 10.8
AMENDED AND RESTATED GUARANTY AGREEMENT
( LEASE NO. 1 )
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this Guaranty ) is entered into as of August 4, 2009 by FIVE STAR QUALITY CARE, INC. , a Maryland corporation ( Guarantor ), for the benefit of SNH CHS PROPERTIES TRUST, a Maryland real estate investment trust, SPTIHS PROPERTIES TRUST, a Maryland real estate investment trust, SPTMNR PROPERTIES TRUST, a Maryland real estate investment trust, SNH/LTA PROPERTIES TRUST, a Maryland real estate investment trust, SNH/LTA PROPERTIES GA LLC, a Maryland limited liability company, and SNH SOMERFORD PROPERTIES TRUST, a Maryland real estate investment trust, collectively as landlord ( Landlord ).
W I T N E S S E T H :
WHEREAS, Guarantor and Landlord and certain affiliates of Landlord are parties to those certain Amended and Restated Guaranty Agreements, dated as of June 30, 2008 (collectively, the Original Guarantees ); and
WHEREAS, the Original Guarantees guarantee all of the payment and performance obligations of the tenants under those certain Amended and Restated Lease Agreements, dated as of June 30, 2008, as further described in the Original Guarantees (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, they and certain of their affiliates are amending and restating the Original Leases into separate leases (collectively, the Restated Leases ); and
WHEREAS , in connection with the execution and delivery of the Restated Leases, Guarantor, Landlord and certain affiliates of Landlord have agreed to amend and restate the Original Guarantees into separate guarantees that will each guaranty all of the payment and performance obligations of each tenant under a Restated Lease; and
WHEREAS , this Guaranty amends and restates the Original Guarantees with respect to that certain Amended and Restated Lease Agreement, dated as of the date hereof, between Landlord and Five Star Quality Care Trust, a Maryland business trust, as tenant (as the same may be amended, modified or supplemented from time to time, the Amended Lease No. 1 );
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Certain Terms . Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Amended Lease No. 1. The Amended Lease No. 1 and the Incidental Documents are hereinafter collectively referred to as the Amended Lease No. 1 Documents .
2. Guaranteed Obligations . For purposes of this Guaranty the term Guaranteed Obligations shall mean the payment and performance of each and every obligation of Tenant to Landlord under the Amended Lease No. 1 Documents or relating thereto, whether now existing or hereafter arising, and including, without limitation, the payment of the full amount of the Rent payable under the Amended Lease No. 1.
3. Representations and Covenants . Guarantor represents, warrants, covenants, and agrees that:
3.1 Incorporation of Representations and Warranties . The representations and warranties of Tenant and its Affiliated Persons set forth in the Amended Lease No. 1 Documents are true and correct on and as of the date hereof in all material respects.
3.2 Performance of Covenants and Agreements . Guarantor hereby agrees to take all lawful action in its power to cause Tenant duly and punctually to perform all of the covenants and agreements set forth in the Amended Lease No. 1 Documents.
3.3 Validity of Agreement . Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets
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of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any provision of law, or any applicable order, writ, injunction, judgment or decree of any court or any order or other public regulation of any governmental commission, bureau or administrative agency.
3.4 Payment of Expenses . Guarantor agrees, as principal obligor and not as guarantor only, to pay to Landlord forthwith, upon demand, in immediately available federal funds, all costs and expenses (including reasonable attorneys fees and disbursements) incurred or expended by Landlord in connection with the enforcement of this Guaranty, together with interest on amounts recoverable under this Guaranty from the time such amounts become due until payment at the Overdue Rate. Guarantors covenants and agreements set forth in this Section 3.4 shall survive the termination of this Guaranty.
3.5 Notices . Guarantor shall promptly give notice to Landlord of any event known to it which might reasonably result in a material adverse change in its financial condition.
3.6 Reports . Guarantor shall promptly provide to Landlord each of the financial reports, certificates and other documents required of it under the Amended Lease No. 1 Documents.
3.7 Books and Records . Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided
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that Landlord shall direct such lenders to maintain such information as confidential.
3.8 Taxes, Etc . Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon Guarantor or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided , however , that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.
3.9 Legal Existence of Guarantor . Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.
3.10 Compliance . Guarantor shall use reasonable business efforts to comply in all material respects with all applicable statutes, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to environmental, safety and other similar standards or controls).
3.11 Insurance . Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.
3.12 No Change in Control . Guarantor shall not permit the occurrence of any direct or indirect Change in Control of Tenant or Guarantor.
4. Guarantee . Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether
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upon demand, at the stated or accelerated maturity thereof pursuant to any Amended Lease No. 1 Document, or otherwise, and that the Guaranteed Obligations which are performance obligations shall be fully performed at the times and in the manner such performance is required by the Amended Lease No. 1 Documents. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Amended Lease No. 1 Documents) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Amended Lease No. 1 Documents.
5. Set-Off . Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.
6. Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Amended Lease No. 1 Documents), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of any Transaction Document or any limitation on the liability of Tenant thereunder not contemplated by the Amended Lease No. 1 Documents or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.
7. Additional Guarantees . This Guaranty shall be in addition to any other guarantee or other security for the
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Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.
8. Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of correct and complete copies of each of the Amended Lease No. 1 Documents, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Amended Lease No. 1 Documents, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Amended Lease No. 1 Documents, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or any of the Amended Lease No. 1 Documents or the Guaranteed Obligations (other than that the same have been discharged in accordance with the Amended Lease No. 1 Documents).
9. No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Amended Lease No. 1 Documents or any indulgence in or the extension of the time for payment by Tenant
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or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Amended Lease No. 1 Documents or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantors obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.
10. Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Amended Lease No. 1 Documents, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation, and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the Amended Lease No. 1 Documents shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by Landlord.
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11. Defeasance . This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided , however , if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.
12. Notices .
(a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord to:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[ Telecopier No. (617) 796-8349]
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if to Guarantor to:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
(d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.
13. Successors and Assigns . Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlords successors and assigns, including without limitation said holders, whether so expressed or not.
14. Applicable Law . Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlords organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.
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16. Modification of Agreement . No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand
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in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.
17. Waiver of Rights by Landlord . Neither any failure nor any delay on Landlords part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.
18. Severability . In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.
19. Entire Contract . This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.
20. Headings; Counterparts . Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.
21. Remedies Cumulative . No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.
22. NON-LIABILITY OF TRUSTEES . THE DECLARATIONS OF TRUST ESTABLISHING CERTAIN ENTITIES COMPRISING THE LANDLORD, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE DECLARATIONS ), ARE DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDE THAT THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDER SUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIES SHALL BE HELD TO ANY PERSONAL
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LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES. ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
23. Original Guarantees . Guarantor and Landlord acknowledge and agree that this Guaranty amends and restates the Original Guarantees in their entirety with respect to the Guaranteed Obligations and that this Guaranty shall govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations from and after the date of this Guaranty. Notwithstanding the foregoing, the Original Guarantees shall continue to govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations (as defined in the Original Guarantees) prior to the date of this Guaranty and nothing contained in this Guaranty shall operate to release Guarantor from any such rights or obligations.
[Remainder of page intentionally left blank.]
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WITNESS the execution hereof under seal as of the date above first written.
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FIVE STAR QUALITY CARE, INC. |
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By: |
/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
LANDLORD HEREBY CONSENTS TO THE EXECUTION AND DELIVERY OF THIS GUARANTY BY GUARANTOR AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS OF SECTION 23 OF THIS GUARANTY.
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SNH CHS PROPERTIES TRUST,
SPTIHS
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President of each of the foregoing entities |
[SIGNATURE PAGE TO AMENDED AND RESTATED GUARANTY AGREEMENT (LEASE NO. 1)]
Exhibit 10.9
AMENDED
AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 2),
dated as of August 4, 2009,
by and among
CERTAIN AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,
AS LANDLORD,
AND
CERTAIN AFFILIATES OF FIVE STAR QUALITY CARE, INC.,
AS TENANT
Table of Contents
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Page |
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ARTICLE 1 |
DEFINITIONS |
1 |
1.1 |
AAA |
2 |
1.2 |
Additional Charges |
2 |
1.3 |
Additional Rent |
2 |
1.4 |
Affiliated Person |
2 |
1.5 |
Agreement |
2 |
1.6 |
Applicable Laws |
2 |
1.7 |
Arbitration Award |
3 |
1.8 |
Award |
3 |
1.9 |
Base Gross Revenues |
3 |
1.10 |
Business Day |
3 |
1.11 |
Capital Addition |
4 |
1.12 |
Capital Expenditure |
4 |
1.13 |
Change in Control |
4 |
1.14 |
Claim |
5 |
1.15 |
Code |
5 |
1.16 |
Commencement Date |
5 |
1.17 |
Condemnation |
5 |
1.18 |
Condemnor |
5 |
1.19 |
Consolidated Financials |
5 |
1.20 |
Date of Taking |
5 |
1.21 |
Default |
6 |
1.22 |
Disbursement Rate |
6 |
1.23 |
Disputes |
6 |
1.24 |
Easement Agreement |
6 |
1.25 |
Encumbrance |
6 |
1.26 |
Entity |
6 |
1.27 |
Environment |
6 |
1.28 |
Environmental Obligation |
6 |
1.29 |
Environmental Notice |
6 |
1.30 |
Event of Default |
6 |
1.31 |
Excess Gross Revenues |
6 |
1.32 |
Extended Term |
7 |
1.33 |
Facility |
7 |
1.34 |
Facility Mortgage |
7 |
1.35 |
Facility Mortgagee |
7 |
1.36 |
Facility Trade Names |
7 |
1.37 |
Financial Officers Certificate |
7 |
1.38 |
Fiscal Year |
8 |
1.39 |
Five Star |
8 |
1.40 |
Fixed Term |
8 |
1.41 |
Fixtures |
8 |
1.42 |
GAAP |
8 |
1.43 |
Government Agencies |
8 |
1.44 |
Gross Revenues |
8 |
1.45 |
Guarantor |
9 |
1.46 |
Guaranty |
9 |
1.47 |
Hazardous Substances |
10 |
1.48 |
Immediate Family |
11 |
1.49 |
Impositions |
11 |
1.50 |
Incidental Documents |
12 |
1.51 |
Indebtedness |
12 |
1.52 |
Insurance Requirements |
12 |
Table of Contents
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Page |
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1.53 |
Interest Rate |
12 |
1.54 |
Land |
12 |
1.55 |
Landlord |
12 |
1.56 |
Landlord Default |
12 |
1.57 |
Landlord Liens |
12 |
1.58 |
Lease Year |
13 |
1.59 |
Leased Improvements |
13 |
1.60 |
Leased Intangible Property |
13 |
1.61 |
Leased Personal Property |
13 |
1.62 |
Leased Property |
13 |
1.63 |
Legal Requirements |
13 |
1.64 |
Lien |
14 |
1.65 |
Manager |
14 |
1.66 |
Management Agreement |
14 |
1.67 |
Minimum Rent |
14 |
1.68 |
Notice |
14 |
1.69 |
Officers Certificate |
14 |
1.70 |
Original Leases |
14 |
1.71 |
Other Leases |
14 |
1.72 |
Overdue Rate |
15 |
1.73 |
Parent |
15 |
1.74 |
Permitted Encumbrances |
15 |
1.75 |
Permitted Use |
15 |
1.76 |
Person |
15 |
1.77 |
Pledge Agreement |
15 |
1.78 |
Property |
15 |
1.79 |
Provider Agreements |
15 |
1.80 |
Regulated Medical Wastes |
16 |
1.81 |
Rehabilitation Hospital Properties |
16 |
1.82 |
Rent |
16 |
1.83 |
Rules |
16 |
1.84 |
SEC |
16 |
1.85 |
Security Agreement |
16 |
1.86 |
Senior Housing Properties |
16 |
1.87 |
State |
16 |
1.88 |
Subordinated Creditor |
16 |
1.89 |
Subordination Agreement |
16 |
1.90 |
Subsidiary |
17 |
1.91 |
Successor Landlord |
17 |
1.92 |
Tenant |
17 |
1.93 |
Tenants Personal Property |
17 |
1.94 |
Term |
17 |
1.95 |
Third Party Payor Programs |
17 |
1.96 |
Third Party Payors |
17 |
1.97 |
Unsuitable for Its Permitted Use |
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1.98 |
Work |
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ARTICLE 2 |
LEASED PROPERTY AND TERM |
18 |
2.1 |
Leased Property |
18 |
2.2 |
Condition of Leased Property |
19 |
2.3 |
Fixed Term |
20 |
2.4 |
Extended Terms |
20 |
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Table of Contents
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2.5 |
Limitations on Term |
21 |
ARTICLE 3 |
RENT |
21 |
3.1 |
Rent |
21 |
3.2 |
Late Payment of Rent, Etc. |
28 |
3.3 |
Net Lease |
28 |
3.4 |
No Termination, Abatement, Etc. |
28 |
ARTICLE 4 |
USE OF THE LEASED PROPERTY |
29 |
4.1 |
Permitted Use |
29 |
4.2 |
Compliance with Legal/Insurance Requirements, Etc. |
31 |
4.3 |
Compliance with Medicaid and Medicare Requirements |
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4.4 |
Environmental Matters |
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ARTICLE 5 |
MAINTENANCE AND REPAIRS |
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5.1 |
Maintenance and Repair |
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5.2 |
Tenants Personal Property |
36 |
5.3 |
Yield Up |
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5.4 |
Management Agreement |
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ARTICLE 6 |
IMPROVEMENTS, ETC. |
39 |
6.1 |
Improvements to the Leased Property |
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6.2 |
Salvage |
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ARTICLE 7 |
LIENS |
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ARTICLE 8 |
PERMITTED CONTESTS |
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ARTICLE 9 |
INSURANCE AND INDEMNIFICATION |
41 |
9.1 |
General Insurance Requirements |
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9.2 |
Waiver of Subrogation |
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9.3 |
Form Satisfactory, Etc. |
42 |
9.4 |
No Separate Insurance; Self-Insurance |
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9.5 |
Indemnification of Landlord |
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ARTICLE 10 |
CASUALTY |
44 |
10.1 |
Insurance Proceeds |
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10.2 |
Damage or Destruction |
45 |
10.3 |
Damage Near End of Term |
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10.4 |
Tenants Property |
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10.5 |
Restoration of Tenants Property |
47 |
10.6 |
No Abatement of Rent |
48 |
10.7 |
Waiver |
48 |
ARTICLE 11 |
CONDEMNATION |
48 |
11.1 |
Total Condemnation, Etc. |
48 |
11.2 |
Partial Condemnation |
48 |
11.3 |
Abatement of Rent |
50 |
11.4 |
Temporary Condemnation |
50 |
11.5 |
Allocation of Award |
50 |
ARTICLE 12 |
DEFAULTS AND REMEDIES |
51 |
12.1 |
Events of Default |
51 |
12.2 |
Remedies |
53 |
12.3 |
Tenants Waiver |
55 |
12.4 |
Application of Funds |
55 |
12.5 |
Landlords Right to Cure Tenants Default |
55 |
12.6 |
Trade Names |
56 |
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Table of Contents
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ARTICLE 13 |
HOLDING OVER |
56 |
ARTICLE 14 |
LANDLORD DEFAULT |
57 |
ARTICLE 15 |
PURCHASE RIGHTS |
57 |
ARTICLE 16 |
SUBLETTING AND ASSIGNMENT |
58 |
16.1 |
Subletting and Assignment |
58 |
16.2 |
Required Sublease Provisions |
60 |
16.3 |
Permitted Sublease |
61 |
16.4 |
Sublease Limitation |
62 |
ARTICLE 17 |
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS |
62 |
17.1 |
Estoppel Certificates |
62 |
17.2 |
Financial Statements |
62 |
17.3 |
General Operations |
64 |
ARTICLE 18 |
LANDLORDS RIGHT TO INSPECT |
65 |
ARTICLE 19 |
EASEMENTS |
65 |
19.1 |
Grant of Easements |
65 |
19.2 |
Exercise of Rights by Tenant |
66 |
19.3 |
Permitted Encumbrances |
66 |
ARTICLE 20 |
FACILITY MORTGAGES |
66 |
20.1 |
Landlord May Grant Liens |
66 |
20.2 |
Subordination of Lease |
66 |
20.3 |
Notice to Mortgagee and Superior Landlord |
68 |
ARTICLE 21 |
ADDITIONAL COVENANTS OF TENANT |
69 |
21.1 |
Prompt Payment of Indebtedness |
69 |
21.2 |
Conduct of Business |
69 |
21.3 |
Maintenance of Accounts and Records |
69 |
21.4 |
Notice of Litigation, Etc. |
70 |
21.5 |
Prohibited Transactions |
70 |
21.6 |
Notice of Change of Name, Etc. |
70 |
ARTICLE 22 |
ARBITRATION |
70 |
22.1 |
Disputes |
70 |
22.2 |
Selection of Arbitrators |
71 |
22.3 |
Location of Arbitration |
71 |
22.4 |
Scope of Discovery |
71 |
22.5 |
Arbitration Award |
71 |
22.6 |
Costs |
72 |
22.7 |
Final Judgment |
72 |
22.8 |
Payment |
72 |
ARTICLE 23 |
MISCELLANEOUS |
73 |
23.1 |
Limitation on Payment of Rent |
73 |
23.2 |
No Waiver |
73 |
23.3 |
Remedies Cumulative |
73 |
23.4 |
Severability |
73 |
23.5 |
Acceptance of Surrender |
74 |
23.6 |
No Merger of Title |
74 |
23.7 |
Conveyance by Landlord |
74 |
23.8 |
Quiet Enjoyment |
74 |
23.9 |
No Recordation |
75 |
23.10 |
Notices |
75 |
23.11 |
Construction |
76 |
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Table of Contents
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Page |
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23.12 |
Counterparts; Headings |
76 |
23.13 |
Applicable Law, Etc. |
77 |
23.14 |
Right to Make Agreement |
77 |
23.15 |
Attorneys Fees |
77 |
23.16 |
Nonliability of Trustees |
78 |
23.17 |
Original Leases |
78 |
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AMENDED
AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 2)
THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT is entered into as of August 4, 2009 by and among each of the parties identified on the signature pages hereof as a landlord (collectively, Landlord ), and each of the parties identified on the signature pages hereof as a tenant (jointly and severally, Tenant ).
W I T N E S S E T H :
WHEREAS, Landlord and Tenant are parties to certain Amended and Restated Master Lease Agreements, dated as of June 30, 2008 (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, Landlord and Tenant and the landlords and tenants under the Original Leases wish to amend and restate the Original Leases into separate leases and to make certain other modifications thereto as are set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, the Original Leases are hereby amended and restated but only with respect to the Leased Property (as hereinafter defined), as follows:
For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated Articles, Sections and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.
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If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on July 1, 2026 and expire on June 30, 2036 and the second Extended Term shall commence on July 1, 2036 and expire on June 30, 2046. All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond June 30, 2046. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than June 30, 2024, and if Tenant shall elect to exercise its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than June 30, 2034, it being understood and agreed that time shall be of the
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essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlords option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.
Notwithstanding the foregoing, Tenant shall have no right to extend the Term for the second Extended Term with respect to any Properties located in the State of California. If Tenant shall extend the Term for the second Extended Term, the definition of Leased Property shall exclude any Properties located in the State of California during the second Extended Term, Minimum Rent shall be reduced by the Minimum Rent allocated thereto by the parties, and Tenant shall surrender such Properties to Landlord at the expiration of the first Extended Term in the condition required by Section 5.3 and shall comply with all of its other obligations relating to such Properties as if the Term had expired at the end of the first Extended Term.
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If the annual Additional Rent for such preceding Lease Year as set forth in Tenants statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close
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of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.
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Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.
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Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided , however , that Landlords failure to give any such notice shall in no way diminish Tenants obligation hereunder to pay such Impositions.
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In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent.
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If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property, subject to Tenants right to contest the same in accordance with Article 8 , Tenant shall take (and shall cause to be taken) all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Laws, (x) to clean up and remove from and about such Property all Hazardous Substances thereon, (y) to contain and prevent any further release or threat of release of Hazardous Substances on or about such Property and (z) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.
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Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.4 , which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.
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Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlords estate in the Leased Property or any part thereof to liability under any mechanics lien law of any State in any way, it being expressly understood Landlords estate shall not be subject to any such liability.
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In addition, upon the expiration or earlier termination of this Agreement with respect to any Senior Housing Property, Tenant shall, at Landlords sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlords nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility located on such Property as then operated. If requested by Landlord, Tenant shall continue to manage one or more of the Facilities located at the Senior Housing Properties after the expiration of the Term with respect to such Properties for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.
In addition, upon the expiration or earlier termination of this Agreement with respect to either Rehabilitation Hospital Property, Tenant shall, at Landlords reasonable cost and expense, use its best efforts to complete the transfer of ownership of the hospital business and the related hospital operations and records necessary for such operation to, and cooperate with Landlord or Landlords nominee in connection with the processing of all applications for, licenses, operating
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permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental entities, which may be necessary for the operation of the hospitals at such Properties. Until such transfer of ownership is approved by the Massachusetts Department of Public Health, it is understood that Tenant shall continue as owner and licensee of the hospital business and the related hospital operations conducted at the Facilities located at the Rehabilitation Hospital Properties after the termination of this Agreement and for so long thereafter as is necessary for Landlord or Landlords nominee to obtain all necessary licenses, operating permits and other governmental authorizations. If a new tenant is not licensed upon the expiration or termination of this Agreement in connection with a Default or Event of Default by Tenant, then, during such post termination period, Tenant shall pay hold over rent in accordance with Section 13 . Otherwise, during such period, Minimum Rent with respect to each applicable Rehabilitation Hospital Property shall be payable in an amount equal to seventy-five percent (75%) of the Minimum Rent attributable to such Rehabilitation Hospital Property for the last month of the Term for the first six (6) months after the expiration date and fifty percent (50%) of such Minimum Rent thereafter. If necessary, Landlord and Tenant shall negotiate in good faith to agree upon the Minimum Rent attributable to each Rehabilitation Hospital Property, it being acknowledged and agreed that the Minimum Rent attributable to each Rehabilitation Hospital Property shall equal the fair market rent for such Rehabilitation Hospital Property. If Landlord and Tenant are unable to agree upon the Minimum Rent attributable to either Rehabilitation Hospital Property within thirty (30) days following the commencement of such negotiations, then the Minimum Rent attributable to such Rehabilitation Hospital Property shall be determined by arbitration in accordance with Section 22 . It is expressly understood and agreed that any transfer with respect to a Rehabilitation Hospital Property pursuant to this Section 5.3 or any other Section of this Agreement is not a transfer of ownership of the hospital and is not a transfer of the right, title and interest related to the licenses granted by the Massachusetts Department of Public Health to operate the Facilities thereon or any other permit, license or certification used in the operation of such Facilities that is otherwise by its terms non-transferable. Any such change in ownership and licensee shall be subject, in all events, to the approval of each and every applicable Government Agency, including, without limitation, the Massachusetts Department of Public Health, and Applicable Law, Tenant being obligated to cooperate in and facilitate such approval process.
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Subject to Article 8 , Tenant shall use its best efforts not, directly or indirectly, to create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenants leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16 , (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Article 8 , (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8 , (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of Article 20 and (h) Landlord Liens and any other voluntary liens created by Landlord.
Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, Claims ) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying
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or extending Tenants obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this Article 8 ) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.
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Landlords obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.
Tenants obligation to restore the applicable Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).
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Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors estimates, (d) architects certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlords obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenants obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.
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then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement with respect to any or all of the Leased Property by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate with respect to all or the designated portion of the Leased Property and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenants breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenants Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenants Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.
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At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlords election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the applicable Commencement Date for any Property, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.
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In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlords option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof, as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.
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Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.
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If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenants obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a Landlord Default by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenants invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlords Notice of dispute, either may submit the matter for resolution in accordance with Article 22 .
Landlord shall have the option to purchase Tenants Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1
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financing statements and other encumbrances to which Tenants Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlords rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenants Personal Property in accordance with this Article 15 shall be applied first to Tenants current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the applicable State and any balance shall be paid to Tenant.
For purposes of this Section 16.1 , an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of any or all of the Entities comprising Tenant.
If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other
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than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1 , the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.
Any assignment or transfer of Tenants interest under this Agreement shall be subject to such assignees or transferees delivery to Landlord of (a) a Guaranty, which Guaranty shall be in form and substance satisfactory to Landlord in its sole discretion and which Guaranty shall constitute an Incidental Document hereunder; (b) a pledge of the stock, partnership, membership or other ownership interests of such assignee or other transferee to secure Tenants obligations under this Agreement and the Incidental Documents, which pledge shall be in form and substance satisfactory to Landlord in its sole discretion and which pledge shall constitute an Incidental Document hereunder; (c) a security agreement granting Landlord a security interest in all of such assignees or transferees right, title and interest in and to any personal property, intangibles and fixtures (other than accounts receivable) with respect to any Property which is subject to any such assignment or transfer to secure Tenants obligations under this Agreement and the Incidental Documents, which security agreement shall be in form and substance satisfactory to Landlord in its sole discretion and which security agreement shall constitute an Incidental Document hereunder; and (d) in the case of a sublease, an assignment which assigns all of such subtenants right, title and interest in such sublease to Landlord to secure Tenants obligations under this Agreement and the Incidental Documents, which assignment shall be in form and substance satisfactory to Landlord in its sole discretion and which assignment shall constitute an Incidental Document hereunder.
No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1 . No assignment, subletting or occupancy shall
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affect any Permitted Use. Any subletting, assignment or other transfer of Tenants interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlords option.
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The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1 .
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Landlord may at any time, and from time to time, provide any Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.
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Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenants use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.
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If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, Successor Landlord ), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenants landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to
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such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlords interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlords obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenants agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenants possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2 . Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b) , (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b) .
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if to Landlord:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]
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if to Tenant to:
c/o Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
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IN WITNESS WHEREOF , the parties have executed this Agreement as a sealed instrument as of the date above first written.
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LANDLORD: |
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SPTIHS PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SPTMNR PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH/LTA PROPERTIES GA LLC |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH/LTA PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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O.F.C. CORPORATION |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH CHS PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCC OF KENTUCKY TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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LEISURE PARK VENTURE LIMITED PARTNERSHIP |
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By: |
CCC Leisure Park Corporation, |
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its General Partner |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCDE SENIOR LIVING LLC |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCOP SENIOR LIVING LLC |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCC PUEBLO NORTE TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCC RETIREMENT COMMUNITIES II, L.P. |
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By: |
Crestline Ventures LLC, |
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its General Partner |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCC INVESTMENTS I, L.L.C. |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCC FINANCING I TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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CCC FINANCING LIMITED, L.P. |
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CCC Retirement Trust, |
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its General Partner |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH SOMERFORD PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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HRES1 PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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TENANT: |
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FIVE STAR QUALITY CARE TRUST |
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By: |
/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
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FS TENANT HOLDING COMPANY TRUST |
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By: |
/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
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FS COMMONWEALTH LLC |
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By: |
/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
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FS PATRIOT LLC |
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By: |
/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
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SCHEDULE 1
Schedule omitted.
EXHIBITS A-1 THROUGH A-50
LAND
Certain Schedules and Exhibits to this agreement have been omitted and will be furnished supplementally to the Securities and Exchange Commission upon request.
Exhibit 10.10
AMENDED AND RESTATED GUARANTY AGREEMENT
( LEASE NO. 2 )
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this Guaranty ) is entered into as of August 4, 2009 by FIVE STAR QUALITY CARE, INC. , a Maryland corporation ( Guarantor ), for the benefit of CCC FINANCING I TRUST , a Maryland business trust, CCC OF KENTUCKY TRUST , a Maryland business trust, CCC PUEBLO NORTE TRUST , a Maryland business trust, CCC INVESTMENTS I, L.L.C. , a Delaware limited liability company, CCDE SENIOR LIVING LLC, a Delaware limited liability company, CCOP SENIOR LIVING LLC , a Delaware limited liability company, CCC FINANCING LIMITED, L.P. , a Delaware limited partnership, CCC RETIREMENT COMMUNITIES II, L.P. , a Delaware partnership, HRES1 PROPERTIES TRUST , a Maryland real estate investment trust, LEISURE PARK VENTURE LIMITED PARTNERSHIP , a Delaware limited partnership, O.F.C. CORPORATION , an Indiana corporation, SNH CHS PROPERTIES TRUST , a Maryland real estate investment trust, SNH SOMERFORD PROPERTIES TRUST , a Maryland real estate investment trust, SNH/LTA PROPERTIES GA LLC , a Maryland limited liability company, SNH/LTA PROPERTIES TRUST , a Maryland real estate investment trust, SPTIHS PROPERTIES TRUST , a Maryland real estate investment trust, and SPTMNR PROPERTIES TRUST , a Maryland real estate investment trust, collectively as landlord ( Landlord ).
W I T N E S S E T H :
WHEREAS, Guarantor and Landlord and certain affiliates of Landlord are parties to those certain Amended and Restated Guaranty Agreements, dated as of June 30, 2008 (collectively, the Original Guarantees ); and
WHEREAS, the Original Guarantees guarantee all of the payment and performance obligations of the tenants under those certain Amended and Restated Lease Agreements, dated as of June 30, 2008, as further described in the Original Guarantees (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, they and certain of their affiliates are amending and restating the Original Leases into separate leases (collectively, the Restated Leases ); and
WHEREAS , in connection with the execution and delivery of the Restated Leases, Guarantor, Landlord and certain affiliates of Landlord have agreed to amend and restate the Original Guarantees into separate guarantees that will each guaranty all
of the payment and performance obligations of each tenant under a Restated Lease; and
WHEREAS , this Guaranty amends and restates the Original Guarantees with respect to that certain Amended and Restated Lease Agreement, dated as of the date hereof, between Landlord and Five Star Quality Care Trust, a Maryland business trust, FS Commonwealth LLC, a Maryland limited liability company, FS Patriot LLC, a Maryland limited liability company, and FS Tenant Holding Company Trust, a Maryland business trust (collectively, Tenant ) (as the same may be amended, modified or supplemented from time to time, the Amended Lease No. 2 );
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Certain Terms . Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Amended Lease No. 2. The Amended Lease No. 2 and the Incidental Documents are hereinafter collectively referred to as the Amended Lease No. 2 Documents .
2. Guaranteed Obligations . For purposes of this Guaranty the term Guaranteed Obligations shall mean the payment and performance of each and every obligation of Tenant to Landlord under the Amended Lease No. 2 Documents or relating thereto, whether now existing or hereafter arising, and including, without limitation, the payment of the full amount of the Rent payable under the Amended Lease No. 2.
3. Representations and Covenants . Guarantor represents, warrants, covenants, and agrees that:
3.1 Incorporation of Representations and Warranties . The representations and warranties of Tenant and its Affiliated Persons set forth in the Amended Lease No. 2 Documents are true and correct on and as of the date hereof in all material respects.
3.2 Performance of Covenants and Agreements . Guarantor hereby agrees to take all lawful action in its power to cause Tenant duly and punctually to perform all of the covenants and agreements set forth in the Amended Lease No. 2 Documents.
3.3 Validity of Agreement . Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of
2
Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any provision of law, or any applicable order, writ, injunction, judgment or decree of any court or any order or other public regulation of any governmental commission, bureau or administrative agency.
3.4 Payment of Expenses . Guarantor agrees, as principal obligor and not as guarantor only, to pay to Landlord forthwith, upon demand, in immediately available federal funds, all costs and expenses (including reasonable attorneys fees and disbursements) incurred or expended by Landlord in connection with the enforcement of this Guaranty, together with interest on amounts recoverable under this Guaranty from the time such amounts become due until payment at the Overdue Rate. Guarantors covenants and agreements set forth in this Section 3.4 shall survive the termination of this Guaranty.
3.5 Notices . Guarantor shall promptly give notice to Landlord of any event known to it which might reasonably result in a material adverse change in its financial condition.
3.6 Reports . Guarantor shall promptly provide to Landlord each of the financial reports, certificates and other documents required of it under the Amended Lease No. 2 Documents.
3.7 Books and Records . Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties
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during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential.
3.8 Taxes, Etc . Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon Guarantor or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided , however , that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.
3.9 Legal Existence of Guarantor . Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.
3.10 Compliance . Guarantor shall use reasonable business efforts to comply in all material respects with all applicable statutes, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to environmental, safety and other similar standards or controls).
3.11 Insurance . Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect
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to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.
3.12 No Change in Control . Guarantor shall not permit the occurrence of any direct or indirect Change in Control of Tenant or Guarantor.
4. Guarantee . Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof pursuant to any Amended Lease No. 2 Document, or otherwise, and that the Guaranteed Obligations which are performance obligations shall be fully performed at the times and in the manner such performance is required by the Amended Lease No. 2 Documents. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Amended Lease No. 2 Documents) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Amended Lease No. 2 Documents.
5. Set-Off . Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.
6. Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Amended Lease No. 2 Documents), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in
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whole or in part of any Guaranteed Obligation or of any Transaction Document or any limitation on the liability of Tenant thereunder not contemplated by the Amended Lease No. 2 Documents or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.
7. Additional Guarantees . This Guaranty shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.
8. Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of correct and complete copies of each of the Amended Lease No. 2 Documents, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Amended Lease No. 2 Documents, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Amended Lease No. 2 Documents, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or any of the Amended Lease No. 2 Documents or the Guaranteed Obligations (other than that the same have been
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discharged in accordance with the Amended Lease No. 2 Documents).
9. No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Amended Lease No. 2 Documents or any indulgence in or the extension of the time for payment by Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Amended Lease No. 2 Documents or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantors obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.
10. Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Amended Lease No. 2 Documents, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation,
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and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the Amended Lease No. 2 Documents shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by Landlord.
11. Defeasance . This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided , however , if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.
12. Notices .
(a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.
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(c) All such notices shall be addressed,
if to Landlord to:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[ Telecopier No. (617) 796-8349]
if to Guarantor to:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
(d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.
13. Successors and Assigns . Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlords successors and assigns, including without limitation said holders, whether so expressed or not.
14. Applicable Law . Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlords organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding
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is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.
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16. Modification of Agreement . No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.
17. Waiver of Rights by Landlord . Neither any failure nor any delay on Landlords part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.
18. Severability . In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.
19. Entire Contract . This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.
20. Headings; Counterparts . Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.
21. Remedies Cumulative . No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or
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hereafter existing at law or in equity or by statute or otherwise.
22. NON-LIABILITY OF TRUSTEES . THE DECLARATIONS OF TRUST ESTABLISHING CERTAIN ENTITIES COMPRISING THE LANDLORD, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE DECLARATIONS ), ARE DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDE THAT THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDER SUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIES SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES. ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
23. Original Guarantees . Guarantor and Landlord acknowledge and agree that this Guaranty amends and restates the Original Guarantees in their entirety with respect to the Guaranteed Obligations and that this Guaranty shall govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations from and after the date of this Guaranty. Notwithstanding the foregoing, the Original Guarantees shall continue to govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations (as defined in the Original Guarantees) prior to the date of this Guaranty and nothing contained in this Guaranty shall operate to release Guarantor from any such rights or obligations.
[Remainder of page intentionally left blank.]
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WITNESS the execution hereof under seal as of the date above first written.
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FIVE STAR QUALITY CARE, INC. |
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/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
LANDLORD HEREBY CONSENTS TO THE EXECUTION AND DELIVERY OF THIS GUARANTY BY GUARANTOR AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS OF SECTION 23 OF THIS GUARANTY.
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CCC FINANCING I TRUST, |
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CCC OF KENTUCKY TRUST, |
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CCC PUEBLO NORTE TRUST, |
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CCC INVESTMENTS I, L.L.C., |
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CCDE SENIOR LIVING LLC, |
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CCOP SENIOR LIVING LLC, |
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O.F.C. CORPORATION, |
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SNH CHS PROPERTIES TRUST, |
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SNH SOMERFORD PROPERTIES TRUST, |
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SNH/LTA PROPERTIES GA LLC, |
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SNH/LTA PROPERTIES TRUST, |
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SPTIHS PROPERTIES TRUST, and |
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SPTMNR PROPERTIES TRUST |
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HRES1 PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President of each of the foregoing entities |
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CCC FINANCING LIMITED, L.P. |
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By: |
CCC RETIREMENT TRUST, |
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its General Partner |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
[SIGNATURE PAGE TO AMENDED AND RESTATED GUARANTY AGREEMENT (LEASE NO. 2)]
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CCC RETIREMENT COMMUNITIES II, L.P. |
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CRESTLINE VENTURES LLC, |
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its General Partner |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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LEISURE PARK VENTURE LIMITED PARTNERSHIP |
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By: |
CCC LEISURE PARK CORPORATION, |
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its General Partner |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President |
[SIGNATURE PAGE TO AMENDED AND RESTATED SUBTENANT AGREEMENT (LEASE NO. 2)]
Exhibit 10.11
AMENDED AND RESTATED MASTER LEASE AGREEMENT,
dated as of August 4, 2009,
by and among
SNH FM FINANCING LLC, SNH FM
FINANCING TRUST AND
ELLICOTT CITY LAND I, LLC,
COLLECTIVELY AS LANDLORD,
AND
FVE FM FINANCING, INC.,
AS TENANT
ARTICLE 1 |
DEFINITIONS |
1 |
1.1 |
AAA |
2 |
1.2 |
Additional Charges |
2 |
1.3 |
Additional Rent |
2 |
1.4 |
Affiliated Person |
2 |
1.5 |
Agreement |
2 |
1.6 |
Applicable Laws |
2 |
1.7 |
Arbitration Award |
3 |
1.8 |
Award |
3 |
1.9 |
Base Gross Revenues |
3 |
1.10 |
Business Day |
3 |
1.11 |
Capital Addition |
3 |
1.12 |
Capital Expenditure |
4 |
1.13 |
Change in Control |
4 |
1.14 |
Claim |
5 |
1.15 |
Code |
5 |
1.16 |
Commencement Date |
5 |
1.17 |
Condemnation |
5 |
1.18 |
Condemnor |
5 |
1.19 |
Consolidated Financials |
5 |
1.20 |
Date of Taking |
5 |
1.21 |
Default |
5 |
1.22 |
Disbursement Rate |
6 |
1.23 |
Disputes |
6 |
1.24 |
Easement Agreement |
6 |
1.25 |
Encumbrance |
6 |
1.26 |
Entity |
6 |
1.27 |
Environment |
6 |
1.28 |
Environmental Obligation |
6 |
1.29 |
Environmental Notice |
6 |
1.30 |
Event of Default |
6 |
1.31 |
Excess Gross Revenues |
6 |
1.32 |
Existing Financing |
7 |
1.33 |
Extended Term |
7 |
1.34 |
Facility |
7 |
1.35 |
Facility Mortgage |
7 |
1.36 |
Facility Mortgagee |
7 |
1.37 |
Financial Officers Certificate |
7 |
1.38 |
Fiscal Year |
7 |
1.39 |
Five Star |
7 |
1.40 |
Fixed Term |
7 |
1.41 |
Fixtures |
7 |
1.42 |
GAAP |
8 |
1.43 |
Government Agencies |
8 |
1.44 |
Gross Revenues |
8 |
1.45 |
Guarantor |
9 |
1.46 |
Guaranty |
9 |
1.47 |
Hazardous Substances |
9 |
1.48 |
Immediate Family |
10 |
1.49 |
Impositions |
10 |
1.50 |
Incidental Documents |
11 |
1.51 |
Indebtedness |
11 |
1.52 |
Insurance Requirements |
12 |
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AMENDED AND RESTATED MASTER LEASE AGREEMENT
THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT is entered into as of August 4, 2009 by and among SNH FM FINANCING LLC, a Delaware limited liability company, SNH FM FINANCING TRUST, a Maryland real estate investment trust, and ELLICOTT CITY LAND I, LLC, a Delaware limited liability company, collectively as landlord ( Landlord ), and FVE FM FINANCING, INC., a Maryland corporation, as tenant ( Tenant ).
W I T N E S S E T H :
WHEREAS, certain affiliates of Landlord and Tenant are parties to certain Amended and Restated Master Lease Agreements, dated as of June 30, 2008 (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, Landlord and Tenant and the landlords and tenants under the Original Leases wish to amend and restate the Original Leases into separate leases and to make certain other modifications thereto as are set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, the Original Leases are hereby amended and restated but only with respect to the Leased Property (as hereinafter defined), as follows:
For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated Articles, Sections and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.
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If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on January 1, 2029 and expire on December 31, 2043 and the second Extended Term shall commence on January 1, 2044 and expire on December 31, 2058. All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond December 31, 2058. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than December 31, 2026, and if Tenant shall elect to exercise
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its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than December 31, 2041, it being understood and agreed that time shall be of the essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlords option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.
Notwithstanding the foregoing, Tenant shall have no right to extend the Term for either Extended Term with respect to any Properties located in the State of California. If Tenant shall extend the Term, the definition of Leased Property shall exclude any Properties located in the State of California during the Extended Term(s), Minimum Rent shall be reduced by the Minimum Rent allocated thereto by the parties, and Tenant shall surrender such Properties to Landlord at the expiration of the Fixed Term in the condition required by Section 5.3 and shall comply with all of its other obligations relating to such Properties as if the Term had expired at the end of the Fixed Term.
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If the annual Additional Rent for such preceding Lease Year as set forth in Tenants statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided
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that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.
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Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.
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Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided , however , that Landlords failure to give any such notice shall in no way diminish Tenants obligation hereunder to pay such Impositions.
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In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent.
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If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property, subject to Tenants right to contest the same in accordance with Article 8 , Tenant shall take (and shall cause to be taken) all actions and
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incur any and all expenses, as are required by any Government Agency and by Applicable Laws, (x) to clean up and remove from and about such Property all Hazardous Substances thereon, (y) to contain and prevent any further release or threat of release of Hazardous Substances on or about such Property and (z) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.
Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.4 , which amounts shall bear interest from the date ten (10) Business Days
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after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.
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Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlords estate in the Leased Property or any part thereof to liability under any mechanics lien law of any State in any way, it being expressly understood Landlords estate shall not be subject to any such liability.
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In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlords sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlords nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility as then operated. If requested by Landlord, Tenant shall continue to manage one or more of the Facilities after the expiration of the Term for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.
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Subject to Article 8 , Tenant shall use its best efforts not, directly or indirectly, to create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenants leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16 , (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Article 8 , (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8 , (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of
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Article 20 and (h) Landlord Liens and any other voluntary liens created by Landlord.
Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, Claims ) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenants obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this Article 8 ) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and
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penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.
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Landlords obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.
Tenants obligation to restore the applicable Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).
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Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors estimates,
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(d) architects certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlords obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenants obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.
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then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement with respect to any or all of the Leased Property by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate with respect to all or the designated portion of the Leased Property and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenants breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenants Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenants Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to
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Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.
At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlords election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the applicable Commencement Date for any Property, the payments required for such lesser period projected
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to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlords option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof, as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.
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Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.
If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any
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agreement affecting the Leased Property, the performance of which is not Tenants obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a Landlord Default by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenants invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlords Notice of dispute, either may submit the matter for resolution in accordance with Article 22 .
Landlord shall have the option to purchase Tenants Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which Tenants Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and
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agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlords rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenants Personal Property in accordance with this Article 15 shall be applied first to Tenants current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the applicable State and any balance shall be paid to Tenant.
For purposes of this Section 16.1 , an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of Tenant.
If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1 , the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its
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covenants, agreements or obligations contained in this Agreement.
No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1 . No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenants interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlords option.
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The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1 .
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Landlord may at any time, and from time to time, provide any Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.
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Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenants use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.
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If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, Successor Landlord ), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenants landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlords interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for
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the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlords obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenants agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenants possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2 . Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b) , (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b) .
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if to Landlord:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]
if to Tenant to:
c/o Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
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IN WITNESS WHEREOF , the parties have executed this Agreement as a sealed instrument as of the date above first written.
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LANDLORD: |
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SNH FM FINANCING LLC |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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SNH FM FINANCING TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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ELLICOTT CITY LAND I, LLC |
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/s/ David J. Hegarty |
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TENANT: |
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FVE FM FINANCING, INC. |
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Bruce J. Mackey Jr. |
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[SIGNATURE PAGE TO AMENDED AND RESTATED MASTER LEASE AGREEMENT]
SCHEDULE 1
Schedule omitted.
EXHIBITS A-1 THROUGH A-27
LAND
Certain Schedules and Exhibits to this agreement have been omitted and will be furnished supplementally to the Securities and Exchange Commission upon request.
Exhibit 10.12
EXECUTION VERSION (1)
AMENDMENT NO. 1 TO
AMENDED AND RESTATED MASTER LEASE AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (this Amendment ) is made as of August 4, 2009 by and among SNH FM Financing LLC, a Delaware limited liability company, SNH FM Financing Trust, a Maryland real estate investment trust, and Ellicott City Land I, LLC, a Delaware limited liability company, collectively as landlord ( Landlord ) and FVE FM Financing, Inc., a Maryland corporation , as tenant ( Tenant ).
RECITALS
A. Landlord and Tenant are parties to that certain Amended and Restated Master Lease Agreement dated as of the date hereof (as the same may be amended, restated, modified or supplemented from time to time, the Lease Agreement ).
B. SNH FM Financing LLC and Citibank, N.A., a national banking association ( Lender ) are parties to that certain Master Credit Facility Agreement dated as of August 4, 2009 (as the same may be amended, restated, modified or supplemented from time to time, the Master Agreement ) pursuant to which Lender established a $512,934,000 Term Loan in favor of Landlord.
C. Immediately after the execution of the Master Agreement, the Lenders interests under the Master Agreement were assigned by the Lender to Fannie Mae, that body corporate duly organized under the Federal National Mortgage Association Charter Act, as amended, 12 U.S.C. §1716 et seq . and duly organized and existing under the laws of the United States, and its successors and assigns ( Fannie Mae ), pursuant to that certain Assignment of Master Credit Facility Agreement and Other Loan Documents dated as of August 4, 2009.
D. Landlord and Tenant have agreed to amend the Lease Agreement in certain respects pursuant to this Amendment so long as the Term Loan established pursuant to the Master Agreement remains outstanding or if Fannie Mae becomes Successor Landlord pursuant to the Lease Agreement. After the Term Loan is no longer outstanding and if Fannie Mae is not the Successor Landlord pursuant to the Lease Agreement, this Amendment shall no longer be in full force and effect.
E. Landlord and Tenant intend these Recitals to be a material part of this Amendment.
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NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows:
1.34 Facility shall mean, with respect to any Property, the skilled nursing/independent living/assisted living facility being operated or proposed to be operated on such Property.
1.35 Facility Mortgage shall mean all of the Loan Documents as defined in the Master Agreement.
1.36 Facility Mortgagee shall mean Fannie Mae or any subsequent holder of any Facility Mortgage.
1.52 Insurance Requirements shall mean all terms of any insurance policy required by this Agreement and any Facility Mortgage and all requirements of the issuer of any such policy and all orders, rules and regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon Landlord, Tenant or the Leased Property.
1.55 Landlord shall have the meaning given such term in the preambles to this Agreement, shall also include its successors and assigns including any Facility Mortgagee that forecloses on its Facility Mortgage and becomes a Successor Landlord.
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1.65 Intentionally Deleted.
1.66 Intentionally Deleted.
1.73 Permitted Encumbrances shall mean, with respect to any Property, all rights, restrictions, and easements of record set forth on Schedule B to the applicable owners or leasehold title insurance policy issued to Landlord with respect to such Property, plus any other encumbrances as may have been granted or caused by Landlord or otherwise consented to in writing by Landlord and Facility Mortgagee from time to time.
1.76 Intentionally Deleted.
1.83 Single Purpose shall mean, with respect to Tenant at all times since its formation:
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4.1.1 Permitted Use . (a) Tenant shall, at all times during the Term, and at any other time that Tenant shall be in possession of any Property, continuously use and operate, or cause to be used and operated, such Property as a skilled nursing/independent living/assisted living facility as currently operated, and any uses incidental thereto. Tenant shall not use (and shall not permit any Person to use) any Property, or any portion thereof, for any other use without the prior written consent of Landlord, except as may be permitted by the Master Agreement. No use shall be made or permitted to be made of any Property and no acts shall be done thereon which will cause the cancellation of any insurance policy covering such Property or any part thereof (unless another adequate policy is available), nor shall Tenant sell or otherwise provide to residents or patients therein, or permit to be kept, used or sold in or about any Property any article which may be prohibited by law or by the standard form of fire insurance policies, or any other insurance policies required to be carried hereunder, or fire underwriters regulations. Tenant shall, at its sole cost (except as expressly provided in Section 5.1.2(b) ), comply or cause to be complied with all Insurance Requirements. Tenant shall not take or omit to take, or permit to be taken or omitted to be taken, any action, the taking or omission of which materially
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impairs the value or the usefulness of any Property or any part thereof for its Permitted Use.
4.1.2 Necessary Approvals . Tenant shall proceed with all due diligence and obtain and maintain, or cause to be obtained and maintained, all approvals necessary to use and operate, for its Permitted Use, each Property and the Facility located thereon under Applicable Laws and, without limiting the foregoing, shall maintain (or cause to be maintained) appropriate certifications for reimbursement and licensure.
4.1.3 Lawful Use, Etc. Tenant shall not, and shall not permit any Person to use or suffer or permit the use of any Property or Tenants Personal Property, if any, for any unlawful purpose. Tenant shall not, and shall not permit any Person to, commit or suffer to be committed any waste on any Property, or in any Facility, nor shall Tenant cause or permit any unlawful nuisance thereon or therein. Tenant shall not, and shall not permit any Person to, suffer nor permit any Property, or any portion thereof, to be used in such a manner as (a) may adversely impair Landlords title thereto or to any portion thereof, or (b) may reasonably allow a claim or claims for adverse usage or adverse possession by the public, as such, or of implied dedication of such Property, or any portion thereof.
4.4 Environmental Matters.
4.4.1 Restriction on Use, Etc. During the Term and any other time that Tenant shall be in possession of any Property, Tenant shall not, and shall not permit any Person to, store, spill upon, dispose of or transfer to or from such Property any Hazardous Substance, except in compliance with all Applicable Laws. During the Term and any other time that Tenant shall be in possession of any Property, Tenant shall maintain (or shall cause to be maintained) such Property at all times free of any Hazardous Substance (except in compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of notice or knowledge, notify Landlord in writing of any material change in the nature or extent of Hazardous Substances at any Property, (b) transmit to Landlord a copy of any report which is required to be filed by Tenant with respect to any Property pursuant to SARA Title III or any other Applicable Laws, (c) transmit to Landlord copies of any citations, orders, notices or other governmental communications
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received by Tenant or its respective agents or representatives with respect thereto (collectively, Environmental Notice ), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Applicable Laws and/or presents a material risk of any material cost, expense, loss or damage (an Environmental Obligation ), (d) observe and comply with (or cause to be observed and complied with) all Applicable Laws relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment or other disposition thereof, and (e) pay or otherwise dispose (or cause to be paid or otherwise disposed) of any fine, charge or Imposition related thereto, unless Tenant shall contest the same in good faith and by appropriate proceedings and the right to use and the value of any of the Leased Property is not affected thereby.
If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property, subject to Tenants right to contest the same in accordance with Article 8 , Tenant shall take (and shall cause to be taken) all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Laws, (x) to clean up and remove from and about such Property all Hazardous Substances thereon, (y) to contain and prevent any further release or threat of release of Hazardous Substances on or about such Property and (z) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.
4.4.2 Indemnification of Landlord . Tenant shall protect, indemnify and hold harmless Landlord and each Facility Mortgagee, their trustees, officers, agents, employees and beneficiaries, and any of their respective successors or assigns with respect to this Agreement (collectively, the Indemnitees and, individually, an Indemnitee ) for, from and against any and all debts, liens, claims, liabilities, damages, causes of action, administrative orders or notices, costs, fines, penalties or expenses (including, without limitation, reasonable attorneys fees and expenses) imposed upon, incurred by or asserted against any Indemnitee resulting from, either directly or indirectly, the presence in, upon or under the soil or ground water of any Property or any properties surrounding such Property of any Hazardous Substances in violation of any Applicable Laws, except to the extent the same arise from the gross negligence or willful misconduct of Landlord or any other Indemnitee or during any period that Landlord or a Person designated by Landlord (other than Tenant) is in possession of such Property from and after the Commencement Date for such Property. Tenants duty herein includes, but is not limited to, costs associated with personal injury or property damage claims as a result of the presence prior to the expiration or sooner termination of the Term and the surrender of such Property to Landlord in accordance with the terms of this Agreement of Hazardous Substances in, upon or under the soil or ground water of such Property in violation of any Applicable
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Laws. Upon Notice from Landlord and any other of the Indemnitees, Tenant shall undertake the defense, at Tenants sole cost and expense, of any indemnification duties set forth herein, in which event, Tenant shall not be liable for payment of any duplicative attorneys fees incurred by any Indemnitee
Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.4 , which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.
6.1 Improvements to the Leased Property . Tenant shall not make, construct or install (or permit to be made, constructed or installed) any Capital Additions without, in each instance, obtaining Successor Landlords prior written consent, which consent shall be provided or not provided pursuant to the terms of the Facility Mortgage; provided , however , that no such consent shall be required in the event immediate action is required to prevent imminent harm to person or property and no consent shall be required if it would not have been required by the Facility Mortgage. Prior to commencing construction of any Capital Addition for which consent is required, Tenant shall submit to Successor Landlord, in writing, a proposal setting forth, in reasonable detail, any such proposed improvement and shall provide to Successor Landlord such plans and specifications, and such permits, licenses, contracts and such other information concerning the same as Successor Landlord may reasonably request. Successor Landlord shall have thirty (30) days to review all materials submitted to Successor Landlord in connection with any such proposal. Failure of Successor Landlord to respond to Tenants proposal within thirty (30) days after receipt of all information and materials requested by Successor Landlord in connection with the proposed improvement shall be deemed to constitute rejection of the same. Without limiting the generality of the foregoing, such proposal shall indicate the approximate projected cost of constructing such proposed improvement and the use or uses to which it will be put. No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to any Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of any construction of such improvement by the granting of a lien on or security interest in the Leased Property or such improvement, or Tenants interest therein, without the prior written consent of Successor Landlord, which consent may be withheld by Successor Landlord in Successor Landlords sole discretion. Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass to and become
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the property of Successor Landlord, free and clear of all encumbrances other than Permitted Encumbrances.
Subject to Article 8 , Tenant shall not, directly or indirectly, create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenants leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord and Facility Mortgagee, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16 , (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Article 8 , (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8 , (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of Article 20 and (h) Landlord Liens and any other voluntary liens created by Landlord.
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Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.
9.5 Indemnification of Landlord / Facility Mortgagee . Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify and hold harmless Landlord and any Facility Mortgagee for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord or Facility Mortgagee by reason of the following, except to the extent caused by Landlords or such Facility Mortgagees gross negligence or
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willful misconduct: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about any Property or portion thereof or adjoining sidewalks or rights of way, (b) any past, present or future use, misuse, non-use, condition, management, maintenance or repair by Tenant or anyone claiming under any of them or Tenants Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Landlord is made a party or participant relating to any Property or portion thereof or Tenants Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Landlord is made a party, (c) any Impositions that are the obligations of Tenant to pay pursuant to the applicable provisions of this Agreement, and (d) any failure on the part of Tenant or anyone claiming under Tenant to perform or comply with any of the terms of this Agreement. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord (and shall not be responsible for any duplicative attorneys fees incurred by Landlord) or may compromise or otherwise dispose of the same, with Landlords prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this Section 9.5 are in addition to the obligations set forth in Section 4.4 and shall survive the termination of this Agreement.
10.8 Facility Mortgage Provisions Control . Notwithstanding anything to the contrary contained in this Article 10, all provisions of this Agreement pertaining to insurance and the use of casualty proceeds are subject to the requirements set forth in any Facility Mortgage. At all times and including in the event a Facility Mortgagee becomes the Landlord under this Agreement, to the extent that there is any conflict between the terms and conditions of this Agreement and the provisions regarding insurance and the use of casualty proceeds set forth in a Facility Mortgage, the terms and conditions of the Facility Mortgage will control.
11.6 Facility Mortgagee Provisions Control . Notwithstanding anything to the contrary contained in this Article 11, all provisions of this Agreement pertaining to condemnation and the use of condemnation proceeds are subject to the requirements set forth in any Facility Mortgage. At all times and including in the event a Facility Mortgagee becomes the Landlord under this Agreement, to the extent that there is any conflict between the terms and conditions of this Agreement and the provisions regarding condemnation and the use of condemnation proceeds set forth in a Facility Mortgage, the terms and conditions of the Facility Mortgage will control.
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(c) should Tenant default in the due observance or performance of any of the terms, covenants or agreements contained herein to be performed or observed by it (other than as specified in clauses (a) and (b) above) and should such default continue for a period of thirty (30) days after Notice thereof from Landlord to Tenant; provided , however , that if in Landlords judgment such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if, in addition, in Landlords judgment Tenant commences to cure or cause to be cured such default within thirty (30) days after Notice thereof from Landlord and if in Landlords judgment thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional sixty (60) days in the aggregate) as may be necessary to cure such default with all due diligence; or
(i) should the estate or interest of Tenant in the Leased Property or any part thereof be levied upon or attached in any proceeding and the same shall not be vacated, bonded, fully insured or discharged within ninety (90) days after commencement thereof, unless the amount in dispute is less than $250,000, in which case Tenant shall give notice to Landlord of the dispute but Tenant may defend in any suitable way; or
If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof.
Subject to the security interest of any Facility Mortgagee, Landlord shall have the option to purchase Tenants Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which Tenants Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred
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and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlords rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenants Personal Property in accordance with this Article 15 shall be applied first to Tenants current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the applicable State and any balance shall be paid to Tenant.
(a) that it is subject and subordinate to this Agreement and any Facility Mortgage and to the matters to which this Agreement is or shall be subject or subordinate;
16.3 Permitted Sublease . Notwithstanding the foregoing, including, without limitation, Section 16.2 , but subject to the provisions of Section 16.4 and any other express conditions or limitations set forth herein, Tenant may, in each instance after Notice to Landlord, (a) enter into third party residency agreements with respect to the units located at the Facilities, (b) sublease space at any Property for laundry, commissary or child care purposes or other concessions in furtherance of the Permitted Use, so long as such subleases will not reduce the number of units at any Facility, will not violate or affect any Legal Requirement or Insurance Requirement, will not violate any requirements of the Facility Mortgage, and Tenant shall provide such additional insurance coverage applicable to the activities to be conducted in such subleased space as Landlord and any Facility Mortgagee may require, and (c) enter into one or more subleases with Affiliated Persons of Tenant with respect to the Leased Property, or any portion thereof, provided Tenant gives Landlord Notice of the material terms and conditions thereof and Facility Mortgagee consents thereto.
Tenant shall permit Landlord and its authorized representatives and Facility Mortgagee and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenants use and operation of the Leased Property and further
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provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.
(c) Landlord receives consent from any Facility Mortgagee.
20.2 Subordination of Lease . This Agreement and any and all rights of Tenant hereunder are and shall be subject and subordinate to all mortgages and deeds of trust, which may now or hereafter affect the Leased Property, or any portion thereof, or any improvements thereon and/or any of such leases, whether or not such mortgages or deeds of trust shall also cover other lands and/or buildings and/or leases, to each and every advance made or hereafter to be made under such mortgages and deeds of trust, and to all renewals, modifications, replacements and extensions of such leases and such mortgages and deeds of trust and all consolidations of such mortgages and deeds of trust. This section shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute, acknowledge and deliver any instrument that Landlord, the lessor under any such lease or the holder of any such mortgage or the trustee or beneficiary of any deed of trust or any of their respective successors in interest may reasonably request to evidence such subordination. Any such subordination, however, shall be subject to the provisions of, and conditioned upon receipt by Tenant of the nondisturbance agreement described in, the penultimate sentence of this Section 20.2 . Any mortgage or deed of trust to which this Agreement is, at the time referred to, subject and subordinate is herein called Superior Mortgage and the holder, trustee or beneficiary of a Superior Mortgage or any successor in interest thereto is herein called Superior Mortgagee . Tenant shall have no obligations under any Superior Mortgage other than those expressly set forth in this Section 20.2 , unless Tenant shall agree otherwise pursuant to any agreement between Tenant and such Superior Mortgagee.
If any Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, Successor Landlord ), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenants landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its
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nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlords interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlords obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenants agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from such Superior Mortgagee in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee shall agree to recognize Tenants possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2 .
20.3 Notice to Facility Mortgagee . Subsequent to the receipt by Tenant of Notice from Landlord as to the identity of any Facility Mortgagee (which Notice shall be accompanied by a copy of the applicable mortgage), no Notice from Tenant to Landlord as to a default by Landlord under this Agreement shall be effective with respect to a Facility Mortgagee unless and until a copy of the same is given to such Facility Mortgagee at the address set forth in the above described Notice, and the curing of any of Landlords defaults within the applicable notice and cure periods set forth in Article 14 by such Facility Mortgagee shall be treated as performance by Landlord.
21.2 Conduct of Business . Tenant shall not engage in any business other than the leasing and operation of the Leased Property (including any incidental or ancillary business relating thereto). Tenant shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and its rights and licenses necessary to conduct such business. Tenant shall maintain itself as a Single Purpose entity.
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21.7 Indebtedness of Tenant . Tenant shall not create, incur, assume or guarantee, or permit to exist, or become or remain liable directly or indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord ;
(b) Indebtedness of Tenant for Impositions, to the extent that payment thereof shall not at the time be required to be made in accordance with the provisions of Article 8;
(c) Indebtedness of Tenant in respect of judgments or awards (i) which have been in force for less than the applicable appeal period and in respect of which execution thereof shall have been stayed pending such appeal or review, or (ii) which are fully covered by insurance payable to Tenant, or (iii) which are for an amount not in excess of $250,000 in the aggregate at any one time outstanding and (x) which have been in force for not longer than the applicable appeal period, so long as execution is not levied thereunder or (y) in respect of which an appeal or proceedings for review shall at the time be prosecuted in good faith in accordance with the provisions of Article 8 , and in respect of which execution thereof shall have been stayed pending such appeal or review;
(d) Indebtedness for purchase money financing in accordance with Section 21.9(a) and other operating liabilities incurred in the ordinary course of Tenants business; and
(e) Indebtedness of Tenant to Facility Mortgagee.
21.8 Distributions, Payments to Affiliated Persons, Etc. Tenant shall not declare, order, pay or make, directly or indirectly, any Distributions or any payment to any Affiliated Person of Tenant (including payments in the ordinary course of business) or set apart any sum or property therefor, or agree to do so, if, at the time of such proposed action, or immediately after giving effect thereto, any Event of Default shall have occurred and be continuing. Otherwise, as long as no Event of Default shall have occurred and be continuing, Tenant may make Distributions and payments to Affiliated Persons; provided , however , that any such payments shall at all times be subordinate to Tenants obligations under this Agreement.
21.9 Liens and Encumbrances . Except as permitted by Section 7.1 and Section 21.7 , Tenant shall not create or incur or suffer to be created or incurred or to exist any Lien on this Agreement or any of Tenants assets, properties, rights or income, or any of its interest therein, now or at any time hereafter owned, other than:
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(a) Security interests securing the purchase price of equipment or personal property whether acquired before or after the Commencement Date; provided , however , that (i) such Lien shall at all times be confined solely to the asset in question and (ii) the aggregate principal amount of Indebtedness secured by any such Lien shall not exceed the cost of acquisition or construction of the property subject thereto;
(b) Permitted Encumbrances; and
(c) Liens in favor of Facility Mortgagee.
21.10 Merger; Sale of Assets; Etc . Without Landlords prior written consent (which consent may be given or withheld in Landlords sole discretion) and except as otherwise permitted under this Agreement, Tenant shall not (i) sell, lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon, all or any material portion of its assets (including capital stock or other equity interests) or business to any Person, (ii) merge into or with or consolidate with any other Entity, or (iii) sell, lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon, any personal property or fixtures or any real property; provided , however , that, notwithstanding the provisions of clause (iii) preceding, Tenant may dispose of equipment or fixtures which have become inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, provided substitute equipment or fixtures having equal or greater value and utility (but not necessarily having the same function) have been provided.
23.13 Applicable Law, Etc. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the District of Columbia applicable to contracts between residents of the District of Columbia which are to be performed entirely within the District of Columbia, regardless of (a) where this Agreement is executed or delivered; or (b) where any payment or other performance required by this Agreement is made or required to be made; or (c) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than the District of Columbia; or (g) any combination of the
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foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of any Property.
23.18 Facility Mortgagee as Third-Party Beneficiary . Facility Mortgagee is a third-party beneficiary of each provision of this Agreement which provides Facility Mortgagee with any rights and remedies and the Facility Mortgagee has the right to enforce such provisions in this Agreement.
23.19 Master Agreement and Facility Mortgage Provisions Control . To the extent that there is any conflict between the terms and conditions of this Agreement and the Master Agreement or Facility Mortgage, the terms and conditions of the Master Agreement or Facility Mortgage will control. By way of example, no Capital Addition will be made pursuant to Section 6.1 of the Agreement, no lien will be placed on any property interest of the Tenant, and the Leased Property will not be used or operated in any manner, in each case which violates any term or condition of the Master Agreement or the Facility Mortgage. Tenant agrees not to take any action or omit to take any action that will cause Landlord to be in default of any provisions in the Master Agreement or the Facility Mortgage.
23.20 Breach of Covenants . If Tenant is aware of a breach of any covenant or a potential breach of any covenant under the Facility Mortgage or the Lease Agreement or the SASA (as defined herein), Tenant shall promptly make Landlord and Facility Mortgagee aware of such breach or potential breach in writing.
23.21 Subordination, Assignment and Security Agreement . Landlord, Tenant, Facility Mortgagee and certain affiliates of the Tenant, which affiliates are sub-tenants (Sub-Tenant) under certain approved sub-leases under this Agreement (Sub-Lease), have entered into a Subordination, Assignment and Security Instrument (SASA) for each Property subject to this Agreement. Pursuant to each SASA, Tenant and Sub-Tenant have assigned certain collateral to Facility Mortgagee as security for payments due under this Agreement and the Sub-Lease (Lease Collateral). If Facility Mortgagee becomes the Landlord under this Agreement, all obligations of the Tenant and Sub-Tenant set forth in the SASA shall continue to be valid obligations and the assignment and security interest in the Lease Collateral shall continue in full force and effect so long as Facility Mortgagee is the Landlord under this Agreement. In addition, during the period in which the Facility Mortgagee is the Landlord, any default under any SASA by the Tenant or Sub-Tenant shall be an event of default under this Agreement. To the extent that there is any conflict between the terms and conditions of this Agreement and the SASA, the terms and conditions of the SASA control.
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23.22. Assignment of Rents and Leases.
The following terms, when used in this Section, shall have the following meanings:
Leases means all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Properties known as Aspenwood, Heartfields at Easton, Heartlands at Ellicott City and Heartlands at Severna Park (the Maryland Properties) or any portion of the Maryland Properties (including proprietary leases or occupancy agreements if Tenant is a cooperative housing corporation), and all modifications, extensions or renewals thereof. The term Leases shall also include any residency, occupancy, admission, and care agreements pertaining to residents of the Maryland Properties, any and all collateral securing the Leases and shall also specifically include, without limitation, this Agreement.
Master Agreement shall mean that certain Master Credit Facility Agreement by and between SNH FM Financing LLC and Citibank, N.A. (Lender) dated as of the date hereof.
Rents means all rents (whether from residential or non-residential space), revenues and other income of the Maryland Properties, including subsidy payments received from any sources (including but not limited to payments under any Housing Assistance Payments Contract), parking fees, laundry and vending machine income and fees and charges for food, healthcare and other services provided at the Maryland Properties, whether now due, past due, or to become due, resident and tenant security deposits, any and all collateral securing the payments of Rents, entrance fees, application fees, processing fees, community fees and any other amounts or fees deposited by any resident or tenant (whether forfeited or not) together with and including all proceeds from any private insurance for residents to cover rental charges and charges for services at or in connection with the Maryland Properties, and the right to third party payments due for the rents or services of residents at the Maryland Properties.
(a) To the extent permitted by applicable law, Tenant absolutely and unconditionally assigns and transfers to Landlord Tenants right, title and interest in all Rents. To the extent permitted by applicable law, it is the intention of Tenant to establish a present, absolute and irrevocable transfer and assignment to Landlord of Tenants right, title and interest in all Rents and to authorize and empower Landlord to collect and receive all Rents owed to Tenant without the necessity of further action on the part of Tenant. Promptly upon request by Landlord, Tenant agrees to execute and deliver further confirmation of such assignments as Landlord may from time to time require. To the extent permitted by applicable law, Tenant and Landlord intend this assignment of Rents to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. However, if this present, absolute and unconditional assignment of Rents is not enforceable by its terms under the laws of the State is located, then it is the intention of Tenant that in this circumstance
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this Agreement create and perfect a lien on Tenants right, title and interest in all Rents in favor of Landlord, which lien shall be effective as of the date of this Agreement and shall secure all obligations of Tenant under this Agreement.
(b) After the occurrence of an Event of Default, Tenant authorizes Landlord to collect, sue for and compromise Rents and directs each resident and tenant of the Maryland Properties to pay all Rents to, or as directed by, Landlord. However, until the occurrence of an Event of Default, Landlord hereby grants to Tenant a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Landlord and subject to the terms of this Agreement, to apply all Rents to pay the current costs and expenses of managing, operating and maintaining the Maryland Properties, including Additional Charges, resident and tenant improvements and other capital expenditures and otherwise to apply such Rents and retain them as its sole property, all to the extent such Rents are attributable to periods during which an Event of Default has not occurred (each a Nondefault Period). Subject to the terms of this Agreement, Rents attributable to Nondefault Periods may be retained by Tenant free and clear of, and released from, Landlords rights with respect to Rents under this Agreement. From and after the occurrence of an Event of Default, and without the necessity of Landlord entering upon and taking and maintaining control of the Maryland Properties directly, or by a receiver, Tenants license to collect Rents shall automatically terminate and Landlord shall without notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid. Tenant shall pay to Landlord upon demand all Rents to which Landlord is entitled. At any time on or after the date of Landlords demand for Rents, Landlord may give, and Tenant hereby irrevocably authorizes Landlord to give, notice to all residents and tenants of the Maryland Properties instructing them to pay all Rents to Landlord. No resident or tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no resident or tenant shall be obligated to pay to Tenant any amounts which are actually paid to Landlord in response to such a notice. Any such notice by Landlord shall be delivered to each resident and tenant personally, by mail or by delivering such demand to each rental unit. Tenant shall not interfere with and shall cooperate with Landlords collection of such Rents. After an Event of Default, Landlord is further authorized to give notice to all third party payment payors (other than governmental entities) at Landlords option, instructing them to pay all third party payments which would be otherwise paid to Tenant to Landlord, to the extent permitted by law.
(c) To the extent permitted by applicable law, Tenant absolutely and unconditionally assigns and transfers to Landlord all of Tenants right, title and interest in, to and under the Leases, including Tenants right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease. To the extent permitted by applicable law, it is the intention of Tenant to establish a present, absolute and irrevocable transfer and assignment to Landlord of all of Tenants right, title and interest in, to and under the Leases. To the extent permitted by applicable law, Tenant and Landlord intend this assignment of the
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Leases to be immediately effective and to constitute an absolute present assignment and not an assignment for additional security only. However, if this present, absolute and unconditional assignment of the Leases is not enforceable by its terms under the laws of the State, then it is the intention of Tenant that in this circumstance this Agreement create and perfect a lien on the Leases in favor of Landlord, which lien shall be effective as of the date of this Agreement and shall secure all obligations of Tenant under this Agreement. Notwithstanding the foregoing or (c) below, the parties may agree to remove any Maryland Property from the terms of this Agreement in connection with a release of any of the Maryland Properties pursuant to the terms and conditions of the Master Agreement.
(d) Until Landlord gives notice to Tenant of Landlords exercise of its rights under this Section 23.22, Tenant shall have all rights, power and authority granted to Tenant under any Lease (except as otherwise limited by this Section or any other provision of this Sublease), including the right, power and authority to modify the terms of any Lease or extend or terminate any Lease. If an Event of Default has occurred and is continuing and at the option of Landlord, the permission given to Tenant pursuant to the preceding sentence to exercise all rights, power and authority under Leases shall terminate. Tenant shall comply with and observe Tenants material obligations under all Leases, including Tenants obligations pertaining to the maintenance and disposition of resident or tenant security deposits.
(e) Tenant represents and warrants to Landlord that Tenant has not executed any prior assignment of Rents or Leases or any such assignments have been terminated and Tenant covenants and agrees that it will not perform any acts and has not executed, and shall not execute, any instrument which would prevent Landlord from exercising its rights under this Section 23.22, and that at the time of execution of this Agreement there has been no anticipation or prepayment of any Rents for more than two months prior to the due dates of such Rents. Tenant shall not collect or accept payment of any Rents more than two months prior to the due dates of such Rents.
(f) Tenant hereby authorizes Landlord to file financing statements, continuation statements and financing statement amendments in such form as Landlord may require to perfect or continue the perfection of the security interest herein granted and Tenant agrees, if Landlord so requests, to execute and deliver to Landlord such financing statements , continuation statements and amendments.
(g) The liens and security interests provided for herein, and all rights of Landlord in and to the Rents and Lease, shall be subordinate in all respects to all right, title and interest of Lender in and to the same.
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(h) Tenant acknowledges and agrees that Landlord may and shall assign to Lender the liens and security interests provided for herein and all rights of Landlord in and to the Rents and Leases.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.
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LANDLORD: |
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SNH FM Financing LLC , a Delaware limited liability company |
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/s/ David J. Hegarty |
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President |
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SNH FM Financing Trust , a Maryland real estate investment trust |
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/s/ David J. Hegarty |
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David J. Hegarty |
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President |
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Ellicott City Land I, LLC , a Delaware limited liability company |
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/s/ David J. Hegarty |
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David J. Hegarty |
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TENANT: |
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FVE FM Financing, Inc. , a Maryland corporation |
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/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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S-4
Exhibit 10.13
AMENDED AND RESTATED GUARANTY AGREEMENT
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this Guaranty ) is entered into as of August 4, 2009 by FIVE STAR QUALITY CARE, INC., a Maryland corporation ( Guarantor ), for the benefit of SNH FM FINANCING LLC, a Delaware limited liability company, SNH FM FINANCING TRUST, a Maryland real estate investment trust, and ELLICOTT CITY LAND I, LLC, a Delaware limited liability company, collectively as landlord ( Landlord ).
W I T N E S S E T H :
WHEREAS, Guarantor and certain affiliates of Landlord are parties to those certain Amended and Restated Guaranty Agreements, dated as of June 30, 2008 (collectively, the Original Guarantees ); and
WHEREAS, the Original Guarantees guarantee all of the payment and performance obligations of the tenants under those certain Amended and Restated Lease Agreements, dated as of June 30, 2008, as further described in the Original Guarantees (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, they and certain of their affiliates are amending and restating the Original Leases into separate leases (collectively, the Restated Leases ); and
WHEREAS , in connection with the execution and delivery of the Restated Leases, Guarantor, Landlord and certain affiliates of Landlord have agreed to amend and restate the Original Guarantees into separate guarantees that will each guaranty all of the payment and performance obligations of each tenant under a Restated Lease; and
WHEREAS , this Guaranty amends and restates the Original Guarantees with respect to that certain Amended and Restated Lease Agreement, dated as of the date hereof, between Landlord and FVE FM Financing, Inc. (as the same may be amended, modified or supplemented from time to time, the FM Financing Lease );
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Certain Terms . Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the FM Financing Lease. The FM Financing Lease and the Incidental Documents are hereinafter collectively referred to as the FM Financing Lease Documents .
2. Guaranteed Obligations . For purposes of this Guaranty the term Guaranteed Obligations shall mean the payment and performance of each and every obligation of Tenant to Landlord under the FM Financing Lease Documents or relating thereto, whether now existing or hereafter arising, and including, without limitation, the payment of the full amount of the Rent payable under the FM Financing Lease.
3. Representations and Covenants . Guarantor represents, warrants, covenants, and agrees that:
3.1 Incorporation of Representations and Warranties . The representations and warranties of Tenant and its Affiliated Persons set forth in the FM Financing Lease Documents are true and correct on and as of the date hereof in all material respects.
3.2 Performance of Covenants and Agreements . Guarantor hereby agrees to take all lawful action in its power to cause Tenant duly and punctually to perform all of the covenants and agreements set forth in the FM Financing Lease Documents.
3.3 Validity of Agreement . Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any
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provision of law, or any applicable order, writ, injunction, judgment or decree of any court or any order or other public regulation of any governmental commission, bureau or administrative agency.
3.4 Payment of Expenses . Guarantor agrees, as principal obligor and not as guarantor only, to pay to Landlord forthwith, upon demand, in immediately available federal funds, all costs and expenses (including reasonable attorneys fees and disbursements) incurred or expended by Landlord in connection with the enforcement of this Guaranty, together with interest on amounts recoverable under this Guaranty from the time such amounts become due until payment at the Overdue Rate. Guarantors covenants and agreements set forth in this Section 3.4 shall survive the termination of this Guaranty.
3.5 Notices . Guarantor shall promptly give notice to Landlord of any event known to it which might reasonably result in a material adverse change in its financial condition.
3.6 Reports . Guarantor shall promptly provide to Landlord each of the financial reports, certificates and other documents required of it under the FM Financing Lease Documents.
3.7 Books and Records . Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential.
3.8 Taxes, Etc . Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon Guarantor
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or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided , however , that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.
3.9 Legal Existence of Guarantor . Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.
3.10 Compliance . Guarantor shall use reasonable business efforts to comply in all material respects with all applicable statutes, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to environmental, safety and other similar standards or controls).
3.11 Insurance . Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.
3.12 No Change in Control . Guarantor shall not permit the occurrence of any direct or indirect Change in Control of Tenant or Guarantor.
4. Guarantee . Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof pursuant to any FM Financing Lease Document, or otherwise, and that the Guaranteed Obligations which are performance obligations shall be fully performed at the times and in the manner such performance is required by the FM Financing Lease
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Documents. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the FM Financing Lease Documents) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the FM Financing Lease Documents.
5. Set-Off . Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.
6. Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the FM Financing Lease Documents), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of any Transaction Document or any limitation on the liability of Tenant thereunder not contemplated by the FM Financing Lease Documents or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.
7. Additional Guarantees . This Guaranty shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.
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8. Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of correct and complete copies of each of the FM Financing Lease Documents, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the FM Financing Lease Documents, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the FM Financing Lease Documents, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or any of the FM Financing Lease Documents or the Guaranteed Obligations (other than that the same have been discharged in accordance with the FM Financing Lease Documents).
9. No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the FM Financing Lease Documents or any indulgence in or the extension of the time for payment by Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the FM Financing Lease Documents or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal
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thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantors obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.
10. Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the FM Financing Lease Documents, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation, and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the FM Financing Lease Documents shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by Landlord.
11. Defeasance . This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided , however , if at any time, all or any part of any payment applied on account
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of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.
12. Notices .
(a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord to:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[ Telecopier No. (617) 796-8349]
if to Guarantor to:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
(d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right
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from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.
13. Successors and Assigns . Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlords successors and assigns, including without limitation said holders, whether so expressed or not.
14. Applicable Law . Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlords organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.
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16. Modification of Agreement . No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.
17. Waiver of Rights by Landlord . Neither any failure nor any delay on Landlords part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any
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other or further exercise or the exercise of any other right, power or privilege.
18. Severability . In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.
19. Entire Contract . This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.
20. Headings; Counterparts . Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.
21. Remedies Cumulative . No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.
22. NON-LIABILITY OF TRUSTEES . THE DECLARATION OF TRUST ESTABLISHING SNH FM FINANCING TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE DECLARATION ), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME SNH FM FINANCING TRUST REFERS TO THE TRUSTEES UNDER SUCH DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SNH FM FINANCING TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SNH FM FINANCING TRUST. ALL PERSONS DEALING WITH SNH FM FINANCING TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SNH FM FINANCING TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
23. Original Guarantees . Guarantor and Landlord acknowledge and agree that this Guaranty amends and restates the Original Guarantees in their entirety with respect to the
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Guaranteed Obligations and that this Guaranty shall govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations from and after the date of this Guaranty. Notwithstanding the foregoing, the Original Guarantees shall continue to govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations (as defined in the Original Guarantees) prior to the date of this Guaranty and nothing contained in this Guaranty shall operate to release Guarantor from any such rights or obligations.
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WITNESS the execution hereof under seal as of the date above first written.
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FIVE STAR QUALITY CARE, INC. |
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President |
LANDLORD HEREBY CONSENTS TO THE EXECUTION AND DELIVERY OF THIS GUARANTY BY GUARANTOR AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS OF SECTION 23 OF THIS GUARANTY.
SNH FM FINANCING LLC |
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SNH FM FINANCING TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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ELLICOTT CITY LAND I, LLC |
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David J. Hegarty |
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[SIGNATURE PAGE TO AMENDED AND RESTATED GUARANTY AGREEMENT]
Exhibit 10.14
AMENDED AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 4),
dated as of August 4, 2009,
by and among
CERTAIN AFFILIATES OF SENIOR HOUSING PROPERTIES TRUST,
AS LANDLORD,
AND
CERTAIN AFFILIATES OF FIVE STAR QUALITY CARE, INC.,
AS TENANT
ARTICLE 1 |
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DEFINITIONS |
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1.1 |
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AAA |
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1.2 |
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Additional Charges |
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1.3 |
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Additional Rent |
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1.4 |
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Additional Rent Properties |
2 |
1.5 |
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Affiliated Person |
2 |
1.6 |
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Agreement |
2 |
1.7 |
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Applicable Laws |
2 |
1.8 |
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Arbitration Award |
3 |
1.9 |
|
Award |
3 |
1.10 |
|
Base Gross Revenues |
3 |
1.11 |
|
Business Day |
3 |
1.12 |
|
Capital Addition |
4 |
1.13 |
|
Capital Expenditure |
4 |
1.14 |
|
Change in Control |
4 |
1.15 |
|
Claim |
5 |
1.16 |
|
Code |
5 |
1.17 |
|
Commencement Date |
5 |
1.18 |
|
Condemnation |
5 |
1.19 |
|
Condemnor |
5 |
1.20 |
|
Consolidated Financials |
5 |
1.21 |
|
Date of Taking |
5 |
1.22 |
|
Default |
6 |
1.23 |
|
Disbursement Rate |
6 |
1.24 |
|
Disputes |
6 |
1.25 |
|
Easement Agreement |
6 |
1.26 |
|
Encumbrance |
6 |
1.27 |
|
Entity |
6 |
1.28 |
|
Environment |
6 |
1.29 |
|
Environmental Obligation |
6 |
1.30 |
|
Environmental Notice |
6 |
1.31 |
|
Event of Default |
6 |
1.32 |
|
Excess Gross Revenues |
7 |
1.33 |
|
Extended Term |
7 |
1.34 |
|
Facility |
7 |
1.35 |
|
Facility Mortgage |
7 |
1.36 |
|
Facility Mortgagee |
7 |
1.37 |
|
Fair Market Rental |
7 |
1.38 |
|
Financial Officers Certificate |
7 |
1.39 |
|
Fiscal Year |
8 |
1.40 |
|
Five Star |
8 |
1.41 |
|
Fixed Term |
8 |
1.42 |
|
Fixtures |
8 |
1.43 |
|
GAAP |
8 |
1.44 |
|
Government Agencies |
8 |
1.45 |
|
Gross Revenues |
8 |
1.46 |
|
Guarantor |
9 |
1.47 |
|
Guaranty |
9 |
1.48 |
|
Hazardous Substances |
10 |
1.49 |
|
Immediate Family |
11 |
1.50 |
|
Impositions |
11 |
1.51 |
|
Incidental Documents |
12 |
1.52 |
|
Indebtedness |
12 |
1.53 |
|
Insurance Requirements |
12 |
1.54 |
|
Interest Rate |
12 |
1.55 |
|
Land |
12 |
1.56 |
|
Landlord |
12 |
1.57 |
|
Landlord Default |
12 |
1.58 |
|
Landlord Liens |
12 |
1.59 |
|
Lease Year |
13 |
1.60 |
|
Leased Improvements |
13 |
1.61 |
|
Leased Intangible Property |
13 |
1.62 |
|
Leased Personal Property |
13 |
1.63 |
|
Leased Property |
13 |
1.64 |
|
Legal Requirements |
13 |
1.65 |
|
Lien |
14 |
1.66 |
|
Manager |
14 |
1.67 |
|
Management Agreement |
14 |
1.68 |
|
Minimum Rent |
14 |
1.69 |
|
New Seasons Properties |
14 |
1.70 |
|
Notice |
14 |
1.71 |
|
Officers Certificate |
14 |
1.72 |
|
Original Leases |
14 |
1.73 |
|
Other Leases |
14 |
1.74 |
|
Overdue Rate |
15 |
1.75 |
|
Parent |
15 |
1.76 |
|
Permitted Encumbrances |
15 |
1.77 |
|
Permitted Use |
15 |
1.78 |
|
Person |
15 |
1.79 |
|
Pledge Agreement |
15 |
1.80 |
|
Prime Rate |
16 |
1.81 |
|
Property |
16 |
1.82 |
|
Provider Agreements |
16 |
1.83 |
|
Regulated Medical Wastes |
16 |
1.84 |
|
Rent |
16 |
1.85 |
|
Rules |
16 |
1.86 |
|
SEC |
16 |
1.87 |
|
Security Agreement |
16 |
1.88 |
|
State |
16 |
1.89 |
|
Subordinated Creditor |
16 |
1.90 |
|
Subordination Agreement |
16 |
1.91 |
|
Subsidiary |
17 |
1.92 |
|
Successor Landlord |
17 |
1.93 |
|
Tax Regulatory Agreement |
17 |
1.94 |
|
Tenant |
17 |
1.95 |
|
Tenants Personal Property |
17 |
1.96 |
|
Term |
17 |
1.97 |
|
Third Party Payor Programs |
17 |
1.98 |
|
Third Party Payors |
18 |
1.99 |
|
Unsuitable for Its Permitted Use |
18 |
1.100 |
|
Work |
18 |
ARTICLE 2 |
|
LEASED PROPERTY AND TERM |
18 |
2.1 |
|
Leased Property |
18 |
2.2 |
|
Condition of Leased Property |
19 |
2.3 |
|
Fixed Term |
20 |
2
2.4 |
|
Extended Terms |
20 |
2.5 |
|
Limitations on Term |
21 |
ARTICLE 3 |
|
RENT |
22 |
3.1 |
|
Rent |
22 |
3.2 |
|
Late Payment of Rent, Etc. |
28 |
3.3 |
|
Net Lease |
28 |
3.4 |
|
No Termination, Abatement, Etc. |
29 |
ARTICLE 4 |
|
USE OF THE LEASED PROPERTY |
30 |
4.1 |
|
Permitted Use |
30 |
4.2 |
|
Compliance with Legal/Insurance Requirements, Etc. |
32 |
4.3 |
|
Compliance with Medicaid and Medicare Requirements |
32 |
4.4 |
|
Environmental Matters |
32 |
ARTICLE 5 |
|
MAINTENANCE AND REPAIRS |
34 |
5.1 |
|
Maintenance and Repair |
34 |
5.2 |
|
Tenants Personal Property |
36 |
5.3 |
|
Yield Up |
37 |
5.4 |
|
Management Agreement |
37 |
ARTICLE 6 |
|
IMPROVEMENTS, ETC. |
38 |
6.1 |
|
Improvements to the Leased Property |
38 |
6.2 |
|
Salvage |
39 |
ARTICLE 7 |
|
LIENS |
39 |
ARTICLE 8 |
|
PERMITTED CONTESTS |
39 |
ARTICLE 9 |
|
INSURANCE AND INDEMNIFICATION |
40 |
9.1 |
|
General Insurance Requirements |
40 |
9.2 |
|
Waiver of Subrogation |
41 |
9.3 |
|
Form Satisfactory, Etc. |
41 |
9.4 |
|
No Separate Insurance; Self-Insurance |
42 |
9.5 |
|
Indemnification of Landlord |
42 |
ARTICLE 10 |
|
CASUALTY |
43 |
10.1 |
|
Insurance Proceeds |
43 |
10.2 |
|
Damage or Destruction |
44 |
10.3 |
|
Damage Near End of Term |
46 |
10.4 |
|
Tenants Property |
46 |
10.5 |
|
Restoration of Tenants Property |
46 |
10.6 |
|
No Abatement of Rent |
46 |
10.7 |
|
Waiver |
47 |
ARTICLE 11 |
|
CONDEMNATION |
47 |
11.1 |
|
Total Condemnation, Etc. |
47 |
11.2 |
|
Partial Condemnation |
47 |
11.3 |
|
Abatement of Rent |
48 |
11.4 |
|
Temporary Condemnation |
49 |
11.5 |
|
Allocation of Award |
49 |
ARTICLE 12 |
|
DEFAULTS AND REMEDIES |
49 |
12.1 |
|
Events of Default |
49 |
12.2 |
|
Remedies |
52 |
12.3 |
|
Tenants Waiver |
54 |
12.4 |
|
Application of Funds |
54 |
12.5 |
|
Landlords Right to Cure Tenants Default |
54 |
3
ARTICLE 13 |
|
HOLDING OVER |
55 |
ARTICLE 14 |
|
LANDLORD DEFAULT |
55 |
ARTICLE 15 |
|
PURCHASE RIGHTS |
56 |
ARTICLE 16 |
|
SUBLETTING AND ASSIGNMENT |
56 |
16.1 |
|
Subletting and Assignment |
56 |
16.2 |
|
Required Sublease Provisions |
58 |
16.3 |
|
Permitted Sublease |
59 |
16.4 |
|
Sublease Limitation |
60 |
ARTICLE 17 |
|
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS |
60 |
17.1 |
|
Estoppel Certificates |
60 |
17.2 |
|
Financial Statements |
61 |
17.3 |
|
General Operations |
62 |
ARTICLE 18 |
|
LANDLORDS RIGHT TO INSPECT |
63 |
ARTICLE 19 |
|
EASEMENTS |
63 |
19.1 |
|
Grant of Easements |
63 |
19.2 |
|
Exercise of Rights by Tenant |
64 |
19.3 |
|
Permitted Encumbrances |
64 |
ARTICLE 20 |
|
FACILITY MORTGAGES |
64 |
20.1 |
|
Landlord May Grant Liens |
64 |
20.2 |
|
Subordination of Lease |
64 |
20.3 |
|
Notice to Mortgagee and Superior Landlord |
66 |
ARTICLE 21 |
|
ADDITIONAL COVENANTS OF TENANT |
67 |
21.1 |
|
Prompt Payment of Indebtedness |
67 |
21.2 |
|
Conduct of Business |
67 |
21.3 |
|
Maintenance of Accounts and Records |
67 |
21.4 |
|
Notice of Litigation, Etc. |
68 |
21.5 |
|
Prohibited Transactions |
68 |
21.6 |
|
Tax Regulatory Agreement |
68 |
ARTICLE 22 |
|
ARBITRATION |
69 |
22.1 |
|
Disputes |
69 |
22.2 |
|
Selection of Arbitrators |
69 |
22.3 |
|
Location of Arbitration |
69 |
22.4 |
|
Scope of Discovery |
70 |
22.5 |
|
Arbitration Award |
70 |
22.6 |
|
Costs |
70 |
22.7 |
|
Final Judgment |
70 |
22.8 |
|
Payment |
70 |
ARTICLE 23 |
|
MISCELLANEOUS |
71 |
23.1 |
|
Limitation on Payment of Rent |
71 |
23.2 |
|
No Waiver |
71 |
23.3 |
|
Remedies Cumulative |
71 |
23.4 |
|
Severability |
72 |
23.5 |
|
Acceptance of Surrender |
72 |
23.6 |
|
No Merger of Title |
72 |
23.7 |
|
Conveyance by Landlord |
72 |
23.8 |
|
Quiet Enjoyment |
72 |
23.9 |
|
No Recordation |
73 |
23.10 |
|
Notices |
73 |
23.11 |
|
Construction |
74 |
23.12 |
|
Counterparts; Headings |
75 |
4
23.13 |
|
Applicable Law, Etc. |
75 |
23.14 |
|
Right to Make Agreement |
75 |
23.15 |
|
Attorneys Fees |
76 |
23.16 |
|
Nonliability of Trustees |
76 |
23.17 |
|
Original Leases |
76 |
5
AMENDED
AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 4)
THIS AMENDED AND RESTATED MASTER LEASE AGREEMENT is entered into as of August 4, 2009 by and among each of the parties identified on the signature pages hereof as a landlord (collectively, Landlord ), and each of the parties identified on the signature pages hereof as a tenant (jointly and severally, Tenant ).
W I T N E S S E T H :
WHEREAS, Landlord and Tenant are parties to certain Amended and Restated Master Lease Agreements, dated as of June 30, 2008 and July 1, 2008 (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, Landlord and Tenant and the landlords and tenants under the Original Leases wish to amend and restate the Original Leases into separate leases and to make certain other modifications thereto as are set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, the Original Leases are hereby amended and restated but only with respect to the Leased Property (as hereinafter defined), as follows:
For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated Articles, Sections and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on May 1, 2017 and expire on April 30, 2032 and the second Extended Term shall commence on May 1, 2032 and expire on April 30, 2047. All of the terms, covenants and provisions of this Agreement shall apply to each
20
Extended Term, except that during the second Extended Term, the Minimum Rent shall be adjusted so that the portion of the Minimum Rent attributable to the New Seasons Properties shall be the Fair Market Rental Value thereof, and Tenant shall have no right to extend the Term beyond April 30, 2047. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than April 30, 2015, and if Tenant shall elect to exercise its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than April 30, 2030, it being understood and agreed that time shall be of the essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlords option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.
Notwithstanding the foregoing, Tenant shall have no right to extend the Term for the second Extended Term with respect to any Properties located in the State of California. If Tenant shall extend the Term for the second Extended Term, the definition of Leased Property shall exclude any Properties located in the State of California during the second Extended Term, Minimum Rent shall be reduced by the Minimum Rent allocated thereto by the parties, and Tenant shall surrender such Properties to Landlord at the expiration of the first Extended Term in the condition required by Section 5.3 and shall comply with all of its other obligations relating to such Properties as if the Term had expired at the end of the first Extended Term.
21
22
23
If the annual Additional Rent for such preceding Lease Year as set forth in Tenants statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.
24
25
Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.
26
Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided , however , that Landlords failure to give any such notice shall in no way diminish Tenants obligation hereunder to pay such Impositions.
27
In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent.
28
29
30
31
32
If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property, subject to Tenants right to contest the same in accordance with Article 8 , Tenant shall take (and shall cause to be taken) all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Laws, (x) to clean up and remove from and about such Property all Hazardous Substances thereon, (y) to contain and prevent any further release or threat of release of Hazardous Substances on or about such Property and (z) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.
33
Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.4 , which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.
34
35
Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlords estate in the Leased Property or any part thereof to liability under any mechanics lien law of any State in any way, it being expressly understood Landlords estate shall not be subject to any such liability.
36
In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlords sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlords nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility as then operated. If requested by Landlord, Tenant shall continue to manage one or more of the Facilities after the expiration of the Term for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.
37
38
Subject to Article 8 , Tenant shall use its best efforts not, directly or indirectly, to create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenants leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16 , (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (i) the same are not yet due and payable, or (ii) are being contested in accordance with Article 8 , (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8 , (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of Article 20 and (h) Landlord Liens and any other voluntary liens created by Landlord.
Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, Claims ) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenants obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of
39
trust shall permit Tenant to exercise the rights granted pursuant to this Article 8 ) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.
40
41
42
43
44
45
Landlords obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.
Tenants obligation to restore the applicable Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).
46
47
Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors estimates, (d) architects certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlords obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenants obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.
48
49
50
then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement with respect to any or all of the Leased Property by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate with respect to all or the designated portion of the Leased Property
51
and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenants breach of this Agreement.
Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenants Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenants Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.
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At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlords election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the applicable Commencement Date for any Property, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.
In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlords option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof, as Landlord, in its sole and absolute discretion, considers
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advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.
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Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.
If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenants obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a Landlord Default by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenants invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.
If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant,
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setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlords Notice of dispute, either may submit the matter for resolution in accordance with Article 22 .
Landlord shall have the option to purchase Tenants Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which Tenants Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlords rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenants Personal Property in accordance with this Article 15 shall be applied first to Tenants current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the applicable State and any balance shall be paid to Tenant.
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For purposes of this Section 16.1 , an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of any or all of the Entities comprising Tenant.
If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1 , the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.
Any assignment or transfer of Tenants interest under this Agreement shall be subject to such assignees or transferees delivery to Landlord of (a) a Guaranty, which Guaranty shall be in form and substance satisfactory to Landlord in its sole discretion and which Guaranty shall constitute an Incidental Document hereunder; (b) a pledge of the stock, partnership, membership or other ownership interests of such assignee or other transferee to secure Tenants obligations under this Agreement and the Incidental Documents, which pledge shall be in form and substance satisfactory to Landlord in its sole discretion and which pledge shall constitute an Incidental Document hereunder; (c) a security agreement granting Landlord a security interest in all of such assignees or transferees right, title and interest in and to any personal property, intangibles and fixtures (other than accounts receivable) with respect to any Property which is subject to any such assignment or transfer to secure Tenants obligations under this Agreement and the Incidental Documents, which security agreement shall be
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in form and substance satisfactory to Landlord in its sole discretion and which security agreement shall constitute an Incidental Document hereunder; and (d) in the case of a sublease, an assignment which assigns all of such subtenants right, title and interest in such sublease to Landlord to secure Tenants obligations under this Agreement and the Incidental Documents, which assignment shall be in form and substance satisfactory to Landlord in its sole discretion and which assignment shall constitute an Incidental Document hereunder.
No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1 . No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenants interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlords option.
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The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1 .
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Landlord may at any time, and from time to time, provide any Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.
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Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenants use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.
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If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, Successor Landlord ), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenants landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlords interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for
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the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlords obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenants agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenants possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2 . Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b) , (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b) .
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if to Landlord:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]
if to Tenant to:
c/o Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
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IN WITNESS WHEREOF , the parties have executed this Agreement as a sealed instrument as of the date above first written.
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LANDLORD: |
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SNH SOMERFORD PROPERTIES TRUST |
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SNH NS PROPERTIES TRUST |
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/s/ David J. Hegarty |
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SNH/LTA PROPERTIES TRUST |
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/s/ David J. Hegarty |
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SPTIHS PROPERTIES TRUST |
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/s/ David J. Hegarty |
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SNH CHS PROPERTIES TRUST |
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/s/ David J. Hegarty |
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David J. Hegarty |
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SNH/LTA PROPERTIES GA LLC |
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/s/ David J. Hegarty |
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CCOP SENIOR LIVING LLC |
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TENANT: |
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FIVE STAR QUALITY CARE TRUST |
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/s/ Bruce J. Mackey Jr. |
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FIVE STAR QUALITY CARE - NS TENANT, LLC |
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FS TENANT HOLDING COMPANY TRUST |
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SCHEDULE 1
Schedule omitted.
EXHIBITS A-1 THROUGH A-25
LAND
Certain Schedules and Exhibits to this agreement have been omitted and will be furnished supplementally to the Securities and Exchange Commission upon request.
Exhibit 10.15
AMENDED AND RESTATED GUARANTY AGREEMENT
( LEASE NO. 4 )
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this Guaranty ) is entered into as of August 4, 2009 by FIVE STAR QUALITY CARE, INC. , a Maryland corporation ( Guarantor ), for the benefit of CCOP SENIOR LIVING LLC , a Delaware limited liability company, SNH CHS PROPERTIES TRUST, a Maryland real estate investment trust, SNH NS PROPERTIES TRUST, a Maryland real estate investment trust, SNH SOMERFORD PROPERTIES TRUST, a Maryland real estate investment trust, SNH/LTA PROPERTIES GA LLC , a Maryland limited liability company, SNH/LTA PROPERTIES TRUST , a Maryland real estate investment trust, and SPTIHS PROPERTIES TRUST , a Maryland real estate investment trust (collectively, Landlord ).
W I T N E S S E T H :
WHEREAS, Guarantor and Landlord and certain affiliates of Landlord are parties to those certain Amended and Restated Guaranty Agreements, dated as of June 30, 2008 and July 1, 2008 (collectively, the Original Guarantees ); and
WHEREAS, the Original Guarantees guarantee all of the payment and performance obligations of the tenants under those certain Amended and Restated Lease Agreements, dated as of June 30, 2008 and July 1, 2008, as further described in the Original Guarantees (collectively, the Original Leases ); and
WHEREAS, the landlords and tenants under the Original Leases are conveying their interests in certain of the properties demised thereunder and, in connection therewith, they and certain of their affiliates are amending and restating the Original Leases into separate leases (collectively, the Restated Leases ); and
WHEREAS , in connection with the execution and delivery of the Restated Leases, Guarantor, Landlord and certain affiliates of Landlord have agreed to amend and restate the Original Guarantees into separate guarantees that will each guaranty all of the payment and performance obligations of each tenant under a Restated Lease; and
WHEREAS , this Guaranty amends and restates the Original Guarantees with respect to that certain Amended and Restated Lease Agreement, dated as of the date hereof, between Landlord and Five Star Quality Care NS Tenant, LLC, a Maryland limited liability company, Five Star Quality Care Trust, a Maryland business trust and FS Tenant Holding Company Trust , a Maryland business trust (collectively, Tenant ) (as the same may be
amended, modified or supplemented from time to time, the Amended Lease No. 4 );
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Certain Terms . Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Amended Lease No. 4. The Amended Lease No. 4 and the Incidental Documents are hereinafter collectively referred to as the Amended Lease No. 4 Documents .
2. Guaranteed Obligations . For purposes of this Guaranty the term Guaranteed Obligations shall mean the payment and performance of each and every obligation of Tenant to Landlord under the Amended Lease No. 4 Documents or relating thereto, whether now existing or hereafter arising, and including, without limitation, the payment of the full amount of the Rent payable under the Amended Lease No. 4.
3. Representations and Covenants . Guarantor represents, warrants, covenants, and agrees that:
3.1 Incorporation of Representations and Warranties . The representations and warranties of Tenant and its Affiliated Persons set forth in the Amended Lease No. 4 Documents are true and correct on and as of the date hereof in all material respects.
3.2 Performance of Covenants and Agreements . Guarantor hereby agrees to take all lawful action in its power to cause Tenant duly and punctually to perform all of the covenants and agreements set forth in the Amended Lease No. 4 Documents.
3.3 Validity of Agreement . Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the
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terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any provision of law, or any applicable order, writ, injunction, judgment or decree of any court or any order or other public regulation of any governmental commission, bureau or administrative agency.
3.4 Payment of Expenses . Guarantor agrees, as principal obligor and not as guarantor only, to pay to Landlord forthwith, upon demand, in immediately available federal funds, all costs and expenses (including reasonable attorneys fees and disbursements) incurred or expended by Landlord in connection with the enforcement of this Guaranty, together with interest on amounts recoverable under this Guaranty from the time such amounts become due until payment at the Overdue Rate. Guarantors covenants and agreements set forth in this Section 3.4 shall survive the termination of this Guaranty.
3.5 Notices . Guarantor shall promptly give notice to Landlord of any event known to it which might reasonably result in a material adverse change in its financial condition.
3.6 Reports . Guarantor shall promptly provide to Landlord each of the financial reports, certificates and other documents required of it under the Amended Lease No. 4 Documents.
3.7 Books and Records . Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation
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between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential.
3.8 Taxes, Etc . Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon Guarantor or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided , however , that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.
3.9 Legal Existence of Guarantor . Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.
3.10 Compliance . Guarantor shall use reasonable business efforts to comply in all material respects with all applicable statutes, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to environmental, safety and other similar standards or controls).
3.11 Insurance . Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.
3.12 No Change in Control . Guarantor shall not permit the occurrence of any direct or indirect Change in Control of Tenant or Guarantor.
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4. Guarantee . Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof pursuant to any Amended Lease No. 4 Document, or otherwise, and that the Guaranteed Obligations which are performance obligations shall be fully performed at the times and in the manner such performance is required by the Amended Lease No. 4 Documents. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Amended Lease No. 4 Documents) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Amended Lease No. 4 Documents.
5. Set-Off . Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.
6. Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Amended Lease No. 4 Documents), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of any Transaction Document or any limitation on the liability of Tenant thereunder not contemplated by the Amended Lease No. 4 Documents or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.
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7. Additional Guarantees . This Guaranty shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.
8. Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of correct and complete copies of each of the Amended Lease No. 4 Documents, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Amended Lease No. 4 Documents, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Amended Lease No. 4 Documents, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or any of the Amended Lease No. 4 Documents or the Guaranteed Obligations (other than that the same have been discharged in accordance with the Amended Lease No. 4 Documents).
9. No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed
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Obligations or the Amended Lease No. 4 Documents or any indulgence in or the extension of the time for payment by Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Amended Lease No. 4 Documents or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantors obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.
10. Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Amended Lease No. 4 Documents, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation, and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the Amended Lease No. 4 Documents shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit
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of, or any right to participate in, any security whatsoever now or in the future held by Landlord.
11. Defeasance . This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided , however , if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.
12. Notices .
(a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.
(c) All such notices shall be addressed,
if to Landlord to:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[ Telecopier No. (617) 796-8349]
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if to Guarantor to:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Bruce J. Mackey Jr.
[Telecopier No. (617) 796-8385]
(d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.
13. Successors and Assigns . Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlords successors and assigns, including without limitation said holders, whether so expressed or not.
14. Applicable Law . Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlords organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.
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10
16. Modification of Agreement . No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand
11
in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.
17. Waiver of Rights by Landlord . Neither any failure nor any delay on Landlords part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.
18. Severability . In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.
19. Entire Contract . This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.
20. Headings; Counterparts . Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.
21. Remedies Cumulative . No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.
22. NON-LIABILITY OF TRUSTEES . THE DECLARATIONS OF TRUST ESTABLISHING CERTAIN ENTITIES COMPRISING THE LANDLORD, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE DECLARATIONS ), ARE DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDE THAT THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDER SUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIES SHALL BE HELD TO ANY PERSONAL
12
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES. ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
23. Original Guarantees . Guarantor and Landlord acknowledge and agree that this Guaranty amends and restates the Original Guarantees in their entirety with respect to the Guaranteed Obligations and that this Guaranty shall govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations from and after the date of this Guaranty. Notwithstanding the foregoing, the Original Guarantees shall continue to govern the rights and obligations of Guarantor with respect to the Guaranteed Obligations (as defined in the Original Guarantees) prior to the date of this Guaranty and nothing contained in this Guaranty shall operate to release Guarantor from any such rights or obligations.
[Remainder of page intentionally left blank.]
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WITNESS the execution hereof under seal as of the date above first written.
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FIVE STAR QUALITY CARE, INC. |
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By: |
/s/ Bruce J. Mackey Jr. |
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Bruce J. Mackey Jr. |
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President |
LANDLORD HEREBY CONSENTS TO THE EXECUTION AND DELIVERY OF THIS GUARANTY BY GUARANTOR AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS OF SECTION 23 OF THIS GUARANTY.
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CCOP SENIOR LIVING LLC, SNH NS PROPERTIES TRUST, SNH CHS PROPERTIES TRUST, SPTIHS PROPERTIES TRUST, SNH/LTA PROPERTIES TRUST, SNH/LTA PROPERTIES GA LLC, and SNH SOMERFORD PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty |
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President of each of the foregoing entities |
[SIGNATURE PAGE TO AMENDED AND RESTATED GUARANTY AGREEMENT (LEASE NO. 4)]
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Exhibit 10.16
SECOND AMENDMENT TO PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO PURCHASE AGREEMENT (this Amendment ) is made as of August 6, 2009 by and between HUB PROPERTIES TRUST , a Maryland real estate investment trust (the Seller ), and SENIOR HOUSING PROPERTIES TRUST , a Maryland real estate investment trust (the Purchaser ).
W I T N E S S E T H
WHEREAS , the Seller and the Purchaser executed a Purchase and Sale Agreement dated as of May 5, 2008, as amended by that certain First Amendment to Purchase Agreement, dated December 23, 2008 (as amended, the Purchase Agreement ), with respect to the Property (this and other capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement) described in Exhibit A hereto; and
WHEREAS , the Seller and the Purchaser now wish to amend the Purchase Agreement subject to and upon the terms and conditions set forth herein;
NOW, THEREFORE , for good and valuable consideration and in consideration of the mutual covenants of the parties hereto, the mutual receipt and legal sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
3. This Amendment may be executed in a number of identical counterparts. If so executed, each counterpart is to be deemed an original for all purposes, and all such counterparts shall, collectively, constitute one agreement. Such executed counterparts may be delivered by facsimile or by e-mail (in .pdf format) and any such counterparts so delivered shall be deemed original documents for all purposes.
4. The Declaration of Trust of the Seller, a copy of which is duly filed with the Department of Assessments and Taxation of the State of Maryland, provides that the name Hub Properties Trust refers to the trustees under such Declaration of Trust collectively as trustees, but not individually or personally, and that no trustee, officer, shareholder, employee or agent of the Seller shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, the Seller. All persons dealing with the Seller in any way shall look only to the assets of the Seller for the payment of any sum or the performance of any obligation.
5. The Declaration of Trust of the Purchaser, a copy of which is duly filed with the Department of Assessments and Taxation of the State of Maryland, provides that the name Senior Housing Properties Trust refers to the trustees under such Declaration of Trust collectively as trustees, but not individually or personally, and that no trustee, officer, shareholder, employee or agent of the Purchaser shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, the Purchaser. All persons dealing with the Purchaser in any way shall look only to the assets of the Purchaser for the payment of any sum or the performance of any obligation.
[Signature page follows.]
IN WITNESS WHEREOF , the Seller and the Purchaser have executed this Amendment under seal as of the date above first written.
WITNESS: |
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SELLER: |
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HUB PROPERTIES TRUST , a Maryland real estate investment trust |
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/s/ Judith A. Stapleton |
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By: |
/s/ John C. Popeo |
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John C. Popeo, Treasurer and Chief Financial Officer |
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WITNESS: |
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PURCHASER: |
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SENIOR HOUSING PROPERTIES TRUST |
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/s/ Judith A. Stapleton |
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By: |
/s/ David J. Hegarty |
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David J. Hegarty, President |
EXHIBIT A
Address of Property
3030-50 Science Park, San Diego, California
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
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Six Months Ended
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Year Ended December 31, |
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2009 |
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2008 |
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2008 |
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2007 |
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2006 |
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2005 |
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2004 |
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Earnings: |
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Net income |
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$ |
62,044 |
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$ |
44,996 |
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$ |
106,511 |
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$ |
85,303 |
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$ |
66,101 |
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$ |
63,912 |
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$ |
56,742 |
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Fixed charges |
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21,483 |
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19,328 |
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40,154 |
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37,755 |
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47,020 |
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46,633 |
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41,836 |
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Adjusted earnings |
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$ |
83,527 |
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$ |
64,324 |
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$ |
146,665 |
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$ |
123,058 |
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$ |
113,121 |
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$ |
110,545 |
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$ |
98,578 |
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Fixed charges: |
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Interest expense |
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$ |
21,483 |
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$ |
19,328 |
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$ |
40,154 |
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$ |
37,755 |
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$ |
47,020 |
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$ |
46,633 |
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$ |
41,836 |
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Ratio of earnings to fixed charges |
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3.9x |
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3.3x |
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3.7x |
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3.3x |
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2.4x |
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2.4x |
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2.4x |
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Exhibit 31.1
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
I, Barry M. Portnoy, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 10, 2009 |
/s/ Barry M. Portnoy |
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Barry M. Portnoy |
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Managing Trustee |
Exhibit 31.2
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
I, Adam D. Portnoy, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 10, 2009 |
/s/ Adam D. Portnoy |
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Adam D. Portnoy |
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Managing Trustee |
Exhibit 31.3
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
I, David J. Hegarty, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 10, 2009 |
/s/ David J. Hegarty |
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David J. Hegarty |
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President and Chief Operating Officer |
Exhibit 31.4
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
I, Richard A. Doyle, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 10, 2009 |
/s/ Richard A. Doyle |
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Richard A. Doyle |
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Treasurer and Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SEC. 1350
(Section 906 of the Sarbanes Oxley Act of 2002)
In connection with the filing by Senior Housing Properties Trust (the Company) of the Quarterly Report on Form 10-Q for the period ended June 30, 2009 (the Report), each of the undersigned hereby certifies, to the best of his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Barry M. Portnoy |
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/s/ David J. Hegarty |
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Barry M. Portnoy |
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David J. Hegarty |
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Managing Trustee |
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President and Chief Operating Officer |
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/s/ Adam D. Portnoy |
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/s/ Richard A. Doyle |
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Adam D. Portnoy |
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Richard A. Doyle |
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Managing Trustee |
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Treasurer and Chief Financial Officer |
Date: August 10, 2009
Exhibit 99.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this Agreement ) made August 4, 2009, between Five Star Quality Care, Inc. (the Company) and Senior Housing Properties Trust (the Shareholder).
RECITAL
Pursuant to the terms of that certain Lease Realignment Agreement, dated August 4, 2009 (the Realignment Agreement), among the Company, the Shareholder and certain of their respective subsidiaries, the Company has sold and the Shareholder has acquired and holds as of the date hereof 3,200,000 shares of the Companys common shares, $0.01 par value (the Shares).
The Company has agreed to enter into this Agreement to provide the Shareholder with certain rights relating to the registration of the Shares.
Now, therefore, the parties agree as follows:
AAA is defined in Section 6.10(a).
Agreement means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.
Award is defined in Section 6.10(e).
Business Day means any day other than a Saturday, a Sunday or a day on which banks in the City of Boston are required, permitted or authorized, by applicable law or executive order, to be closed for regular banking business.
Commission means the United States Securities and Exchange Commission, or such successor federal agency or agencies as may be established in lieu thereof.
Company is defined in the preamble to this Agreement.
Company Indemnified Party is defined in Section 4.2.
Demand Registration is defined in Section 2.1.1.
Disputes is defined in Section 6.10(a).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
Maximum Number of Shares is defined in Section 2.1.3.
Notices is defined in Section 6.2.
Piggy-Back Registration is defined in Section 2.2.1.
Prospectus means a prospectus relating to a Registration Statement, as amended or supplemented, including all materials incorporated by reference in such Prospectus.
r egister , registered and registration refer to a registration effected by preparing and filing a registration statement or similar document under the Securities Act and such registration statement becoming effective.
Registration Statement means any registration statement filed by the Company with the Commission in compliance with the Securities Act for a public offering and sale of Shares (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity), as amended or supplemented, including all materials incorporated by reference in such Registration Statement.
Restricted Shares mean all of the Shares held of record by the Shareholder or held of record by its permitted transferees from time to time in accordance with Section 6.1 (together with any shares issued in respect thereof as a result of any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization); provided , that such Shares shall cease to be Restricted Shares hereunder, as of any date, when: (a) a Registration Statement with respect to the sale of such Restricted Shares shall have become effective under the Securities Act (as defined below) and such Restricted Shares shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement as of such date; (b) such Restricted Shares shall have been otherwise transferred pursuant to Rule 144 under the Securities Act (or any similar provisions thereunder, but not Rule 144A), and new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, in each case, as of such date; (c) such Restricted Shares are saleable immediately in their entirety without condition or limitation pursuant to Rule 144 under the Securities Act; or (d) such Restricted Shares shall have ceased to be outstanding as of such date.
Rules is defined in Section 6.10(a).
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
Shareholder is defined in the preamble to this Agreement.
Shareholder Indemnified Party is defined in Section 4.1.
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Shares is defined in the recitals of this Agreement.
Underwriter means a securities dealer who purchases any Restricted Shares as principal in an underwritten offering and not as part of such dealers market-making activities.
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(a) If the registration is undertaken for the Companys account: (i) first, the shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the shares or other securities, if any, including the Restricted Shares, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders ( pro rata in accordance with the number of Shares or other securities which each such person has actually requested to be included in such registration, regardless of the number of shares or other securities with respect to which such persons have the right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares; and
(b) If the registration is a demand registration undertaken at the demand of persons, other than the Shareholder, pursuant to written contractual arrangements with such persons, (i) first, the Shares or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the Shares or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; and (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the shares or other securities, if any, including the Restricted Shares, as to which registration has been requested pursuant to written contractual piggy-back registration rights which other security holders desire to sell ( pro rata in accordance with the number of Shares or other securities which each such person has actually requested to be included in such registration, regardless of the number of shares or other securities with respect to which such persons have the right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares.
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(a) the Company shall have the right to defer any Demand Registration for periods of up to thirty (30) days, and any Piggy-Back Registration for such period(s) as may be applicable to deferment of any demand registration to which such Peggy-Back Registration relates, in each case if the Company shall furnish to the holders a certificate signed by the Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its Shareholder for such Registration Statement to be effected at such time (including without limitation because the Company is then engaged in a material transaction or has an undisclosed material corporate development, in either case, which would be required to be disclosed in the Registration Statement); provided , further , however , that the Company shall not have the right to exercise the right set forth in this clause (a) for more than one hundred and twenty (120) days in any 365-day period in respect of a Demand Registration (including in such 120 days, any deferral under subsection (d) of this Section 3.1.1 if the Registration Statement was not timely filed thereunder);
(b) the Company shall not be obligated to effect any registration of Restricted Shares upon receipt of a written demand for a Demand Registration if the Company has already completed four (4) Demand Registrations;
(c) the Company shall not be obligated to effect any registration of Restricted Shares upon receipt of a written demand for a Demand Registration in the event that the number of Restricted Shares proposed to be included in the Demand Registration represents less than one-quarter (1/4) of the Shares issued to the Shareholder pursuant to the Realignment Agreement or if less, all the Shares then held by the Shareholder;
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(d) the Company shall not then be obligated to effect any registration of Restricted Shares upon receipt of a written demand for a Demand Registration if the Company shall furnish to the Shareholder a certificate signed by the Chief Executive Officer of the Company stating that within ninety (90) days of receipt of the written demand for a Demand Registration, the Company shall file a Registration Statement and offer to the Shareholder the opportunity to register Restricted Shares thereunder in accordance with Section 2.2;
(e) the Company shall not be obligated to effect any registration of Restricted Shares upon receipt of a written demand for a Demand Registration if the Company has, within the six (6) month period preceding the date of the written demand for a Demand Registration already effected one Demand Registration for the Shareholder pursuant to Section 2.1; and
(f) the Company shall not be obligated to effect any registration of Restricted Shares to the extent the Companys disposition of Restricted Shares pursuant to such registration would constitute a breach of or default under the Realignment Agreement.
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To the Company: |
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Five Star Quality Care, Inc. |
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400 Centre Street |
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Newton, Massachusetts 02458 |
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Attn: Bruce Mackey, President |
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Facsimile: (617) 658-1751 |
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with a copy (which shall not constitute notice) to: |
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Skadden, Arps, Slate Meagher & Flom LLP |
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One Beacon Street |
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Boston, Massachusetts 02108 |
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Attn.: Louis Goodman |
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Facsimile: (617) 573-4822 |
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To the Shareholder: |
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Senior Housing Properties Trust |
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400 Centre Street |
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Newton, Massachusetts 02458 |
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Attn: David Hegarty, President |
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Facsimile: (617) 796-8349 |
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with a copy (which shall not constitute notice) to: |
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Sullivan & Worcester LLP |
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One Post Office Square |
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Boston, Massachusetts 02109 |
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Attn: Richard Teller |
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Facsimile: (617) 338-2880 |
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(a) Any disputes, claims or controversies between the Shareholder and the Company (i) arising out of or relating to this Agreement or the transactions contemplated hereby, or (ii) brought by or on behalf of any shareholder of either the Shareholder or the Company (which, for purposes of this Section 6.10, shall mean any shareholder of record or any beneficial owner of shares of either the Shareholder or the Company, or any former shareholder of record or beneficial owner of shares of either the Shareholder or the Company), either on its own behalf, on behalf of either the Shareholder or the Company or on behalf of any series or class of shares of either the Shareholder or the Company or shareholders of either the Shareholder or the Company against either the Shareholder or the Company or any trustee, director, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of either the Shareholder or the Company, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, the declaration of trust or the bylaws of the Shareholder or the charter or bylaws of the Company (all of which are referred to as Disputes) or relating in any way to such a Dispute or Disputes, shall on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the Rules) of the American Arbitration Association (AAA) then in effect, except as modified herein. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, directors, managers or officers of either the Shareholder or the Company and class actions by a shareholder of either the Shareholder or the Company against those individuals or entities and either the Shareholder and the Company.
(b) There shall be three arbitrators. If there are (i) only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt by respondent of a copy of the demand for arbitration and (ii) more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator. The two party-nominated arbitrators shall jointly nominate the third and presiding arbitrator within 15 days of the nomination of the second arbitrator. If any arbitrator has not been nominated within the time limit specified herein, then the AAA
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shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause. For the avoidance of doubt, the arbitrators appointed by the parties to such Dispute may be affiliates or interested persons of such parties but the third arbitrator elected by the party arbitrators or by the AAA shall be unaffiliated with either party.
(c) The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.
(d) There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.
(e) In rendering an award or decision (the Award), the arbitrators shall be required to follow the laws of The Commonwealth of Massachusetts. Any arbitration proceedings or Award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based.
(f) Except to the extent expressly provided by this Agreement or as otherwise agreed between the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys fees) or, in a derivative case or class action by a shareholder of either the Shareholder or the Company, award any portion of the Shareholders or the Companys award to the claimant or the claimants attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.
(g) The Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon the Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.
(h) Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. The party against which the Award assesses a monetary
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obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.
Signatures appear on the next page
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Executed under seal as of the date first above written.
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FIVE STAR QUALITY CARE, INC. |
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By: |
/s/ Bruce J. Mackey Jr. |
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Name: Bruce J. Mackey Jr. |
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Title: President |
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SENIOR HOUSING PROPERTIES TRUST |
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By: |
/s/ David J. Hegarty |
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Name: David J. Hegarty |
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Title: President |
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