Exhibit 10.28

 

 

 

AMENDED AND RESTATED LOAN AGREEMENT (A-2)

 

 

BETWEEN

 

 

 

WELLTOWER INC.

 

 

 

AND

 

 

 

EACH OF THE BORROWER ENTITIES SET FORTH ON SCHEDULE I

 

 

 

Effective October 1, 2016

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

SECTION

 

 

PAGE

 

  

 

 

ARTICLE 1: PURPOSE AND DEFINITIONS

1 

1.1

 

Purpose

1 

1.2

 

Definitions

1 

1.3

 

Incorporation of Amendments

10 

1.4

 

Exhibits

10 

 

 

 

 

ARTICLE 2: LOAN AND LOAN DOCUMENTS

10 

2.1

 

Obligation to Lend

10 

2.2

 

Obligation to Repay

10 

 

 

2.2.1    Term of the Loan

10 

 

 

2.2.2    Interest and Payments

10 

2.3

 

Use of Proceeds

11 

2.4

 

Security

11 

2.5

 

Funding Fee

11 

2.6

 

Loan Expenses

11 

2.7

 

Disbursements

11 

2.8

 

Closing

11 

2.9

 

Joint and Several Liability

11 

 

 

 

 

ARTICLE 3: CONDITIONS PRECEDENT TO CLOSING

11 

3.1

 

Conditions Precedent to Closing

11 

 

 

3.1.1    Title Commitment

11 

 

 

3.1.2    Affidavits

12 

 

 

3.1.3    Intentionally Omitted

12 

 

 

3.1.4    Legal Opinion

12 

 

 

3.1.5    Intentionally Omitted

12 

 

 

3.1.6    Insurance

12 

 

 

3.1.7    Loan Documents

12 

 

 

3.1.8    Organizational Documents

12 

 

 

3.1.9    Intentionally Omitted

12 

 

 

3.1.10  Intentionally Omitted

12 

 

 

3.1.11  Intentionally Omitted

12 

 

 

3.1.12  Intentionally Omitted

12 

 

 

3.1.13  Licenses and Permits

12 

 

 

3.1.14  Financial Statements

12 

 

 

3.1.15  Damage and Destruction

12 

 

 

3.1.16  No Event of Default

12 

 

 

3.1.17  Other Closing Requirements

13 

 

 

 

 

ARTICLE 4: BORROWER’S REPRESENTATIONS AND WARRANTIES

13 

4.1

 

Organization and Good Standing

13 

4.2

 

Power and Authority

13 

4.3

 

Enforceability

13 

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SECTION

 

 

PAGE

 

  

 

 

4.4

 

No Violation

13 

4.5

 

No Litigation

14 

4.6

 

Financial Statements

14 

4.7

 

Reports and Statements

14 

4.8

 

Title to Land

14 

4.9

 

Parties in Possession

15 

4.10

 

Intentionally Omitted

15 

4.11

 

Utilities

15 

4.12

 

Condemnation and Assessments

15 

4.13

 

Intentionally Omitted

15 

4.14

 

Government Authorizations

15 

4.15

 

Environmental Matters

15 

4.16

 

No Default

16 

4.17

 

ERISA

16 

4.18

 

Chief Executive Office

16 

4.19

 

Other Name or Entities

16 

4.20

 

Tax Status

16 

 

 

 

 

ARTICLE 5: AFFIRMATIVE COVENANTS

16 

5.1

 

Perform Obligations

16 

5.2

 

Indemnity

16 

 

 

5.2.1  Indemnification

16 

 

 

5.2.2  Notice of Claim

17 

 

 

5.2.3  Survival of Covenants

17 

 

 

5.2.4  Reimbursement of Expenses

17 

5.3

 

Environmental Indemnity; Audits

17 

 

 

5.3.1  Indemnification

17 

 

 

5.3.2  Audits

18 

5.4

 

Mechanic’s Liens

18 

5.5

 

Personal Property

18 

5.6

 

Proceedings to Enjoin or Prevent Use

19 

5.7

 

Documents and Information

19 

 

 

5.7.1  Furnish Documents

19 

 

 

5.7.2  Furnish Information

19 

 

 

5.7.3  Further Assurances and Information

19 

 

 

5.7.4  Material Communications

20 

 

 

5.7.5  Requirements for Financial Statements

20 

5.8

 

Compliance With Laws

20 

5.9

 

Broker’s Commission

20 

5.10

 

Existence and Change in Ownership

20 

5.11

 

Financial Covenants

20 

5.12

 

Transfer of License

21 

5.13

 

Deposit Accounts

21 

5.14

 

Compliance with Anti-Terrorism Laws

21 

5.15

 

Compliance with Anti-Corruption Laws

21 

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SECTION

 

 

PAGE

 

  

 

 

 

 

 

 

ARTICLE 6: NEGATIVE COVENANTS

22 

6.1

 

No Debt

22 

6.2

 

No Liens

22 

6.3

 

No Guaranties

22 

6.4

 

No Transfer of Facility

22 

6.5

 

No Dissolution

22 

6.6

 

No Change in Management or Operation

22 

6.7

 

Changes to Licensed Beds

22 

6.8

 

Contracts

23 

6.9

 

Subordination of Payments to Affiliates

23 

6.10

 

Change of Location or Name

23 

6.11

 

Anti-Terrorism Laws

23 

6.12

 

Anti-Corruption Laws

23 

 

 

 

 

ARTICLE 7: DEFAULT AND REMEDIES

24 

7.1

 

Event of Default

24 

7.2

 

Remedies on Default

25 

 

 

7.2.1  Acceleration

25 

 

 

7.2.2  Other Remedies

25 

 

 

7.2.3  Waiver

26 

 

 

7.2.4  Terminate Disbursement

26 

7.3

 

Borrower Waivers

26 

 

 

 

 

ARTICLE 8: MISCELLANEOUS

26 

8.1

 

Advances by Lender

26 

8.2

 

Intentionally Omitted

26 

8.3

 

Construction of Rights and Remedies and Waiver of Notice and Consent

26 

 

 

8.3.1  Applicability

26 

 

 

8.3.2  Waiver of Notices and Consent to Remedies

26 

 

 

8.3.3  Cumulative Rights

26 

 

 

8.3.4  Extension or Modification of Loan

26 

 

 

8.3.5  Right to Select Security

27 

 

 

8.3.6  Forbearance Not a Waiver

27 

 

 

8.3.7  No Waiver

27 

 

 

8.3.8  No Continuing Waivers

27 

 

 

8.3.9  Approval Not a Waiver

27 

 

 

8.3.10 No Release

27 

 

 

8.3.11 Waiver of Homestead, Appraisal and Exemption

28 

8.4

 

Assignment

28 

 

 

8.4.1  Assignment by Lender

28 

 

 

8.4.2  Assignment by Borrower

28 

8.5

 

Notices

28 

8.6

 

Entire Agreement

28 

8.7

 

Severability

28 

iii

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SECTION

 

 

PAGE

 

  

 

 

8.8

 

Captions and Headings

28 

8.9

 

Governing Law

28 

8.10

 

Binding Effect

28 

8.11

 

Modification

29 

8.12

 

Construction of Agreement

29 

8.13

 

Counterparts

29 

8.14

 

No Third-Party Beneficiary Rights

29 

8.15

 

Lender’s Authority to Furnish Copies of Loan Documents

29 

8.16

 

Permitted Contests

29 

8.17

 

Priority of Lien

30 

8.18

 

Lender Merely a Lender

30 

 

 

8.18.1  No Agency

30 

 

 

8.18.2  No Obligation to Pay

30 

 

 

8.18.3  No Responsibility for Construction

30 

8.19

 

Intentionally Omitted

30 

 

 

 

 

ARTICLE 9: SECURITY

31 

9.1

 

Accounts Receivable

31 

9.2

 

Mortgage

31 

9.3

 

Guaranty

31 

 

 

EXHIBIT A:LEGAL DESCRIPTIONS

 

EXHIBIT B:PERMITTED EXCEPTIONS

 

EXHIBIT C:GOVERNMENT AUTHORIZATIONS TO BE OBTAINED; ZONING PERMITS

 

EXHIBIT D:TX PROPERTIES

 

EXHIBIT E:PENDING LITIGATION

 

EXHIBIT F:DOCUMENTS TO BE DELIVERED

 

EXHIBIT G:BORROWER’S CERTIFICATE AND FACILITY FINANCIAL REPORTS

 

EXHIBIT H:ANTI-CORRUPTION AND ANTI-TERRORISM CERTIFICATE

 

EXHIBIT I:ALLOCATED LOAN AMOUNTS

 

 

iv

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AMENDED AND RESTATED LOAN AGREEMENT (A-2)

 

THIS AMENDED AND RESTATED LOAN AGREEMENT (A-2) (“Agreement”) is entered into as
of December 22, 2016 and made effective as of October 1, 2016 (the “Effective
Date”) between WELLTOWER INC. (formerly known as Health Care REIT, Inc.), a
corporation organized under the laws of the State of Delaware (“Lender”), having
an address of 4500 Dorr Street, Toledo, Ohio 43615-4040, and each of the
BORROWER entities set forth on Schedule I attached hereto and made a part
hereof, each a limited liability company organized under the laws of the State
of Delaware (individually and collectively, “Borrower”), having its chief
executive office located at 101 East State Street, Kennett Square, Pennsylvania
19348.

 

R E C I T A L S:

 

A.     Lender made a loan (the “Original Loan”) to the Borrower and certain
other entities evidenced by that certain Loan Agreement, dated as of February 2,
2015 (as amended, the “Original Loan Agreement”).

 

B.     On the date hereof, Lender and Borrower and certain other entities are
entering into that certain Note Splitter and Modification Agreement, pursuant to
which the Original Loan will be split into three separate notes which will be
evidenced by separate amended and restated or consolidated, amended and restated
loan agreements, as applicable.

 

C.     On the date hereof, Borrower is entering into that certain Second Amended
and Restated Note A-2, pursuant to which Lender has agreed to provide a loan of
up to the Loan Amount (defined below), subject to the terms and conditions of
this Agreement.

 

NOW, THEREFORE, Lender and Borrower agree as follows:

 

ARTICLE 1: PURPOSE AND DEFINITIONS

 

1.1     Purpose.  The purpose of this Agreement is to establish the Loan with
Lender for the financing of the Facility (defined below).

 

1.2     Definitions.  Except as otherwise expressly provided, [i] the terms
defined in this section have the meanings assigned to them in this section and
include the plural as well as the singular; [ii] all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles as of the time applicable; and
[iii] the words “herein”, “hereof”, and “hereunder” and similar words refer to
this Agreement as a whole and not to any particular section.

 

“ABL Loan Agreement” means that certain Third Amended and Restated Credit
Agreement, dated as of February 2, 2015, by and among Genesis Healthcare, Inc.,
certain other borrowers from time to time party thereto, certain financial
institutions from time to time party thereto, L/C Issuers (as defined therein)
from time to time party thereto and Healthcare Financial

 

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Solutions, LLC, as administrative agent, as amended, restated, replaced or
otherwise modified from time to time. 

 

“Affiliate” means with respect to a Person, any other Person that directly or
indirectly, controls, or is controlled by, or is under common control with the
aforementioned Person. “Control” means (and the correlative meanings of the
terms “controlling” and “controlled by” and “under common control with”), as
applied to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities, by contract or otherwise.
Without limiting the generality of the foregoing, when the term “control” is
used in reference to any limited liability company, the managing member shall
also be deemed to “control” such limited liability company. Notwithstanding the
foregoing, Affiliate, with respect to GEN and any subsidiary of GEN, shall
include only GEN and any and all other subsidiaries of GEN but shall not include
any shareholders in, or entities in which members of the board of directors of
GEN, either have any equity interest or otherwise Control.

 

“Affiliate Obligation” means all indebtedness and obligations of Borrower and
any Affiliate to Lender or any Lender Affiliate now existing or hereafter
arising, including, without limitation, indebtedness evidenced by promissory
notes, lease agreements, guaranties or otherwise and obligations under such
indebtedness documents and all other documents executed by Borrower or any
Affiliate in connection therewith, and any extensions, modifications,
substitutions or renewals thereof.  For the avoidance of doubt, “Affiliate
Obligation” shall include the obligations of Master Tenant under the Master
Lease and the obligations to Lender under that certain (i) Second Amended and
Restated Note A-1, dated the date hereof, by the borrower named therein in favor
of Lender, (ii) First Amended and Restated Note B-1, dated the date hereof, by
the borrower named therein in favor of Lender and (iii) Second Consolidated,
Amended and Restated Note, dated the date hereof, by the borrower named therein
in favor of Lender.

 

“Annual Financial Statements” means [i] for Borrower and Operator, the audited
balance sheet and statement of income, and statement of cash flows for the most
recent fiscal year on an individual facility and consolidated basis; and
[ii] for GEN, the audited balance sheet and statement of income for the most
recent fiscal year.

 

“Anti-Corruption and Anti-Terrorism Certificate” means Borrower’s certification
as to its compliance with §§5.14, 5.15, 6.11 and 6.12 of this Agreement in the
form attached as Exhibit H.

 

“Anti-Corruption Laws” means any laws or regulations relating to bribery,
extortion, kickbacks or other similar activities, including, without limitation,
the U.S. Foreign Corrupt Practices Act, the United Kingdom Bribery Act, the
Canada Corruption of Foreign Public Officials Act and any other applicable
anti-bribery or anti-corruption laws.

 

“Anti-Terrorism Laws” means any laws or regulations relating to terrorism, money
laundering or similar activities, including, without limitation, Executive Order
13224, the USA Patriot Act, the laws comprising the Bank Secrecy Act, the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the laws
administered by OFAC and any other applicable anti-terrorism or money laundering
laws.

2

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“Approved Costs” means the reasonable and reasonably documented costs incurred
by Borrower in consummating the Transactions (including the repayment of
existing debt) and the Closing Costs.

 

“Article 9” means Article 9 of the Uniform Commercial Code as enacted in the
State.

 

“Blocked Person” means a person or entity with whom Lender is restricted from
transacting business of the type contemplated by this Agreement by reason of the
Anti-Terrorism Laws or because such person or entity is subject to Sanctions or
is included on the OFAC Lists.

 

“Borrower” has the meaning set forth in the first paragraph of this Agreement.

 

“Borrower Parties” means Genesis HealthCare LLC, Sun Healthcare Group, Inc., GEN
Operations II, LLC and/or certain subsidiaries thereof.

 

“Business Day” means any day which is not a Saturday or Sunday or a public
holiday under the laws of the United States of America or the State of Ohio.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.

 

“Closing” means the closing of the Loan.

 

“Closing Costs” means the following reasonable costs incurred to meet the
closing requirements: [i] Funding Fee; [ii] title insurance premiums and search
fees; [iii] cost of surveys, if any; [iv] cost of environmental studies, if any;
[v] out-of-pocket legal fees of Lender’s counsel and Borrower’s counsel;
[vi] property inspection fees, if any; [vii] Loan Expenses; and [viii] other
costs customarily incurred in closing financing transactions of this type.

 

“Company” means FC-GEN Operations Investment, LLC, a limited liability company
organized under the laws of the State of Delaware. 

 

“Company LLC Agreement” means that certain Sixth Amended and Restated Limited
Liability Company Operating Agreement of Company effective as of February 2,
2015.

 

“Effective Date” means October 1, 2016.

 

“Environmental Laws” means all federal, state, and local laws, ordinances and
policies the purpose of which is to protect human health and the environment, as
amended from time to time, including, but not limited to, [i] CERCLA; [ii] the
Resource Conservation and Recovery Act; [iii] the Hazardous Materials
Transportation Act; [iv] the Clean Air Act; [v] Clean Water Act; [vi] the Toxic
Substances Control Act; [vii] the Occupational Safety and Health Act; [viii] the
Safe Drinking Water Act; and [ix] analogous state laws and regulations.

 

“Facility” means the Real Property and Personal Property comprising each
facility subject to a Mortgage, as listed on Exhibit A hereto, individually and
collectively.

3

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“Facility Uses” means the uses relating to the operation of each Facility as
currently being operated.

 

“Financial Statements” means [i] the annual, quarterly and year to date
financial statements of Borrower and GEN; and [ii] all operating statements for
the Facility that were submitted to Lender prior to the Effective Date.

 

“Fixtures” means all fixtures now or hereafter installed or located in, on or
about the Land or the Improvements and any replacements, substitutions and
additions thereto.

 

“Funding Fee” means the funding fee for the Loan previously paid to Lender in an
amount equal to 1.5% of the Loan Amount.

 

“GEN” means Genesis Healthcare, Inc., a corporation organized under the laws of
the State of Delaware.

 

“GEN Guaranty” means the Amended and Restated Unconditional and Continuing Loan
Guaranty (A-2) entered into by GEN to guarantee payment of the Loan and any
amendments thereto or substitutions or replacements therefor.

 

“Government Authorizations” means all permits, licenses, approvals, consents,
and authorizations required to comply with all Legal Requirements, including,
but not limited to, [i] zoning permits, variances, exceptions, special use
permits, conditional use permits, and consents; [ii] the permits, licenses,
provider agreements and approvals required for licensure and operation of each
Facility for its Facility Uses certified, if applicable, as a provider under the
federal Medicare and state Medicaid programs; [iii] environmental, ecological,
coastal, wetlands, air, and water permits, licenses, and consents; [iv] curb
cut, subdivision, land use, and planning permits, licenses, approvals and
consents; [v] building, sign, fire, health, and safety permits, licenses,
approvals, and consents; and [vi] architectural reviews, approvals, and consents
required under restrictive covenants.

 

“Government Related Person” means [i] any elected or appointed government
official, member of the armed forces, or member of a royal family; [ii] any
officer or employee of a government or any department, agency, or
instrumentality of a government; [iii] any person acting in an official capacity
for or on behalf of a government or any department, agency, or instrumentality
of a government; [iv] any officer or employee of a company or business owned or
controlled in whole or part, directly or indirectly, by a government; [v] any
officer or employee of a public international organization, such as the World
Bank or the United Nations; [vi] any officer or employee of a political party or
any person acting in an official capacity on behalf of a political party;
[vii] any candidate for political office; and/or [viii] the spouse or immediate
family member of any of the above.

 

“Guaranty” means the GEN Guaranty and the Operator Guaranty.

 

“Guaranty Documents” means the Guaranty and the Security Agreement and any other
agreement or instrument to be executed by GEN or Operator in accordance with the
requirements of any Loan Documents.

4

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“Hazardous Materials” means any substance [i] the presence of which poses a
hazard to the health or safety of persons on or about the Facility, including,
but not limited to, asbestos containing materials; [ii] which requires removal
or remediation under any Environmental Law, including without limitation any
substance which is toxic, explosive, flammable, radioactive, or otherwise
hazardous; or [iii] which is regulated under or classified under any
Environmental Law as hazardous or toxic, including, but not limited to, any
substance within the meaning of “hazardous substance”, “hazardous material”,
“hazardous waste”, “toxic substance”, “regulated substance”, “solid waste”, or
“pollutant” as defined in any Environmental Law.

 

“Improvements” means all buildings, structures, additions, and improvements now
or hereafter erected or placed upon the Land and the offsite improvements, if
any, necessary for the operation of the Facility.

 

“Insurance Requirements” means [i] all terms of any insurance policy required by
the Loan Documents; [ii] all requirements of the issuer of any such policy; and
[iii] the requirements of any Board of Insurance Underwriters or similar
organization.

 

“Intangible Personal Property” means the following:  [i] all Receivables;
[ii] unless prohibited by law, all franchises, permits, licenses and rights
therein regarding the use, occupancy or operation of the Improvements, or any
part thereof; [iii] unless expressly prohibited by the terms thereof, all
contracts, agreements, contract rights and materials relating to the design,
construction or operation of the Improvements, including but not limited to,
plans, specifications, drawings, blueprints, models and mock-ups, and all
brochures, flyers, advertising and promotional materials and mailing lists; and
[iv] all ledger sheets, files, records, computer programs, tapes, other
electronic data processing materials, and other documentation relating to the
preceding listed property.

 

“Intercreditor Agreement” means that certain Third Amended and Restated
Intercreditor Agreement, dated as of the date hereof, by and among Healthcare
Financial Solutions, LLC, Welltower Inc., in its capacity as collateral agent
under the Term Documents (as defined in the Intercreditor Agreement) and as
lender under each HCN Loan Agreement (as defined in the Intercreditor
Agreement), as acknowledged by the Company and the other loan parties identified
therein as amended, restated, amended and restated, supplemented and otherwise
modified from time to time and along with any joinders made a part thereof from
time to time.

 

“Land” means the land described on Exhibit A.

 

“Lease” means any lease of the Facility, now existing or hereafter created and
as amended from time to time.

 

“Legal Requirements” means all laws, regulations, rules, orders, writs,
injunctions, decrees, certificates, requirements, agreements, conditions of
participation and standards of any federal, state, county, municipal or other
governmental entity, administrative agency, insurance underwriting board,
architectural control board, private third-party payor, accreditation
organization, or any restrictive covenants applicable to the development,
construction and operation of the Facility by GEN, Borrower, Operator or an
Affiliate, including, but not limited to, [i] zoning, building, fire, health,
safety, sign, and subdivision regulations and codes; [ii] certificate

5

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of need laws; [iii] licensure to operate each Facility for its Facility Uses
certified, if applicable, for reimbursement under the federal Medicare and state
Medicaid programs; [iv] the Environmental Laws; and [v] requirements, conditions
and standards for participation in third-party payor insurance programs.

 

“Lender” has the meaning set forth in the first paragraph of this Agreement.

 

“Lender Affiliate” means any person, corporation, partnership, limited liability
company, trust, or other legal entity that, directly or indirectly, controls, or
is controlled by, or is under common control with Lender.  “Control” (and the
correlative meanings of the terms “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such entity.  “Lender
Affiliate” includes, without limitation, Master Landlord and Welltower Inc.

 

“Loan” means the loan by Lender to Borrower in the amount of the Loan Amount.

 

“Loan Amount” means $103,620,097.00.

 

“Loan Documents” means [i] this Agreement; [ii] the Note; [iii] the Mortgage;
and [iv] all other documents and instruments executed by Borrower or an
Affiliate in connection with the Loan, all as amended from time to time.

 

“Loan Expenses” means all reasonable costs and expenses incurred by Lender in
investigating, making and administering the Loan, including, but not limited to,
actual, reasonable and documented [i] out-of-pocket attorneys’ and paralegals’
fees and costs; and [ii] travel, transportation, food, and lodging costs and
expenses incurred by Lender and Lender’s attorneys and paralegals.

 

“Master Landlord” means FC-GEN Real Estate, LLC, a Delaware limited liability
company and a Lender Affiliate.

 

“Master Lease” means that certain Nineteenth Amended and Restated Master Lease
Agreement dated as of December 1, 2015 between Master Tenant and Master
Landlord, as may be amended or amended and restated from time to time.

 

“Master Tenant” means Genesis Operations LLC, a Delaware limited liability
company and an Affiliate.

 

“Material Obligation” means [i] any indebtedness secured by a security interest
in or a lien, deed of trust or mortgage on the Facility (or any part thereof,
including any Personal Property) and any agreement relating thereto; [ii] any
obligation or agreement that is material to the construction or operation of the
Facility or that is material to Borrower’s business or financial condition; and
[iii] any indebtedness or capital lease that has an outstanding principal
balance of at least $2,000,000.00 and any agreement relating thereto.

 

“Mortgage” means each Mortgage or Deed of Trust, Security Agreement, Assignment
of Leases and Rents and Fixture Filing, dated as of February 2, 2015, granted by
Borrower to Lender for a Facility, as amended from time to time, individually
and collectively.

6

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“Note” means the Second Amended and Restated Note A-2 of even date made by
Borrower in favor of Lender for a principal amount equal to the Loan Amount, and
any extensions, modifications, substitutions or renewals thereof.

 

“OFAC” means the Office of Foreign Assets Control, Department of the Treasury.

 

“OFAC Lists” means lists of known or suspected terrorists or terrorist
organizations published by OFAC.

 

“Operator” means each operator of a Facility which is an Affiliate of Borrower,
individually and collectively.

 

“Operator Guaranty” means the Amended and Restated Unconditional and Continuing
Non-Recourse Loan Guaranty (A-2) entered into by Operator to guarantee payment
of the Loan and any amendments thereto or substitutions or replacements
therefor.

 

“Organizational Documents” means [i] for a corporate entity, the Articles of
Incorporation of such entity certified by the Secretary of State of the state of
organization, as amended to date, and the Bylaws of such entity certified by
such entity, as amended to date; [ii] for a partnership entity, the Partnership
Agreement of such entity certified by such entity, as amended to date and the
Partnership Certificate, certified by the appropriate authority, as amended to
date; and [iii] for a limited liability company entity, the Articles of
Organization of such entity certified by the Secretary of State of the state of
organization, as amended to date and the Operating Agreement of such entity
certified by such entity, as amended to date.

 

“Periodic Financial Statements” means [i] for Borrower, the unaudited balance
sheet and statement of income for the most recent quarter; and [ii] for GEN, the
unaudited balance sheet and statement of income of GEN for the most recent
quarter.

 

“Permitted Exceptions” means the exceptions to title set forth on Exhibit B.

 

“Permitted Liens” means [i] liens granted to Lender; [ii] liens customarily
incurred by Borrower or an Affiliate in the ordinary course of business for
items not due and payable including mechanic’s liens and deposits and charges
under workers’ compensation laws; [iii] liens for taxes and assessments not yet
due and payable; [iv] any lien, charge, or encumbrance which is being contested
in good faith pursuant to this Agreement; [v] the Permitted Exceptions; [vi]
subject to the terms of the Intercreditor Agreement, any liens granted under the
Term Loan Agreement and ABL Loan Agreement, and [vii] purchase money financing
and capitalized equipment leases for the acquisition of personal property
provided,  however, that Lender obtains a nondisturbance agreement from the
purchase money lender or equipment lessor in form and substance as may be
satisfactory to Lender if the original cost of the equipment exceeds
$2,000,000.00.

 

“Permitted Transfer” means any of the following: [i] an assignment of the Loan
by Borrower to a Primary Affiliate thereof; [ii] the imposition (whether or not
consensual) of any Permitted Lien; [iii] a Transfer of any interest in Company,
any Borrower, any Operator or GEN which does not result in a Change of Control
(as defined in the Master Lease) of such Person; [iv] a Permitted Company
Transfer (as defined in the Master Lease); [v] an initial public offering of
equity in any Borrower or Company; [vi] Transfers comprised of the incurrence of
indebtedness

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and liens created in connection therewith, in each case to the extent permitted
by the terms of this Agreement, [vii] Transfers of Excluded Entities (as defined
in the Master Lease) to Primary Affiliates of Company; [viii] any Transfers of
assets by GEN and its Subsidiaries of their respective assets to the extent the
Loan is not secured by such assets; [ix] any other Transfer approved by Lender,
such approval not to be unreasonably withheld, conditioned or delayed, provided
that the proposed transferee [a] is a creditworthy entity with sufficient
financial stability to satisfy the financial obligations hereunder; [b] has (or
the majority of its senior managers each individually have) not less than 10
years’ experience in operating health care facilities for the purpose of the
applicable Facility Uses; [c] has a favorable business and operational
(including quality of care) reputation and character in the industry; and
[d] acknowledges, or in the case of an assignment assumes, in writing all of the
terms of this Agreement on the part of Borrower to be performed hereunder from
and after the date of such Transfer; and [x] the exchange or Transfer of all or
any portion of the stock in GEN held by Genesis Members (as defined in the
Master Lease), including interests received by participants in Genesis
Healthcare LLC Management Incentive Compensation Plan. 

 

“Person” means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, unincorporated organization, real estate investment trust or other
legal entity.

 

“Personal Property” means the Tangible Personal Property and Intangible Personal
Property.

 

“Primary Affiliate” means, with respect to a Person, any other Person that
directly or indirectly, primarily controls, or is primarily controlled by, or is
under primary common control with the aforementioned Person.  “Primary Control”
(and the correlative meanings of the terms “controlled by” and “under common
control with”) means, with respect to this definition of “Primary Affiliate”,
the direct or indirect ownership of more than fifty percent (50%) of the
outstanding voting stock of such Person.

 

“Real Property” means, collectively, the Land, Improvements and Fixtures.

 

“Receivables” means, in respect of each Borrower, and in each case as solely
related to the Real Property of such Borrower encumbered by the Mortgage and the
senior housing facility located thereon, and, in respect of each Operator, and
in each case as solely related to the Facility operated by such Operator, as
applicable: (a) each Controlled Deposit Account (as defined in the ABL Loan
Agreement), Controlled Securities Accounts (as defined in the ABL Loan
Agreement) and each Facility Lockbox Account (as defined in the ABL Loan
Agreement) and all cash, cash equivalents and money deposited therein; (b) all
accounts and all of money, contract rights, chattel paper, documents,
securities, investment property and instruments with respect thereto, and all
rights, remedies, security, liens and supporting obligations, in, to and in
respect of the foregoing, including, without limitation, rights of stoppage in
transit, replevin, repossession and reclamation and other rights and remedies of
an unpaid vendor, lienor or secured party, guaranties or other contracts of
suretyship with respect to the accounts, deposits or other security for the
obligation of any account debtor, and credit and other insurance; (c) all
general intangibles (including, but not limited to, payment intangibles),
intellectual property, rights, remedies, guarantees, security interests, rights
of enforcement and collection, and other property of every kind and description,

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to the extent necessary for the collection of accounts, including, but not
limited to, all provider numbers, health care related licenses, permits,
certificates of need and similar governmental authorizations, existing and
future customer lists, choses in action, claims, books, records, ledger cards,
formulae, tax and other types of refunds, returned and unearned insurance
premiums, rights and claims under insurance policies, and computer programs,
information, software, and data compiled or derived by Borrower Parties or to
which Borrower Parties are entitled, all to the extent necessary for the
collection of the accounts; (d) all letter of credit rights and commercial tort
claims with respect to, evidencing, directly relating to or necessary for the
collection of accounts; (e) all books and records pertaining to the other
property described herein; and (f) to the extent not listed above as original
collateral, the proceeds (including, without limitation, insurance proceeds) of
all of the foregoing, irrespective of whether such proceeds are deposited into a
deposit account and/or are transferred from one deposit account to another
deposit account and all supporting obligations of all of the foregoing.

 

“Restricted Transfer” means any Transfer, in whole or in part, by, Borrower,
Operator, GEN, Company or any of their Affiliates, of any of the following or
any interest therein: [i] the Loan, [ii] any Facility, [iii] any Borrower,
[iv] any Operator, [v] GEN, or [vi] any assets of Borrower, Operator or GEN,
other than, in each case, a Permitted Transfer.

 

“Sanctions” means any economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by [i] the United States
government (including, without limitation, OFAC) or [ii] the United Nations
Security Council, the European Union or any member state thereof, Her Majesty’s
Treasury of the United Kingdom or other relevant sanctions authority.

 

“Secured Obligations” has the meaning set forth in the Mortgage.

 

“Security Agreement” means the Amended and Restated Security Agreement (A-2) of
even date between Operator and Lender, as amended from time to time.

 

“State” means the State of Ohio.

 

“Tangible Personal Property” means all machinery, furniture, equipment, trade
fixtures, appliances, inventory, and other goods, except inventory sold or
consumed in the ordinary course of business (as “equipment”, “inventory”, and
“goods” are defined for purposes of Article 9) now or hereafter located in or on
or used in connection with the Real Property and replacements, additions, and
accessions thereto, including without limitation those items which are to become
Fixtures or which are building supplies and materials to be incorporated into an
Improvement or Fixture.

 

“Term Loan Agreement” means the Term Loan Agreement, dated as of July 29, 2016,
by and among the Company, as borrower, Genesis Healthcare, Inc., GEN Operations
I, LLC, GEN Operations II, LLC, HCRI Tucson Properties, Inc. and OHI Mezz
Lender, LLC, as the initial lenders and any other lender from time to time party
thereto and Welltower Inc., as administrative agent and collateral agent, as
amended, restated, replaced or otherwise modified from time to time.

 

“Title Commitment” means each ALTA Form B Commitment, 2006 form, for mortgage
title insurance issued by the Title Company for each Facility, individually and
collectively.

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“Title Company” means Fidelity National Title Insurance Company.

 

“Transfer” means any [i] lease or other arrangement (including, but not limited
to, management agreements, concessions, licenses, and easements) which allows a
third party any rights of use or occupancy, [ii] sale, [iii] exchange,
[iv] assignment, [v] merger, [vi] consolidation, [vii] disposition,
[viii] pledge, [ix] hypothecation, [x] encumbrance, [xi] other grant of a
security interest, [xii] grant of right of first refusal, [xiii] change in
ownership, [xiv] conveyance in trust, [xv] gift, [xvi] transfer by bequest,
devise or descent, or [xvii] other transfer, including a transfer to a receiver,
levying creditor, trustee or receiver in bankruptcy or a general assignment for
the benefit of creditors, in each case, of any asset or equity interests,
whether direct or indirect, for value or no value, or voluntary or involuntary
(including, in each case, by operation of law or other legal or equitable
proceedings).

 

“TX Properties” means the properties identified on Exhibit D located in the
State of Texas.

 

1.3     Incorporation of Amendments.  The definition of any agreement, document,
or instrument set forth in this Agreement or in any other Loan Document shall be
deemed to incorporate all amendments, modifications, and renewals thereof and
all substitutions and replacements therefor.

 

1.4     Exhibits.  The following exhibits are attached hereto and incorporated
herein:

 

Exhibit A:

Legal Description

Exhibit B:

Permitted Exceptions

Exhibit C:

Government Authorizations to be Obtained; Zoning Permits

Exhibit D:

TX Properties

Exhibit E:

Pending Litigation

Exhibit F:

Documents to be Delivered

Exhibit G:

Certificate and Facility Financial Reports

Exhibit H:

Anti-Corruption and Anti-Terrorism Certificate

Exhibit I:

Allocated Loan Amounts

 

ARTICLE 2: LOAN AND LOAN DOCUMENTS

 

2.1     Obligation to Lend.  Subject to the terms and upon the conditions set
forth in the Loan Documents, Lender shall lend to Borrower up to the Loan
Amount.  The indebtedness of Borrower to Lender for the Loan is evidenced by the
Note.

 

2.2     Obligation to Repay.  Borrower shall repay the Loan in accordance with
the terms of the Note and the other Loan Documents.

 

2.2.1     Term of the Loan.  The term of the Loan will expire on the Maturity
Date set forth in the Note.

 

2.2.2     Interest and Payments.  Borrower shall make payments in accordance
with the Note at the rates set forth in the Note.

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2.3     Use of Proceeds.  Borrower shall use the proceeds of the Loan solely for
the purpose of paying Approved Costs.

 

2.4     Security.  The Loan is secured by the Mortgage and any other security
for the Loan provided to Lender, including the security described in Article 9
of this Agreement.  Notwithstanding any other provision hereof or of any Loan
Document, if and when Borrower transfers a Facility on commercially reasonable
terms and pays to Lender the Extraordinary Net Proceeds (as defined in the Note)
derived from such transfer as required by the Note, Lender shall provide to
Borrower, at Borrower’s expense, documentation reasonably acceptable to Borrower
releasing such Facility from the liens imposed by the Mortgage and the Security
Agreement.  In addition, notwithstanding any other provision hereof or of any
Loan Document, if and when Borrower refinances a Facility and pays to Lender an
amount equal to the applicable allocated loan amount as shown on Exhibit I
hereto, [i] Lender shall apply the amount so paid against the obligations due
hereunder, to be applied as provided in Section 7 of the Note, and [ii] Lender
shall provide to Borrower, at Borrower’s expense, documentation reasonably
acceptable to Borrower releasing such Facility from the liens imposed by the
Mortgage and the Security Agreement.

 

2.5     Funding Fee.  Borrower paid the Funding Fee at the date of the initial
funding of the Loan.

 

2.6     Loan Expenses.  At the Closing, Borrower shall pay or reimburse Lender
for any Loan Expenses incurred up to the Effective Date.  Within 30 days after
receipt of an invoice therefor, Borrower shall reimburse Lender for any Loan
Expenses incurred by Lender.  Lender may, at Lender’s option, apply proceeds of
the Loan to pay the Loan Expenses.

 

2.7     Disbursements.  Lender previously disbursed the full amount of the Loan.

 

2.8     Closing.  The Closing shall occur on the Effective Date.  Lender may
elect to close by exchanging executed counterparts of one or more of the Loan
Documents and other closing documents by mail or a national courier service, or
by telecopier followed by exchanging documents by mail or national courier
service.

 

2.9     Joint and Several Liability.  The liability of each Borrower hereunder
and under the Loan Documents shall be joint and several.

 

ARTICLE 3: CONDITIONS PRECEDENT TO CLOSING

 

3.1     Conditions Precedent to Closing.  Borrower shall comply with, and
Lender’s obligation to close the Loan shall be conditioned upon Borrower’s
performance of the following conditions precedent:

 

3.1.1     Title Commitment.  Lender shall have received the Title Commitment
issued by the Title Company committing to insure the Mortgage to be a valid
first lien upon the Real Property and all appurtenant easements subject only to
Permitted Exceptions.  The Title Commitment shall be in form and substance
reasonably satisfactory to Lender.

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3.1.2     Affidavits.  Borrower shall have delivered and shall have caused its
Affiliates to deliver such customary Owner’s and No Change Affidavits as Title
Company may reasonably require.

 

3.1.3     Intentionally Omitted.

 

3.1.4     Legal Opinion.  Borrower shall have delivered to Lender such opinions
of counsel as Lender may reasonably require.

 

3.1.5     Intentionally Omitted.

 

3.1.6     Insurance.  Borrower shall have delivered to Lender reasonably
satisfactory evidence of the property and liability insurance coverage required
by Lender.

 

3.1.7     Loan Documents. Borrower shall have delivered to Lender fully executed
originals of the Loan Documents and Guaranty Documents, and, where applicable,
such documents shall be in proper form for recording and submitted for recording
on the Closing Date.

 

3.1.8     Organizational Documents.  Borrower shall have delivered to Lender
copies of GEN’s, Operator’s and the Borrower’s Organizational Documents, and
resolutions authorizing the Loan and the Guaranty, certified by Borrower to be
true and complete and not revoked or amended since the respective dates thereof.

 

3.1.9     Intentionally Omitted.

 

3.1.10   Intentionally Omitted.

 

3.1.11   Intentionally Omitted.

 

3.1.12   Intentionally Omitted.

 

3.1.13     Licenses and Permits.  Borrower shall have delivered to Lender copies
of all required licenses, permits, consents, and approvals and other Government
Authorizations as may be needed to comply with all Legal Requirements and such
items shall be in full force and effect.

 

3.1.14   Financial Statements.  Borrower shall have delivered to Lender the
Financial Statements.

 

3.1.15   Damage and Destruction.  A substantial number of the Facilities shall
not have been substantially or materially damaged or destroyed, in whole or in
part, by fire or other casualty nor shall eminent domain proceedings have been
threatened or be pending with respect to a substantial number of the
Facilities.  For purposes hereof, a “substantial number” of Facilities shall be
a number of Facilities with an aggregate appraised value of $50,000,000 or more.

 

3.1.16   No Event of Default.  There shall be no uncured Event of Default under
this Agreement.

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3.1.17   Other Closing Requirements.  Borrower shall have satisfied all other
closing requirements of the Loan Documents.

 

ARTICLE 4: BORROWER’S REPRESENTATIONS AND WARRANTIES

 

Borrower hereby makes the following representations and warranties, as of the
Effective Date, to Lender and acknowledges that Lender is making the Loan in
reliance upon such representations and warranties.  Borrower’s representations
and warranties shall survive the Closing and, except as specifically provided
below, shall continue in full force and effect until Borrower has repaid the
Loan in full and performed all other obligations under the Loan Documents.

 

4.1     Organization and Good Standing.  Each Borrower is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Delaware and is qualified to do business in and is in good standing
under the laws of each state where a Facility owned by the applicable Borrower
is located.  Each Operator is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and is qualified to do business in and is in good standing under the laws of
each state where a Facility operated by the applicable Operator is located.  GEN
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware.

 

4.2     Power and Authority.  Borrower has the power and authority to execute,
deliver, and perform Borrower’s obligations under the Loan Documents and has
taken all requisite action to authorize the execution, delivery and performance
of Borrower’s obligations under such documents.

 

4.3     Enforceability.  The Loan Documents constitute valid and binding
obligations of Borrower or the Affiliate party thereto, enforceable in
accordance with their terms.  The Guaranty Documents constitute valid and
binding obligations of GEN and Operator, enforceable in accordance with their
terms.

 

4.4     No Violation.  The execution, delivery and performance of the Loan
Documents and Guaranty Documents and the consummation of the Transactions and
the transactions contemplated by the Loan Documents and Guaranty Documents
[i] do not conflict with and will not conflict with, and do not result and will
not result in a breach of Borrower’s Organizational Documents or the
organizational documents of GEN or Operator; [ii] do not conflict with and will
not conflict with, and do not result and will not result in a breach of, or
constitute or will constitute a default (or an event which, with or without
notice or lapse of time, or both, would constitute a default) under, or result
or will result in a creation of any lien or encumbrance (other than the lien of
the Mortgage and any liens granted to the Term Loan Lenders and ABL Loan Lenders
in compliance with the terms of the applicable Intercreditor Agreement) upon the
Facility under any of the terms, conditions or provisions of any agreement or
other instrument or obligation to which Borrower, Operator or GEN is a party or
by which its assets are bound; and [iii] do not violate and will not violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Borrower, Operator, GEN, or the Facility.

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4.5     No Litigation.  As of the Effective Date and except as disclosed on
Exhibit E, [i] (A) there are no actions, suits, proceedings or investigations by
any governmental agency or regulatory body pending against Borrower, Operator or
any Facility which, if determined adversely to Borrower or Operator, would
materially and adversely affect the applicable Facility or the financial
condition of the applicable Borrower or Operator and (B) no material actions,
suits, proceedings or investigations by any governmental agency or regulatory
body pending against GEN; [ii] Borrower has not received written notice of
[a] any threatened actions, suits or proceeding or investigations against
Borrower, Operator or any Facility which, if determined adversely to Borrower or
Operator, would materially and adversely affect the applicable Facility or the
financial condition of the applicable Borrower or Operator or [b] any threatened
material actions, suits or proceeding or investigations against GEN, in either
case at law or in equity, or before any governmental board, agency or authority
which, if determined adversely to GEN, would materially and adversely affect the
financial condition of GEN; [iii] there are no unsatisfied or outstanding
judgments against GEN the existence of which would reasonably be anticipated to
materially and adversely affect the financial condition of GEN; [iv] there is no
labor dispute materially and adversely affecting the operation or business
conducted by Borrower, Operator, GEN, or any Facility; and [v] Borrower does not
have actual knowledge of any facts or circumstances which would be reasonably
likely to form the basis for any such action, suit, or proceeding.

 

4.6     Financial Statements.  Borrower has furnished Lender with true, correct
and complete copies of the Financial Statements.  The Financial Statements
fairly present the financial position of Borrower, Operator and GEN as
applicable, as of the respective dates and the results of operations for the
periods then ended in conformance with generally accepted accounting principles
applied on a basis consistent with prior periods.  The Financial Statements are
true, complete and correct and, as of the Effective Date, no material adverse
change has occurred since the furnishing of such statements and information.  As
of the Effective Date, the Financial Statements and other information do not
contain any untrue statement or omission of a material fact and are not
misleading in any material respect.  Borrower, Operator and GEN are solvent, and
no bankruptcy, insolvency, or similar proceeding is pending or contemplated by
or against Borrower, Operator or GEN.

 

4.7     Reports and Statements.  All reports, statements, certificates and other
data furnished by or on behalf of Borrower, Operator or GEN to Lender in
connection with the Loan Documents or Guaranty Documents, or the transactions
contemplated thereunder, and all representations and warranties made therein, or
any certificate or other instrument delivered in connection therewith, are true
and correct in all material respects and do not omit to state any material fact
or circumstance necessary to make the statements contained therein, in light of
the circumstances under which they are made, not misleading as of the date of
such information, reports, statements or certificates.  The copies of all
agreements and instruments submitted to Lender are true, correct and complete
copies and include all amendments and modifications of such agreements.

 

4.8     Title to Land.  Borrower has good, insurable record fee simple title to
the Real Property, free and clear of any and all mortgages, liens, charges,
claims, collateral assignments, leases, attachments, levies, encroachments,
rights-of-way, equities, restrictions, assessments, and all other title matters
whatsoever except for the Permitted Liens.

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4.9     Parties in Possession.  Except (i) residents of the Facilities and
(ii) as disclosed on Exhibit B, there are no parties in possession of the
Facility or any material portion thereof as managers, lessees, tenants at
sufferance, or trespassers.

 

4.10     Intentionally Omitted.

 

4.11     Utilities.  There are available at the Land gas, municipal water, and
sanitary sewer lines, storm sewers, electrical and telephone services in
operating condition which are adequate for the current operation of the Facility
in all material respects. 

 

4.12     Condemnation and Assessments.  As of the Effective Date, Borrower has
not received notice of, and there are no pending or, to the best of Borrower’s
knowledge, threatened, condemnation, assessment or similar proceedings affecting
or relating to the Facility in any material manner.

 

4.13     Intentionally Omitted.

 

4.14     Government Authorizations.  The Facility is in compliance with all
Legal Requirements.  Except as otherwise noted on Exhibit C, GEN, Borrower or
Operator has obtained all Government Authorizations required to operate the
Facility for its Facility Uses (after giving effect to the Transactions) and all
such Government Authorizations are in full force and effect.  For any such
Government Authorizations that GEN, Borrower or Operator has not obtained as of
the Effective Date, if any, Borrower has filed, or has caused GEN or Operator to
file, all applications and reports and taken all necessary action to obtain such
Government Authorizations as soon as possible after the Effective Date, subject
to governmental approval, and Borrower has no knowledge of any fact or
circumstance that would prevent or delay Borrower’s obtaining of such Government
Authorizations.

 

4.15     Environmental Matters.  During the period of Borrower’s or GEN’s
ownership of the Facility and, except as may be set forth in any Environmental
Reports delivered to Lender by GEN or Borrower prior to the Effective Date, to
Borrower’s knowledge, for the period prior to Borrower’s or GEN’s ownership of
the Facility, [i] the Facility is in material compliance with all Environmental
Laws; [ii] there were no releases or threatened releases of Hazardous Materials
on, from, or under the Facility, except in compliance with all Environmental
Laws; [iii] no Hazardous Materials have been, are or will be used, generated,
stored, or disposed of at the Facility, except in compliance with all
Environmental Laws; [iv] asbestos has not been used and will not be used in the
construction of any Improvements; [v] no permit is or has been required from the
Environmental Protection Agency or any similar agency or department of any state
or local government for the use or maintenance of any Improvements;
[vi] underground storage tanks on or under the Real Property, if any, have been
and currently are being operated in material compliance with all applicable
Environmental Laws; [vii] any closure, abandonment in place or removal of an
underground storage tank on or from the Real Property was performed in material
compliance with applicable Environmental Laws and any such tank had no release
contaminating the Real Property or, if there had been a release, the release was
remediated in compliance with applicable Environmental Laws to the satisfaction
of regulatory authorities; [viii] no summons, citation or inquiry has been made
by any such environmental unit, body or agency or a third party demanding any
right of recovery for payment or reimbursement for costs incurred under CERCLA

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or any other Environmental Laws and the Land is not subject to the lien of any
such agency; and [ix] Borrower has no actual knowledge that any such
Environmental Report is not true, complete and accurate.  “Disposal” and
“release” shall have the meanings set forth in CERCLA.

 

 

4.16     No Default.  As of the Effective Date, [i] there is no existing Event
of Default by Borrower or any Affiliate under the Loan Documents or by GEN or
Operator under the Guaranty Documents; and [ii] no event has occurred which,
with the giving of notice or the passage of time, or both, would constitute or
result in such an Event of Default.

 

4.17     ERISA.  All plans (as defined in §4021(a) of the Employee Retirement
Income Security Act of 1974, as amended or supplemented from time to time
(“ERISA”)) for which Borrower is an “employer” or a “substantial employer” (as
defined in §§3(5) and 4001(a)(2) of ERISA, respectively) are in compliance with
ERISA and the regulations and published interpretations thereunder.  To the
extent Borrower maintains a qualified defined benefit pension plan:  [i] there
exists no accumulated funding deficiency; [ii] no reportable event and no
prohibited transaction has occurred; [iii] no lien has been filed or threatened
to be filed by the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA; and [iv] Borrower has not been deemed to be a
substantial employer as of the Effective Date.

 

4.18     Chief Executive Office.  Borrower maintains its chief executive office
and its books and records at the address set forth in the introductory paragraph
of this Agreement.  Borrower does not conduct any of its business or operations
other than at its chief executive office and at the Facility.

 

4.19     Other Name or Entities.  Except as disclosed herein, none of Borrower’s
or Operator’s business is conducted through any corporate subsidiary,
unincorporated association or other entity and neither Borrower nor Operator
has, within the six months preceding the date of this Agreement [i] changed its
name, or [ii] reconstituted its existence in a state other than its original
state of organization.

 

4.20     Tax Status.  If Borrower is a partnership or limited liability company,
Borrower is taxable as a partnership or disregarded as an entity separate from
its owner under the Internal Revenue Code and all applicable state tax laws.

 

ARTICLE 5: AFFIRMATIVE COVENANTS

 

5.1     Perform Obligations.  Borrower shall perform all its obligations under
the Loan Documents, the Government Authorizations, the Permitted Exceptions, all
Insurance Requirements, all Legal Requirements and all Leases, if any.

 

5.2     Indemnity.

 

5.2.1     Indemnification.  Borrower shall indemnify, save harmless and defend
Lender, any successors or assigns of Lender, and Lender’s and such successor’s
and assign’s directors, officers, employees and agents from and against any and
all liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses (including, without limitation, reasonable, actual and
documented out-of-pocket attorneys’ fees and court costs) imposed upon or
incurred by or asserted against Lender by reason of [i] ownership of a lender’s
interest in the

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Facility; [ii] any accident or injury to or death of persons or loss of or
damage to or loss of the use of property occurring on or about the Facility or
any part thereof or the adjoining sidewalks, curbs, vaults and vault spaces, if
any, streets, alleys or ways; [iii] any use, nonuse or condition of the Facility
or any part thereof or the adjoining sidewalks, curbs, vaults and vault spaces,
if any, streets, alleys or ways; [iv] performance of any labor or services or
the furnishing of any materials or other property in respect of the Facility or
any part thereof made or suffered to be made by or on behalf of GEN, Borrower,
Operator or any Affiliate; [v] any negligence or tortious act on the part of
GEN, Borrower, Operator or any of their respective agents, contractors, lessees,
licensees, or invitees; [vi] any work in connection with any alterations,
changes, new construction or demolition of the Facility; or [vii] the
consummation of the Loan and the execution and delivery of the Loan
Documents.  Borrower will pay and save Lender harmless against any and all
liability with respect to any intangible personal property tax or similar
imposition of the State or any subdivision or authority thereof now or hereafter
in effect, to the extent that the same may be payable by Lender in respect of
the Mortgage or the Secured Obligations.  All amounts payable to Lender under
this section shall be payable on written demand and shall be deemed indebtedness
secured by the Mortgage and any such amounts which are not paid within 10 days
after demand therefor by Lender shall bear interest at the Default Rate.  In
case any action, suit or proceeding is brought against GEN, Borrower, Operator
or any Affiliate by reason of any such occurrence, Borrower shall use its best
efforts to defend such action, suit or proceeding.

 

5.2.2     Notice of Claim.  Lender shall notify Borrower in writing of any claim
or action brought against Lender in which indemnity may be sought against
Borrower pursuant to this section.  Such notice shall be given in sufficient
time to allow Borrower to defend or participate in such claim or action, but the
failure to give such notice in sufficient time shall not constitute a defense
hereunder nor in any way impair the obligations of Borrower under this section
unless the failure to give such notice precludes Borrower’s defense of any such
action.

 

5.2.3     Survival of Covenants.  The covenants of Borrower contained in this
section shall remain in full force and effect after the termination of this
Agreement until the expiration of the period stated in the applicable statute of
limitations during which a claim or cause of action may be brought and payment
in full or the satisfaction of such claim or cause of action and of all expenses
and charges incurred by Lender relating to the enforcement of the provisions
herein specified.

 

5.2.4     Reimbursement of Expenses.  Unless prohibited by law, Borrower hereby
agrees to pay to Lender all of the reasonable fees, charges and reasonable
out-of-pocket expenses related to the Facility and requested by Lender or
required hereby, or incurred by Lender in enforcing the provisions of this
Agreement, which are not otherwise required to be paid by Borrower.

 

5.3     Environmental Indemnity; Audits.

 

5.3.1     Indemnification.  Borrower shall defend, indemnify and hold harmless
Lender, any successors to Lender’s interest in this Agreement or the other Loan
Documents, and Lender’s and such successors’ directors, officers, employees,
agents, and contractors from and against any losses, claims, damages, penalties,
fines, liabilities, costs (including cleanup and recovery costs), and expenses
(including expenses of litigation and reasonable, actual and

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documented out-of-pocket consultants’ and attorneys’ fees) incurred by Lender or
other indemnitee or assessed against the Facility by virtue of any claim or lien
by any governmental or quasi-governmental unit, body, or agency, or any third
party for clean-up costs or other costs pursuant to CERCLA or any other
Environmental Law.  Borrower’s indemnity shall survive the termination of this
Agreement; provided,  however, Borrower shall have no indemnity obligation with
respect to [i] Hazardous Materials that are first introduced to the Facility
subsequent to the date that GEN’s, Borrower’s or any Affiliate’s legal and
equitable ownership and occupancy of the Facility shall have fully terminated;
or [ii] Hazardous Materials introduced to the Facility by Lender, its successors
or assigns.

 

5.3.2     Audits.  If at any time during the term of the Loan any governmental
authority notifies Borrower of a violation of Environmental Laws or Lender
reasonably believes that a Facility may violate Environmental Laws, Lender may
require one or more additional environmental audits of the Facility by a
qualified environmental consultant in such form, scope and substance as
specified by Lender, at Borrower’s expense.

 

5.4     Mechanic’s Liens.  Borrower shall not suffer or permit any mechanic’s,
materialmen or construction lien claims to be filed or otherwise asserted
against the Facility and will promptly discharge the same in case of the filing
of any lien claims or proceedings for the enforcement thereof; provided,
 however, that Borrower shall have the right to contest in good faith and with
due diligence the validity of any such lien or claim.  If Borrower shall fail
promptly either to discharge or to contest claims asserted, then Lender may, at
its election (but shall not be required to), procure the release and discharge
of any such claim and any judgment or decree thereon and may in its sole
discretion effect any settlement or compromise of the same, and any amounts so
expended by Lender, including premiums paid or security furnished in connection
with the issuance of any surety company bonds, shall be deemed to be an
advance.  In settling, compromising, or discharging any claims or liens, Lender
shall not be required to inquire into the validity or amount of any such claim
and shall have no liability for its actions in connection therewith.

 

5.5     Personal Property.  All of the Personal Property will be kept free and
clear of all mortgages, conditional vendor’s liens, equipment leases and all
liens, encumbrances, and security interests whatsoever, except for the Permitted
Liens.  Borrower shall, from time to time upon Lender’s reasonable request,
furnish Lender with satisfactory evidence of the foregoing, including searches
of applicable public records.  Upon Lender’s request and subject to the terms of
the Intercreditor Agreement, Borrower shall execute and deliver a security
agreement, control agreements, financing statements and other related
instruments to evidence and perfect Lender’s security interest in the Personal
Property.  If Borrower fails to execute any such instrument pursuant to Lender’s
request, Lender may execute such instrument as Borrower’s or such entity’s
attorney-in-fact pursuant to the power of attorney made by Borrower in the
Mortgage. Each Borrower hereby authorizes Lender to file financing statements in
any jurisdictions and with such filing offices as Lender determines, in its sole
discretion, is necessary or advisable to perfect the security interest granted
by any Borrower to Lender in any agreement (including without limitation, the
Mortgages). Any such financing statement may indicate the collateral as “all
assets of the debtor, whether now owned or hereafter acquired”, “all personal
property of the debtor, whether now owned or

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hereafter acquired”, “all assets of the debtor, whether now owned or hereafter
acquired, including without limitation goods that are or are to become fixtures
located on the real property described in Exhibit A hereto” or words of similar
effect and/or meaning.

 

5.6     Proceedings to Enjoin or Prevent Use.  If any proceedings are filed
seeking to enjoin or otherwise prevent or declare invalid or unlawful occupancy,
maintenance, or operation of the Improvements or any portion thereof, Borrower
will cause such proceedings to be vigorously contested in good faith, and in the
event of an adverse ruling or decision, prosecute all allowable appeals
therefrom, and will, without limiting the generality of the foregoing, resist
the entry or seek the stay of any temporary or permanent injunction that may be
entered, and use its best efforts to bring about a favorable and speedy
disposition of all such proceedings and any other proceedings.

 

5.7     Documents and Information.

 

5.7.1     Furnish Documents.  Borrower shall periodically during the term of the
Loan deliver to Lender the Annual Financial Statements, Periodic Financial
Statements, Anti-Corruption and Anti-Terrorism Certificate and other documents
described on Exhibit F within the specified time periods.  With each delivery of
Annual Financial Statements and Periodic Financial Statements to Lender,
Borrower shall also deliver to Lender a certificate signed by the Chief
Financial Officer, general partner or managing member (as applicable) of
Borrower, an Annual Facility Financial Report or Quarterly Facility Financial
Report, as applicable, and a Quarterly Facility Accounts Receivable Aging Report
all in the form of Exhibit G.  In addition, Borrower shall deliver to Lender the
Annual Facility Financial Report and a Quarterly Facility Accounts Receivable
Aging Report (based upon internal financial statements) within 60 days after the
end of each fiscal year.

 

5.7.2     Furnish Information.  Borrower shall, and shall cause Operator and GEN
to, [i] promptly supply Lender with such information concerning their respective
financial condition, affairs and property, as Lender may reasonably request from
time to time hereafter, including reporting formats used by Lender and
electronic filing and transfer; [ii] promptly notify Lender in writing of any
condition or event that constitutes a breach or event of default of any term,
condition, warranty, representation, or provisions of any Loan Document or any
Guaranty Document or any other material agreement, and of any material adverse
change in its financial condition; [iii] maintain a standard and modern system
of accounting; [iv] permit Lender or any of its agents or representatives to
have access to and to examine all of its books and records regarding the
financial condition of the Facility at any time or times hereafter during
business hours; and [v] permit Lender to copy and make abstracts from any and
all of said books and records.

 

5.7.3     Further Assurances and Information.  Borrower shall, and shall cause
Operator, GEN or any Affiliate to, on request of Lender from time to time,
execute, deliver, and furnish documents as may be necessary to fully consummate
the transactions contemplated under this Agreement.  Within 15 days after a
request from Lender, Borrower shall provide to Lender such additional
information regarding Borrower, GEN or Operator, or Borrower’s, GEN’s or
Operator’s financial condition or the Facility as Lender, or any existing or
proposed creditor of Lender, or any auditor or underwriter of Lender, may
require from time to time, including, without limitation, a current Borrower’s
Certificate and Facility Financial Report in the form of Exhibit G.

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Upon Lender’s reasonable request but not more than once every three years,
Borrower shall provide to Lender, at Borrower’s expense, an appraisal prepared
by an MAI appraiser setting forth the current fair market value of each
Facility.

 

5.7.4     Material Communications.  Borrower shall transmit to Lender, within
five business days after receipt thereof, any material communication affecting a
Facility, the Loan Documents, the Legal Requirements or the Government
Authorizations, and Borrower will promptly respond to Lender’s inquiry with
respect to such information.  Borrower shall promptly notify Lender in writing
of any potential, threatened or existing material litigation or proceeding
against, or investigation of, Borrower, GEN, Operator or the Facility and of
which each such entity has knowledge that if adversely determined could
reasonably be expected to adversely affect the right to operate the Facility for
its current use or title to the Facility or Lender’s interest therein.

 

5.7.5     Requirements for Financial Statements.  Borrower shall, and shall
cause GEN and, to the extent applicable, Operator to, meet the following
requirements in connection with the preparation of the financial
statements:  [i] all audited financial statements shall be prepared in
accordance with generally accepted accounting principles consistently applied;
[ii] all unaudited financial statements shall be prepared in a manner
substantially consistent with prior audited and unaudited financial statements
submitted to Lender; [iii] all financial statements shall fairly present the
financial condition and performance for the relevant period in all material
respects; [iv] the financial statements shall include all notes to the financial
statements and a complete schedule of material contingent liabilities and
transactions with Affiliates; and [v] the audited financial statements shall
contain an unqualified opinion.

 

5.8     Compliance With Laws.  Borrower shall comply with all material Legal
Requirements and keep all material Government Authorizations in full force and
effect.  Borrower, Operator or GEN, as applicable, shall pay when due all taxes
and governmental charges of every kind and nature that are assessed or imposed
upon Borrower, Operator or GEN at any time during the term of the Loan,
including, without limitation, all income, franchise, capital stock, property,
sales and use, business, intangible, employee withholding, and all taxes and
charges relating to Borrower’s, Operator’s or GEN’s business and operations.

 

5.9     Broker’s Commission.  Borrower shall indemnify Lender from claims of
brokers arising by the execution hereof or the consummation of the transactions
contemplated hereby and from expenses incurred by Lender in connection with any
such claims (including attorneys’ fees).

 

5.10     Existence and Change in Ownership.  Borrower shall, and shall cause
Operator and GEN to, maintain its existence throughout the term of this
Agreement.  Borrower shall not, and shall cause Company, Operator, GEN and their
Affiliates to not, effectuate a Restricted Transfer without Lender’s prior
written consent, which consent may be withheld in Lender’s sole discretion. 

 

5.11     Financial Covenants.  The following financial covenants shall be met
throughout the term of the Loan:  Subject to the provisions of Exhibit U,
Sections U.1, U.6 and U.7 of the Master Lease, Borrower shall cause Company and
GEN to comply with the obligations set forth in Exhibit U, Sections U.2 (other
than those set forth in Section U.2(b)), U.3, U.4 and U.5 of the Master Lease.

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5.12     Transfer of License.  If Borrower or Operator ceases to operate any
Facility for any reason or if Lender or any transferee or purchaser acquires
title to a Facility (whether pursuant to foreclosure, deed in lieu of
foreclosure or otherwise), Borrower shall, and shall cause Operator to, execute,
deliver and file all documents and statements requested by Lender or such other
party to effect the transfer of the Facility license and Government
Authorizations to such party, subject to any required approval of governmental
regulatory authorities, and Borrower shall provide to Lender or such other party
all information and records required in connection with the transfer of the
license and Government Authorizations.

 

5.13     Deposit Accounts.  From time to time, upon Lender’s request, Borrower
shall provide to Lender a true and correct listing of all deposit accounts of
Borrower, in such detail as Lender may reasonably require, including the
applicable depository institutions and account numbers.

 

5.14     Compliance with Anti-Terrorism Laws.  Borrower shall immediately notify
Lender if Borrower has knowledge that Borrower or any Affiliate becomes a
Blocked Person or is otherwise listed on any OFAC List or [i] is convicted with
respect to, [ii] pleads nolo contendere to, [iii] is indicted with respect to,
or [iv] is arraigned and held over on charges involving, money laundering,
predicate crimes to money laundering or any Anti-Terrorism Law.  Borrower will
not, directly or indirectly, nor allow any Affiliate to, directly or indirectly,
[a] conduct any business, or engage in any transaction or dealing, with any
Blocked Person, including, without limitation, the making or receiving of any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, [b] deal in, or otherwise engage in any transaction relating to, any
property or interests in property blocked pursuant to any Anti-Terrorism Law, or
[c] engage in or conspire to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.  In addition, Borrower hereby
agrees to provide Lender with any additional information that Lender deems
necessary from time to time in order to ensure compliance with the
Anti-Terrorism Laws.

 

5.15     Compliance with Anti-Corruption Laws. 

 

5.15.1  Borrower agrees that, should it learn or have reason to know of: [i] any
payment, offer or agreement to make a payment by Borrower or any Affiliate to a
Government Related Person for the purpose of obtaining or retaining business,
securing any improper advantage or influencing a person to misuse his or her
position, [ii] any other payment, offer, agreement to make or receive or receipt
of a payment by Borrower or any Affiliate that would constitute a violation of
applicable Anti-Corruption Laws; or [iii] any other development during the term
of the Loan that in any way makes inaccurate or incomplete the representations,
warranties and certifications of Borrower hereunder given or made as of the
Effective Date or at any time during the term, Borrower will immediately advise
Lender in writing of such knowledge or suspicion and the entire basis known to
Borrower therefor.

 

5.15.2  Upon a good faith basis and written notification to Borrower, Lender, at
Lender’s expense, may conduct an investigation and audit of Borrower’s books,
records and accounts to verify compliance with §§5.14, 5.15, 6.11 and
6.12.  Borrower agrees to cooperate fully with such investigation, the scope,
method, nature and duration of which shall be at the reasonable discretion of
Lender.  Borrower agrees that it will provide annually to Lender the Anti-

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Corruption and Anti-Terrorism Certificate, with such certificate to be delivered
with the Annual Financial Statements in accordance with §15.3.1.

 

ARTICLE 6: NEGATIVE COVENANTS

 

Until the Secured Obligations shall have been performed in full, Borrower
covenants and agrees that Borrower (and GEN or Operator where applicable) shall
not do any of the following without the prior written consent of Lender:

 

6.1     No Debt. Borrower shall not, and shall not allow Operator to, create,
incur, assume, or permit to exist any indebtedness other than [i] trade debt
incurred in the ordinary course of Borrower’s or Operator’s business; and
[ii] indebtedness that is secured by any Permitted Lien.

 

6.2     No Liens.  Borrower shall not, and shall not allow Operator to, create,
incur, or permit to exist [i] any lien, charge, encumbrance, easement or
restriction upon the Facility, the Property (as defined in the Mortgage), or any
other asset owned directly by Borrower or Operator (including any of their
deposit accounts [as “deposit account” is defined for purposes of Article 9]) or
[ii] any lien upon or pledge of any interest in Borrower or Operator, except, in
either case, for Permitted Liens.

 

6.3     No Guaranties.  Except with respect to the Operator Guaranty and any
indebtedness under the ABL Loan Agreement and the Term Loan Agreement incurred
in compliance with the Intercreditor Agreement, Borrower shall not, and shall
not allow Operator to, create, incur, assume, or permit to exist any guarantee
of any loan or other indebtedness except for the endorsement of negotiable
instruments for collection in the ordinary course of business.

 

6.4     No Transfer of Facility.  Borrower shall not sell, lease, mortgage,
convey or otherwise transfer any legal or equitable interest in the Facility
except for transfers made in connection with any Permitted Lien. Notwithstanding
the foregoing, Borrower may convey one or more of the Facilities to newly
created Persons that become borrowers under this Agreement (each such Person, a
“New Borrower”), provided that [i] each such New Borrower shall be 100% owned,
directly or indirectly, by GEN or an Affiliate of GEN and [ii] each such New
Borrower will execute an assumption agreement in form reasonably satisfactory to
Lender, New Borrower and GEN. In addition, Lender shall not unreasonably
withhold its consent to the disposition of any Facility if [a] such disposition
is on commercially reasonable terms and [b] the net proceeds of such disposition
are applied to a partial prepayment of the Loan Amount. 

 

6.5     No Dissolution.  Subject to Section 5.10, Borrower shall not, and shall
not allow GEN or Operator to, dissolve, liquidate, merge, consolidate or
terminate its existence or sell, assign, lease, or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired).

 

6.6     No Change in Management or Operation.  Except with respect to the TX
Properties, GEN or its subsidiary shall remain the licensed operator of each
Facility.

 

6.7     Changes to Licensed Beds.  Borrower agrees that, except as expressly
otherwise set forth herein, [i] the net number of beds licensed at any
individual Facility may not be reduced by more than fifteen percent (15%) of the
number of beds licensed at such Facility as of the Effective

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Date; [ii] the aggregate number of beds licensed at the Facilities, taken as a
whole, may not be reduced by more than five percent (5%) of the number of beds
licensed at the Facilities, taken as a whole as of the Effective Date, [iii] the
aggregate number of skilled nursing facility beds licensed at the Facilities,
taken as a whole, may not be reduced by more than five percent (5%) of the
number of skilled nursing facility beds licensed at the Facilities, taken as a
whole as of the Effective Date (each such limitation, a “Bed Cap”).  To
determine the number of beds being licensed and Borrower’s compliance with each
Bed Cap, [a] increases in the number of skilled nursing facility beds being
licensed at any Facility shall offset any decreases in the number of skilled
nursing facility beds licensed, [b] increases in the number of beds (other than
skilled nursing facility beds) licensed at any Facility shall offset any
decreases in the number of beds (other than skilled nursing facility beds)
licensed, and [c] temporary de-licensed beds and the number of licensed beds
reduced as a result of (I) the disposition of any Facility as may be allowed
hereunder, (II) the closure of a Facility expressly consented to by Lender,
(III) a temporary loss resulting from a Casualty or Condemnation as anticipated
by the Mortgage, shall not be treated as lost beds in determining whether the
Bed Cap has been breached. 

 

6.8     Contracts.  Borrower shall not execute or modify any material contracts
or agreements with respect to the Facility or any Lease.  Contracts made in the
ordinary course of business and in an amount less than $2,000,000.00 shall not
be considered “material” for purposes of this paragraph.

 

6.9     Subordination of Payments to Affiliates.  After the occurrence of an
Event of Default and until such Event of Default is cured, Borrower shall not,
and shall not allow Operator to, make any payments or distributions (including,
without limitation, salary, bonuses, fees, principal, interest, dividends,
liquidating distributions, management fees, cash flow distributions or lease
payments) to GEN, any Affiliate or any shareholder, member or partner of
Borrower, Operator, GEN, or any Affiliate.

 

6.10     Change of Location or Name.  Borrower shall not, and shall not allow
Operator to, change any of the following:  [i] the location of its principal
place of business or chief executive office, or of any office where any of its
books and records are maintained; or [ii] the name under which it conducts any
of its business or operations.

 

6.11     Anti-Terrorism Laws.  None of Borrower, Operator, GEN nor any Affiliate
is now, or shall be at any time hereafter, a Blocked Person, whether such
restriction arises under United States law, regulation, executive orders and
OFAC Lists, and neither Borrower, Operator, GEN nor any Affiliate is engaging,
or shall engage, in any dealings or transactions with, or shall otherwise be
associated with, any Blocked Person.  Borrower, Operator and GEN shall not at
any time be in violation of any laws or regulations relating to terrorism, money
laundering or similar activities, including, without limitation, Anti-Terrorism
Laws.

 

6.12     Anti-Corruption Laws.  Borrower covenants and agrees that neither it
nor any of its Affiliates has, and covenants and agrees that it will not, and
will not allow its Affiliates to, in connection with the transactions
contemplated by this Agreement or in connection with any other business
transactions involving Lender or Welltower Inc., authorize, make, offer, promise
to make, request, agree to accept, or accept, any payment or transfer anything
of value, directly or indirectly, [i] to secure an improper advantage or
illegitimate or unjust benefit, or to influence a person to

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misuse his or her position or [ii] that is otherwise illegal under any
applicable Anti-Corruption Laws.  It is the intent of the parties hereto that no
payment or transfer of value shall be made which has the purpose or effect of
public or commercial bribery; acceptance of or acquiescence in extortion,
kickbacks, or other unlawful or improper means of obtaining or retaining
business; securing an improper advantage or illegitimate or unjust benefit; or
influencing a person to misuse his or her position.    

 

ARTICLE 7: DEFAULT AND REMEDIES

 

7.1     Event of Default.  Any one or more of the following events shall
constitute an “Event of Default” hereunder without any advance notice to
Borrower unless specified herein:

 

7.1.1     Borrower fails to pay any installment on the Note or any other
monetary obligation payable by Borrower under the Loan Documents within 10 days
after such payment is due.

 

7.1.2     Borrower, GEN or Operator (where applicable) fails to comply with any
covenant set forth in §5.10, §5.11 or Article 6 of this Agreement.

 

7.1.3     Borrower fails to observe and perform any other covenant, condition or
agreement under the Loan Documents to be performed by Borrower and
[i] continuance of such failure for a period of 30 days after written notice
thereof is given to the Borrower by the Lender; or [ii] if, by reason of the
nature of such default the same cannot be remedied within the said 30 days,
Borrower fails to proceed with reasonable diligence (reasonably satisfactory to
Lender) after receipt of the notice to cure the same or, in any event, fails to
cure such default within 60 days after receipt of the notice.  The foregoing
notice and cure provisions do not apply to any Event of Default otherwise
specifically described in any other subsection of §7.1.

 

7.1.4     [i] The filing by Borrower, Operator or GEN of a petition under
11 U.S.C. or the commencement of a bankruptcy or similar proceeding by it;
[ii] the failure by Borrower, Operator or GEN within 60 days to dismiss any
involuntary bankruptcy petition or other commencement of a bankruptcy,
reorganization or similar proceeding against it or to lift or stay any
execution, garnishment or attachment of the Facility; [iii] the entry of an
order for relief under 11 U.S.C. in respect of Borrower, Operator or GEN;
[iv] assignment by Borrower, Operator or GEN for the benefit of its creditors;
[v] the entry by Borrower, Operator or GEN into an agreement of composition with
its creditors; [vi] the approval by a court of competent jurisdiction of a
petition applicable to Borrower, Operator or GEN in any proceeding for its
reorganization instituted under the provisions of any state or federal
bankruptcy, insolvency, or similar laws; or [vii] appointment by final order,
judgment or decree of a court of competent jurisdiction of a receiver of the
whole or any substantial part of the properties of Borrower, Operator or GEN
(provided such receiver shall not have been removed or discharged within 60 days
of the date of his qualification).

 

7.1.5     [i] Any receiver, administrator, custodian or other person takes
possession or control of all or part of the Facility and continues in possession
for 60 days; [ii] any writ against all or part of the Facility is not released
within 60 days; [iii] any judgment is rendered or proceedings are instituted
against all or part of the Facility or Borrower, Operator or GEN which affect
all or part of the Facility and which is undismissed for 60 days (except as
otherwise provided

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in this section); [iv] all or a substantial part of the assets of Borrower,
Operator or GEN are attached, seized, subjected to a writ or distress warrant,
or are levied upon, or come into the possession of any receiver, trustee,
custodian, or assignee for the benefit of creditors and are not released within
60 days; [v] Borrower, Operator or GEN is enjoined, restrained, or in any way
prevented by court order, or any proceeding is filed or commenced seeking to
enjoin, restrain, or in any way prevent it from conducting all or a substantial
part of its business or affairs and such proceeding is not released within
60 days; or [vi] if a notice of lien, levy, or assessment is filed of record
with respect to all or any part of the property of Borrower, Operator or GEN and
is not dismissed within 30 days.

 

7.1.6     Any representation or warranty made by Borrower, Operator or GEN in
the Loan Documents, Guaranty Documents, any guaranty of or other security for
the Secured Obligations, or any report, certificate, application, financial
statement or other instrument furnished by Borrower, Operator or GEN pursuant
hereto or thereto shall prove to be false, misleading or incorrect in any
material respect as of the date made.

 

7.1.7     The Bed Cap is breached, taking into account any reduction resulting
from the loss of a Facility that Borrower closes in its discretion, but
excluding any reductions associated with a casualty or condemnation of any
Facility, provided that a breach of subclause (i) of the definition of Bed Cap
shall not constitute an Event of Default unless such breach concurrently affects
a “substantial number” of Facilities. A “substantial number” of Facilities shall
be a number of Facilities with an aggregate appraised value, as of the date
hereof, of $50,000,000 or more.

 

7.1.8     Borrower, Operator, GEN or any Affiliate defaults on any indebtedness
or obligation to Lender or any Lender Affiliate, any agreement with Lender or
any Lender Affiliate or any Affiliate Obligation, or Borrower, Operator or GEN
defaults on any Material Obligation, and any applicable grace or cure period
with respect to default under such indebtedness, obligation or agreement expires
without such default having been cured.  This provision applies to all such
indebtedness, obligations and agreements as they may be amended, modified,
extended, or renewed from time to time.

 

7.2     Remedies on Default.  Upon the occurrence of an Event of Default under
this Agreement or any Loan Document, and at any time thereafter until Lender
waives the default in writing or acknowledges cure of the default in writing, at
Lender’s option, without declaration, notice of nonperformance, protest, notice
of protest, notice of default, or any other notice or demand of any kind, Lender
may, in addition to any other remedies under the Loan Documents, at law or in
equity, exercise any one or more of the following remedies concurrently or
successively:

 

7.2.1     Acceleration.  Lender may declare the Secured Obligations to be
immediately due and payable, without presentment of any kind, demand, notice of
dishonor, protest, or other notice of any kind, all of which Borrower hereby
waives.

 

7.2.2     Other Remedies.  Lender may take whatever action at law or in equity
as may appear necessary or desirable to collect any monies then due and/or
thereafter to become due, or to enforce performance of the Secured Obligations.

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7.2.3     Waiver.  Without waiving any prior or subsequent Event of Default,
Lender may waive any Event of Default or, with or without waiving any Event of
Default, remedy any default.

 

7.2.4     Terminate Disbursement.  Lender may terminate its obligation, if any,
to disburse Loan proceeds.

 

7.3     Borrower Waivers.  Borrower waives [i] any right to a trial by jury in
any action or proceeding arising out of or relating to this Agreement; [ii] any
objections, defenses, claims or rights with respect to the exercise by Lender of
any rights or remedies; [iii] all presentments, demands for performance, notices
of performance, protest, notice of protest, notices of dishonor and other notice
or demand of any kind; and [iv] all notices of the existence, creation or
incurring of any obligation or advance under this Agreement before or after this
date.

 

ARTICLE 8: MISCELLANEOUS

 

8.1     Advances by Lender.  At any time and from time to time, Lender may incur
and/or pay and/or advance costs or expenses:  [i] which Lender is authorized or
has the right (but not necessarily the obligation) to incur or may incur under
any Loan Document or any law; [ii] in exercising any right or remedy provided
under any Loan Document or in taking any action which Lender is authorized to
take under any Loan Document; [iii] which are required to be paid by Borrower
under any Loan Document, but which Borrower fails to pay upon demand; or
[iv] from which Borrower is required to hold Lender harmless under any Loan
Document, but from which Borrower fails to hold Lender harmless.  Any costs,
expenses, or advances incurred or paid by Lender shall become part of the Loan
and, upon demand, shall be paid to Lender together with interest thereon at the
Default Rate from the date of disbursement by Lender.  Payment of such costs,
expenses, or advances shall be secured by the Mortgage.

 

8.2     Intentionally Omitted.

 

8.3     Construction of Rights and Remedies and Waiver of Notice and Consent.

 

8.3.1     Applicability.  The provisions of this §8.3 shall apply to all rights
and remedies provided by any Loan Document or by law or equity.

 

8.3.2     Waiver of Notices and Consent to Remedies.  Unless otherwise expressly
provided herein, any right or remedy may be pursued without notice to or further
consent of Borrower, both of which Borrower waives.

 

8.3.3     Cumulative Rights.  Each right or remedy under the Loan Documents is
distinct from but cumulative to each other right or remedy and may be exercised
independently of, concurrently with, or successively to any other rights and
remedies.

 

8.3.4     Extension or Modification of Loan.  No extension of time for or
modification of amortization of the Loan shall release the liability or bar the
availability of any right or remedy against Borrower or any successor in
interest, and Lender shall not be required to commence proceedings against
Borrower or any successor or to extend time for payment or

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otherwise to modify amortization of the Loan secured by this Agreement by reason
of any demand by Borrower or any successor.

 

8.3.5     Right to Select Security.  Lender has the right to proceed at its
election against all security or against any item or items of such security from
time to time, and no action against any item or items of security shall bar
subsequent actions against any item or items of security.

 

8.3.6     Forbearance Not a Waiver.  No forbearance in exercising any right or
remedy shall operate as a waiver thereof; no forbearance in exercising any right
or remedy on any one or more occasion shall operate as a waiver thereof on any
further occasion; and no single or partial exercise of any right or remedy shall
preclude any other exercise thereof or the exercise of any other right or
remedy.

 

8.3.7     No Waiver.  Failure by Lender to insist upon the strict performance of
any of the covenants and agreements herein set forth or to exercise any rights
or remedies upon default by Borrower hereunder shall not be considered or taken
as a waiver or relinquishment for the future of the right to insist upon and to
enforce by mandamus or other appropriate legal or equitable remedy strict
compliance by Borrower with all of the covenants and conditions hereof, or of
the rights to exercise any such rights or remedies, if such default by Borrower
is continued or repeated, or of the right to recover possession of the Facility
by reason thereof.  To the extent permitted by law, any two or more of such
rights or remedies may be exercised at the same time.

 

8.3.8     No Continuing Waivers.  If any covenant or agreement contained in the
Loan Documents is breached by Borrower and thereafter waived by Lender, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.  No waiver shall be binding unless
it is in writing and signed by Lender.  No course of dealing between Lender and
Borrower, nor any delay nor omission on the part of Lender in exercising any
rights under the Loan Documents, shall operate as a waiver.

 

8.3.9     Approval Not a Waiver.  Lender’s review and approval of any contracts
relating to a Facility shall not constitute a waiver by Lender of any of the
terms or requirements of the Loan Documents which may conflict with any
provision of any such contracts.

 

8.3.10     No Release.  Borrower and any other person now or hereafter obligated
for the payment or performance of all or any part of the Note shall not be
released from paying and performing under the Note, and the lien of the Mortgage
shall not be affected by reason of [i] the failure of Lender to comply with any
request of Borrower (or of any other person so obligated), to take action to
foreclose the Mortgage or otherwise enforce any of the provisions of the
Mortgage or of any of the Secured Obligations, or [ii] the release, regardless
of consideration, of the obligations of any person liable for payment or
performance of the Note, or any part thereof, or [iii] any agreement or
stipulation extending the time of payment or modifying the terms of the Note,
and in the event of such agreement or stipulation, Borrower and all such other
persons shall continue to be liable under such documents, as amended by such
agreement or stipulation, unless expressly released and discharged in writing by
Lender.

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8.3.11     Waiver of Homestead, Appraisal and Exemption.  Borrower, for itself
and its successors and assigns, hereby irrevocably waives and releases, to the
extent permitted by law, and whether now or hereafter in force, [i] the benefit
of any and all valuation and appraisement laws, [ii] any right of redemption
after the date of any sale of the Facility upon foreclosure, whether statutory
or otherwise, in respect of the Facility, [iii] any applicable homestead or
dower laws, and [iv] all exemption laws whatsoever and all moratoriums,
extensions or stay laws or rules, or orders of court in the nature of any one or
more of them.

 

8.4     Assignment.

 

8.4.1     Assignment by Lender.  Lender may assign, negotiate, pledge, or
transfer this Agreement, the Note, the Mortgage, and all other Loan Documents to
any creditors to secure a loan from such creditors to Lender and, in case of
such assignment, the rights and remedies of Lender shall be enforceable against
Borrower by such creditors with the same force and effect and to the same extent
as the same would have been enforceable by Lender but for such
assignment.  Lender shall have the right to sell participation interests in the
Loan provided that Lender shall be designated the agent for all participants in
the Loan.

 

8.4.2     Assignment by Borrower.  Borrower shall not assign or attempt to
assign its rights nor delegate its obligations under this Agreement.

 

8.5     Notices.  All notices, demands, requests, and consents (hereinafter
“notices”) given pursuant to the terms of this Agreement shall be in writing,
shall be addressed to the addresses set forth in the introductory paragraph of
this Agreement and shall be served by [i] personal delivery; [ii] United States
mail, postage prepaid; or [iii] nationally recognized overnight courier.  All
notices shall be deemed to be given upon the earlier of actual receipt or three
days after deposit in the United States mail or one business day after deposit
with the overnight courier.  Any notices meeting the requirements of this
section shall be effective, regardless of whether or not actually
received.  Lender and Borrower may change their notice address at any time by
giving the other party notice of such change.

 

8.6     Entire Agreement.  This Agreement and the other Loan Documents
constitute the entire agreement between Borrower and Lender.  No
representations, warranties, and agreements have been made by Lender except as
set forth in this Agreement. 

 

8.7     Severability.  If any term or provision of this Agreement is held or
deemed by Lender to be invalid or unenforceable, such holding shall not affect
the remainder of this Agreement and the same shall remain in full force and
effect.

 

8.8     Captions and Headings.  The captions and headings are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope of this Agreement or the intent of any provision thereof.

 

8.9     Governing Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State, without giving effect to the
conflict of laws rules thereof.

 

8.10     Binding Effect.  This Agreement will be binding upon and inure to the
benefit of the heirs, successors, personal representatives, and permitted
assigns of Lender and Borrower.

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8.11     Modification.  This Agreement may only be modified by a writing signed
by both Lender and Borrower.  All references to this Agreement, whether in this
Agreement or in any other document or instrument, shall be deemed to incorporate
all amendments, modifications, and renewals of this Agreement made after the
date hereof.  If Borrower requests Lender’s consent to any change in ownership,
merger or consolidation of Borrower, Operator or GEN, any assumption of the
Loan, or any modification of the Loan Documents to the extent such consent is
required hereunder, Borrower shall provide Lender all relevant information and
documents sufficient to enable Lender to evaluate the request.  In connection
with any request for the assumption of the Loan, Borrower shall pay to Lender a
fee in the amount of one percent of the then current principal outstanding
balance of the Loan.  In addition, in connection with any request for the
assumption of or modification to the Loan, Borrower shall pay all of Lender’s
reasonable attorney’s fees and expenses and other reasonable out-of-pocket
expenses incurred in connection with Lender’s evaluation of Borrower’s request,
the preparation of any documents and amendments, the subsequent amendment of any
documents between Lender and its collateral pool lenders (if applicable), and
all related matters.

 

8.12     Construction of Agreement.  This Agreement has been prepared by Lender
and its professional advisors and reviewed by Borrower and its professional
advisors.  Lender, Borrower and their advisors believe that this Agreement is
the product of all their efforts, it expresses their agreement, and that it
shall not be interpreted in favor of either Lender or Borrower or against either
Lender or Borrower merely because of their efforts in preparing it.

 

8.13     Counterparts.  This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original hereof.

 

8.14     No Third-Party Beneficiary Rights.  No person not a party to this
Agreement shall have or enjoy any rights hereunder and all third-party
beneficiary rights are expressly negated.  Without limiting the generality of
the foregoing, no one other than Borrower shall have any rights to obtain or
compel a disbursement of proceeds of the Loan hereunder.

 

8.15     Lender’s Authority to Furnish Copies of Loan Documents.  Lender may
exhibit or furnish the Loan Documents or copies thereof to any potential
transferee of the Secured Obligations (whether such transfer is absolute or
collateral), to any governmental or regulatory authority in connection with any
legal, administrative or regulatory proceedings requiring the disclosure of the
terms of the Loan Documents, to Lender’s attorneys, auditors and underwriters,
and to any other person or entity for which there is a legitimate business
purpose for such disclosure.

 

8.16     Permitted Contests.  Borrower, on its own or on Lender’s behalf (or in
Lender’s name), but at Borrower’s expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition (as defined in
the Mortgage) or any Legal Requirement or Insurance Requirement or any lien,
attachment, levy, encumbrance, charge or claim provided that [i] in the case of
an unpaid Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Lender and from the Facility; [ii] the Facility or any part thereof
or interest therein would not be in any immediate danger of being sold,
forfeited, attached or lost; [iii] in the case of a Legal Requirement, Lender

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would not be in any immediate danger of civil or criminal liability for failure
to comply therewith pending the outcome of such proceedings; [iv] in the case of
a mechanic’s or materialmen lien, the requirements of §5.4 shall be satisfied;
and [v] if such contest be finally resolved against Lender or Borrower, Borrower
shall promptly pay the amount required to be paid, together with all interest
and penalties accrued thereon, or comply with the applicable Legal Requirement
or Insurance Requirement.  Lender, at Borrower’s expense, shall execute and
deliver to Borrower such authorizations and other documents as may reasonably be
required in any such contest, and, if reasonably requested by Borrower or if
Lender so desires, Lender shall join as a party therein.  Borrower shall
indemnify and save Lender harmless against any liability, cost or expense of any
kind that may be imposed upon Lender in connection with any such contest and any
loss resulting therefrom.

 

8.17     Priority of Lien. It is the intent of the parties to this Agreement,
and Borrower confirms, acknowledges and agrees, that the liens granted in favor
of Lender under the Original Loan Agreement and each other Loan Document (as
defined in the Original Loan Agreement) (the “Existing Liens”) are hereby
reaffirmed by this Agreement and each other Loan Document (as defined herein)
executed on the date hereof and such Existing Liens shall continue to be in full
force and effect.

 

8.18     Lender Merely a Lender.

 

8.18.1     No Agency.  Lender is not and will not be in any way the agent for or
trustee of Borrower.  Lender does not intend to act in any way for or on behalf
of Borrower in disbursing the proceeds of the Loan.  Its purpose in making the
requirements set forth in this Agreement is to protect the validity and priority
of the Mortgage and the value of its security.  Lender does not intend to be and
is not and will not be responsible for the completion of any Improvements
erected or to be erected upon the Land; the payment of bills or any other
details in connection with the Land and Improvements; any Plans and
Specifications prepared in connection with the Land and Improvements; or
Borrower’s relations with any contractors, subcontractors, materialmen, or
laborers performing work or supplying materials for the Land and Improvements.

 

8.18.2     No Obligation to Pay.  The Mortgage and this Agreement are not to be
construed by Borrower or anyone furnishing labor, materials, or any other work
or product for improving the Land as an agreement upon the part of Lender to
assure that anyone will be paid for furnishing such labor, materials, or any
other work or product.  Borrower shall be solely responsible for such payments.

 

8.18.3     No Responsibility for Construction.  Lender is not responsible for
construction of the Improvements.  Notwithstanding inspection of the Land and
the Improvements, Lender assumes no responsibility for the quality of
construction or workmanship or for the architectural or structural soundness of
any Improvements to be erected upon the Land or for the adherence to or approval
of any plans and specifications in connection therewith or for any Improvements.

 

8.19     Intentionally Omitted.  

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ARTICLE 9: SECURITY

 

9.1     Accounts Receivable.  The Loan and the Secured Obligations are secured
by a second lien in the Receivables of Borrower, Operator and their
subsidiaries.

 

9.2     Mortgage.  The Loan and the Secured Obligations are secured by the
Mortgage.

 

9.3     Guaranty.  The Loan is guaranteed by GEN and Operator pursuant to the
Guaranty.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

 

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IN WITNESS WHEREOF, Lender and Borrower have executed and delivered this
Agreement effective as of the Effective Date.

 

LENDER:

    

WELLTOWER INC.

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Justin R. Skiver

 

 

Name:  Justin R. Skiver

 

 

Title:  Authorized Signatory

 

 

 

 

 

 

BORROWER:

 

EACH BORROWER LISTED ON

 

 

SCHEDULE I HERETO

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Michael S. Sherman

 

 

 

 

 

 

Michael S. Sherman, Secretary

 

 

S-1

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SCHEDULE I: BORROWERS

 

 

 

FACILITY

BORROWER

Texas

 

Clairmont Longview, Longview, Gregg County, TX

SHG Resources, LLC

Colonial Tyler Care Center, Tyler, Smith County, TX

SHG Resources, LLC

Fort Worth Center of Rehabilitation, Fort Worth, Tarrant County, TX

SHG Resources, LLC

Guadalupe Valley Nursing Center, Seguin, Guadalupe County, TX

SHG Resources, LLC

Hallettsville Rehabilitation and Nursing Center. Hallettsville, Lavaca County,
TX

SHG Resources, LLC

Live Oak Nursing Center, George West, Live Oak County, TX

SHG Resources, LLC

Lubbock Hospitality House Nursing and Rehabilitation Center, Lubbock, Tarrant
County, TX

Hospitality Lubbock Property, LLC

Monument Hill Rehabilitation and Nursing Center, La Grange, Fayette County, TX

Monument La Grange Property, LLC

Oak Manor Nursing Center, Flatonia, Fayette County, TX

SHG Resources, LLC

Oakland Manor Nursing Center, Giddings, Lee County, TX

SHG Resources, LLC

Southwood Care Center, Austin, Travis County, TX

SHG Resources, LLC

The Clairmont Tyler, Tyler, Smith County, TX

SHG Resources, LLC

Town & Country Manor, Boerne, Kendall County, TX

Town and Country Boerne Property, LLC

 

Exhibit I-1

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