Document:

Exhibit 10.1

 

 

CREDIT AGREEMENT

 

DATED AS OF APRIL 18, 2011,

 

AMONG

 

LTC PROPERTIES, INC.,

 

THE GUARANTORS FROM TIME TO TIME PARTIES HERETO,

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

BANK OF MONTREAL, CHICAGO BRANCH

AS ADMINISTRATIVE AGENT,

 

KEYBANK NATIONAL ASSOCIATION,

AS SYNDICATION AGENT

 

AND

 

ROYAL BANK OF CANADA AND WELLS FARGO BANK, NATIONAL ASSOCIATION,

AS CO-DOCUMENTATION AGENTS

 

 

BMO CAPITAL MARKETS,  KEYBANC CAPITAL MARKETS INC.,

RBC CAPITAL MARKETS AND WELLS FARGO SECURITIES, LLC,

AS CO-LEAD ARRANGERS AND JOINT BOOK RUNNERS

 

 

TABLE OF CONTENTS

 

	
SECTION
    	
 
    	
HEADING
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 1.
    	
 
    	
DEFINITIONS; INTERPRETATION
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 1.1.
    	
 
    	
Definitions
    	
 
    	
1
    
	
Section 1.2.
    	
 
    	
Interpretation
    	
 
    	
19
    
	
Section 1.3.
    	
 
    	
Change in Accounting Principles
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 2.
    	
 
    	
THE CREDIT FACILITY
    	
 
    	
19
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 2.1.
    	
 
    	
Revolving Credit Commitments
    	
 
    	
19
    
	
Section 2.2.
    	
 
    	
Letters of Credit
    	
 
    	
20
    
	
Section 2.3.
    	
 
    	
Applicable Interest Rates
    	
 
    	
23
    
	
Section 2.4.
    	
 
    	
Minimum Borrowing Amounts;   Maximum Eurodollar Loans
    	
 
    	
25
    
	
Section 2.5.
    	
 
    	
Manner of Borrowing Loans and   Designating Applicable Interest Rates
    	
 
    	
25
    
	
Section 2.6.
    	
 
    	
Maturity of Loans
    	
 
    	
27
    
	
Section 2.7.
    	
 
    	
Prepayments
    	
 
    	
28
    
	
Section 2.8.
    	
 
    	
Default Rate
    	
 
    	
28
    
	
Section 2.9.
    	
 
    	
Evidence of Indebtedness
    	
 
    	
29
    
	
Section 2.10.
    	
 
    	
Funding Indemnity
    	
 
    	
30
    
	
Section 2.11.
    	
 
    	
Commitment Terminations
    	
 
    	
30
    
	
Section 2.12.
    	
 
    	
Substitution of Lenders
    	
 
    	
30
    
	
Section 2.13.
    	
 
    	
Increase in Revolving Credit   Commitments
    	
 
    	
31
    
	
Section 2.14.
    	
 
    	
Defaulting Lenders
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 3.
    	
 
    	
FEES
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 3.1.
    	
 
    	
Fees
    	
 
    	
32
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 4.
    	
 
    	
PLACE AND APPLICATION OF PAYMENTS
    	
 
    	
33
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 4.1.
    	
 
    	
Place and Application of Payments
    	
 
    	
33
    
	
Section 4.2.
    	
 
    	
Account Debit
    	
 
    	
35
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 5.
    	
 
    	
GUARANTIES
    	
 
    	
35
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 5.1.
    	
 
    	
Guaranties
    	
 
    	
35
    
	
Section 5.2.
    	
 
    	
Further Assurances
    	
 
    	
35
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 6.
    	
 
    	
REPRESENTATIONS AND WARRANTIES
    	
 
    	
35
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 6.1.
    	
 
    	
Organization and Qualification
    	
 
    	
35
    
	
Section 6.2.
    	
 
    	
Subsidiaries
    	
 
    	
35
    
	
Section 6.3.
    	
 
    	
Authority and Validity of   Obligations
    	
 
    	
36
    
	
Section 6.4.
    	
 
    	
Use of Proceeds; Margin Stock
    	
 
    	
36
    

 

 

	
Section 6.5.
    	
 
    	
Financial Reports
    	
 
    	
37
    
	
Section 6.6.
    	
 
    	
No Material Adverse Change
    	
 
    	
37
    
	
Section 6.7.
    	
 
    	
Full Disclosure
    	
 
    	
37
    
	
Section 6.8.
    	
 
    	
Trademarks, Franchises, and   Licenses
    	
 
    	
37
    
	
Section 6.9.
    	
 
    	
Governmental Authority and   Licensing
    	
 
    	
37
    
	
Section 6.10.
    	
 
    	
Good Title
    	
 
    	
38
    
	
Section 6.11.
    	
 
    	
Litigation and Other   Controversies
    	
 
    	
38
    
	
Section 6.12.
    	
 
    	
Taxes
    	
 
    	
38
    
	
Section 6.13.
    	
 
    	
Approvals
    	
 
    	
38
    
	
Section 6.14.
    	
 
    	
Affiliate Transactions
    	
 
    	
38
    
	
Section 6.15.
    	
 
    	
Investment Company
    	
 
    	
39
    
	
Section 6.16.
    	
 
    	
ERISA
    	
 
    	
39
    
	
Section 6.17.
    	
 
    	
Compliance with Laws
    	
 
    	
39
    
	
Section 6.18.
    	
 
    	
Other Agreements
    	
 
    	
40
    
	
Section 6.19.
    	
 
    	
OFAC
    	
 
    	
40
    
	
Section 6.20.
    	
 
    	
No Default
    	
 
    	
40
    
	
Section 6.21.
    	
 
    	
Solvency
    	
 
    	
40
    
	
Section 6.22.
    	
 
    	
No Broker Fees
    	
 
    	
40
    
	
Section 6.23.
    	
 
    	
Stock of the Borrower
    	
 
    	
41
    
	
Section 6.24.
    	
 
    	
Condition of Property;   Casualties; Condemnation
    	
 
    	
41
    
	
Section 6.25.
    	
 
    	
Legal Requirements, and Zoning
    	
 
    	
41
    
	
Section 6.26.
    	
 
    	
No Defaults; Landlord is in   Compliance with Leases
    	
 
    	
41
    
	
Section 6.27.
    	
 
    	
UAP Properties
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 7.
    	
 
    	
CONDITIONS PRECEDENT
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 7.1.
    	
 
    	
All Credit Events
    	
 
    	
42
    
	
Section 7.2.
    	
 
    	
Initial Credit Event
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 8.
    	
 
    	
COVENANTS
    	
 
    	
44
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 8.1.
    	
 
    	
Maintenance of Business
    	
 
    	
44
    
	
Section 8.2.
    	
 
    	
Maintenance of Properties
    	
 
    	
44
    
	
Section 8.3.
    	
 
    	
Taxes and Assessments
    	
 
    	
44
    
	
Section 8.4.
    	
 
    	
Insurance
    	
 
    	
44
    
	
Section 8.5.
    	
 
    	
Financial Reports
    	
 
    	
44
    
	
Section 8.6.
    	
 
    	
Inspection
    	
 
    	
47
    
	
Section 8.7.
    	
 
    	
Office of Foreign Asset Control
    	
 
    	
47
    
	
Section 8.8.
    	
 
    	
Liens
    	
 
    	
47
    
	
Section 8.9.
    	
 
    	
Investments, Acquisitions, Loans   and Advances
    	
 
    	
47
    
	
Section 8.10.
    	
 
    	
Mergers, Consolidations and Sales
    	
 
    	
49
    
	
Section 8.11.
    	
 
    	
Maintenance of Subsidiaries
    	
 
    	
50
    
	
Section 8.12.
    	
 
    	
UAP Properties
    	
 
    	
50
    
	
Section 8.13.
    	
 
    	
ERISA
    	
 
    	
50
    
	
Section 8.14.
    	
 
    	
Compliance with Laws
    	
 
    	
50
    
	
Section 8.15.
    	
 
    	
Burdensome Contracts With   Affiliates
    	
 
    	
51
    
	
Section 8.16.
    	
 
    	
No Changes in Fiscal Year
    	
 
    	
51
    

 

ii

 

	
Section 8.17.
    	
 
    	
Compliance with OFAC Sanctions   Programs
    	
 
    	
51
    
	
Section 8.18.
    	
 
    	
Change in the Nature of Business
    	
 
    	
52
    
	
Section 8.19.
    	
 
    	
Use of Loan Proceeds
    	
 
    	
52
    
	
Section 8.20.
    	
 
    	
No Restrictions
    	
 
    	
52
    
	
Section 8.21.
    	
 
    	
Financial Covenants
    	
 
    	
52
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 9.
    	
 
    	
EVENTS OF DEFAULT AND REMEDIES
    	
 
    	
54
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 9.1.
    	
 
    	
Events of Default
    	
 
    	
54
    
	
Section 9.2.
    	
 
    	
Non-Bankruptcy Defaults
    	
 
    	
56
    
	
Section 9.3.
    	
 
    	
Bankruptcy Defaults
    	
 
    	
56
    
	
Section 9.4.
    	
 
    	
Collateral for Undrawn Letters of   Credit
    	
 
    	
56
    
	
Section 9.5.
    	
 
    	
Notice of Default
    	
 
    	
57
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 10.
    	
 
    	
CHANGE IN CIRCUMSTANCES
    	
 
    	
57
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 10.1.
    	
 
    	
Change of Law
    	
 
    	
57
    
	
Section 10.2.
    	
 
    	
Unavailability of Deposits or   Inability to Ascertain, or Inadequacy of, LIBOR
    	
 
    	
58
    
	
Section 10.3.
    	
 
    	
Increased Cost and Reduced Return
    	
 
    	
58
    
	
Section 10.4.
    	
 
    	
Lending Offices
    	
 
    	
59
    
	
Section 10.5.
    	
 
    	
Discretion of Lender as to Manner   of Funding
    	
 
    	
59
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 11.
    	
 
    	
THE ADMINISTRATIVE AGENT
    	
 
    	
60
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 11.1.
    	
 
    	
Appointment and Authorization of   Administrative Agent
    	
 
    	
60
    
	
Section 11.2.
    	
 
    	
Administrative Agent and its   Affiliates
    	
 
    	
60
    
	
Section 11.3.
    	
 
    	
Action by Administrative Agent
    	
 
    	
60
    
	
Section 11.4.
    	
 
    	
Consultation with Experts
    	
 
    	
61
    
	
Section 11.5.
    	
 
    	
Liability of Administrative   Agent; Credit Decision
    	
 
    	
61
    
	
Section 11.6.
    	
 
    	
Indemnity
    	
 
    	
62
    
	
Section 11.7.
    	
 
    	
Resignation of Administrative   Agent and Successor Administrative Agent
    	
 
    	
62
    
	
Section 11.8.
    	
 
    	
L/C Issuer
    	
 
    	
62
    
	
Section 11.9.
    	
 
    	
Hedging Liability and Funds   Transfer and Deposit Account Liability Arrangements
    	
 
    	
63
    
	
Section 11.10.
    	
 
    	
Designation of Additional Agents
    	
 
    	
63
    
	
Section 11.11.
    	
 
    	
Release of Guarantors
    	
 
    	
63
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 12.
    	
 
    	
THE GUARANTEES
    	
 
    	
63
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 12.1.
    	
 
    	
The Guarantees
    	
 
    	
63
    
	
Section 12.2.
    	
 
    	
Guarantee Unconditional
    	
 
    	
64
    
	
Section 12.3.
    	
 
    	
Discharge Only upon Payment in   Full; Reinstatement in Certain Circumstances
    	
 
    	
65
    
	
Section 12.4.
    	
 
    	
Subrogation
    	
 
    	
65
    
	
Section 12.5.
    	
 
    	
Waivers
    	
 
    	
65
    
	
Section 12.6.
    	
 
    	
Limit on Recovery
    	
 
    	
65
    

 

iii

 

	
Section 12.7.
    	
 
    	
Stay of Acceleration
    	
 
    	
66
    
	
Section 12.8.
    	
 
    	
Benefit to Guarantors
    	
 
    	
66
    
	
Section 12.9.
    	
 
    	
Guarantor Covenants
    	
 
    	
66
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
SECTION 13.
    	
 
    	
MISCELLANEOUS
    	
 
    	
66
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Section 13.1.
    	
 
    	
Withholding Taxes
    	
 
    	
66
    
	
Section 13.2.
    	
 
    	
No Waiver, Cumulative Remedies
    	
 
    	
67
    
	
Section 13.3.
    	
 
    	
Non-Business Days
    	
 
    	
68
    
	
Section 13.4.
    	
 
    	
Documentary Taxes
    	
 
    	
68
    
	
Section 13.5.
    	
 
    	
Survival of Representations
    	
 
    	
68
    
	
Section 13.6.
    	
 
    	
Survival of Indemnities
    	
 
    	
68
    
	
Section 13.7.
    	
 
    	
Sharing of Set-Off
    	
 
    	
68
    
	
Section 13.8.
    	
 
    	
Notices
    	
 
    	
68
    
	
Section 13.9.
    	
 
    	
Counterparts
    	
 
    	
69
    
	
Section 13.10.
    	
 
    	
Successors and Assigns
    	
 
    	
69
    
	
Section 13.11.
    	
 
    	
Participants
    	
 
    	
69
    
	
Section 13.12.
    	
 
    	
Assignments
    	
 
    	
70
    
	
Section 13.13.
    	
 
    	
Amendments
    	
 
    	
72
    
	
Section 13.14.
    	
 
    	
Headings
    	
 
    	
72
    
	
Section 13.15.
    	
 
    	
Costs and Expenses;   Indemnification
    	
 
    	
72
    
	
Section 13.16.
    	
 
    	
Set-off
    	
 
    	
74
    
	
Section 13.17.
    	
 
    	
Entire Agreement
    	
 
    	
74
    
	
Section 13.18.
    	
 
    	
Governing Law
    	
 
    	
74
    
	
Section 13.19.
    	
 
    	
Severability of Provisions
    	
 
    	
74
    
	
Section 13.20.
    	
 
    	
Excess Interest
    	
 
    	
75
    
	
Section 13.21.
    	
 
    	
Construction
    	
 
    	
75
    
	
Section 13.22.
    	
 
    	
Lender’s and L/C Issuer’s   Obligations Several
    	
 
    	
75
    
	
Section 13.23.
    	
 
    	
Submission to Jurisdiction;   Waiver of Jury Trial
    	
 
    	
75
    
	
Section 13.24.
    	
 
    	
USA Patriot Act
    	
 
    	
76
    
	
Section 13.25.
    	
 
    	
Confidentiality
    	
 
    	
76
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Signature Page
    	
 
    	
 
    	
 
    	
78
    

 

	
EXHIBIT A
    	
 
    	
—
    	
 
    	
Notice   of Payment Request
    
	
EXHIBIT B
    	
 
    	
—
    	
 
    	
Notice   of Borrowing
    
	
EXHIBIT C
    	
 
    	
—
    	
 
    	
Notice   of Continuation/Conversion
    
	
EXHIBIT D
    	
 
    	
—
    	
 
    	
Revolving   Note
    
	
EXHIBIT E
    	
 
    	
—
    	
 
    	
Compliance   Certificate
    
	
EXHIBIT F
    	
 
    	
—
    	
 
    	
Assignment   and Acceptance
    
	
EXHIBIT   G
    	
 
    	
—
    	
 
    	
Additional   Guarantor Supplement
    
	
EXHIBIT   H
    	
 
    	
—
    	
 
    	
Commitment   Amount Increase Request
    
	
SCHEDULE   1
    	
 
    	
—
    	
 
    	
Commitments
    
	
SCHEDULE 6.2
    	
 
    	
—
    	
 
    	
Subsidiaries
    
	
SCHEDULE   6.26
    	
 
    	
—
    	
 
    	
Significant   Leases
    
	
SCHEDULE   6.27
    	
 
    	
—
    	
 
    	
UAP   Properties
    

 

iv

 

CREDIT AGREEMENT

 

This Credit Agreement is entered into as of April 18, 2011, by and among LTC Properties, Inc., a Maryland corporation (the “Borrower”), certain direct and indirect Subsidiaries of the Borrower from time to time party to this Agreement, as Guarantors, the several financial institutions from time to time party to this Agreement, as Lenders, and BANK OF MONTREAL, a Canadian chartered bank acting through its Chicago Branch, as Administrative Agent as provided herein.  All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in Section 1.1 hereof.

 

PRELIMINARY STATEMENT

 

The Borrower has requested, and the Lenders have agreed to extend, a certain credit facility on the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.                                                 DEFINITIONS; INTERPRETATION.

 

Section 1.1.        Definitions.  The following terms when used herein shall have the following meanings:

 

“Additional Guarantor Supplement” is defined in Section 5.2 hereof.

 

“Adjusted LIBOR” is defined in Section 2.3(b) hereof.

 

“Administrative Agent” means Bank of Montreal, in its capacity as Administrative Agent hereunder, and any successor in such capacity pursuant to Section 11.7 hereof.

 

“Administrative Questionnaire” means an Administrative Questionnaire by each Lender in a form supplied by the Administrative Agent.

 

“Affiliate” means any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person.  A Person shall be deemed to control another Person for purposes of this definition if such Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the other Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise; provided that, in any event for purposes of this definition, any Person that owns, directly or indirectly, 20% or more of the securities having the ordinary voting power for the election of directors or governing body of a corporation or 20% or more of the partnership or other ownership interest of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.

 

 

“Agreement” means this Credit Agreement, as the same may be amended, modified, restated or supplemented from time to time pursuant to the terms hereof.

 

“ALF’s” is defined in the definition of Capitalization Rate.

 

“Applicable Margin” means, with respect to Revolving Loans, Reimbursement Obligations, and the commitment fees and letter of credit fees payable under Section 3.1 hereof, until the first Pricing Date, the rates per annum shown opposite Level I below, and thereafter from one Pricing Date to the next the Applicable Margin means the rates per annum determined in accordance with the following schedule:

 

	
LEVEL
    	
 
    	
MAXIMUM TOTAL
   INDEBTEDNESS TO TOTAL
   ASSET VALUE RATIO FOR SUCH
   PRICING DATE
    	
 
    	
APPLICABLE MARGIN
   FOR BASE RATE LOANS
   AND REIMBURSEMENT
   OBLIGATIONS SHALL BE:
    	
 
    	
APPLICABLE MARGIN FOR
   EURODOLLAR LOANS AND
   LETTER OF CREDIT FEE
   SHALL BE:
    	
 
    	
APPLICABLE MARGIN
   FOR COMMITMENT FEE
   SHALL BE:
    	
 
    
	
IV
    	
 
    	
Greater   than 0.45 to 1.0
    	
 
    	
1.25
    	
%
    	
2.25
    	
%
    	
0.50
    	
%
    
	
III
    	
 
    	
Less   than or equal to 0.45 to 1.0, but greater than 0.35 to 1.0
    	
 
    	
1.00
    	
%
    	
2.00
    	
%
    	
0.45
    	
%
    
	
II
    	
 
    	
Less   than or equal to 0.35 to 1.0 but greater than 0.25 to 1.0
    	
 
    	
0.75
    	
%
    	
1.75
    	
%
    	
0.40
    	
%
    
	
I
    	
 
    	
Less   than or equal to 0.25 to 1.0
    	
 
    	
0.50
    	
%
    	
1.50
    	
%
    	
0.35
    	
%
    

 

For purposes hereof, the term “Pricing Date” means, for any Fiscal Quarter of the Borrower ending on or after March 31, 2011, the date on which the Administrative Agent is in receipt of the Borrower’s most recent financial statements and current Compliance Certificate (and, in the case of the year-end financial statements, audit report) for the Fiscal Quarter then ended, pursuant to Section 8.5 hereof.  The Applicable Margin shall be established based on the Maximum Total Indebtedness to Total Asset Value Ratio for the most recently completed Fiscal Quarter and the Applicable Margin established on a Pricing Date shall remain in effect until the next Pricing Date.  If the Borrower has not delivered its financial statements, including a Compliance Certificate, by the date such financial statements (and, in the case of the year-end financial statements, audit report) are required to be delivered under Section 8.5 hereof, until such financial statements and audit report are delivered, the Applicable Margin shall be the highest Applicable Margin (i.e., Level IV shall apply).  If the Borrower subsequently delivers such financial statements before the next Pricing Date, the Applicable Margin established by such late delivered financial statements shall take effect from the date of delivery until the next Pricing Date.  In all other circumstances, the Applicable Margin established by such financial statements shall be in effect from the Pricing Date that occurs immediately after the end of the Fiscal Quarter covered by such financial statements until the next Pricing Date.  Each determination of the Applicable Margin made by the Administrative Agent in accordance with the foregoing shall be conclusive and binding on the Borrower and the Lenders if reasonably determined.

 

2

 

“Application” is defined in Section 2.2(b) hereof.

 

“Approved Fund” means any Fund that has been approved by Borrower (such approval not to be unreasonably withheld or delayed and such approval not to be required if an Event of Default has occurred and is continuing) and is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Assets Under Development” means any real property under construction other than Redevelopment Assets.

 

“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 13.12 hereof), and accepted by the Administrative Agent, in substantially the form of Exhibit F or any other form approved by the Administrative Agent.

 

“Authorized Representative” means those persons shown on the list of officers provided by the Borrower pursuant to Section 7.2 hereof or on any update of any such list provided by the Borrower to the Administrative Agent, or any further or different officers of the Borrower so named by any Authorized Representative of the Borrower in a written notice to the Administrative Agent.

 

“Base Rate” is defined in Section 2.3(a) hereof.

 

“Base Rate Loan” means a Revolving Loan bearing interest at a rate specified in Section 2.3(a) hereof.

 

“Borrower” is defined in the introductory paragraph of this Agreement.

 

“Borrowing” means the total of Revolving Loans of a single type advanced, continued for an additional Interest Period, or converted from a different type into such type on a single date and, in the case of Eurodollar Loans, for a single Interest Period.  Borrowings of Loans are made and maintained ratably from each of the Lenders according to their Revolver Percentages.  A Borrowing is “advanced” on the day Lenders advance funds comprising such Borrowing to the Borrower, is “continued” on the date a new Interest Period for the same type of Revolving Loans commences for such Borrowing, and is “converted” when such Borrowing is changed from one type of Revolving Loans to the other, all as determined pursuant to Section 2.5 hereof.

 

“Business Day” means any day (other than a Saturday or Sunday) on which banks are not authorized or required to close in Chicago, Illinois and, if the applicable Business Day relates to the advance or continuation of, or conversion into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar deposits in the interbank eurodollar market in London, England and Nassau, Bahamas.

 

“Capital Lease” means any lease of Property which in accordance with GAAP is required to be capitalized on the balance sheet of the lessee.

 

3

 

“Capitalization Rate” means 8.25% for assisted living facilities (“ALF’s”), or 10.0% for skilled nursing facilities (“SNF’s”). The Capitalization Rates for continuum of care facilities will be 9% for facilities where <50% of beds are classified as SNF beds, and shall otherwise be 10%.

 

“Capitalized Lease Obligation” means, for any Person, the amount of the liability shown on the balance sheet of such Person in respect of a Capital Lease determined in accordance with GAAP.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future amendments.

 

“Change of Control” means any of (a) the acquisition by any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) at any time of beneficial ownership of 50% or more of the outstanding capital stock or other equity interests of the Borrower on a fully-diluted basis, (b) any “Change of Control” (or words of like import), as defined in any agreement or indenture relating to any issue of Indebtedness for Borrowed Money in excess of $10,000,000 shall occur or (c) during any twelve (12) month period on or after the date hereof, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election by the Board of Directors or whose nomination for election by the shareholders of the Borrower was approved by a vote of at least a majority of the members of the Board of Directors then in office who either were members of the Board of Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors then in office.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Closing Date” means the date of this Agreement or such later Business Day upon which each condition described in Section 7.2 shall be satisfied or waived in a manner acceptable to the Administrative Agent in its discretion.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto.

 

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“Collateral Account” is defined in Section 9.4 hereof.

 

“Compliance Certificate” is defined in Section 8.5(c) hereof.

 

“Commonly Controlled Entity” means an entity, whether or not incorporated, that is under common control with the Borrower within the meaning of Section 4001 of ERISA or that is part of a group that includes the Borrower and is treated as a single employer under Section 414(b), (c) or (m) of the Code.

 

“Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code.

 

“Credit Event” means the advancing of any Revolving Loan, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit.

 

“Debt Service” means, for any Fiscal Quarter, the sum of (a) Interest Expense and (b) the greater of (i) zero or (ii) scheduled principal amortization paid on Total Indebtedness (exclusive of any balloon payments or prepayments of principal paid on such Total Indebtedness) less amortized principal payments received on the Borrower’s and its Subsidiaries’ mortgage loans receivable (exclusive of any balloon payments or prepayments of principal received on the Borrower’s and its Subsidiaries’ mortgage loans receivable).

 

“Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default.

 

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Revolving Loans or participations in L/C Obligations required to be funded by it hereunder (herein, a “Defaulted Loan”) within two (2) Business Days of the date required to be funded by it hereunder unless such failure has been cured, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, unless the subject of a good faith dispute or unless such failure has been cured, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding or a receiver or conservator has been appointed for such Lender.

 

“Defaulting Lender Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Revolver Percentage of the aggregate outstanding principal amount of Revolving Loans of all Lenders (calculated as if all Defaulting Lenders had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Revolving Loans of such Defaulting Lender.

 

“Defaulting Lender Period” means, with respect to any Defaulting Lender, the period commencing on the date upon which such Lender first became a Defaulting Lender and ending on the earliest of the following dates:  (a) the date on which all Revolving Credit Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and

 

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payable and (b) the date on which (i) such Defaulting Lender is no longer insolvent, the subject of a bankruptcy or insolvency proceeding or, if applicable, under the direction of a receiver or conservator, (ii) the Defaulting Lender Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or otherwise), and (iii) such Defaulting Lender shall have delivered to Borrower and the Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Revolving Credit Commitments.

 

“Designated Disbursement Account” means the account of the Borrower maintained with the Administrative Agent or its Affiliate and designated in writing to the Administrative Agent as the Borrower’s Designated Disbursement Account (or such other account as the Borrower and the Administrative Agent may otherwise agree).

 

“EBITDA” means, for any period, determined on a consolidated basis of the Borrower and its Subsidiaries, in accordance with GAAP, the sum of net income (or loss) plus: (i) depreciation and amortization expense, (ii) interest expense, (iii) income tax expense, (iv) extraordinary, unrealized or non-recurring losses, including impairment charges and reserves, minus:  (v) funds received by the Borrower or a Subsidiary as rent but which are reserved for capital expenses; (vi) unrealized gains on the sale of assets; and (vii) income tax benefits.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) the L/C Issuer, and (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any Guarantor or any of the Borrower’s or such Guarantor’s Affiliates or Subsidiaries.

 

“Eligible Line of Business” means any business engaged in as of the date of this Agreement by the Borrower or any of its Subsidiaries or any business reasonably related thereto.

 

“Eligible Property NOI” means, for any given period, the aggregate Property NOI attributable to the UAP Properties.

 

“Environmental Claim” means any investigation, notice, violation, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding or claim (whether administrative, judicial or private in nature) arising (a) pursuant to, or in connection with an actual or alleged violation of, any Environmental Law, (b) in connection with any Hazardous Material, (c) from any abatement, removal, remedial, corrective or response action in connection with a Hazardous Material, Environmental Law or order of a governmental authority or (d) from any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

 

“Environmental Law” means any current or future Legal Requirement pertaining to (a) the protection of health, safety and the indoor or outdoor environment, (b) the conservation, management or use of natural resources and wildlife, (c) the protection or use of surface water or

 

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groundwater, (d) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material or (e) pollution (including any Release to air, land, surface water or groundwater), and any amendment, rule, regulation, order or directive issued thereunder.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute thereto.

 

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the Borrower’s controlled group, or is under common control with the Borrower, within the meaning of Sections 414 and 4001 of the Code and the regulations promulgated and rulings issued thereunder.

 

“Eurodollar Loan” means a Revolving Loan bearing interest at the rate specified in Section 2.3(b) hereof.

 

“Eurodollar Reserve Percentage” is defined in Section 2.3(b) hereof.

 

“Event of Default” means any event or condition identified as such in Section 9.1 hereof.

 

“Event of Loss” means, with respect to any Property, any of the following:  (a) any total loss, destruction or damage of such Property or (b) any total condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, of such Property, or confiscation of such Property or the requisition of the use of such Property.

 

“Federal Funds Rate” means the fluctuating interest rate per annum described in part (i) of clause (b) of the definition of Base Rate appearing in Section 2.3(a) hereof.

 

“Fiscal Quarter” means each of the three month periods ending on March 31, June 30, September 30 and December 31.

 

“Fiscal Year” means the twelve month period ending on December 31.

 

“Fixed Charges” means, for any Fiscal Quarter, Debt Service for such quarter, plus Preferred Dividends for such quarter, plus $400 per bed for any Property on which the Lease of such Property does not require the tenant to pay for all capital expenditures.

 

“Former Plan” means any employee benefit plan in respect of which the Borrower or a Commonly Controlled Entity has engaged in a transaction described in Section 4069 or Section 4212(c) of ERISA.

 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

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“Funds From Operations” or “FFO” means, for any period reported, as determined on a consolidated basis for the Borrower and its Subsidiaries, the sum of net income or (loss), plus:  (i) depreciation and amortization expense; (ii) realized losses from extraordinary or non-recurring items; (iii) realized losses on sales of real estate or other assets; (iv) impairment charges or other loss reserves; and (v) provisions for income taxes for such period, minus:  (i) gains (whether realized or unrealized) on sales of real estate or other assets; and, (ii) income tax benefits for such period.

 

“Funds Transfer and Deposit Account Liability” means the liability of the Borrower or any Subsidiary  owing to any of the Lenders, or any Affiliates of such Lenders, arising out of (a) the execution or processing of electronic transfers of funds by automatic clearing house transfer, wire transfer or otherwise to or from deposit accounts of the Borrower and/or any Subsidiary now or hereafter maintained with any of the Lenders or their Affiliates, (b) the acceptance for deposit or the honoring for payment of any check, draft or other item with respect to any such deposit accounts, and (c) any other deposit, disbursement, and cash management services afforded to the Borrower or any Subsidiary  by any of such Lenders or their Affiliates.

 

“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination.

 

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantor” and “Guarantors” each is defined in Section 5.1 hereof.

 

“Guaranty” and “Guaranties” each is defined in Section 5.1 hereof.

 

“Hazardous Material” means any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which is hazardous or toxic, and includes, without limitation, (a) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and (b) any material classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an Environmental Law.

 

“Hazardous Material Activity” means any activity, event or occurrence involving a Hazardous Material, including, without limitation, the manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, Release, threatened Release, abatement, removal, remediation, handling of or corrective or response action to any Hazardous Material.

 

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“Hedging Liability” means the liability of the Borrower or any Subsidiary  to any of the Lenders, or any Affiliates of such Lenders, in respect of any interest rate, foreign currency, and/or commodity swap, exchange, cap, collar, floor, forward, future or option agreement, or any other similar interest rate, currency or commodity hedging arrangement, as the Borrower or such Subsidiary, as the case may be, may from time to time enter into with any one or more of the Lenders party to this Agreement or their Affiliates.

 

“Hostile Acquisition” means the acquisition of the capital stock or other equity interests of a Person through a tender offer or similar solicitation of the owners of such capital stock or other equity interests which has not been approved (prior to such acquisition) by resolutions of the Board of Directors of such Person or by similar action if such Person is not a corporation, or as to which such approval has been withdrawn.

 

“Indebtedness for Borrowed Money” means for any Person (without duplication) (a) all indebtedness created, assumed or incurred in any manner by such Person representing money borrowed (including by the issuance of debt securities), (b) all indebtedness for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business and contingent liabilities related to potential earn out payments which do not meet the balance sheet recognition requirements of Accounting Standards Codification No. 450 —Contingencies), (c) all indebtedness secured by any Lien upon Property of such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness, (d) all Capitalized Lease Obligations of such Person, and (e) all obligations of such Person on or with respect to letters of credit, bankers’ acceptances and other extensions of credit whether or not representing obligations for borrowed money.

 

“Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Interest Expense” means, with respect to a Person for any period of time the interest expense whether paid, accrued or capitalized (without deduction of consolidated interest income) of such Person for such period.  Interest Expense shall exclude any amortization of (i) deferred financing fees, including the write-off such fees relating to the early retirement of such related Indebtedness for Borrowed Money, and (ii) debt discounts (but only to the extent such discounts do not exceed 3.0% of the initial face principal amount of such debt).

 

“Interest Payment Date” means (a) with respect to any Eurodollar Loan, the last day of each Interest Period with respect to such Eurodollar Loan and on the maturity date and, if the applicable Interest Period is longer than (3) three months, on each day occurring every three (3) months after the commencement of such Interest Period and (b) with respect to any Base Rate Loan, the last day of every Fiscal Quarter and on the maturity date.

 

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“Interest Period” means the period commencing on the date a Borrowing of Eurodollar Loans is advanced, continued, or created by conversion and ending (a) in the case of Eurodollar Loans, 1, 2, 3, or 6 months thereafter, provided, however, that:

 

(i)            no Interest Period shall extend beyond the Revolving Credit Termination Date;

 

(ii)           whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, if such extension would cause the last day of an Interest Period for a Borrowing of Eurodollar Loans to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and

 

(iii)          for purposes of determining an Interest Period for a Borrowing of Eurodollar Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end.

 

“L/C Issuer” means Bank of Montreal, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.2(h) hereof.

 

“L/C Obligations” means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations.

 

“L/C Sublimit” means $10,000,000, as reduced pursuant to the terms hereof.

 

“Lease” means any lease, tenancy agreement, contract or other agreement for the use or occupancy of a Property or any portion thereof.

 

“Legal Requirement” means any treaty, convention, statute, law, regulation, ordinance, license, permit, governmental approval, injunction, judgment, order, consent decree or other requirement of any governmental authority, whether federal, state, or local.

 

“Lenders” means and includes Bank of Montreal, Chicago Branch, Key Bank National Association  and the other financial institutions from time to time party to this Agreement, including any new Lender pursuant to Section 2.13 hereof and each assignee Lender pursuant to Section 13.12 hereof.

 

“Lending Office” is defined in Section 10.4 hereof.

 

“Letter of Credit” is defined in Section 2.2(a) hereof.

 

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“LIBOR” is defined in Section 2.3(b) hereof.

 

“Lien” means any mortgage, lien, security interest, pledge, charge or encumbrance of any kind in respect of any Property, including the interests of a vendor or lessor under any conditional sale, Capital Lease or other title retention arrangement.

 

“Loan Documents” means this Agreement, the Notes (if any), the Applications, the Guaranties,  and each other instrument or document to be delivered hereunder or thereunder or otherwise in connection therewith.

 

“Material Adverse Effect” means a material and adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower or any Guarantor to perform its obligations under the Loan Documents to which it is a party or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent or the Lenders thereunder; provided, however, that the sale of assets of one or more Guarantors in accordance with the terms of this Agreement shall not be deemed in and of itself to cause a Material Adverse Effect absent the presence of the factors set forth above.

 

“Material Subsidiary” means, each Subsidiary that owns a Property included in the Unencumbered Asset Pool.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Multiemployer Plan” means a Plan that is a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA.

 

“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA and subject to Title IV thereof, that (a) is maintained by the Borrower or an ERISA Affiliate and at least one Person other than the Borrower and its ERISA Affiliates or (b) was so maintained previously, but is not currently maintained by the Borrower or its ERISA Affiliates, and in respect of which the Borrower or an ERISA Affiliate would still have liability under Section 4063, 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

 

“Note” and “Notes” each is defined in Section 2.9 hereof.

 

“Note Purchase Agreement” means the Note Purchase Agreement and Private Shelf Agreement dated July 14, 2010, as amended, modified, supplemented or amended and restated in its entirety, and any refinancing or replacement of any series of notes issued and outstanding thereunder.

 

“Noteholders” means the holders of any series of notes issued under the Note Purchase Agreement, including, without limitation (i) the 5.26% Series A-1 Senior Notes due July 14, 2015 in the aggregate original principal amount of $25,000,000 and (ii) the 5.74% Series A-2 Senior Notes Due January 14, 2019 in the aggregate original principal amount of $25,000,000.

 

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“Obligations” means all obligations of the Borrower to pay principal and interest on the Revolving Loans, all Reimbursement Obligations owing under the Applications, all fees and charges payable hereunder, and all other payment obligations of the Borrower or any of its Subsidiaries arising under or in relation to any Loan Document, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.

 

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

 

“OFAC Event” means the event specified in Section 8.15 hereof.

 

“OFAC Sanctions Programs” means all laws, regulations, and Executive Orders administered by OFAC, including without limitation, the Bank Secrecy Act, anti-money laundering laws (including, without limitation, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act)), and all economic and trade sanction programs administered by OFAC, any and all similar United States federal laws, regulations or Executive Orders, and any similar laws, regulators or orders adopted by any State within the United States.

 

“OFAC SDN List” means the list of the Specially Designated Nationals and Blocked Persons maintained by OFAC.

 

“Participating Interest” is defined in Section 2.2(e) hereof.

 

“Participating Lender” is defined in Section 2.2(e) hereof.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any Person succeeding to any or all of its functions under ERISA.

 

“Permitted Acquisition” means any investment or acquisition with respect to which all of the following conditions shall have been satisfied:

 

(a)         the investment or acquisition is with respect to real property or improvements on real property located in, or of a business with its primary operations in, the United States of America; and

 

(b)         he acquisition shall not be a Hostile Acquisition; and

 

(c)         the investment or acquisition is with respect to an asset or business associated with an Eligible Line of Business, which may include, but is not limited to, sale/leaseback transactions, mortgage loans, lines of credit or other financings, etc.; and

 

(d)         if a new Material Subsidiary is formed or acquired as a result of or in connection with the investment or acquisition, the Borrower shall have complied with the requirements of Section 5.2 hereof in connection therewith; and

 

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(e)          after giving effect to the investment or acquisition, no Event of Default shall exist, including with respect to the financial covenants contained in Section 8.21 hereof, provided, however, that if such investment or acquisition together with any other investments or acquisitions made during such Fiscal Quarter have an aggregate cost exceeding 20% of the Total Asset Value of the Borrower and its Subsidiaries as of the last day of the most recently ended Fiscal Quarter for which financial statements have been delivered pursuant to Section 8.5 hereof, then for such investment or acquisition, the Borrower shall provide to the Administrative Agent an executed Compliance Certificate showing Borrower’s pro forma compliance with the covenants contained in Section 8.21 after giving effect to the proposed investment or acquisition, including giving effect in terms of additional asset value, liabilities incurred, if any, additional revenues and expenses associated therewith which have been contemplated and have been projected into the expected operating results and financial position of the Borrower for the Fiscal Quarter in which the investment or acquisition occurs.

 

“Permitted Lien” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding has been commenced:  (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 8.3; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue or that are being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained; (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; (d) easements, rights of way and other encumbrances on title to real property that do not materially and adversely affect the value of such property or the use of such property for its present purposes; (e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of like nature incurred in the ordinary course of business; (f) Liens in favor of the United States of America for amounts paid to the Borrower or any Subsidiary as progress payments under government contracts entered into by it; (g) attachment, judgment and other similar Liens arising in connection with court, reference or arbitration proceedings, provided that the same have been in existence less than 20 days, that the same have been discharged or that execution or enforcement thereof has been stayed pending appeal; and (h) Liens on Properties not included in the Unencumbered Asset Pool.

 

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof.

 

“Plan” means any employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code that either (a) is maintained by a member of the Controlled Group for employees of a member of the Controlled Group or (b) is maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions.

 

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“Preferred Dividends” means any dividend paid (or payable) as the case may be, in cash on any preferred equity security issued by the Borrower.

 

“Property” or “Properties” means, as to any Person, all types of real, personal, tangible, intangible or mixed property owned by such Person whether or not included in the most recent balance sheet of such Person and its subsidiaries under GAAP.

 

“Property Expenses” means the costs (including, but not limited to, payroll, taxes, assessments, insurance, utilities, landscaping and other similar charges) of operating and maintaining any UAP Property which are the responsibility of the Borrower or the applicable Guarantor that are not paid directly by the tenant, but excluding depreciation, amortization, interest costs and maintenance capital expenditures to the extent such UAP Property is under a triple net lease.

 

“Property Income” means cash rents (excluding, as an abundance of caution, non-cash straight-line rent) and other cash revenues received by the Borrower or a Guarantor in the ordinary course for any UAP Property, but excluding security deposits and prepaid rent except to the extent applied in satisfaction of tenants’ obligations for rent.

 

“Property Net Operating Income” or “Property NOI” means, with respect to any property for the four most recently ended Fiscal Quarters (without duplication) the aggregate amount of (i) Property Income for such period minus (ii) Property Expenses for such period.

 

“RCRA” means the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.

 

“Redevelopment Assets” means any real estate under major redevelopment.

 

“Reimbursement Obligation” is defined in Section 2.2(c) hereof.

 

“REIT” means a real estate investment trust under Sections 856-860 of the Code.

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migration, dumping, or disposing into the indoor or outdoor environment, including, without limitation, the abandonment or discarding of barrels, drums, containers, tanks or other receptacles containing or previously containing any Hazardous Material.

 

“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the 30-day notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg. §4043.

 

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“Required Lenders” means, as of the date of determination thereof, Lenders whose outstanding Revolving Loans and interests in Letters of Credit and Unused Revolving Credit Commitments constitute more than 66-2/3% of the sum of the total outstanding Revolving Loans, interests in Letters of Credit, and Unused Revolving Credit Commitments of the Lenders.

 

“Revolver Percentage” means, for each Lender, the percentage of the Revolving Credit Commitments represented by such Lender’s Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated, the percentage held by such Lender (including through participation interests in Reimbursement Obligations) of the aggregate principal amount of all Revolving Loans and L/C Obligations then outstanding.

 

“Revolving Credit” means the credit facility for making Revolving Loans and issuing Letters of Credit described in Sections 2.1 and 2.2 hereof.

 

“Revolving Credit Commitment” means, as to any Lender, the obligation of such Lender to make Revolving Loans and to participate in Letters of Credit issued for the account of the Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1 attached hereto and made a part hereof, as the same may be reduced or modified at any time or from time to time pursuant to the terms hereof.  The Borrower and the Lenders acknowledge and agree that the Revolving Credit Commitments of the Lenders aggregate $210,000,000 on the date hereof.

 

“Revolving Credit Termination Date” means April 18, 2015, or such earlier date on which the Revolving Credit Commitments are terminated in whole pursuant to Section 2.11, 9.2 or 9.3 hereof.

 

“Revolving Loan” is defined in Section 2.1 hereof and, as so defined, includes a Base Rate Loan or a Eurodollar Loan, each of which is a “type” of Revolving Loan hereunder.

 

“Rolling Period” means, as of any date, the four Fiscal Quarters ending on or immediately preceding such date.

 

“S&P” means Standard & Poor’s Ratings Services Group, a Standard & Poor’s Financial Services LLC business.

 

“Secured Debt” means as of any date of determination, the aggregate principal amount of all indebtedness outstanding of the Borrower and its Subsidiaries, evidenced by notes, bonds debentures or similar instruments and capital lease obligations that are secured by a Lien (other than certain Permitted Encumbrances).

 

“Secured Recourse Debt” means Secured Debt that is recourse for payment to the Borrower or its Subsidiaries.

 

“Senior Housing Assets” means any Property on which the improvements consist only of one or more of the following:  (a) senior apartments, (b) independent living facilities, (c) congregate communities, (d) assisted living facilities, (e) nursing homes, (f) hospitals and

 

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(g) other Property primarily used for senior citizen residences or health care services, together with other improvements incidental thereto.

 

“Significant Lease” means any Lease under which the Borrower or one of its Subsidiaries is the lessor and which Lease provides for minimum rent payments of $2,000,000 or more during any Fiscal Year prior to the year containing the Revolving Credit Termination Date.

 

“Single Employer Plan” means any Plan that is covered by Title IV of ERISA but is not a Multiemployer Plan.

 

“SNF’s” is defined in the definition of Capitalization Rate.

 

“Stock” means shares of capital stock, beneficial or partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation or equivalent entity, whether voting or non-voting, and includes, without limitation, common stock, but excluding any preferred stock or other preferred equity security.

 

“Stock Equivalents” means all securities (other than Stock) convertible into or exchangeable for Stock at  the option of the holder, and all warrants, options or other rights to purchase or subscribe for any stock, whether or not presently convertible, exchangeable or exercisable.

 

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or any other entity of which more than 50% of the outstanding Voting Stock or, in the case of a partnership, more than the 50% of the general partnership interests are at the time directly or indirectly owned by such parent or by any one or more other entities which are themselves subsidiaries of such parent.  Unless otherwise expressly noted herein, the term “Subsidiary” means a Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries.

 

“Tangible Net Worth” means for each applicable period, total stockholders’ equity on the Borrower’s consolidated balance sheet as reported in its Form 10-K or 10-Q less all amounts appearing on the assets side of its consolidated balance sheet representing an intangible asset under GAAP.

 

“Total Asset Value” means the book value, without giving effect to depreciation, of all assets of the Borrower and its Subsidiaries at such time; less (a) the amount, if any, of the Borrower’s investment in any unconsolidated subsidiary, joint venture or other similar entity, and (b) all amounts appearing on the assets side of its consolidated balance sheet separately identifiable as intangible assets under GAAP.

 

“Total Indebtedness” means, as of a given date, all liabilities of the Borrower and its Subsidiaries which would, in conformity with GAAP, be properly classified as a liability on a

 

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consolidated balance sheet of the Borrower and its Subsidiaries as of such date, excluding any amounts categorized as accrued expenses, accrued dividends, deposits held, deferred revenues, minority interests and other liabilities not directly associated with the borrowing of money

 

“UAP Property” is defined in the definition of Unencumbered Asset Pool.

 

“Unconsolidated Affiliates” means an Affiliate of the Borrower whose financial statements are not required to be consolidated with the financial statements of the Borrower in accordance with GAAP.

 

“Unencumbered Asset Pool” means, a pool of unencumbered Properties consisting of properties (each a “UAP Property” and collectively, the “UAP Properties”) owned by the Borrower or a Guarantor, and (i) listed on Schedule 6.27 on the Closing Date or (ii) deemed to be listed on Schedule 6.27 after such properties’ designation by the Borrower as an UAP Property in writing to the Administrative Agent in accordance with Section 8.12 hereof; that meet the following criteria:

 

(a)         Is real property 100% owned in fee simple by the Borrower and/or a Guarantor;

 

(b)         Currently in service (not under development or non-stabilized);

 

(c)         Senior Housing Asset located in the United States;

 

(d)         If such Property is owned by the Borrower, (i) neither the Borrower’s beneficial ownership interest in such Property nor the Property is subject to any Lien (other than Permitted Liens and Liens in favor of the Agent and the Noteholders (but only to the extent the Obligations hereunder are simultaneously secured by such Liens on terms and provisions, including an intercreditor agreement, satisfactory to the Required Lenders)) or to any negative pledge other than the negative pledge set forth herein or in the Note Purchase Agreement and (ii) the Borrower has the unilateral right to (x) sell, transfer or otherwise dispose of such Property and (y) to create a Lien on such Property as security for indebtedness of the Borrower (other than restrictions imposed by the negative pledge set forth herein or in the Note Purchase Agreement);

 

(e)          If such Property is owned by a Guarantor, (i) none of the Borrower’s beneficial ownership interest in such Guarantor or the Property is subject to any Lien (other than Permitted Liens and Liens in favor of the Agent and the Noteholders (but only to the extent the Obligations hereunder are simultaneously secured by such Liens on terms and provisions, including an intercreditor agreement, satisfactory to the Required Lenders)) or to any negative pledge other than the negative pledge set forth herein or in the Note Purchase Agreement and (ii) the Guarantor has the unilateral right to (x) sell, transfer or otherwise dispose of such Property and (y) to create a Lien on such Property as security for indebtedness of the Borrower or such Guarantor (other than restrictions imposed by the negative pledge set forth herein or in the Note Purchase Agreement);

 

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(f)         Such Property, based on Borrower’s or Guarantor’s actual knowledge, is free of all material structural defects or major architectural deficiencies, material title defects, material environmental conditions or other adverse matters which, individually or collectively, materially impair the value of such Property; and

 

(g)         The lessee of such Property under its lease is not more than 60 days past due with respect to any monthly minimum rent payment obligations under such lease.

 

“Unencumbered Asset Pool Value” means an amount equal to the sum of:

 

(a)          for all UAP Properties owned for more than twelve months prior to the date of determination, the quotient of (i) the Property NOI from such UAP Properties divided by (ii) the Capitalization Rate, plus

 

(b)         for all UAP Properties owned for twelve months or less prior to the date of determination, the lesser of (i) the book value (as defined by GAAP) of any such UAP Property or (ii) the value of any such UAP Property as determined by the calculation in clause (a) above.

 

“Unfunded Vested Liabilities”  means, for any Plan at any time, the amount (if any) by which the present value of all vested nonforfeitable accrued benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA.

 

“Unsecured Debt” means, with respect to a Person as of any given date, the aggregate principal amount of all Total Indebtedness of such Person outstanding at such date that is not Secured Indebtedness (excluding Total Indebtedness associated with Unconsolidated Affiliates that is not guaranteed by the Borrower or a Subsidiary of the Borrower) and in the case of the Borrower shall include (without duplication) Total Indebtedness that does not constitute Secured Indebtedness.

 

“Unsecured Debt Service” means, for a given period, Debt Service with respect to Unsecured Debt.

 

“Unused Revolving Credit Commitments” means, at any time, the difference between the Revolving Credit Commitments then in effect and the aggregate outstanding principal amount of Revolving Loans and L/C Obligations.

 

“U.S. Dollars” and “$” each means the lawful currency of the United States of America.

 

“Voting Stock” of any Person means capital stock or other equity interests of any class or classes (however designated) having ordinary power for the election of directors or other similar governing body of such Person, other than stock or other equity interests having such power only by reason of the happening of a contingency.

 

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“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

“Wholly-owned Subsidiary” means a Subsidiary of which all of the issued and outstanding shares of capital stock (other than directors’ qualifying shares as required by law) or other equity interests are owned by the Borrower and/or one or more Wholly-owned Subsidiaries within the meaning of this definition.

 

Section 1.2.      Interpretation.  The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined.  The words “hereof”, “herein”, and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All references to time of day herein are references to Chicago, Illinois, time unless otherwise specifically provided.  Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement.

 

Section 1.3.      Change in Accounting Principles.  If, after the date of this Agreement, there shall occur any change in GAAP from those used in the preparation of the financial statements referred to in Section 6.5 hereof and such change shall result in a change in the method of calculation of any financial covenant, standard or term found in this Agreement, either the Borrower or the Required Lenders may by notice to the Lenders and the Borrower, respectively, require that the Lenders and the Borrower negotiate in good faith to amend such covenants, standards, and terms so as equitably to reflect such change in accounting principles, with the desired result being that the criteria for evaluating the financial condition of the Borrower and its Subsidiaries shall be the same as if such change had not been made.  No delay by the Borrower or the Required Lenders in requiring such negotiation shall limit their right to so require such a negotiation at any time after such a change in accounting principles.  Until any such covenant, standard, or term is amended in accordance with this Section 1.3, financial covenants shall be computed and determined in accordance with GAAP in effect prior to such change in accounting principles.  Without limiting the generality of the foregoing, the Borrower shall neither be deemed to be in compliance with any financial covenant hereunder nor out of compliance with any financial covenant hereunder if such state of compliance or noncompliance, as the case may be, would not exist but for the occurrence of a change in accounting principles after the date hereof.

 

SECTION 2.                                          THE CREDIT FACILITY.

 

Section 2.1.      Revolving Credit Commitments.  Subject to the terms and conditions hereof, each Lender, by its acceptance hereof, severally agrees to make a loan or loans (individually a “Revolving Loan” and collectively for all the Lenders, the “Revolving Loans”) in U.S. Dollars to the Borrower from time to time on a revolving basis up to the amount of such Lender’s Revolving Credit Commitment, subject to any reductions thereof pursuant to the terms hereof, before the Revolving Credit Termination Date.  The sum of the aggregate principal amount of Revolving Loans and L/C Obligations at any time outstanding shall not exceed the Revolving Credit Commitments in effect at such time.  Each Borrowing of Revolving Loans shall be made

 

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ratably by the Lenders in proportion to their respective Revolver Percentages.  As provided in Section 2.5 hereof, the Borrower may elect that each Borrowing of Revolving Loans be either Base Rate Loans or Eurodollar Loans.  Revolving Loans may be repaid and the principal amount thereof reborrowed before the Revolving Credit Termination Date, subject to the terms and conditions hereof.

 

Section 2.2.      Letters of Credit.  (a) General Terms.  Subject to the terms and conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue standby and commercial letters of credit (each a “Letter of Credit”) for the account of the Borrower or for the account of the Borrower and one or more of its Subsidiaries  in an aggregate undrawn face amount up to the L/C Sublimit.  Each Letter of Credit shall be issued by the L/C Issuer, but each Lender shall be obligated to reimburse the L/C Issuer for such Lender’s Revolver Percentage of the amount of each drawing thereunder and, accordingly, each Letter of Credit shall constitute usage of the Revolving Credit Commitment of each Lender pro rata in an amount equal to its Revolver Percentage of the L/C Obligations then outstanding.

 

(b)     Applications.  At any time before the Revolving Credit Termination Date, the L/C Issuer shall, at the request of the Borrower, issue one or more Letters of Credit in U.S. Dollars, in a form satisfactory to the L/C Issuer, with expiration dates no later than the earlier of 12 months from the date of issuance (or which are cancelable not later than 12 months from the date of issuance and each renewal) or 30 days prior to the Revolving Credit Termination Date, in an aggregate face amount as set forth above, upon the receipt of an application duly executed by the Borrower and, if such Letter of Credit is for the account of one of its Subsidiaries, such Subsidiary for the relevant Letter of Credit in the form then customarily prescribed by the L/C Issuer for the Letter of Credit requested (each an “Application”).  Notwithstanding anything contained in any Application to the contrary:  (i) the Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 3.1 hereof, (ii) except as otherwise provided in Section 2.7 or Section 2.14 hereof, unless an Event of Default exists, the L/C Issuer will not call for the funding by the Borrower of any amount under a Letter of Credit before being presented with a drawing thereunder, and (iii) if the L/C Issuer is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid, the Borrower’s obligation to reimburse the L/C Issuer for the amount of such drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed).  If the L/C Issuer issues any Letter of Credit with an expiration date that is automatically extended unless the L/C Issuer gives notice that the expiration date will not so extend beyond its then scheduled expiration date, unless the Administrative Agent or the Required Lenders instruct the L/C Issuer otherwise, the L/C Issuer will give such notice of non-renewal before the time necessary to prevent such automatic extension if before such required notice date:  (i) the expiration date of such Letter of Credit if so extended would be after the Revolving Credit Termination Date, (ii) the Revolving Credit Commitments have been terminated, or (iii) a Default or an Event of Default exists and either the Administrative Agent or the Required Lenders (with notice to the Administrative Agent) have given the L/C Issuer instructions not to so permit the extension of the expiration date of such Letter of Credit.  The L/C Issuer agrees to issue amendments to the Letter(s) of Credit increasing

 

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the amount, or extending the expiration date, thereof at the request of the Borrower subject to the conditions of Section 7 hereof and the other terms of this Section 2.2. Notwithstanding anything contained herein to the contrary, the L/C Issuer shall be under no obligation to issue, extend or amend any Letter of Credit if a default of any Lender’s obligations to fund under Section 2.2(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into arrangements with Borrower or such Lender satisfactory to the L/C Issuer to eliminate the L/C Issuer’s risk with respect to such Lender.

 

(c)     The Reimbursement Obligations.  Subject to Section 2.2(b) hereof, the obligation of the Borrower to reimburse the L/C Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”) shall be governed by the Application related to such Letter of Credit, except that reimbursement shall be made by no later than 2:00 p.m. (Chicago time) on the date when each drawing is to be paid if the Borrower has been informed of such drawing by the L/C Issuer on or before 11:30 a.m. (Chicago time) on the date when such drawing is to be paid or, if notice of such drawing is given to the Borrower after 11:30 a.m. (Chicago time) on the date when such drawing is to be paid, by no later than 12:00 Noon (Chicago time) on the following Business Day, in immediately available funds at the Administrative Agent’s principal office in Chicago, Illinois or such other office as the Administrative Agent may designate in writing to the Borrower (who shall thereafter cause to be distributed to the L/C Issuer such amount(s) in like funds).  If the Borrower does not make any such reimbursement payment on the date due and the Participating Lenders fund their participations therein in the manner set forth in Section 2.2(e) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 2.2(e) below.

 

(d)     Obligations Absolute.  The Borrower’s obligation to reimburse L/C Obligations as provided in subsection (c) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement and the relevant Application under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the L/C Issuer under a Letter of Credit against presentation of a draft or other document that does not strictly comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. None of the Administrative Agent, the Lenders, or the L/C Issuer shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the L/C Issuer; provided that the foregoing shall not be construed to excuse the L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in

 

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respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the L/C Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the L/C Issuer (as finally determined by a court of competent jurisdiction by final and nonappealable judgment), the L/C Issuer shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the L/C Issuer may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(e)     The Participating Interests.  Each Lender (other than the Lender acting as L/C Issuer in issuing the relevant Letter of Credit), by its acceptance hereof, severally agrees to purchase from the L/C Issuer, and the L/C Issuer hereby agrees to sell to each such Lender (a “Participating Lender”), an undivided percentage participating interest (a “Participating Interest”), to the extent of its Revolver Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the L/C Issuer.  Upon any failure by the Borrower to pay any Reimbursement Obligation at the time required on the date the related drawing is to be paid, as set forth in Section 2.2(c) above, or if the L/C Issuer is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Lender shall, not later than the Business Day it receives a certificate in the form of Exhibit A hereto from the L/C Issuer (with a copy to the Administrative Agent) to such effect, if such certificate is received before 1:00 p.m. (Chicago time), or not later than 1:00 p.m. (Chicago time) the following Business Day, if such certificate is received after such time, pay to the Administrative Agent for the account of the L/C Issuer an amount equal to such Participating Lender’s Revolver Percentage of such unpaid or recaptured Reimbursement Obligation together with interest on such amount accrued from the date the related payment was made by the L/C Issuer to the date of such payment by such Participating Lender at a rate per annum equal to:  (i) from the date the related payment was made by the L/C Issuer to the date two (2) Business Days after payment by such Participating Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Lender to the date such payment is made by such Participating Lender, the Base Rate in effect for each such day.  Each such Participating Lender shall thereafter be entitled to receive its Revolver Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the L/C Issuer retaining its Revolver Percentage thereof as a Lender hereunder.  The several obligations of the Participating Lenders to the L/C Issuer under this Section 2.2 shall be absolute, irrevocable, and unconditional under any and all circumstances whatsoever and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Lender may have or have had against the Borrower, the L/C Issuer, the Administrative Agent, any Lender or any other Person whatsoever.  Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of any Revolving Credit Commitment of any Lender, and each payment by a Participating Lender under this Section 2.2 shall be made without any offset, abatement, withholding or reduction whatsoever.

 

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(f)     Indemnification.  The Participating Lenders shall, to the extent of their respective Revolver Percentages, indemnify the L/C Issuer (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such L/C Issuer’s gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment) that the L/C Issuer may suffer or incur in connection with any Letter of Credit issued by it.  The obligations of the Participating Lenders under this Section 2.2(f) and all other parts of this Section 2.2 shall survive termination of this Agreement and of all Applications, Letters of Credit, and all drafts and other documents presented in connection with drawings thereunder.

 

(g)     Manner of Requesting a Letter of Credit.  The Borrower shall provide at least five (5) Business Days’ advance written notice to the Administrative Agent of each request for the issuance of a Letter of Credit, such notice in each case to be accompanied by an Application for such Letter of Credit properly completed and executed by the Borrower and, in the case of an extension or amendment or an increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the Administrative Agent and the L/C Issuer, in each case, together with the fees called for by this Agreement.  The Administrative Agent shall promptly notify the L/C Issuer of the Administrative Agent’s receipt of each such notice (and the L/C Issuer shall be entitled to assume that the conditions precedent to any such issuance, extension, amendment or increase have been satisfied unless notified to the contrary by the Administrative Agent or the Required Lenders) and the L/C Issuer shall promptly notify the Administrative Agent and the Lenders of the issuance of the Letter of Credit so requested.

 

(h)     Replacement of the L/C Issuer.  The L/C Issuer may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced L/C Issuer and the successor L/C Issuer.  The Administrative Agent shall notify the Lenders of any such replacement of the L/C Issuer.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced L/C Issuer.  From and after the effective date of any such replacement (i) the successor L/C Issuer shall have all the rights and obligations of the L/C Issuer under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “L/C Issuer” shall be deemed to refer to such successor or to any previous L/C Issuer, or to such successor and all previous L/C Issuers, as the context shall require.  After the replacement of a L/C Issuer hereunder, the replaced L/C Issuer shall remain a party hereto and shall continue to have all the rights and obligations of a L/C Issuer under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

Section 2.3.      Applicable Interest Rates.  (a) Base Rate Loans.  Each Base Rate Loan made or maintained by a Lender shall bear interest (computed on the basis of a year of 365 or 366 days, as the case may be, and the actual days elapsed) on the unpaid principal amount thereof from the date such Revolving Loan is advanced, or created by conversion from a Eurodollar Loan, until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect, payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

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“Base Rate” means, for any day, the rate per annum equal to the greatest of:  (a) the rate of interest announced or otherwise established by the Administrative Agent from time to time as its prime commercial rate, or its equivalent, for U.S. Dollar loans to borrowers located in the United States  as in effect on such day, with any change in the Base Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate (it being acknowledged and agreed that such rate may not be the Administrative Agent’s best or lowest rate), (b) the sum of (i) the rate determined by the Administrative Agent to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to the Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) by two or more Federal funds brokers selected by the Administrative Agent for sale to the Administrative Agent at face value of Federal funds in the secondary market in an amount equal or comparable to the principal amount for which such rate is being determined, plus (ii) 1/2 of 1%, and (c) the LIBOR Quoted Rate for such day plus 1.00%.  As used herein, the term “LIBOR Quoted Rate” means, for any day, the rate per annum equal to the quotient of (i) the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a one-month interest period which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on such day (or, if such day is not a Business Day, on the immediately preceding Business Day) divided by (ii) one (1) minus the Eurodollar Reserve Percentage.

 

(b)     Eurodollar Loans.  Each Eurodollar Loan made or maintained by a Lender shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Revolving Loan is advanced or continued, or created by conversion from a Base Rate Loan, until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Adjusted LIBOR applicable for such Interest Period, payable by the Borrower on each Interest Payment Date and at maturity (whether by acceleration or otherwise).

 

“Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum determined in accordance with the following formula:

 

	
Adjusted   LIBOR
    	
=
    	
LIBOR
    	
 
    
	
 
    	
 
    	
1   - Eurodollar Reserve Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    

“Eurodollar Reserve Percentage” means the maximum reserve percentage, expressed as a decimal, at which reserves (including, without limitation, any emergency, marginal, special, and supplemental reserves) are imposed by the Board of Governors of the Federal Reserve System (or any successor) on “eurocurrency liabilities”, as defined in such Board’s Regulation D (or any successor thereto), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto.  For purposes of this definition, the relevant Revolving Loans shall be deemed to be “eurocurrency liabilities” as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any such reserve percentage.

 

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“LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds are offered to the Administrative Agent at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by three (3) or more major banks in the interbank eurodollar market selected by the Administrative Agent for delivery on the first day of and for a period equal to such Interest Period and in an amount equal or comparable to the principal amount of the Eurodollar Loan scheduled to be made as part of such Borrowing.

 

“LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a period equal to such Interest Period, which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period.

 

“LIBOR01 Page” means the display designated as “LIBOR01 Page” on the Reuters Service (or such other page as may replace the LIBOR01 Page on that service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits).

 

(c)     Rate Determinations.  The Administrative Agent shall determine each interest rate applicable to the Revolving Loans and the Reimbursement Obligations hereunder, and its determination thereof shall be conclusive and binding except in the case of manifest error.

 

Section 2.4.      Minimum Borrowing Amounts; Maximum Eurodollar Loans.  Each Borrowing of Base Rate Loans advanced under the Revolving Credit shall be in an amount not less than $100,000.  Each Borrowing of Eurodollar Loans advanced, continued or converted under the Revolving Credit shall be in an amount equal to $1,000,000 or such greater amount which is an integral multiple of $500,000.  Without the Administrative Agent’s consent, there shall not be more than five (5) Borrowings of Eurodollar Loans outstanding hereunder at any one time.

 

Section 2.5.      Manner of Borrowing Loans and Designating Applicable Interest Rates.  (a) Notice to the Administrative Agent.  The Borrower shall give notice to the Administrative  Agent by no later than 11:00 a.m. (Chicago time):  (i) at least three (3) Business Days before the date on which the Borrower requests the Lenders to advance a Borrowing of Eurodollar Loans and (ii) on the date the Borrower requests the Lenders to advance a Borrowing of Base Rate Loans.  The Revolving Loans included in each Borrowing shall bear interest initially at the type of rate specified in such notice of a new Borrowing.  Thereafter, subject to the terms and conditions hereof, the Borrower may from time to time elect to change or continue the type of

 

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interest rate borne by each Borrowing or, subject to the minimum amount requirement for each outstanding Borrowing set forth in Section 2.4 hereof, a portion thereof, as follows:  (i) if such Borrowing is of Eurodollar Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or all of such Borrowing as Eurodollar Loans or convert part or all of such Borrowing into Base Rate Loans or (ii) if such Borrowing is of Base Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into Eurodollar Loans for an Interest Period or Interest Periods specified by the Borrower.  The Borrower shall give all such notices requesting the advance, continuation or conversion of a Borrowing to the Administrative  Agent by telephone, telecopy, or other telecommunication device acceptable to the Administrative Agent (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing in a manner acceptable to the Administrative Agent), substantially in the form attached hereto as Exhibit B (Notice of Borrowing) or Exhibit C (Notice of Continuation/Conversion), as applicable, or in such other form acceptable to the Administrative  Agent.  Notice of the continuation of a Borrowing of Eurodollar Loans for an additional Interest Period or of the conversion of part or all of a Borrowing of Base Rate Loans into Eurodollar Loans must be given by no later than 11:00 a.m. (Chicago time) at least three (3) Business Days before the date of the requested continuation or conversion.  All such notices concerning the advance, continuation or conversion of a Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a Business Day), the amount of the requested Borrowing to be advanced, continued or converted, the type of Revolving Loans to comprise such new, continued or converted Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the Interest Period applicable thereto.  No  Borrowing of Eurodollar Loans shall be advanced, continued, or created by conversion if any Default or Event of Default then exists.  The Borrower agrees that the Administrative Agent may rely on any such telephonic, telecopy or other telecommunication notice given by any person the Administrative Agent in good faith believes is an Authorized Representative without the necessity of independent investigation, and in the event any such notice by telephone conflicts with any written confirmation such telephonic notice shall govern if the Administrative Agent has acted in reliance thereon.

 

(b)     Notice to the Lenders.  The Administrative Agent shall give prompt telephonic, telecopy or other telecommunication notice to each Lender of any notice from the Borrower received pursuant to Section 2.5(a) above and, if such notice requests the Lenders to make Eurodollar Loans, the Administrative Agent shall give notice to the Borrower and each Lender by like means of the interest rate applicable thereto promptly after the Administrative Agent has made such determination.

 

(c)     Borrower’s Failure to Notify.  If the Borrower fails to give notice pursuant to Section 2.5(a) above of the continuation or conversion of any outstanding principal amount of a Borrowing of Eurodollar Loans before the last day of its then current Interest Period within the period required by Section 2.5(a) and such Borrowing is not prepaid in accordance with Section 2.7, such Borrowing shall automatically be converted into a Borrowing of Base Rate Loans.  In the event the Borrower fails to give notice pursuant to Section 2.5(a) above of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified the Administrative Agent by 12:00 noon (Chicago time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not

 

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borrowed under this Agreement, the Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under the Revolving Credit on such day in the amount of the Reimbursement Obligation then due, which Borrowing shall be applied to pay the Reimbursement Obligation then due.

 

(d)     Disbursement of Loans.  Not later than 1:00 p.m. (Chicago time) on the date of any requested advance of a new Borrowing, subject to Section 7 hereof, each Lender shall make available its Revolving Loan comprising part of such Borrowing in funds immediately available at the principal office of the Administrative Agent in Chicago, Illinois (or at such other location in the United States as the Administrative Agent shall designate in writing to the Borrower).  The Administrative Agent shall make the proceeds of each new Borrowing available to the Borrower at the Administrative Agent’s principal office in Chicago, Illinois (or at such other location in the United States as the Administrative Agent shall designate in writing to the Borrower), by depositing or wire transferring such proceeds to the credit of the Borrower’s Designated Disbursement Account or as the Borrower and the Administrative Agent may otherwise agree.

 

(e)     Administrative Agent Reliance on Lender Funding.  Unless the Administrative Agent shall have been notified by a Lender prior to (or, in the case of a Borrowing of Base Rate Loans, by 1:00 p.m. (Chicago time) on) the date on which such Lender is scheduled to make payment to the Administrative Agent of the proceeds of a Revolving Loan (which notice shall be effective upon receipt) that such Lender does not intend to make such payment, the Administrative Agent may assume that such Lender has made such payment when due and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower the proceeds of the Revolving Loan to be made by such Lender and, if any Lender has not in fact made such payment to the Administrative Agent, such Lender shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Lender together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Lender pays such amount to the Administrative Agent at a rate per annum equal to:  (i) from the date the related advance was made by the Administrative Agent to the date two (2) Business Days after payment by such Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Base Rate in effect for each such day.  If such amount is not received from such Lender by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Revolving Loan attributable to such Lender with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Revolving Loan, but without such payment being considered a payment or prepayment of a Loan under Section 2.10 hereof so that the Borrower will have no liability under such Section with respect to such payment.

 

Section 2.6.      Maturity of Loans.  Each Revolving Loan, both for principal and interest not sooner paid, shall mature and be due and payable by the Borrower on the Revolving Credit Termination Date.

 

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Section 2.7.      Prepayments.  (a) Optional.  The Borrower may prepay  in whole or in part (but, if in part, then:  (i) if such Borrowing is of Base Rate Loans, in an amount not less than $100,000, (ii) if such Borrowing is of Eurodollar Loans, in an amount not less than $500,000, and (iii) in each case, in an amount such that the minimum amount required for a Borrowing pursuant to Section 2.4 hereof remains outstanding) any Borrowing of Eurodollar Loans at any time upon three (3) Business Days prior notice by the Borrower to the Administrative Agent or, in the case of a Borrowing of Base Rate Loans, notice delivered by the Borrower to the Administrative Agent no later than 10:00 a.m. (Chicago time) on the date of prepayment (or, in any case, such shorter period of time then agreed to by the Administrative Agent), such prepayment to be made by the payment of the principal amount to be prepaid and, in the case of any Eurodollar Loans, accrued interest thereon to the date fixed for prepayment plus any amounts due the Lenders under Section 2.10 hereof.

 

(b)     Mandatory.      (i) The Borrower shall, on each date the Revolving Credit Commitments are reduced pursuant to Section 2.11 hereof, prepay the Revolving Loans and, if necessary, prefund the L/C Obligations by the amount, if any, necessary to reduce the sum of the aggregate principal amount of Revolving Loans and L/C Obligations then outstanding to the amount to which the Revolving Credit Commitments have been so reduced.

 

(ii)     Unless the Borrower otherwise directs, prepayments of Revolving Loans under this Section 2.7(b) shall be applied first to Borrowings of Base Rate Loans until payment in full thereof with any balance applied to Borrowings of Eurodollar Loans in the order in which their Interest Periods expire.  Each prepayment of Revolving Loans under this Section 2.7(b) shall be made by the payment of the principal amount to be prepaid and, in the case of any Eurodollar Loans, accrued interest thereon to the date of prepayment together with any amounts due the Lenders under Section 2.10 hereof.  Each prefunding of L/C Obligations shall be made in accordance with Section 9.4 hereof.

 

(c)     Any amount of Revolving Loans paid or prepaid before the Revolving Credit Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again.

 

Section 2.8.      Default Rate.  Notwithstanding anything to the contrary contained herein, while any Event of Default exists or after acceleration, the Borrower shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Revolving Loans and Reimbursement Obligations, and letter of credit fees at a rate per annum equal to:

 

(a)          for any Base Rate Loan, the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to time in effect;

 

(b)         for any Eurodollar Loan, the sum of 2.0% plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans plus the Base Rate from time to time in effect;

 

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(c)          for any Reimbursement Obligation, the sum of 2.0% plus the amounts due under Section 2.2 with respect to such Reimbursement Obligation; and

 

(d)         for any Letter of Credit, the sum of 2.0% plus the letter of credit fee due under Section 3.1 with respect to such Letter of Credit;

 

provided, however, that in the absence of acceleration, any adjustments pursuant to this Section shall be made at the election of the Administrative Agent, acting at the request or with the consent of the Required Lenders, with written notice to the Borrower.  While any Event of Default exists or after acceleration, interest shall be paid on demand of the Administrative Agent at the request or with the consent of the Required Lenders.

 

Section 2.9.      Evidence of Indebtedness.  (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Revolving Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(b)     The Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Revolving Loan made hereunder and the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

 

(c)     The entries maintained in the accounts maintained pursuant to paragraphs (a) and (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

 

(d)     Any Lender may request that its Revolving Loans be evidenced by a promissory note in the form of Exhibit D (collectively, the “Notes” and individually as a “Note”).  In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender or its registered assigns in the amount of its Revolving Credit Commitment.  Thereafter, the Revolving Loans evidenced by such Note or Notes and interest thereon shall at all times (including after any assignment pursuant to Section 13.12) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 13.12, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Revolving Loans once again be evidenced as described in subsections (a) and (b) above.

 

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Section 2.10.        Funding Indemnity.  If any Lender shall incur any loss, cost or expense (including, without limitation, any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by such Lender to fund or maintain any Eurodollar Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to such Lender) as a result of:

 

(a)         any payment, prepayment or conversion of a Eurodollar Loan on a date other than the last day of its Interest Period,

 

(b)         any failure (because of a failure to meet the conditions of Section 7 or otherwise) by the Borrower to borrow or continue a Eurodollar Loan, or to convert a Base Rate Loan into a Eurodollar Loan, on the date specified in a notice given pursuant to Section 2.5(a) hereof,

 

(c)          any failure by the Borrower to make any payment of principal on any Eurodollar Loan  when due (whether by acceleration or otherwise), or

 

(d)         any acceleration of the maturity of a Eurodollar Loan  as a result of the occurrence of any Event of Default hereunder,

 

then, upon the demand of such Lender, the Borrower shall pay to such Lender such amount as will reimburse such Lender for such loss, cost or expense.  If any Lender makes such a claim for compensation, it shall provide to the Borrower, with a copy to the Administrative Agent, a certificate setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate shall be deemed prime facie correct.

 

Section 2.11.        Commitment Terminations.  (a) Optional Revolving Credit Terminations.  The Borrower shall have the right at any time and from time to time, upon five (5) Business Days prior written notice to the Administrative Agent (or such shorter period of time agreed to by the Administrative Agent), to terminate the Revolving Credit Commitments without premium or penalty and in whole or in part, any partial termination to be (i) in an amount not less than $1,000,000 and (ii) allocated ratably among the Lenders in proportion to their respective Revolver Percentages, provided that the Revolving Credit Commitments may not be reduced to an amount less than the sum of the aggregate principal amount of Revolving Loans and L/C Obligations then outstanding.  Any termination of the Revolving Credit Commitments below the L/C Sublimit then in effect shall reduce the L/C Sublimit by a like amount.  The Administrative Agent shall give prompt notice to each Lender of any such termination of the Revolving Credit Commitments.

 

(b)             Any termination of the Revolving Credit Commitments pursuant to this Section may not be reinstated.

 

Section 2.12.        Substitution of Lenders.  In the event (a) the Borrower receives a claim from any Lender for compensation under Section 10.3 or 13.1 hereof, (b) the Borrower receives notice from any Lender of any illegality pursuant to Section 10.1 hereof, (c) any Lender is then a

 

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Defaulting Lender or such Lender is a Subsidiary or Affiliate of a Person who has been deemed insolvent or becomes the subject of a bankruptcy or insolvency proceeding or a receiver or conservator has been appointed for any such Person, or (d) a Lender fails to consent to an amendment or waiver requested under Section 13.13 hereof at a time when the Required Lenders have approved such amendment or waiver (any such Lender referred to in clause (a), (b), (c), or (d) above being hereinafter referred to as an “Affected Lender”), the Borrower may, in addition to any other rights the Borrower may have hereunder or under applicable law, require, at its expense, any such Affected Lender to assign, at par, without recourse, all of its interest, rights, and obligations hereunder (including all of its Revolving Credit Commitments and the Revolving Loans and participation interests in Letters of Credit and other amounts at any time owing to it hereunder and the other Loan Documents) to an Eligible Assignee specified by the Borrower, provided that (i) such assignment shall not conflict with or violate any law, rule or regulation or order of any court or other governmental authority, (ii) the Borrower shall have paid to the Affected Lender all monies (together with amounts due such Affected Lender under Section 2.10 hereof as if the Revolving Loans owing to it were prepaid rather than assigned) other than such principal owing to it hereunder, and (iii) the assignment is entered into in accordance with, and subject to the consents required by, Section 13.12 hereof (provided any assignment fees and reimbursable expenses due thereunder shall be paid by the Borrower).

 

Section 2.13.        Increase in Revolving Credit Commitments.  The Borrower may, on any Business Day prior to the Revolving Credit Termination Date, with the written consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), increase the aggregate amount of the Revolving Credit Commitments by delivering a Commitment Amount Increase Request substantially in the form attached hereto as Exhibit H or in such other form acceptable to the Administrative Agent at least five (5) Business Days prior to the desired effective date of such increase (the “Commitment Amount Increase”) identifying one or more additional Lenders (or additional Revolving Credit Commitments for existing Lender(s)) and the amount of its Revolving Credit Commitment (or additional amount of its Revolving Credit Commitment(s)); provided, however, that (i) any increase of the aggregate amount of the Revolving Credit Commitments to an amount in excess of $250,000,000 will require the approval of the Required Lenders, (ii) any increase of the aggregate amount of the Revolving Credit Commitments shall be in an amount not less than $5,000,000, (iii) no Default or Event of Default shall have occurred and be continuing at the time of the request or  the effective date of the Commitment Amount Increase and (iv) all representations and warranties contained in Section 6 hereof shall be true and correct at the time of such request and on the effective date of such Commitment Amount Increase.  The effective date of the Commitment Amount Increase shall be agreed upon by the Borrower and the Administrative Agent.  Upon the effectiveness thereof, (i) the new Lender(s) (or, if applicable, existing Lender(s)) shall advance Revolving Loans in an amount sufficient such that after giving effect to its advance each Lender shall have outstanding its Revolver Percentage of Revolving Loans and (ii) each Lender shall be deemed to have a Participation Interest, based on the then current Revolver Percentages, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the L/C Issuer.  It shall be a condition to such effectiveness that (i) if any Eurodollar Loans are outstanding under the Revolving Credit on the date of such effectiveness, such Eurodollar Loans shall be deemed to be prepaid on such date and the Borrower shall pay any amounts owing to the Lenders pursuant to Section 2.10 hereof and (ii) the Borrower shall not have terminated any portion of the Revolving

 

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Credit Commitments pursuant to Section 2.11 hereof.  The Borrower agrees to pay any reasonable expenses of the Administrative Agent relating to any Commitment Amount Increase.  Notwithstanding anything herein to the contrary, no Lender shall have any obligation to increase its Revolving Credit Commitment and no Lender’s Revolving Credit Commitment shall be increased without its consent thereto, and each Lender may at its option, unconditionally and without cause, decline to increase its Revolving Credit Commitment.

 

Section 2.14.        Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the event that any Lender at any time is a Defaulting Lender, then (a) during any Defaulting Lender Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting on any matters (including the granting of any consents or waivers) with respect to any of the Loan Documents and such Defaulting Lender’s Commitments shall be excluded for purposes of determining “Required Lenders” (provided that the foregoing shall not permit an increase in such Lender’s Commitments or an extension of the maturity date of such Lender’s Revolving Loans or other Obligations without such Lender’s consent); (b) to the extent permitted by applicable law, until such time as the Defaulting Lender Excess with respect to such Defaulting Lender shall have been reduced to zero, any voluntary prepayment of the Revolving Loans shall, if the Administrative Agent so directs at the time of making such voluntary prepayment, be applied to the Revolving Loans of other Lenders as if such Defaulting Lender had no Loans outstanding; (c) such Defaulting Lender’s Revolving Credit Commitments and outstanding Revolving Loans shall be excluded for purposes of calculating any commitment fee payable to Lenders pursuant to Section 3.1 in respect of any day during any Defaulting Lender Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any fee pursuant to Section 3.1 with respect to such Defaulting Lender’s Revolving Credit Commitment in respect of any Defaulting Lender Period with respect to such Defaulting Lender (and any Letter of Credit fee otherwise payable to a Lender who is a Defaulting Lender shall instead be paid to the L/C Issuer for its use and benefit); (d) the utilization of Revolving Credit Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Revolving Loans of such Defaulting Lender; and (e) if so requested by the L/C Issuer at any time during the Defaulting Lender Period with respect to such Defaulting Lender, the Borrower shall deliver to the Administrative Agent cash collateral in an amount equal to such Defaulting Lender’s Revolver Percentage of L/C Obligations then outstanding (to be, held by the Administrative Agent as set forth in Section 9.4 hereof).  No Revolving Credit Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.14, performance by the Borrower of its obligations hereunder and the other Loan Documents shall not be excused or otherwise modified as a result of the operation of this Section 2.14.  The rights and remedies against a Defaulting Lender under this Section 2.14 are in addition to other rights and remedies which the Borrower may have against such Defaulting Lender and which the Administrative Agent or any Lender may have against such Defaulting Lender.

 

SECTION 3.                                                 FEES.

 

Section 3.1.        Fees.  (a) Revolving Credit Commitment Fee.  The Borrower shall pay to the Administrative Agent for the ratable account of the Lenders in accordance with their

 

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Revolver Percentages a commitment fee at the rate per annum equal to the Applicable Margin (computed on the basis of a year of 360 days and the actual number of days elapsed) on the average daily Unused Revolving Credit Commitments.  Such commitment fee shall be payable quarterly in arrears on the last day of each March, June, September, and December in each year (commencing on the first such date occurring after the date hereof) and on the Revolving Credit Termination Date, unless the Revolving Credit Commitments are terminated in whole on an earlier date, in which event the commitment fee for the period to the date of such termination in whole shall be paid on the date of such termination.

 

(b)             Letter of Credit Fees.  On the date of issuance or extension, or increase in the amount, of any Letter of Credit pursuant to Section 2.2 hereof, the Borrower shall pay to the L/C Issuer for its own account a fronting fee equal to 0.125% of the face amount of (or of the increase in the face amount of) such Letter of Credit.  Quarterly in arrears, on the last day of each March, June, September, and December, commencing on the first such date occurring after the date hereof, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders in accordance with their Revolver Percentages, a letter of credit fee at a rate per annum equal to the Applicable Margin (computed on the basis of a year of 360 days and the actual number of days elapsed) in effect during each day of such quarter applied to the daily average face amount of Letters of Credit outstanding during such quarter.  In addition, the Borrower shall pay to the L/C Issuer for its own account the L/C Issuer’s standard issuance, drawing, negotiation, amendment, assignment, cancellation, transfer and other administrative fees for each Letter of Credit as established by the L/C Issuer from time to time.

 

(c)             Administrative Agent Fees.  The Borrower shall pay to the Administrative Agent, for its own use and benefit, the fees agreed to between the Administrative Agent and the Borrower in a fee letter dated March 24, 2011, or as otherwise agreed to in writing between them.

 

SECTION 4.                                                 PLACE AND APPLICATION OF PAYMENTS.

 

Section 4.1.        Place and Application of Payments.  All payments of principal of and interest on the Revolving Loans and the Reimbursement Obligations, and of all other Obligations payable by the Borrower under this Agreement and the other Loan Documents, shall be made by the Borrower to the Administrative Agent by no later than 12:00 Noon (Chicago time) on the due date thereof at the office of the Administrative Agent in Chicago, Illinois (or such other location in the United States as the Administrative Agent may designate in writing to the Borrower) for the benefit of the Lender(s) or L/C Issuer entitled thereto.  Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day.  All such payments shall be made in U.S. Dollars, in immediately available funds at the place of payment, in each case without set-off or counterclaim.  The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Revolving Loans and on Reimbursement Obligations in which the Lenders have purchased Participating Interests ratably to the Lenders and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement.  If the Administrative Agent causes amounts to be distributed to the Lenders in reliance upon the assumption that the Borrower will make a scheduled payment

 

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and such scheduled payment is not so made, each Lender shall, on demand, repay to the Administrative Agent the amount distributed to such Lender together with interest thereon in respect of each day during the period commencing on the date such amount was distributed to such Lender and ending on (but excluding) the date such Lender repays such amount to the Administrative Agent, at a rate per annum equal to:  (i) from the date the distribution was made to the date two (2) Business Days after payment by such Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Base Rate in effect for each such day.

 

Anything contained herein to the contrary notwithstanding (including, without limitation, Section 2.7(b) hereof), all payments and collections received in respect of the Obligations by the Administrative Agent or any of the Lenders after acceleration or the final maturity of the Obligations or termination of the Revolving Credit Commitments as a result of an Event of Default shall be remitted to the Administrative Agent and distributed as follows:

 

(a)          first, to the payment of any outstanding costs and expenses incurred by the Administrative Agent in protecting, preserving or enforcing rights under the Loan Documents, and in any event including all costs and expenses of a character which the Borrower has agreed to pay the Administrative Agent under Section 13.15 hereof (such funds to be retained by the Administrative Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Lenders, in which event such amounts shall be remitted to the Lenders to reimburse them for payments theretofore made to the Administrative Agent);

 

(b)         second, to the payment of any outstanding interest and fees due under the Loan Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

(c)          third, to the payment of principal on the Revolving Loans, unpaid Reimbursement Obligations, together with amounts to be held by the Administrative Agent as collateral security for any outstanding L/C Obligations pursuant to Section 9.4 hereof (until the Administrative Agent is holding an amount of cash equal to the then outstanding amount of all such L/C Obligations), and Hedging Liability, the aggregate amount paid to, or held as collateral security for, the Lenders and L/C Issuer and, in the case of Hedging Liability, their Affiliates to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

(d)         fourth, to the payment of all other unpaid Obligations and all other indebtedness, obligations, and liabilities of the Borrower and its Subsidiaries evidenced by the Loan Documents (including, without limitation, Funds Transfer and Deposit Account Liability) to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof; and

 

(e)          finally, to the Borrower or whoever else may be lawfully entitled thereto.

 

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Section 4.2.        Account Debit.  The Borrower hereby irrevocably authorizes the Administrative Agent to charge any of  the Borrower’s deposit accounts maintained with the Administrative Agent or any of its Affiliates for the amounts from time to time necessary to pay any then due Obligations; provided that  the Borrower acknowledges and agrees that the Administrative Agent shall not be under an obligation to do so and the Administrative Agent shall not incur any liability to the Borrower or any other Person for the Administrative Agent’s failure to do so.

 

SECTION 5.                                                 GUARANTIES.

 

Section 5.1.        Guaranties.  The payment and performance of the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability shall at all times be guaranteed by each direct and indirect Material  Subsidiary of the Borrower pursuant to Section 12 hereof or pursuant to one or more guaranty agreements in form and substance acceptable to the Administrative Agent, as the same may be amended, modified or supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties” and each such Material Subsidiary executing and delivering a Guaranty being referred to herein as a “Guarantor” and collectively the “Guarantors”).

 

Section 5.2.        Further Assurances.  In the event the Borrower or any Guarantor forms or acquires any other Material Subsidiary after the date hereof, the Borrower shall promptly upon such formation or acquisition cause such newly formed or acquired Material Subsidiary to execute a Guaranty or an Additional Guarantor Supplement in the form of Exhibit G attached hereto (the “Additional Guarantor Supplement”) as the Administrative Agent may then require, and the Borrower shall also deliver to the Administrative Agent, or cause such Material Subsidiary to deliver to the Administrative Agent, at the Borrower’s cost and expense, such other instruments, documents, certificates, and opinions reasonably required by the Administrative Agent in connection therewith.

 

SECTION 6.                                                 REPRESENTATIONS AND WARRANTIES.

 

The Borrower represents and warrants to the Administrative Agent, the Lenders, and the L/C Issuer as follows:

 

Section 6.1.        Organization and Qualification.  The Borrower is duly organized, validly existing, and in good standing as a corporation  under the laws of the State of Maryland, has full and adequate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying.

 

Section 6.2.        Subsidiaries.  Each Subsidiary is duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is organized, has full and adequate power to own its Property and conduct its business as now conducted, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business conducted by it or the nature of the Property owned or leased by it requires such licensing or qualifying.

 

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Schedule 6.2 hereto identifies each Subsidiary as of the date hereof and as updated from time to time as provided in Section 8.5(i), the jurisdiction of its organization, the percentage of issued and outstanding shares of each class of its capital stock or other equity interests owned by the Borrower and the other Subsidiaries and, if such percentage is not 100% (excluding directors’ qualifying shares as required by law), a description of each class of its authorized capital stock and other equity interests and the number of shares of each class issued and outstanding.  All of the outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable and all such shares and other equity interests indicated on Schedule 6.2 as owned by the Borrower or another Subsidiary are owned, beneficially and of record, by the Borrower or such Subsidiary free and clear of all Liens.  Neither the Borrower or any of its Subsidiaries has committed or is obligated to issue Stock Equivalents in any of the Borrower’s Subsidiaries to any Person not owned by the Borrower or its Subsidiaries.

 

Section 6.3.        Authority and Validity of Obligations.  The Borrower has full right and authority to enter into this Agreement and the other Loan Documents executed by it, to make the borrowings herein provided for, to issue its Notes in evidence thereof, and to perform all of its obligations hereunder and under the other Loan Documents executed by it.  Each Subsidiary has full right and authority to enter into the Loan Documents executed by it, to guarantee the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability  and to perform all of its obligations under the Loan Documents executed by it.  The Loan Documents delivered by the Borrower and by each Material Subsidiary have been duly authorized, executed, and delivered by such Persons and constitute valid and binding obligations of the Borrower and its Material Subsidiary enforceable against them in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law); and this Agreement and the other Loan Documents do not, nor does the performance or observance by the Borrower or any Subsidiary of any of the matters and things herein or therein provided for, (a) contravene or constitute a default under any provision of law or any judgment, injunction, order or decree binding upon the Borrower or any Material Subsidiary or any provision of the organizational documents (e.g., charter, certificate or articles of incorporation and by-laws, certificate or articles of association and operating agreement, partnership agreement, or other similar organizational documents) of the Borrower or any Material Subsidiary, (b) contravene or constitute a default under any covenant, indenture or agreement of or affecting the Borrower or any Material Subsidiary or any of its Property, or (c) result in the creation or imposition of any Lien on any Property of the Borrower or any Material Subsidiary.  The Borrower hereby represents and warrants that all obligations of it or any of its Subsidiaries to GMAC Commercial Mortgage Corporation, as Master Servicer for Bankers Trust Company, as Trustee under that certain Pooling and Servicing Agreement, dated as of November 1, 1994, as amended, restated or otherwise modified, have been terminated, satisfied and cancelled.

 

Section 6.4.        Use of Proceeds; Margin Stock.  The Borrower shall use the proceeds of the Revolving Credit for refinancing its existing indebtedness, for its general working capital purposes and for such other legal and proper purposes as are consistent with all applicable laws.  Neither the Borrower nor any Subsidiary is engaged in the business of extending credit for the

 

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purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Revolving Loan or any other extension of credit made hereunder will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock.  Margin stock (as hereinabove defined) constitutes less than 25% of the assets of the Borrower and its Subsidiaries which are subject to any limitation on sale, pledge or other restriction hereunder.

 

Section 6.5.        Financial Reports.  The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2010, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, and accompanying notes thereto, which financial statements are accompanied by the audit report of Ernst & Young, LLP, independent public accountants, and the unaudited interim consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2010, and the related consolidated statements of income, retained earnings and cash flows of the Borrower and its Subsidiaries for the 12 months then ended, heretofore furnished to the Administrative Agent and the Lenders, fairly present the consolidated financial condition of the Borrower and its Subsidiaries as at said dates and the consolidated results of their operations and cash flows for the periods then ended in conformity with GAAP applied on a consistent basis.  Neither the Borrower nor any Subsidiary has contingent liabilities which are material to it other than as indicated on such financial statements or, with respect to future periods, on the financial statements furnished pursuant to Section 8.5 hereof.

 

Section 6.6.        No Material Adverse Change.  Since December 31, 2010, there has been no event which could reasonably be expected to have a Material Adverse Effect on the Borrower or its Subsidiaries, taken as a whole.

 

Section 6.7.        Full Disclosure.  The statements and information furnished to the Administrative Agent and the Lenders in connection with the negotiation of this Agreement and the other Loan Documents and the commitments by the Lenders to provide all or part of the financing contemplated hereby do not contain any untrue statements of a material fact or omit a material fact necessary to make the material statements contained herein or therein not misleading, the Administrative Agent and the Lenders acknowledging that as to any projections furnished to the Administrative Agent and the Lenders, the Borrower only represents that the same were prepared on the basis of information and estimates the Borrower believed to be reasonable.

 

Section 6.8.        Trademarks, Franchises, and Licenses.  The Borrower and its Subsidiaries own, possess, or have the right to use all necessary patents, licenses, franchises, trademarks, trade names, trade styles, copyrights, trade secrets, know how, and confidential commercial and proprietary information to conduct their businesses as now conducted, without known conflict with any patent, license, franchise, trademark, trade name, trade style, copyright or other proprietary right of any other Person.

 

Section 6.9.        Governmental Authority and Licensing.  The Borrower and its Subsidiaries have received all licenses, permits, and approvals of all federal, state, and local governmental

 

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authorities, if any, necessary to conduct their businesses, in each case where the failure to obtain or maintain the same could reasonably be expected to have a Material Adverse Effect.  No investigation or proceeding which, if adversely determined, could reasonably be expected to result in revocation or denial of any material license, permit or approval is pending or, to the knowledge of the Borrower, threatened.

 

Section 6.10.        Good Title.  The Borrower and its Subsidiaries have good and defensible title (or valid leasehold interests) to their assets as reflected on the most recent consolidated balance sheet  of the Borrower and its Subsidiaries furnished to the Administrative Agent and the Lenders (except for sales of assets permitted by Section 8.10 hereof), subject to no Liens other than such thereof as are permitted by Section 8.8 hereof.

 

Section 6.11.        Litigation and Other Controversies.  There is no litigation or governmental or arbitration proceeding or labor controversy pending, nor to the knowledge of the Borrower threatened, against the Borrower or any Subsidiary or any of their Property which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 6.12.        Taxes.  All tax returns required to be filed by the Borrower or any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes, assessments, fees, and other governmental charges upon the Borrower or any Subsidiary or upon any of its Property, income or franchises, which are shown to be due and payable in such returns, have been paid, except such taxes, assessments, fees and governmental charges, if any, as are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and as to which adequate reserves established in accordance with GAAP have been provided or where the failure to so file or pay would not cause a Material Adverse Effect on the Borrower and its Subsidiaries taken as a whole.  The Borrower does not know of any proposed additional tax assessment against it or its Subsidiaries for which adequate provisions in accordance with GAAP have not been made on their accounts.  Adequate provisions in accordance with GAAP for taxes on the books of the Borrower and each Subsidiary have been made for all open years, and for its current fiscal period.

 

Section 6.13.        Approvals.  No authorization, consent, license or exemption from, or filing or registration with, any court or governmental department, agency or instrumentality, nor any approval or consent of any other Person, is or will be necessary to the valid execution, delivery or performance by the Borrower or any Subsidiary of any Loan Document, except for such approvals which have been obtained prior to the date of this Agreement and remain in full force and effect.

 

Section 6.14.        Affiliate Transactions.  Neither the Borrower nor any Subsidiary is a party to any contracts or agreements with any of its Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions which are less favorable to the Borrower or such Subsidiary than would be usual and customary in similar contracts or agreements between Persons not affiliated with each other.

 

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Section 6.15.        Investment Company.  Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 6.16.        ERISA.  During the 5-year period before each date as of which this representation is made or deemed made with respect to any Plan (or, with respect to (f) and (h) below, as of the date on which such representation is made or deemed made), none of the following events or conditions, either individually or in the aggregate, has occurred and could reasonably be expected to have a Material Adverse Effect:  (a) a Reportable Event; (b) an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA); (c) noncompliance with the applicable provisions of ERISA or the Code; (d) termination of a Single Employer Plan; (e) a Lien on the property of the Borrower or any Subsidiary in favor of the PBGC or a Plan; (f) a complete or partial withdrawal from a Multiemployer Plan by the Borrower or any Commonly Controlled Entity; (g) a liability of the Borrower or a Commonly Controlled Entity under ERISA if the Borrower or such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the annual valuation date most closely preceding the date on which this representation is made or deemed made; (h) the Reorganization or Insolvency of any Multiemployer Plan; and (i) an event or condition with respect to which the Borrower or any Commonly Controlled Entity could reasonably be expected to incur any liability in respect of a Former Plan.  Neither the Borrower nor any Subsidiary maintains or participates in any Defined Benefit Plan or Multiple Employer Plan.

 

Section 6.17.        Compliance with Laws.  (a) The Borrower and its Subsidiaries are in compliance with the requirements of all federal, state and local laws, rules and regulations applicable to or pertaining to their Property or business operations (including, without limitation, the Occupational Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and regulations establishing quality criteria and standards for air, water, land and toxic or hazardous wastes and substances), where any such non-compliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(b)            Without limiting the representations and warranties set forth in Section 6.17(a) above, except for such matters, individually or in the aggregate, which could not reasonably be expected to result in a Material Adverse Effect, the Borrower represents and warrants that to the actual knowledge of each respectively that the Borrower and its Subsidiaries, and each of the Properties owned by them: (i) comply in all material respects with all applicable Environmental Laws; (ii) the tenants of the Borrower and its Subsidiaries have obtained all governmental approvals required for the operation of the Properties under any applicable Environmental Law; (iii) the Borrower and its Subsidiaries have no actual knowledge of any other Person who has, caused any Release, threatened Release or disposal of any Hazardous Material at, on, about, or off any of the Properties in any material quantity and, to the actual the knowledge of the Borrower, none of the Properties are adversely affected by any Release, threatened Release or disposal of a Hazardous Material originating or emanating from any other property; (iv) none of the Properties contain or have contained any:  (1) underground storage tanks in which any Hazardous Material is being or has been treated, stored or disposed of on any Property owned by the Borrower or any Subsidiary, in each case in any manner not in

 

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compliance in all material respects with all applicable Environmental Laws, (2) material amounts of asbestos containing building material, (3) landfills or dumps, (4) hazardous waste management facility as defined pursuant to RCRA or any comparable state law, or (5) site on or nominated for the National Priority List promulgated pursuant to CERCLA or any state remedial priority list promulgated or published pursuant to any comparable state law; (v) the Borrower and its Subsidiaries have not used a material quantity of any Hazardous Material and have conducted no Hazardous Material Activity at any of the Properties; (vi) the Borrower and its Subsidiaries have no material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (vii) the Borrower and its Subsidiaries are not subject to, have no notice or actual knowledge of and are not required to give any notice of any Environmental Claim involving the Borrower or any Subsidiary or any of their Properties, and there are no conditions or occurrences at any of their Properties which could reasonably be anticipated to form the basis for an Environmental Claim against the Borrower or any Subsidiary or such Property; (viii) none of the Properties are subject to any, and the Borrower has no actual knowledge of any imminent restriction on the ownership, occupancy, use or transferability of their Properties in connection with any (1) Environmental Law or (2) Release, threatened Release or disposal of a Hazardous Material; and (ix) there are no conditions or circumstances at any of their Properties which pose an unreasonable risk to the environment or the health or safety of Persons.

 

Section 6.18.        Other Agreements.  Neither the Borrower nor any Subsidiary is in default under the terms of any covenant, indenture or agreement of or affecting such Person or any of its Property, which default if uncured could reasonably be expected to have a Material Adverse Effect.

 

Section 6.19.        OFAC.  (a) The Borrower is in compliance with the requirements of all OFAC Sanctions Programs applicable to it, (b) each Subsidiary of the Borrower is in compliance with the requirements of all OFAC Sanctions Programs applicable to such Subsidiary, (c) the Borrower has provided to the Administrative Agent, the L/C Issuer, and the Lenders all information regarding the Borrower and its Affiliates and Subsidiaries  necessary for the Administrative Agent, the L/C Issuer, and the Lenders to comply with all applicable OFAC Sanctions Programs, and (d) to the best of the Borrower’s knowledge, neither the Borrower nor any of its Affiliates or Subsidiaries is, as of the date hereof, named on the current OFAC SDN List.

 

Section 6.20.        No Default.  No Default or Event of Default has occurred and is continuing.

 

Section 6.21.        Solvency.  The Borrower and its Subsidiaries are solvent, able to pay their debts as they become due, and have sufficient capital to carry on their business and all businesses in which they are about to engage.

 

Section 6.22.        No Broker Fees.  No broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated thereby; and the Borrower hereby agrees to indemnify the Administrative Agent and the Lenders against, and agree that they will hold the Administrative Agent and the Lenders harmless from, any claim, demand, or liability for any such broker’s or finder’s fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable attorneys’ fees) arising in connection with any such claim, demand, or liability.

 

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Section 6.23.        Stock of the Borrower.  As of the Closing Date, the entire authorized capital stock of the Borrower consists of (i) Series F Cumulative Preferred Stock, 3,536,530 shares; (ii) Series C Cumulative Convertible Preferred Stock, 2,000,000 shares; and (iii) Common Stock, 30,334,574 shares; all of which are duly and validly issued and outstanding, fully paid and nonassessable as of the Closing Date.  The issuance and sale of such Stock of the Borrower of the Borrower either (i) has been registered under applicable federal and state securities laws or (ii) was issued pursuant to an exemption therefrom.  The Borrower meets the requirements for taxation as a REIT under the Code.

 

Section 6.24.        Condition of Property; Casualties; Condemnation.  As of the Closing Date, to the actual knowledge of the Borrower or its Material Subsidiaries, each Property owned by them, in all material respects (a) is in good repair, working order and condition, normal wear and tear excepted, (b) is free of structural defects, (c) is not subject to material deferred maintenance and (d) has and will have all building systems contained therein in good repair, working order and condition, normal wear and tear excepted.  To the actual knowledge of the Borrower or of any of its Material Subsidiaries, none of the Properties owned by them is currently materially and adversely affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition or taking of property or cancellation of contracts, permits or concessions by a governmental authority, riot, activities of armed forces or acts of God or of any public enemy.  No condemnation or other like proceedings that has had, or could reasonably be expected to result in, a Material Adverse Change, are pending and served nor, to the actual knowledge of the Borrower, threatened against any Property owned by it in any manner whatsoever.  No casualty has occurred to any such Property that could reasonably be expected to have a Material Adverse Effect.

 

Section 6.25.        Legal Requirements and Zoning.  To the actual knowledge of the Borrower and its Subsidiaries, the use and operation of each Property owned by the Borrower and its Subsidiaries constitutes a legal use under applicable zoning regulations (as the same may be modified by special use permits or the granting of variances) and complies in all material respects with all Legal Requirements, and does not violate in any material respect any material approvals, material restrictions of record or any material agreement affecting any such Property (or any portion thereof).

 

Section 6.26.        No Defaults; Landlord is in Compliance with Leases.  Schedule 6.26 hereto identifies each Significant Lease in existence on the date hereof, the Property which is demised pursuant to each Significant Lease and the name of each landlord and lessee under each Significant Lease.  As of the Closing Date:  (i) none of the tenants under Significant Leases on Properties owned by the Borrower, Material Subsidiaries or any other Subsidiary of the Borrower are in default for a period in excess of 60 days on the monthly minimum rent payments due under such Significant Leases and (ii) no other tenants on other Leases that in the aggregate generate more than $6,000,000 in annual minimum rents payable to the Borrower or its Subsidiaries are in default for a period in excess of 60 days on the monthly minimum rent payments due under such Leases.

 

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Section 6.27.        UAP Properties.  Schedule 6.27 hereto identifies each UAP Property.

 

SECTION 7.                                                 CONDITIONS PRECEDENT.

 

Section 7.1.        All Credit Events.  At the time of each Credit Event hereunder:

 

(a)          each of the representations and warranties set forth herein and in the other Loan Documents shall be and remain true and correct as of said time, except to the extent the same expressly relate to an earlier date (in which case the same shall be true and correct as of such earlier date);

 

(b)         the Borrower and each Subsidiary shall be in compliance with all of the terms and conditions hereof and of the other Loan Documents, and no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event;

 

(c)          in the case of a Borrowing the Administrative Agent shall have received the notice required by Section 2.5 hereof, in the case of the issuance of any Letter of Credit the L/C Issuer shall have received a duly completed Application for such Letter of Credit together with any fees called for by Section 3.1 hereof, and, in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor in a form acceptable to the L/C Issuer together with fees called for by Section 3.1 hereof; and

 

(d)         such Credit Event shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to the Administrative Agent, the L/C Issuer, or any Lender (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System) as then in effect.

 

Each request for a Borrowing hereunder and each request for the issuance of, increase in the amount of, or extension of the expiration date of, a Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date on such Credit Event as to the facts specified in subsections (a) through (c), both inclusive, of this Section; provided, however, that the Lenders may continue to make advances under the Revolving Credit, in the sole discretion of the Lenders with Revolving Credit Commitments, notwithstanding the failure of the Borrower to satisfy one or more of the conditions set forth above and any such advances so made shall not be deemed a waiver of any Default or Event of Default or other condition set forth above that may then exist.

 

Section 7.2.        Initial Credit Event.  Before or concurrently with the initial Credit Event:

 

(a)          the Administrative Agent shall have received this Agreement duly executed by the Borrower and its Material Subsidiaries, as Guarantors, and the Lenders;

 

(b)         if requested by any Lender, the Administrative Agent shall have received for such Lender such Lender’s duly executed Note of the Borrower dated the date hereof and otherwise in compliance with the provisions of Section 2.9 hereof;

 

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(c)          the Administrative Agent shall have received evidence of insurance required to be maintained under the Loan Documents;

 

(d)         the Administrative Agent shall have received copies of the Borrower’s and each Material Subsidiary’s articles of incorporation and bylaws (or comparable organizational documents) and any amendments thereto, certified in each instance by its Secretary or Assistant Secretary;

 

(e)          the Administrative Agent shall have received copies of resolutions of the Borrower’s and each Material Subsidiary’s Board of Directors (or similar governing body) authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, together with specimen signatures of the persons authorized to execute such documents on the Borrower’s and each Material Subsidiary’s behalf, all certified in each instance by its Secretary or Assistant Secretary;

 

(f)         the Administrative Agent shall have received copies of the certificates of good standing for the Borrower and each Material Subsidiary (dated no earlier than 30 days prior to the date hereof) from the office of the secretary of the state of its incorporation or organization and of each state in which it is qualified to do business as a foreign corporation or organization;

 

(g)         the Administrative Agent shall have received a list of the Borrower’s Authorized Representatives;

 

(h)         the Administrative Agent shall have received for itself and for the Lenders the initial fees called for by Section 3.1 hereof;

 

(i)         the Administrative Agent shall have received UCC searches with respect to Borrower and each Guarantor and UCC termination statements for any existing UCC financing statements that are not Permitted Liens;

 

(j)         the Administrative Agent shall have received the favorable written opinion of counsel to the Borrower and each Material Subsidiary, in form and substance satisfactory to the Administrative Agent;

 

(k)          the Administrative Agent shall have received satisfactory evidence that the Noteholders have received credit approval to cause the amendments to the Note Purchase Agreement required by Section 8.22 hereof;

 

(l)         the Administrative Agent shall have received a fully executed Internal Revenue Service Form W-9  for the Borrower and each Guarantor; and

 

(m)          the Administrative Agent shall have received such other agreements, instruments, documents, certificates, and opinions as the Administrative Agent may reasonably request.

 

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SECTION 8.                                                 COVENANTS.

 

The Borrower agrees that, so long as any credit is available to or in use by the Borrower hereunder, except to the extent compliance in any case or cases is waived in writing pursuant to the terms of Section 13.13 hereof:

 

Section 8.1.        Maintenance of Business.  (i) The Borrower shall, and shall cause each Material Subsidiary to, preserve and maintain its existence, except as otherwise provided in Section 8.10(c) hereof.  The Borrower shall, and shall cause each Material Subsidiary to, preserve and keep in force and effect all licenses, permits, franchises, approvals, patents, trademarks, trade names, trade styles, copyrights, and other proprietary rights necessary to the proper conduct of its business.

 

(ii)             (a) The Common Stock of the Borrower shall at all times be duly listed on the New York Stock Exchange, Inc., the American Stock Exchange or the National Association of Securities Dealers Automated Quotation and (b) the Borrower shall timely file all reports required to be filed by it with the New York Stock Exchange, Inc., the American Stock Exchange or the National Association of Securities Dealers Automated Quotation and the Securities and Exchange Commission.

 

Section 8.2.        Maintenance of Properties.  The Borrower and each Material Subsidiary shall cause each of its tenants to, maintain, preserve, and keep all of the Borrower’s and each Material Subsidiaries’ Property in working order and condition (ordinary wear and tear excepted) and to maintain the value of such Property in all material respects, except to the extent that, in the reasonable business judgment of such Person, any such Property is no longer necessary for the proper conduct of the business of such Person.

 

Section 8.3.        Taxes and Assessments.  The Borrower and each Material Subsidiary shall, and shall cause its tenants to, duly pay and discharge, all taxes, rates, assessments, fees, and governmental charges upon or against the Borrower, Material Subsidiary or tenant or the Borrower’s or Material Subsidiaries’ Property, to the extent that individually or collectively would materially impair the value of such Property, and in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings which prevent enforcement of the matter under contest and adequate reserves are provided therefor.

 

Section 8.4.        Insurance.  The Borrower and each Material Subsidiary shall maintain, or cause its tenants to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by Persons similarly situated and operating like Properties.  The Borrower shall, upon the request of the Administrative Agent, furnish to the Administrative Agent and the Lenders certificates of insurance setting forth in summary form the nature and extent of the insurance maintained on the Properties.

 

Section 8.5.        Financial Reports.  The Borrower shall, and shall cause each Subsidiary to, maintain a standard system of accounting in accordance with GAAP and shall furnish to the

 

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Administrative Agent, each Lender, the L/C Issuer and each of their duly authorized representatives such information respecting the business and financial condition of the Borrower and each Subsidiary as the Administrative Agent or such Lender may reasonably request; and without any request, shall furnish to the Administrative Agent, the Lenders and L/C Issuer the following:

 

(a)          as soon as available, and in any event within 45 days after the close of each of the first three (3) Fiscal Quarters of each Fiscal Year of the Borrower a copy of the consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such Fiscal Quarter and the consolidated statements of income, and cash flows of the Borrower and its Subsidiaries for the Fiscal Quarter and for the fiscal year-to-date period then ended, each in reasonable detail showing in comparative form the figures for the corresponding date and period in the previous fiscal year, prepared by the Borrower in accordance with GAAP and certified to by its chief financial officer or another officer of the Borrower acceptable to the Administrative Agent (the delivery of the Borrower’s Form 10-Q shall satisfy this requirement);

 

(b)         as soon as available, and in any event within 90 days after the close of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of the Fiscal Year then ended and the consolidated statements of income, retained earnings, and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, and accompanying notes thereto, each in reasonable detail showing in comparative form the figures for the previous Fiscal Year, accompanied in the case of the consolidated financial statements by an unqualified opinion of Ernst & Young, LLP or another firm of independent public accountants of recognized national standing, selected by the Borrower and reasonably satisfactory to the Administrative Agent and the Required Lenders, to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of the Borrower and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances (the delivery of the Borrower’s Form 10-K shall satisfy this requirement);

 

(c)          with each of the financial statements furnished to the Lenders pursuant to subsections (a) and (b) hereof,  a written certificate (“Compliance Certificate”) in the form attached hereto as Exhibit E signed by the chief financial officer of the Borrower or another officer of the Borrower acceptable to the Administrative Agent to the effect that to the best of such officer’s knowledge and belief no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken by the Borrower or any Subsidiary to remedy the same.  Such certificate shall also set forth the calculations supporting such statements in respect of Section 8.21 hereof; and

 

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(d)         promptly after receipt thereof, any additional written reports, management letters or other detailed information contained in writing concerning significant aspects of the Borrower’s or any Subsidiary’s operations and financial affairs given to it by its independent public accountants;

 

(e)          promptly after the sending or filing thereof, copies of each financial statement, report, notice or proxy statement sent by the Borrower or any Subsidiary to its stockholders or other equity holders, and copies of each regular, periodic or special report, registration statement or prospectus (including all Form 10-K, Form 10-Q and Form 8-K reports) filed by the Borrower or any Subsidiary with any securities exchange or the Securities and Exchange Commission or any successor agency;

 

(f)         as soon as available, and in any event within 90 days after  the end of each fiscal year of the Borrower, a copy of the Borrower’s consolidated projections for the then current fiscal year of revenues, expenses and balance sheet on a quarter-by-quarter basis, with such projections in reasonable detail prepared by the Borrower and in form satisfactory to the Administrative Agent  (which shall include a summary of all significant assumptions made in preparing such business plan);

 

(g)         notice of any Change of Control;

 

(h)         promptly after knowledge thereof shall have come to the attention of any responsible officer of the Borrower, written notice of (i) any threatened or pending litigation or governmental or arbitration proceeding or labor controversy against the Borrower or any Subsidiary or any of their Property which could reasonably be expected to have a Material Adverse Effect or (ii) the occurrence of any Default or Event of Default hereunder; and

 

(i)         within 45 days of the end of each of the first 3 Fiscal Quarters and within 90 days after the close of the last Fiscal Quarter of the year (i) a list of all newly formed or acquired Subsidiaries during such quarter (such list shall contain the information relative to such new Subsidiaries as set forth in Schedule 6.2 hereto); (ii) a list of newly executed Significant Leases during such quarter (upon receipt of which Schedule 1.1 and/or Schedule 6.26 shall be deemed amended to include references to such Significant Lease); (iii) a copy of any notice of a material default or any other material notice (including without limitation property condition reviews) received by the Borrower or any Guarantor from any ground lessor under a Significant Lease during such quarter and (iv) a schedule showing for such quarter (a) any Significant Lease that was or is continuing to be in default with respect to monthly minimum rent payments in excess of 60 days, and (b) any other Leases that in the aggregate generate more than $6,000,000 in annual minimum rents payable to the Borrower or its Subsidiaries that were or are continuing to be in default for a period in excess of 60 days on the monthly minimum rent payments due under such Significant Leases.

 

Unless otherwise expressly requested by a Lender, documents required to be delivered pursuant to Sections 8.5(a), (b), (c), (d), (e), (f) or (i) may be delivered via electronic communication to any Lender.

 

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Section 8.6.        Inspection.  The Borrower shall, and shall cause each Subsidiary to, permit the Administrative Agent, each Lender, the L/C Issuer and each of their duly authorized representatives and agents to visit and inspect any of its Property, corporate books, and financial records, to examine and make copies of its books of accounts and other financial records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers, employees and independent public accountants (and by this provision the Borrower hereby authorizes such accountants to discuss with the Administrative Agent, such Lenders and L/C Issuer the finances and affairs of the Borrower and its Subsidiaries) at such reasonable times and intervals as the Administrative Agent or any such Lender or L/C Issuer may designate and, so long as no Default or Event of Default exists, with reasonable prior notice to the Borrower.

 

Section 8.7.        Office of Foreign Asset Control.  Neither Borrower nor any Guarantor is (or will be) a person with whom a Lender is restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury of the United States of America (including, those Persons named on OFAC’s Specially Designated and Blocked Persons list) or under any statute, executive order (including, the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not and shall not engage in any dealings or transactions or otherwise be associated with such persons.  In addition, Borrower hereby agrees to provide to any Lender with any additional information that the Lender deems necessary from time to time in order to ensure compliance with all applicable Laws concerning money laundering and similar activities.

 

Section 8.8.        Liens.  The Borrower shall not, nor shall it permit any Subsidiary to, create, incur or permit to exist any Lien of any kind on any Property owned by any such Person; provided, however, that the foregoing shall not apply to nor operate to prevent any Permitted Liens.

 

Section 8.9.        Investments, Acquisitions, Loans and Advances.  The Borrower shall not, nor shall it permit any Subsidiary to (i) directly or indirectly, make, retain or have outstanding any investments (whether through the purchase of stock or obligations or otherwise) in any Person, real property or improvements on real property, or any loans, advances, lines of credit, mortgage loans or other financings (including pursuant to sale/leaseback transactions) to any other Person, or (ii) acquire any real property, improvements on real property or all or any substantial part of the assets or business of any other Person or division thereof; provided, however, that the foregoing shall not apply to nor operate to prevent:

 

(a)          investments in direct obligations of the United States of America or of any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America, provided that any such obligations shall mature within one year of the date of issuance thereof;

 

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(b)         investments in commercial paper rated at least P-1 by Moody’s and at least A-1 by S&P maturing within one year of the date of issuance thereof;

 

(c)          investments in certificates of deposit issued by any Lender or by any United States commercial bank having capital and surplus of not less than $100,000,000 which have a maturity of one year or less;

 

(d)         investments in repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in subsection (a) above entered into with any bank meeting the qualifications specified in subsection (c) above, provided all such agreements require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System;

 

(e)          investments in money market funds that invest solely, and which are restricted by their respective charters to invest solely, in investments of the type described in the immediately preceding subsections (a), (b), (c), and (d) above;

 

(f)         the Borrower’s investments from time to time in its Subsidiaries, and investments made from time to time by a Subsidiary in one or more of its Subsidiaries;

 

(g)         intercompany advances made from time to time among the Borrower and its Subsidiaries in the ordinary course of business to finance working capital needs;

 

(h)         investments in Permitted Acquisitions, other than those described in clauses (j), (k) or (l) below;

 

(i)         investments held by the Borrower and its Subsidiaries as of the date of this Agreement;

 

(j)         excluding investments in joint ventures existing prior to the date of this Agreement, investments in joint ventures which are Permitted Acquisitions and are in an amount not to exceed in the aggregate at any one time outstanding 15% of the Total Asset Value of the Borrower and its Subsidiaries at such time;

 

(k)          excluding Assets Under Development existing prior to the date of this Agreement, investments in Assets Under Development which are Permitted Acquisitions and are in an amount not to exceed in the aggregate at any one time outstanding 15% of the Total Asset Value of the Borrower and its Subsidiaries at such time;

 

(l)         excluding investments in Redevelopment Assets existing prior to the date of this Agreement, investments in Redevelopment Assets which are Permitted Acquisitions and are in an amount not to exceed in the aggregate at any one time outstanding 15% of the Total Asset Value of the Borrower and its Subsidiaries at such time;

 

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(m)                              investments received in connection with a workout of any obligation owed to Borrower or its Subsidiaries; and

 

(n)                            investments other than those otherwise permitted under this Section in an amount not to exceed in the aggregate at any one time outstanding 15% of the Total Asset Value of the Borrower and its Subsidiaries at such time.

 

Investments made after the date of this Agreement and of the type described in clauses (j), (k), (l) and (n) immediately preceding shall at no time exceed in the aggregate at any one time outstanding 20% of the Total Asset Value of the Borrower and its Subsidiaries at such time.  In determining the amount of investments, acquisitions, loans, and advances permitted under this Section, investments and acquisitions shall always be taken at the original cost thereof (regardless of any subsequent appreciation or depreciation therein), and loans and advances shall be taken at the principal amount thereof then remaining unpaid.

 

Section 8.10.                         Mergers, Consolidations and Sales.  The Borrower will not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or a series of transactions) any of its Property (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, or permit any Subsidiary to do so; provided, however, that the Borrower may merge or consolidate with another Person, including a Subsidiary, if (A) the Borrower is the surviving corporation, (B) the Borrower will be in pro forma compliance with all provisions of this Agreement upon and after such merger or consolidation and (C) the Borrower will not engage in any material line of business substantially different from that engaged in on the Closing Date and; provided, further, that so long as no Default or Event of Default exists this Section shall not apply to nor operate to prevent:

 

(a)                             the sale, transfer, lease or other disposition of Property of the Borrower and its Subsidiaries to one another in the ordinary course of its business;

 

(b)                            sales of shares of capital stock or other equity interests by Borrower or, to the extent permitted by Section 8.11, its Subsidiaries;

 

(c)                             the sale, transfer or other disposition of any tangible personal property that, in the reasonable business judgment of the Borrower or its Subsidiary, has become obsolete or worn out, and which is disposed of in the ordinary course of business; and

 

(d)                            the sale, transfer, lease or other disposition of Property of the Borrower or any Subsidiary (including any disposition of Property as part of a sale and leaseback transaction); provided however, that if such sale, transfer, lease or disposition during any Fiscal Quarter exceeds $5,000,000 and together with any other sales, transfers, leases or dispositions made during such Fiscal Quarter in the aggregate exceed $50,000,000, then for such sales, transfers, leases or dispositions, the Borrower shall provide to the Administrative Agent a Compliance Certificate with covenant calculations for the covenants contained in Section 8.21 showing that after giving effect to such sales, transfers, leases or dispositions the Borrower shall be in pro forma compliance with such covenants for the Fiscal Quarter in which the sale, transfer, lease or disposition occurs.

 

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Section 8.11.                         Maintenance of Material Subsidiaries.  The Borrower shall not assign, sell or transfer, nor shall it permit any Material Subsidiary to issue, assign, sell or transfer, any shares of capital stock or other equity interests of a Material Subsidiary; provided, however, that the foregoing shall not operate to prevent (a) Liens on the capital stock or other equity interests of Material Subsidiaries granted to the Administrative Agent, (b) the issuance, sale, and transfer to any person of any shares of capital stock of a Material Subsidiary solely for the purpose of qualifying, and to the extent legally necessary to qualify, such person as a director of such Material Subsidiary, and (c) any transaction permitted by Section 8.10 above.

 

Section 8.12.                         UAP Properties.  Upon not less than ten (10) Business Days prior written notice from the Borrower to the Administrative Agent, the Borrower may from time to time designate that a Property be added (subject to the other requirements for a Property otherwise qualifying as an UAP Property) or deleted as an UAP Property.  Such notice shall be accompanied by a certificate certifying that immediately before and after giving effect to such additions or deletions the Borrower is in compliance with Section 8.21 on a pro forma basis and no Default exists.  Upon Administrative Agent’s receipt of the forgoing, Schedule 6.27 hereof shall be deemed to have been updated to reflect the deletion or addition, as applicable.

 

Section 8.13.                         ERISA.  The Borrower shall, and shall cause each Subsidiary to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to result in the imposition of a Lien against any of its Property.  The Borrower shall, and shall cause each Subsidiary to, promptly notify the Administrative Agent and each Lender of:  (a) the occurrence of any reportable event (as defined in ERISA) with respect to a Plan, (b) receipt of any notice from the PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (c) its intention to terminate or withdraw from any Plan, and (d) the occurrence of any event with respect to any Plan which would result in the incurrence by the Borrower or any Subsidiary of any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower or any Subsidiary with respect to any post-retirement Welfare Plan benefit.

 

Section 8.14.                         Compliance with Laws.  (a) The Borrower shall, and shall cause each Subsidiary to, comply in all respects with the requirements of all federal, state, and local laws, rules, regulations, ordinances and orders applicable to or pertaining to its Property or business operations, where any such non-compliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or result in a Lien upon any of its Property.

 

(b)                                      Without limiting the agreements set forth in Section 8.14(a) above, for each of its owned Properties, respectively, the Borrower shall, and shall cause each Subsidiary to require that each tenant and subtenant, if any, of any of the Properties or any part thereof, at all times, do the following to the extent the failure to do so, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect: (i) comply in all material respects with all applicable Environmental Laws; (ii) obtain and maintain in full force and effect all material governmental approvals required by any applicable Environmental Law for operations at each of

 

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the Properties; (iii) cause to be cured any material violation by it or at any of the Properties of applicable Environmental Laws; (iv) not allow the presence or operation at any of the Properties of any (1) landfill or dump or (2) hazardous waste management facility or solid waste disposal facility as defined pursuant to RCRA or any comparable state law; (v) not manufacture, use, generate, transport, treat, store, release, dispose or handle any Hazardous Material at any of the Properties except in the ordinary course of its business and in de minimis amounts; (vi) within ten (10) Business Days notify the Administrative Agent in writing of and provide any reasonably requested documents upon learning of any of the following in connection with the Borrower or any Subsidiary or any of the Properties:  (1) any material liability for response or corrective action, natural resource damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (2) any material Environmental Claim; (3) any material violation of an Environmental Law or material Release, threatened Release or disposal of a Hazardous Material; (4) any restriction on the ownership, occupancy, use or transferability arising pursuant to any (x) Release, threatened Release or disposal of a Hazardous Material or (y) Environmental Law; or (5) any environmental, natural resource, health or safety condition, which could reasonably be expected to have a Material Adverse Effect; (vii) conduct at its expense any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any material Release, threatened Release or disposal of a Hazardous Material as required by any applicable Environmental Law, (viii) abide by and observe any restrictions on the use of the Properties imposed by any governmental authority as set forth in a deed or other instrument affecting the Borrower’s or any Subsidiary’s interest therein; (ix) promptly provide or otherwise make available to the Administrative Agent any reasonably requested environmental record concerning the Properties which the Borrower or any Subsidiary possesses or can reasonably obtain; and (x) perform, satisfy, and implement any operation or maintenance actions required by any governmental authority or Environmental Law, or included in any no further action letter or covenant not to sue issued by any governmental authority under any Environmental Law.

 

Section 8.15.                         Burdensome Contracts With Affiliates.  The Borrower shall not, nor shall it permit any Subsidiary to, enter into any contract, agreement or business arrangement with any of its Affiliates (other than with Wholly-owned Subsidiaries) on terms and conditions which are less favorable to the Borrower or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between Persons not affiliated with each other.

 

Section 8.16.                         No Changes in Fiscal Year.  The fiscal year of the Borrower and its Subsidiaries ends on December 31st of each year; and the Borrower shall not, nor shall it permit any Subsidiary to, change its fiscal year from its present basis.

 

Section 8.17.                         Compliance with OFAC Sanctions Programs.  (a) The Borrower shall at all times comply with the requirements of all OFAC Sanctions Programs applicable to the Borrower and shall cause each of its Subsidiaries to comply with the requirements of all OFAC Sanctions Programs applicable to such Subsidiary.

 

(b)                                      The Borrower shall provide the Administrative Agent, the L/C Issuer, and the Lenders any information regarding the Borrower, its Affiliates, and its Subsidiaries necessary for the Administrative Agent, the L/C Issuer, and the Lenders to comply with all applicable OFAC Sanctions Programs; subject however, in the case of Affiliates, to the Borrower’s ability to provide information applicable to them.

 

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(c)                                      If the Borrower obtains actual knowledge or receives any written notice that the Borrower, any Affiliate or any Subsidiary is named on the then current OFAC SDN List (such occurrence, an “OFAC Event”), the Borrower shall promptly (i) give written notice to the Administrative Agent, the L/C Issuer, and the Lenders of such OFAC Event, and (ii) comply with all applicable laws with respect to such OFAC Event (regardless of whether the party included on the OFAC SDN List is located within the jurisdiction of the United States of America), including the OFAC Sanctions Programs, and the Borrower hereby authorizes and consents to the Administrative Agent, the L/C Issuer, and the Lenders taking any and all steps the Administrative Agent, the L/C Issuer, or the Lenders deem necessary, in their sole but reasonable discretion, to avoid violation of all applicable laws with respect to any such OFAC Event, including the requirements of the OFAC Sanctions Programs (including the freezing and/or blocking of assets and reporting such action to OFAC).

 

Section 8.18.                         Change in the Nature of Business.  The Borrower shall not, nor shall it permit any Subsidiary to, engage in any business or activity if as a result the general nature of the business of the Borrower and its Subsidiaries would be changed in any material respect from the general nature of the business engaged in by it as of the Closing Date.  As of the Closing Date, the general nature of the business of the Borrower and its Subsidiaries is primarily the business of the acquisition, financing and ownership of Senior Housing Assets and other business activities incidental thereto.

 

Section 8.19.                         Use of Loan Proceeds.  The Borrower shall use the credit extended under this Agreement solely for the purposes set forth in, or otherwise permitted by, Section 6.4 hereof.

 

Section 8.20.                         No Restrictions.  Except as provided herein, the Borrower shall not, nor shall it permit any Subsidiary (except for bankruptcy remote subsidiaries established in connection with (i) any securitization or participation transaction or with any Permitted Lien or (ii) any ownership of fee simple real estate Properties not exceeding $200,000,000 individually or in the aggregate) to, directly or indirectly create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of the Borrower or any Subsidiary to:  (a) pay dividends or make any other distributions on any Subsidiary’s capital stock or other equity interests owned by the Borrower or any other Subsidiary, (b) pay any indebtedness owed to the Borrower or any other Subsidiary, (c) make loans or advances to the Borrower or any other Subsidiary, (d) transfer any of its Property to the Borrower or any other Subsidiary, provided, however, that the foregoing does not apply to any limitation on transfers of property that is subject to a Permitted Lien or (e) guarantee the Obligations, Hedging Liability, and Funds Transfer and Deposit Account Liability and/or grant Liens on its assets to the Administrative Agent as required by the Loan Documents.

 

Section 8.21.                         Financial Covenants.  (a) Maximum Total Indebtedness to Total Asset Value Ratio.  As of the last day of each Fiscal Quarter of the Borrower, the Borrower shall not permit the ratio of Total Indebtedness to Total Asset Value to be greater than 0.50 to 1.0.

 

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(b)                                      Maximum Secured Debt to Total Asset Value Ratio.  As of the last day of each Fiscal Quarter of the Borrower, the Borrower shall not permit the ratio of Secured Debt to Total Asset Value to be greater than 0.35 to 1.0

 

(c)                                      Maximum Unsecured Debt to Unencumbered Asset Pool Value.  As of the last day of each Fiscal Quarter of the Borrower, the Borrower shall not permit the ratio of Unsecured Debt of the Borrower and its Subsidiaries to Unencumbered Asset Pool Value to be greater than 0.60 to 1.00.

 

(d)                                      Minimum EBITDA to Fixed Charges Ratio.  As of the last day of each Rolling Period of the Borrower, the Borrower shall not permit the ratio of EBITDA for such Rolling Period to Fixed Charges for such Rolling Period to be less than 1.50 to 1.0.

 

(e)                                      Maximum Secured Recourse Debt to Total Asset Value Ratio.  As of the last day of each Rolling Period of the Borrower, the Borrower and its Subsidiaries shall not permit the ratio of Secured Recourse Debt to Total Asset Value to be greater than 0.10 to 1.0.

 

(f)                                       Maintenance of Net Worth.  The Borrower shall at all times maintain a Tangible Net Worth of not less than the sum of (a) $385,000,000 plus (b) 80% of the aggregate net proceeds received by the Borrower or any of its Subsidiaries after the Closing Date in connection with any offering of Stock or Stock Equivalents of the Borrower or the Subsidiaries that results in an increase of Tangible Net Worth.

 

(g)                                      Floating Rate Debt.  On any date, the Borrower and its Subsidiaries shall not, on a consolidated basis, have outstanding floating rate debt that is neither at a fixed rate or hedged pursuant to a derivative contract greater than 40% of Total Asset Value.

 

(h)                                      Minimum Eligible Property NOI to Unsecured Debt Service Ratio.  As of the last day of each Rolling Period  of the Borrower, the Borrower shall not permit the ratio of Eligible Property NOI for such Rolling Period to Unsecured Debt Service for such Rolling Period to be less than 2.25 to 1.0.

 

Section 8.22.                                      Note Agreement Amendment.  On or before the date 20 calendar days after the Closing Date, the Borrower shall cause to be delivered to the Administrative Agent a certified copy of an amendment to the Note Purchase Agreement which, to the Administrative Agent’s reasonable satisfaction, causes the financial covenants and the definitions used therein or in connection therewith to be conformed to the definitions and financial covenants set forth in Sections 1.1 and 8.21 hereof.

 

Section 8.23.                                      Modification of Material Contracts.  Neither Borrower nor any Subsidiary shall enter into an amendment or modification of any contract or agreement which could reasonably be expected to have a Material Adverse Effect.

 

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SECTION 9.                                                 EVENTS OF DEFAULT AND REMEDIES.

 

Section 9.1.                                 Events of Default.  Any one or more of the following shall constitute an “Event of Default” hereunder:

 

(a)                             default in the payment when due of all or any part of the principal on any Revolving Loan (whether at the stated maturity thereof or at any other time provided for in this Agreement) or of any Reimbursement Obligation payable hereunder or under any other Loan Document;

 

(b)                            default within three (3) Business Days of when due in the payment of all or any part of the interest on any Revolving Loan (whether at the stated maturity thereof or at any other time provided for in this Agreement) or of any fee or other Obligation payable hereunder or under any other Loan Document;

 

(c)                             default in the observance or performance of any covenant set forth in Sections 8.1, 8.8, 8.9, 8.10, 8.11, 8.21, 8.22 or 8.23 hereof;

 

(d)                            default in the observance or performance of any other provision hereof or of any other Loan Document which is not remedied within 30 days after the earlier of (i) the date on which such failure shall first become known to any officer of the Borrower or (ii) written notice thereof is given to the Borrower by the Administrative Agent;

 

(e)                             any representation or warranty made herein or in any other Loan Document or in any certificate furnished to the Administrative Agent or the Lenders pursuant hereto or thereto or in connection with any transaction contemplated hereby or thereby proves untrue in any material respect as of the date of the issuance or making or deemed making thereof;

 

(f)                            any event occurs or condition exists (other than those described in subsections (a) through (e) above) which is specified as an event of default under any of the other Loan Documents, or any of the Loan Documents shall for any reason not be or shall cease to be in full force and effect or is declared to be null and void;

 

(g)                            default shall occur under any Indebtedness for Borrowed Money issued, assumed or guaranteed by the Borrower or any Subsidiary aggregating in excess of $10,000,000 or under any indenture, agreement or other instrument under which the same may be issued, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such Indebtedness for Borrowed Money (whether or not such maturity is in fact accelerated), or any such Indebtedness for Borrowed Money shall not be paid when due (whether by demand, lapse of time, acceleration or otherwise);

 

(h)                            any judgment or judgments, writ or writs or warrant or warrants of attachment, or any similar process or processes, shall be entered or filed against the Borrower or any Subsidiary, or against any of its Property, in an aggregate amount in excess of $10,000,000 (except to the extent fully covered by insurance pursuant to which the insurer has accepted liability therefor in writing), and which remains undischarged, unvacated, unbonded or unstayed for a period of 30 days;

 

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(i)                            the Borrower or any Subsidiary, or any member of its Controlled Group, shall fail to pay when due an amount or amounts aggregating in excess of $10,000,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $10,000,000 (collectively, a “Material Plan”) shall be filed under Title IV of ERISA by the Borrower or any Subsidiary, or any other member of its Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Borrower or any Subsidiary, or any member of its Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated;

 

(j)                            any Change of Control shall occur;

 

(k)                             the Borrower or any Material Subsidiary shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action in furtherance of any matter described in parts (i) through (v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 9.1(l) hereof;

 

(l)                            a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any Subsidiary, or any substantial part of any of its Property, or a proceeding described in Section 9.1(k)(v) shall be instituted against the Borrower or any Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 days;

 

(m)                              there shall be a determination from the applicable governmental authority from which no appeal can be taken that the Borrower’s tax status as a REIT has been lost; or

 

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(n)                            the Borrower at any time hereafter fails to cause the Common Stock of the Borrower to be duly listed on the New York Stock Exchange, Inc., the American Stock Exchange or the National Association of Securities Dealers Automated Quotation.

 

Section 9.2.                                 Non-Bankruptcy Defaults.  When any Event of Default other than those described in subsection (k) or (l) of Section 9.1 hereof has occurred and is continuing, the Administrative Agent shall, by written notice to the Borrower:  (a) if so directed by the Required Lenders, terminate the remaining Revolving Credit Commitments and all other obligations of the Lenders hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by the Required Lenders declare the principal of and the accrued interest on all outstanding Revolving Loans to be forthwith due and payable and thereupon all outstanding Revolving Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Loan Documents without further demand, presentment, protest or notice of any kind; and (c) if so directed by the Required Lenders, demand that the Borrower immediately pay to the Administrative Agent the full amount then available for drawing under each or any Letter of Credit, and the Borrower agrees to immediately make such payment and acknowledges and agrees that the Lenders would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Administrative Agent, for the benefit of the Lenders, shall have the right to require the Borrower to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under any Letter of Credit.  The Administrative Agent, after giving notice to the Borrower pursuant to Section 9.1(d) or this Section 9.2, shall also promptly send a copy of such notice to the other Lenders, but the failure to do so shall not impair or annul the effect of such notice.

 

Section 9.3.                                 Bankruptcy Defaults.  When any Event of Default described in subsections (k) or (l) of Section 9.1 hereof has occurred and is continuing, then all outstanding Revolving Loans shall immediately become due and payable together with all other amounts payable under the Loan Documents without presentment, demand, protest or notice of any kind, the obligation of the Lenders to extend further credit pursuant to any of the terms hereof shall immediately terminate and the Borrower shall immediately pay to the Administrative Agent the full amount then available for drawing under all outstanding Letters of Credit, the Borrower acknowledging and agreeing that the Lenders would not have an adequate remedy at law for failure by the Borrower to honor any such demand and that the Lenders, and the Administrative Agent on their behalf, shall have the right to require the Borrower to specifically perform such undertaking whether or not any draws or other demands for payment have been made under any of the Letters of Credit.

 

Section 9.4.                                 Collateral for Undrawn Letters of Credit.  (a) If the prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 2.7(b), Section 9.2 or Section 9.3 above, the Borrower shall forthwith pay the amount required to be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below.

 

(b)                   All amounts prepaid pursuant to subsection (a) above shall be held by the Administrative Agent in one or more separate collateral accounts (each such account, and the

 

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credit balances, properties, and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the “Collateral Account”) as security for, and for application by the Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by the L/C Issuer, and to the payment of the unpaid balance of all other Obligations (and to all Hedging Liability and Funds Transfer and Deposit Account Liability).  The Collateral Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent, the Lenders, and the L/C Issuer.  If and when requested by the Borrower, the Administrative Agent shall invest funds held in the Collateral Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided that the Administrative Agent is irrevocably authorized to sell investments held in the Collateral Account when and as required to make payments out of the Collateral Account for application to amounts due and owing from the Borrower to the L/C Issuer, the Administrative Agent or the Lenders; provided, however, that (i) if the Borrower shall have made payment of all obligations referred to in subsection (a) above required under Section 2.7(b) and Section 2.14 hereof, if any, at the request of the Borrower the Administrative Agent shall release to the Borrower amounts held in the Collateral Account so long as at the time of the release and after giving effect thereto no Default or Event of Default exists and, in the case of Section 2.4 hereof, the Defaulting Lender Period with respect to the relevant Defaulting Lender has terminated, and (ii) if the Borrower shall have made payment of all obligations referred to in subsection (a) above required under Section 9.2 or 9.3 hereof, so long as no Letters of Credit, Revolving Credit Commitments, Revolving Loans or other Obligations, Hedging Liability, or Funds Transfer and Deposit Account Liability remain outstanding, at the request of the Borrower the Administrative Agent shall release to the Borrower any remaining amounts held in the Collateral Account.

 

Section 9.5.                                 Notice of Default.  The Administrative Agent shall give notice to the Borrower under Section 9.1(d) hereof promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof.

 

SECTION 10.                                           CHANGE IN CIRCUMSTANCES.

 

Section 10.1.                                  Change of Law.  Notwithstanding any other provisions of this Agreement or any other Loan Document, if at any time any Change in Law makes it unlawful for any Lender to make or continue to maintain any Eurodollar Loans or to perform its obligations as contemplated hereby, such Lender shall promptly give notice thereof to the Borrower and such Lender’s obligations to make or maintain Eurodollar Loans under this Agreement shall be suspended until it is no longer unlawful for such Lender to make or maintain Eurodollar Loans.  The Borrower shall prepay on demand the outstanding principal amount of any such affected Eurodollar Loans, together with all interest accrued thereon and all other amounts then due and payable to such Lender under this Agreement; provided, however, subject to all of the terms and conditions of this Agreement, the Borrower may then elect to borrow the principal amount of the affected Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender, which Base Rate Loans shall not be made ratably by the Lenders but only from such affected Lender.

 

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Section 10.2.                                  Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.  If on or prior to the first day of any Interest Period for any Borrowing of Eurodollar Loans:

 

(a)                             the Administrative Agent determines that deposits in U.S. Dollars (in the applicable amounts) are not being offered to it in the interbank eurodollar market for such Interest Period, or that by reason of circumstances affecting the interbank eurodollar market adequate and reasonable means do not exist for ascertaining the applicable LIBOR, or

 

(b)                            the Required Lenders advise the Administrative Agent that (i) LIBOR as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their Eurodollar Loans for such Interest Period or (ii) that the making or funding of Eurodollar Loans become impracticable,

 

then the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Lenders to make Eurodollar Loans shall be suspended.

 

Section 10.3.                                  Increased Cost and Reduced Return.  (a) If any Change in Law shall:

 

(i)                            subject any Lender (or its Lending Office) or the L/C Issuer to any tax, duty or other charge with respect to its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligations owed to it or its obligation to make Eurodollar Loans, issue a Letter of Credit, or to participate therein, or shall change the basis of taxation of payments to any Lender (or its Lending Office) or the L/C Issuer of the principal of or interest on its Eurodollar Loans, Letter(s) of Credit, or participations therein or any other amounts due under this Agreement or any other Loan Document in respect of its Eurodollar Loans, Letter(s) of Credit, any participation therein, any Reimbursement Obligations owed to it, or its obligation to make Eurodollar Loans, or issue a Letter of Credit, or acquire participations therein (except for changes in the rate of tax on the overall net income of such Lender or its Lending Office or the L/C Issuer imposed by the jurisdiction in which such Lender’s or the L/C Issuer’s principal executive office or Lending Office is located); or

 

(ii)                              impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Eurodollar Loans any such requirement included in an applicable Eurodollar Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Lending Office) or the L/C Issuer or shall impose on any Lender (or its Lending Office) or the L/C Issuer or on the interbank market any other condition affecting its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its

 

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obligation to make Eurodollar Loans, or to issue a Letter of Credit, or to participate therein;

 

and the result of any of the foregoing is to increase the cost to such Lender (or its Lending Office) or the L/C Issuer of making or maintaining any Eurodollar Loan, issuing or maintaining a Letter of Credit, or participating therein, or to reduce the amount of any sum received or receivable by such Lender (or its Lending Office) or the L/C Issuer under this Agreement or under any other Loan Document with respect thereto, by an amount deemed by such Lender or L/C Issuer to be material, then, within 15 days after demand by such Lender or L/C Issuer (with a copy to the Administrative Agent), the Borrower shall be obligated to pay to such Lender or L/C Issuer such additional amount or amounts as will compensate such Lender or L/C Issuer for such increased cost or reduction.

 

(b)                   If any Lender or L/C Issuer determines that any Change in Law affecting such Lender or L/C Issuer or any lending office of such Lender or such Lender’s or L/C Issuer’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lender’s or L/C Issuer’s capital or on the capital of such Lender’s or L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Revolving Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by such Lender, or the Letters of Credit issued by any L/C Issuer, to a level below that which such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or L/C Issuer’s policies and the policies of such Lender’s or L/C Issuer’s holding company with respect to capital adequacy and liquidity position), then from time to time, within 15 days after demand by such Lender or L/C Issuer (with a copy to the Administrative Agent), the Borrower shall pay to such Lender or L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or L/C Issuer or such Lender’s or L/C Issuer’s holding company for any such reduction suffered.

 

(c)                   A certificate of a Lender or L/C Issuer claiming compensation under this Section 10.3 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive if reasonably determined.  In determining such amount, such Lender or L/C Issuer may use any reasonable averaging and attribution methods.

 

Section 10.4.                                  Lending Offices.  Each Lender may, at its option, elect to make its Revolving Loans hereunder at the branch, office or affiliate specified on the appropriate signature page hereof (each a “Lending Office”) for each type of Revolving Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written notice to the Borrower and the Administrative Agent.  To the extent reasonably possible, a Lender shall designate an alternative branch or funding office with respect to its Eurodollar Loans to reduce any liability of the Borrower to such Lender under Section 10.3 hereof or to avoid the unavailability of Eurodollar Loans under Section 10.2 hereof, so long as such designation is not otherwise disadvantageous to the Lender.

 

Section 10.5.                                  Discretion of Lender as to Manner of Funding.  Notwithstanding any other provision of this Agreement, each Lender shall be entitled to fund and maintain its funding of all

 

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or any part of its Revolving Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder with respect to Eurodollar Loans shall be made as if each Lender had actually funded and maintained each Eurodollar Loan through the purchase of deposits in the interbank eurodollar market having a maturity corresponding to such Revolving Loan’s Interest Period, and bearing an interest rate equal to LIBOR for such Interest Period.

 

SECTION 11.                                           THE ADMINISTRATIVE AGENT.

 

Section 11.1.                                  Appointment and Authorization of Administrative Agent.  Each Lender and the L/C Issuer hereby appoints Bank of Montreal, Chicago Branch, as the Administrative Agent under the Loan Documents and hereby authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto.  The Lenders and L/C Issuer expressly agree that the Administrative Agent is not acting as a fiduciary of the Lenders or the L/C Issuer in respect of the Loan Documents, the Borrower or otherwise, and nothing herein or in any of the other Loan Documents shall result in any duties or obligations on the Administrative Agent or any of the Lenders or L/C Issuer except as expressly set forth herein.

 

Section 11.2.                                  Administrative Agent and its Affiliates.  The Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise or refrain from exercising such rights and power as though it were not the Administrative Agent, and the Administrative Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Affiliate of the Borrower as if it were not the Administrative Agent under the Loan Documents.  The term “Lender” as used herein and in all other Loan Documents, unless the context otherwise clearly requires, includes the Administrative Agent in its capacity as a Lender (if applicable).

 

Section 11.3.                                  Action by Administrative Agent.  If the Administrative Agent receives from the Borrower a written notice of an Event of Default pursuant to Section 8.5 hereof, the Administrative Agent shall promptly give each of the Lenders and L/C Issuer written notice thereof.  The obligations of the Administrative Agent under the Loan Documents are only those expressly set forth therein.  Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action hereunder with respect to any Default or Event of Default, except as expressly provided in Sections 9.2 and 9.5.  Unless and until the Required Lenders give such direction, the Administrative Agent may (but shall not be obligated to) take or refrain from taking such actions as it deems appropriate and in the best interest of all the Lenders and L/C Issuer.  In no event, however, shall the Administrative Agent be required to take any action in violation of applicable law or of any provision of any Loan Document, and the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder or under any other Loan Document unless it first receives any further assurances of its indemnification from the Lenders that it may require, including prepayment of any related expenses and any other protection it requires against any and all costs, expense, and liability which may be incurred by it by reason of taking or continuing to take any such action.  The

 

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Administrative Agent shall be entitled to assume that no Default or Event of Default exists unless notified in writing to the contrary by a Lender, the L/C Issuer, or the Borrower.  In all cases in which the Loan Documents do not require the Administrative Agent to take specific action, the Administrative Agent shall be fully justified in using its discretion in failing to take or in taking any action thereunder.  Any instructions of the Required Lenders, or of any other group of Lenders called for under the specific provisions of the Loan Documents, shall be binding upon all the Lenders and the holders of the Obligations.

 

Section 11.4.                                  Consultation with Experts.  The Administrative Agent may consult with legal counsel, independent public accountants, and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.

 

Section 11.5.                                  Liability of Administrative Agent; Credit Decision.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with the Loan Documents:  (i) with the consent or at the request of the Required Lenders or (ii) in the absence of its own gross negligence or willful misconduct.  Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify:  (i) any statement, warranty or representation made in connection with this Agreement, any other Loan Document or any Credit Event; (ii) the performance or observance of any of the covenants or agreements of the Borrower or any Subsidiary contained herein or in any other Loan Document; (iii) the satisfaction of any condition specified in Section 7 hereof, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness, genuineness, enforceability, perfection, value, worth or collectibility hereof or of any other Loan Document or of any other documents or writing furnished in connection with any Loan Document; and the Administrative Agent makes no representation of any kind or character with respect to any such matter mentioned in this sentence.  The Administrative Agent may execute any of its duties under any of the Loan Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, the L/C Issuer, the Borrower, or any other Person for the default or misconduct of any such agents or attorneys-in-fact selected with reasonable care.  The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, other document or statement (whether written or oral) believed by it to be genuine or to be sent by the proper party or parties.  In particular and without limiting any of the foregoing, the Administrative Agent shall have no responsibility for confirming the accuracy of any compliance certificate or other document or instrument received by it under the Loan Documents.  The Administrative Agent may treat the payee of any Obligation as the holder thereof until written notice of transfer shall have been filed with the Administrative Agent signed by such payee in form satisfactory to the Administrative Agent.  Each Lender and L/C Issuer acknowledges that it has independently and without reliance on the Administrative Agent or any other Lender or L/C Issuer, and based upon such information, investigations and inquiries as it deems appropriate, made its own credit analysis and decision to extend credit to the Borrower in the manner set forth in the Loan Documents.  It shall be the responsibility of each Lender and L/C Issuer to keep itself informed as to the creditworthiness of the Borrower and its Subsidiaries, and the Administrative Agent shall have no liability to any Lender or L/C Issuer with respect thereto.

 

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Section 11.6.                                  Indemnity.  The Lenders shall on a several basis and ratably, in accordance with their respective Revolver Percentages, indemnify and hold the Administrative Agent, and its directors, officers, employees, agents, and representatives harmless from and against any liabilities, losses, costs or expenses suffered or incurred by it under any Loan Document or in connection with the transactions contemplated thereby, regardless of when asserted or arising, except to the extent they are promptly reimbursed for the same by the Borrower and except to the extent that any event giving rise to a claim was caused by the gross negligence or willful misconduct of the party seeking to be indemnified.  The obligations of the Lenders under this Section shall survive termination of this Agreement.  The Administrative Agent shall be entitled to offset amounts received for the account of a Lender under this Agreement against unpaid amounts due from such Lender to the Administrative Agent, or any L/C Issuer hereunder (whether as fundings of participations, indemnities or otherwise, and with any amounts offset for the benefit of the Administrative Agent to be held by it for its own account and with any amounts offset for the benefit of an L/C Issuer to be remitted by the Administrative Agent to or for the account of such L/C Issuer), but shall not be entitled to offset against amounts owed to the Administrative Agent or any L/C Issuer by any Lender arising outside of this Agreement and the other Loan Documents.

 

Section 11.7.                                  Resignation of Administrative Agent and Successor Administrative Agent.  The Administrative Agent may resign at any time by giving written notice thereof to the Lenders, the L/C Issuer, and the Borrower.  Upon any such resignation of the Administrative Agent, the Required Lenders shall have the right to appoint a successor Administrative Agent.  If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which may be any Lender hereunder or any commercial bank, or an Affiliate of a commercial bank, having an office in the United States of America and having a combined capital and surplus of at least $200,000,000.  Upon the acceptance of its appointment as the Administrative Agent hereunder, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent under the Loan Documents, and the retiring Administrative Agent shall be discharged from its duties and obligations thereunder.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 11 and all protective provisions of the other Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent, but no successor Administrative Agent shall in any event be liable or responsible for any actions of its predecessor.  If the Administrative Agent resigns and no successor is appointed, the rights and obligations of such Administrative Agent shall be automatically assumed by the Required Lenders and the Borrower shall be directed to make all payments due each Lender and L/C Issuer hereunder directly to such Lender or L/C Issuer.

 

Section 11.8.                                  L/C Issuer.  The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith.  The L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Section 11 with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the Applications pertaining

 

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to such Letters of Credit as fully as if the term “Administrative Agent”, as used in this Section 11, included the L/C Issuer with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to such L/C Issuer.

 

Section 11.9.                                  Hedging Liability and Funds Transfer and Deposit Account Liability Arrangements.  By virtue of a Lender’s execution of this Agreement or an assignment agreement pursuant to Section 13.12 hereof, as the case may be, any Affiliate of such Lender with whom the Borrower or any Subsidiary has entered into an agreement creating Hedging Liability or Funds Transfer and Deposit Account Liability shall be deemed a Lender party hereto for purposes of any reference in a Loan Document to the parties for whom the Administrative Agent is acting, it being understood and agreed that the rights and benefits of such Affiliate under the Loan Documents consist exclusively of such Affiliate’s right to share in payments and collections out of the Guaranties as more fully set forth in Section 4.1 hereof.  In connection with any such distribution of payments and collections, or any request for the release of the Guaranties in connection with the termination of the Revolving Credit Commitments and the payment in full of the Obligations, the Administrative Agent shall be entitled to assume no amounts are due to any Lender or its Affiliate with respect to Hedging Liability or Funds Transfer and Deposit Account Liability unless such Lender has notified the Administrative Agent in writing of the amount of any such liability owed to it or its Affiliate prior to such distribution or payment or release of Guaranties.

 

Section 11.10.                                   Designation of Additional Agents.  The Administrative Agent shall have the continuing right, for purposes hereof, at any time and from time to time to designate one or more of the Lenders (and/or its or their Affiliates) as “syndication agents,” “documentation agents,” “book runners,” “lead arrangers,” “arrangers” or other designations for purposes hereto, but such designation shall have no substantive effect, and such Lenders and their Affiliates shall have no additional powers, duties or responsibilities as a result thereof.

 

Section 11.11.                                   Release of Guarantors.  Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon the request of the Borrower in connection with (i) any disposition of a Guarantor as permitted by the Loan Documents or (ii) the removal of all UAP Properties of such Guarantor from the Unencumbered Asset Pool in compliance with Section 8.12 hereof, the Administrative Agent shall (without notice to, or vote or consent of, any Lender) take such actions as shall be required to release any such Guarantor from its Guaranty obligations hereunder.

 

SECTION 12.                                           THE GUARANTIES.

 

Section 12.1.                                  The Guarantees.  To induce the Lenders to provide the credits described herein and in consideration of benefits expected to accrue to the Borrower by reason of the Revolving Credit Commitments and for other good and valuable consideration, receipt of which is hereby acknowledged, each Material Subsidiary party hereto (including any Material Subsidiary formed or acquired after the Closing Date executing an Additional Guarantor Supplement in the form attached hereto as Exhibit G or such other form acceptable to the Administrative Agent) hereby unconditionally and irrevocably guarantee jointly and severally to the Administrative Agent, the Lenders, and their Affiliates, the due and punctual payment of all

 

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present and future Obligations, including, but not limited to, the due and punctual payment of principal of and interest on the Revolving Loans, the Reimbursement Obligations, Hedging Liability, Funds Transfer and Deposit Account Liability, and the due and punctual payment of all other Obligations now or hereafter owed by the Borrower under the Loan Documents as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, according to the terms hereof and thereof (including interest which, but for the filing of a petition in bankruptcy, would otherwise accrue on any such indebtedness, obligation, or liability).  In case of failure by the Borrower or other obligor punctually to pay any obligations guaranteed hereby, each Guarantor hereby irrevocably and unconditionally agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, and as if such payment were made by the Borrower or such obligor.  The Guaranties are guaranties of payment and not merely of collection.

 

Section 12.2.                                  Guarantee Unconditional.  The obligations of each Guarantor under this Section 12 shall be continuing, unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged, or otherwise affected by:

 

(a)                             any extension, renewal, settlement, compromise, waiver, or release in respect of any obligation of the Borrower or other obligor or of any other guarantor under this Agreement or any other Loan Document or by operation of law or otherwise;

 

(b)                            any modification or amendment of or supplement to this Agreement or any other Loan Document;

 

(c)                             any change in the corporate existence, structure, or ownership of, or any insolvency, bankruptcy, reorganization, or other similar proceeding affecting, the Borrower or other obligor, any other guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of the Borrower or other obligor or of any other guarantor contained in any Loan Document;

 

(d)                            the existence of any claim, set-off, or other rights which the Borrower or other obligor or any other guarantor may have at any time against the Administrative Agent, any Lender, or any other Person, whether or not arising in connection herewith;

 

(e)                             any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against the Borrower or other obligor, any other guarantor, or any other Person or Property;

 

(f)                            any application of any sums by whomsoever paid or howsoever realized to any obligation of the Borrower or other obligor, regardless of what obligations of the Borrower or other obligor remain unpaid;

 

(g)                            any invalidity or unenforceability relating to or against the Borrower or other obligor or any other guarantor for any reason of this Agreement or of any other Loan Document or any provision of applicable law or regulation purporting to prohibit

 

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the payment by the Borrower or other obligor or any other guarantor of the principal of or interest on any Revolving Loan or any Reimbursement Obligation or any other amount payable under the Loan Documents; or

 

(h)                            any other act or omission to act or delay of any kind by the Administrative Agent, any Lender, or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of any Guarantor under this Section 12.

 

Section 12.3.                                  Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances.  Each Guarantor’s obligations under this Section 12 shall remain in full force and effect until the Revolving Credit Commitments are terminated, all Letters of Credit have expired, and the principal of and interest on the Revolving Loans and all other amounts payable by the Borrower and the Guarantors under this Agreement and all other Loan Documents are indefeasibly repaid in full.  If at any time any payment of the principal of or interest on any Revolving Loan or any Reimbursement Obligation or any other amount payable by the Borrower or other obligor or any Guarantor under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or reorganization of the Borrower or other obligor or of any Guarantor, or otherwise, each Guarantor’s obligations under this Section 12 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time.

 

Section 12.4.                                  Subrogation.  Each Guarantor agrees it will not exercise any rights which it may acquire by way of subrogation by any payment made hereunder, or otherwise, until all the obligations guaranteed hereby shall have been indefeasibly paid in full subsequent to the termination of all the Revolving Credit Commitments and expiration of all Letters of Credit.  If any amount shall be paid to a Guarantor on account of such subrogation rights at any time prior to the later of (x) the indefeasible payment in full of the Obligations, Funds Transfer and Deposit Account Liability and Hedging Liability and all other amounts payable by the Borrower hereunder and the other Loan Documents and (y) the termination of the Revolving Credit Commitments and expiration of all Letters of Credit, such amount shall be held in trust for the benefit of the Administrative Agent and the Lenders (and their Affiliates) and shall forthwith be paid to the Administrative Agent for the benefit of the Lenders (and their Affiliates) or be credited and applied upon the Obligations, Funds Transfer and Deposit Account Liability and Hedging Liability, whether matured or unmatured, in accordance with the terms of this Agreement.

 

Section 12.5.                                  Waivers.  Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, and any notice not provided for herein, as well as any requirement that at any time any action be taken by the Administrative Agent, any Lender, or any other Person against the Borrower or other obligor, another guarantor, or any other Person.

 

Section 12.6.                                  Limit on Recovery.  Notwithstanding any other provision hereof, the right of recovery against each Guarantor under this Section 12 shall not exceed $1.00 less than the lowest amount which would render such Guarantor’s obligations under this Section 12 void or voidable under applicable law, including, without limitation, fraudulent conveyance law.

 

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Section 12.7.                                  Stay of Acceleration.  If acceleration of the time for payment of any amount payable by the Borrower or other obligor under this Agreement or any other Loan Document, is stayed upon the insolvency, bankruptcy or reorganization of the Borrower or such obligor, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Loan Documents, shall nonetheless be payable by the Guarantors hereunder forthwith on demand by the Administrative Agent made at the request of the Required Lenders.

 

Section 12.8.                                  Benefit to Guarantors.  The Borrower and the Guarantors are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of the Borrower has a direct impact on the success of each Guarantor.  Each Guarantor will derive substantial direct and indirect benefit from the extensions of credit hereunder.

 

Section 12.9.                                  Guarantor Covenants.  Each Guarantor shall take such action as the Borrower is required by this Agreement to cause such Guarantor to take, and shall refrain from taking such action as the Borrower is required by this Agreement to prohibit such Guarantor from taking.

 

SECTION 13.                                           MISCELLANEOUS.

 

Section 13.1.                                  Withholding Taxes.  (a) Payments Free of Withholding.  Except as otherwise required by law and subject to Section 13.1(b) hereof, each payment by the Borrower and the Guarantors under this Agreement or the other Loan Documents shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient) imposed by or within the jurisdiction in which the Borrower or such Guarantor is domiciled, any jurisdiction from which the Borrower or such Guarantor makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein.  If any such withholding is so required, the Borrower or such Guarantor shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon, and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by each Lender, the L/C Issuer, and the Administrative Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which that Lender, L/C Issuer, or the Administrative Agent (as the case may be) would have received had such withholding not been made.  If the Administrative Agent, the L/C Issuer, or any Lender pays any amount in respect of any such taxes, penalties or interest, the Borrower or such Guarantor shall reimburse the Administrative Agent, the L/C Issuer, or such Lender for that payment on demand in the currency in which such payment was made.  If the Borrower or such Guarantor pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Lender, the L/C Issuer or Administrative Agent on whose account such withholding was made (with a copy to the Administrative Agent if not the recipient of the original) on or before the thirtieth day after payment.

 

(b)                   U.S. Withholding Tax Exemptions.  Each Lender or L/C Issuer that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent on or before the date the initial Credit Event is made hereunder or, if later, the date such financial institution becomes a Lender or L/C Issuer

 

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hereunder, two duly completed and signed copies of (i) either Form W-8 BEN (relating to such Lender or L/C Issuer and entitling it to a complete exemption from withholding under the Code on all amounts to be received by such Lender or L/C Issuer, including fees, pursuant to the Loan Documents and the Obligations) or Form W-8 ECI (relating to all amounts to be received by such Lender or L/C Issuer, including fees, pursuant to the Loan Documents and the Obligations) of the United States Internal Revenue Service or (ii) solely if such Lender is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a Form W-8 BEN, or any successor form prescribed by the Internal Revenue Service, and a certificate representing that such Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code).  Thereafter and from time to time, each Lender and L/C Issuer shall submit to the Borrower and the Administrative Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) and such other certificates as may be (i) requested by the Borrower in a written notice, directly or through the Administrative Agent, to such Lender or L/C Issuer and (ii) required under then-current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Lender or L/C Issuer, including fees, pursuant to the Loan Documents or the Obligations.  Upon the request of the Borrower or the Administrative Agent, each Lender and L/C Issuer that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent a certificate to the effect that it is such a United States person.

 

(c)                   Inability of Lender to Submit Forms.  If any Lender or L/C Issuer determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to the Borrower or the Administrative Agent any form or certificate that such Lender or L/C Issuer is obligated to submit pursuant to subsection (b) of this Section 13.1 or that such Lender or L/C Issuer is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Lender or L/C Issuer shall promptly notify the Borrower and Administrative Agent of such fact and the Lender or L/C Issuer shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable.

 

Section 13.2.                                  No Waiver, Cumulative Remedies.  No delay or failure on the part of the Administrative Agent, the L/C Issuer, or any Lender, or on the part of the holder or holders of any of the Obligations, in the exercise of any power or right under any Loan Document shall operate as a waiver thereof or as an acquiescence in any default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.  The rights and remedies hereunder of the Administrative Agent, the L/C Issuer, the Lenders, and of the holder or holders of any of the Obligations are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have.

 

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Section 13.3.                                  Non-Business Days.  If any payment hereunder becomes due and payable on a day which is not a Business Day, the due date of such payment shall be extended to the next succeeding Business Day on which date such payment shall be due and payable.  In the case of any payment of principal falling due on a day which is not a Business Day, interest on such principal amount shall continue to accrue during such extension at the rate per annum then in effect, which accrued amount shall be due and payable on the next scheduled date for the payment of interest.

 

Section 13.4.                                  Documentary Taxes.  The Borrower agrees to pay on demand any documentary, stamp or similar taxes payable in respect of this Agreement or any other Loan Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder.

 

Section 13.5.                                  Survival of Representations.  All representations and warranties made herein or in any other Loan Document or in certificates given pursuant hereto or thereto shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder.

 

Section 13.6.                                  Survival of Indemnities.  All indemnities and other provisions relative to reimbursement to the Lenders and L/C Issuer of amounts sufficient to protect the yield of the Lenders and L/C Issuer with respect to the Revolving Loans and Letters of Credit, including, but not limited to, Sections 2.10, 10.3, and 13.15 hereof, shall survive the termination of this Agreement and the other Loan Documents and the payment of the Obligations.

 

Section 13.7.                                  Sharing of Set-Off.  Each Lender agrees with each other Lender a party hereto that if such Lender shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise, on any of the Loans or Reimbursement Obligations in excess of its ratable share of payments on all such Obligations then outstanding to the Lenders, then such Lender shall purchase for cash at face value, but without recourse, ratably from each of the other Lenders such amount of the Revolving Loans or Reimbursement Obligations, or participations therein, held by each such other Lenders (or interest therein) as shall be necessary to cause such Lender to share such excess payment ratably with all the other Lenders; provided, however, that if any such purchase is made by any Lender, and if such excess payment or part thereof is thereafter recovered from such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase price promptly restored as to the portion of such excess payment so recovered, but without interest.  For purposes of this Section, amounts owed to or recovered by the L/C Issuer in connection with Reimbursement Obligations in which Lenders have been required to fund their participation shall be treated as amounts owed to or recovered by the L/C Issuer as a Lender hereunder.

 

Section 13.8.                                  Notices.  Except as otherwise specified herein, all notices hereunder and under the other Loan Documents shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party at its address or telecopier number set forth below, or such other address or telecopier number as such party may hereafter specify by notice

 

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to the Administrative Agent and the Borrower given by courier, by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt.  Notices under the Loan Documents to any Lender shall be addressed to its address or telecopier number set forth on its Administrative Questionnaire; and notices under the Loan Documents to the Borrower, the Administrative Agent, or L/C Issuer shall be addressed to its respective address or telecopier number set forth below:

 

	
to   the Borrower:
    	
to   the Administrative Agent and L/C Issuer:
    
	
 
    	
 
    
	
LTC   Properties, Inc.
    	
Bank   of Montreal
    
	
2829   Townsgate Road, Suite 350
    	
115 South   LaSalle Street
    
	
Westlake   Village, California 91361
    	
Chicago, Illinois   60603
    
	
Attention:   
    	
Chief   Financial Officer
    	
Attention:   
    	
Lloyd   Baron
    
	
Telephone:
    	
(805)   981-8655
    	
Telephone:   
    	
(312)   461-6812
    
	
Telecopy:   
    	
(805)   981-8663
    	
Telecopy:   
    	
(312)   293-8409
    

 

Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section or in the relevant Administrative Questionnaire and a confirmation of such telecopy has been received by the sender, (ii) if given by mail, five (5) days after such communication is deposited in the mail, certified or registered with return receipt requested, addressed as aforesaid or (iii) if given by any other means, when delivered at the addresses specified in this Section or in the relevant Administrative Questionnaire; provided that  any notice given pursuant to Section 2 hereof shall be effective only upon receipt.

 

Section 13.9.        Counterparts.  This Agreement may be executed in any number of counterparts, and by the different parties hereto on separate counterpart signature pages, and all such counterparts taken together shall be deemed to constitute one and the same instrument.

 

Section 13.10.         Successors and Assigns.  This Agreement shall be binding upon the Borrower, the Guarantors and their respective successors and assigns, and shall inure to the benefit of the Administrative Agent, the L/C Issuer, and each of the Lenders, and the benefit of their respective successors and assigns, including any subsequent holder of any of the Obligations.  The Borrower and the Guarantors may not assign any of their rights or obligations under any Loan Document without the written consent of all of the Lenders and, with respect to any Letter of Credit or the Application therefor, the L/C Issuer.

 

Section 13.11.         Participants.  Each Lender shall have the right at its own cost to grant participations (to be evidenced by one or more agreements or certificates of participation) in the Revolving Loans made and Reimbursement Obligations and/or Revolving Credit Commitments held by such Lender at any time and from time to time to one or more other Persons; provided that no such participation shall relieve any Lender of any of its obligations under this Agreement, and, provided, further that no such participant shall have any rights under this Agreement except as provided in this Section, and the Administrative Agent shall have no obligation or responsibility to such participant.  Any agreement pursuant to which such participation is granted

 

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shall provide that the granting Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower under this Agreement and the other Loan Documents including, without limitation, the right to approve any amendment, modification or waiver of any provision of the Loan Documents, except that such agreement may provide that such Lender will not agree to any modification, amendment or waiver of the Loan Documents that would reduce the amount of or postpone any fixed date for payment of any Obligation in which such participant has an interest.  Any party to which such a participation has been granted shall have the benefits of Section 2.10 and Section 10.3 hereof.  The Borrower authorizes each Lender to disclose to any participant or prospective participant under this Section any financial or other information pertaining to the Borrower or any Subsidiary.

 

Section 13.12.         Assignments.  (a) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Revolving  Credit Commitment and the Revolving Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)         Minimum Amounts.  (A) In the case of an assignment of the entire remaining amount of the assigning Lender’s Revolving Credit Commitment and the Revolving Loans and participation interest in L/C Obligations at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in subsection (a)(i)(A) of this Section, the aggregate amount of the Revolving Credit Commitment (which for this purpose includes Revolving Loans and participation interest in L/C Obligations outstanding thereunder) or, if the applicable Revolving Credit Commitment is not then in effect, the principal outstanding balance of the Revolving Loans and participation interest in L/C Obligations of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent or, if “Effective Date” is specified in the Assignment and Acceptance, as of the Effective Date specified in such Assignment and Acceptance) shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);

 

(ii)          Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Revolving Loan or the Revolving Credit Commitment.

 

(iii)          Required Consents.  No consent shall be required for any assignment except to the extent required by Section 13.12(a)(i)(B) and, in addition:

 

(a)          the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default  has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower

 

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shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

 

(b)         the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender with a Revolving Credit Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

 

(c)          the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding).

 

(iv)          Assignment and Acceptance.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (except no fee shall be required for an assignment by a Lender to an Approved Fund related to such Lender), and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)         No Assignment to Borrower.  No such assignment shall be made to the Borrower or any of its Affiliates or Subsidiaries.

 

(vi)          No Assignment to Natural Persons.  No such assignment shall be made to a natural person.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 13.12(b) hereof, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 13.6 and 13.15 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 13.11 hereof.

 

(b) Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Chicago, Illinois, a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Revolving Credit Commitments of, and principal amounts of the Revolving Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).

 

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The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(c)     Any Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any such pledge or grant to a Federal Reserve Bank, and this Section shall not apply to any such pledge or grant of a security interest; provided that no such pledge or grant of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or secured party for such Lender as a party hereto; provided further, however, the right of any such pledgee or grantee (other than any Federal Reserve Bank) to further transfer all or any portion of the rights pledged or granted to it, whether by means of foreclosure or otherwise, shall be at all times subject to the terms of this Agreement.

 

Section 13.13.         Amendments.  Any provision of this Agreement or the other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Borrower, (b) the Required Lenders, and (c) if the rights or duties of the Administrative Agent or the L/C Issuer are affected thereby, the Administrative Agent or the L/C Issuer, as applicable; provided that:

 

(i)         no amendment or waiver pursuant to this Section 13.13 shall (A) increase any Revolving Credit Commitment of any Lender without the consent of such Lender or (B) reduce the amount of or postpone the date for any scheduled payment of any principal of or interest on any Revolving Loan or of any Reimbursement Obligation or of any fee payable hereunder without the consent of the Lender to which such payment is owing or which has committed to make such Revolving Loan or Letter of Credit (or participate therein) hereunder;

 

(ii)          no amendment or waiver pursuant to this Section 13.13 shall, unless signed by each Lender, extend the Revolving Credit Termination Date, change the definition of Required Lenders, release any Guarantor (other than as permitted under Section 11.11 hereof), amend the waterfall provisions of Section 4.1 hereof, change the provisions of this Section 13.13 or affect the number of Lenders required to take any action hereunder or under any other Loan Document; and

 

(iii)          no amendment to Section 12 hereof shall be made without consent of the Guarantors affected thereby.

 

Section 13.14.         Headings.  Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.

 

Section 13.15.         Costs and Expenses; Indemnification.  (a) The Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent in connection with the preparation, negotiation, syndication, and administration of the Loan Documents, including, without

 

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limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, in connection with the preparation and execution of the Loan Documents, and any amendment, waiver or consent related thereto, whether or not the transactions contemplated herein are consummated.  The Borrower agrees to pay to the Administrative Agent, the L/C Issuer, and each Lender, and any other holder of any Obligations outstanding hereunder, all costs and expenses reasonably incurred or paid by the Administrative Agent, the L/C Issuer, such Lender, or any such holder, including reasonable attorneys’ fees and disbursements and court costs, in connection with any Default or Event of Default hereunder or in connection with the enforcement of any of the Loan Documents (including all such costs and expenses incurred in connection with any proceeding under the United States Bankruptcy Code involving the Borrower or any Guarantor as a debtor thereunder).  The Borrower further agrees to indemnify the Administrative Agent, the L/C Issuer, each Lender, and any security trustee therefor, and their respective directors, officers, employees, agents, financial advisors, and consultants (each such Person being called an “Indemnitee”) against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable fees and disbursements of counsel for any such Indemnitee and all reasonable expenses of litigation or preparation therefor, whether or not the Indemnitee is a party thereto, or any settlement arrangement arising from or relating to any such litigation) which any of them may pay or incur arising out of or relating to any Loan Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Revolving Loan or Letter of Credit, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification.  The Borrower, upon demand by the Administrative Agent, the L/C Issuer, or a Lender at any time, shall reimburse the Administrative Agent, the L/C Issuer, or such Lender for any legal or other expenses (including, without limitation, all reasonable fees and disbursements of counsel for any such Indemnitee) incurred in connection with investigating or defending against any of the foregoing (including any settlement costs relating to the foregoing) except if the same is directly due to the gross negligence or willful misconduct of the Indemnitee.  To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or the other Loan Documents or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Revolving Loan or Letter of Credit or the use of the proceeds thereof.  The obligations of the Borrower under this Section shall survive the termination of this Agreement.

 

(b)     The Borrower unconditionally agrees to forever indemnify, defend and hold harmless, and covenants not to sue for any claim for contribution against, each Indemnitee for any damages, costs, loss or expense, including without limitation, response, remedial or removal costs and all fees and disbursements of counsel for any such Indemnitee, arising out of any of the following:  (i) any presence, release, threatened release or disposal of any hazardous or toxic substance or petroleum by the Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), (ii) the operation or violation of any Environmental Law, whether federal, state, or local, and any regulations promulgated thereunder, by the Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), (iii) any claim for personal injury or property damage in connection

 

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with the Borrower or any Subsidiary or otherwise occurring on or with respect to its Property (whether owned or leased), and (iv) the inaccuracy or breach of any environmental representation, warranty or covenant by the Borrower or any Subsidiary made herein or in any other Loan Document evidencing or securing any Obligations or setting forth terms and conditions applicable thereto or otherwise relating thereto, except for damages arising from the willful misconduct or gross negligence of the relevant Indemnitee.  This indemnification shall survive the payment and satisfaction of all Obligations and the termination of this Agreement, and shall remain in force beyond the expiration of any applicable statute of limitations and payment or satisfaction in full of any single claim under this indemnification.  This indemnification shall be binding upon the successors and assigns of the Borrower and shall inure to the benefit of each Indemnitee and its successors and assigns.

 

Section 13.16.         Set-off.  In addition to any rights now or hereafter granted under the Loan Documents or applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default, each Lender, the L/C Issuer, each subsequent holder of any Obligation, and each of their respective affiliates, is hereby authorized by the Borrower and each Guarantor  at any time or from time to time, without notice to the Borrower or such Guarantor or to any other Person, any such notice being hereby expressly waived, to set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, and in whatever currency denominated, but not including trust accounts) and any other indebtedness at any time held or owing by that Lender, L/C Issuer, subsequent holder, or affiliate, to or for the credit or the account of the Borrower or such Guarantor, whether or not matured, against and on account of the Obligations of the Borrower or such Guarantor to that Lender, L/C Issuer, or subsequent holder under the Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Loan Documents, irrespective of whether or not (a) that Lender, L/C Issuer, or subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Revolving Loans and other amounts due hereunder shall have become due and payable pursuant to Section 9 and although said obligations and liabilities, or any of them, may be contingent or unmatured.

 

Section 13.17.         Entire Agreement.  The Loan Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby.

 

Section 13.18.         Governing Law.  This Agreement and the other Loan Documents (except as otherwise specified therein), and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of New York.

 

Section 13.19.         Severability of Provisions.  Any provision of any Loan Document which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.  All rights, remedies and powers provided in this Agreement and the other Loan Documents may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Agreement and other Loan Documents are intended to be subject to all

 

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applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement or the other Loan Documents invalid or unenforceable.

 

Section 13.20.         Excess Interest.  Notwithstanding any provision to the contrary contained herein or in any other Loan Document, no such provision shall require the payment or permit the collection of any amount of interest in excess of the maximum amount of interest permitted by applicable law to be charged for the use or detention, or the forbearance in the collection, of all or any portion of the Revolving Loans or other obligations outstanding under this Agreement or any other Loan Document (“Excess Interest”).  If any Excess Interest is provided for, or is adjudicated to be provided for, herein or in any other Loan Document, then in such event (a) the provisions of this Section shall govern and control, (b) neither the Borrower nor any guarantor or endorser shall be obligated to pay any Excess Interest, (c) any Excess Interest that the Administrative Agent or any Lender may have received hereunder shall, at the option of the Administrative Agent, be (i) applied as a credit against the then outstanding principal amount of Obligations hereunder and accrued and unpaid interest thereon (not to exceed the maximum amount permitted by applicable law), (ii) refunded to the Borrower, or (iii) any combination of the foregoing, (d) the interest rate payable hereunder or under any other Loan Document shall be automatically subject to reduction to the maximum lawful contract rate allowed under applicable usury laws (the “Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction in the relevant interest rate, and (e) neither the Borrower nor any guarantor or endorser shall have any action against the Administrative Agent or any Lender for any damages whatsoever arising out of the payment or collection of any Excess Interest.  Notwithstanding the foregoing, if for any period of time interest on any of the Borrower’s Obligations is calculated at the Maximum Rate rather than the applicable rate under this Agreement, and thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on the Borrower’s Obligations shall remain at the Maximum Rate until the Lenders have received the amount of interest which such Lenders would have received during such period on the Borrower’s Obligations had the rate of interest not been limited to the Maximum Rate during such period.

 

Section 13.21.         Construction.  The parties acknowledge and agree that the Loan Documents shall not be construed more favorably in favor of any party hereto based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation of the Loan Documents.  The provisions of this Agreement relating to Subsidiaries shall only apply during such times as the Borrower has one or more Subsidiaries.

 

Section 13.22.         Lender’s and L/C Issuer’s Obligations Several.  The obligations of the Lenders and L/C Issuer hereunder are several and not joint.  Nothing contained in this Agreement and no action taken by the Lenders or L/C Issuer pursuant hereto shall be deemed to constitute the Lenders and L/C Issuer a partnership, association, joint venture or other entity.

 

Section 13.23.         Submission to Jurisdiction; Waiver of Jury Trial.  The Borrower and each Guarantor hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New York, New York for purposes of all legal proceedings arising out of or relating to this Agreement, the

 

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other Loan Documents or the transactions contemplated hereby or thereby.  The Borrower and each Guarantor irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  THE BORROWER, EACH GUARANTOR, THE ADMINISTRATIVE AGENT, THE L/C ISSUER, AND THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

Section 13.24.         USA Patriot Act.  Each Lender and L/C Issuer that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain, verify, and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or L/C Issuer to identify the Borrower in accordance with the Act.

 

Section 13.25.         Confidentiality.  Each of the Administrative Agent, the Lenders, and the L/C Issuer severally agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors to the extent any such Person has a need to know such Information (it being understood that the Persons to whom such disclosure is made will first be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower or any Subsidiary and its obligations, (g) with the prior written consent of the Borrower, (h) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section or (B) becomes available to the Administrative Agent, any Lender or the L/C Issuer on a non-confidential basis from a source other than the Borrower or any Subsidiary or any of their directors, officers, employees or agents, including accountants, legal counsel and other advisors, (i) to rating agencies if requested or required by such agencies in connection with a rating relating to the Revolving Loans or Revolving Credit Commitments hereunder, or (j) to entities which compile and publish information about the syndicated loan market, provided that only basic information about the pricing and structure of the transaction evidenced hereby may be disclosed pursuant to this subsection (j).  For purposes of this Section, “Information” means all information received from the Borrower or any of the Subsidiaries or from any other Person on behalf of the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a non-confidential basis prior to

 

76

 

disclosure by the Borrower or any of its Subsidiaries or from any other Person on behalf of the Borrower or any of the Subsidiaries.

 

[SIGNATURE PAGES TO FOLLOW]

 

77

 

This Credit Agreement is entered into between us for the uses and purposes hereinabove set forth as of the date first above written.

 

	
 
    	
“BORROWER”
    
	
 
    	
 
    
	
 
    	
LTC   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Wendy Simpson
    
	
 
    	
 
    	
Name   Wendy Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and President
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title Executive Vice President and
   Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
“ADMINISTRATIVE   AGENT AND L/C ISSUER”
    
	
 
    	
 
    
	
 
    	
BANK OF MONTREAL, as L/C Issuer and as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   Lloyd Baron 
    
	
 
    	
 
    	
Name
    	
Lloyd   Baron
    
	
 
    	
 
    	
Title
    	
Vice   President 
    

 

S-1

 

	
 
    	
“GUARANTORS”
    
	
 
    	
 
    
	
 
    	
“GUARANTORS”
    
	
 
    	
 
    
	
 
    	
Florida-LTC, Inc.
    
	
 
    	
LTC GP I, Inc.
    
	
 
    	
LTC-Gardner, Inc.
    
	
 
    	
LTC-Griffin, Inc.
    
	
 
    	
LTC-Jonesboro, Inc.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and President
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Albuquerque   Real Estate Investments, Inc.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Clint Malin
    
	
 
    	
 
    	
Name   Clint Malin
    
	
 
    	
 
    	
Title   Chairman and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Chief Financial Officer and Treasurer
    

 

S-2

 

	
 
    	
Beaumont Real Estate Investments, LP
    
	
 
    	
 
    
	
 
    	
By   L-Tex GP, Inc.
    
	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and
   President
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LTC Partners IX, L.P.
    
	
 
    	
 
    
	
 
    	
By   LTC GP VI, Inc.,
    
	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and
   President
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    

 

S-3

 

	
 
    	
Texas-LTC Limited Partnership
    
	
 
    	
 
    
	
 
    	
By   L-Tex GP, Inc.
    
	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and President
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    
	
 
    	
 
    
	
 
    	
Texas-LTC Woodridge Limited Partnership
    
	
 
    	
 
    
	
 
    	
By   L-Tex GP, Inc.,
    
	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and President
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    

 

S-4

 

	
 
    	
 
    	
North   Carolina Real Estate Investments, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By   LTC-Dearfield, Inc.
    
	
 
    	
its   Member
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and 
    
	
 
    	
 
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By   LTC-Richmond, Inc.
    
	
 
    	
its   Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   Wendy L. Simpson
    
	
 
    	
 
    	
Name   Wendy L. Simpson
    
	
 
    	
 
    	
Title   Chief Executive Officer and 
    
	
 
    	
 
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Name   Pamela J. Shelley-Kessler
    
	
 
    	
 
    	
Title   Senior Vice President, Chief
    
	
 
    	
 
    	
Financial   Officer and Secretary
    
					

 

S-5

 

	
 
    	
“LENDERS”
    
	
 
    	
 
    
	
 
    	
BANK   OF MONTREAL, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Lloyd Baron 
    
	
 
    	
 
    	
Name
    	
Lloyd   Baron
    
	
 
    	
 
    	
Title
    	
Vice   President 
    

 

S-6

 

	
 
    	
KEYBANK   NATIONAL ASSOCIATION, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Amy L. MacLearie
    
	
 
    	
 
    	
Name
    	
Amy   L. MacLearie
    
	
 
    	
 
    	
Title
    	
Assistant   Vice President-Closing Officer
    

 

S-7

 

	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a   Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Jamie Chen
    
	
 
    	
 
    	
Name
    	
Jamie   Chen
    
	
 
    	
 
    	
Title
    	
Vice   President 
    

 

S-8

 

	
 
    	
ROYAL   BANK OF CANADA, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Dan LePage 
    
	
 
    	
 
    	
Name
    	
Dan   LePage 
    
	
 
    	
 
    	
Title
    	
Authorized   Signatory 
    

 

S-9

 

	
 
    	
RAYMOND   JAMES BANK, FSB, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Alexander L. Rody 
    
	
 
    	
 
    	
Name
    	
Alexander   L. Rody 
    
	
 
    	
 
    	
Title
    	
Senior   Vice President
    

 

S-10

 

EXHIBIT A

 

NOTICE OF PAYMENT REQUEST

 

[Date]

 

[Name of Lender]

[Address]

 

Attention:

 

Reference is made to the Credit Agreement, dated as of April 18, 2011, among LTC Properties, Inc., the Guarantors from time to time party thereto, the Lenders party thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”).  Capitalized terms used herein and not defined herein have the meanings assigned to them in the Credit Agreement.  [The Borrower has failed to pay its Reimbursement Obligation in the amount of $                        .  Your Revolver Percentage of the unpaid Reimbursement Obligation is $                        ] or [                                  has been required to return a payment by the Borrower of a Reimbursement Obligation in the amount of $                              .  Your Revolver Percentage of the returned Reimbursement Obligation is $                              .]

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
BANK   OF MONTREAL, Chicago Branch, as L/C Issuer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    

 

 

EXHIBIT B

 

NOTICE OF BORROWING

 

Date:                      ,        

 

To:                       Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders parties to the Credit Agreement dated as of April 18, 2011 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), among LTC Properties, Inc., certain Guarantors which are signatories thereto, certain Lenders which are signatories thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, LTC Properties, Inc. (the “Borrower”), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.5 of the Credit Agreement, of the Borrowing specified below:

 

1.         The Business Day of the proposed Borrowing is                       ,         .

 

2.         The aggregate amount of the proposed Borrowing is $                            .

 

3.         The Borrowing is to be comprised of $                       of [Base Rate] [Eurodollar] Loans.

 

[4.         The duration of the Interest Period for the Eurodollar Loans included in the Borrowing shall be                          months.]

 

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom:

 

(a)          the representations and warranties of the Borrower contained in Section 6 of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date); and

 

 

(b)         no Default or Event of Default has occurred and is continuing or would result from such proposed Borrowing.

 

	
 
    	
LTC   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    

 

2

 

EXHIBIT C

 

NOTICE OF CONTINUATION/CONVERSION

 

Date:                          ,        

 

To:                  Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders parties to the Credit Agreement dated as of April 18, 2011 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”) among LTC Properties, Inc., certain Guarantors which are signatories thereto, certain Lenders which are signatories thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, LTC Properties, Inc. (the “Borrower”), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.5 of the Credit Agreement, of the [conversion] [continuation] of the Revolving Loans specified herein, that:

 

1.         The conversion/continuation Date is                     ,         .

 

2.         The aggregate amount of the Revolving  Loans to be [converted] [continued] is $                            .

 

3.         The Revolving Loans are to be [converted into] [continued as] [Eurodollar] [Base Rate] Loans.

 

4.         [If applicable:]  The duration of the Interest Period for the Revolving Loans included in the [conversion] [continuation] shall be                    months.

 

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed conversion/continuation date, before and after giving effect thereto and to the application of the proceeds therefrom:

 

(a)          the representations and warranties of the Borrower contained in Section 6 of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date); provided, however, that this condition shall not apply to the conversion of an outstanding Eurodollar Loan to a Base Rate Loan; and

 

 

(b)         no Default or Event of Default has occurred and is continuing, or would result from such proposed [conversion] [continuation].

 

	
 
    	
LTC   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    

 

2

 

EXHIBIT D

 

REVOLVING NOTE

 

	
U.S. $
    	
April 18, 2011
    

 

FOR VALUE RECEIVED, the undersigned, LTC Properties, Inc., a Maryland corporation  (the “Borrower”), hereby promises to pay to                                          (the “Lender”) or its registered assigns on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at the principal office of the Administrative Agent in Chicago, Illinois (or such other location as the Administrative Agent may designate to the Borrower), in immediately available funds, the principal sum of                                        Dollars ($                    ) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrower pursuant to the Credit Agreement, together with interest on the principal amount of each Revolving Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement.

 

This Note is one of the Revolving Notes referred to in the Credit Agreement dated as of April 18, 2011, among the Borrower, the Guarantors party thereto, the Lenders and L/C Issuer parties thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof.  All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement.  This Note shall be governed by and construed in accordance with the internal laws of the State of New York.

 

Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

 

 

The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder.

 

	
 
    	
LTC   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    

 

2

 

EXHIBIT E

 

LTC PROPERTIES, INC.

 

COMPLIANCE CERTIFICATE

 

To:                              Bank of Montreal, Chicago Branch, as Administrative Agent under, and the Lenders and L/C Issuer parties to, the Credit Agreement described below

 

This Compliance Certificate is furnished to the Administrative Agent, the L/C Issuer, and the Lenders pursuant to that certain Credit Agreement dated as of April 18, 2011, among us (as extended, renewed, amended or restated from time to time, the “Credit Agreement”).  Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.            I am the duly elected                          of LTC Properties, Inc.;

 

2.            I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements;

 

3.            The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or the occurrence of any event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below;

 

4.            The financial statements required by Section 8.5 of the Credit Agreement and being furnished to you concurrently with this Compliance Certificate are true, correct and complete as of the date and for the periods covered thereby; and

 

5.            Schedule I hereto sets forth financial data and computations evidencing the Borrower’s compliance with certain covenants of the Credit Agreement, all of which data and computations are, to the best of my knowledge, true, complete and correct and have been made in accordance with the relevant Sections of the Credit Agreement.

 

 

Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event:

 

 

 

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this              day of                                      20      .

 

	
 
    	
LTC   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name
    	
 
    
	
 
    	
 
    	
Title
    	
 
    

 

2

 

SCHEDULE I

TO COMPLIANCE CERTIFICATE

 

LTC PROPERTIES, INC.

 

COMPLIANCE CALCULATIONS

FOR CREDIT AGREEMENT DATED AS OF APRIL 18, 2011

 

CALCULATIONS AS OF                   ,         

 

	
A.                                   Maximum Total Indebtedness   to Total Asset Value (Section 8.21(a))
    	
 
    
	
1.                                       Total Indebtedness
    	
$                      
    
	
2.                                       Total Asset Value
    	
                      
    
	
3.                                       Ratio of Line A1 to A2
    	
        :1.0
    
	
4.                                       Line A3 ratio must not   exceed
    	
0.50:1.0
    
	
5.                                       The Borrower is in   compliance (circle yes or no)
    	
yes/no
    
	
 
    	
 
    
	
B.                                     Maximum Secured Debt to   Total Asset Value (Section 8.21(b))
    	
 
    
	
1.                                       Secured Debt
    	
$                      
    
	
2.                                       Total Asset Value
    	
                      
    
	
3.                                       Ratio of Line B1 to B2
    	
        :1.0
    
	
4.                                       Line B3 ratio must not   exceed
    	
0.35:1.0
    
	
5.                                       The Borrower is in   compliance (circle yes or no)
    	
yes/no
    
	
 
    	
 
    
	
C.                                     Maximum Unsecured Debt to   Unencumbered Asset Pool Value (Section 8.21(c))
    	
 
    
	
1.                                       Unsecured Debt of the   Borrower and its Subsidiaries
    	
$                      
    
	
2.                                       Unencumbered Asset Pool   Value as set forth on Exhibit A attached hereto
    	
                      
    
	
3.                                       Ratio of Line C1 to C2
    	
        :1.0
    
	
4.                                       Line C3 ratio must not   exceed
    	
0.60:1.0
    
	
5.                                       The Borrower is in   compliance (circle yes or no)
    	
 
    
	
 
    	
 
    
	
D.                                    Minimum EBITDA to Fixed   Charge Ratio (Section 8.21(d))
    	
 
    
	
1.                                       Net income (loss) for the   last 4 quarters
    	
$                      
    

 

 

	
2.                                       Depreciation and   amortization expense for last 4 quarters
    	
                      
    
	
3.                                       Interest expense for last   4 quarters
    	
                      
    
	
4.                                       Income tax expense for   last 4 quarters
    	
                      
    
	
5.                                       Extraordinary, unrealized   or non-recurring losses, including impairment charges and reserves for the   last 4 quarters
    	
                      
    
	
6.                                       Sum of Lines C1 through C5
    	
                      
    
	
7.                                       The funds received by the   Borrower or a Subsidiary as rent but which are reserved for capital expenses   for the last 4 quarters
    	
                          
    
	
8.                                       Unrealized gains of the   sale of assets for the last 4 quarters
    	
                        
    
	
9.                                       Income tax benefits of the   last 4 quarters
    	
                        
    
	
10.                                 Sum of Lines C7 through C9
    	
                        
    
	
11.                                 Line 6 minus Line 10   (“EBITDA”)
    	
                        
    
	
12.                                 Fixed Charges for the last   4 quarters
    	
                      
    
	
13.                                 Ratio of Line D11 to D12
    	
        :1.0
    
	
14.                                 Line D13 ratio shall not   be less than
    	
1.50:1.0
    
	
15.                                 The Borrower is in   compliance (circle yes or no)
    	
yes/no
    
	
 
    	
 
    
	
E.                                      Maximum   Secured Recourse Debt to Total Asset Value Ratio (Section 8.21(e))
    	
 
    
	
1.                                       Secured Recourse Debt
    	
                      
    
	
2.                                       Total Asset Value
    	
                      
    
	
3.                                       Ratio of Line E1 to Line   E2
    	
        :1.0
    
	
4.                                       Line E3 shall not exceed
    	
0.10:1.0
    
	
5.                                       The Borrower is in   compliance (circle yes or no)
    	
yes/no
    
	
 
    	
 
    
	
F.                                      Net Worth   (Section 8.21(f))
    	
 
    
	
1.                                       Tangible Net Worth
    	
$                      
    
	
2.                                       Net Proceeds from Stock   and Stock Equivalents
    	
                                                              
    
	
3.                                       80% of Line F2
    	
 
    
	
4.                                       $385,000,000 plus Line F3
    	
$                      
    
	
5.                                       Line F1 shall not be less   than Line F4
    	
 
    
	
6.                                       The Borrower is in   compliance (circle yes or no)
    	
yes/no
    

 

2

 

	
G.                                     Floating Rate Debt   (Section 8.21(g))
    	
 
    
	
1.                                       Total Asset Value
    	
$                      
    
	
2.                                       Total unhedged floating   rate debt outstanding
    	
$                      
    
	
3.                                       Percentage of Total Asset   Value consisting of outstanding unhedged floating rate debt
    	
                %
    
	
4.                                       Line G3 shall not exceed
    	
40%
    
	
5.                                       The Borrower is in   compliance (circle yes or no)
    	
yes/no
    
	
 
    	
 
    
	
H.                                    Minimum Eligible Property   NOI to Unsecured Debt Service Ratio (Section 8.21(h))
    	
 
    
	
1.                                       Eligible Property NOI for   the last 4 quarters
    	
                      
    
	
2.                                       Unsecured Debt Service for   the last 4 quarters
    	
$                      
    
	
3.                                       Ratio of Line H1 to H2
    	
        :1.0
    
	
4.                                       Line H3 ratio shall not be   less than
    	
2.25:1.0
    
	
5.                                       The Borrower is in   compliance (circle yes or no)
    	
yes/no
    

 

3

 

EXHIBIT A TO SCHEDULE I

TO COMPLIANCE CERTIFICATE

OF LTC PROPERTIES, INC.

 

This Exhibit A is attached to Schedule I to the Compliance Certificate of LTC Properties, Inc.  dated                       , 20       and delivered to Bank of Montreal, as Administrative Agent, and the Lenders party to the Credit Agreement referred to therein.  The undersigned hereby certifies that the following is a true, correct and complete list of the unencumbered Properties included in the determination of the Unencumbered Asset Pool Value set forth in Section C.2. of the Compliance Certificate:

 

A. UAP PROPERTIES OWNED FOR MORE THAN 12 MONTHS

 

	
PROPERTY
    	
 
    	
PROPERTY NOI/CAPITALIZATION RATE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Total:
    	
 
    	
 
    

 

B. UAP PROPERTIES OWNED FOR 12 MONTHS OR LESS

 

	
PROPERTY
    	
 
    	
BOOK VALUE
    	
 
    	
PROPERTY NOI/CAPITALIZATION
   RATE
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total:
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
 
    	
LTC   PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    

 

4

 

EXHIBIT F

 

ASSIGNMENT AND ACCEPTANCE

 

Dated                  ,            

 

Reference is made to the Credit Agreement dated as of April 18, 2011 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”) among LTC Properties, Inc., the Lenders and L/C Issuer parties thereto, and Bank of Montreal, as Administrative Agent (the “Administrative Agent”).  Terms defined in the Credit Agreement are used herein with the same meaning.

 

                                                                                                (the “Assignor”) and                                                    (the “Assignee”) agree as follows:

 

1.         The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, the amount and specified percentage interest shown on Annex I hereto of the Assignor’s rights and obligations under the Credit Agreement as of the Effective Date (as defined below), including, without limitation, the Assignor’s Commitments as in effect on the Effective Date and the Loans, if any, owing to the Assignor on the Effective Date and the Assignor’s Revolver Percentage of any outstanding L/C Obligations.

 

2.         The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim, lien, or encumbrance of any kind; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of their respective obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto.

 

3.         The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered to the Lenders pursuant to Section 8.5(a) and (b) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent to take such action as Administrative Agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent

 

 

by the terms thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (v) specifies as its lending office (and address for notices) the offices set forth on its Administrative Questionnaire.

 

4.         As consideration for the assignment and sale contemplated in Annex I hereof, the Assignee shall pay to the Assignor on the Effective Date in Federal funds the amount agreed upon between them.  It is understood that commitment and/or letter of credit fees accrued to the Effective Date with respect to the interest assigned hereby are for the account of the Assignor and such fees accruing from and including the Effective Date are for the account of the Assignee.  Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party’s interest therein and shall promptly pay the same to such other party.

 

5.         The effective date for this Assignment and Acceptance shall be                             (the “Effective Date”).  Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent and, if required, the Borrower.

 

6.         Upon such acceptance and recording, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

 

7.         Upon such acceptance and recording, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee.  The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.

 

2

 

8.         This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York.

 

	
 
    	
[ASSIGNOR LENDER]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[ASSIGNEE LENDER]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    
				

 

	
Accepted and consented   this             day   of                            
    	
 
    
	
 
    	
 
    
	
LTC PROPERTIES, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
 
    	
 
    
	
Name
    	
 
    	
 
    
	
Title
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
 
    	
 
    
	
Name
    	
 
    	
 
    
	
Title
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Accepted and consented to by the Administrative   Agent and L/C Issuer this            day of                 
    	
 
    
	
 
    	
 
    
	
BANK OF MONTREAL, Chicago Branch, as   Administrative Agent and L/C Issuer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
 
    	
 
    
	
Name
    	
 
    	
 
    
	
Title
    	
 
    	
 
    
				

 

3

 

ANNEX I

TO ASSIGNMENT AND ACCEPTANCE

 

The assignee hereby purchases and assumes from the assignor the following interest in and to all of the Assignor’s rights and obligations under the Credit Agreement as of the effective date.

 

	
FACILITY ASSIGNED
    	
 
    	
AGGREGATE
   COMMITMENT/LOANS
   FOR ALL LENDERS
    	
 
    	
AMOUNT OF
   COMMITMENT/LOANS
   ASSIGNED
    	
 
    	
PERCENTAGE ASSIGNED
   OF COMMITMENT/LOANS
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Revolving Credit
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    
										

 

 

EXHIBIT G

 

ADDITIONAL GUARANTOR SUPPLEMENT

 

                                       ,                  

 

Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders named in the Credit Agreement dated as of April 18, 2011, among LTC Properties, Inc., as Borrower, the Guarantors referred to therein, the Lenders from time to time party thereto, and the Administrative Agent (the “Credit Agreement”)

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement described above.  Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein.

 

The undersigned, [name of Subsidiary Guarantor], a [jurisdiction of incorporation or organization] hereby elects to be a “Guarantor” for all purposes of the Credit Agreement, effective from the date hereof.  The undersigned confirms that the representations and warranties set forth in Section 6 of the Credit Agreement are true and correct as to the undersigned as of the date hereof and the undersigned shall comply with each of the covenants set forth in Section 8 of the Credit Agreement applicable to it.

 

Without limiting the generality of the foregoing, the undersigned hereby agrees to perform all the obligations of a Guarantor under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Section 12 thereof, to the same extent and with the same force and effect as if the undersigned were a signatory party thereto.

 

The undersigned acknowledges that this Agreement shall be effective upon its execution and delivery by the undersigned to the Administrative Agent, and it shall not be necessary for the Administrative Agent or any Lender, or any of their Affiliates entitled to the benefits hereof, to execute this Agreement or any other acceptance hereof.  This Agreement shall be construed in accordance with and governed by the internal laws of the State of New York.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
[NAME   OF SUBSIDIARY GUARANTOR]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    

 

 

EXHIBIT H

 

COMMITMENT AMOUNT INCREASE REQUEST

 

                            ,                  

 

To:                              Bank of Montreal, Chicago Branch, as Administrative Agent for the Lenders parties to the Credit Agreement dated as of April 18, 2011 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”), among LTC Properties, Inc. the Guarantors party thereto, certain Lenders which are signatories thereto, and Bank of Montreal, Chicago Branch, as Administrative Agent

 

Ladies and Gentlemen:

 

The undersigned, LTC Properties, Inc. (the “Borrower”) hereby refers to the Credit Agreement and requests that the Administrative Agent consent to an increase in the aggregate Revolving Credit Commitments (the “Commitment Amount Increase”), in accordance with Section 2.13 of the Credit Agreement, to be effected by [an increase in the Revolving Credit Commitment of [name of existing Lender] [the addition of [name of new Lender] (the “New Lender”) as a Lender under the terms of the Credit Agreement].  Capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.

 

After giving effect to such Commitment Amount Increase, the Revolving Credit Commitment of the [Lender] [New Lender] shall be $                          .

 

[Include paragraphs 1-4 for a New Lender]

 

1.            The New Lender hereby confirms that it has received a copy of the Loan Documents and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the making of the Revolving Loans and other extensions of credit thereunder.  The New Lender acknowledges and agrees that it has made and will continue to make, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Credit Agreement.  The New Lender further acknowledges and agrees that the Administrative Agent has not made any representations or warranties about the credit worthiness of the Borrower or any other party to the Credit Agreement or any other Loan Document or with respect to the legality, validity, sufficiency or enforceability of the Credit Agreement or any other Loan Document or the value of any security therefor.

 

 

2.            Except as otherwise provided in the Credit Agreement, effective as of the date of acceptance hereof by the Administrative Agent, the New Lender (i) shall be deemed automatically to have become a party to the Credit Agreement and have all the rights and obligations of a “Lender” under the Credit Agreement as if it were an original signatory thereto and (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement as if it were an original signatory thereto.

 

3.            The New Lender shall deliver to the Administrative Agent an Administrative Questionnaire.

 

[4.          The New Lender has delivered, if appropriate, to the Borrower and the Administrative Agent (or is delivering to the Borrower and the Administrative Agent concurrently herewith) the tax forms referred to in [Section 13.1] of the Credit Agreement.]*

 

THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

The Commitment Amount Increase shall be effective when the executed consent of the Administrative Agent is received or otherwise in accordance with Section 2.13 of the Credit Agreement, but not in any case prior to                                       ,         .  It shall be a condition to the effectiveness of the Commitment Amount Increase that all expenses referred to in Section 2.13 of the Credit Agreement shall have been paid.

 

The Borrower hereby certifies that no Default or Event of Default has occurred and is continuing.

 

* Insert bracketed paragraph if New Lender is organized under the law of a jurisdiction other than the United States of America or a state thereof.

 

2

 

Please indicate the Administrative Agent’s consent to such Commitment Amount Increase by signing the enclosed copy of this letter in the space provided below.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
LTC PROPERTIES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[NEW OR EXISTING LENDER INCREASING COMMITMENTS]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name
    	
 
    
	
 
    	
Title
    	
 
    
				

 

	
The   undersigned hereby consents on this      day of                             ,              to the   above-requested Commitment Amount Increase.
    	
 
    
	
 
    	
 
    
	
BANK   OF MONTREAL, Chicago Branch,
    	
 
    
	
as Administrative Agent
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    
	
Name
    	
 
    	
 
    
	
Title
    	
 
    	
 
    
				

 

3

 

SCHEDULE 1

 

COMMITMENTS

 

	
NAME OF LENDER
    	
 
    	
REVOLVING
   CREDIT
   COMMITMENT
    	
 
    
	
Bank of Montreal
    	
 
    	
$
    	
50,000,000
    	
 
    
	
KeyBank National   Association
    	
 
    	
$
    	
50,000,000
    	
 
    
	
Wells Fargo Bank, National   Association
    	
 
    	
$
    	
50,000,000
    	
 
    
	
Royal Bank of Canada
    	
 
    	
$
    	
50,000,000
    	
 
    
	
Raymond James Bank, FSB
    	
 
    	
$
    	
10,000,000
    	
 
    
	
TOTAL
    	
 
    	
$
    	
210,000,000
    	
 
    

 

 

FORM OF SCHEDULE 6.2

 

SUBSIDIARIES

 

 

SCHEDULE 6.26

 

SIGNIFICANT LEASES

 

 

FORM OF SCHEDULE 6.27

 

UAP PROPERTIESAR Filed by Filing Services Canada Inc.  (403) 717-3898

 

SUBSCRIPTION AGREEMENT

(Regulation S Offering For Non-U.S. Persons)

SENTRY PETROLEUM LTD.

SUBSCRIPTION AGREEMENT between Sentry Petroleum Ltd., a Nevada corporation (the “Company”) and the undersigned (the “Subscriber”).

WHEREAS:

A.

The Company desires to offer for sale pursuant to Regulation S of the United States Securities Act of 1933 (the “Act”) (the “Offering”) 1,162,987 Common Shares ($ 3.0 million) (the “Shares”) at an average offering price of $2.58 per Share in the currency of the United States.  

B.

The Subscriber desires to acquire the number of Shares of the Offering pursuant to table 1 as set forth on the signature page hereof on the terms and subject to the conditions of this Subscription Agreement. The undersigned hereby irrevocably subscribes for the purchase of Shares, pursuant to and in accordance with the terms and conditions of this Subscription Agreement, and herewith makes payment, covering the purchase of the Shares, which should be delivered to the undersigned at the address stated below.

C.

The undersigned agrees that:  (1) the undersigned will not offer, sell, transfer or otherwise dispose of any such securities, unless either (a) a registration statement, or post-effective amendment thereto, covering such securities have been filed with the Securities and Exchange Commission (“Commission”) pursuant to the Act , and such sale, transfer or other disposition is accompanied by a prospectus meeting the requirements of Section 10 of the Act forming a part of such registration statement, or post-effective amendment thereto, which is in effect under the Act covering the Shares to be so sold, transferred or otherwise disposed of, or (b) counsel to the Company satisfactory to the undersigned has rendered an opinion in writing and addressed to the Company that such proposed offer, sale, transfer or other disposition of the securities is exempt from the provisions of Section 5 of the Act in view of the circumstances of such proposed offer, sale, transfer or other disposition; (2) the Company may notify the transfer agent for its Common Stock that the certificates for the common stock acquired by the undersigned are not to be transferred unless the transfer agent receives advice from the Company that one or both of the conditions referred to in (1)(a) and (1)(b) above have been satisfied; and (3) the Company may affix the legend set forth in Section 3.1 of the Warrant to the certificates for Shares hereby subscribed for, if such legend is applicable.

The following information is furnished as the undersigned’s subscription for Shares issued by the Company, consisting of shares of common stock, $0.0001 par value per share,  and for you to determine whether I am qualified to purchase Shares from the Company pursuant to Regulation S promulgated under the Act.  I, the undersigned, understand that you will rely upon the following information for purposes of such determination, and that the Shares will not be registered under the Act in reliance upon the exemption from registration provided by Regulation S promulgated under the Act.

ALL INFORMATION CONTAINED IN THIS SUBSCRIPTION AGREEMENT WILL BE TREATED CONFIDENTIALLY. However, it is agreed that you may present this document to such parties as you deem appropriate if called upon to establish that the proposed offer and sale of the Shares is exempt from registration under the Act or meets the requirements of applicable state
securities laws.  I understand that if I make a false statement, it will constitute a violation of my representations and warranties under this Subscription Agreement and may also constitute a violation of law, for which the Company can make a claim for damages against me.  My investment in the Shares will not be accepted until the Company determines that I satisfy all of the conditions set forth in Regulation S. 

-1-

1.

Representations and Warranties.  I, the undersigned, represent and warrant as follows:

(a)

I have carefully reviewed all information filed by the Company with the Commission (collectively the “SEC Filings”), and have relied solely on the information contained therein, and information otherwise provided to me in writing by the Company.   I understand that all documents, records and books pertaining to this investment have been made available by the Company for inspection by me or my attorney and accountant.  I am familiar with the Company’s business objectives and the financial arrangements in connection therewith.  The Shares I am purchasing are the kind of securities that I wish to hold for investment and the nature of the Shares are consistent with my investment program. My advisor(s) and I have had a reasonable opportunity to ask questions of and receive answers from the officers and directors of the Company concerning the Company and the Shares.  All such questions have been answered to my full satisfaction.  I, or my representatives, have made such investigation of the facts and circumstances set forth in the SEC Filings and exhibits thereto in connection with any purchase of the Shares as I have deemed necessary.  No representations have been made or information furnished to me or my advisor(s) relating to the Company or the Shares that are in any way inconsistent with the SEC Filings.

(b)

As purchaser, I am not a “U.S. Person” as defined by Regulation S of the Act and am not acquiring the Shares for the account or benefit of a U.S. Person.  A “U.S. Person” is defined by Regulation S of the Act to be any person who is:  (i) Any natural person resident in the United States; (ii) Any partnership or corporation organized or incorporated under the laws of the United States; (iii) Any estate of which any executor or administrator is a U.S. person; (iv) Any trust of which any trustee is a U.S. person; (v) Any agency or branch of a foreign entity located in the United States; (vi) Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (vii) Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (viii) Any partnership or corporation if: (A) Organized or incorporated under the laws of any foreign jurisdiction; and (B) Formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts.

(c)

Subject to the terms and conditions hereof, I hereby irrevocably tender this Subscription Agreement for the purchase of the Shares indicated below and shall pay for such Shares in the manner set forth herein.  I am aware that the subscription made herein is irrevocable, but that the Company has the unconditional right to accept or reject this subscription, in whole or in part, and that the sale of the Shares pursuant hereto is subject to the approval of certain legal matters by legal counsel and to other conditions.  If my subscription is not accepted for any reason whatsoever my money will be returned in full, without any interest that may be earned thereon, and the Company will be relieved of any
responsibility or liability that might be deemed to arise out of my offer to subscribe for the Shares. 

-2-

(d)

I have carefully reviewed the SEC Filings.  I have such knowledge and experience in business and financial matters as will enable me to evaluate the merits and risks of the prospective investment and to make an informed investment decision.  I am also aware that no governmental agency has reviewed or endorsed the Shares and that the Shares involve a high degree of economic risk.

(e)

I have satisfied myself as to the full observance of the laws of my jurisdiction in connection with any invitation to subscribe for the Shares and/or any use of this Agreement, including (i) the legal requirements within my jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares

(f)

I have been advised and am fully aware that investing in the Shares is a speculative and uncertain undertaking, the advantages and benefits of which are generally limited to a certain class of investors, and that the Shares may be sold only to persons who understand the nature of the proposed operations of the Company and for whom the investment is suitable.  I represent that I meet such suitability requirements.

(g)

I have relied on my own tax and legal adviser and my own investment counselor with respect to the income tax and investment considerations of investing in the Shares.

(h) 

I understand that the Company has not registered the Shares under the Act, or the applicable laws of any other jurisdiction, in reliance on exemptions from registration.  I further understand that such exemptions depend upon my investment intent at the time I acquire the Shares.  I therefore represent and warrant that I am purchasing the Shares for my own account for investment, not as a nominee or agent, without any present intention to distribution, assignment, resale or other transfer of the Shares in any manner which would result in a violation of Regulation S or any other provision of United States securities laws.  Except as specifically stated herein, no other person has a direct or indirect beneficial interest in the Shares.  Because the Shares are not registered, I am aware that I must hold them indefinitely unless they are registered under the Act or I must obtain exemptions from such registration.  I acknowledge that the Company is under no duty to register the Shares or comply with any exemption in connection with my sale, transfer or other disposition under applicable rules and regulations. I understand that if I desire to sell, assign, transfer, hypothecate or in any way alienate or encumber the Shares in the future, the Company can require that I provide, at my own expense, an opinion of counsel satisfactory to the Company to the effect that such action will not result in a violation of applicable federal or state securities laws and regulations or other applicable federal or state laws and regulations.

(i)

The solicitation of an offer to purchase the Shares was directly communicated to me.  At no time was I presented with or solicited by or through any leaflet, public promotional meeting, circular, newspaper or magazine article, radio or television advertisement or any other form of general advertising in connection with such communicated offer.

-3-

(j)

I recognize that my investment in the Shares involves certain risks and I have taken full cognizance of and understand all of the risk factors related to the business objectives of the Company and the purchase of the Shares, including those risk factors set forth under the caption “RISK FACTORS” in the SEC Filings.

(k)

All information that I have provided herein is correct and complete as of the date hereof, and if there should be any material change in such information prior to the acceptance of this Subscription Agreement, I will immediately provide the Company with such information.

(l)

If the Subscriber is a corporation, partnership, trust, unincorporated association or other entity, it is authorized and otherwise duly qualified to purchase and hold the Shares subscribed hereunder, and such entity has not been formed for the specific purpose of acquiring the Shares.  If the Subscriber is a trustee and is acquiring the Shares for the trust of which he is a trustee, he has sought the advice of counsel regarding whether the purchase of the Shares is an authorized trust investment and has been advised by counsel that after reviewing all the applicable laws and the terms of the trust instrument, such counsel is of the opinion that the undersigned has the authority to purchase the Shares for the trust.

(m)

If the Subscriber is an individual, he or she is 21 years of age, or if the Subscriber is an association, all of its members are of such age.

(n)

Pending acceptance of this subscription by the Company, all funds paid hereunder shall be deposited by the Company and immediately available to the Company for its corporate purposes.  In the event the subscription is not accepted, the subscription funds will constitute a non-interest bearing demand loan of the Subscriber to the Company.

(o)

The Subscriber hereby authorizes and directs the Company to deliver the securities to be issued to such Subscriber pursuant to this subscription Agreement to the Subscriber’s address indicated herein.

(p) 

The Subscriber acknowledges and agrees that the subscription for the Shares and the Company’s acceptance of the subscription is not subject to any minimum subscription for the Offering. 

2.

Restrictive Legend.  I hereby acknowledge and consent to the placement of the following restrictive, or similar content and substantive legend on the certificate(s) and other documents(s) representing shares of the Company’s common stock:

THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGES OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE OF THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 

-4-

144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A SATISFACTORY LEGAL OPINION TO THE COMPANY.  DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.  A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY”  MAY BE OBTAINED FROM THE COMPANY UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION IN A FORM SATISFACTORY TO THE COMPANY AND ITS REGISTRAR AND TRANSFER AGENT, TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT OR AS PRESCRIBED BY THE COMPANY FROM TIME TO TIME.

3.

Indemnification.  

I agree to indemnify and hold harmless the Company, its officers and directors from and against all damages, losses, costs and expenses (including reasonable attorney’s fees) which they may incur by reason of my failure to fulfill any of the terms or conditions of this Subscription Agreement, or by reason of any untrue statement made herein or any breach of the representations and warranties made herein or in any document that I have provided to the Company.

 

4.

Miscellaneous.

(a)

I agree that I may not cancel, terminate or revoke this Subscription Agreement or any covenant hereunder and that this Subscription Agreement shall survive my death or disability and shall be binding upon my heirs, executors, administrators, successors and assigns.

(b)

This Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Nevada.  

(c)

Within five days after receipt of a written request from the Company, I agree to provide such information and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.

-5-

IN WITNESS WHEREOF, this SUBSCRIPTION AGREEMENT made as of this 14 day of April, 2011 between Sentry Petroleum Ltd., a Nevada corporation (the “Company”) and the undersigned (the “Subscriber”). I, the undersigned Subscriber, hereby supply you with the following information and representations:

Table 1

					
	 
	Number of shares subscribed for

	Price per share

	Amount of subscription

	Condition precedence

	Tranche 1

	227,273

	$2.20

	$500,000

	 

	Tranche 2

	400,000

	$2.50

	$1,000,000

	Certified test results of the core samples by an independent laboratory, confirming the average In-Situ Methane Storage Capacity is: 

(a)

For coal – not less than average [2.5] cubic meters per tonne dry ash free (D.A.F.) and;

(b)

For Carb Shale - not less than average [0.5] cubic meters per tonne TOC (total organic content) greater than 8 weight percent.

	Tranche 3

	535,714

	$2.80

	$1,500,000

	Initial 3P reserve certification from an independent competent person in accordance with the definitions and guidelines set forth in the 2007 Petroleum Resources Management System.

	TOTAL

	1,162,987

	 
	$3,000,000

	 

Authorized Signature of Subscriber: /s/ Authorized Signatory

Name of Subscriber, Corporation or other form of registration (use full legal name):

Camerts S.A. 

Address of Subscriber: <>

City: <>    Country: <>  Postal Code: <>

Home Phone: <>  Bus. Phone:<>

Cell Phone: <>

 Bus. Fax: <>

Email address: <>

-6-

Sentry Petroleum Ltd.

Company Acceptance

(To be filled out by Sentry Petroleum Ltd.)

ACCEPTED BY: 

SENTRY PETROLEUM LTD. 

Signature of Authorized Signatory:  

/s/ Arne Raabe                

Name of Authorized Signatory:       

Arne Raabe

Position of Authorized Signatory:   

Corporate Secretary

Date of Acceptance:                        

April 14, 2011

-7-

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