INTERCREDITOR AGREEMENT
THIS
INTERCREDITOR AGREEMENT (“Agreement”)
is entered into effective as of the 3rd day of March, 2005 by and
between
HEALTH CARE REIT, INC., a
Delaware corporation (“HCN”), and
HEALTHCARE REALTY TRUST INCORPORATED, a
Maryland corporation (“HRT”).
RECITALS
A.
HCN
and certain HCN Affiliates, as hereinafter defined, lease to
Emeritus Corporation, a Washington corporation,
(“Emeritus”) the real property identified on
Exhibit “A” attached hereto and made a part hereof
(“ML Leased Property”) pursuant to an Amended and
Restated Master Lease Agreement dated September 30, 2003
(“Master Lease”).
B.
HCN
has made a loan to Emeritus in the principal amount of
$25,800,000 (“Loan”) pursuant to an Amended and
Restated Loan Agreement dated September 30, 2003 (“Loan
Agreement”) as evidenced by an Amended and Restated Note
dated September 30, 2003 (“Note”). The Loan is
secured by an Amended and Restated Leasehold Mortgage/Deed of
Trust, Security Agreement, Assignment of Lease and Rents,
Financing Statement and Fixture Filing granted by Emeritus to
HCN dated effective as of September 30, 2003 with respect to
the ML Leased Property (“ML Leasehold Mortgage”)
granting HCN an interest in the leasehold estate of Emeritus
arising under the Master Lease.
C.
HCN
has agreed to sell and HRT has agreed to purchase the Note and
take an assignment of the Loan Documents, as defined
below.
D.
In
connection with the sale of the Note, HCN and HRT have agreed
to enter into this Agreement to clarify their respective
rights.
NOW
THEREFORE, to induce HCN to sell the Note and assign the Loan
Documents to HRT, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as
follows:
1.
Definitions .
As used in this Intercreditor Agreement (this
“Agreement”), the following terms shall have the
following meanings (with terms defined above having the meanings
indicated):
“
Affiliate ”
means HCRI Mississippi Properties, Inc., a Mississippi corporation;
HCRI Massachusetts Properties Trust II, a Massachusetts business
trust; and HCRI Texas Properties, Ltd., a Texas limited
partnership.
“
Bankruptcy Code ”
means the United States Bankruptcy Code set forth in 11 U.S.C.
§101,
et seq., as
amended from time to time.
“
HRT Collateral ”
means the leasehold estate of Emeritus arising under the Lease in
the Leased Property, and any other property of Emeritus located
upon or held in connection with the Leased Property in which HRT
has a security interest, however created as of the date
hereof.
“
HRT Debt ”
means those obligations, liabilities and indebtedness arising under
the Loan Documents, as amended from time to time.
“
Indefeasibly Satisfied ”
means receipt of payment in full in cash followed by the passage of
a period of 91 days from such payment in which no challenge to such
payment as a preference or other impermissible payment has been
made by any person, or upon the dismissal, withdrawal or final
ruling against such a challenge, together with the termination of
all further commitments of Landlord or HRT, as the case may be, to
lend money to Emeritus in connection with the Leased
Property.
“
Insolvency Event ”
means the following:
[1]
Emeritus
commences any case, proceeding or other action (i) under any
existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to
adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or Emeritus making a general assignment for the
benefit of its creditors; or
[2]
there
is commenced against Emeritus any case, proceeding or other
action of a nature referred to in clause [1] above that (i)
results in the entry of an order for relief or any such
adjudication or appointment or (ii) remains undismissed,
undischarged or unbonded for a period of 60 days;
or
[3]
there
is commenced against Emeritus any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for
any such relief and which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days
from the entry of such order; or
[a]
Emeritus
takes any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth
in any of clauses [1], [2] or [3] above; or
[b]
Emeritus
generally is not paying, or is unable to pay, or admits in
writing its inability to pay, its debts as they become
due.
“
Landlord ”
means HCN and each Affiliate, jointly and severally.
“
Landlord Collateral ”
means the following described property located at a Leased
Property, or arising in connection with the operation of the Leased
Property, whether now owned or hereafter acquired by Tenant or
Subtenant to secure the payment and performance of the Landlord
Obligations:
[1]
All
machinery, furniture, equipment, trade fixtures, appliances,
inventory and all other goods (as “equipment”,
“inventory” and “goods” are defined
for purposes of Article 9 (“Article 9”) of the
Uniform Commercial Code as adopted in Ohio) and any leasehold
interest of Tenant or any Subtenant in any of the foregoing,
including, without limitation, those items which are to become
fixtures or which are building supplies and materials to be
incorporated into any improvement or fixture.
[2]
All
accounts, contract rights, general intangibles, instruments,
documents, and chattel paper [as “accounts”,
“contract rights”, “general
intangibles”, “instruments”,
“documents”, and “chattel paper”, are
defined for purposes of Article 9] now or hereafter
arising.
[3]
All
franchises, permits, licenses, operating rights,
certifications, approvals, consents, authorizations and other
general intangibles, including, without limitation,
certificates of need, state health care facility licenses, and
Medicare and Medicaid provider agreements, to the extent
permitted by law.
[4]
Unless
expressly prohibited by the terms thereof, all contracts,
agreements, contract rights and materials relating to the
design, construction, operation or management of any
improvements, including, but not limited to, plans,
specifications, drawings, blueprints, models, mock ups,
brochures, flyers, advertising and promotional materials and
mailing lists.
[5]
All
subleases, occupancy agreements, license agreements and
concession agreements, written or unwritten, of any nature,
now or hereafter entered into, and all right, title and
interest of Tenant there under, including, without limitation,
those certain Subleases dated as of the Effective Date, by and
between Tenant, as Sublandlord, and each Subtenant, as
Subtenant; and including, without limitation, Tenant’s
right, if any, to cash or securities deposited there under
whether or not the same was deposited to secure performance by
the subtenants, occupants, licensees and concessionaires of
their obligations there under, including the right to receive
and collect the rents, revenues, and other charges there
under.
[6]
All
ledger sheets, files, records, computer programs, tapes, other
electronic data processing materials, and other
documentation.
[7]
The
products and proceeds of the preceding listed property,
including, without limitation, cash and non cash proceeds,
proceeds of proceeds, and insurance proceeds.
“
Landlord Obligations ”
means all obligations, liabilities and indebtedness of every nature
of Emeritus from time to time owed to Landlord under the Lease,
whether now existing or hereafter incurred or created, and all
fees, costs and expenses, whether primary, secondary, direct,
contingent, fixed or otherwise, heretofore, now and from time to
time hereafter owing, due or payable, whether before or after the
commencement of an Insolvency Event (including, without limitation,
interest or rent accruing thereon after the commencement of an
Insolvency Event, without regard to whether or not such interest is
an allowed claim.
“
Lease ”
means the Master Lease, as the same may be hereafter modified,
supplemented, amended, restated, extended, renewed or
increased.
“
Leased Property ”
means individually and collectively each ML Leased
Property.
“
Loan Documents ”
means collectively the Note, the ML Leasehold Mortgage, and the
Loan Agreement, as the same may be hereafter modified,
supplemented, amended, restated, extended, renewed or
increased.
“
Subtenant ”
means each of Texas ESC Lubbock, L.P., a Washington limited
partnership; and Painted Post Properties, Inc., a Washington
corporation.
“
Tenant ”
means Emeritus Corporation, a Washington corporation.
|
2.
|
Subordination of Payments
.
|
(a)
HRT
hereby agrees that the HRT Debt shall be subordinated to the
Landlord Obligations. Except as provided in 2(b), no payment
shall be made by or on behalf of Emeritus for or on account of
the HRT Debt, and HRT shall not take or receive from Emeritus,
directly or indirectly, in cash or other property or by setoff
or in any other manner, payment of all or any of the HRT Debt,
if any, so long as any sums in respect to the Landlord
Obligations shall then be due and payable. If there is any
conflict between the Lease and the Loan Documents, the terms
of the Lease shall govern.
(b)
Notwithstanding
any provision contained herein, as long as no monetary Event
of Default has occurred and is continuing under the Lease, HRT
may (i) receive all payments as and when due on the HRT Debt
pursuant to the HRT Documents, including without limitation,
the final payment due at maturity, (ii) allow Emeritus to
prepay the Note in full provided the funds for the prepayment
are not Landlord Collateral, and (iii) may bring legal
proceedings against Emeritus under the Note, but shall not
pursue or prosecute any right or remedy which HRT may have as
a secured party or otherwise under the ML Leasehold
Mortgage.
3.
Subordination of Liens on Landlord
Collateral .
HRT hereby agrees that all of its rights with respect to the
Landlord Collateral shall be in all respects subject and
subordinate to the rights of Landlord with respect to such Landlord
Collateral in connection with and on account of the Landlord
Obligations. HRT agrees to refrain from challenging the validity,
enforceability, priority or perfection of Landlord’s security
interests and liens in the Landlord Collateral. The foregoing
subordination shall be effective irrespective of: (a) the time,
order, manner or method of creation, attachment or perfection of
the respective security interests, liens and/or other rights
granted to HRT or Landlord, or any lapse of perfection or
attachment; (b) the time or manner of the filing of their
respective financing statements; (c) whether HRT or Landlord or any
bailee or agent of either party holds possession of any or all of
the property or assets of Emeritus; (d) the dating, execution or
delivery of any agreement, document or instrument granting HRT or
Landlord security interests and/or liens in or on any or all of the
property or assets of Emeritus; (e) any amendment, modification,
restatement, extension, renewal or increase to the Landlord
Obligations or Lease or the creation of any new indebtedness which
becomes a part of the Landlord Obligations or secured or evidenced
by the Lease; and (f) any provision of the UCC or any other
applicable law to the contrary.
4.
Adding and Removing Facilities from the Master
Lease .
Landlord may amend the Master Lease to include additional
facilities without HRT’s consent, provided that Landlord has
consented to Tenant amending the ML Leasehold Mortgage to include
such additional facilities. Additionally, in the event Landlord
desires to amend the Lease to remove a facility from the Master
Lease, HRT shall release such facility upon payment by Emeritus of
an amount mutually agreed to by HRT and Emeritus or a prorated
amount of the then outstanding HRT Debt on a site by site basis,
i.e. the release amount shall be equal to then outstanding HRT Debt
divided by the number of facilities then in the Master Lease.
Landlord shall provide HRT with a copy of any amendment to the
Master Lease within five days of execution.
5.
Default Under Loan Documents .
In the event of a default under the Loan Documents, HRT shall not
have the right to accelerate the Loan and demand payment in full
unless HRT has given Landlord notice of the default and Landlord
has failed to cure such default as set forth in §8 hereof. If
there is a conflict between the terms of the Lease and of the Loan
Documents, the Lease shall prevail. Furthermore, provided Emeritus
is paying all sums due under the Note, no Event of Default shall be
deemed to exist under the Loan Documents so long as HCN has not
provided notice of an Event of Default under the
Lease.
6.
Default Under Lease .
If an Event of Default, as defined in the Lease, exists under the
Lease, Landlord shall have all remedies available in accordance
with and under the terms of the Lease, but only after Landlord has
given HRT notice of the default and HRT has failed to cure such
default as set forth in §8 hereof.
(a)
HRT
will furnish Landlord with a copy of any default notice sent
to Emeritus in respect of the HRT Debt simultaneously with
giving such notice to Emeritus.
(b)
Landlord
will furnish HRT with a copy of any default notice sent to
Tenant in respect of the Landlord Obligations simultaneously
with giving such notice to Emeritus.
(c)
The
failure of either HRT or Landlord to deliver any notice of
default to the other party shall not impair the notices given
to Emeritus/Tenant, however, each party retains all rights
under this Agreement including its respective right to cure an
event of default upon receipt of notice.
8.
Right to Cure and Assumption of Lease
.
Upon receipt of a notice pursuant to §7, each party shall have
10 days to cure a monetary default after any applicable cure or
grace period has expired and 30 days to cure any other default on
behalf of Emeritus, provided such default is curable. HRT and
Landlord shall not exercise any right or remedy under the Loan
Documents or Lease, respectively, and shall not foreclose on the
intere
