LOAN PURCHASE AGREEMENT
AMONG
HEALTHCARE REALTY TRUST INCORPORATED
AND
HEALTH CARE REIT, INC.
AND
EMERITUS CORPORATION
MARCH 3, 2005
TABLE OF CONTENTS
ARTICLE
1: PURPOSE
AND DEFINITIONS 2
1.1
Purpose
2
1.2
Definitions
2
1.3
Incorporation
of Amendments 3
1.4
Exhibits
3
ARTICLE
2: SALE
OF THE LOAN AND ASSIGNMENT OF THE LOAN DOCUMENTS
3
2.1
Sale
of the Loan 3
2.2
Closing
4
2.3
Endorsement
of the Note and Delivery of Loan Documents 4
2.4
Assignments
of Mortgages 4
2.5
Assignment
of Additional Loan Documents 4
2.6
Other
Assurances 4
ARTICLE
3: CONDITIONS
PRECEDENT TO DISBURSEMENT 4
3.1
Conditions
Precedent to Purchase of the Loan 4
3.1.1
Amendment
of Loan 4
3.1.2
Completion
of Due Diligence Review 4
3.1.3
Intercreditor
Agreement 4
3.1.4
Estoppel
Certificates 5
3.1.5
Loan
Documents 5
3.1.6
Legal
Opinion 5
3.1.7
Organizational
Documents 5
3.1.8
No
Default 5
ARTICLE
4: REPRESENTATIONS AND WARRANTIES OF HCN 5
4.1
Organization
and Good Standing 5
4.2
Power
and Authority 5
4.3
No
Default 5
4.4
Note
Payments in Advance 6
4.5
Obligations
for Facility Improvements 6
4.6
Schedule
of Loan Documents 6
4.7
No
Notice of Remedial Action 6
4.8
Compliance
6
ARTICLE
5: REPRESENTATIONS AND WARRANTIES OF TENANT 6
5.1
Organization
and Good Standing 6
5.2
Power
and Authority 7
5.3
Claims
Against HCN 7
5.4
Schedule
of Loan Documents 7
5.5
No
Litigation 7
5.6
Reports,
Statements and Copies 7
5.7
No
Default 7
5.8
Note
Payments in Advance 7
5.9
Obligations
for Facility Improvements 7
5.10
No
Adverse Changes 8
5.11
Compliance
8
ARTICLE
6: AFFIRMATIVE COVENANTS 8
6.1
Impairment
of Lease 8
6.2
Notices
Under The Lease 8
6.3
Demolitions
of Facilities 8
6.4
Further
Assurances and Information 8
ARTICLE
7: MISCELLANEOUS 8
7.1
Notices
8
7.2
Entire
Agreement 9
7.3
Severability
9
7.4
Captions
and Headings 9
7.5
Governing
Law 9
7.6
Binding
Effect 9
7.7
Modification
9
7.8
Construction
of Agreement 9
7.9
Counterparts
9
7.10
No
Third-Party Beneficiary Rights 9
7.11
Remedies
10
7.12
Confidentiality
10
7.13
No
Brokers 10
7.14
Costs
and Expenses 10
7.15
Post
Closing Items 10
7.16
Waiver
of Jury 10
LOAN PURCHASE AGREEMENT
THIS
LOAN PURCHASE AGREEMENT (“Agreement”) is made and
entered into effective as of March 3, 2005 (the
“Effective Date”) among
HEALTH CARE REIT, INC .,
a corporation organized under the laws of the State of Delaware
(“HCN”), having an address of One Seagate, Suite 1500,
P.O. Box 1475, Toledo, Ohio 43603,
EMERITUS CORPORATION ,
a corporation organized under the laws of the State of Washington
(“Tenant”), having an address of 3131 Elliott Avenue,
Suite 500, Seattle, Washington 98121, and
HEALTHCARE REALTY TRUST INCORPORATED ,
a corporation organized under the laws of the State of Maryland
(“HRT”), having an address of 3310 West End Avenue,
Suite 400, Nashville, Tennessee, 37203.
R E C I T A L S:
A.
HCN
purchased four certain properties for a purchase price of
$39,700,000.00 and leased said properties to Tenant, pursuant
to a Master Lease Agreement dated March 28, 2002, and in
connection therewith, HCN also provided a line of credit to
Tenant in the maximum amount of $6,800,000.00 (“Original
Loan”), subject to the terms and conditions of a Loan
Agreement dated as of April 1, 2002.
B.
HCN
subsequently purchased 19 additional properties for a purchase
price of $110,000,000.00 and leased said properties to Tenant
by amending and restating the Master Lease Agreement pursuant
to that certain Amended and Restated Master Lease Agreement
dated as of September 30, 2003 between Tenant and HCN (as
amended, the “Master Lease”). HCN agreed to
increase the line of credit in an amount of $11,500,000.00 and
to consolidate two additional loans made on August 28, 2003 in
the amount of $3,100,000.00 and $4,400,000.00, for a total
indebtedness of $25,800,000.00 (collectively, the
“Loan”) subject to the terms of that certain
Amended and Restated Loan Agreement, dated as of September 30,
2003 (the “Loan Agreement”).
C.
The
Loan is secured by first priority leasehold mortgages or deeds
of trust (each, a “Mortgage, and collectively, the
Mortgages”) from Tenant to HCN encumbering the leasehold
interest of Tenant in twenty six (26) assisted living and long
term care facilities (each a “Facility, and
collectively, the “Facilities”). Twenty three (23)
of the Facilities (the “Master Lease Facilities”)
are leased pursuant to the Master Lease and each Mortgage with
respect to a Master Lease Facility are the only Mortgages
being assigned under this Agreement.
D.
HCN
has agreed to sell the Loan to HRT for the outstanding
principal Loan balance and any other amounts due under the
Loan Documents, and to assign to HRT all of the Mortgages (the
“Transaction”).
E.
The
principal balance of the Loan is currently Nineteen Million
Four Hundred Sixty Six Thousand Four Hundred Eighty Four and
86/100 Dollars ($19,466,484.86). HRT shall advance additional
funds to Tenant in the amount of One Million Eight Hundred
Twenty Two Thousand One Hundred Fifty One Dollars
($1,822,151.00) plus funds for certain closing costs and as a
result, the principal balance of the Loan shall increase to
Twenty One Million Four Hundred Twenty Six Thousand Dollars
($21,426,000.00).
NOW,
THEREFORE, in consideration of the mutual covenants and the
premises contained herein, the parties agree as
follows:
ARTICLE 1: PURPOSE AND DEFINITIONS
1.1
Purpose .
The purpose of this Agreement is to establish the terms and
conditions of the Transaction.
1.2
Definitions .
Except as otherwise expressly provided, [i] the terms defined in
this section have the meanings assigned to them in this section and
include the plural as well as the singular; [ii] all accounting
terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles as
of the time applicable; and [iii] the words “herein”,
“hereof”, and “hereunder” and similar words
refer to this Agreement as a whole and not to any particular
section.
“Affiliate”
means any person, corporation, partnership, limited liability
company, trust, or other legal entity that, directly or
indirectly, controls, or is controlled by, or is under common
control with a referenced party. “Control” (and
the correlative meanings of the terms “controlled
by” and “under common control with”) means
the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such
entity.
“Closing”
means the closing of the purchase and sale of the
Loan.
“Commitment”
means the non-binding letter of understanding dated January
27, 2005 between HCN, HRT and Tenant.
“Effective
Date” means the effective date of Closing.
“Event
of Default” means any material default under this
Agreement not cured within any applicable notice and cure
period, and, where the context so provides, any such uncured
default under any Loan Documents (as hereinafter defined) or
Lease Documents (as hereinafter defined).
“Facility”
means each skilled nursing, assisted living or retirement
facility leased to Tenant pursuant to the Master
Lease..
“HCN”
means Health Care REIT, Inc., a Delaware corporation, its
successors and assigns.
“HRT”
means Healthcare Realty Trust Incorporated, a Maryland
corporation, its successors and assigns.
“Lease”
means the Master Lease.
“Lease
Documents” means the Lease and all other documents
executed by Tenant in connection with the Lease, each as
amended from time to time.
“Loan”
means the loan by HCN to Tenant with a current principal
balance equal to the Loan Amount.
“Loan
Amount” means $21,426,000.00
“Loan
Documents” means [i] the Note; [ii] the Amended and
Restated Loan Agreement, of even date therewith, between said
parties; and [iii] the Mortgage, each as amended from time to
time.
“Master
Lease” means the Amended and Restated Master Lease
Agreement dated September 30, 2003 by which HCN leased each
Master Lease Facility to Tenant, as amended from time to
time.
“Mortgage”
means the Amended and Restated Leasehold Mortgage/Deed of
Trust, Security Agreement, Assignment of Leases and Rents,
Financing Statement and Fixture Filing granted by Tenant to
HCN, dated as of September 30, 2003.
“Note”
means the Amended and Restated Note, dated as of September 30,
2003, made by Tenant in favor of HCN in the original principal
amount of Twenty Five Million Eight Hundred Thousand Dollars
($25,800,000.00), and any extensions, modifications,
substitutions or renewals thereof.
“State”
means the State of Ohio.
“Tenant”
means Emeritus Corporation, a corporation organized under the
laws of the State of Washington, its successors and permitted
assigns.
“Transaction
Documents” mean the endorsed Note, the Loan Documents,
all instruments of assignment of HCN’s rights, title and
interest under the Loan Documents, and all other documents to
be executed and delivered in connection with the Closing of
the Transaction.
1.3
Incorporation of Amendments .
The definition of any agreement, document, or instrument set forth
in this Agreement shall be deemed to incorporate all amendments,
modifications, and renewals thereof and all substitutions and
replacements therefor.
1.4
Exhibits .
The following exhibits are attached hereto and incorporated
herein:
Exhibit A -
Schedule of Loan Documents
Exhibit B -
Post Closing Deliverables
ARTICLE 2: SALE OF THE LOAN AND ASSIGNMENT OF THE LOAN
DOCUMENTS
2.1
Sale of the Loan .
HCN hereby agrees to sell, transfer, convey, and assign to HRT all
of its rights, title and interest with respect to the Loan, the
Loan Documents, and otherwise with respect to the Loan. The
purchase price for the Loan shall be the principal balance of the
Loan, all accrued but unpaid interest thereon as of the Effective
Date and all other amounts due to HCN under the Loan Documents (the
“Purchase Price”). At Closing, HRT shall pay to HCN the
Purchase Price by federally wired funds, available for immediate
disbursement. The Transaction shall be closed in escrow by a title
insurance company mutually selected by HRT and HCN and pursuant to
escrow instructions acceptable to HCN and HRT. The sale of the Loan
shall be subject to the terms of this Agreement.
2.2
Closing .
The Closing of the sale of the Loan shall occur as of the Effective
Date, as agreed by HCN and HRT, but no later than March 3,
2005.
2.3
Endorsement of the Note and Delivery of Loan Documents
.
At Closing, HCN shall properly endorse the original Note to the
order of HRT and shall deliver to HRT the endorsed Note, together
with all original Loan Documents, which shall all be assigned by
HCN to HRT.
2.4
Assignments of Mortgages .
At Closing, HCN shall execute and deliver to HRT assignments of the
Mortgages in form and substance satisfactory to HRT (collectively,
the “Assignment of Mortgage”). The Assignment of
Mortgage shall be executed in multiple originals, in forms
acceptable for recording in the real estate records in the county
in which each Facility is located.
2.5
Assignment of Additional Loan Documents .
At Closing, HCN shall also assign to HRT, by instrument or
instruments in form and substance acceptable to HRT, any and all
and all other documents, agreements, or rights otherwise securing,
evidencing, or relating to the Loan or any Loan Documents.
`
2.6
Other Assurances .
At Closing, HCN shall deliver to HRT such additional documents at
HRT may reasonably require in order to consummate the sale of the
Loan, the assignment of all Loan Documents, and the other
provisions of this Agreement.
ARTICLE 3: CONDITIONS PRECEDENT TO
DISBURSEMENT
3.1
Conditions Precedent to Purchase of the Loan
. HRT’s obligation to purchase the Loan shall be conditioned
upon the following conditions precedent:
3.1.1
Amendment of Loan .
HRT and Tenant shall have executed agreements amending and
restating the Loan in such form and substance as are acceptable to
HRT and Tenant and consented to in writing by HCN. Each such
agreement shall have been deposited in escrow pending completion of
the sale of the Loan.
3.1.2
Completion of Due Diligence Review .
HRT shall have completed all Facility level and Loan due diligence
review which it deems appropriate, and must be satisfied with the
results of its due diligence review. The due diligence review shall
include, without limitation, review of the Loan Documents, the
Lease, the Mortgages, and all related surveys, title insurance
policies, UCC filings, environmental assessments, engineering
studies, opinions of counsel, appraisals, operational data,
financial data, and updated information with respect to each
Facility, and the Loan.
3.1.3
Intercreditor Agreement .
HRT and HCN shall have entered into an Intercreditor Agreement on
mutually agreed terms (the “Intercreditor
Agreement”).
3.1.4
Estoppel Certificates .
HRT shall have received one or more estoppel certificates
(individually and collectively the “Estoppel
Certificates”) from HCN and Emeritus in form mutually
acceptable to HRT and HCN with respect to both the Loan and the
Lease confirming that, except as otherwise disclosed to HRT
therein, no Events of Default or potential Events of Default have
occurred, the date through which all rent has been paid under the
Lease, the principal balance of the Loan, any accrued but unpaid
interest thereon, the date through which all interest accrued under
the Loan has been paid, the absence of any claims, defenses,
counterclaims, offsets, or unfulfilled obligations of either party
to the other, and such other matters as HRT may reasonably
request.
3.1.5
Loan Documents .
HCN shall have delivered to HRT fully executed originals of the
Loan Documents, properly endorsed and properly assigned to
HRT.
3.1.6
Legal Opinion .
Tenant shall have delivered to HRT an opinion of its primary
outside counsel, and, to t
