EXHIBIT 4.14
ACKNOWLEDGMENT AND CONSENT
THIS ACKNOWLEDGMENT AND CONSENT (this "Agreement") dated as of June 12,
2002 is by and among Merrill Lynch Private Finance Inc., a Delaware corporation
("Lender"), The Boyer Company, L.C., a Utah limited liability company
("Borrower"), HCPI/Utah II, LLC, a Delaware limited liability company (the "Down
REIT Sub"), each of the entities that is affiliated with Borrower and that is a
signatory hereto under the designation "Pledgor" (individually and collectively,
as the context requires, "Pledgor"), and Health Care Property Investors, Inc., a
Maryland corporation ("HCPI").
RECITALS:
1. Each Pledgor is a Non-Managing Member of the Down REIT Sub pursuant to
that certain Amended and Restated Limited Liability Company Agreement of
HCPI/Utah II, LLC, dated as of August 17, 2001, as amended (the "LLC
Agreement"). Further, each Pledgor is the record owner of the number of
Non-Managing Member Units, as set forth opposite such Pledgor's name on Exhibit
A attached hereto (collectively, the "Pledged Units"). As of the date of this
Agreement, the Pledged Units are evidenced by the LLC Unit Certificates referred
to on Exhibit A (collectively, the "Certificates"). All references herein to the
Pledged Units shall include all additional or substituted Non-Managing Member
Units, from time to time pledged to Lender pursuant to the Loan Agreement, as
defined below, and all references herein to the Certificates shall include the
Certificates related to such additional or substituted Non-Managing Member
Units.
2. Lender is a party to that certain Loan and Collateral Account
Agreement (Demand Loan), dated as of the date hereof, by and among Borrower,
Pledgor, Lender and Merrill Lynch, Pierce, Fenner & Smith Incorporated (as such
agreement has been or may hereafter be amended, supplemented or otherwise
modified from time to time, the "Loan Agreement"), whereby Lender has agreed to
lend to Borrower from time to time, on a revolving basis, an amount not to
exceed $20,000,000 as presently established.
3. Pursuant to the Loan Agreement, the loan contemplated therein is
secured by, inter alia, (i) all of Pledgor's right, title and interest in the
Pledged Units, and (ii) all of Pledgor's right, title and interest in the
Registration Rights Agreement dated as of August 17, 2001, as amended, among
each Pledgor and HCPI, and those certain other Registration Rights Agreements
between each Pledgor and HCPI with respect to certain of the Pledged Units
(individually and collectively, referred to herein as the "Registration Rights
Agreement"). The loan contemplated in the Loan Agreement is also secured,
pursuant to the Loan Agreement, by similar collateral security pertaining to
HCPI/Utah, LLC, a Delaware limited liability company ("HCPI/Utah, LLC") as
confirmed in the Acknowledgment and Consent, dated as of the date hereof (the
"Utah I Acknowledgment and Consent"), among Lender, Borrower, HCPI, HCPI/Utah,
LLC and certain other pledgors specified therein.
4. The parties hereto desire to enter into this Agreement for the purpose
of setting forth certain agreements among Lender, Borrower, Pledgor, HCPI and
the Down REIT Sub with respect to the Collateral.
5. Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the LLC Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings hereinafter set forth unless the context shall otherwise require.
a. "Collateral" shall mean, collectively, the Pledged Units, the Pledged
Shares and any and all securities issued or issuable on the conversion
or redemption of the Pledged Units or Pledged Shares, or cash or other
distributions of every kind in respect of any of the foregoing.
b. "Commission" shall mean the Securities and Exchange Commission.
c. "Default" shall mean a Remedy Event as defined in the Loan Agreement
or a demand under Section 8.3 of the Loan Agreement.
d. "Material Adverse Effect" shall mean (i) an adverse condition or event
material to, (ii) a material adverse effect on, or (iii) a material
adverse change in, as the case may be, any one or more of the
following: (A) the business, assets, results of operations, financial
condition or prospects of HCPI or the Down REIT Sub, as the case may
be, or (B) the ability of HCPI or the Down REIT Sub, as the case may
be, to perform its obligations under any material contract to which it
is a party.
e. "Pledged Shares" shall mean REIT Shares which are exchanged by HCPI
for any Pledged Units which are tendered to HCPI, as the Managing
Member of the Down REIT Sub, pursuant to the exchange provisions set
forth in Section 8.6 of the LLC Agreement, as the same are amended as
provided in Section 7.b.i below.
f. "Registration Rights" shall mean a Pledgor's rights under the
Registration Rights Agreement, as supplemented and modified in Section
7.b below.
g. "S-3 Expiration Date" means the date on which Form S-3 (or a similar
successor form of registration statement) is not available to HCPI for
the registration of REIT Shares pursuant to the Securities Act.
h. "Securities Act" shall mean the Securities Act of 1933, as amended.
2. Acknowledgment of Pledge, etc.
a. HCPI and the Down REIT Sub hereby agree, acknowledge and approve, as
being subject to, but complying with Section 11.3 of the LLC
Agreement, (i) the grant
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by Pledgor to Lender of a security interest in the Collateral pursuant
to the Loan Agreement, and (ii) subject to Section 7.a below, the
Transfer, to Lender or other purchaser at foreclosure, of the Pledged
Units upon foreclosure (or transfer in lieu of foreclosure, with each
reference herein to foreclosure to include such a transfer) thereon by
Lender under or pursuant to the Loan Agreement; provided, however,
that such acknowledgement and approval of the Down REIT Sub is not,
and shall not be construed to be, the consent to or approval of any
other Transfer in the event Lender or other purchaser at foreclosure
becomes the owner of any of the Pledged Units. HCPI agrees to note in
its and the Down REIT Sub's books and records that the undersigned
Pledgors have granted to Lender security interests in the Collateral
and agrees that upon delivery to HCPI by Lender of the Certificates
evidencing ownership of the Pledged Units, together with original unit
powers duly executed by Pledgor in blank in the form attached hereto
as Exhibit B, if requested by Lender, HCPI will register in its books
and records, or the books and records of the Down REIT Sub, ownership
of such Pledged Units in the name of Lender or its nominee. HCPI
agrees that it will not register the Pledged Units (or any entitlement
to any dividend, distribution or other proceeds thereof) into the name
of any person other than the Pledgor listed as the owner thereof on
Exhibit A attached hereto, or recognize any person other than such
Pledgor as the owner of such Pledged Units, without the prior written
consent of Lender.
b. HCPI and the Down REIT Sub agree that notwithstanding Section 11.3.D
of the LLC Agreement, they will not require an opinion of counsel in
order for the Down REIT Sub and HCPI to recognize the Pledgor's pledge
of the Pledged Units and the grant of a security interest to Lender in
the Collateral.
c. HCPI and the Down REIT Sub hereby acknowledge receipt of copies of the
Instructions to Register Security Interest attached hereto as Exhibit
C (the "Instructions") and the notice of Lender's security interest
contained therein and agree to comply with the terms of the
Instructions.
d. HCPI and the Down REIT Sub hereby agree that by virtue of Lender
holding a security interest in the Pledged Units (i) Lender does not
and shall not become a Substituted Member under Section 11.4 of the
LLC Agreement unless and until Lender forecloses on the Pledged Units
and (ii) Lender does not and shall not undertake any obligations or
liabilities of Pledgor of any nature whatsoever pertaining to the
Pledged Units or under the LLC Agreement, both before or after any
foreclosure by Lender on the Pledged Units.
e. HCPI and the Down REIT Sub acknowledge and agree that upon the
execution and delivery to Lender by the Pledgors of this Agreement,
the Loan Agreement and all schedules hereto and thereto to which the
Pledgors are parties, and the Certificates, the Pledgors will not be
required to sign any other documents or take any other action with
respect to the Transfer of the Pledged Units to Lender in connection
with the exercise of Lender's rights under this Agreement.
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f. The parties acknowledge and agree that Lender and Borrower may from
time to time further modify the Loan Agreement, including by way of
adding additional entities as Pledgors thereunder and/or by adding
additional Non-Managing Member Units as Pledged Units. Any such
additional entities added as Pledgors and/or any existing Pledgors who
pledge additional Pledged Units shall concurrently acknowledge their
status as parties to this Agreement on such terms and with the same
force and effect as if each such entity had originally executed and
delivered same. Lender shall give written notice thereof to the Down
REIT Sub, HCPI and each Pledgor contemporaneously with any such
modification of the Loan Agreement; no written consent or other
acknowledgement shall be required from any entity to which such notice
is sent as a condition to the effectiveness of the foregoing. Such
notice shall include such further amendment and restatement of Exhibit
A to this Agreement as necessary in order to reflect the additional
Pledged Units of each such entity added as an additional Pledgor
and/or the additional Pledged Units of each such existing Pledgor.
Following such notification from Lender, each reference to "Pledgor"
in this Agreement shall be understood to include for all purposes any
such entity so added to the Loan Agreement.
3. Notices. Unless and until HCPI has received written notice from Lender to
the effect that Lender no longer claims any interest in the Collateral, (a)
HCPI shall send to Lender a copy of each notice sent to holders of LLC
Units by HCPI under the LLC Agreement as and when it delivers such notice
to Pledgor, including any notice of Reduction pursuant to Section 8.6.D of
the LLC Agreement, and (b) at the written request of Lender, HCPI shall
send to Lender a copy of each other communication, report or other
information from time to time sent to Pledgor as holder of the Pledged
Units or Pledged Shares.
4. Amendments to Registration Rights Agreement and the LLC Agreement. Unless
and until HCPI has received written notice from Lender to the effect that
Lender no longer claims any interest in the Collateral, (a) no amendment
of, termination of, or supplement to, the Registration Rights Agreement
shall be effective without the prior written consent of Lender, and (b) no
amendment of, termination of or supplement to the LLC Agreement for which
the consent of any Pledgor is required shall be effective without the prior
written consent of Lender, which consent shall not be unreasonably
withheld; provided that if written disapproval is not received from Lender
within 10 Business Days following receipt by Lender of a written request to
approve such amendment (which request shall specifically reference the time
limitation imposed by this Section 4), then Lender's approval of such
amendment shall be deemed to have been given.
5. Distributions, etc.
a. Following receipt by the Down REIT Sub of written notice (which notice
shall specifically reference this Section 5 of this Agreement) from
Lender that a Default has occurred and is continuing (a "Default
Notice"): (i) upon the written instruction of Lender and until
instructions to the contrary are received from Lender, the Down REIT
Sub shall remit to Lender all cash distributions otherwise payable to
Pledgor in respect of the Pledged Units, and HCPI shall remit to
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Lender all cash dividends otherwise payable to Pledgor in respect of
the Pledged Shares, of any nature, and (ii) upon the written
instruction of Lender and until instructions to the contrary are
received from Lender, all rights of Pledgor to exercise the voting or
other consensual rights that Pledgor would otherwise be entitled to
exercise in respect of the Collateral shall cease, and all such rights
(and any other rights Pledgor may have in respect of the Collateral)
shall thereupon become vested in Lender, which shall have the sole
right to exercise such rights, until further notice from Lender. With
respect to cash distributions payable during such time as no event of
Default is occurring, each Pledgor hereby directs the Down REIT Sub
and/or HCPI, as the case may be, and the Down REIT Sub and/or HCPI, as
the case may be, agrees to deposit any and all such dividends and
distributions in the following account as set forth in Section 3.1. of
the Loan Agreement: 43JO7293. Any amounts paid to the Lender or its
designee as contemplated by the terms of the foregoing shall be
treated as amounts paid or distributed to Pledgor for all purposes of
the LLC Agreement, or other agreement pursuant to which the payment or
distribution is made or is required to be made and shall be deemed to
satisfy the obligations of the Down REIT Sub or HCPI to make such
payment thereunder. Each Pledgor hereby agrees that neither the Down
REIT Sub nor HCPI shall be deemed to be in breach of its obligations
under, or in violation of the provisions of, any such agreement by
virtue of having made such payments in the foregoing manner.
b. From and after the date of this Agreement, and whether or not a
Default has occurred and is continuing, if Pledgor shall become
entitled to receive, in connection with any of the Collateral, any:
i. LLC Units or stock certificates (including, without limitation,
stock certificates relating to the Pledged Shares), including,
without limitation, any certificates (1) issued in respect of
additional properties contributed by such Pledgor to the Down
REIT Sub, or (2) representing a dividend or distribution or
issued in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets,
combination of shares or partnership units, stock or partnership
units split, spin-off, or split-off;
ii. Options, warrants, rights or other securities or instruments,
whether as an addition to, or in substitution or in exchange for,
any of the Collateral, or otherwise;
iii. Dividends or distributions payable in property other than cash,
including securities issued by other than the issuer of any of
the Collateral; or
iv. Any sums paid in redemption of any of the Collateral,
then HCPI shall deliver the same to Lender, to be held by Lender as
part of the Collateral. Any amounts paid to the Lender or its designee
as contemplated by the terms of the foregoing shall be treated as
amounts paid or distributed to
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Pledgor for all purposes of the LLC Agreement, or other agreement
pursuant to which the payment or distribution is made or is
required to be made and shall be deemed to satisfy the obligations
of the Down REIT Sub or HCPI to make such payment thereunder. Each
Pledgor hereby agrees that neither the Down REIT Sub nor HCPI
shall be deemed to be in breach of its obligations under, or in
violation of the provisions of, any such agreement by virtue of
having made such payments in the foregoing manner.
6. Registration Rights and Registration Statements. In the name of and on
behalf of Pledgor, Lender shall have the right to exercise Pledgor's
Registration Rights with respect to any Pledged Units then owned by
Pledgor and held by Lender, including without limitation (i) subject to
the terms and conditions of the Registration Rights Agreement, the right
to enforce the applicable provisions of the Registration Rights Agreement
pertaining to HCPI's obligation to file with the commission a
registration statement on Form S-3 (the "Issuance Registration
Statement") covering, among other things, the issuance to Lender of REIT
Shares issued or to be issued by the Down REIT Sub upon exchange of the
Pledged Units attached hereto and naming Lender as a "Selling
Shareholder" thereunder and (ii) the right to request, at the times and
in the manner set forth in the Registration Rights Agreement, HCPI to
register for sale under the Securities Act any Pledged Shares issuable or
issued upon exchange of Pledged Units; provided, however, that, in the
case of a Demand Registration pursuant to Section 3.1(a) of the
Registration Rights Agreement, the Down REIT Sub agrees that Lender shall
not be subject to the once-every-twelve-months limitation set forth in
clause (i) thereof (provided that if at any time Lender has exercised a
Demand Registration right in the previous twelve month period, for which
the Down REIT Sub or HCPI has paid the expenses thereof, as provided in
Section 3.4 of the Registration Rights Agreement, Lender shall pay the
expenses described in Section 3.4 of the Registration Rights Agreement in
connection with the filing of such Demand Registration), nor shall Lender
be subject to the $1,000,000 minimum requirement referred to in clause
(ii) thereof if Lender is exercising Demand Registration Rights with
respect to all of the Pledged Shares it owns or has the right to acquire
upon an Exchange. Pledgor hereby irrevocably appoints Lender as his
attorney-in-fact to exercise any such Registration Rights, and
irrevocably instructs HCPI to honor any such exercise by Lender of
Pledgor's Registration Rights.
7. Rights upon Remedy Events.
a. Restrictions on Transfer. Upon foreclosure of any Pledged Units,
the Lender shall be entitled to Transfer such Pledged Units, in
whole or in part, subject to applicable restrictions set forth in
Section 11.3 through 11.6 of the LLC Agreement; provided, however,
that HCPI and the Down REIT Sub acknowledge and agree that (i) the
provisions of Section 11.6.C shall not apply to any foreclosure by
Lender on any Pledged Units, (ii) to the extent any such
restrictions require the consent of HCPI or the Down REIT Sub,
HCPI and the Down REIT Sub hereby provide their consent to such
foreclosure, (iii) if Lender or a purchaser of Pledged Units at
foreclosure is prohibited from becoming a Substituted Member of
HCPI, Lender or such purchaser may become an Assignee
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in accordance with such restrictions, (iv) the Down REIT Sub shall
conduct its business in the ordinary course in accordance with
past practices, and (v) neither Lender nor any purchaser of
Pledged Units or Pledged Shares at foreclosure shall be obligated
to assume, or otherwise be responsible for, any obligation a
Pledgor may have under the LLC Agreement or any other obligation
of Pledgor accrued prior to foreclosure under the LLC Agreement;
provided that nothing in this subclause 7.a.(v) shall release or
reduce any prior obligations of a Pledgor to HCPI or the Down REIT
Sub, it being acknowledged and agreed by the Down REIT Sub or HCPI
that the Down REIT Sub and HCPI have recourse against any such
Pledgor only and not against Lender. HCPI further acknowledges and
agrees that the aforesaid restrictions do not apply to Pledged
Shares. Lender acknowledges and agrees that the Pledged Shares are
subject to certain restrictions on ownership and transfer as set
forth in the Charter of the HCPI, as amended from time to time.
b. Exchange of Pledged Shares; Foreclosure. In addition to (i)
Lender's rights under Section 5 of this Agreement, (ii) Lender's
rights as a pledgee, transferee or Assignee at foreclosure of LLC
Units or a Membership Interest as provided in the LLC Agreement,
and (iii) any and all other rights Lender may have in respect of a
Default under any other agreement, document or instrument, or
under applicable law, upon the occurrence of any one or more
Defaults (including, without limitation, the right of Lender to
exercise its rights under the Loan Agreement to foreclose on or
acquire the entire interest of Pledgor in all or any portion of
any Collateral), Lender shall thereupon and thereafter during the
continuance thereof have the right, in its sole and absolute
discretion, to do or cause to be done any one or more of the
following:
i. Exchange of Registered Pledged Units.
Lender shall have the right, upon written notice to the
Down REIT Sub and in the name of and on behalf of Pledgor,
to exercise Pledgor's exchange rights and require HCPI to
exchange all or any portion (as selected and in such order
as Lender may elect in its sole discretion) of the
Registered Pledged Units in accordance with Section 8.6.A
of the LLC Agreement (the "Exchange Rights"). Any request
for such exchange shall be made on the form of Notice of
Exchange attached hereto as Exhibit D. Pledgor hereby
irrevocably appoints Lender as its attorney-in-fact to
exercise such Exchange Rights, and irrevocably instructs
the Down REIT Sub and HCPI to honor any such exercise by
Lender of the Exchange Rights. HCPI hereby agrees that upon
any such exercise of the Exchange Rights, HCPI shall
deliver the entire Cash Amount or REIT Shares to Lender, in
each case without deduction in respect of any claim which
HCPI or the Down REIT Sub may from time to time have of any
nature or kind against Pledgor (other than with respect to
any withholding tax obligation imposed by law on the Down
REIT Sub with respect to any amount distributable or
allocable to a Pledgor in respect of Registered Pledged
Units, as contemplated in Section 5.3 of the LLC
Agreement).
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In addition to the foregoing, the second sentence of Section 8.6.A
of the LLC Agreement is hereby amended with respect to Lender to
provide that notwithstanding the first sentence of Section 8.6.A
of the LLC Agreement, after, or concurrently with, receipt by HCPI
of any Default Notice, the Lender shall have the right to (i)
tender Registered Pledged Units for Exchange (subject to the
following terms and conditions of Section 8.6.A of the LLC
Agreement) and require the Down REIT Sub to acquire up to the
number of Registered Pledged Units specified in the Notice of
Exchange as referred to in the definition of "Specified Exchange
Date" set forth in subparagraph (c) immediately following;
provided, however that Lender may tender Registered Pledged Units
for Exchange hereunder once, irrespective of the aggregate market
value of such Registered Pledged Units, and an unlimited number of
times, provided the aggregate market value of such Registered
Pledged Units is at least $1,000,000 on the date of any such
Notice of Exchange.
In connection with the foregoing, the definition of the term
"Specified Exchange Date" in the LLC Agreement shall, with respect
to Lender and only with respect to Lender, be amended to read as
follows:
"Specified Exchange Date" means in the case of an Exchange
pursuant to Section 8.6.A hereof, that date specified by
Lender in a Notice of Exchange to the Company; provided,
however, that such date shall in no event be less than
fourteen (14) days (or if such day is not a Business Day,
the next following Business Day) after HCPI's receipt of
such Notice of Exchange and provided further that the
Specified Exchange Date, as well as the closing of an
Exchange on the Specified Exchange Date, may be deferred in
the Managing Member's sole and absolute discretion, for
such time as may be reasonably required to effect, as
applicable, (i) necessary funding arrangements, (ii)
compliance with the Securities Act or other applicable laws
(including, but not limited to, (a) state "blue sky" or
other securities laws and (b) the expiration or termination
of the applicable waiting period, if any, under the Hart
Scott Rodino Antitrust Improvements Act of 1976, as
amended, and (iii) satisfaction or waiver of other
commercially reasonable and customary closing conditions
and requirements for a transaction of such nature (provided
that in no event shall such Exchange be delayed more than
30 days in the aggregate with respect to (i) and (iii)
above, or more than 150 days in the aggregate with respect
to (ii) above.
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ii. Put for Unregistered Pledged Units.
Until such time as HCPI has filed, pursuant to Section 6 of
this Agreement, the Issuance Registration Statement, Lender
shall have the right upon written notice to HCPI in the
form of Deficiency Notice attached hereto as Exhibit E (a
"Deficiency Notice"), to exchange all or any portion of the
Unregistered Pledged Units for one or more cash payments
from HCPI on any foreclosure of the Unregistered Pledged
Units, where the cash or fair market value of Pledged
Shares (determined based on the closing price of the REIT
Shares on the date of the Deficiency Notice, as reported on
the New York Stock Exchange or such other exchange on which
the REIT Shares are then listed) issued on exchange of
Registered Pledged Units will be insufficient to satisfy
Borrower's Obligations (as defined in the Loan Agreement)
under the Loan Agreement, in an amount (the "Unregistered
Units Cash Payment") equal to (i) the fair market value of
such Unregistered Pledged Units (determined based on the
closing price of the REIT Shares on the date of the
Deficiency Notice on the New York Stock Exchange or such
other exchange on which the REIT Shares are then listed),
multiplied by (ii) the number of such Unregistered Pledged
Units exchanged, less (iii) 1% of the product of (i) and
(ii). Each Unregistered Units Cash Payment shall be payable
by HCPI within 14 days following its receipt of the
Deficiency Notice with respect thereto; provided, however,
that at such time as Lender receives written notice from
HCPI of the filing and effectiveness of the Issuance
Registration Statement, Lender's rights pursuant to this
Section 7.b.ii shall terminate with respect to any such
Unregistered Pledged Units covered by such registration, so
long as such registration remains effective. In the event
and to the extent that any registration statement with
respect to any Pledged Units ceases to be effective, the
provisions of this Section 7.b.ii shall again apply with
respect to all affected Pledged Units and/or Pledged
Shares.
Notwithstanding the provisions of Section 7.b.ii above, but
subject to Section 7.b.iii below and Section 7.b.iii of the
Utah I Acknowledgement and Consent, Lender agrees that to
the extent Lender has the right to exchange Registered
Pledged Units under either this Agreement or under the Utah
I Acknowledgment and Consent on or before the specified
date in the applicable Notice of Exchange, Lender shall
exercise any and all such exchange rights hereunder and
thereunder, prior to delivering a Deficiency Notice under
Section 7.b.ii above.
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iii. Put for Exchange Delays in Pledged Units. Notwithstanding
anything to the contrary in this Agreement, in the event
that the Specified Exchange Date under Section 7.b.i is
deferred to a date that is later than the date specified in
the applicable Notice of Exchange and where the cash or
fair market value of the Pledged Units (determined based on
the closing price of the REIT Shares on the date of the
Deficiency Notice on the New York Stock Exchange or such
other exchange on which the REIT Shares are then listed),
if any, which may be exchanged on or before the specified
date in the applicable Notice of Exchange will be
insufficient to satisfy Borrower's Obligations (as defined
in the Loan Agreement) under the Loan Agreement, Lender
shall have the right, upon providing a Deficiency Notice to
HCPI, to exchange all or any portion of the affected
Pledged Units for one or more cash payments from HCPI in an
amount (the "Exchange Delay Cash Payment") equal to (i) the
fair market value (determined based on the closing price of
the REIT Shares on the date of the Deficiency Notice on the
New York Stock Exchange or such other exchange on which the
REIT Shares are then listed) of such affected Pledged
Units, multiplied by (ii) the number of such affected
Pledged Units to be exchanged, less (iii) 1% of the product
of (i) and (ii). Each Exchange Delay Cash Payment shall be
payable by HCPI within 14 days following its receipt of the
Deficiency Notice with respect thereto.
In addition, the parties hereto agree and acknowledge that
the obligation of HCPI, HCPI/Utah, LLC and/or the Down REIT
Sub, as the case may be, to make Unregistered Units Cash
Payments and/or Exchange Delay Cash Payments under this
Section 7 and under Section 7 of the Utah I Acknowledgment
and Consent shall not exceed, in the aggregate,
$20,000,000.
iv. Concurrent Exercise. The rights exercisable by Lender under
this Section 7.b may be invoked before or after foreclosure
under the Loan Agreement in Lender's sole discretion, and
all without further notice to or any requirement of consent
by Pledgor, which hereby irrevocably and unconditionally
waives any right to give any contrary instructions to HCPI.
All parties acknowledge that Lender desires to consummate
any necessary foreclosure under the Loan Agreement on a
basis that such foreclosure occurs concurrent with the
closing of an Exchange; all parties agree to cooperate
reasonably with Lender to that end. HCPI agrees that it
will not act on any separate instructions or communications
from Pledgor pertaining to the Pledged Units or Pledged
Shares or Registration Rights Agreement without the express
written consent of Lender. Nothing in this subparagraph (v)
shall in any way obligate Lender to consummate any
necessary foreclosure under the Loan Agreement in the
manner referred to above; Lender may, in its sole
discretion, determine that another method of realization
upon the Collateral is preferable or required, and such
determination by Lender shall in no manner limit or
restrict the obligations
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of Borrower, Pledgor or any other person or entity with respect to the
loans contemplated herein.
v. Foreclosure. Subject to the terms and conditions of the Loan
Agreement, Lender shall have the right to foreclose on or acquire the
entire interest of Pledgor in all or any portion of any Pledged Shares
(including all of Pledgor's right, title and interest in the
Registration Rights Agreement to the extent applicable to such Pledged
Shares) owned by Pledgor, by foreclosure or in any other manner. In
the event that Lender elects to exercise its rights under this Section
7.b.v, Lender shall deliver to HCPI a notice of its intent to do so no
later than 10 Business Days prior to the date of any sale, public or
private, or of any transfer in lieu of foreclosure, and HCPI (without
limitation on its own right, under applicable law, to participate in
any sale or other disposition of any of the Collateral) shall
reasonably cooperate, at no expense to itself, with Lender in
completing its foreclosure on the affected Pledged Shares in
compliance with applicable laws, including, if applicable, all actions
reasonably necessary to comply with the filing requirements described
in Rule 144(c)(1) of the Securities Act, so as to enable the Lender to
sell such Pledged Shares without registration under the Securities
Act.
8. Representations and Warranties by the Down REIT Sub and HCPI. The Down REIT
Sub and HCPI hereby represent and warrant to Lender as follows as of the
date hereof:
a. LLC Agreement. A true and correct copy of the LLC Agreement as in
effect as of the date hereof is attached as Exhibit F hereto.
b. Organization And Authority of the Down REIT Sub. The Down REIT Sub has
been duly formed, is validly existing as a limited liability company
in good standing under the laws of the State of Delaware, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification except where the
absence of such qualification would not have a Material Adverse
Effect. The Down REIT Sub has all requisite power and authority to own
or hold under lease the property it purports to own or hold under
lease, to carry on its business as now conducted and as proposed to be
conducted except as would not have a Material Adverse Effect, and to
execute and deliver this Agreement and to perform its obligations
hereunder.
c. Authorization by the Down REIT Sub; Binding Effect. The Down REIT Sub
has by all necessary action duly authorized (i) the execution and
delivery of this Agreement and (ii) the performance of its obligations
hereunder. This Agreement constitutes the legal, valid and binding
obligation of the Down REIT Sub, enforceable against it in accordance
with its terms, except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors' rights generally.
11
d. Pledged Units; Managing Member of the Down REIT Sub. All of the
Pledged Units are validly issued and non-assessable. The identity of
the registered owners, the total number of Pledged Units and the
corresponding Certificates evidencing ownership thereof are accurately
set forth on Exhibit A attached hereto. No security interest in the
Pledged Units has been registered on the records of the Down REIT Sub
(or its transfer agent). HCPI is the sole Managing Member of the Down
REIT Sub and owns the only Managing Member Units thereof.
e. Organization and Authority of HCPI. HCPI is a corporation duly
organized, validly existing and in good standing under the laws of
Maryland, and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification
except where the absence of such qualification would not have a
Material Adverse Effect. HCPI has all requisite power and authority to
own or hold under lease the property it purports to own or hold under
lease, to carry on its business as now conducted and as proposed to be
conducted except as would not have a Material Adverse Effect, and to
execute and deliver this Agreement and to perform its obligations
hereunder.
f. No Claims. To their knowledge, neither HCPI nor the Down REIT Sub has
any existing claim, defense, setoff or right of recoupment under the
LLC Agreement, any other agreement, or any law, rule or regulation,
against or with respect to (i) any of the Pledged Units, (ii) any of
REIT Shares that may be issuable or any amount that may be payable in
connection with the exchange of any Pledged Units or (iii) any
obligation of Pledgor under the LLC Agreement or any other agreement
with respect to any of the Pledged Units, any of the REIT Shares that
may be issued or any amount that may be payable in connection with the
redemption of any Pledged Units.
g. Authorization by HCPI; Binding Effect. HCPI has by all necessary
action duly authorized the execution and delivery of this Agreement
and the performance of its obligations hereunder. This Agreement
constitutes the legal, valid and binding obligation of HCPI,
enforceable against it in accordance with its terms, except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to
creditors' rights generally.
h. HCPI Status. HCPI is organized in conformity with the requirements for
qualification as a real estate investment trust under the Code and its
ownership and method of operation enables it to meet the requirements
for taxation as a real estate investment trust under the Code.
i. No Conflict. The execution, delivery and performance by HCPI of this
Agreement, and the consummation of the transactions contemplated
hereby, do not and will not violate any provision of the charter or
bylaws of HCPI, or the LLC Agreement, or any contractual or other
undertaking by which HCPI or any
12
of its assets are bound. As of the date of this Agreement, the Pledged
Units are not evidenced by writing or certificate except by the
Certificates expressly referred to on Exhibit A hereto.
j. Registration Rights Agreement. A true and complete copy of the
Registration Rights Agreement, including any amendments and
supplements thereto, is attached to this Agreement as Exhibit G. The
Registration Rights Agreement remains in full force and effect as of
the date of this Agreement, and is the legal, valid and binding
obligation of HCPI enforceable against it in accordance with its
terms, except as enforcement may be limited by equitable principles
and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally.
k. Governmental or Other Approvals. No governmental or other approval is
or will be required in connection with the execution, delivery and
performance by the Down REIT Sub or HCPI of this Agreement or the
transactions contemplated hereby or to ensure the legality, validity
or enforceability hereof.
9. Representations and Warranties by Pledgor. To its knowledge, Pledgor does
not have any existing claims, defenses, setoff rights or rights of
recoupment under the LLC Agreement, under any other agreement, or any law,
rule or regulation, against or with respect to any obligation of either
HCPI or the Down REIT Sub under the LLC Agreement or any other agreement.
10. Compliance with Securities Laws. Lender, Borrower and Pledgor hereby
acknowledge that a portion of the Collateral has not been registered for
sale under the Securities Act, that Lender may be unable to effect a public
sale (under applicable provisions of the Uniform Commercial Code) of all or
any part of the Collateral, and subject to the restrictions on transfer
described above, may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obligated to agree, among
other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof.
Lender and Pledgors hereby further acknowledge that any such private sales
may be at prices and on terms less favorable than those of public sales.
11. Liability to Pledgor. Pledgor and Borrower assume all risks of the acts or
omissions of Lender with respect to its exercise of its rights hereunder.
Neither the Down REIT Sub, HCPI, nor any of their officers, directors,
partners, employees or agents shall be liable or responsible for any acts
or omissions of the Lender, including without limitation the validity of
any determination by Lender that a Default has occurred or is continuing,
nor shall any of such persons have any responsibility for investigation
into the facts and circumstances giving rise to any such determination by
Lender, nor shall any such person be liable or responsible for following
the instructions of Lender in accordance with this Agreement regardless of
any notice, information or instructions to the contrary received by HCPI
from Pledgor or any other person, including without limitation following
instruction of Lender (a) to remit distributions by the Down REIT Sub made
in respect of the Pledged Units, and distributions of HCPI made in respect
of Pledged Shares, to
13
Lender, pursuant to Section 5 above, (b) to terminate the voting and/or
other consensual rights of Pledgor (and consider such right to have vested
in Lender) pursuant to Section 5 above, (c) to exercise Pledgor's Exchange
Rights in the name of and on behalf of Pledgor pursuant to Section 7 above,
or (d) to exercise Pledgor's Registration Rights in the name of and on
behalf of Pledgor, pursuant to Section 6 above.
12. Separate Actions; Waiver of Statute of Limitations. The obligations of HCPI
and Pledgor hereunder shall be in addition to any obligations of Pledgor
under the Loan Agreement. Without limiting the provisions of the Loan
Agreement, a separate action or actions may be brought and prosecuted
against any one or more of the parties hereto whether or not action is
brought against any other person or whether any other person is joined in
any such action or actions. HCPI and Pledgor acknowledge that there are no
conditions precedent to the effectiveness of this Agreement and that this
Agreement is in full force and effect and is binding on such person as of
the date hereof. To the extent permitted under applicable law, Pledgor
waives the benefit of any statute of limitations affecting such person's
liability hereunder or the enforcement thereof. Lender hereby agrees that
neither the Down REIT Sub nor HCPI shall have any obligation or liability
under the Loan Agreement or any other agreement related to the loan
contemplated by the Loan Agreement except as expressly set forth herein and
in the Instructions. Pledgor agrees that nothing set forth herein shall
alter, diminish or otherwise affect its obligations under the LLC Agreement
or any other agreement between Pledgor and HCPI or the Down REIT Sub
relating to the Pledged Units or Pledged Shares.
13. Continuing Obligations. Borrower and Pledgor shall indemnify and hold
harmless Lender from and against any and all obligations, claims, losses,
liabilities, damages, expenses or costs (including reasonable attorneys'
fees and expenses and fees and expenses of expert witnesses) arising from
or in any way connected with the obligations or liabilities of either such
person with respect to agreements, documents or other instruments, whether
now existing or hereafter incurred, or the conditions and obligations to be
observed and performed by Borrower or Pledgor under any agreement, document
or other instrument relating to the Collateral, except for those arising
from Lender's gross negligence or willful misconduct. In addition, Borrower
shall indemnify and hold harmless Lender from and against any and all
obligations, claims, losses, liabilities, damages, expenses or costs
(including reasonable attorneys' fees and expenses and fees and expenses of
expert witnesses) arising from or in any way connected with the exercise by
Lender of any rights or remedies under the Loan Agreement or this Agreement
with respect to the Collateral, including, without limitation, all costs
and expenses associated with the exercise of any foreclosure rights and/or
exchange rights pursuant to Section 6.b above or otherwise.
14. Appointment as Attorney-in-Fact. Pledgor hereby appoints Lender as its true
and lawful attorney-in-fact, with full power of substitution, for the
purpose of carrying out the provisions of this Agreement and taking any
action and executing any instruments either in the name of Pledgor or in
the name of Lender, which such attorney-in-fact may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest; provided,
that nothing in this section shall require the Lender to take any action or
execute any instruments.
14
15. Notices. Any notice, demand, request or report required or permitted to be
given or made to a party to this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class
United States mail or by other means of written communication (including by
telecopy, facsimile, or commercial courier service) (a) in the case of a
Pledgor, to that Pledgor at the address set forth below and (ii) in the
case of each other party, at its address for notices set forth below or at
such other address as such party may give notice of in accordance with the
provisions of this Section:
Borrower and each Pledgor: c/o The Boyer Company, L.C.
127 South 500 East, Suite 100
Salt Lake City, Utah 84102
Attention: Brian Gochour
Telephone No.: 801-521-4781
Telecopier: 801-521-4793
Lender: Merrill Lynch Private Finance Inc.
2049 Century Park East, Suite 1100
Los Angeles, CA 90067
Attention: Jay D. Sanders
Telephone No.: 310-407-4943
Telecopier: 310-284-2835
HCPI and/or Down REIT Sub: Health Care Property Investors, Inc.
4675 MacArthur Court, Suite 900
Newport Beach, California 92660
Attention: Legal Department
Telephone No.: (949) 221-0600
Telecopier: (949) 221-0607
16. Assignments. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Nothing contained herein, express or
implied, is intended to confer on any person other than the parties hereto
or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
17. Governing Law. This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to contracts made and to be
performed in that State, without regard to conflict of laws principles.
18. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original but all of which together
shall constitute but one agreement. This Agreement may be executed and
delivered by facsimile.
19. Entire Agreement; Amendments. This Agreement (including the instruments
between the parties referred to herein) constitutes the entire agreement
among the parties and supersedes all other prior agreements and
understandings, both written and oral, among
15
the parties, or any of them, with respect to the subject matter hereof.
All references to sections, subsections, clauses, exhibits and schedules
shall be deemed references to such part of this Agreement, unless the
context shall otherwise require. No provisions of this Agreement may be
effectively waived, changed or amended, or the termination or discharge
thereof agreed to or acknowledged, orally, but only by an agreement in
writing signed by the party against whom the enforcement of any waiver,
change, amendment, termination or discharge is sought.
20. Headings. The headings contained in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
21. Invalidity. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain
in full force and effect.
22. Attorneys' Fees. In the event of any controversy, claim or dispute between
the parties hereto arising out of or relating to this Agreement or any of
the documents provided for herein, or the breach thereof, the prevailing
party shall be entitled to recover from the losing party reasonable
attorneys' fees, expenses and costs.
[Remainder of page intentionally left blank.]
16
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
LENDER:
MERRILL LYNCH PRIVATE FINANCE INC.,
a Delaware corporation
By: /s/ Authorized Signatory
----------------------------------------
Date: 6/12/02
--------------------------------------
Title: Director
-------------------------------------
BORROWER:
THE BOYER COMPANY, L.C.,
a Utah limited liability company
By: /s/ Steve Ostler
----------------------------------------
Date: 6/12/02
--------------------------------------
Title: Manager
-------------------------------------
THE DOWN REIT SUB:
HCPI/UTAH II, LLC,
a Delaware limited liability company
By: HEALTH CARE PROPERTY
INVESTORS, INC., its Managing Member
By: /s/ Edward J. Henning
---------------------------------
Date: 6/12/02
-------------------------------
Title: Senior Vice President
------------------------------
HCPI:
HEALTH CARE PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s / Edward J. Henning
----------------------------------------
Date: 6/12/02
--------------------------------------
Title: Senior Vice President
-------------------------------------
17
PLEDGORS:
BOYER-FOOTHILL ASSOCIATES, LTD.,
a Utah limited partnership
By: THE BOYER COMPANY, L.C.,
its General Partner
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
BOYER KAYSVILLE ASSOCIATES, L.C.,
a Utah limited liability company
By: THE BOYER COMPANY, L.C.,
its Manager
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
BOYER OLD MILL II, L.C.,
a Utah limited liability company
By: THE BOYER COMPANY, L.C.,
its Manager
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
BOYER RANCHO VISTOSO, L.C.,
a Utah limited liability company
By: THE BOYER COMPANY, L.C.,
its Manager
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
18
PLEDGORS:
BOYER-RESEARCH PARK ASSOCIATES,
LTD., a Utah limited partnership
By: THE BOYER COMPANY, L.C.,
its General Partner
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
BOYER RESEARCH PARK ASSOCIATES VI,
L.C., a Utah limited liability company
By: THE BOYER COMPANY, L.C.,
its Manager
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
BOYER TATUM HIGHLANDS DENTAL CLINIC,
L.C., a Utah limited liability company
By: THE BOYER COMPANY, L.C.,
its Manager
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
19
PLEDGORS:
BOYER STANSBURY II, L.C.,
a Utah limited liability company
By: THE BOYER COMPANY, L.C.,
its Manager
By: /s/ Steve Ostler
-------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
BOYER-ALTA VIEW ASSOCIATES, LTD.,
a Utah limited partnership
By: THE BOYER COMPANY, L.C.,
its General Partner
By: /s/ Steve Ostler
--------------------------------
Name: 6/12/02
------------------------------
Title: Manager
-----------------------------
20
EXHIBIT A
UNREGISTERED PLEDGED UNITS
- ----------------------------------------------------------------------------------------
Member Name Certificate Nos. Number of Non-Managing
Member Units Pledged
- ----------------------------------------------------------------------------------------
Boyer-Foothill Associates, Ltd. 42, 47 63,740
- ----------------------------------------------------------------------------------------
Boyer Kaysville Associates, L.C. 10 20,876
- ----------------------------------------------------------------------------------------
Boyer Old Mill II, L.C. 49 36,842
- ----------------------------------------------------------------------------------------
Boyer Rancho Vistoso, L.C. 7 43,773
- ----------------------------------------------------------------------------------------
Boyer-Research Park Associates, Ltd. 17 195,462
- ----------------------------------------------------------------------------------------
Boyer Research Park Associates VI, L.C. 37 43,794
- ----------------------------------------------------------------------------------------
Boyer Tatum Highlands Dental Clinic, L.C. 13 4,623
- ----------------------------------------------------------------------------------------
Boyer-Alta View Associates, Ltd. 66, 67 28,789
- ----------------------------------------------------------------------------------------
Boyer Stansbury II, L.C. 64, 65 33,969
- ----------------------------------------------------------------------------------------
TOTAL: 471,868
- ----------------------------------------------------------------------------------------
21
EXHIBIT B
IRREVOCABLE UNIT POWER
22
EXHIBIT C
THE INSTRUCTIONS
23
EXHIBIT D
NOTICE OF EXCHANGE
24
EXHIBIT E
NOTICE OF DEFICIENCY
25
EXHIBIT F
LLC AGREEMENT
26
EXHIBIT G
REGISTRATION RIGHTS AGREEMENT
27