Standstill Agreement (Stillhaltevereinbarung)
Exhibit 10.2
Standstill Agreement
(Stillhaltevereinbarung)
This Standstill Agreement (Stillhaltevereinbarung) ("Agreement") is made on 23 December 2008 between
1. Sunrise Hannover Senior Living GmbH & Co. KG, registered with the commercial register
(Handelsregister) at the local court (Amtsgericht) of Königsstein im Taunus, represented by its
sole general partner, PSRZ (Germany) General Partner GmbH, registered with the commercial
register at the local court of Königsstein im Taunus under HRB 6199, Frankfurter Str. 1, 61476
Kronberg im Taunus
– "PropCo" –
2. Sunrise Hannover GmbH, registered with the commercial register at the local court of
Königsstein im Taunus under HRB 6613, Frankfurter Str. 1, 61476 Kronberg im Taunus
– "OpCo" –
3. Sunrise Senior Living Inc., 7902 Westpark Drive, Mc Lean, VA 22102, U.S.A.
– "Guarantor" –
4. Natixis, London Branch, Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA,
United Kingdom
in its capacity as agent under the Loan Agreements (as defined below) also for and on behalf of
the other Finance Parties
– "Agent" –
PropCo, OpCo, the Guarantor and the Agent are hereinafter collectively referred to as the "Parties"
and each a "Party"
The Parties hereby agree as follows:
PREAMBLE:
(A) OpCo and the Agent are parties to a loan agreement dated 13 March 2006 (the "OpCo Loan
Agreement") under which, inter alia, the Lender (as defined in the OpCo Loan
Agreement) have made available to OpCo the Facilities (as defined in the OpCo Loan
Agreement);
(B) PropCo and the Agent are parties to a loan agreement dated 13 March 2006 (the "PropCo
Loan Agreement" and collectively with the OpCo Loan Agreement, the "Loan
Agreements") under which, inter alia, the Lender (as defined in the PropCo Loan
Agreement) have made available to PropCo the Facilities (as defined in the PropCo Loan
Agreement);
(C) The Guarantor and the Agent are parties to (i) a funding obligation agreement dated 26 June
2006 with PropCo (the "PropCo Funding Obligation") and (ii) a funding obligation agreement
dated 26 June 2006 with OpCo (the "OpCo Funding Obligation" and collectively with the
PropCo Funding Obligation, the "Funding Obligations"). Under the Funding Obligations, the
Guarantor has agreed, subject to the terms set out therein, to pay to the Agent amounts equal to
the Cash Flow Deficit (as defined in the Funding Obligations) of OpCo or PropCo, as the case
may be;
(D) The Loan Agreements contain certain financial covenants, inter alia, not to exceed the LTV
Threshold. Per Clause 6.3.1.3 of the Loan Agreements, if the LTV Threshold is exceeded, the
respective Borrower has to, within 14 days after notification by the Agent, provide the Agent
with (or procure the provision of) additional security of a nature as further set out in the Loan
Agreements, or, if proposals of such security are not made within time, is deemed to have elected
for prepayment of a portion of the Loans to an extent that the Loans are reduced to a sum not
exceeding the LTV Threshold;
(E) Per letter dated 7 November 2008, the Borrowers have requested the Agent’s consent for the
closure of the Hannover care home operated by PropCo and OpCo which has not been approved
by the Agent;
(F) Per letter dated 17 November 2008, the Agent informed PropCo, OpCo and the Guarantor that
per a valuation by Atrisreal Limited, the Loan-To-Value Ratio was 204.7%, and asked the
Borrowers to comply with the procedures set out in the Loan Agreements;
(G) Per letters dated 3 December 2008, the Agent informed PropCo and OpCo that it has not received
any proposals from the Borrower and that they were deemed to have elected for prepayment, and
informed the Guarantor that a cash flow deficit of EUR 11,224,376 existed which the Guarantor
had to pay under the Funding Obligations;
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(H) Per letter dated 4 December 2008 from PropCo and OpCo to the Agent, PropCo and OpCo
reserved their rights to dispute a breach of the LTV Threshold, and stated that they should not be
deemed to have elected for a prepayment due to the previous discussions between the Agent and
them about the provision of additional collateral;
(I) Per letter dated 18 December 2008, the Agent served a demand on the Guarantor for payment of
an amount equal to the cash flow deficit of EUR 11,224,376 pursuant to the Funding Obligations;
(J) It is contemplated that the Parties have entered, or will enter, into a Pre-Negotiation and Standstill
Agreement (the “US Standstill Agreement”) dated on or about the date hereof with respect to
Guarantor’s obligations under the Funding Obligations;
(K) It is contemplated that the Guarantor intends to enter into a temporary agreement with Bank of
America (the “BoA Agreement”) dated on or after the date hereof with respect to Guarantor’s
obligations under the Senior Secured Revolving Facility dated 2 December 2005;
(L) As the Parties intend to continue their discussions in good faith, it is the Parties' intention to enter
into this Agreement.
The Parties agree as follows:
1. Definitions and interpretation
Capitalized terms used herein shall, unless defined otherwise herein, have the same meaning as in
the Loan Agreements.
2. Standstill Agreement
Until termination of this Agreement in accordance with Clause 3 below, the Agent (on behalf of
the Finance Parties) agrees
(a) not to enforce (durchsetzen) its claims for prepayment of the Loans (or any portion thereof)
based on Clause 6.3.1.3 of the Loan Agreements (either by filing of legal proceedings of
any kind or by realization of any security granted under or in connection with the Loan
Agreements, with the exception of the Funding Obligations which are subject to the US
Standstill Agreement), and that any prepayment obligation (with the exception of any
obligation under the Funding Obligations which are subject to the US Standstill Agreement)
shall be deferred (gestundet);
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(b) not to accelerate (kündigen) the Loans (or any portion thereof) based on a breach of the
LTV Threshold which has arisen, or might potentially arise, due to the facts and
circumstances described in Preamble (D) herein or in connection therewith;
(c) not to demand that additional security is provided, other than the provision of additional
security as required pursuant to Clause 6.3.1.3 of the Loan Agreements which is currently
subject of the Parties' negotiations.
3. Term
This Agreement shall remain effective until the later of:
(a) 60 calendar days after the date of this Agreement; or
(b) the final termination date of the BoA Agreement.
In any case, irrespective of (a) and (b) above, this Agreement shall expire on 31 March 2009
(the “Long Stop Date”).
4. Event of Default
Upon the occurrence of any of the following events of default this Agreement shall automatically
terminate and the Agent shall have the right to exercise all rights and remedies available to the
Agent under the Loan Agreements:
(a) the Parties having definitely aborted their negotiations and this has been confirmed by the
relevant other Party/Parties in writing, such confirmation not to be unreasonably withheld.
The Parties, as of the date of this Agreement, consider it more likely than not (überwiegend
wahrscheinlich) that a solution can be reached which will enable OpCo and PropCo to
continue to trade as a going concern (Fortführung des Geschäftsbetriebs);
(b) the Acceleration of the Loan Agreements based on an Event of Default (other than a breach
of the LTV Threshold);
(c) an application for the opening of insolvency proceedings or the commencement of
insolvency proceedings (Eröffnung des Insolvenzverfahrens) with respect to PropCo or
OpCo; and
(d) the termination of the US Standstill Agreement (including by way of an early termination).
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5. No waiver of rights or defenses
Nothing in this Agreement shall, to the extent not expressed herein, constitute a waiver,
amendment or termination of any agreement between the Parties or of the rights, remedies or
defenses any Party has against the other party and the Parties confirm that the Loan Agreements
and any security granted in connection therewith remain in full force and effect to the extent they
have been in full force and effect would it not have been for this Agreement.
6. Confirmations
OpCo and PropCo confirm that
(a) subject to the execution of this Agreement, neither OpCo nor PropCo is overindebted
(überschuldet) or illiquid (zahlungsunfähig) for the purpose of Sections 17 – 19 of the
German Insolvency Code (Insolvenzordnung);
(b) the execution of this Agreement does not impair other creditors of PropCo or OpCo; and
(c) to the best of their knowledge, it is not anticipated that during the term of this Agreement
the financial situation of OpCo and PropCo will deteriorate leading to any of the effects
described in (a) and (b) of this Clause.
7. Covenants
OpCo and PropCo shall
(a) observe and perform all their respective obligations under the Loan Agreements;
(b) provide the Agent with such information about the financial status and condition of the
Borrowers as the Agent may reasonably request from time to time. Each Borrower
authorizes and allows the Agent and its representatives, upon reasonable notice and at any
reasonable time during normal business hours, to examine, at its own cost and expense,
Borrower's financial books and records and all other records relating or pertaining to the
operation of the Property, and the Agent shall be permitted, at its own cost and expense, to
photocopy any such books and records;
(c) provide the Agent immediately after execution with a copy of the BoA Agreement, and
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(d) not take legal proceedings or actions against the Agent during the term of this Agreement.
8. Miscellaneous
(a) If at any time, any one or more of the provisions hereof is or becomes invalid, illegal or
unenforceable in any respect under the law of any jurisdiction, such provision shall as to
such jurisdiction, be ineffective to the extent necessary without affecting or impairing the
validity, legality and enforceability of the remaining provisions hereof or of such
provisions in any other jurisdiction.The invalid, illegal or unenforceable provision shall
be deemed to be replaced with such valid, legal or enforceable provision which comes
as close as possible to the original intent of the parties and the invalid, illegal or
unenforceable provision. Should a gap (Regelungslücke) become evident in this
Agreement, such gap shall, without affecting or impairing the validity, legality and
enforceability of the remaining provisions hereof, be deemed to be filled in with such
provision which comes as close as possible to the original intent of the Parties.
(b) Changes and amendments to this Agreement including this Clause 7 shall be made in
writing.
(c) This Agreement is governed by the laws of the Federal Republic of Germany.
(d) The place of jurisdiction for any and all disputes arising under or in connection with this
Agreement shall be the district court (Landgericht) in Frankfurt am Main. The Agent
however, shall also be entitled to take action against any of the other Parties in any other
court of competent jurisdiction.
(e) All duly evidenced costs, charges, fees and expenses triggered by this Agreement or
incurred in connection with its preparation, translation, execution or amendment (in each
case including duly evidenced fees for legal advisers) shall be paid jointly and severally by
OpCo, PropCo and the Guarantor.
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Sunrise Hannover Senior Living GmbH & Co. KG
by its general partner PSRZ (Germany) General Partner GmbH
/s/ Richard J. Nadeau
Name: Richard J. Nadeau
Title: Geschäftsführer
Sunrise Hannover GmbH
/s/ Tiffany L. Tomasso
Name: Tiffany L. Tomasso
Title: Geschäftsführer
Sunrise Senior Living Inc.
/s/ Richard J. Nadeau
Name: Richard J. Nadeau
Title: Chief Financial Officer
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Natixis, London Branch
/s/ Gregoire Hennekinne /s/ David Newby
Name: Gregoire Hennekinne Name: David Newby Title: Director Title: Managing Director
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