LOAN AGREEMENT (AMENDED AND RESTATED)
(AMENDED
AND RESTATED)
THIS
LOAN AGREEMENT
(this
“Agreement”) is made as of February 28, 2007,
by and
among the twenty-four (24) Delaware limited liability companies or limited
partnerships listed on Schedule
A
attached
hereto and made a part hereof (together with their respective successors and
assigns, the “Borrowers”, and individually, a “Borrower”), and CAPMARK BANK, a
Utah industrial bank (together with its successors and assigns,
“Lender”).
RECITALS
A. Borrowers
obtained forty-eight (48) loans from Lender in the aggregate principal sum
of
$90,000,000.00, as evidenced and governed by that certain Loan Agreement dated
August 31, 2005 (the “Original Loan Agreement”).
B. Borrowers
have now requested that the loans evidenced and governed by the Original Loan
Agreement be consolidated into two (2) loans and increased to an aggregate
of
$140,000,000.00, with one note for $132,000,000.00 and the second for
$8,000,000.00, and Lender has agreed to such consolidation and increase upon
certain conditions, one of which is the execution of this Amended and Restated
Loan Agreement.
C. Lender
has agreed to make such increased loan on the terms and conditions hereinafter
set forth.
AGREEMENT
NOW,
THEREFORE,
it is
hereby agreed as follows:
ARTICLE
I
DEFINITIONS,
ACCOUNTING PRINCIPLES, UCC TERMS.
1.1 As
used
in this Agreement, the following terms shall have the following meanings unless
the context hereof shall otherwise indicate:
“Accounts”
means
any rights of Borrowers, if any, arising from the operation of a Facility to
payment for goods sold or leased or for services rendered, not evidenced by
an
Instrument, including, without limitation, (i) all accounts arising from the
operation of a Facility, (ii) all moneys and accounts held by or for the
benefit of Lender of this Agreement and under the Mortgage, and (iii) all rights
to payment from Medicare or Medicaid programs, or similar state or federal
programs, boards, bureaus or agencies and rights to payment from residents,
private insurers, and others arising from the operation of the Facility,
including rights to payment pursuant to Reimbursement Contracts. Accounts shall
include the proceeds thereof (whether cash or noncash, moveable or immoveable,
tangible or intangible) received from the sale, exchange, transfer, collection
or other disposition or substitution thereof.
“Affiliate”
means,
with respect to any Person, (a) each Person that controls, is controlled by
or is under common control with such Person, (b) each Person that, directly
or
1
indirectly,
owns or controls, whether beneficially or as a trustee, guardian or other
fiduciary, any of the Stock of such Person, and (c) each of such Person’s
officers, directors, members, joint venturers and partners.
“Assignment
of Leases and Rents”
means
that certain Assignment of Leases and Rents by each Borrower in favor of
Lender.
“Assignment
of Licenses”
means,
collectively, those certain Assignment of Licenses, Permits and Contracts to
and
for the benefit of Lender.
“Business
Day”
means a
day, other than Saturday or Sunday and legal holidays, when Lender is open
for
business.
“Closing
Date”
means
the date on which all or any part of the Loan is disbursed by Lender to or
for
the benefit of Borrower.
“Collateral”
means,
collectively, the Borrowers’ interest in the Mortgaged Property, Improvements,
Equipment, Rents, Accounts, General Intangibles, Instruments, Inventory, Money,
Permits (to the full extent assignable), Reimbursement Contracts, and all
Proceeds, all whether now owned or hereafter acquired, and including
replacements, additions, accessions, substitutions, and products thereof and
thereto, and all other property which is or hereafter may become subject to
a
Lien in favor of Lender as security for any of the Loan
Obligations.
“Commitment
Letter”
means
the commitment letter issued by Lender to Borrowers dated of even date
herewith.
“Default”
means
the occurrence or existence of any event which, but for the giving of notice
or
expiration of time or both, would constitute an Event of Default.
“Default
Rate”
with
respect to each Note, has the meaning given to that term in such
Note.
“Emeritus”
means
Emeritus Corporation, a publicly-traded company organized under the laws of
the
State of Washington.
“Environmental
Permit”
means
any permit, license, or other authorization issued under any Hazardous Materials
Law with respect to any activities or businesses conducted on or in relation
to
the Land and/or the Improvements.
“Equipment”
means
all beds, linens, televisions, carpeting, telephones, cash registers, computers,
lamps, glassware, rehabilitation equipment, restaurant and kitchen equipment,
and other fixtures and equipment, if any, owned by Borrowers located on,
attached to or used or useful in connection with any of the Property or the
Facilities and all renewals and replacements thereof and substitutions therefor;
provided, however, that with respect to any items which are leased for the
benefit of a Facility and not owned by a Borrower, the Equipment shall include
the leasehold interest only of such Borrower together with any options to
purchase any of said items and any additional or greater rights with respect
to
such items which such
2
Borrower
may hereafter acquire, but the foregoing shall not be construed to mean that
such leasing shall be permitted hereunder and under the other Loan
Documents.
“Event
of Default”
means
any “Event of Default” as defined in Article VII hereof.
“Exhibit”
means an
Exhibit to this Agreement, unless the context refers to another document, and
each such Exhibit shall be deemed a part of this Agreement to the same extent
as
if it were set forth in its entirety wherever reference is made
thereto.
“Expected
Sale Property”
has the
meaning given to such term in Section
2.4.
“Facilities”
means
the twenty-four (24) facilities listed on Schedule
B
attached
hereto and made a part hereof located on the Land, as they may now or hereafter
exist, together with any other general or specialized care facilities, if any
(including any Alzheimer’s care unit, subacute, and any other healthcare related
facility), now or hereafter operated on the Land, and, individually, a
“Facility”.
“Fretus”
means
Fretus Investors LLC, a Washington limited liability company, the managing
member or general partner, as applicable, of each of the Borrowers.
“GAAP”
means,
as in effect from time to time, generally accepted accounting principles
consistently applied as promulgated by the American Institute of Certified
Public Accountants.
“General
Intangibles”
means
all intangible personal property of Borrowers arising out of or connected with
the Mortgaged Property or the Facilities and all renewals and replacements
thereof and substitutions therefor (other than Accounts, Rents, Instruments,
Inventory, Money, Permits, and Reimbursement Contracts), including, without
limitation, things in action, contract rights and other rights to payment of
money.
“Governmental
Authority”
means
any nation or government, any state or other political subdivision thereof,
and
any Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to such government.
“Guarantor”
means
Emeritus.
“Guaranty
Agreement”
means
that certain Guaranty Agreement of even date herewith executed by Emeritus
in
favor of Lender.
“Hazardous
Materials”
means
petroleum and petroleum products and compounds containing them, including
gasoline, diesel fuel and oil; explosives; flammable materials; radioactive
materials; polychlorinated biphenyls (“PCBs”) and compounds containing them;
lead and lead-based paint; asbestos or asbestos-containing materials in any
form
that is or could become friable; underground storage tanks, whether empty or
containing any substance; any substance the presence of which on the Land and/or
the Improvements is prohibited by any federal, state or local authority; any
substance that requires special handling; and any other
3
material
or substance now or in the future defined as a “hazardous substance,” “hazardous
material,” “hazardous waste,” “toxic substance,” “toxic pollutant,”
“contaminant,” or “pollutant” within the meaning of any Hazardous Materials
Law.
“Hazardous
Materials Laws”
means
all federal, state, and local laws, ordinances and regulations and standards,
rules, policies and other governmental requirements, administrative rulings
and
court judgments and decrees in effect now or in the future and including all
amendments, that relate to Hazardous Materials and apply to Borrower or to
the
Land and/or the Improvements. Hazardous Materials Laws include, but are not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C.
Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
and
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, and their
state analogs.
“Improvements”
means
all buildings, structures and improvements of every nature whatsoever now or
hereafter situated on the Land, including but not limited to, all gas and
electric fixtures, radiators, heaters, engines and machinery, boilers, ranges,
elevators and motors, plumbing and heating fixtures, carpeting and other floor
coverings, water heaters, awnings and storm sashes, and cleaning apparatuses
which are or shall be attached to the Land or said buildings, structures or
improvements.
“Indebtedness”
means
any (a) obligations for borrowed money, (b) obligations, payment for which
is
being deferred by more than ninety (90) days, representing the deferred purchase
price of property other than accounts payable arising in connection with the
purchase of inventory customary in the trade and in the ordinary course of
Borrower’s business, (c) obligations, whether or not assumed, secured by Liens
or payable out of the proceeds or production from the Accounts and/or property
now or hereafter owned or acquired, and (d) the amount of any other obligation
(including obligations under financing leases) which would be shown as a
liability on a balance sheet prepared in accordance with GAAP.
“Instruments”
means
all instruments, chattel paper, documents or other writings obtained from or
in
connection with the operation of the Mortgaged Property or the Facilities
(including, without limitation, all ledger sheets, computer records and
printouts, data bases, programs, books of account and files relating
thereto).
“Inventory”
means
all
inventories of food, beverages and other comestibles held by Borrowers for
sale
or use at or from the Mortgaged Property or the Facilities, and soap, paper
supplies, medical supplies, drugs and all other such goods, wares and
merchandise held by Borrowers for sale to or for consumption by guests, or
residents of the Mortgaged Property or the Facilities and all such other goods
returned to or repossessed by Borrowers.
“Land”
means
the land described in Exhibit
“A”
attached
hereto and made a part hereof.
“Leases”
has the
meaning given to that term in the Mortgage.
4
“Lien”
means
any voluntary or involuntary mortgage, security deed, deed of trust, lien,
pledge, assignment, security interest, title retention agreement, financing
lease, levy, execution, seizure, judgment, attachment, garnishment, charge,
lien
or other encumbrance of any kind, including those contemplated by or permitted
in this Agreement and the other Loan Documents.
“Loans”
means
the two (2) loans in the aggregate principal sum of $140,000,000.00 made by
Lender to Borrowers as amended, increased and restated as of the date hereof,
and, individually, a “Loan”.
“Loan
Documents”
means,
collectively, the Commitment Letter, this Agreement, the Note, the Mortgage,
the
Assignment of Leases and Rents, the Assignment of Licenses, the Guaranty
Agreement, and the Subordination Agreement, together with any and all other
documents executed by Borrowers, Guarantor or others, evidencing, securing
or
otherwise relating to the Loans.
“Loan
Obligations”
means
the aggregate of all principal and interest owing from time to time under the
Notes and all expenses, charges and other amounts from time to time owing under
the Notes, this Agreement or the other Loan Documents and all covenants,
agreements and other obligations from time to time owing to, or for the benefit
of, Lender pursuant to the Loan Documents.
“Managed
Care Plans”
means
any health maintenance organization, preferred provider organization, individual
practice association, competitive medical plan, or similar arrangement, entity,
organization, or Person.
“Management
Agreement”
means
that certain Management Agreement dated February 28, 2007, between Manager
and
each Borrower, obligating Manager to operate and manage the
Facilities.
“Manager”
means
Emeritus and any successor manager of the Facilities approved by Lender in
writing.
“Maturity
Date”
means
March 1, 2010 (for the $8,000,000.00 Note), and March 1, 2012 (for the
$132,000,000.00 Note), as reflected in the respective Notes.
“Medicaid”
means
that certain program of medical assistance, funded jointly by the federal
government and the States, for impoverished individuals who are aged, blind
and/or disabled, and/or members of families with dependent children, which
program is more fully described in Title XIX of the Social Security Act (42
U.S.C. §§ 1396 et
seq.)
and
the regulations promulgated thereunder.
“Medicare”
means
that certain federal program providing health insurance for eligible elderly
and
other individuals, under which physicians, hospitals, skilled nursing homes,
home health care and other providers are reimbursed for certain covered services
they provide to the beneficiaries of such program, which program is more fully
described in Title XVIII of the Social Security Act (42 U.S.C. §§ 1395
et
seq.)
and
the regulations promulgated thereunder.
5
“Money”
means
all monies, cash, rights to deposit or savings accounts or other items of legal
tender obtained from or for use in connection with the operation of a
Facility.
“Mortgage”
means
collectively those certain twenty-four (24) Mortgages or Deeds of Trust and
Security Agreements executed by Borrowers in favor of or for the benefit of
Lender and covering each Borrower’s respective Mortgaged Property.
“Mortgaged
Property”
has the
meaning given to that term in the Mortgage.
“Notes”
means
jointly the two (2) Promissory Notes of even date herewith in the aggregate
principal amount of the Loans payable by Borrower to the order of Lender, and,
individually, a “Note”.
“OFAC
List”
means
the list of specially designated nationals and blocked persons subject to
financial sanctions that is maintained by the U.S. Treasury Department, Office
of Foreign Assets Control and any other similar list maintained by the U.S.
Treasury Department, Office of Foreign Assets Control pursuant to any
Requirements of Law, including, without limitation, trade embargo, economic
sanctions, or other prohibitions imposed by Executive Order of the President
of
the United States. The OFAC List currently is accessible through the internet
website ▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇/▇▇▇▇▇▇.▇▇▇.
“O&M
Program”
means a
written program of operations and maintenance established or approved in writing
by Lender relating to any Hazardous Materials in, on or under the Land and/or
the Improvements.
“Permits”
means
all licenses, permits and certificates used or necessary in connection with
the
construction, ownership, operation, use or occupancy of the Mortgaged Property
and/or the Facility, including, without limitation, business licenses, state
health department licenses, food service licenses, licenses to conduct business,
certificates of need and all such other permits, licenses and rights, obtained
from any governmental, quasi-governmental or private person or entity whatsoever
concerning ownership, operation, use or occupancy.
“Permitted
Encumbrances”
has the
meaning given to that term in Section 5.2 hereof.
“Person”
means an
individual, partnership, limited partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever
nature.
“Proceeds”
means
all proceeds (including proceeds of insurance and condemnation) from the sale,
exchange, transfer, collection, loss, damage, disposition, substitution or
replacement of any of the Collateral.
“Reimbursement
Contracts”
means
all third-party reimbursement contracts relating to the Facility which are
now
or hereafter in effect with respect to residents or patients qualifying for
coverage under the same, including Medicare and Medicaid, Managed Care Plans
and
private insurance agreements, and any successor program or other similar
reimbursement program and/or private insurance agreements, now or hereafter
existing.
6
“Rents”
means
all rent and other payments of whatever nature from time to time payable
pursuant to leases of the Mortgaged Property or the Facilities, or for retail
space or other space at the Mortgaged Property (including, without limitation,
rights to payment earned under leases for space in the Improvements for the
operation of ongoing retail businesses such as newsstands, barbershops, beauty
shops, physicians’ offices, pharmacies and specialty shops).
“Requirements
of Law”
means
(a) the organizational documents of an entity, and (b) any law, regulation,
ordinance, code, decree, treaty, ruling or determination of an arbitrator,
court
or other Governmental Authority, or any Executive Order issued by the President
of the United States, in each case applicable to or binding upon such Person
or
to which such Person, any of its property or the conduct of its business is
subject including, without limitation, laws, ordinances and regulations
pertaining to the zoning, occupancy and subdivision of real
property.
“Single
Purpose Entity” means
a
Person which complies with the requirements of Section 5.4.
“Stock”
means
all shares, options, warrants, general or limited partnership interests,
membership interests, participations or other equivalents (regardless of how
designated) in a corporation, limited liability company, partnership or any
equivalent entity, whether voting or nonvoting, including, without limitation,
common stock, preferred stock, or any other “equity security” (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as
amended).
“Subordinated
Debt”
has the
meaning given to such term in Section
2.5.
“Subordination
Agreement”
means
that certain Subordination of Management Agreement of even date herewith by
and
among Borrower, Manager, and Lender.
1.2 Singular
terms shall include the plural forms and vice versa, as applicable, of the
terms
defined.
1.3 Each
term
contained in this Agreement and defined in the Uniform Commercial Code (the
“UCC”) in effect from time to time in the state in which the Land is located
shall have the meaning given to such term in the UCC, unless the context
otherwise indicates, and shall include, without limitation, the meaning set
forth in this Agreement.
1.4 All
accounting terms used in this Agreement shall be construed in accordance with
GAAP, except as otherwise specified.
1.5 All
references to other documents or instruments shall be deemed to refer to such
documents or instruments as they may hereafter be extended, renewed, modified,
or amended and all replacements and substitutions therefor.
1.6 All
references herein to “Medicaid” and “Medicare” shall be deemed to include any
successor program thereto.
7
ARTICLE
II
TERMS
OF THE LOAN
2.1 The
Loan.
Each
Borrower has agreed to borrow the Loans from Lender, and Lender has agreed
to
make the Loans to Borrowers, subject to Borrowers’ compliance with and
observance of the terms, conditions, covenants, and provisions of this Agreement
and the other Loan Documents, and each Borrower has made the covenants,
representations, and warranties herein and therein as a material inducement
to
Lender to make the Loans.
2.2 Security
for the Loan.
The
Loans will be evidenced, secured and guaranteed by the Loan Documents and the
Collateral.
2.3 Limitation
on Interest.
All
agreements between Borrowers and Lender, whether now existing or hereafter
arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of acceleration of the maturity of any
indebtedness governed hereby or otherwise, shall the interest contracted for,
charged or received by Lender exceed the maximum amount permissible under
applicable law. If, from any circumstance whatsoever, interest would otherwise
be payable to Lender in excess of the maximum lawful amount, the interest
payable to Lender shall be reduced to the maximum amount permitted under
applicable law; and, if from any circumstance the Lender shall ever receive
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive interest shall be applied to
the
reduction of the principal of the Loans and not to the payment of interest,
or,
if such excessive interest exceeds the unpaid balance of principal of the Loans,
such excess shall be refunded to Borrowers. All interest paid or agreed to
be
paid to Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full period until payment in
full
of the principal of the Loans (including the period of any renewal or extension
thereof) so that interest thereon for such full period shall not exceed the
maximum amount permitted by applicable law. This paragraph shall control all
agreements between the Borrowers and Lender.
2.4 Sale
of Certain Facilities.
Borrowers have informed Lender that the Facilities known as “Galleria Oaks” in
Birmingham, Alabama, and “Champion Oaks” in Houston, Texas (together, the
“Expected Sale Property”) are intended to be sold prior to the Maturity Date of
the $8,000,000.00 Note. So long as no Event of Default exists at the time of
such sale, Lender shall consent to a sale of either and/or both Expected Sale
Property in consideration of payment (a) in full of the $8,000,000.00 Note
if
both Expected Sale Property are sold simultaneously, and, (b) if only one is
sold at any time, a repayment of principal on the $8,000,000.00 Note of
$4,900,000.00 (or such lesser amount as Lender may approve in its sole
discretion) upon the sale of Galleria Oaks, and $3,100,000.00 (or such lesser
amount as Lender may approve in its sole discretion) upon the sale of Champion
Oaks, up to a maximum aggregate, when the second Expected Sale Property is
sold,
of $8,000,000.00.
2.5 Additional
Financing.
Lender
acknowledges that Emeritus has borrowed the amount of $18,000,000.00 from CP’02
Pool LLC in order to complete the financing of Emeritus’ acquisition of the
membership interest in Fretus (the “Subordinated Debt”). Borrowers represent and
warrant to Lender that the Subordinated Debt is unsecured and is not secured
in
whole or in part by the Collateral, or any other collateral security.
8
ARTICLE
III
BORROWER’S
REPRESENTATIONS AND WARRANTIES
To
induce
Lender to enter into this Agreement, and to make the Loans to Borrowers, each
Borrower with respect to itself and its Facility, represents and warrants to
Lender as follows:
3.1 Existence,
Power and Qualification.
Borrower is a duly organized and validly existing Delaware limited liability
company or Delaware limited partnership, as the case may be, has the power
to
own its properties and to carry on its business as is now being conducted,
and
is duly qualified to do business and is in good standing in every jurisdiction
in which the character of the properties owned by it or in which the transaction
of its business makes its qualification necessary, specifically including,
without limitation, the State in which its applicable Facility is
located.
3.2 Power
and Authority.
Borrower has full power and authority to borrow the indebtedness evidenced
by
the Notes and to incur the Loan Obligations provided for herein, all of which
have been authorized by all proper and necessary action. All consents, approvals
authorizations, orders or filings of or with any court or governmental agency
or
body, if any, required for the execution, delivery and performance of the Loan
Documents by Borrower have been obtained or made.
3.3 Single
Purpose Entity.
Borrower is a Single Purpose Entity.
3.4 Due
Execution and Enforcement.
Each of
the Loan Documents to which Borrower is a party constitutes a valid and legally
binding obligation of Borrower, enforceable in accordance with its respective
terms (except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium, or other laws relating to the rights
of creditors generally and by general principles of equity) and does not
violate, conflict with, or constitute any default under any law, government
regulation, decree, judgment, Borrower’s articles of organization, partnership
agreement or operating agreement, as applicable, or any other agreement or
instrument binding upon Borrower.
3.5 Pending
Matters.
(a) Operations;
Financial Condition.
No
action or investigation is pending or, to the best of Borrower’s knowledge,
threatened before or by any court or administrative agency which might result
in
any material adverse change in the financial condition, operations or prospects
of Borrower or any lower reimbursement rate under the Reimbursement Contracts.
Borrower is not in violation of any agreement, the violation of which might
reasonably be expected to have a material adverse effect on its business or
assets, and Borrower is not in violation of any order, judgment, or decree
of
any court, or any statute or governmental regulation to which it is
subject.
(b) Land
and Improvements.
There
are no proceedings pending, or, to the best of Borrower’s knowledge, threatened,
to acquire through the exercise of any power of condemnation, eminent domain
or
similar proceeding any part of the Land, the Improvements or any interest
therein, or to enjoin or similarly prevent or restrict the use of the Land
or
the
9
operation
of the Facility in any manner. None of the Improvements is subject to any
unrepaired casualty or other damage.
3.6 Financial
Statements Accurate.
All
financial statements heretofore or hereafter provided by Borrower are and will
be true and complete in all material respects as of their respective dates
and
fairly present the financial condition of Borrower, and there are no material
liabilities, direct or indirect, fixed or contingent, as of the respective
dates
of such statements which are not reflected therein or in the notes thereto
or in
a written certificate delivered with such statements. The financial statements
of Borrower have been prepared in accordance with GAAP. There has been no
material adverse change in the financial condition, operations, or prospects
of
Borrower since the dates of such statements except as fully disclosed in writing
with the delivery of such statements. All financial statements of the operations
of the Facility heretofore or hereafter provided to Lender are and will be
true
and complete in all material respects as of their respective dates.
3.7 Compliance
with Facility Laws.
Each
Facility is duly licensed as an assisted living facility and is currently
operated at the licensed unit/bed capacity set forth on Schedule
B
attached
hereto and made a part hereof under the applicable laws of the state where
the
Facility is located. To Borrower’s actual knowledge, Borrower or Manager has
obtained all Permits for the Facility, including, without limitation, the
Certificate of Need, if applicable, which (a) are in full force and effect,
(b) constitute all of the permits, licenses and certificates required for
the use, operation and occupancy thereof, (c) have not been pledged as
collateral for any loan or Indebtedness other than the Loans, (d) are held
free from restrictions or any encumbrance which would materially adversely
affect the use or operation of the Facility, and (e) except as set forth on
Schedule
3.7
attached
hereto and made a part hereof, are not provisional, probationary or restricted
in any way. Borrower, the Facility and, to Borrower's actual knowledge, Manager
are in compliance in all material respects with the applicable provisions of
assisted living facility laws, rules, regulations and published interpretations
to which the Facility is subject. No waivers of any laws, rules, regulations,
or
requirements (including, but not limited to, minimum foot requirements per
bed)
are required for the Facility to operate at the current licensed unit and/or
bed
capacity. To the extent required, Borrower is and, to Borrower’s actual
knowledge, Manager is in good standing with all the respective agencies
governing such applicable licenses and program certification. Borrower and/or
the Facility is current in the payment of all so-called provider specific taxes
or other assessments, if applicable. Borrower will maintain or cause to be
maintained by Manager (without allowing to lapse) the Certificate of Need,
if
applicable, and any required Permits.
3.8 Maintain
Unit Capacity.
Neither
Borrower nor Manager has granted to any third party the right to reduce the
number of licensed beds or units in the Facility or to apply for approval to
transfer the right to any or all of the licensed Facility units to any other
location.
3.9 Medicare
and Medicaid Compliance.
The
Facilities described in Schedule
III
are
certified to participate in Medicaid. Except as set forth in Schedule
III,
none of
the Facilities participates in any other Third-Party Payors’ Programs (as
defined in Section
3.10
below).
3.10 Third
Party Payors.
There
is no threatened or pending revocation, suspension, termination, probation,
restriction, limitation, or nonrenewal affecting Borrower, Manager or the
10
Facility
or any participation or provider agreement with any third-party payor, including
Medicare, Medicaid, Blue Cross and/or Blue Shield, and any other private
commercial insurance managed care and employee assistance program (such
programs, the “Third-Party Payors’ Programs”) to which Borrower or Manager
presently is subject. All Medicare (if any), Medicaid (if any) and private
insurance cost reports and financial reports submitted by Borrower or Manager
are and will be materially accurate and complete and have not been and will
not
be misleading in any material respects. No cost reports for the Facility remain
“open” or unsettled except as otherwise disclosed.
3.11 Governmental
Proceedings and Notices.
Neither
Borrower nor Guarantor nor Manager nor the Facility is currently the subject
of
any proceeding by any governmental agency, and no notice of any violation has
been received from any federal, state or local government or quasi-governmental
body or agency or any administrative or investigative body that would, directly
or indirectly, or with the passage of time:
(a) have
a
material adverse impact on Borrower’s or Manager’s ability to accept and/or
retain residents or result in the imposition of a fine, a sanction, a lower
rate
certification or a lower reimbursement rate for services rendered to eligible
residents;
(b) modify,
limit or annul or result in the transfer, suspension, revocation or imposition
of probationary use of any of the Permits; or
(c) affect
Borrower’s continued participation in the Medicare or Medicaid programs or any
other Third-Party Payors’ Programs, or any successor programs thereto, at
current rate certifications.
3.12 Physical
Plant Standards.
The
Facility and the use thereof comply in all material respects with all applicable
local, state and federal building codes, fire codes, health care,
nursing/assisted living/senior housing facility (as applicable) and other
similar regulatory requirements (the “Physical Plant Standards”), and no waivers
of Physical Plant Standards exist at the Facility.
3.13 Pledge
of Receivables.
Borrower has not pledged its Accounts as collateral security for any loan or
Indebtedness other than, if applicable, the Loans.
3.14 Payment
of Taxes and Property Impositions.
Borrower has filed all federal, state, and local tax returns which it is
required to file and has paid, or made adequate provision for the payment of,
all taxes and assessments which are shown pursuant to such returns or are
required to be shown thereon, including, without limitation, provider taxes
which are due and owing as of the date hereof. All such returns are complete
and
accurate in all respects. Borrower has paid or made adequate provision for
the
payment of all applicable water and sewer charges, ground rents (if applicable)
and Taxes (as defined in the Mortgage) with respect to the Land and/or the
Improvements which are due and owing as of the date hereof.
3.15 Title
to Mortgaged Property.
Borrower has good and marketable title to all of the Mortgaged Property, subject
to no lien, mortgage, pledge, encroachment, zoning violation, or encumbrance,
except Permitted Encumbrances (specifically including special exceptions
11
reflected
in Lender’s title insurance policies insuring the Mortgage) which do not
materially interfere with the security intended to be provided by the Mortgage
or the current use or operation of the Land and the Improvements or the current
ability of the Facility to generate net operating income sufficient to service
the Loan. All Improvements situated on the Land are situated wholly within
the
boundaries of the Land.
3.16 Priority
of Mortgage.
The
Mortgage constitutes a valid first lien against the real and personal property
described therein, prior to all other liens or encumbrances, including those
which may hereafter accrue, excepting only Permitted Encumbrances.
3.17 Location
of Chief Executive Offices.
The
location of Borrower’s chief executive office is set forth on Exhibit
“B”
hereto.
Borrower has no place of business other than the locations of the Facilities
listed on Schedule
“B”.
3.18 Disclosure.
All
information furnished or to be furnished by Borrower to Lender in connection
with the Loan or any of the Loan Documents is, or will be at the time the same
is furnished, accurate and correct in all material respects and complete insofar
as completeness may be necessary to provide Lender with true and accurate
knowledge of the subject matter.
3.19 Trade
Names.
Borrower has not changed its name, been known by any other name, or been a
party
to a merger, reorganization or similar transaction within the last five (5)
years.
3.20 ERISA.
As of
the date hereof and throughout the term of this Agreement,
(a) Borrower
is not an “employee benefit plan,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), subject to Title I
of ERISA, and none of the assets of Borrower constitute “plan assets” (within
the meaning of Department of Labor Regulation Section 2510.3-101) of one or
more
such plans, and
(b) Borrower
is not a “governmental plan” within the meaning of Section 3(32) of ERISA, and
transactions by or with Borrower are not be subject to state statutes regulating
investments of, and fiduciary obligations with respect to, governmental
plans.
The
execution and delivery of the Loan Documents and the borrowing of indebtedness
hereunder do not constitute a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
(the “Code”).
3.21 Ownership.
The
ownership interests of the Persons comprising Borrower and each of the
respective interests in Borrower are correctly and accurately set forth on
Exhibit
“C”
hereto.
3.22 Compliance
with Applicable Laws.
The
Facility and its operations and the Land and Improvements comply in all material
respects with all covenants and restrictions of record and applicable laws,
ordinances, rules and regulations, including, without limitation, the Americans
with Disabilities Act and the regulations thereunder, and all laws, ordinances,
rules and regulations relating to zoning, setback requirements and building
codes and there are no waivers of any building codes currently in existence
for
the Facility.
12
3.23 Solvency.
Borrower is solvent for purposes of 11 U.S.C. § 548, and the borrowing of the
Loan will not render Borrower insolvent for purposes of 11 U.S.C. §
548.
3.24 Management
Agreement.
The
Management Agreement is in full force and effect, and there are no defaults
(either monetarily or non-monetarily) by Manager or Borrower
thereunder.
3.25 Other
Indebtedness.
Borrower has no outstanding Indebtedness, secured or unsecured, direct or
contingent (including any guaranties), other than indebtedness which represents
trade payables or accrued expenses incurred in the ordinary course of business
of owning and operating the Mortgaged Property; no other debt incurred by
Borrower after the date hereof will be secured (senior, subordinate or
pari
passu)
by the
Mortgaged Property.
3.26 Other
Obligations.
Borrower has no material financial obligation under any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which Borrower
is a party or by which Borrower or the Mortgaged Property is otherwise bound,
other than obligations incurred in the ordinary course of the operation of
the
Mortgaged Property and other than obligations under the Mortgage and the other
Loan Documents.
3.27 Fraudulent
Conveyances.
Borrower (a) has not entered into this Agreement or any of the other Loan
Documents with the actual intent to hinder, delay, or defraud any creditor
and
(b) Borrowers together have received reasonably equivalent value in
exchange for their collective obligations under the Loan Documents. Giving
effect to the transactions contemplated by the Loan Documents, the fair saleable
value of Borrower’s assets exceeds and will, immediately following the execution
and delivery of the Loan Documents, be greater than Borrower’s probable
liabilities, including the maximum amount of its contingent liabilities or
its
debts as such debts become absolute and mature. Borrower’s assets do not and,
immediately following the execution and delivery of the Loan Documents will
not,
constitute unreasonably small capital to carry out its business as conducted
or
as proposed to be conducted. Borrower does not intend to, and does not believe
that it will, incur debts and liabilities (including, without limitation,
contingent liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts to be payable
on or in respect of obligations of Borrower).
3.28 Representations
and Warranties.
Borrower agrees that its representations and warranties and covenants contained
herein are true and correct as of the date hereof and shall survive the making
of the Loans and the assignment and delivery of the Loans to any participant
of
the Loans.
3.29 Use
of Loan Proceeds.
The
Loans are primarily for commercial or business purposes and are not primarily
for personal, family or household purposes.
3.30 No
Change in Facts or Circumstances.
All
information in any application for the Loans submitted to Lender (the “Loan
Application”) and in all financial statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application are
complete and accurate in all material respects. There has been no material
13
adverse
change in any fact or circumstance that would make any such information
incomplete or inaccurate.
3.31 Fraud
and Abuse.
(a) Anti-Kickback
Law.
After
consultation with counsel concerning the federal anti-kickback law (42 U.S.C.A.
SEC. 1320a-7b(b)), neither Borrower nor its agent have offered or given any
remuneration or thing of value to any person to encourage referral to the
facility nor has Borrower or its agent solicited or received any remuneration
or
thing of value in exchange for Borrower’s agreement to make referrals or to
purchase goods or services for the Facility.
(b) Relationships.
No
physician or other healthcare practitioner has an ownership interest in, or
financial relationship with, Borrower, Manager or the Facility.
(c) Required
Adjustments.
All cost
report periods for all Facility payors have been closed and settled, and all
required adjustments have been fully paid and/or implemented, if
applicable.
3.32 No
Illegal Activity as Source of Funds.
No
portion of the Mortgaged Property has been or will be purchased, improved,
equipped or furnished with proceeds of any illegal activity.
3.33 Compliance
with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering
Laws.
Borrower, and to the best of Borrower's knowledge, after having made diligent
inquiry, (a) each Person owning an interest of 20% or more in Borrower and
in
the Single Purpose Entity that is the managing member or general partner of
Borrower, (b) Guarantor, and
(c)
Manager: (i) is not currently identified on OFAC List, and (ii) is not a Person
with whom a citizen of the United States is prohibited to engage in transactions
by any trade embargo, economic sanction, or other prohibition of United States
law, regulation, or Executive Order of the President of the United States.
Borrower has implemented procedures, and will consistently apply those
procedures throughout the term of the Loan, to ensure the foregoing
representations and warranties remain true and correct during the term of the
Loan.
ARTICLE
IV
AFFIRMATIVE
COVENANTS OF BORROWER
Each
Borrower agrees with and covenants unto Lender that until the Loan Obligations
have been paid in full, Borrower shall, with respect to its
Facility:
4.1 Payment
of Loan/Performance of Loan Obligations.
Duly
and punctually pay or cause to be paid the principal and interest of the Notes
in accordance with their respective terms and duly and punctually pay and
perform or cause to be paid or performed all Loan Obligations hereunder and
under the other Loan Documents.
14
4.2 Maintenance
of Existence.
Maintain Borrower’s existence as a Delaware limited liability company or
Delaware limited partnership, as applicable, and, in each jurisdiction in which
the character of the property owned by it or in which the transaction of its
business makes qualification necessary, maintain good standing, and
qualification to do business.
4.3 Maintenance
of Single Purpose Status.
Maintain its existence as a Single Purpose Entity.
4.4 Accrual
and Payment of Taxes.
During
each fiscal year, make accurate provision for the payment in full of all current
tax liabilities of all kinds including, without limitation, federal and state
income taxes, franchise taxes, payroll taxes, provider taxes (to the extent
necessary to participate in and receive maximum funding pursuant to
Reimbursement Contracts), Taxes (as defined in the Mortgage), all required
withholding of income taxes of employees, all required old age and unemployment
contributions, and all required payments to employee benefit plans, and pay
the
same when they become due.
4.5 Insurance.
Maintain, at its expense, the following insurance coverages and policies with
respect to the Mortgaged Property and the Facility, which coverages and policies
must be acceptable to Lender’s insurance consultant in its sole
discretion:
(a) Comprehensive
“all risk” or “special” cause of loss insurance, including coverage for
windstorms and hail, in an amount equal to 100% of the full replacement cost
of
the Facility, which replacement cost shall be determined by the “Insurable
Value” or “Cost Approach to Value” reflected in the most recent Lender approved
appraisal for the Facility, without deduction for depreciation. Such insurance
shall also include (i) agreed insurance amount endorsement waiving all
co-insurance provisions, and (ii) an “Ordinance or Law Coverage” endorsement if
the Facility or the use thereof shall constitute a legal non-conforming
structure or use.
(b) Commercial
general liability insurance against claims for sexual harassment abuse of
residents and/or patients, personal injury, bodily injury, death or property
damage, in or about the Facility to be on a so-called “occurrence” basis for at
least $1,000,000.00 per occurrence and $3,000,000.00 in the aggregate with
a
$10,000,000.00 umbrella coverage.
(c) Professional
liability insurance against claims for personal injury, bodily injury or death,
in or about the Facility to be on a so-called “occurrence” basis for at least
$1,000,000.00 per occurrence and $5,000,000.00 in the aggregate.
(d) Business
interruption income insurance for the Facility in an amount equal to 100% of
the
net income plus carrying costs and extraordinary expenses of the Facility for
a
period of eighteen (18) months as projected by Lender, containing a 180-day
extended period of indemnity endorsement.
(e) Flood
Hazard insurance if any portion of the Improvements is located in a “flood zone
area,” as identified in the Federal Register by the Federal Emergency Management
Agency as a 100-year flood zone or “special flood hazard area” and in which
flood insurance is
15
available.
In lieu thereof, Lender will accept proof, satisfactory to it in its sole
discretion, that the Improvements are not within the boundaries of a designated
area.
(f) Workers’
compensation insurance, if applicable and required by state law, subject to
applicable state statutory limits, and employer’s liability insurance with a
limit of $1,000,000.00 per accident and per disease per employee with respect
to
the Facility.
(g) Comprehensive
boiler and machinery insurance, including property damage coverage and time
element coverage in an amount equal to 100% of the full replacement cost,
without deduction for depreciation, of the Facility housing the machinery,
if
steam boilers, pipes, turbines, engines or any other pressure vessels are in
operation with respect to the Facility. Such insurance coverage shall include
a
“joint loss” clause if such coverage is provided by an insurance carrier other
than that which provides the comprehensive “all risk” insurance described
above.
(h) During
the period of any construction and/or renovation of capital improvements with
respect to the Facility or any new construction at the Facility, builder’s risk
insurance for any improvements under construction and/or renovation, including,
without limitation, costs of demolition and increased cost of construction
or
renovation, in an amount equal the amount of the general contract plus the
value
of any existing purchase money financing for improvements and materials stored
on or off the Property, including “soft cost” coverage.
(i) If
the
Facility is located in a seismically active area or an area prone to geologic
instability and mine subsidence, Lender may require an inspection by a qualified
structural or geological engineer satisfactory to Lender, and at Borrower’s
expense. The Facility must be structurally and geologically sound and capable
of
withstanding normal seismic activity or geological movement. Lender reserves
the
right to require earthquake insurance or Maximum Probable Loss insurance on
a
case by case basis in amounts determined by Lender.
(j) Such
other insurance coverages as may be deemed necessary at any time during the
term
of the Loan and as shall be provided within such time periods as Lender may
determine, in each case, in its commercially reasonable discretion.
All
insurance policies shall have a term of not less than one year and shall be
in
the form and amount and with deductibles as, from time to time, shall be
acceptable to Lender in its sole discretion. All such policies shall provide
for
loss payable solely to Lender and shall contain a standard “non-contributory
mortgagee” endorsement or its equivalent relating, among other things, to
recovery by Lender notwithstanding the negligent or willful acts or omissions
of
Borrower and notwithstanding (i) occupancy or use of the Facility for
purposes more hazardous than those permitted by the terms of such policy, (ii)
any foreclosure or other action taken by Lender pursuant to the Mortgage upon
the occurrence of an Event of Default thereunder, or (iii) any change in title
or ownership of the Facility.
All
insurance policies must be written by an admitted carrier licensed in the State
in which the Facility is located and such insurance carrier must have a
long-term senior debt rating of at least “A” by Standard and Poor’s Rating
Service; provided, that if the initial principal
16
balance
of the Loan is in excess of $25,000,000.00, such insurance carrier must have
a
long-term senior debt rating of at least “AA” by Standard & Poor’s Rating
Service.
All
liability insurance policies (including, but not limited to, general liability,
professional liability and any applicable blanket and/or umbrella policies)
must
name “Capmark Finance, Inc. [Capmark Bank] and its successors and/or assigns” as
additional insureds, and all property insurance policies must name “Capmark
Finance, Inc. [Capmark Bank] and its successors and/or assigns” as the named
mortgage holder entitled to all insurance proceeds. Lender shall have the right,
without Borrower’s consent, by notice to the insurance company, to change the
additional insured and named mortgagee endorsements in connection with any
sale
of the Loan.
All
insurance policies for the above-required insurance must provide for thirty
(30)
days prior written notice of cancellation to Lender.
Policies
or binders, together with evidence of the above required insurance on ▇▇▇▇▇
Form
27 or its equivalent, must be submitted to Lender prior to setting the interest
rate on the Loan.
With
respect to insurance policies which require payment of premiums annually, not
less than thirty (30) days prior to the expiration dates of the insurance
policies obtained pursuant to this Agreement, Borrower shall pay such amount,
except to the extent Lender is escrowing sums therefor pursuant to the Loan
Documents. Not less than thirty (30) days prior to the expiration dates of
the
insurance policies obtained pursuant to this Agreement, originals or certified
copies of renewals of such policies (or certificates evidencing such renewals)
bearing notations evidencing the payment of premiums or accompanied by other
evidence satisfactory to Lender of such payment, which premiums shall not be
paid by Borrower through or by any financing arrangement, shall be delivered
by
Borrower to Lender at the address set forth in Section 8.7 hereof. Borrower
shall not carry separate insurance, concurrent in kind or form or contributing
in the event of loss, with any insurance required under this Section 4.5. If
the
limits of any policy required hereunder are reduced or eliminated due to a
covered loss, Borrower shall pay the additional premium, if any, in order to
have the original limits of insurance reinstated, or Borrower shall purchase
new
insurance in the same type and amount that existed immediately prior to the
loss.
If
Borrower fails to maintain and deliver to Lender the original policies or
certificates of insurance required by this Agreement, Lender may, at its option,
procure such insurance and Borrower shall pay or, as the case may be, reimburse
Lender for, all premiums thereon promptly, upon demand by Lender, with interest
thereon at the Default Rate from the date paid by Lender to the date of
repayment and such sum shall constitute a part of the Loan
Obligations.
The
insurance required by this Agreement may, at the option of Borrower, be effected
by blanket and/or umbrella policies issued to Borrower or to an Affiliate of
Borrower covering the Facility and the properties of such Affiliate; provided
that, in each case, the policies otherwise comply with the provisions of this
Agreement and allocate to the Facility, from time to time, the coverage
specified by this Agreement, without possibility of reduction or coinsurance
by
reason of, or damage to, any other property (real or personal) named therein.
If
the insurance required
17
by
this
Agreement shall be effected by any such blanket or umbrella policies, Borrower
shall furnish to Lender original policies or certified copies thereof, with
schedules attached thereto showing the amount of the insurance provided under
such policies which is applicable to the Facility.
Neither
Lender nor its agents or employees shall be liable for any loss or damage
insured by the insurance policies required to be maintained under this
Agreement; it being understood that (a) Borrower shall look solely to its
insurance company for the recovery of such loss or damage, (b) such
insurance company shall have no rights of subrogation against Lender, its agents
or employees, and (c) Borrower shall use its best efforts to procure from
such insurance company a waiver of subrogation rights against Lender. If,
however, such insurance policies do not provide for a waiver of subrogation
rights against Lender (whether because such a waiver is unavailable or
otherwise), then Borrower hereby agrees, to the extent permitted by law and
to
the extent not prohibited by such insurance policies, to waive its rights of
recovery, if any, against Lender, its agents and employees, whether resulting
from any damage to the Facility, any liability claim in connection with the
Facility or otherwise. If any such insurance policy shall prohibit Borrower
from
waiving such claims, then Borrower must obtain from such insurance company
a
waiver of subrogation rights against Lender.
Borrower
appoints Lender as Borrower’s attorney-in-fact, which appointment shall be
deemed irrevocable and coupled with an interest, to cause the issuance of an
endorsement of any insurance policy to bring Borrower into compliance herewith
and, as limited above, at Lender’s sole option, to make any claim for, receive
payment for, and execute and endorse any documents, checks or other instruments
in payment for loss, theft, or damage covered under any such insurance policy;
provided, however, that in no event will Lender be liable for failure to collect
any amounts payable under any insurance policy.
Subject
to the terms of any forbearance letter issued by Lender in connection with
the
Loans, each Borrower appoints Lender as Borrower’s attorney-in-fact to cause the
issuance of an endorsement of any insurance policy to bring Borrower into
compliance herewith and, as limited above, at Lender’s sole reasonable option,
to make any claim for, receive payment for, and execute and endorse any
documents, checks or other instruments in payment for loss, theft, or damage
covered under any such insurance policy; provided, however, that in no event
will Lender be liable for failure to collect any amounts payable under any
insurance policy.
4.6 Proceeds
of Insurance or Condemnation.
If,
after damage to or destruction of or condemnation of the Mortgaged Property
(or
any part thereof), the net Proceeds of insurance or condemnation (after payment
of Lender’s reasonable costs and expenses in connection with the administration
thereof) are:
(a) less
than
Two Hundred Fifty Thousand Dollars ($250,000.00), Lender shall deliver such
proceeds to Borrower to be applied within thirty (30) days thereafter to the
repair, restoration and replacement by Borrower of the Improvements, Equipment
and Inventory damaged, destroyed or taken,
or
18
(b) Two
Hundred Fifty Thousand Dollars ($250,000.00) or more and Lender agrees, at
its
option, to make such net Proceeds available to Borrower, Lender shall make
such
net Proceeds available to Borrower on the following terms:
(i) The
aggregate amount of all such Proceeds shall not exceed the aggregate amount
of
all such Loan Obligations;
(ii) At
the
time of such loss or damage and at all times thereafter while Lender is holding
any portion of such Proceeds, there shall exist no Default or Event of
Default;
(iii) The
Improvements, Equipment, and Inventory to which loss or damage has resulted
shall be capable of being restored to its preexisting condition and utility
in
all material respects with a value equal to or greater than that which existed
prior to such loss or damage and such restoration shall be capable of being
completed prior to the earlier to occur of (i) the expiration of business
interruption insurance as determined by an independent inspector or (ii) the
Maturity Date;
(iv) Within
thirty (30) days from the date of such loss or damage Borrower shall have given
Lender a written notice electing to have the Proceeds applied for such
purpose;
(v) Within
sixty (60) days following the date of notice under the preceding subparagraph
(iv) and prior to any Proceeds being disbursed to Borrower, Borrower shall
have
provided to Lender all of the following:
(A) complete
plans and specifications for restoration, repair and replacement of the
Improvements, Equipment and Inventory damaged to the condition, utility and
value required by (iii) above,
(B) if
loss
or damage exceeds Fifty Thousand Dollars ($50,000), fixed-price or guaranteed
maximum cost bonded construction contracts for completion of the repair and
restoration work in accordance with such plans and specifications,
(C) builder’s
risk insurance for the full cost of construction with Lender named under a
standard mortgagee loss-payable clause
(D) such
additional funds as in Lender’s reasonable opinion are necessary to complete
such repair, restoration and replacement, and
(E) copies
of
all permits and licenses necessary to complete the work in accordance with
the
plans and specifications;
(vi) Lender
may, at Borrower’s expense, retain an independent inspector to review and
approve plans and specifications and completed construction and to approve
all
requests for disbursement, which approvals shall be conditions precedent to
release of Proceeds as work progresses;
19
(vii) No
portion of such Proceeds shall be made available by Lender for architectural
reviews or for any other purposes which are not directly attributable to the
cost of repairing, restoring or replacing the Improvements, Equipment and
Inventory to which a loss or damage has occurred unless the same are covered
by
such insurance;
(viii) Borrower
shall diligently pursue such work and shall complete such work prior to the
earlier to occur of the expiration of business interruption insurance or the
Maturity Date;
(ix) Each
disbursement by Lender of such Proceeds and deposits shall be funded subject
to
conditions and in accordance with disbursement procedures which a commercial
construction lender would typically establish in the exercise of sound banking
practices and shall be made only upon receipt of disbursement requests on an
AIA
G702/703 form (or similar form approved by Lender) signed and certified by
Borrower and, if required by Lender, its architect and general contractor with
appropriate invoices and lien waivers as required by Lender; and
(x) Lender
shall have a first lien on and security interest in all building materials
and
completed repair and restoration work and in all fixtures and equipment acquired
with such Proceeds, and Borrower shall execute and deliver such mortgages,
deeds
of trust, security agreements, financing statements and other instruments as
Lender shall request to create, evidence, or perfect such lien and security
interest.
In
the
event and to the extent that such Proceeds are not required to be used for
the
repair, restoration and replacement of the Improvements, Equipment and Inventory
to which a loss or damage has occurred, or, if the conditions set forth herein
for such application are otherwise not satisfied, then Lender shall be entitled
without notice to or consent from Borrower to apply such Proceeds, or the
balance thereof, at Lender’s option either (a) to the full or partial payment or
prepayment of the Loan Obligations (without premium) in the manner aforesaid
or
(b) to the repair, restoration and/or replacement of all or any part of such
Improvements, Equipment and Inventory to which a loss or damage has occurred.
Any excess Proceeds after such application by Lender shall be paid to
Borrower.
4.7 Financial
and Other Information.
Provide
Lender, and cause Guarantor and Manager to provide to Lender, at its address
set
forth in Section 8.7 and at Capmark Bank, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, the following financial statements and information on
a
continuing basis during the term of the Loans:
(a) Within
one hundred twenty (120) days after the end of each fiscal year of Borrower,
unaudited financial statements prepared in accordance with GAAP by a nationally
recognized accounting firm or independent certified public accounting firm
acceptable to the Lender, which statements shall include a balance sheet and
a
statement of income and expenses for the year then ended.
(b) Within
one hundred twenty (120) days after the end of each fiscal year of Emeritus
audited financial statements of Emeritus prepared in accordance with GAAP by
a
nationally recognized accounting firm or independent certified public accounting
firm acceptable
20
to
the
Lender, which statements shall include a balance sheet and a statement of income
and expenses for the year then ended. In lieu of its obligations hereunder,
Emeritus may submit to Lender, upon its filing thereof, a copy of its Form
10-K
as filed with the United States Securities and Exchange Commission.
(c) Within
forty-five (45) days after the end of each of the first three (3) fiscal
quarters, and within one hundred-twenty (120) days after the end of the fourth
fiscal quarter of each Facility, unaudited interim financial statements of
the
operations of each Facility, certified as true and correct in all material
respects by a financial officer of Borrower, prepared in accordance with GAAP,
which statements shall include a balance sheet, statement of income and expenses
and occupancy information for the quarter then ended. Such statements of the
Facility shall be accompanied by the Summary of Financial Statements and Census
Data attached hereto as Exhibit
“D”.
(d) Within
sixty (60) days after the end of each of the first three (3) fiscal quarters
of
Emeritus, financial statements of Emeritus, including a balance sheet and a
statement of income and expenses for the quarter then ended, which shall be
satisfied by providing a copy of Form 8-K as filed by Emeritus with the United
States Securities and Exchange Commission.
(e) If
requested by Lender, within thirty (30) days after the filing deadline, as
may
be extended from time to time, copies of all federal, state and local tax
returns of Borrower and Emeritus, together with all supporting documentation
and
required schedules.
(f) If
and to
the extent applicable, within twenty (20) days after filing or receipt, all
Medicaid cost reports and any amendments thereto filed with respect to the
Facility and all responses, audit reports, or other inquiries with respect
to
such cost reports.
(g) If
and to
the extent applicable, within twenty (20) days after receipt, copies of all
licensure and certification survey reports and statements of deficiencies (with
plans of correction attached thereto).
(h) If
and to
the extent applicable, within ten (10) days after receipt, a copy of the
“Medicaid Rate Calculation Worksheet” (or the equivalent thereof) from the
applicable agency.
(i) If
and to
the extent applicable, within ten (10) days of receipt, a statement of the
number of resident days for which the Facility has received the Medicare default
rate for any applicable period. For purposes herein, “default rate” shall have
the meaning ascribed to it in that certain applicable Medicare rate notification
letter prepared in connection with any review or survey of the
Facility.
(j) Within
three (3) days after receipt, any and all notices (regardless of form) from
any
and all licensing and/or certifying agencies, including but not limited to,
that
the Facility’s license is being downgraded to a substandard category, revoked or
suspended, or that action is pending or being considered to downgrade to a
substandard category, revoke or suspend the Facility’s license or
certification.
(k) If
requested by Lender, evidence of payment by Borrower or Manager of
any
applicable provider bed taxes or similar taxes.
21
(l) If
requested by Lender, within forty-five (45) days after the end of each June
and
December, and more frequently if requested by Lender, an aged accounts
receivable report for each Facility in sufficient detail to show amounts due
from each class of resident-mix, if applicable (i.e.,
private, Medicare, Medicaid and V.A.), by the account age classifications of
30
days, 60 days, 90 days, 120 days, and over 120 days.
Lender
reserves the right to require that the annual and/or quarterly financial
statements of each Borrower and Emeritus be audited and prepared by a nationally
recognized accounting firm or independent certified public accounting firm
acceptable to Lender, at their respective sole cost and expense, if (i) an
Event
of Default exists, (ii) if required by internal policy or by any investor in
any
securities backed in whole or in part by the Loan or any rating agency rating
such securities, or (iii) if Lender has reasonable grounds to believe that
the
unaudited financial statements do not accurately represent the financial
condition of Borrower or Guarantor, as the case may be.
Lender
further reserves the right to require such other financial information of
Borrower, Emeritus, Manager and/or
each Facility, at such other times (including monthly or more frequently) as
it
shall deem necessary. All financial statements must be in the form and detail
as
Lender shall from time to time request.
4.8 Compliance
Certificate.
At the
time of furnishing the quarterly operating statements required under Section
4.7
herein, furnish to Lender a compliance certificate in the form attached hereto
as Exhibit
“E”
executed
by a financial officer of Borrower.
4.9 Books
and Records.
Keep
and maintain at all times at the Facility or Manager’s offices, and upon
Lender’s request make available at the Facility, complete and accurate books of
account and records (including copies of supporting bills and invoices) adequate
to reflect correctly the results of the operation of the Facility, and copies
of
all written contracts, leases (if any), and other instruments which affect
the
Mortgaged Property, which books, records, contracts, leases (if any) and other
instruments shall be subject to examination and inspection at any reasonable
time by Lender (upon reasonable advance notice, which for such purposes only
may
be given orally, except in the case of an emergency or following an Event of
Default, in which case no advance notice shall be required); provided, however,
that if an Event of Default has occurred and is continuing, Borrower shall
deliver to Lender upon written demand all books, records, contracts, leases
(if
any) and other instruments relating to the Facility or its operation and
Borrower authorizes Lender to obtain a credit report on Borrower at any
time.
4.10 Payment
of Indebtedness.
Duly
and punctually pay or cause to be paid all other Indebtedness now owing or
hereafter incurred by Borrower in accordance with the terms of such
Indebtedness, except such Indebtedness owing to those other than Lender which
is
being contested in good faith and with respect to which any execution against
properties of Borrower has been effectively stayed and for which reserves and
collateral for the payment and security thereof have been established in
sufficient amounts as determined by Lender in its sole commercially reasonable
discretion.
22
4.11 Records
of Accounts.
Maintain all records, including records pertaining to the Accounts of Borrower,
at the principal place of business of Borrower as set forth in this
Agreement.
4.12 Conduct
of Business.
Conduct, or cause Manager to conduct, the operation of the Facility at all
times
in a manner consistent with the level of operation of the Facility as of the
date hereof, including without limitation, the following:
(a) to
maintain the standard of care for the residents of the Facility at all times
at
a level necessary to ensure quality care for the residents of the Facility
in
accordance with customary and prudent industry standards;
(b) to
operate the Facility in a prudent manner and in compliance with applicable
laws
and regulations relating thereto and cause all Permits, Reimbursement Contracts
(if any), and any other agreements necessary for the use and operation of the
Facility or, if applicable, as may be necessary for participation in the
Medicaid, Medicare, or other applicable reimbursement programs (if any) to
remain in effect without reduction in the number of licensed beds authorized
for
use in the Medicaid, Medicare, or other applicable reimbursement
programs;
(c) to
maintain sufficient Inventory and Equipment of types and quantities at the
Facility to enable Borrower to perform operations of the Facility
adequately;
(d) to
keep
all Improvements and Equipment located on or used or useful in connection with
the Facility in good repair, working order and condition, reasonable wear and
tear excepted, and from time to time make all needed and proper repairs,
renewals, replacements, additions, and improvements thereto to keep the same
in
good operating condition;
(e) to
maintain sufficient cash in the operating accounts of the Facility in order
to
satisfy the working capital needs of the Facility; and
(f) to
keep
all required Permits current and in full force and effect.
4.13 Periodic
Surveys.
Furnish
or cause Manager to furnish to Lender, within twenty (20) days of receipt,
a
copy of any Medicare, Medicaid, or other licensing agency survey or report
and
any statement of deficiencies and/or any other report indicating that any action
is pending or being considered to downgrade the Facility to a substandard
category, and within the time period required by the particular agency for
furnishing a plan of correction also furnish or cause to be furnished to Lender
a copy of the plan of correction generated from such survey or report for the
Facility, and correct or cause to be corrected any deficiency, the curing of
which is a condition of continued licensure or for full participation in
Medicaid, Medicare or other reimbursement program pursuant to any Reimbursement
Contract for existing residents or for new residents to be admitted with
Medicaid or Medicare coverage, by the date required for cure by such agency
(plus extensions granted by such agency).
4.14 Capital
Expenditures.
Maintain, and/or cause Manager to maintain, the Facility in good condition
and
make minimum capital expenditures for the Facility in each fiscal year, in
an
amount equal to $300 per
unit
(or the appropriate prorated amount for any partial fiscal year), (which capital
expenditures may include ordinary repairs and routine maintenance), commencing
23
the
first
year of the Loan term and continuing throughout the Loan term, and, within
forty-five (45) days after the end of each fiscal year, provide evidence thereof
satisfactory to Lender. In the event that Borrower shall fail to meet such
requirement or to provide such evidence, Borrower shall, upon Lender’s written
request, immediately establish and maintain a capital expenditures reserve
fund
with Lender equal to the difference between the required amount per unit and
the
amount per unit actually spent by Borrower. Borrower grants to Lender a lien
on
and a right of setoff against all moneys in the capital expenditures reserve
fund, and Borrower shall not permit any other Lien to exist upon such fund.
Moneys on deposit in such capital expenditures reserve fund will be disbursed
to
Borrower monthly upon Lender’s receipt of satisfactory evidence that Borrower
has caused to be made the required capital expenditures. Upon Borrower’s or
Manager’s failure to adequately maintain the Facility in good condition, Lender
may, but shall not be obligated to, make such capital expenditures and may
apply
the moneys in the capital expenditures reserve fund for such purpose. To the
extent there are insufficient moneys in such capital expenditures reserve fund
for such purposes, all funds advanced by Lender to make such capital
expenditures shall constitute a portion of the Loan Obligations, shall be
secured by the Mortgage and shall accrue interest at the Default Rate until
paid. Upon the occurrence of an Event of Default, Lender may apply any moneys
in
the capital expenditures reserve fund to the Loan Obligations, in such order
and
manner as Lender may elect. For any partial fiscal year during which the Loan
is
outstanding, the required expenditure amount shall be prorated by multiplying
the required amount per unit amount by a fraction, the numerator of which is
the
number of days during such year for which all or part of the Loan is outstanding
and the denominator of which is the number of days in such year. During the
term
of the Loan, Lender may, from time to time, engage a professional building
inspector to conduct an inspection of the Facility. If the inspector’s report
indicates that repairs or replacements are necessary over and above the $300
per
unit requirement in this Section 4.14, then Lender shall require a non-interest
bearing repair escrow fund to ensure completion of such necessary repairs or
replacements. The amount of any such repair escrow fund shall be one hundred
twenty-five percent (125%) of the estimated cost of repairs as determined by
such inspector and Lender. Lender also shall require an agreement satisfactory
to Lender, in its commercially reasonable discretion, which will provide for
completion of the repairs and the disbursement of the escrow funds. All
commercially reasonable fees and costs associated with the inspection, report
and subsequent inspections (if required) shall be paid by Borrower.
4.15 Management
Agreement.
Maintain the Management Agreement in full force and effect and timely perform
all of Borrower’s obligations thereunder and enforce performance of all
obligations of Manager thereunder and not permit the termination, amendment
or
assignment of the Management Agreement unless the prior written consent of
Lender is first obtained, which consent may be in the sole and absolute
discretion of Lender. Borrower will enter into and cause Manager to enter into
the Subordination Agreement. Borrower will not enter into any other management
agreement without Lender’s prior written consent, which consent may be in the
sole and absolute discretion of Lender.
4.16 Updated
Appraisals.
For so
long as the Loans remain outstanding, if any Event of Default shall occur
hereunder, or if, in Lender’s judgment, a material depreciation in the value of
the Land and/or the Improvements shall have occurred, then in any such event,
Lender, may cause the Land and Improvements to be appraised by an appraiser
selected by Lender, and in accordance with Lender’s appraisal guidelines and
procedures then in effect, and Borrower
24
agrees
to
cooperate in all respects with such appraisals and furnish to the appraisers
all
requested information regarding the Land and Improvements and the Facility.
Borrower agrees to pay all reasonable costs incurred by Lender in connection
with such appraisal which costs shall be secured by the Mortgage and shall
accrue interest at the Default Rate until paid.
4.17 Comply
with Covenants and Laws.
Comply,
in all material respects, with all applicable covenants and restrictions of
record and all laws, ordinances, rules and regulations and keep the Facility
and
the Land and Improvements in compliance with all applicable laws, ordinances,
rules and regulations, including, without limitation, the Americans with
Disabilities Act and regulations promulgated thereunder, and laws, ordinances,
rules and regulations relating to zoning, health, building codes, setback
requirements, Medicaid and Medicare laws and keep the Permits for the Facility
in full force and effect.
4.18 Taxes
and Other Charges.
Subject
to Borrower’s right to contest the same as set forth in Section 9(c) of the
Mortgage, pay all taxes, assessments, charges, claims for labor, supplies,
rent,
and other obligations which, if unpaid, might give rise to a Lien against real
or personal property of the Borrower, except Liens to the extent permitted
by
this Agreement.
4.19 Commitment
Letter.
Provide
all items and pay all amounts required by the Commitment Letter. If any term
of
the Commitment Letter shall conflict with the terms of this Agreement, this
Agreement shall govern and control. As to any matter contained in the Commitment
Letter, and as to which no mention is made in this Agreement or the other Loan
Documents, the Commitment Letter shall continue to be in effect and shall
survive the execution of this Agreement and all other Loan
Documents.
4.20 Certificate.
Upon
Lender’s written request, furnish Lender with a certificate stating that
Borrower has complied with and is in compliance with all terms, covenants and
conditions of the Loan Documents to which Borrower is a party and that there
exists no Default or Event of Default or, if such is not the case, that one
or
more specified events have occurred, and that the representations and warranties
contained herein are true and correct with the same effect as though made on
the
date of such certificate.
4.21 Notice
of Fees or Penalties.
Immediately notify Lender, upon Borrower’s knowledge thereof, of the assessment
by any state or, if applicable, any Medicare, Medicaid, health or licensing
agency of any fines or penalties against Borrower, Manager, or the
Facility.
4.22 Loan
Closing Certification.
Immediately notify Lender in writing, in the event any representation or
warranty contained in that certain Loan Closing Certification of even date
herewith, executed by Borrower for the benefit of Lender, becomes untrue or
there shall have been any material adverse change in any such representation
or
warranty.
4.23 Compliance
with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering
Laws.
Borrower
shall comply with all Requirements of Law relating to money laundering,
anti-terrorism, trade embargos and economic sanctions, now or hereafter in
effect. Upon Lender's request from time to time during the term of the Loan,
Borrower shall certify in writing to Lender that Borrower's representations,
warranties and obligations under Sections 3.32 and 3.33 and this Section 4.23
remain true and correct and have not been breached. Borrower
25
shall
immediately notify Lender in writing if any of such representations, warranties
or covenants are no longer true or have been breached or if Borrower has a
reasonable basis to believe that they may no longer be true or have been
breached. In connection with such an event, Borrower shall comply with all
Requirements of Law and directives of Governmental Authorities and, at Lender's
request, provide to Lender copies of all notices, reports and other
communications exchanged with, or received from, Governmental Authorities
relating to such an event. Borrower shall also reimburse Lender any expense
incurred by Lender in evaluating the effect of such an event on the Loan and
Lender's interest in the collateral for the Loan, in obtaining any necessary
license from Governmental Authorities as may be necessary for Lender to enforce
its rights under the Loan Documents, and in complying with all Requirements
of
Law applicable to Lender as the result of the existence of such an event and
for
any penalties or fines imposed upon Lender as a result thereof.
4.24 Renovations.
Obtain
the prior written consent from Lender for any renovations or expansions of
a
Facility costing in excess of $750,000.00.
ARTICLE
V
NEGATIVE
COVENANTS OF BORROWER
Until
the
Loan Obligations have been paid in full, no Borrower shall:
5.1 Assignment
of Licenses and Permits.
Assign
or transfer any of its interest in any Permits or Reimbursement Contracts
(including rights to payment thereunder) pertaining to the Facility, or assign,
transfer, or remove or permit any other Person to assign, transfer, or remove
any records pertaining to the Facility including, without limitation, resident
records, medical and clinical records (except for removal of such
resident records
as directed by the residents owning such records and except as may be required
by law), without Lender’s prior written consent, which consent may be granted or
refused in Lender’s sole discretion.
5.2 No
Liens; Exceptions.
Create,
incur, assume or suffer to exist any Lien upon or with respect to the Facility,
any of its properties, rights, income or other assets relating thereto,
including, without limitation, the Mortgaged Property whether now owned or
hereafter acquired, other than the following permitted Liens (“Permitted
Encumbrances”):
(a) Liens
at
any time existing in favor of Lender;
(b) Liens
permitted pursuant to the terms of the Mortgage;
(c) Inchoate
Liens arising by operation of law for the purchase of labor, services,
materials, equipment or supplies, provided payment shall not be delinquent
and,
if such Lien is a lien upon any of the Land or Improvements, such Lien must
be
fully disclosed to Lender and bonded off and removed from the Land and
Improvements within thirty (30) days of its creation, in a manner satisfactory
to Lender in its reasonable discretion;
(d) Liens
incurred in the ordinary course of business in connection with workers’
compensation, unemployment insurance or other forms of governmental insurance
or
benefits, or to secure performance of tenders, statutory obligations, leases
and
contracts (other than for money borrowed or for credit received with respect
to
property acquired) entered into in the
26
ordinary
course of business as presently conducted or to secure obligations for surety
or
appeal bonds;
(e) Liens
for
current year’s taxes, assessments or governmental charges or levies provided
payment thereof shall not be delinquent; and
(f) Notwithstanding
anything to the contrary contained in the Mortgage, second and subordinate
liens
on the Facilities, subject to Lender’s prior written consent, which may be
granted or denied in Lender’s reasonable discretion.
5.3 Merger,
Consolidation, etc.
Except
as otherwise provided in the Mortgage, consummate any merger, consolidation
or
similar transaction, or sell, assign, lease or otherwise dispose of (whether
in
one transaction or in a series of transactions), all or substantially all of
its
assets (whether now or hereafter acquired), without the prior written consent
of
Lender, which consent may be granted or refused in Lender’s sole
discretion.
5.4 Maintain
Single Purpose Entity Status.
(a) Engage
in
any business or activity other than the ownership, operation and maintenance
of
the Mortgaged Property, and activities incidental thereto;
(b) Acquire
or own any material assets other than (i) the Mortgaged Property, and (ii)
such
incidental machinery, equipment, fixtures and other personal property as may
be
necessary for the operation of the Mortgaged Property;
(c) Merge
into or consolidate with any Person or dissolve, terminate or liquidate in
whole
or in part, transfer or otherwise dispose of all or substantially all of its
assets (except as permitted in the Loan Documents, specifically including,
without limitation, the sale of an Expected Sale Property as provided in
Section
2.4)
or
change its legal structure, without in each case Lender’s consent;
(d) Without
the prior written consent of Lender, amend, modify, terminate or fail to comply
with the provisions of its Partnership Agreement or Articles of Organization,
as
same may be further amended or supplemented, if such amendment, modification,
termination or failure to comply would adversely affect its status as a Single
Purpose Entity or its ability to perform its obligations hereunder, under the
Notes or any other document evidencing or securing the Loans;
(e) Own
any
subsidiary or make any investment in, any Person without the consent of
Lender;
(f) Commingle
its funds or assets with assets of, or pledge its assets with or for, any of
its
general partners, members, shareholders, Affiliates, principals or any other
Person, except as permitted under the Loan Documents or the Management
Agreement;
(g) Incur
any
debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than the Loan and trade payables incurred in the ordinary
course of business, payable within 90 days of the date incurred, based on
historical amounts;
27
(h) Fail
to
maintain its records, books of account and bank accounts separate and apart
from
those of its general partners, members, shareholders, principals and Affiliates,
the Affiliates of any of its general partners, members, shareholders,
principals, and any other Person;
(i) Enter
into any contract or agreement with any of its general partners, members,
shareholders, principals or Affiliates, or the Affiliates of any of its general
partners, members, shareholders, principals except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties;
(j) Seek
its
dissolution or winding up in whole, or in part;
(k) Maintain
its assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any of its general
partners, members, shareholders, principals and Affiliates, the Affiliates
of
any of its general partners, members, shareholders, principals or any other
Person;
(l) Hold
itself out to be responsible for the debts of another Person or pay another
Person’s liabilities out of its own funds, except as expressly provided in the
Loan Documents;
(m) Make
any
loans or advances to any third party, including any of its general partners,
members, shareholders, principals or Affiliates, or the Affiliates of any of
its
general partners, members, shareholders, principals;
(n) Fail
to
have prepared and filed its own tax returns;
(o) Fail
either to hold itself out to the public as a legal Person separate and distinct
from any other Person or to conduct its business solely in its own name, in
order not (i) to mislead others as to the identity with which such other party
is transacting business, or (ii) to suggest that it is responsible for the
debts
of any third party (including any of its members or Affiliates, or any general
partner, member, principal or Affiliate thereof); or
(p) Fail
to
maintain adequate capital for the normal obligations reasonably foreseeable
in a
business of its size and character and in light of its contemplated business
operations.
5.5 Change
of Business.
Make
any material change in the nature of its business as it is being conducted
as of
the date hereof.
5.6 Changes
in Accounting.
Change
its methods of accounting, unless such change is permitted by GAAP, and provided
such change does not have the effect of curing or preventing what would
otherwise be an Event of Default or Default had such change not taken
place.
5.7 ERISA.
(a) Agree
to,
enter into or consummate any transaction which would render it unable to confirm
that (i) it is not an “employee benefit plan” as defined in Section 3(32) of
ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(32) of ERISA; (ii) it is not subject to state statutes
regulating investments and fiduciary
28
obligations
with respect to governmental plans; and (iii) less than twenty-five percent
(25%) of each of its outstanding class of equity interests are held by “benefit
plan investors” within the meaning of 29 C.F.R. § 2510.3-101(f)(2);
(b) Engage
in
a non-exempt prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code, as such sections relate to Borrower, or in any transaction
that would cause any obligation or action taken or to be taken hereunder (or
the
exercise by Lender of any of its rights under the Loan Documents) to be a
non-exempt prohibited transaction under ERISA.
5.8 Transactions
with Affiliates.
Enter
into any transaction with a Person which is an Affiliate of Borrower other
than
in the ordinary course of its business and on fair and reasonable terms no
less
favorable to Borrower, than those they could obtain in a comparable arms-length
transaction with a Person not an Affiliate.
5.9 Transfer
of Ownership Interests.
Except
as otherwise allowable under the Mortgage, permit a change in the percentage
ownership interest of the Persons owning the Borrower, unless the written
consent of Lender is first obtained, which consent may be granted or refused
in
Lender’s sole discretion.
5.10 Change
of Use.
Alter
or change the use of the Facility or enter into any management agreement for
the
Facility other than the Management Agreement or enter into any operating lease
for the Facility, unless Borrower first notifies Lender and provides Lender
a
copy of the proposed lease agreement or management agreement, obtains Lender’s
written consent thereto, which consent may be withheld in Lender’s sole
discretion, and obtains and provides Lender with a subordination agreement
in
form satisfactory to Lender, as determined by Lender in its sole discretion,
from such manager or lessee subordinating to all rights of Lender.
5.11 Place
of Business.
Change
its chief executive office or its principal place of business without first
giving Lender at least thirty (30) days prior written notice thereof and
promptly providing Lender such information and amendatory financing statements
as Lender may request in connection therewith.
5.12 Acquisitions.
Directly or indirectly, purchase, lease, manage, own, operate, or otherwise
acquire any property or other assets (or any interest therein) which are not
used in connection with the operation of the Facility.
5.13 Dividends,
Distributions and Redemptions.
Except
as hereinafter provided or as otherwise consented to by Lender in writing,
declare or pay any distributions to its shareholders, members or partners,
as
applicable, or purchase, redeem, retire, or otherwise acquire for value, any
ownership interests in Borrower now or hereafter outstanding, return any capital
to its shareholders, members or partners, as applicable, or make any
distribution of assets to its shareholders, members, or partners, as
applicable.
5.14 Indebtedness.
Incur,
create, assume or permit to exist any indebtedness or liability on account
of
deposits or advances or any indebtedness or liability for borrowed money, or
any
other indebtedness or liability evidenced by notes, bonds, debentures or similar
29
obligations,
except (a) indebtedness evidenced by the Notes, and any of the other Loan
Obligations, (b) only if Borrower assumes responsibility for the operations
of
the Facility, indebtedness incurred in the ordinary course of business, and
(c)
the Subordinated Debt.
ARTICLE
VI
ENVIRONMENTAL
HAZARDS
6.1 Prohibited
Activities and Conditions.
Except
for matters covered by a written program of operations and maintenance approved
in writing by Lender (an “O&M Program”) or matters described in Section 6.2,
Borrower shall not cause or permit to exist any of the following:
(a) The
presence, use, generation, release, treatment, processing, storage (including
storage in above ground and underground storage tanks), handling, or disposal
of
any Hazardous Materials in, on or under the Land or any Improvements, in
violation of applicable Hazardous Materials Laws;
(b) The
transportation of any Hazardous Materials to, from, or across the Land in
violation of Hazardous Materials Laws;
(c) Any
occurrence or condition on the Land or in the Improvements, which occurrence
or
condition is or may be in violation of Hazardous Materials Laws;
(d) Any
violation of or noncompliance with the terms of any Environmental Permit with
respect to the Land or the Improvements; or
(e) Any
Lien
(whether or not such Lien has priority over the Lien created by the Mortgage)
upon the Land or any Improvements imposed pursuant to any Hazardous Materials
Laws.
The
matters described in clauses (a) through (e) above are referred to collectively
in this Article VI as “Prohibited Activities and Conditions” and individually as
a “Prohibited Activity and Condition.”
6.2 Exclusions.
Notwithstanding any other provision of Article VI to the contrary, “Prohibited
Activities and Conditions” shall not include the safe and lawful use and storage
of quantities of (a) pre-packaged supplies, medical waste, Hazardous Materials,
cleaning materials and petroleum products customarily used in the operation
and
maintenance of comparable facilities, (b) cleaning materials, personal grooming
items and other items sold in pre-packaged containers for consumer use and
used
by occupants of the Facility, and (c) petroleum products used in the operation
and maintenance of motor vehicles from time to time located on the Land’s
parking areas, so long as all of the foregoing are used, stored, handled,
transported and disposed of in compliance with Hazardous Materials
Laws.
6.3 Preventive
Action.
Borrower shall take all appropriate and reasonable steps (including the
inclusion of appropriate provisions in any Leases approved by Lender which
are
executed after the date of this Agreement) to prevent its employees, agents,
contractors, tenants
30
and
occupants of the Facility from causing or permitting any Prohibited Activities
and Conditions.
6.4 O
& M Program Compliance.
If an
O&M Program has been established with respect to Hazardous Materials,
Borrower shall comply in a timely manner with, and cause all employees, agents
and contractors of Borrower and any other Persons (excluding trespassers)
present on the Land to comply with the O&M Program. All costs of performance
of Borrower’s obligations under any O&M Program shall be paid by Borrower,
and Lender’s out-of-pocket costs incurred in connection with the monitoring and
review of the O&M Program and Borrower’s performance shall be paid by
Borrower upon demand by Lender. Any such out-of-pocket costs of Lender which
Borrower fails to pay promptly shall become an additional part of the Loan
Obligations.
6.5 Borrower’s
Environmental Representations and Warranties.
Borrower represents and warrants to Lender that, except as previously disclosed
by Borrower to Lender in writing:
(a) Borrower
has not at any time caused or permitted any Prohibited Activities and
Conditions.
(b) No
Prohibited Activities and Conditions exist or, to Borrower’s knowledge, have
existed.
(c) The
Land
and the Improvements do not now contain any underground storage tanks, and,
to
the best of Borrower’s knowledge, the Land and the Improvements have not
contained any underground storage tanks in the past. If there is an underground
storage tank located on the Land or the Improvements which has been previously
disclosed by Borrower to Lender in writing, that tank complies with all
requirements of Hazardous Materials Laws.
(d) Borrower
has complied with all Hazardous Materials Laws, including all requirements
for
notification regarding releases of Hazardous Materials, relating to the Land.
Without limiting the generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the Land and the
Improvements in accordance with Hazardous Materials Laws now in effect and
all
such Environmental Permits are in full force and effect. During Borrower’s
ownership of the Land, and, to the best of Borrower’s knowledge, no event has
occurred with respect to the Land and/or Improvements that constitutes or,
with
the passing of time or the giving of notice, would constitute, noncompliance
with the terms of any Environmental Permit.
(e) There
are
no actions, suits, claims or proceedings pending or, to the best of Borrower’s
knowledge, threatened that involve the Land and/or the Improvements and allege,
arise out of, or relate to any Prohibited Activity and Condition.
(f) Borrower
has not received any written complaint, order, notice of violation or other
communication from any Governmental Authority with regard to air emissions,
water discharges, noise emissions or Hazardous Materials, or any other
environmental, health or safety matters affecting the Land or the Improvements.
The representations and warranties in this
31
Article
VI shall be continuing representations and warranties that shall be deemed
to be
made by Borrower throughout the term of the Loan evidenced by the Note and
until
all of the Loan Obligations have been paid in full.
6.6 Notice
of Certain Events.
Borrower shall promptly notify Lender in writing of any and all of the following
that may occur:
(a) Borrower’s
discovery of any Prohibited Activity and Condition.
(b) Borrower’s
receipt of or knowledge of any complaint, order, notice of violation or other
communication from any Governmental Authority or other Person with regard to
present or future alleged Prohibited Activities and Conditions or any other
environmental, health or safety matters affecting the Land or the
Improvements.
(c) Any
representation or warranty in this Article VI which becomes untrue at any time
after the date of this Agreement.
Any
such
notice given by Borrower shall not relieve Borrower of, or result in a waiver
of, any obligation under this Agreement, the Note, or any of the other Loan
Documents.
6.7 Costs
of Inspection.
Borrower shall pay promptly the reasonable costs of any environmental
inspections, tests or audits (“Environmental Inspections”) required by Lender in
connection with any foreclosure or deed in lieu of foreclosure or, if required
by Lender, as a condition of Lender’s consent to any “Transfer” (as defined in
the Mortgage), or required by Lender following a commercially reasonable
determination by Lender that Prohibited Activities and Conditions may exist.
Any
such costs incurred by Lender (including the reasonable fees and out-of-pocket
costs of attorneys and technical consultants whether incurred in connection
with
any judicial or administrative process or otherwise) which Borrower fails to
pay
promptly shall become an additional part of the Loan Obligations. The results
of
all Environmental Inspections made by Lender shall at all times remain the
property of Lender, and Lender shall have no obligation to disclose or otherwise
make available to Borrower or any other party such results or any other
information obtained by Lender in connection with its Environmental Inspections.
Lender hereby reserves the right, and Borrower hereby expressly authorizes
Lender, to make available to any prospective bidder at a foreclosure sale of
the
Mortgaged Property, the results of any Environmental Inspections made by Lender
with respect to the Mortgaged Property. Borrower consents to Lender notifying
said party of the results of any of Lender’s Environmental Inspections. Borrower
acknowledges that Lender cannot control or otherwise assure the truthfulness
or
accuracy of the results of any of its Environmental Inspections and that the
release of such results to prospective bidders at a foreclosure sale of the
Mortgaged Property may have a material and adverse effect upon the amount which
a party may bid at such sale. Borrower agrees that Lender shall have no
liability whatsoever as a result of delivering the results of any of its
Environmental Inspections to said third party, and Borrower hereby releases
and
forever discharges Lender from any and all claims, damages, or causes of action,
arising out of, connected with or incidental to the results of, such delivery
of
any of Lender’s Environmental Inspections.
32
6.8 Remedial
Work.
If any
investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial Work”) is required to bring Borrower into compliance
with any Hazardous Materials Law or order of any Governmental Authority that
has
or acquires jurisdiction over the Land, the Improvements or the use, operation
or improvement of the Land under any Hazardous Materials Law, Borrower shall,
by
the earlier of (a) the applicable deadline required by Hazardous Materials
Law
or (b) thirty (30) days after notice from Lender demanding such action, begin
performing the Remedial Work, and thereafter diligently prosecute it to
completion, and shall in any event complete such work by the time required
by
applicable Hazardous Materials Law. If Borrower fails to begin on a timely
basis
or diligently prosecute any required Remedial Work, Lender may, at its option,
cause the Remedial Work to be completed, in which case Borrower shall reimburse
Lender on demand for the cost of doing so. Any reimbursement due from Borrower
to Lender shall become part of the Loan Obligations.
6.9 Cooperation
with Governmental Authorities.
Borrower shall cooperate with any inquiry by any Governmental Authority and
shall comply with any governmental or judicial order which arises from any
alleged Prohibited Activity and Condition. Notwithstanding the foregoing,
Borrower shall be entitled to challenge in good faith the validity, scope or
extent of any such governmental or judicial order.
6.10 Indemnity.
(a) Borrower
shall hold harmless, defend and indemnify (i) Lender, (ii) any prior owner
or
holder of the Notes, or either of them, (iii) any Person who is or will have
been involved in the servicing of the Notes, or either of them, (iv) the
officers, directors, partners, agents, shareholders, employees and trustees
of
any of the foregoing, and (v) the heirs, legal representatives, successors
and
assigns of each of the foregoing (together, the “Indemnitees”) from and against
all proceedings, claims, damages, losses, expenses, penalties and costs (whether
initiated or sought by any Governmental Authority or private parties), including
fees and out of pocket expenses of attorneys and expert witnesses, investigatory
fees, and remediation costs, whether incurred in connection with any judicial
or
administrative process or otherwise, arising directly or indirectly from any
of
the following:
(i) Any
breach of any representation or warranty of Borrower in this Article
VI;
(ii) Any
failure by Borrower to perform any of its obligations under this Article
VI;
(iii) The
existence or alleged existence of any Prohibited Activity and
Condition;
(iv) The
presence or alleged presence of Hazardous Materials in, on, around or under
the
Land or the Improvements; or
(v) The
actual or alleged violation of any Hazardous Materials Law.
(b) Counsel
selected by Borrower to defend Indemnitees shall be subject to the reasonable
approval of those Indemnitees. Notwithstanding anything contained herein, any
33
Indemnitee
may elect to defend any claim or legal or administrative proceeding at
Borrower’s reasonable expense. Nothing contained herein shall prevent an
Indemnitee from employing separate counsel in any such action at any time and
participating in the defense thereof at its own expense.
(c) Borrower
shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a “Claim”) settle
or compromise the Claim if the settlement (i) results in the entry of any
judgment that does not include as an unconditional term the delivery by the
claimant or plaintiff to Lender of a written release of those Indemnitees,
reasonably satisfactory in form and substance to Lender; or (ii) may materially
and adversely affect any Indemnitee, as determined by such Indemnitee in its
sole discretion.
(d) The
liability of Borrower to indemnify the Indemnitees shall not be limited or
impaired by any of the following, or by any failure of Borrower or any guarantor
to receive notice of or consideration for any of the following:
(i) Any
amendment or modification of any Loan Document;
(ii) Any
extensions of time for performance required by any of the Loan
Documents;
(iii) The
accuracy or inaccuracy of any representations and warranties made by Borrower
under this Agreement or any other Loan Document;
(iv) The
release of Borrower or any other Person, by Lender or by operation of law,
from
performance of any obligation under any of the Loan Documents;
(v) The
release or substitution in whole or in part of any security for the Loan
Obligations; or
(vi) Lender’s
failure to properly perfect any lien or security interest given as security
for
the Loan Obligations; or
(vii) Any
provision in any of the Loan Documents limiting Lender’s recourse to property
securing the Loan or limiting the personal liability of Borrower or any party
for payment of all or any part of the Loan.
(e) Borrower
shall, at its own cost and expense, do all of the following:
(i) Pay
or
satisfy any judgment or decree that may be entered against any Indemnitee or
Indemnitees in any legal or administrative proceeding incident to any matters
against which Indemnitees are entitled to be indemnified under this Article
VI,
subject to Borrower’s right to lawfully defend and challenge same;
(ii) Reimburse
Indemnitees for any reasonable expenses paid or incurred in connection with
any
matters against which Indemnitees are entitled to be indemnified under this
Article VI; and
34
(iii) Reimburse
Indemnitees for any and all reasonable expenses, including fees and costs of
attorneys and expert witnesses, paid or incurred in connection with the
enforcement by Indemnitees of their rights under this Article VI, or in
monitoring and participating in any legal or administrative
proceeding.
(f) In
any
circumstances in which the indemnity under this Article VI applies, Lender
may
employ its own legal counsel and consultants to prosecute, defend or negotiate
any claim or legal or administrative proceeding and Lender, with the prior
written consent of Borrower (which shall not be unreasonably withheld, delayed
or conditioned) may settle or compromise any action or legal or administrative
proceeding. Borrower shall reimburse Lender upon demand for all reasonable
costs
and expenses incurred by Lender, including all costs of settlements entered
into
in good faith, and the reasonable fees and out of pocket expenses of such
attorneys and consultants.
(g) The
provisions of this Article VI shall be in addition to any and all other
obligations and liabilities that Borrower may have under the applicable law
or
under the other Loan Documents, and each Indemnitee shall be entitled to
indemnification under this Article VI without regard to whether Lender or that
Indemnitee has exercised any rights against the Land and/or the Improvements
or
any other security, pursued any rights against any guarantor, or pursued any
other rights available under the Loan Documents or applicable law. If Borrower
consists of more than one Person or entity, the obligation of those Persons
or
entities to indemnify the Indemnitees under this Article VI shall be joint
and
several. The obligations of Borrower to indemnify the Indemnitees under this
Article VI shall survive any repayment or discharge of the Loan Obligations,
any
foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu
of foreclosure, and any release of record of the lien of the
Mortgage.
ARTICLE
VII
EVENTS
OF DEFAULT AND REMEDIES
7.1 Events
of Default.
The
occurrence of any one or more of the following shall constitute an “Event of
Default” hereunder:
(a) The
failure by Borrower to pay any installment of principal, interest, or other
payments required under either Note, any Mortgage or any other Loan Document
on
the day such payment becomes due after the expiration of any applicable cure
period;
(b) Any
failure by Borrower to provide and maintain in full force and effect the
insurance coverage required by Section 4.5(a) - (j), inclusive, of this
Agreement;
(c) The
violation by Borrower of any covenant set forth in Article V hereof;
(d) The
failure by Borrower to deliver or cause to be delivered the financial statements
and information set forth in Section 4.7 of this Agreement within the times
required, and such failure is not cured within thirty (30) days following
Lender’s written notice to Borrower thereof;
(e) The
failure by Borrower or Guarantor to establish and maintain the capital
expenditures reserve fund in accordance with Section 4.14 of this
Agreement;
35
(f) The
failure of Borrower properly and timely to perform or observe any covenant
or
condition set forth in this Agreement (other than those specified in this
Section 7.1) or any of the other Loan Documents which failure is not cured
within any applicable cure period as set forth herein or in such other Loan
Document, or, if no cure period is specified therefor, is not cured within
thirty (30) days after notice to Borrower of such Default; provided, however,
that if such Default cannot be cured within such thirty (30) day period, such
cure period shall be extended for an additional sixty (60) days, as long as
Borrower is diligently and in good faith prosecuting said cure to
completion;
(g) The
filing by Borrower, Guarantor or Manager of a voluntary petition, or the
adjudication of any of the aforesaid Persons, or the filing by any of the
aforesaid Persons of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under any present or future federal, state or
other
statute, law or regulation relating to bankruptcy, insolvency or other relief
for debtors, or if any of the aforesaid Persons should seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator for itself
or of all or any substantial part of its property or of any or all of the rents,
revenues, issues, earnings, profits or income thereof, or the mailing of any
general assignment for the benefit of creditors or the admission in writing
by
any of the aforesaid Persons of its inability to pay its debts generally as
they
become due;
(h) The
entry
by a court of competent jurisdiction of an order, judgment, or decree approving
a petition filed against Borrower, Guarantor or Manager which
petition seeks any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency,
or
other relief for debtors, which order, judgment or decree remains unvacated
and
unstayed for an aggregate of sixty (60) days (whether or not consecutive) from
the date of entry thereof, or the appointment of any trustee, receiver or
liquidator of any of the aforesaid Persons or of all or any substantial part
of
its properties or of any or all of the rents, revenues, issues, earnings,
profits or income thereof which appointment shall remain unvacated and unstayed
for an aggregate of sixty (60) days (whether or not consecutive);
(i) Unless
otherwise permitted hereunder or under any other Loan Documents, the sale,
transfer, lease, assignment, or other disposition, voluntarily or involuntarily,
of the Mortgaged Property, or any part thereof, except for Permitted
Encumbrances as described in Section 5.2 above, or any further encumbrance
of
the Mortgaged Property (except for Permitted Encumbrances), unless the prior
written consent of Lender is obtained;
(j) Any
certificate, statement, representation, warranty or audit heretofore or
hereafter furnished by or on behalf of Borrower, Guarantor or Manager or any
of
their respective officers, directors or trustees pursuant to or in connection
with this Agreement (including, without limitation, representations and
warranties contained herein or in any Loan Documents) or as an inducement to
Lender to make the Loans to Borrowers, (i) proves to have been false in any
material respect at the time when the facts therein set forth were stated or
certified, or (ii) proves to have omitted any substantial contingent or
unliquidated liability or claim against Borrower, Guarantor or Manager or
(iii) on the date of execution of this Agreement there shall have been any
materially adverse change in any of the acts previously disclosed by any such
36
certificate,
statement, representation, warranty or audit, which change shall not have been
disclosed to Lender in writing at or prior to the time of such execution;
(k) The
failure of Borrower to correct or to cause Manager to correct, within the time
deadlines set by any applicable Medicare, Medicaid or licensing agency, any
deficiency which would result in the following actions by such agency with
respect to the Facility;
(i) a
termination of any Reimbursement Contract or any Permit; or
(ii) a
ban on
new admissions generally or, if applicable, on admission of patients otherwise
qualifying for Medicare or Medicaid coverage;
(l) The
assessment against Borrower, Manager, or the Facility of any fines or penalties
by any state or any Medicare, Medicaid, health or licensing agency having
jurisdiction over such Persons or the Facility in excess of $150,000;
(m) A
final
judgment is rendered by a court of law or equity against Borrower, Guarantor
or
Manager in excess of $250,000.00, and the same remains undischarged for a period
of thirty (30) days, unless such judgment is either (i) fully covered by
collectible insurance and such insurer has within such period acknowledged
such
coverage in writing, or (ii) although not fully covered by insurance,
enforcement of such judgment has been effectively stayed, such judgment is
being
contested or appealed by appropriate proceedings and Borrower, Guarantor or
Manager as the case may be, has established reserves adequate for payment in
the
event such Person is ultimately unsuccessful in such contest or appeal and
evidence thereof is provided to Lender; or
(n) The
occurrence of any material adverse change in the financial condition or
prospects of Borrower or Guarantor or Manager, or the existence of any other
condition which, in Lender’s reasonable determination, constitutes a material
impairment of any such Person’s ability to operate the Facility or of such
Person’s ability to perform their respective obligations under the Loan
Documents, which is not remedied within thirty (30) days after written notice;
or
(o) The
occurrence of an Event of Default under, and as defined in the documents related
to, the Subordinated Debt.
Notwithstanding
anything in this Section, all requirements of notice shall be deemed eliminated
if Lender is prevented from declaring an Event of Default by bankruptcy or
other
applicable law. The cure period, if any, shall then run from the occurrence
of
the event or condition of Default rather than from the date of
notice.
Notwithstanding
anything in this Section, the occurrence of any one or more of the events
described in subsections l and m above with respect to any one or more Facility
(ies) shall not constitute an Event of Default unless such occurrence(s) is/are
of a magnitude as to have material adverse effect on the Facilities in the
aggregate, as determined by Lender in its reasonable discretion.
37
7.2 Remedies.
Upon
the occurrence of any one or more of the foregoing Events of Default, Lender
may, at its option:
(a) Declare
the entire unpaid principal of the Loan Obligations to be, and the same shall
thereupon become, immediately due and payable, without presentment, protest
or
further demand or notice of any kind, all of which are hereby expressly waived;
and/or
(b) Proceed
to protect and enforce its rights by action at law (including, without
limitation, bringing suit to reduce any claim to judgment), suit in equity
and
other appropriate proceedings including, without limitation, for specific
performance of any covenant or condition contained in this Agreement;
and/or
(c) Exercise
any and all rights and remedies afforded by the laws of the United States,
the
states in which any of the Mortgaged Property is located or any other
appropriate jurisdiction as may be available for the collection of debts and
enforcement of covenants and conditions such as those contained in this
Agreement and the Loan Documents; and/or
(d) Exercise
the rights and remedies of setoff and/or banker’s lien against the interest of
Borrower in and to every account and other property of Borrower which is in
the
possession of Lender or any Person who then owns a participating interest in
the
Loans, to the extent of the full amount of the Loans; and/or
(e) Exercise
its rights and remedies pursuant to any other Loan Documents.
7.3 Segregation
of Obligations.
The
Facilities are located in six (6) different states, with the Mortgage related
to
a particular Facility being governed by the laws of the State where the Facility
is located. It is the intent of the parties to avoid triggering what is known
in
some states as “one action” rules by including in a foreclosure of any
Borrower’s Mortgage, the obligations of any other Borrower under this Agreement.
Accordingly, each Borrower’s liability hereunder shall only include the
obligations under this Agreement that pertain to such Borrower and such
Borrower’s assets only and shall not include obligations under this Agreement
that pertain to any other Borrower or its assets, with the result that no
Borrower shall be personally liable for any other Borrower’s obligations under
this Agreement. It is agreed, however, that the Default of any one Borrower
hereunder shall constitute a Default by the other Borrowers.
ARTICLE
VIII
MISCELLANEOUS
8.1 Waiver.
No
remedy conferred upon, or reserved to, a party in this Agreement or any of
the
other Loan Documents is intended to be exclusive of any other remedy or
remedies, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing in law or
in
equity. Exercise of or omission to exercise any right of a party shall not
affect any subsequent right of such party to exercise the same. No course of
dealing between Borrower and Lender or any delay on a party’s part in exercising
any rights shall operate as a waiver of any of such party’s rights. No waiver of
any Default under this Agreement or any of the other Loan Documents shall extend
to or shall affect any
38
subsequent
or other, then existing, Default or shall impair any rights, remedies or powers
of either party.
8.2 Costs
and Expenses.
Each
Borrower will bear all taxes, fees and expenses (including actual, reasonable
attorneys’ fees and expenses of counsel for Lender) in connection with the
Loans, the Notes, the preparation of this Agreement and the other Loan Documents
(including any amendments hereafter made), and in connection with any
modifications thereto and the recording of any of the Loan Documents. If, at
any
time, a Default occurs or Lender becomes a party to any suit or proceeding
in
order to protect its interests or priority in any collateral for any of the
Loan
Obligations or its rights under this Agreement or any of the Loan Documents,
or
if Lender is made a party to any suit or proceeding by virtue of the Loan,
this
Agreement or any Mortgaged Property and as a result of any of the foregoing,
Lender employs counsel to advise or provide other representation with respect
to
this Agreement, or to collect the balance of the Loan Obligations, or to take
any action in or with respect to any suit or proceeding relating to this
Agreement, any of the other Loan Documents, any Mortgaged Property, Borrower,
Guarantor or Manager, or to protect, collect, or liquidate any of the security
for the Loan Obligations, or attempt to enforce any security interest or lien
granted to Lender by any of the Loan Documents, then in any such events, all
of
the actual, reasonable attorney’s fees arising from such services, including
attorneys’ fees for preparation of litigation and in any appellate or bankruptcy
proceedings, and any reasonable expenses, costs and charges relating thereto
shall constitute additional obligations of Borrowers to Lender payable on demand
of Lender. Without limiting the foregoing, each Borrower has undertaken the
obligation for payment of, and shall pay, all recording and filing fees, revenue
or documentary stamps or taxes, intangibles taxes, and other taxes, expenses
and
charges payable in connection with this Agreement, any of the Loan Documents,
the Loan Obligations, or the filing of any financing statements or other
instruments required to effectuate the purposes of this Agreement, and should
Borrowers fail to do so, Borrowers agree to reimburse Lender for the amounts
paid by Lender, together with penalties or interest, if any, incurred by Lender
as a result of underpayment or nonpayment. Such amounts shall constitute a
portion of the Loan Obligations, shall be secured by the Mortgage and shall
bear
interest at the Default Rate (as defined in the Notes) from the date advanced
until repaid.
8.3 Performance
of Lender.
At its
option, upon Borrowers’ failure to do so, Lender may make any payment or do any
act on Borrowers’ behalf that Borrower or others are required to do to remain in
compliance with this Agreement or any of the other Loan Documents, and Borrower
agrees to reimburse Lender, on demand, for any payment made or expense incurred
by Lender pursuant to the foregoing authorization, including, without
limitation, actual, reasonable attorneys’ fees, and until so repaid any sums
advanced by Lender shall constitute a portion of the Loan Obligations, shall
be
secured by the Mortgage and shall bear interest at the Default Rate (as defined
in the Notes) from the date advanced until repaid.
8.4 Indemnification.
Borrowers shall, at their sole cost and expense, protect, defend, indemnify
and
hold harmless the Indemnified Parties from and against any and all claims,
suits, liabilities (including, without limitation, strict liabilities), actions,
proceedings, obligations, debts, damages, losses, costs, expenses, fines,
penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to actual,
reasonable attorneys’ fees and other costs of defense) imposed upon or incurred
by or asserted
39
against
Lender by reason of (a) ownership of the Notes, the Mortgage, the Mortgaged
Property or any interest therein or receipt of any Rents, (b) any amendment
to,
or restructuring of, the Loan Obligations and/or any of the Loan Documents,
(c)
any and all lawful action that may be taken by Lender in connection with the
enforcement of the provisions of the Mortgage or the Note or any of the other
Loan Documents, whether or not suit is filed in connection with same, or in
connection with Borrower, Guarantor, Manager and/or any partner, joint venturer,
member or shareholder thereof becoming a party to a voluntary or involuntary
federal or state bankruptcy, insolvency or similar proceeding, (d) any accident,
injury to or death of persons or loss of or damage to property occurring in,
on
or about the Land, the Improvements or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways,
(e) any use, nonuse or condition in, on or about the Land, the Improvements
or
any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways, (f) any failure on the part of
Borrower, Guarantor or Manager to perform or comply with any of the terms of
this Agreement or any of the other Loan Documents, (g) any claims by any broker,
Person or entity claiming to have participated in arranging the making of the
Loan evidenced by the Note, (h) any failure of the Land and/or Improvements
to
be in compliance with any applicable laws, (i) performance of any labor or
services or the furnishing of any materials or other property with respect
to
the Land, the Improvements or any part thereof, (j) the failure of any
Person to file timely with the Internal Revenue Service an accurate Form 1099-b,
statement for recipients of proceeds from real estate, broker and barter
exchange transactions, which may be required in connection with the Mortgage,
or
to supply a copy thereof in a timely fashion to the recipient of the proceeds
of
the transaction in connection with which the Loan is made, (k) any
misrepresentation made to Lender in this Agreement or in any of the other Loan
Documents, (l) any tax on the making and/or recording of the Mortgage, the
Note
or any of the other Loan Documents; (m) the violation of any requirements of
the
Employee Retirement Income Security Act of 1974, as amended, (n) any fines
or
penalties assessed or any corrective costs incurred by Lender if the Facility
or
any part of the Land and/or Improvements is determined to be in violation of
any
covenants, restrictions of record, or any applicable laws, ordinances, rules
or
regulations, or (o) the enforcement by any of the Indemnified Parties of the
provisions of this Section 8.4. Any amounts payable to Lender by reason of
the
application of this Section 8.4, shall become immediately due and payable,
and
shall constitute a portion of the Loan Obligations, shall be secured by the
Mortgage and shall accrue interest at the Default Rate (as defined in the Note).
The obligations and liabilities of Borrower under this Section 8.4 shall survive
any termination, satisfaction, assignment, entry of a judgment of foreclosure
or
exercise of a power of sale or delivery of a deed in lieu of foreclosure of
the
Mortgage. For purposes of this Section 8.4, the term “Indemnified Parties” means
Lender and any Person who is or will have been involved in the origination
of
the Loan, any Person who is or will have been involved in the servicing of
the
Loan, any Person in whose name the encumbrance created by the Mortgage is or
will have been recorded, any Person who may hold or acquire or will have held
a
full or partial interest in the Loan (including, without limitation, any
investor in any securities backed in whole or in part by the Loan) as well
as
the respective directors, officers, shareholder, partners, members, employees,
agents, servants, representatives, contractors, subcontractors, affiliates,
subsidiaries, participants, successors and assigns of any and all of the
foregoing (including, without limitation, any other Person who holds or acquires
or will have held a participation or other full or partial interest in the
Loan
or the Mortgaged Property, whether during the term of the Mortgage or as a
part
of or following a foreclosure of the Loan and
40
including,
without limitation, any successors by merger, consolidation or acquisition
of
all or a substantial portion of Lender’s assets and business).
8.5 Headings.
The
headings of the Sections of this Agreement are for convenience of reference
only, are not to be considered a part hereof, and shall not limit or otherwise
affect any of the terms hereof.
8.6 Survival
of Covenants.
All
covenants, agreements, representations and warranties made herein and in
certificates or reports delivered pursuant hereto shall be deemed to have been
material and relied on by Lender, notwithstanding any investigation made by
or
on behalf of Lender, and shall survive the execution and delivery to Lender
of
the Note and this Agreement.
8.7 Notices,
etc.
Any
notice or other communication required or permitted to be given by this
Agreement or the other Loan Documents or by applicable law shall be in writing
and shall be deemed received (a) on the date delivered, if sent by hand delivery
(to the person or department if one is specified below) with receipt
acknowledged by the recipient thereof, (b) three (3) Business Days following
the
date deposited in U.S. mail, certified or registered, with return receipt
requested, or (c) one (1) Business Day following the date deposited with Federal
Express or other national overnight carrier, and in each case addressed as
follows:
If
to
Borrower:
Emeritus
Corporation
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Director of
Real
Estate and Business Legal Affairs
with
a
copy to:
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If
to
Lender:
Capmark
Bank
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇.▇.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
41
Attn:
Servicing - Accounting Manager
with
a
copy to:
▇▇▇
▇.
▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ & White LLP
One
Federal Place
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Phone:
▇▇▇-▇▇▇-▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Either
party may change its address to another single address by notice given as herein
provided, except any change of address notice must be actually received in
order
to be effective.
8.8 Benefits.
All of
the terms and provisions of this Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns. No Person
other than Borrowers or Lender shall be entitled to rely upon this Agreement
or
be entitled to the benefits of this Agreement.
8.9 Participation.
Each
Borrower acknowledges that Lender may, at its option, sell participation
interests in the Loan to other participating lenders, which participations
may
be sold without Borrower’s consent, or Lender may (but shall not be obligated
to) assign its interest in the Loan to other assignees (the “Assignee”) to be
included as a pool of properties to be financed in a proposed Real Estate
Mortgage Investment Conduit (REMIC), but any such assignment to a REMIC shall
require Borrower’s consent, not to be unreasonably withheld, conditioned or
delayed. Each Borrower agrees with each present and future participant in the
Loan or Assignee of the Loan that if an Event of Default should occur, each
present and future participant or Assignee shall have all of the rights and
remedies of Lender with respect to any deposit due from Borrower. The execution
by a participant of a participation agreement with Lender, and the execution
by
Borrower of this Agreement, regardless of the order of execution, shall evidence
an agreement between Borrower and said participant in accordance with the terms
of this Section. If the Loan is assigned to the Assignee, the Assignee will
engage an underwriter (the “Underwriter”), who will be responsible for the due
diligence, documentation, preparation and execution of certain documents
required in connection with the offering of interests in the REMIC. Borrower
agrees that if Lender assigns its interest in the Loan to the Assignee for
inclusion in the REMIC, with Borrower’s consent as required herein, Borrower
agrees to provide the Assignee with such information as may be reasonably
required by the Underwriter in connection therewith or by an investor in any
securities backed in whole or in part by the Loan or any rating agency rating
such securities. Borrower irrevocably waives any and all right it may have
under
applicable law to prohibit such disclosure, including, but not limited to,
any
right of privacy, and consents to the disclosure of such information to the
Underwriter, to potential investors in the REMIC, and to such rating
agencies.
8.10 Supersedes
Prior Agreements; Counterparts.
This
Agreement and the instruments referred to herein supersede and incorporate
all
representations, promises and statements, oral or written, made by Lender in
connection with the Loan, specifically including,
42
without
limitation, the Original Loan Agreement. This Agreement may not be varied,
altered, or amended except by a written instrument executed by an authorized
officer of Lender. This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be an original, but such
counterparts shall together constitute one and the same instrument.
8.11 Loan
Agreement Governs.
The
Loan is governed by the terms and provisions set forth in this Loan Agreement
and the other Loan Documents and in the event of any irreconcilable conflict
between the terms of the other Loan Documents and the terms of this Loan
Agreement, the terms of this Loan Agreement shall control; provided, however,
that in the event that there is any apparent conflict between any particular
term or provision which appears in both this Loan Agreement and the other Loan
Documents and it is possible and reasonable for the terms of both this Loan
Agreement and the Loan Documents to be performed or complied with, then,
notwithstanding the foregoing, both the terms of this Loan Agreement and the
other Loan Documents shall be performed and complied with.
8.12 CONTROLLING
LAW.
THE PARTIES HERETO AGREE THAT THE VALIDITY, INTERPRETATION, ENFORCEMENT AND
EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH,
THE LAWS OF THE STATE OF WASHINGTON AND THE PARTIES HERETO SUBMIT (AND WAIVE
ALL
RIGHTS TO OBJECT) TO NON-EXCLUSIVE PERSONAL JURISDICTION IN THE STATE OF
WASHINGTON, FOR THE ENFORCEMENT OF ANY AND ALL OBLIGATIONS UNDER THE LOAN
DOCUMENTS, EXCEPT THAT IF ANY SUCH ACTION OR PROCEEDING ARISES UNDER THE
CONSTITUTION, LAWS OR TREATIES OF THE UNITED STATES OF AMERICA, OR IF THERE
IS A
DIVERSITY OF CITIZENSHIP BETWEEN THE PARTIES THERETO, SO THAT IT IS TO BE
BROUGHT IN A UNITED STATES DISTRICT COURT, IT SHALL BE BROUGHT IN THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON OR ANY SUCCESSOR
FEDERAL COURT HAVING ORIGINAL JURISDICTION.
8.13 WAIVER
OF JURY TRIAL.
BORROWER AND LENDER HEREBY WAIVE ANY RIGHT THAT EITHER OR BOTH MAY HAVE TO
A
TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN,
OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL
TO
ANY DEALINGS OF LENDER AND/OR BORROWER WITH RESPECT TO THE LOAN DOCUMENTS OR
IN
CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF EITHER PARTY’S RIGHTS AND
REMEDIES UNDER THIS AGREEMENT OR OTHERWISE OR THE CONDUCT OR THE RELATIONSHIP
OF
THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER
AGREES THAT LENDER MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF BORROWER
IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT TO LENDER
TO
MAKE THE LOAN, AND THAT,
43
TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER
(WHETHER OR NOT MODIFIED HEREIN) BETWEEN BORROWER AND LENDER SHALL INSTEAD
BE
TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A
JURY.
8.14 Governing
Law Regarding Remedies.Notwithstanding
anything to the contrary in the Notes, the Guaranty Agreements and this
Agreement, the law governing the Mortgages shall be applicable to the rights
of
Lender to seek a deficiency judgment pursuant to the Loan Documents following
foreclosure or other realization proceedings pursuant to the Mortgages and
the
right to pursue one or more remedies against one or more Borrowers under the
Mortgages.
8.15 Reasonable
Discretion.
As
applied to this Agreement and the Loan Documents, Lender shall be deemed to
have
exercised reasonable discretion or shall be deemed to have given its reasonable
consent if Lender's actions are consistent with the standard of care that Lender
employs in connection with its exercise of rights and remedies with other
borrowers and loans of similar structure, size, complexity and number of
facilities.
[SIGNATURES
BEGIN ON NEXT PAGE]
44
IN
WITNESS WHEREOF,
Borrowers and Lender have caused this Agreement to be properly executed by
their
respective duly authorized representatives as of the date first above
written.
PLEASE
BE ADVISED THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT, OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE UNENFORCEABLE UNDER
WASHINGTON LAW.
CAPMARK
BANK, a
Utah
industrial bank
By: /s/
▇▇▇▇▇▇
▇.
Bryant_________(Seal)
Name: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇ ________
Its: Authorized
Signer________
45
|
FRETUS
Investors Birmingham LLC
|
|
FRETUS
Investors ▇▇▇▇▇▇▇▇ LLC
|
|
FRETUS
Investors Glendale LLC
|
|
FRETUS
Investors Mesa LLC
|
|
FRETUS
Investors Orange Park LLC
|
|
FRETUS
Investors Jacksonville LLC
|
|
FRETUS
Investors Melbourne LLC
|
|
FRETUS
Investors Orlando LLC
|
|
FRETUS
Investors Winter Springs LLC
|
|
FRETUS
Investors Fort ▇▇▇▇▇ LLC
|
|
FRETUS
Investors Indianapolis LLC
|
|
FRETUS
Investors Greenwood LLC
|
|
FRETUS
Investors Las Vegas LLC
|
each
a
Delaware limited liability company
By: FRETUS
Investors LLC, a Washington limited liability company
Its: Manager
By:
Emeritus Corporation, a Washington corporation
Its:
Administrative Member
/s/
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
By: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Its: Director
of Real Estate and Legal Affairs
46
|
FRETUS
Investors Austin LP, a
Delaware limited partnership
By: ▇▇▇▇▇
Oaks Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Dallas LP, a
Delaware limited partnership
By: Kingsley
Oaks Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors El Paso LP, a
Delaware limited partnership
By: Village
Oaks Cielo Vista Investors LLC, a Delaware limited liability
company
Its: General
Partner
|
|
FRETUS
Investors Farmers Branch LP, a
Delaware limited partnership
By: Village
Oaks Farmers
Branch
Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Fort Worth LP, a
Delaware limited partnership
By: Tanglewood
Oaks Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Hollywood Park LP, a
Delaware limited partnership
By: Village
Oaks Hollywood
Park Investors
LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Houston LP, a
Delaware limited partnership
By: Champion
Oaks Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Memorial Oaks Houston LP, a
Delaware limited partnership
By: Memorial
Oaks Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Plano LP, a
Delaware limited partnership
By: ▇▇▇▇▇▇
▇▇▇▇ Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors San Antonio LP, a
Delaware limited partnership
By: Northwest
Oaks Investors LLC, a Delaware limited liability company
Its: General
Partner
|
|
FRETUS
Investors Sugar Land LP, a
Delaware limited partnership
By: Sugar
Land Investors
LLC, a Delaware limited liability company
Its: General
Partner
|
By: FRETUS
Investors LLC, a Washington limited liability company
Its: Managing
Manager
By:
Emeritus Corporation, a Washington corporation
Its:
Administrative Member
/s/
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
By: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Its: Director
of Real Estate and Legal Affairs
47
SCHEDULE
A
[List
of
Borrowers]
48
|
FRETUS
Investors Birmingham LLC
|
|
FRETUS
Investors ▇▇▇▇▇▇▇▇ LLC
|
|
FRETUS
Investors Glendale LLC
|
|
FRETUS
Investors Mesa LLC
|
|
FRETUS
Investors Orange Park LLC
|
|
FRETUS
Investors Jacksonville LLC
|
|
FRETUS
Investors Melbourne LLC
|
|
FRETUS
Investors Orlando LLC
|
|
FRETUS
Investors Winter Springs LLC
|
|
FRETUS
Investors Fort ▇▇▇▇▇ LLC
|
|
FRETUS
Investors Indianapolis LLC
|
|
FRETUS
Investors Greenwood LLC
|
|
FRETUS
Investors Las Vegas LLC
|
|
FRETUS
Investors Austin LP
|
|
FRETUS
Investors Dallas LP
|
|
FRETUS
Investors El Paso LP
|
|
FRETUS
Investors Farmers Branch LP
|
|
FRETUS
Investors Fort Worth LP
|
|
FRETUS
Investors Hollywood Park LP
|
|
FRETUS
Investors Houston LP
|
|
FRETUS
Investors Memorial Oaks Houston LP
|
|
FRETUS
Investors Plano LP
|
|
FRETUS
Investors San Antonio LP
|
|
FRETUS
Investors Sugar Land LP
|
49
SCHEDULE
B
[LIST
OF FACILITIES]
|
Facility
|
Address
of Facility
|
Number
of Units/Beds
|
|
Champion
Oaks
|
▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇
|
48
units/90 beds
|
|
▇▇▇▇▇▇
▇▇▇▇
|
▇▇▇▇
▇. ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇,
▇▇
|
75
units/116 beds
|
|
▇▇▇▇▇▇▇▇
▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇
|
▇▇
units/110 beds
|
|
Loyalton
of Austin
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇
|
72
units/112 beds
|
|
Loyalton
of Lake Highlands
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇
|
75
units/116 beds
|
|
Memorial
Oaks
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇
|
68
units/120 beds
|
|
Meridian
Oaks
|
▇▇▇▇
▇. ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇
|
73
units/111 beds
|
|
Sugarland
Oaks
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇
|
72
units/126 beds
|
|
Tanglewood
Oaks
|
▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇
|
73
units/116 beds
|
|
Village
Oaks at Chandler
|
▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇
|
64
units/112 beds
|
|
Village
Oaks at Cielo Vista
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇, ▇▇
|
66
units/105 beds
|
|
Village
Oaks at ▇▇▇▇▇▇
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇
|
63
units/103 beds
|
|
Village
Oaks at Farmers Branch
|
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇
|
63
units/105 beds
|
▇▇
|
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
|
▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇
|
62
units/105 beds
|
|
Village
Oaks at Glendale
|
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇
|
63
units/112 beds
|
|
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
|
▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇
|
61
units/105 beds
|
|
Village
Oaks at Hollywood Park
|
▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇
|
64
units/101 beds
|
|
Village
Oaks at Las Vegas
|
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇
|
61
units/105 beds
|
|
Village
Oaks at Melbourne
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇
|
64
units/102 beds
|
|
Village
Oaks at Mesa
|
▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇,
▇▇
|
65
units/103 beds
|
|
Village
Oaks at Orange Park
|
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇
|
66
units/102 beds
|
|
Village
Oaks at Southpoint
|
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇
|
64
units/102 beds
|
|
Village
Oaks at Tuskawilla
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
|
66
units/102 beds
|
|
Woodbridge
Estates
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇
|
75
units/120 beds
|
51
EXHIBIT
“A”
LEGAL
DESCRIPTION
[Legal
Descriptions of the 24 Mortgages are incorporated herein by
reference]
52
EXHIBIT
“B”
BORROWER’S
CHIEF EXECUTIVE OFFICE
Emeritus
Corporation
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Director of
Real
Estate and Business Legal Affairs
53
EXHIBIT
“C”
OWNERSHIP
INTERESTS IN BORROWER
Each
of
the Borrowers has as its sole member, if it is a limited liability company,
or
as its general partner, if it is a limited partnership, Fretus Investors LLC,
a
Washington limited liability company. Fretus Investors LLC has as its sole
member, Emeritus Corporation, a Washington corporation.
54
EXHIBIT
“D”
QUARTERLY
FINANCIAL STATEMENT AND CENSUS DATA
|
Facility
Name:
|
|
|
Management
Company:
|
|
|
Report
Date:
|
|
Quarter
Ending
(Date)
|
Quarter
Ending
(Date)
|
Quarter
Ending
(Date)
|
Quarter
Ending
(Date)
|
12
Mths.
Ending
(Date)
|
|||||||||||||||
|
Census
Data
|
|||||||||||||||||||
|
Total
Number of Beds (Units)
|
|||||||||||||||||||
|
Number
of Days in Period
|
|||||||||||||||||||
|
Total
Resident Days Available
|
|||||||||||||||||||
|
Resident
Utilization Days
|
|||||||||||||||||||
|
Medicaid
|
|||||||||||||||||||
|
Private
|
|||||||||||||||||||
|
Medicare
|
|||||||||||||||||||
|
Other
Payor (Specify)
|
|||||||||||||||||||
|
Total
Utilization Days
|
|||||||||||||||||||
|
Average
Occupancy
|
|||||||||||||||||||
|
Debt
Service Coverage Analysis
|
|||||||||||||||||||
|
(C)
|
Net
Routine Patient (Resident) Revenue
|
||||||||||||||||||
|
Other
Revenues
|
|||||||||||||||||||
|
Total
Revenues
|
|||||||||||||||||||
|
Total
Expenses
|
|||||||||||||||||||
|
Pre-Tax
Income
|
|||||||||||||||||||
|
Add
Back
|
|||||||||||||||||||
|
Depreciation
and Amortization
|
|||||||||||||||||||
|
Interest
on CAPMARK loan (or Facility Lease Expense)
|
|||||||||||||||||||
|
Extraordinary
Items
|
|||||||||||||||||||
|
(A)
|
Net
Operating Income after Actual Management Fees
|
||||||||||||||||||
|
(B)
|
Principal
and Interest payments due for the period
|
||||||||||||||||||
|
(A)
(B)
|
Debt
Service Coverage after Actual Mgmt. Fees
|
||||||||||||||||||
|
(A)
|
Net
Operating Income after Actual Management Fees
|
||||||||||||||||||
|
+
|
Add
Back
|
||||||||||||||||||
|
Actual
Management Fees
|
|||||||||||||||||||
|
-
|
Less
|
||||||||||||||||||
|
(C)
* 5%
|
Assumed
Management Fees (1
|
)
|
|||||||||||||||||
|
(D)
|
Net
Operating Income after Assumed Management Fees
|
||||||||||||||||||
|
(D)
(B)
|
Debt
Service Coverage after Assumed Mgmt. Fees
|
||||||||||||||||||
I
certify
the above to be true and correct. Dated this _____ day of
_______________.
55
|
By:
|
|
|
Name:
|
|
|
Title:
|
(1)
Percentage used as defined in definitions section of Loan
Agreement.
56
EXHIBIT
“E”
COMPLIANCE
CERTIFICATE
Capmark
Bank
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Re:
|
Loan
Agreement dated _____________, 2007 (together with amendments, if
any, the
“Loan Agreement”), by and between Capmark Bank, as Lender, and the
Borrowers listed on Schedule A
|
The
undersigned officer of the above-named Borrower, does hereby certify that for
the quarterly financial period ending __________________:
1. No
Default or Event of Default has occurred or exists except
_____________.
2. [ANNUAL
COMPLIANCE CERTIFICATE ONLY]
The
capital expenditures per [bed]
unit
are:
|
Required:
|
$300
per unit.
|
|
Actual:
|
$______
per unit.
|
Evidence
of such capital expenditures is attached hereto.
3. The
outstanding principal balance of all Indebtedness (other than the Loan) of
Borrower is $___________, consisting of the following:
[Describe
each debt and the balance thereof.]
4. If
Borrower is a partnership, the outstanding principal balance of all indebtedness
of the Borrower to its partners as of the date hereof is
$____________.
5. All
representations and warranties made by Borrower in the Loan Agreement and in
other Loan Documents are true and correct in all material respects as though
given on the date hereof, except ________________________.
6. All
information provided herein is true and correct.
7. Capitalized
terms not defined herein shall have the meanings given to such terms in the
Loan
Agreement.
Dated
this ______ day of _____________________, _______.
By:
Name:
Title:
57