MASTER FINANCING FACILITY AGREEMENT
between
BROOKDALE LIVING COMMUNITIES, INC.
and
NOMURA ASSET CAPITAL CORPORATION
Dated as of June 17 , 1998
MASTER FINANCING FACILITY AGREEMENT (this "Agreement"), dated as of
June 17, 1998, between BROOKDALE LIVING COMMUNITIES, INC., a Delaware
corporation ("Sponsor"), and NOMURA ASSET CAPITAL CORPORATION, a Delaware
corporation (together with its assigns and successors, "Lender").
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms have the meanings assigned to them
in this Section, and include the plural as well as the singular:
"Action" means any action, suit, claim, arbitration, governmental
investigation or other proceeding pending in any court or before any
governmental authority.
"Appraisal" means an appraisal (i) dated not more than seventy-five
(75) days prior to the delivery thereof to Lender under this Agreement, (ii)
signed by a qualified MAI appraiser who has no interest, direct or indirect, in
any Loan or any Project and whose compensation is not affected by the amount of
the Loan for which the appraisal is made, (iii) addressed to Lender and its
successors and assigns, (iv) made in compliance with the requirements of the
Federal National Mortgage Association Company or Federal Home Loan Mortgage
Corporation, or any successor thereto, and Title XI of the Federal Institutions
Reform, Recover, and Enforcement Act of 1989 and the regulations promulgated
thereunder, and (v) otherwise satisfactory to Lender in all respects.
"Approval Package" has the meaning set forth in Section 2.3(a).
"Approval Package Delivery Period" has the meaning set forth in
Section 2.3(a).
"Approval Package Review Period" has the meaning set forth in
Section 2.3(d).
"Approved Project" means a Project that Lender has approved pursuant to
Section 2.3.
"Assignment of Agreements" means each assignment of agreements to be
executed and delivered by a Borrower and a Manager pursuant to this Agreement
substantially in the form of Exhibit A.
"Assignment of Leases " means each assignment of leases and rents to be
executed and delivered by a Borrower and a Manager pursuant to this Agreement
substantially in the form of Exhibit B.
"Borrower " means any Person acceptable to Lender which (i) is a
Special Purpose Bankruptcy Remote Entity and (ii) is either (A) a corporation
which is wholly owned by a Person
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acceptable to Lender, (B) a limited liability company that has as its sole
managing member a Special Purpose Bankruptcy Remote Entity wholly owned by a
Person acceptable to Lender, or (C) a limited partnership that has as its sole
general partner a Special Purpose Bankruptcy Remote Entity wholly owned by a
Person acceptable to Lender.
"Broker" means none.
"Building' Loan Agreement" means each building loan agreement to be
executed and delivered by a Borrower and a Manager pursuant to this Agreement,
substantially in the form of Exhibit C, with such changes thereto as may be
necessary to reflect local law requirements related to construction loans.
"Consent and Subordination of Manager" means each consent and
subordination executed and delivered by a Manager pursuant to this Agreement
substantially in the form of Exhibit D.
"Construction Commencement Date" means the date of commencement of
construction of an Approved Project in accordance with the applicable Building
Loan Agreement.
"Construction Period" means, with respect to each Approved Project, the
period from the Construction Commencement Date to the Substantial Completion
Date of such Project.
"Debt" means the "Debt" as defined in each Loan Agreement,
collectively.
"Default Rate" means a rate per annum equal to the lesser of (i) the
maximum rate permitted by applicable law or (ii) five percent (5%) above the
Interest Rate.
"Due Diligence Deposit" has the meaning set forth in Section 2.3(f).
"Due Diligence Materials" has the meaning set forth in Section 2.3(c).
"Eligible Area" means Austin, Texas; Southfield, Michigan; Glen Ellyn,
Illinois; Raleigh, North Carolina; and any other geographic area approved by
Lender in its reasonable discretion.
"Engineering Report" means, with respect to this Agreement, any and all
reports produced by an engineering firm hired by Lender ("Lender's Engineer") to
review all of Sponsor's or any Manager's site plans, structural and engineering
reports for any Project, and such other items required by Lender, each of which
items delivered by Sponsor or any Borrower or any Manager to Lender shall be
certified to Lender and its successors and assigns. Lender's Engineer shall
review all of the aforementioned to determine, (i) structural and engineering
viability of the proposed Project, (ii) that there are no material structural
defects in the proposed design or impediments to the building(s) to be included
in the Project, and (iii) an estimate of the cost to repair or remedy any
non-material structural defects or impediments that may exist.
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"Environmental Indemnity Agreement" means each environmental indemnity
agreement to be executed and delivered by Sponsor, as guarantor, pursuant to
this Agreement and the Loan Agreements.
"Environmental Report" means, with respect to a proposed Project, a
"Phase I" environmental report, and a "Phase II" environmental report if such
"Phase I" indicates that a "Phase II" environmental report is appropriate, each
of which reports shall be (i) certified to Lender and its successors and
assigns, (ii) prepared by a firm approved by Lender in its reasonable
discretion, (iii) based upon an inspection conducted not more than ninety (90)
days prior to the delivery thereof to Lender, (iv) in conformity with the
published standards of the Rating Agencies, and (v) otherwise in form and
content reasonably satisfactory to Lender.
"Exit Fee" has the meaning set forth in Section 2.1(c).
"Expenses" has the meaning set forth in Section 2.4(d).
"Event of Default" has the meaning set forth in Section 4.1.
"Facility Closing Date" means June __, 1998.
"Facility Structuring Fee" has the meaning set forth in Section 2.4(a).
"Facility Termination Date" means December __, 1999.
"Feasibility/Market Study" means, with respect to a Project, a report
dated not more than ninety (90) days prior to the date of delivery, in form and
substance and prepared by a firm reasonably satisfactory to Lender, which
provides, without limitation, information regarding demographics of the area,
existing supply and anticipated new supply of congregate care and assisted
living facilities, comparables on sales prices, rental rates and occupancy
rates, major demand sources and expected impact of the Project.
"Ground Lease(s)" means any ground or underlying lease of any Property,
as the same may be amended, modified, supplemented or replaced from time to time
in compliance with the Transaction Documents for such Property.
"Guarantees" mean the guarantees delivered to Lender pursuant to
clauses (6) through (8) of Section 3.1(n).
"Guarantor" means Sponsor.
"Indemnified Parties" has the meaning set forth in Section 6.1(a).
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"Loan Agreement" means each loan agreement to be executed and delivered
by a Borrower and a Manager pursuant to this Agreement, substantially in the
form of Exhibit E.
"Loan Closing Date" means, with respect to any Loan, the date on which
the Loan Agreement, the Building Loan Agreement, and the other Transaction
Documents relating to such Loan are executed and delivered by a Borrower, a
Manager, Lender and Guarantor (as applicable).
"Loans" means the loans made pursuant to this Agreement.
"Losses" has the meaning set forth in Section 6.1(a).
"Manager" means an Affiliate of Sponsor in which Sponsor holds,
directly or indirectly, 100% of the legal and beneficial interests, and which is
either (A) a corporation which is wholly owned by Sponsor, (B) a limited
liability company that has as its sole managing member an entity wholly owned by
Sponsor, or (C) a limited partnership that has as its sole general partner an
entity wholly owned by Sponsor.
"Maximum Advance Amount" means the maximum amount of a Loan as set
forth in Lender's approval of a Project, which amount, in Lender's sole
discretion, may be up to but shall not exceed eighty percent (80%) of the
approved Budget Costs of an Approved Project.
"Maximum Facility Amount" means One Hundred Million and 00/100 Dollars
($100,000,000.00).
"Mortgage" means each mortgage (or deed of trust or deed to secure
debt) to be executed and delivered by a Borrower pursuant to this Agreement.
"Multi-Property Borrower" has the meaning set forth in Section 7.1(c).
"New Borrower" has the meaning set forth in Section 7.1(c).
"Non-Recourse Guaranty" means each non-recourse guaranty to be executed
and delivered by a Borrower pursuant to this Agreement and the Loan Agreements.
"Non-Use Fee" has the meaning set forth in Section 2.4(b).
"Note" means each note to be executed and delivered by a Borrower
pursuant to this Agreement, substantially in the form of Exhibit F.
"Officer's Certificate" means a certificate signed by a senior
executive officer of Sponsor who is authorized to act hereunder on behalf of
Sponsor.
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"Permitted Prepayment" has the meaning set forth in Section 2.1(c).
"Pledged Property" means the Approved Projects and underlying
Properties, and the other collateral in which a security interest is being
granted pursuant to the Security Documents.
"Potential Event of Default" means an event which, with the giving of
any applicable notice and/or lapse of any applicable time period, would become
an Event of Default.
"Preliminary Budget Costs" means Hard Costs and/or Soft Costs for any
Loan estimated by Manager and submitted to Lender for review during the Approval
Package Review Period, which costs must be finalized by Manager and approved by
Lender in its sole and absolute discretion prior to closing on the particular
Loan.
"Preliminary Maximum Advance Amount" means Lender's estimate of the
maximum amount of a Loan, which amount, in Lender's sole discretion, may be up
to but shall not exceed eighty percent (80%) of the Preliminary Budget Costs of
a proposed Project and which estimate shall be finalized by Lender on or before
the applicable Loan Closing Date.
"Project" means the construction of a new congregate care and assisted
living facility in an Eligible Area.
"Property" means the land (in which the applicable Borrower owns either
a fee or leasehold estate) on which any Approved Project is to be located,
together with all improvements thereon, fixtures thereto, direct interests
therein, and personal property related thereto or included therein; provided,
however, that "Property" shall not include any property owned by tenants,
guests, licensees or concessionaires of such Property.
"Responsible Officer" means, with respect to any corporation, any
officer authorized to act as to a given matter under a duly adopted resolution.
"Security Documents" means (a) the Building Loan Agreements, (b) the
Mortgages, (c) all Uniform Commercial Code financing statements relating to the
Debt, (d) the Guaranties, (e) the Assignment of Leases, (f) the Assignment of
Agreements, and (g) any other documents securing the Debt.
"Segregated Pool" has the meaning set forth in Section 7.1.
"Segregated Pool Date" has the meaning set forth in Section 7.1.
"Segregated Pool Property" has the meaning set forth in Section 7.1.
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"Senior Mortgage" means a Mortgage that creates a first priority lien
on a Property, which shall secure the Debt relating to such Property, and shall
be substantially in the form of Exhibit G, with such modifications thereto as
may be necessary to reflect local law.
"Sponsor's Closing Certificate" has the meaning set forth in Section
3.1(k).
"Stabilization Period" means, with respect to an Approved Project, the
period from the Substantial Completion Date to the Conversion Date for such
Project.
"Subordinate Mortgage" means a Mortgage that creates a second priority
lien on a Property, subordinate in lien to a Senior Mortgage and which shall
secure the Debt other than the Debt relating to such Property and shall be
substantially in the form of Exhibit H, with such modifications thereto as may
be necessary to reflect local laws; provided that a Subordinate Mortgage which
encumbers a Property in a state having a mortgage recording tax may secure a
maximum principal amount less than the full principal amount of such other Debt,
in order to reasonably limit the mortgage recording taxes payable in connection
with such Subordinate Mortgage, if (i) Lender approves such maximum amount,
which approval shall not be unreasonably withheld if such limitation does not
adversely affect Lender or its rights under the Security Documents, and (ii)
such maximum amount is not less than (A) 125% of the value of the completed
Project as shown in the Appraisal minus (B) the principal amount secured by the
Senior Mortgage.
"Transaction Documents" means the Loan Agreements , the Building Loan
Agreements, and all documents defined as Loan Documents therein.
"Umbrella Entity" has the meaning set forth in Section 7.2.
1.2 General. Unless otherwise specified, (i) all references to sections
and schedules are to those in this Agreement, (ii) the words "hereof", "herein",
"hereto", and "hereunder" and words of similar import refer to this Agreement as
a whole and not to any particular provision, (iii) all definitions are equally
applicable to the singular and plural forms of the terms defined, (iv) the word
"including" means "including but not limited to," and (v) accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
references to any agreement or instrument shall be to such agreement or
instrument as in effect from time to time, including any amendments,
consolidations, replacements, restatements, modifications and supplements
thereto.
1.3 Terms defined in Loan Agreement. The following terms have the
meanings assigned to them in the form of Loan Agreement attached as Exhibit E
hereto (or, when applied to a specific Loan, the actual Loan Agreement relating
thereto): "Additional Loan", "Affiliate", "Banc One", "Borrower Representative",
"Borrower Sponsor", "Business Day", "Conversion Date", "GAAP", "Governmental
Authority", "Hazardous Substances", "Independent Director", "Legal
Requirements", "Lien", "Loan Closing Date", "Person", "Preferred Equity",
"Rating Agencies", "Securitization", "Special Purpose Bankruptcy Remote Entity",
and "Yield Maintenance Premium".
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1.4 Terms defined in Building Loan Agreement. The following terms have
the meanings assigned to them in the form of Building Loan Agreement attached as
Exhibit F hereto (or, when applied to a specific Loan, the actual Building Loan
Agreement relating thereto): "Advance", "Budget", "Budget Costs", "Construction
Schedule", "Initial Advance ", "Outside Completion Date", "Plans", "Substantial
Completion Date" and "Syndication."
ARTICLE II
THE LOANS
2.1 Loans to Borrowers.
(a) On the terms, and subject to the conditions, set forth
herein, Lender shall make and Sponsor shall cause the respective Borrowers to
borrow Loans, each pursuant to a Loan Agreement and a Building Loan Agreement to
be entered into prior to the earlier of (i) the Facility Termination Date or
(ii) the termination of the obligation of Lender to make Loans hereunder.
(b) The aggregate amount of the Loans (excluding any Additional
Loans) will not exceed One Hundred Million and 00/100 Dollars ($100,000,000.00).
Portions of any Loan that have been repaid or prepaid may not be reborrowed
except as otherwise permitted herein.
(c) Lender hereby agrees that prior to the Conversion Date for a
particular Loan, but in no case later than July 28, 1999 (the "Permitted
Prepayment Termination Date"), Sponsor or the Borrower which owns a specific
Project may refinance, without paying any Yield Maintenance Premium or
prepayment penalty, the lesser of either x) any two (2) Projects or y) Fifty
Million and 00/100 Dollars ($50,000,000.00) of the Maximum Facility Amount with
either (a) tax exempt bond financing, (b) taxable bond financing, or (c) ▇▇▇▇▇▇
▇▇▇ financing ((a), (b), and (c) shall collectively hereinafter be referred to
as the "Permitted Prepayment"). ____ Sponsor understands that any Permitted
Prepayment must be a prepayment of the entire Loan being prepaid and no partial
prepayments of any Loan made pursuant to this Agreement shall be permitted.
Sponsor must notify Lender in writing of its intention to make a Permitted
Prepayment of a specific Loan as provided for herein no later than thirty (30)
days prior to any such refinancing. Such notice must include a copy of any
commitment letter or other evidence of such financing, which must include
evidence reasonably satisfactory to Lender of the bond financing. In connection
with any such refinancing, Sponsor shall pay an exit fee of two percent (2.0%)
of the outstanding principal amount of the particular Loan refinanced (the "Exit
Fee") simultaneously with the delivery of the notice provided for herein. Lender
hereby agrees that any such amount repaid by Sponsor or the individual Borrower
may be reborrowed by Sponsor in accordance with and subject to the provisions of
this Agreement. Notwithstanding anything to the contrary contained in any of the
Transaction Documents, prior to the Permitted Prepayment Termination Date, the
repayment rights granted pursuant to this Section 2.1(c) shall control.
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2.2 Use of Loan Proceeds.
(a) The proceeds of each Loan shall be used by the Borrower in
question to fund a portion of the Budget Costs for the acquisition, ownership,
development, operation, construction and stabilization of such Borrower's
Approved Project and to provide permanent long term financing for such Approved
Project, subject to and in accordance with the provisions of the Loan Agreement
and Building Loan Agreement for such Approved Project, including certain fees
and expenses of the transactions contemplated thereby.
(b) Lender is not making an Advance of any Loan on the date
hereof unless otherwise agreed to by Lender pursuant to the Transaction
Documents, and Sponsor acknowledges that the payment of fees and other
transaction costs related to this Agreement and the Loans on the date hereof
shall be paid by Sponsor from its own funds except as otherwise agreed to by
Lender.
2.3 Preliminary Approvals of Projects.
(a) Sponsor shall, with respect to any Project that it wishes to
finance pursuant to this Agreement, submit to Lender for its preliminary review
and approval a package (an "Approval Package") consisting of all documentation,
reports and other information required by Lender in accordance with Lender's due
diligence underwriting standards, including, without limitation, the following:
(1) A general description of the Project, including size,
location and number of rooms, and a site plan,
location maps, property description, and site
photographs;
(2) a Feasibility/Market Study for the Project, which may
be prepared by Sponsor provided that no previously
submitted Feasibility/Market Study has been rejected
by Lender as inadequate;
(3) preliminary construction cost estimates including a
projected monthly draw schedule through the
Stabilization Period;
(4) a statement of specific uses of funds;
(5) a monthly pro-forma operating statement for the first
twelve (12) months after the completion of
construction, and yearly pro-forma operating state
ments and capital expenditure budgets for the Project
for the five-year period commencing immediately after
the completion of construction.
(6) schematic plans and drawings;
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(7) the estimated Budget Costs and Maximum Advance Amount
for the Project; and
(8) an estimated time frame for the construction and
stabilization of the Project and evidence, reasonably
satisfactory to Lender, that if the Project is
approved it shall be completed on or before the last
day of the fourteenth (14th) full calendar month
after the applicable Loan Closing Date, subject to
extension for Unavoidable Delays (as defined in the
Building Loan Agreement).
Sponsor may deliver Approval Packages to Lender for its review
commencing on the date hereof and ending on November __, 1999, provided
construction of the last Approved Project is commenced in accordance with its
applicable Building Loan Agreement, but in no case later than the Facility
Termination Date (the "Approval Package Delivery Period").
(b) Lender shall notify Sponsor within ten (10) Business Days
after receipt of an Approval Package whether or not it preliminarily approves
the Project described therein in the exercise of its sole discretion. However,
such Project shall not be deemed to be an Approved Project unless and until
final approval is given by Lender pursuant to Section 2.3(d).
(c) If preliminary approval is given for a Project, Sponsor
shall promptly use reasonable efforts to satisfy all other conditions to the
consummation of a Loan for such Project as set forth herein, and to provide
Lender with the following additional information and documentation with respect
to such Project (collectively, the "Due Diligence Materials"):
(1) a survey, legal description, and title report with
respect to the applicable Property, dated not more
than ninety (90) days prior to the date of delivery;
(2) evidence of compliance in all material respects with
all applicable land use, zoning, building,
environmental, and all other applicable Legal
Requirements;
(3) an Environmental Report, dated no more than ninety
(90) days prior to the date of delivery thereof;
(4) an Engineering Report, dated no more than ninety (90)
days prior to the date of delivery thereof;
(5) evidence that all utility services required for the
Property for its intended use are or, when completed,
shall be available, which evidence may include
easements for customary utilities as disclosed by
surveys and title materials provided to Lender
hereunder;
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(6) evidence that the Project is or can be made, and will
be subject to, a separate tax assessment;
(7) evidence that the Property has or, when completed
shall have, adequate and reasonable parking which in
all events complies with all Legal Requirements;
(8) the Plans, the Budget and the Construction Schedule
as required under the Building Loan Agreement;
(9) evidence of the contribution or availability for
contribution by Borrower of an amount of equity equal
to the difference between 100% of the Preliminary
Budget Costs for the Property as approved by Lender
and the Preliminary Maximum Advance Amount for such
Property, and, in connection therewith, Lender may
require, in its reasonable discretion, a cash deposit
in such amount, an irrevocable letter of credit in
such amount for the benefit of Lender issued by a
bank acceptable to Lender, or other security
acceptable to Lender in its sole discretion;
(10) an Appraisal dated not more than seventy-five (75)
days prior to the date of delivery, evidencing an
appraised value for the Property after completion of
construction that provides for a loan to value ratio
no greater than 75% based on the Preliminary Maximum
Advance Amount, together with an updated Feasibility/
Market Study if the Feasibility/Market Study
delivered pursuant to Section 2.3(a) is more than
ninety (90) days old;
(11) if the interest of Borrower in the Property is to be
a leasehold estate, a complete copy of the applicable
ground lease and all amendments thereto, which must
be financeable, as determined by Lender in its sole
but reasonable discretion, and shall, without
limitation, (i) have a remaining term (including
renewal options which have been exercised or which
the ground lessor permits Lender to exercise on
behalf of Borrower) ending not earlier than ten (10)
years after the maturity date of the Loan, (ii)
provide Lender or its assignees notice of, and an
opportunity to cure, defaults of the ground lessee,
(iii) provide Lender and its assignees with a right
to a new ground lease or other adequate protections
if the ground lessee disaffirms the ground lease in
connection with a bankruptcy or the ground lease is
otherwise terminated, (iv) contains no material
adverse restrictions on the rights of the ground
lessee or Lender and its assignees to assign or
sublet the leasehold estate, (v) requires the
subordination of any fee mortgages to the ground
lease, (vi) allows for any insurance proceeds or
condemnation awards to be applied to either the
restoration or repair of the Project or repayment of
the Debt; and (vii) allows for foreclosure of the
Mortgages on the leasehold estate;
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(12) Intentionally deleted;
(13) the identity of the general contractor for the
Project, which general contractor must be reputable,
bonded by a nationally recognized surety company with
a Standard & Poor's Rating (or equivalent rating) of
at least "A" and otherwise acceptable to Lender in
its sole discretion; and
(14) such additional documentation, reports and
information as Lender may reasonably require in
accordance with its due diligence and underwriting
standards.
(d) Lender shall notify Sponsor within ten (10) Business Days
after receipt of all of the Due Diligence Materials (the "Approval Package
Review Period") whether it approves, in the exercise of its reasonable
discretion, the Project covered thereby (the "Approved Project"). If Lender does
not respond within such period, such approval will deemed to have been denied.
If such approval is given, such Project shall constitute an Approved Project,
and Lender shall state in its approval the Maximum Advance Amount of the Loan
for such Project; but Lender shall have no obligation to make such Loan unless
and until all of the conditions to such Loan set forth in this Agreement and the
applicable Loan Agreement and Building Loan Agreement have been satisfied.
(e) If Lender's approval is given with respect to a Project, and
either the Loan Closing Date or the Construction Commencement Date for such
Project has not occurred within ninety (90) days of such approval due to no
material unjustifiable delay of Lender or its counsel, then Lender shall have
the right in its sole but reasonable discretion (i) to require updated Due
Diligence Materials, (ii) to revoke its approval of the Project if any
conditions have adversely changed with respect to such Approved Project or (iii)
to adjust the Maximum Advance Amount of the Loan if any conditions have
adversely changed with respect to such Maximum Advance Amount of the Loan.
(f) Within two (2) Business Days after Lender notifies Sponsor
that it approves a Project after the first Approved Project, Sponsor shall pay
to Lender a Thirty-Five Thousand and 00/100 Dollars ($35,000.00) due diligence
deposit (the "Due Diligence Deposit") for such Project, which will be applied as
provided in Section 2.4(d).
(g) Construction of each Approved Project must be commenced by
the Construction Commencement Date, but in no case later than the Facility
Termination Date. Lender shall not be required to enter into any Loan Agreement,
any Building Loan Agreement, or any other Transaction Document after the
Facility Termination Date.
2.4 Fees.
(a) In addition to the fees provided for in each Loan Agreement
and each Building Loan Agreement, Sponsor shall, or shall cause one or more
Borrowers to, pay to Lender a facility
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structuring fee (the "Facility Structuring Fee") of Five Hundred Thousand and
00/100 Dollars ($500,000.00) as follows: (i) Two Hundred Fifty Thousand and
00/100 Dollars ($250,000.00) (which sum was delivered simultaneously with the
executed commitment letter) and (ii) Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) on or prior to the Facility Closing Date.
(b) Unless the aggregate Maximum Advance Amount of the Loans for
which Loan Agreements have been entered into is equal to or greater than
ninety-five percent (95%) of the Maximum Facility Amount on the Facility
Termination Date, Sponsor shall, or shall cause one or more Borrowers to, pay to
Lender a non-use fee (the "Non-Use Fee") equal to one percent (1.0%) of the
amount by which the Maximum Facility Amount exceeds the aggregate Maximum
Advance Amount of the Loans for which Loan Agreements have been entered into
pursuant to this Agreement. If, however, the aggregate Maximum Advance Amount of
the Loans for which Loan Agreements have been entered into pursuant to this
Agreement are equal to or greater than ninety-five percent (95%) of the Maximum
Facility Amount, Sponsor shall not be required to pay the Non- Use Fee. Lender's
sole and exclusive remedy for Sponsor's failure to finance any Projects pursuant
to Section 2.1(a) shall be limited to payment of the Non-Use Fee.
(c) In connection with any Permitted Prepayment made in
accordance with the provisions of Section 2.1(c) herein, Sponsor shall pay, or
shall cause one or more Borrowers to pay, to Lender the Exit Fee.
(d) Sponsor shall be liable for the payment of fees under this
Section 2.4 and all costs and expenses incurred by Lender in connection with
each Loan through the date of the Initial Advance of each Loan, including,
without limitation, the reasonable and actual out of pocket expenses incurred by
Lender and the outside counsel and auditors retained by or on behalf of Lender
in connection with the matters and transactions contemplated hereby and the
applicable Loan Agreement and Building Loan Agreement, which fees and expenses
shall also include, but not be limited to, the reasonable and actual fees of all
third parties relating to the due diligence review to be undertaken by Lender
and its third party consultants, title insurance, recordation fees, insurance
review costs, the costs of reviewing operating statements, the costs of any
Appraisals, Environmental Reports, Engineering Reports, recordation costs and
all expenses associated with engaging a servicer and a trustee (each of which
shall be selected by Lender in its sole discretion), setting up and prefunding a
cash management account and structuring the Loan (collectively, the "Expenses").
If the actual Expenses with respect to a Loan shall be less than the amount of
the Due Diligence Deposit, then on the date of first advance of such Loan,
Lender shall remit such overpayment to Sponsor. If the actual Expenses with
respect to a Loan shall be more than the Due Diligence Deposit, then any such
deficiency shall be paid to Lender upon request therefor from Lender, but in all
events no later than the date of the Initial Advance of such Loan. Sponsor and
Borrower shall be obligated to pay for all Expenses relating to each Loan
whether or not such Loan closes or is funded. Simultaneously with the execution
hereof, Lender acknowledges receipt of two (2) Due Diligence Deposits from
Sponsor, which will be used for the first two (2) Approved Projects.
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ARTICLE III
CONDITIONS TO ENTERING INTO LOAN AGREEMENTS
3.1 Conditions. The obligation of Lender to enter into a Loan Agreement
and a Building Loan Agreement with a Borrower and a Manager with respect to a
Loan is subject to the satisfaction of the following conditions:
(a) Lender shall have approved the Project in question in
accordance with Section 2.3 hereof;
(b) The representations and warranties set forth in Article V of
this Agreement shall be true and correct in all material respects on and as of
the applicable Loan Closing Date with the same effect as though made on and as
of such date;
(c) Sponsor shall be in compliance in all material respects with
all of the terms and provisions set forth herein and with all Transaction
Documents to which it is a party;
(d) Borrower and Manager with respect to such Loan shall be in
compliance in all material respects with all of the terms and provisions set
forth in each of the Transaction Documents being executed and delivered by such
Borrower or Manager in connection with the closing of such Loan;
(e) Sponsor, Manager or Borrower shall have paid to Lender all
fees, costs and expenses due and payable to Lender by Sponsor, Manager or
Borrower under this Agreement and all Transaction Documents relating to the
Loan;
(f) If the applicable Property shall have been damaged and not
theretofore repaired, the failure to restore such damage shall not, in Lender's
reasonable judgment, adversely affect the Approved Project;
(g) No portion of the applicable Property shall have been taken
in condemnation or other similar proceeding, and no such proceeding shall be
pending which would adversely affect the Approved Project;
(h) There shall have been (i) no material change in the physical
or structural condition of the Approved Project which has not been approved by
Lender or (ii) no violation or breach of the financial covenants Sponsor, as
Guarantor, must maintain pursuant to any Guaranty of Payment since the date of
this Agreement;
(i) No Hazardous Substances shall have been discovered on the
Property other than as set forth in the applicable Environmental Report or which
are strictly in compliance with all applicable Legal Requirements;
13
(j) Lender shall have received such documentation regarding the
organization, formation or existence of Sponsor as Lender may reasonably
request;
(k) Lender shall have received a certificate in the form annexed
hereto as Exhibit I (the "Sponsor's Closing Certificate"), dated the Loan
Closing Date and signed by a Responsible Officer of Sponsor, confirming
compliance with the conditions precedent set forth in Sections 3.1(b) and 3.1
(c);
(l) Except as otherwise permitted by Lender herein or in any
applicable Transaction Documents, Borrower shall have outstanding no
indebtedness other than the Loan (and the Debt secured by a Subordinate
Mortgage);
(m) The Maximum Advance Amount of the Approved Project shall
not, when added to the Maximum Advance Amounts of all other Approved Projects
(whether or not funded), exceed the Maximum Facility Amount unless otherwise
approved by Lender;
(n) The Property shall have been validly conveyed to Borrower on
or prior to the Loan Closing Date;
(o) All other requirements stated in the Building Loan Agreement
and the Loan Agreement shall have been satisfied or waived;
(p) Lender shall have received and approved all documentation,
reports and other information required by Lender in accordance with Lender's due
diligence and underwriting standards, all in form and substance satisfactory to
Lender in its reasonable discretion, including, without limitation the
following:
(1) A Note and a Senior Mortgage each in the amount of
the Maximum Advance Amount for the Approved Project,
executed and acknowledged by Borrower;
(2) A Loan Agreement executed by Borrower and Manager;
(3) A Building Loan Agreement executed (and if required
by Lender, acknowledged) by Borrower and Manager, and
all documentation and other items required thereunder
in order for Lender to make the Initial Advance
thereunder;
(4) An Assignment of Leases executed and acknowledged by
Borrower and Manager;
(5) An Assignment of Agreements executed and acknowledged
by Borrower and Manager;
14
(6) An Environmental Indemnity Agreement, substantially
in the form of Exhibit J, executed by Guarantor;
(7) A guaranty of payment, substantially in the form of
Exhibit K executed by Guarantor;
(8) A guaranty of completion of the Project substantially
in the form of Exhibit L, executed by Guarantor ;
(9) A non-recourse guaranty, substantially in the form of
Exhibit M, executed by Borrower;
(10) Consent and Subordination of Manager executed and
acknowledged by Manager;
(11) A Subordinate Mortgage, executed and acknowledged by
Borrower;
(12) Non-Recourse Guarantees, each executed and
acknowledged by the applicable Other Borrower;
(13) Subordinate Mortgages, each executed and
acknowledged by the applicable Other Borrower;
(14) Favorable opinions of counsel for Borrower, Manager
and Guarantor acceptable to Lender, addressed to
Lender and the Rating Agencies, as to (i) the due
formation, valid existence, good standing, power and
authority of Borrower, Manager and Guarantor, (ii)
the due authorization, execution, delivery, validity,
binding effect, enforceability and non-contravention
of the Transaction Documents, (iii) the non-usurious
nature of the Loan, (iv) the absence of pending
material litigation, (v) substantive
non-consolidation of the Borrower with Borrower
Sponsor, and such other Persons as Lender may
reasonably request and (vi) such other matters as
Lender may reasonably request;
(15) An interest rate lock agreement with respect to the
Maximum Advance Amount in Lender's then standard
form, executed by Sponsor; and
(16) Such other information or documentation as may be
reasonably requested by Lender and in the Building
Loan Agreement and the Loan Agreement;
(q) The Facility Termination Date shall not yet have occurred;
15
(r) Banc One has executed appropriate loan documents
substantially in the form of those loan documents that shall be executed in
connection with the first two Projects on or about the date hereof, to provide
similar mezzanine financing. Provided, however, if Lender has rescinded the
cross-collateralization and cross-default provisions as determined by Lender in
its sole and absolute discretion, Banc One shall not be required to provide any
such mezzanine financing; and
(s) No Event of Default has occurred and is continuing pursuant
to any Transaction Documents.
3.2 Documentation. Without limiting the requirements of Section 3.1 and
the Exhibits referred to therein, all materials and information required to be
delivered to Lender as set forth in this Agreement, any other opinions,
certificates and other instruments and surveys required by the Transaction
Documents and all proceedings in connection with the transactions contemplated
thereby, shall be subject to review by Lender and shall be reasonably
satisfactory in form and substance to Lender.
ARTICLE IV
DEFAULT; REMEDIES; ENFORCEMENT
4.1 Events of Default. Any of the following shall constitute an event of
default under this Agreement (an "Event of Default"):
(a) any representation, warranty, or covenant of Sponsor
contained in this Agreement shall have been untrue or incorrect in any material
respect when made; or
(b) failure by Sponsor or any Borrower to pay when due any sums
in accordance with any provision hereof and such failure has not been cured
within five (5) days after any such sum is due; or
(c) if Sponsor shall be in default under any of the other
obligations, agreements, undertakings, terms, covenants, provisions or
conditions of this Agreement, not otherwise referred to in this Section 4.1, for
thirty (30) days after written notice to Sponsor from Lender or its successors
or assigns, in the case of any other non-monetary default (unless otherwise
provided herein or in any other Transaction Document); provided, however, that
if such non-monetary default under this subparagraph is susceptible of cure but
cannot reasonably be cured within such thirty (30) day period and provided
further that Sponsor shall have commenced to cure such default within such
thirty (30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Sponsor in the exercise of due diligence to cure such
default, but in no event shall such period exceed ninety (90) days after the
original notice from Lender; or
16
(d) Intentionally deleted; or
(e) an order (that has not been vacated or stayed within sixty
(60) days from the entry thereof) is made for, or the stockholders or other
equity owners of Sponsor take any action with regard to, the winding up of
Sponsor, except a winding up for the purpose of a merger, restructuring or
contribution, the terms of which have previously been consented to by Lender,
which consent shall not be unreasonably withheld or delayed, provided same shall
have no effect on the financial covenants Sponsor, as Guarantor, must maintain
pursuant to any Guaranty of Payment; or
(f) Sponsor or any other guarantor of a Loan shall make an
assignment for the benefit of creditors, or shall generally not be paying its
debts as they become due; or
(g) a receiver, liquidator or trustee shall be appointed for
Sponsor, or any other guarantor of the Loan or Loans; or Sponsor, or any other
guarantor of the Loan or Loans shall be adjudicated a bankrupt or insolvent; or
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed or against,
consented to, or acquiesced in by, Sponsor or any other guarantor of the Loan or
Loans; or any proceeding for the dissolution or liquidation of Sponsor shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Sponsor or such other
guarantor of the Loan or Loans, only upon the same not being discharged, stayed
or dismissed within ninety (90) days; or
(h) if Sponsor fails at any time during the term of this
Agreement to maintain the financial covenants of Sponsor, as Guarantor, at a
level of at least fifty percent (50%) of the levels set forth in the form of
Guaranty of Payment attached hereto as Exhibit K; or
(i) Intentionally deleted.
4.2 Termination, Acceleration and Remedies. If an Event of Default occurs
and is continuing, Lender by notice to Sponsor may terminate this Agreement,
whereupon Lender shall have no obligation to make any further Loans or enter
into any further Transaction Documents, and Lender shall collect all fees and
expenses incurred hereunder, including the Non-Use Fee, as Lender's sole and
exclusive remedy hereunder; this shall, however, in no way limit Sponsor's
liability under any of the guarantees it executes as guarantor in connection
with any and all Loans. In any case, this Agreement (i) shall terminate on the
Facility Termination Date provided all fees and expenses are paid in full and
(ii) shall not be cross-defaulted with any Loan after the Facility Termination
Date unless all fees and expenses hereunder have not been paid in full as of
such date.
4.3 Remedies Cumulative; Delay or Omission Not a Waiver. To the extent
permitted by law, except as otherwise provided herein, every remedy given to
Lender in this Agreement shall not be exclusive of any other remedy or remedies,
and every such remedy shall be cumulative and in addition to every remedy
provided by statute, law, equity or otherwise. Lender may exercise all or any of
the powers, rights or remedies given to it under this Agreement or which may be
now or
17
hereafter given by statute, law, equity or otherwise, in its absolute
discretion. No course of dealing between Sponsor and Lender or any delay or
omission of Lender to exercise any power, right or remedy accruing upon any
Event of Default shall impair any power, right or remedy or be construed to be a
waiver of any such Event of Default or acquiescence therein, and every power,
right and remedy given by this Agreement to Lender may, to the extent permitted
by law, be exercised from time to time and as often as may be deemed expedient
by Lender.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Sponsor on the Closing Date.
Sponsor represents and warrants to Lender, that, as of the Facility Closing
Date:
(a) Sponsor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and, to the extent
necessary, is qualified to do business and in good standing in each jurisdiction
where the nature of its business or location of its properties requires it to be
so qualified except where the failure to qualify will not materially adversely
affect the financial condition of Sponsor or the ability of Sponsor to perform
its obligations under this Agreement or any Transaction Document to which
Sponsor is a party.
(b) Sponsor has, and at all relevant times has had, the
requisite power and authority to own its assets and conduct its business, to
execute and deliver this Agreement and to carry out the transactions
contemplated hereby.
(c) The execution, delivery and performance by Sponsor of this
Agreement have been duly and validly authorized by all necessary action and
proceedings, and no further approvals or filings of any kind, including, without
limitation, any approval of or filing with any Governmental Authority, are
required as a condition thereto which have not been previously obtained or made.
(d) Neither the execution and delivery of this Agreement nor the
fulfillment of or compliance with the terms and conditions hereof (i) will
conflict with or result in any breach or violation of any law, rule or
regulation issued by any Governmental Authority, or any judgment or order
applicable to Sponsor or to which Sponsor is subject; or (ii) will conflict with
or result in any breach or violation of, or constitute a default under, any of
the provisions of the documents under which Sponsor was organized or any
agreement or instrument to which Sponsor is a party or to which Sponsor is
subject.
(e) ______ This Agreement has been duly executed and delivered by
Sponsor and constitutes the legal, valid and binding obligation of Sponsor,
enforceable against Sponsor in accordance with its terms, subject to the effects
of bankruptcy, insolvency, reorganization, moratorium and other similar
18
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(f) There is no Action pending to which either Sponsor is a
party and, to Sponsor's knowledge, no such Action is threatened or contemplated
by any Person in which an adverse decision is reasonably likely and would have
an adverse effect on the financial condition of Sponsor or the ability of
Sponsor to perform its obligations under this Agreement or the other Transaction
Documents to which Sponsor is a party, provided however, this covenant shall
apply only if such Action could in any material way impact Sponsor's ability to
transact business.
(g) There exists no Event of Default and, to the best knowledge
of Sponsor, no Potential Event of Default.
(h) Intentionally deleted.
(i) Sponsor did not negotiate or communicate with any broker or
finder in connection with this Agreement.
(j) Sponsor is not (i) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended; (ii) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of either a "holding company"
or a "subsidiary company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended; or (iii) subject to any other federal or state
law or regulation which purports to restrict or regulate its ability to borrow
money.
(k) Sponsor has not entered into this Agreement or any
Transaction Documents with the actual intent to hinder, delay, or defraud any
creditor, and Sponsor has received reasonably equivalent value in exchange for
its obligations under the Transaction Documents to which it is a party. Giving
effect to the transactions contemplated by this Agreement and the Transaction
Documents, the fair saleable value of Sponsor's assets exceeds and will,
immediately following the execution and delivery of this Agreement and the
Transaction Documents to which it is a party, exceed Sponsor's total
liabilities, including subordinated, unliquidated, disputed or contingent
liabilities. The fair saleable value of Sponsor's assets is and will,
immediately following the execution and delivery of this Agreement and the
Transaction Documents to which it is a party, be greater than Sponsor's probable
liabilities, including the maximum amount of its contingent liabilities or its
debts as such debts become absolute and matured. Sponsor's assets do not and,
immediately following the execution and delivery of the Transaction Documents to
which it is a party will not, constitute unreasonably small capital to carry out
business as conducted or as proposed to be conducted. Sponsor does not intend
to, and does not believe that it will, incur debts and liabilities (including
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 Sponsor).
19
5.2 Reaffirmation and Expansion of Representations and
Warranties. Sponsor shall be deemed to have reaffirmed the representations and
warranties set forth in Section 5.1 on each Loan Closing Date except to the
extent such representations and warranties either (a) relate solely to an
earlier date, (b) are subsequently inapplicable, or (c) are modified as a result
of Sponsor's activities or changes in circumstances, in any case as permitted
hereunder or as disclosed to Lender in writing and consented to by Lender in
accordance with the provisions of this Agreement.
5.3 Affirmative Covenants. During the term of this Agreement,
Sponsor shall:
(a) do or cause to be done all things necessary to keep in full
force and effect its valid existence and to qualify to do business in each
jurisdiction in which such qualification is necessary to the conduct of its
business except where the failure to qualify will not materially adversely
affect the financial condition of Sponsor or the ability of Sponsor to perform
its obligations under this Agreement or any Transaction Document to which
Sponsor is a party.
(b) do all things necessary to enable it to comply in all
material respects with all Legal Requirements, and all fiscal and accounting
rules and regulations generally recognized as in accordance with GAAP;
(c) keep proper books of account and records in which full, true
and correct entries in accordance with GAAP shall be made of all dealings and
transactions in relation to its business and activities; allow Lender and any
Person appointed by it access to such books of account and records at all
reasonable times during normal business hours upon reasonable notice; and permit
Lender and any Person appointed by it to discuss the affairs, finances and
accounts of Sponsor with any of the management employees of Sponsor, provided
all such information shall be treated as, and kept, strictly confidential except
as otherwise provided in the sale, Securitization or Syndication of any Loan.
(d) furnish to Lender unaudited annual financial statements
within forty (40) days, and audited annual financial statements within ninety
(90) days, following the close of each fiscal year of Sponsor;
(e) Intentionally deleted;
(f) promptly inform Lender in writing of Sponsor becoming aware
of the commencement of any Action by or against Sponsor in any court of
competent jurisdiction or before any Governmental Authority, or before any
arbitration board, or the written threat of any such Action; or the receipt of
written notice from any Governmental Authority that (i) Sponsor is being placed
under regulatory supervision, (ii) any license, permit, charter, membership or
registration material to the conduct of Sponsor's business is to be suspended or
revoked or (iii) Sponsor is to cease and desist any practice, procedure or
policy employed by Sponsor in the conduct of its business;
20
(g) generally pay its debts as they become due, unless Sponsor
is in good faith contesting Sponsor's obligation to pay such debt in a manner
reasonably satisfactory to Lender (which may include Lender's requirement that
Sponsor post security with respect to the contested debt).
(h) pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, all taxes, assessments and governmental
charges levied or imposed upon Sponsor or upon the income, profits or property
of Sponsor except that Sponsor may at Sponsor's expense, after prior notice to
Lender, contest by appropriate legal, administrative or other proceedings
conducted in good faith and with due diligence, the amount or validity or
application, in whole or in part, of any such tax, assessment or lien therefor,
and may withhold payment of the same pending such proceedings if permitted by
law, as long as (i) in the case of any tax, assessment or lien therefor, such
proceedings shall suspend the collection thereof from the profits or property of
Sponsor, (ii) neither the profits or property of Sponsor nor any part thereof or
interest therein will be sold, forfeited or lost if the Sponsor pays the amount
or satisfies the condition being contested, and the Sponsor would have the
opportunity to do so, in the event of the Sponsor's failure to prevail in the
contest, (iii) the Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which the Sponsor has not
furnished additional security as provided in clause (iv) below, or to any risk
of criminal liability, and neither the profits or property of Sponsor nor any
interest therein would be subject to the imposition of any lien for which the
Sponsor has not furnished additional security as provided in clause (iv) below,
as a result of the failure to comply with such law or of such proceeding and
(iv) the Sponsor shall have furnished to the Lender additional security in
respect of the claim being contested or the loss or damage that may result from
the Sponsor's failure to prevail in such contest in such amount as may be
reasonably requested by the Lender, but in no event less than one hundred and
twenty-five percent (125%) of the amount of such claim or in such other method
acceptable to Lender in its sole but reasonable discretion;
(i) promptly provide copies to Lender of all marketing studies,
appraisals, engineering reports, property improvement plans, environmental
studies and ADA compliance studies relating to the Properties in Sponsor's
possession or under its control and all reports filed by Sponsor and/or its
Affiliates under the United States securities laws;
(j) give Lender prompt notice upon discovery of the occurrence
of any Potential Event of Default or Event of Default under this Agreement; and
(k) observe and perform each and every material term, provision,
covenant, and condition to be observed or performed by it pursuant to the terms
of any agreement affecting it, including this Agreement and any Transaction
Documents, the non-performance of which would have a material adverse effect on
the financial condition of Sponsor or on the ability of Sponsor to perform its
obligations under any agreement, including this Agreement or any other
Transaction Document.
21
5.4 Negative Covenants. During the term of this Agreement, except as
expressly permitted herein (a) Sponsor shall not dissolve or liquidate without
Lender's prior written consent; (b) Sponsor shall not merge or consolidate with
any Person unless (i) Sponsor, as Guarantor, maintains the financial covenants
required pursuant to the Guaranty of Payment and (ii) none of the guarantees
executed by Sponsor, as guarantor, in connection with any of the Loans are
adversely affected; and (c) Sponsor shall not, without Lender's prior written
consent, take any action if such action is likely to interfere with the
enforcement of any rights of Lender under any of the Transaction Documents or
any other agreements or instruments relating to any of the Pledged Property.
5.5 Further Assurances. Sponsor shall execute and deliver or cause to be
executed and delivered, all such additional instruments, and do, or cause to be
done, all such additional acts as may be reasonably necessary or proper, to
carry out the purposes of this Agreement or as Lender may reasonably request.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification.
(a) Sponsor, for itself and all those claiming under or through
Sponsor, to the fullest extent permitted by law, hereby releases and shall
defend, hold harmless and indemnify Lender and its Affiliates and their
respective directors, officers, agents and employees (together the "Indemnified
Parties"), from and against any and all liabilities, claims, charges, losses,
expenses or damages of any kind or nature, including reasonable attorneys' fees
and disbursements (including, without limitation, the costs of any investigation
and preparation) (together, "Losses"), which may arise in connection with (i)
the non-performance by Sponsor of this Agreement or the consummation by Sponsor
of the transactions contemplated herein or (ii) any breach or failure by Sponsor
to comply with any representation, warranty or covenant made by Sponsor herein
except to the extent that the Losses result from the gross negligence, bad
faith, willful misconduct or material breach of this Agreement by any
Indemnified Party. Notwithstanding the foregoing, Sponsor's sole and exclusive
obligation to Lender with respect to this Section 6.1(a) shall be the payment of
the Non- Use Fee.
(b) Sponsor, for itself and all those claiming under or through
Sponsor, to the fullest extent permitted by law, hereby releases and shall
defend, hold harmless and indemnify the Indemnified Parties from and against any
and all Losses which may arise in connection with any claims made by any broker
against any Indemnified Party (other than any broker engaged by Lender or its
affiliates). Notwithstanding anything to the contrary in (a) above, Sponsor's
obligations in connection with this Section 6.1 (b) shall survive the Facility
Termination Date.
22
(c) Any sums due under this Section 6.1 which are not paid
within thirty (30) days after written demand by the applicable Indemnified Party
(which demand shall be accompanied by appropriate invoices in reasonable detail
or other supporting documentation substantiating that such amounts are due and
owing) shall bear interest from the date of demand to the date of payment at the
Default Rate and shall be due and payable on demand.
(d) The obligations of Sponsor under this Section 6.1 shall
survive the termination of this Agreement but such obligations shall terminate
on the Facility Termination Date, except to the extent obligations have not been
paid or a claim has been made.
ARTICLE VII
SPECIAL PROVISIONS
7.1 Segregated Pool Properties. (a) Lender may, at any time, and from
time to time, by giving written notice to Sponsor and each Borrower that will be
affected thereby, divide the Loans made pursuant to this Agreement into two (2)
or more groupings of Loans (each a "Segregated Pool"), for the purpose of
facilitating a Securitization or other transfer with respect to one (1) or more
Segregated Pools. Loans in the same Segregated Pool will be cross-defaulted and
cross- collateralized only with one another. Lender's notice shall be given at
least sixty (60) days prior to the date selected by the Lender for the
Segregated Pools to be created (the "Segregated Pool Date") and shall specify
the Property or Properties to be included in each Segregated Pool (each a
"Segregated Pool Property").
(b) Intentionally deleted.
(c) If, on the date Lender gives a notice to create two (2) or
more Segregated Pools, any Borrower (a "Multi-Property Borrower") owns
Properties that will be in more than one (1) Segregated Pool, then:
(i) not less than thirty (30) days prior to the
Segregated Pool Date, Sponsor shall form one (1) or more new corporations,
limited liability companies or limited partnerships, each of which qualifies as
a Borrower under the definition herein (a "New Borrower") and deliver to Lender
the organizational documents thereof.
(ii) on or before the Segregated Pool Date, each
Multi-Property Borrower shall transfer one (1) or more of its Segregated Pool
Properties to one (1) or more New Borrowers so that no Borrower or New Borrower
owns Segregated Pool Properties in more than one Segregated Pool, and
(iii) on the Segregated Pool Date, each New Borrower will
execute and deliver to Lender (A) the documents that a Borrower must deliver to
Lender pursuant to clauses (i) and
23
(n)(7) of Section 3.1, (B) an assignment and assumption of the Transaction
Documents relating to its Segregated Pool Property, and (c) such other documents
as shall be reasonably required by Lender, all of which shall be in form and
substance reasonably satisfactory to Lender.
7.2 Intentionally deleted.
7.3 Intentionally deleted.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Notices. All notices, consents, approvals and requests required or
permitted hereunder (a "notice") shall be given in writing and shall be
effective for all purposes if hand delivered or sent (i) by certified or
registered United States mail, postage prepaid, or (ii) by (A) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, and (B) telecopier (with answer back acknowledged), in
any case addressed as follows (or to such other address or Person as a party
shall designate from time to time by notice to the other party): If to Lender:
Nomura Asset Capital Corporation, Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Telecopier (▇▇▇) ▇▇▇-▇▇▇▇,
with copies to : Nomura Asset Capital Corporation, Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, Telecopier
(▇▇▇) ▇▇▇-▇▇▇▇ and Dechert Price & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇;
if to Sponsor: Brookdale Living Communities, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Telecopier
(▇▇▇) ▇▇▇-▇▇▇▇, Brookdale Living Communities, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Telecopier (312)
977-3769, with a copy to: Winston & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇. A
notice shall be deemed to have been given: in the case of hand delivery, at the
time of delivery; in the case of registered or certified mail, when delivered or
the first attempted delivery on a Business Day; or in the case of expedited
prepaid delivery and telecopy, upon the first attempted delivery on a Business
Day.
8.2 Benefit of Agreement. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided, however, that Sponsor may not assign or transfer
any of its rights or obligations hereunder without the consent of Lender, which
may be withheld in the sole discretion of Lender. Any such assignment or
transfer shall not release Sponsor from any obligations or liabilities hereunder
without the prior written consent of Lender. Lender's interests under the
Transaction Documents shall be freely assignable and transferrable. No party
other than the parties hereto and their permitted assigns shall be deemed to
have any benefits or obligations under this Agreement.
24
8.3 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO THE CONFLICTS OF LAW PRINCIPLES THEREUNDER.
8.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
8.5 Construction; Table of Contents; Descriptive Headings. In the
preparation of this Agreement and the Exhibits to this Agreement
indistinguishable contributions were made by representatives of both Lender and
Sponsor, and each of Lender and Sponsor waives any and all rights, either at law
or in equity, to have the provisions of this Agreement or any of the Exhibits to
this Agreement interpreted in favor of one over the other based on a claim that
representatives of one or the other were the principal draftsmen thereof. The
Table of Contents to this Agreement and the descriptive headings of the several
Sections and Articles of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
8.6 Amendment or Waiver; Integration. No provision of this Agreement may
be amended, changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, change, waiver, discharge or termination is sought. This Agreement
sets forth the entire agreement and understanding of the parties with respect to
the subject matter hereof, and supersedes any and all prior agreements and
understandings of the parties hereto with respect to the subject matter hereof,
which prior agreements and understandings are terminated in all respects.
8.7 Survival of Representations and Warranties; Reliance.
All representations and warranties contained in this
Agreement and the indemnification provisions hereof shall survive the execution
and delivery of this Agreement and, the making of the Loans and shall be
considered to have been relied upon by Lender regardless of any investigation
made by or on behalf of it. All representations and warranties, and covenants
contained in this Agreement and the indemnification provisions shall terminate
on the Facility Termination Date, except as expressly provided in Section 6.1 of
this Agreement; provided however, all representations, warranties, obligations,
and indemnification of Sponsor pursuant to all guarantees executed by Sponsor,
as guarantor, in connection with every Loan made pursuant to this Agreement
shall survive the termination of the Agreement and shall terminate only as set
forth in such guarantees.
8.8 Termination of Agreement. The Transaction Documents and the Liens
granted to Lender thereunder shall continue in full force and effect
notwithstanding any termination of this Agreement.
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8.9 JURISDICTION AND SERVICE; WAIVER OF JURY TRIAL.
SPONSOR HEREBY (A) IRREVOCABLY CONSENTS AND SUBMITS ITSELF AND
ACKNOWLEDGES AND RECOGNIZES THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK LOCATED IN NEW YORK COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ANY ACTION ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, RELATING TO, OR BASED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF, (B) AGREES THAT SUCH COURTS SHALL BE THE SOLE AND EXCLUSIVE
COURTS AND FORUMS FOR THE PURPOSE OF ANY SUCH ACTION AND (C) WAIVES AND AGREES
NOT TO ASSERT, AS A DEFENSE OR OTHERWISE, IN ANY SUCH ACTION, ANY CLAIM THAT
SUCH COURTS DO NOT HAVE JURISDICTION OVER IT OR THAT SUCH ACTION IS BROUGHT IN
AN INCONVENIENT FORUM; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL
LIMIT, IN ANY MANNER, THE RIGHT OF LENDER TO INSTITUTE OR TAKE ANY ACTION IN ANY
COURT IN ANY JURISDICTION FOR THE PURPOSE OF PROTECTING, PRESERVING OR REALIZING
UPON ANY COLLATERAL, IF ANY, SECURING THE DEBT OR ENFORCING ANY JUDGMENT
OBTAINED BY IT IN CONNECTION WITH ANY TRANSACTION DOCUMENT OR THE SUBJECT MATTER
THEREOF. SPONSOR AND LENDER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION ARISING OUT OF, UNDER, OR IN CONNECTION WITH, RELATING TO, OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, AND AGREE THAT PROCESS IN ANY SUCH
ACTION, IN ADDITION TO ANY OTHER METHOD PERMITTED BY LAW, MAY BE SERVED UPON IT
BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER
AT THE ADDRESS SET FORTH ABOVE OR TO SUCH OTHER ADDRESS AS SPONSOR MAY DESIGNATE
BY NOTICE GIVEN TO LENDER, AND SUCH SERVICE SHALL BE DEEMED EFFECTIVE AS IF
PERSONAL SERVICE HAD BEEN MADE UPON IT WITHIN NEW YORK COUNTY.
8.10 Enforceability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, Sponsor hereby waives any provision of law which renders any
provision hereof prohibited or unenforceable in any respect.
8.11 Conflicting Terms. In the event of any direct conflict between any
provision of this Agreement and any provision of any Transaction Document, the
provision of the Transaction Document shall govern.
8.12 Relationship of Parties. The relationship of Sponsor and Borrowers to
Lender is strictly and solely that of lender and borrower and mortgagor and
mortgagee, and nothing contained in this
26
Agreement, the Mortgages or any other Transaction Document is intended to
create, or shall in any event or under any circumstance be construed as
creating, a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between Sponsor and Lender other
than as lender and borrower. Sponsor acknowledges that (a) Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Sponsor or its Affiliates, (b) Sponsor is represented by competent counsel
and has consulted counsel before executing this Agreement and (c) it shall rely
solely on its own judgment and advisors in entering into the transactions
contemplated hereby without relying in any manner on any statements,
representations or recommendations of Lender or any Affiliate of Lender.
8.13 Confidentiality; Publicity. Except as otherwise required by
applicable Legal Requirements, neither Sponsor nor any Affiliate thereof shall
advertise or issue promotional materials describing Lender's participation in
the Loan or the inclusion of the Loan in any Securitization without the prior
consent of Lender. Lender may, without Sponsor's consent, issue press releases,
advertisements or other promotional materials describing Lender's participation
in the origination of the Loans or the inclusion of any or all of the Loans in
any Securitization effectuated or to be effectuated by Lender.
(Signature page follows)
27
IN WITNESS WHEREOF, each of Sponsor and Lender has caused this
Agreement to be signed and delivered, all as of the day and year first above
written.
NOMURA ASSET CAPITAL CORPORATION
By:
▇▇▇▇▇▇ ▇▇▇▇▇
Director
BROOKDALE LIVING COMMUNITIES, INC.
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Executive Vice President
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions............................................1
1.2 General................................................6
1.3 Terms defined in Loan Agreement........................6
1.4 Terms defined in Building Loan Agreement...............7
ARTICLE II
THE LOANS
2.1 Loans to Borrowers.....................................7
2.2 Use of Loan Proceeds...................................8
2.3 Preliminary Approvals of Projects......................8
2.4 Fees..................................................11
ARTICLE III
CONDITIONS TO ENTERING INTO LOAN AGREEMENTS
3.1 Conditions............................................13
3.2 Documentation.........................................16
ARTICLE IV
DEFAULT; REMEDIES; ENFORCEMENT
4.1 Events of Default.....................................16
4.2 Termination, Acceleration and Remedies................17
4.3 Remedies Cumulative; Delay or Omission Not a Waiver...17
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations and Warranties of Sponsor
on the Closing Date..............................18
5.2 Reaffirmation and Expansion of Representations
and Warranties...................................20
5.3 Affirmative Covenants.................................20
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Page
5.4 Negative Covenants....................................22
5.5 Further Assurances....................................22
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification.......................................22
ARTICLE VII
SPECIAL PROVISIONS
7.1 Segregated Pool Properties............................23
7.2 Intentionally deleted.................................24
7.3 Intentionally deleted.................................24
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Notices...............................................24
8.2 Benefit of Agreement..................................24
8.3 GOVERNING LAW.........................................24
8.4 Counterparts..........................................25
8.5 Construction; Table of Contents; Descriptive Headings.25
8.6 Amendment or Waiver; Integration......................25
8.7 Survival of Representations and Warranties; Reliance..25
8.8 Termination of Agreement..............................25
8.9 JURISDICTION AND SERVICE; WAIVER OF JURY TRIAL........26
8.10 Enforceability........................................26
8.11 Conflicting Terms.....................................26
8.12 Relationship of Parties...............................26
8.13 Confidentiality; Publicity............................27
EXHIBITS
A - Form of Assignment of Agreements
B - Form of Assignment of Leases
C - Form of Building Loan Agreement
D - Form of Consent and Subordination of Manager
E - Form of Loan Agreement
F - Form of Note
G - Form of Senior Mortgage
ii
H - Form of Subordinate Mortgage
I - Form of Sponsor's Closing Certificate
J - Form of Environmental Indemnity Agreement
K - Form of Guaranty of Payment
L - Form Guaranty of Completion
M - Form of Non-Recourse Guaranty
N- Organizational Structure of Borrower Sponsor
iii