1
Exhibit 10.16
FINOVA
SCHEDULE TO MASTER
LOAN AND SECURITY AGREEMENT
BORROWER: BERKSHIRE RENOVATION, LLC
ENCINO RENOVATION, LLC
ROSSMORE RENOVATION, LLC
ADDRESS: C/O ARV ASSISTED LIVING, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇-▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TAX I.D. NO.: SEE SECTION 9.16
DATED AS OF: OCTOBER 30, 1998
This Schedule forms an integral part of the Master Loan and Security Agreement
between the above Borrowers and FINOVA Capital Corporation dated the above date,
and all references herein and therein to this "Agreement" shall be deemed to
refer to said Agreement and to this Schedule.
================================================================================
TOTAL FACILITY (SECTION 1.1):
$26,000,000, allocated as follows:
(a)Berkshire - $5,500,000, including an Allocated Interest
Reserve Amount of $556,280;
(b)Encino - $4,700,000, including an Allocated Interest
Reserve Amount of $285,551; and
(c)Rossmore - $15,800,000, including an Allocated Interest
Reserve Amount of $2,234,894.
================================================================================
LOANS AND BORROWING TERM (SECTION 1.2):
The proceeds of the Loan shall be funded to Borrowers, up to the amounts
set forth in Section 1.1 above, and together with equity to be contributed by
the members of Borrowers, shall be used (i) to finance the
1
2
acquisition and renovation of following facilities: (A) the Encino Hills Terrace
in Encino, California, by Encino; (B) the Rossmore House in Los Angeles,
California, by Rossmore; and (C) the Berkshire in Berkeley, California, by
Berkshire; and (ii) to pay closing costs, loan fees and other costs incurred in
connection with the Loan including, without limitation, architectural and
engineering reports, appraisal fees, and attorneys' fees and expenses. The Loan
shall include a reserve for capitalized interest (in the aggregate, the
"Interest Reserve," and as to each Borrower, the "Allocated Interest Reserve
Amount") in the amounts set forth in Section 1.1 above. Total Advances of the
Loan shall be subject to the further limitation that in no event shall the total
fundings made to any individual Borrower exceed 65.0% of the total acquisition,
construction and renovation costs applicable to the particular Facility to be
owned and operated by such Borrower. The Borrowers shall be required to have
acquired each of the foregoing Facilities by a date not later than thirty (30)
days following the execution of this Agreement. Each of the Borrowers shall
thereafter be permitted to request Advances of the Loan proceeds allocated to
such Borrower during a term of up to twelve (12) months (as to Encino and
Berkshire) from the Closing Dates applicable to Encino and Berkshire, and up to
twenty (20) months (as to Rossmore) from the Pre-Closing Date.
================================================================================
CONDITIONS PRECEDENT (SECTION 2.1):
The obligation of FINOVA to make the initial Advance of any Loan
hereunder is subject to the fulfillment, to the satisfaction of FINOVA
and its counsel, of each of the following conditions, in addition to the
conditions set forth in Section 2.1 above. To the extent individual
items relate to the Facilities or the Collateral, such items shall be
interpreted to refer solely to the individual Facility to be acquired by
an individual Borrower and the other Collateral to be provided by such
Borrower, on a Borrower by Borrower basis. Such conditions are
designated with an "*":
A. Appraisal.* FINOVA has received and approved an MAI
stabilized fair market value appraisal of each Facility, in a
form and from an appraiser satisfactory to FINOVA in its
Permitted Discretion, which shall support a loan to value ratio
of not greater than eighty-five percent (85%), as determined by
reference to that portion of the Loan which as has been
allocated to the applicable Borrower. All such appraisals must
be satisfactory to FINOVA, and shall be dated not more than
thirty (30) days prior to the Closing Date applicable to the
particular Borrower;
B. Management Agreements. FINOVA has received and
approved the Management Agreements. Without limiting the
generality of the foregoing, the amount of management fees
payable to ARV by each Borrower shall be subject to FINOVA's
approval (such management fees as are approved by FINOVA being
referred to herein as the "Permitted Management Fees"). In
addition, ARV shall have entered into the Subordination
Agreements with FINOVA, in form and substance satisfactory to
FINOVA, subordinating payment of the Permitted Management Fees
to repayment of the Borrower's Obligations to FINOVA, and
providing for a suspension of remedies on the part of ARV for
periods during which an Event of Default under the Loan
Documents is in existence.
C. Food Plain/Earthquake.* FINOVA has received
satisfactory evidence that the Real Property is not located
within a flood plain or earthquake zone or that Borrower has
federal flood insurance and earthquake insurance in an amount,
form and issuer acceptable to FINOVA.
D. Material Agreements and Licenses. FINOVA's
satisfactory review of:
(i) Equipment Leases and Operating/Capital
Leases;
(ii) Most current financial statements with
comparable from prior year; and
(iii) Three (3) years of projected operating
budgets.
E. Cash Shortfall Protection. ARV shall have undertaken,
for the benefit of each Borrower and FINOVA, to bear the risk of
(i) cost overruns during the construction/renovation phase in
excess of budgeted amounts and (ii) operating losses in excess
of projected operating
2
3
losses, in each case as detailed in the Budget and projections
to be attached to the applicable Loan Documents (all such
amounts as may hereafter arise being referred to as the
"Projected Cash Shortfalls"). ARV's assurance in this regard
(the "Projected Cash Shortfall Protection") shall be in form and
substance satisfactory to FINOVA and shall be specifically
enforceable by FINOVA as a named third party beneficiary
thereof. ARV shall assure against Projected Cash Shortfalls in
an aggregate amount of up to $4,000,000. The foregoing amount
will not be segregated among Borrowers, such that each Borrower
shall have the right to receive payments thereunder until the
full amount of ARV's assurance has been exhausted. Without
limiting the generality of FINOVA's right to be satisfied with
the terms and conditions of the Projected Cash Shortfall
Protection, the Projected Cash Shortfall Protection shall
specifically provide that, if there exists any Event of Default
under the Loans, any payments owed by ARV shall be paid directly
to FINOVA.
F. Additional Enhancement Applicable to Rossmore
Facility. In addition to the Projected Cash Shortfall Protection
described in Section 2.1(E) above, ARV and Vintage ABR Hillsdale
shall provide additional credit enhancement, in form and
substance satisfactory to FINOVA, to support all operating cash
flow deficits which may be incurred by Rossmore and to provide
protection regarding the repayment of any deficiency resulting
from a sale or other disposition of the Facility owned by
Rossmore for an amount which generates insufficient proceeds to
pay in full that portion of the Loan allocated to Rossmore. Such
additional credit enhancement shall be in the form of an
Operating Deficit and Deficiency Payment Agreement from ARV and
Vintage ABR Hillsdale in favor of FINOVA, the final form of
which shall be determined by FINOVA and agreed upon by ARV and
Vintage ABR Hillsdale prior to the Closing Date applicable to
Rossmore.
G. Interest Reserve. Evidence satisfactory to FINOVA
that the amount budgeted for the Interest Reserve shall be
sufficient to pay interest, at the Interest Rate, on amounts
outstanding from time to time from the date of the first
disbursement of the proceeds of the Loan through the projected
Conversion Date. FINOVA's acceptance and approval of each
Borrower's budget for the construction period, if such budget
supports the sufficiency of the Interest Reserve, shall be
sufficient to satisfy this condition.
H. Equity Structure. FINOVA shall have reviewed and
approved Borrower's organizational documents and the ownership
structure of Borrower.
I. Pending Litigation. FINOVA and its counsel shall have
reviewed and found satisfactory the status of any and all
litigation matters affecting any individual Borrower, one or
more Borrowers as a group, ARV, or Vintage. Without limiting the
generality of the foregoing, ARV shall have provided FINOVA
current status reports with respect to its pending litigation
with Emeritus Corporation (the "Emeritus Litigation") and with
respect to the matter of ARV Assisted Living, Inc. ▇. ▇▇▇▇▇▇
Freres Real Estate Investors LLC, et al., Case Number 794211,
Superior Court of the State of California for Orange County (the
"Lazard Litigation"). The status of all remaining matters as to
the Lazard Litigation and the Emeritus Litigation shall be
satisfactory to FINOVA and its counsel in all respects.
J. Other Indebtedness. No Borrower shall have any other
outstanding Indebtedness, other than in connection with trade
payables incurred in the ordinary course of business and not
past due.
K. Relocation of Residents. Rossmore shall not commence
the renovation phase on the Rossmore House until all existing
residents of such Facility have been relocated to other
premises, unless FINOVA has reviewed and approved Rossmore's
plan for assuring the continued safety and care of residents who
may be remaining in the Facility during renovation.
L. Contribution of Equity. The members of each Borrower
shall have contributed the necessary equity to provide
sufficient funding for such Borrower to have adequate resources
3
4
(together with Loan proceeds) to pay for all items as shown on
the Budgets. The required equity for each Borrower, and for all
Borrowers together, shall have been contributed on or before the
first Closing Date applicable to any Borrower (except to the
extent set forth below with respect to Rossmore). The required
equity contributions for each of the Borrowers shall be not less
than 35% of the total acquisition, construction and renovation
costs applicable to the particular Facility to be owned and
operated by such Borrower. The total equity required to be
contributed to Rossmore shall be contributed at such time as
Rossmore has obtained all necessary permits and approvals to
renovate the Rossmore House, but in no event subsequent to the
Closing Date applicable to Rossmore. All required equity
contributions shall be in cash; provided, however, that Vintage
shall be permitted to receive credit for the contribution of its
development fee with respect to the various Facilities (i.e.,
Vintage may allocate such fee directly to the various Borrowers
as its equity contribution, rather than being paid such fee in
cash), in an amount as to each Borrower to be approved by
FINOVA, but in no event shall the total equity contributed to
all Borrowers in a non-cash form exceed, in the aggregate,
$1,050,000.
M. Current Financial Statements and Projections.* Each
Borrower shall provide FINOVA with updated copies of such
Borrower's operating budgets for the first three (3) years of
the term of the Loan, and Borrower's pro forma balance sheet as
of the Closing of such Borrower's allocated portion of the Loan.
Without limiting the generality of the foregoing, each set of
projections shall include a detailed analysis of "lease-up"
period applicable to the particular Facility and the anticipated
point at which such Facility shall achieve a level of Operating
Cash Flow sufficient to satisfy the Debt Service Coverage
Covenant and Debt Service After Management Fee Coverage
Covenant, each as set forth in Section 10.14 herein.
N. Regulatory Matters.* Review and approval of the
regulatory scheme having jurisdiction over assisted living
communities in the states in which the Facilities are located or
are to be located, including FINOVA's review and approval of
FINOVA's ability to obtain a lien on Borrower's licenses
necessary for the operation of each of the Facilities as an
assisted living community or confirmation satisfactory to FINOVA
that FINOVA will not need a lien on the aforementioned license
in order to operate any Facility for its intended purposes
through a licensed designee acceptable to FINOVA.
O. ARV's Financial Information. ARV shall provide FINOVA
with copies of its federal income tax returns for the years
ended March 31, 1996, and March 31, 1997 (including all
schedules and attachments thereto), its most recent audited
financial statements dated no later than December 31, 1997, and
its interim unaudited financial statements for the six month
period ending June 30, 1998 (together with comparable
information for the same portion of ARV's immediately preceding
fiscal year). Such information may be provided by ARV through
delivery of copies of ARV's most recent filings made with the
SEC.
P. Residency Agreements. Satisfactory review and
approval by FINOVA of the form of residency agreement which
Borrowers shall use in the operation of the Facilities.
Q. Market Feasibility Studies.* Satisfactory review and
approval by FINOVA of a market feasibility study with respect to
each Facility, which shall indicate a need for the capacity
represented by such Facility in its relevant geographic market.
Without limiting the generality of the foregoing, each market
feasibility study shall address, in addition to all competing
projects currently in operation, those competing projects under
construction or otherwise in a development stage and known to
the public.
Borrower shall cause all of the conditions precedent set forth in
Section 2.1 of this Agreement and set forth above in this Schedule to be
satisfied on or before the Closing Date applicable to each Borrower.
================================================================================
INTEREST AND FEES (SECTION 3.1):
4
5
1. Interest Rate. Interest shall accrue on the Loan at a variable rate
per annum equal to the Prime Rate plus one-half of one percent (0.50%)
(the "Interest Rate"). The Prime Rate shall mean that rate of interest
publicly announced by Citibank, N.A., in New York, New York, as
Citibank's base lending rate to its most creditworthy commercial
customers, notwithstanding the fact that some persons may borrow at
rates of interest less than the announced Prime Rate. Changes in the
Interest Rate shall take effect immediately upon any change in the Prime
Rate.
2. Loan Fees. Each Borrower shall have paid to FINOVA a loan fee for the
Loan in the amount of one percent (1%) of the total Loan proceeds as are
allocated to such Borrower, as set forth in Section 1.1 above (the "Loan
Fee"). Borrowers acknowledge that the Loan Fee has been fully earned and
is nonrefundable. Payment of the Loan Fee shall be made concurrently
with the execution and delivery of this Agreement (provided, however,
that in the event Rossmore has not yet obtained all permits and
approvals necessary to renovate the Rossmore House, payment by Rossmore
of that portion of the Loan Fee attributable to Rossmore based upon the
total Loan proceeds which are committed to Rossmore, as set forth in
Section 1.1 above, shall be deferred until such time as all such permits
and approvals have been obtained).
3. Conversion Fees. Each Borrower shall pay to FINOVA a fee (herein, the
"Conversion Fees") in the amount of one percent (1%) of the sum of (i)
total actual fundings to or for the benefit of such Borrower up through
and including the Conversion Date plus (ii) any remaining undisbursed
portion of such Borrower's Allocated Interest Reserve Amount, in
consideration for FINOVA's agreement to provide financing following
completion of the construction phase, which fees shall be payable by
each such Borrower on the Conversion Date applicable to its particular
portion of the Loan. The Conversion Fees are compensation to FINOVA in
consideration of its agreement to fund the Loans during and after the
construction phases applicable thereto, and shall not be applied against
the outstanding principal, accrued interest, or any other amounts owing
to FINOVA with respect to the Loans.
4. Prepayment.
4.1 Voluntary, Full Prepayment. The Prepayment Premium shall be
computed as follows:
Percent of the outstanding principal balance
Period of the Loan as of the Notice Date
------ ---------------------------------
First Loan Year 5%
Second Loan Year 4%
Third Loan Year 3%
Fourth Loan Year 1%
and thereafter
4.2 Prepayment Upon Default. The Prepayment Premium payable in
the case of a prepayment upon an Event of Default and acceleration by
FINOVA shall be as set forth above.
4.3 Reduced Prepayment Events. Notwithstanding the provisions of
Paragraph 4.1 above, in the event that either (i) that portion of the
Loan which is allocated and funded to Encino and Berkshire is prepaid in
full on or after the third anniversary of the last Closing Date
applicable to Encino and Berkshire, or (ii) that portion of the Loan
allocated and funded to Rossmore is prepaid in full on or after the
third anniversary of the Closing Date applicable to Rossmore, and such
prepayments occur through the proceeds of long-term mortgage financing
which the applicable Borrowers or their affiliates have obtained from
FINOVA Realty Capital, Inc., or one or
5
6
more of its affiliates, then the Prepayment Premium shall be reduced
from the amount set forth in Paragraph 4.1 above to one-half of one
percent (0.50%) of the principal amount being prepaid.
4.4 Limited Waiver of Prepayment Premium. In the event that any
of the Facilities, or the outstanding ownership interests in any
Borrower, are acquired by ARV (or an affiliate of ARV provided that such
affiliate has the same or greater financial strength and wherewithal as
ARV) pursuant to those terms and conditions in such Borrower's Articles
of Organization (or in agreements entered into directly between ARV and
Vintage ABR Hillsdale) which provide ARV with certain rights to acquire
the Borrower or its Facility, no Prepayment Premium required by
Paragraph 4.1 above shall be payable in connection with any such sale if
either (x) ARV (or its affiliate) is able to prepay that portion of the
Loan as has been allocated to the applicable Borrower from ARV's (or
such affiliate's) available cash resources, without obtaining new
financing secured by the Facility owned by such Borrower (in which event
the condition set forth above requiring that such affiliate have the
same or greater financial strength and wherewithal as ARV shall be
deemed satisfied), or (y) ARV (or its affiliate) either (i) continues
the existing financing with respect to the Loans, (ii) obtains new
financing through FINOVA or one of FINOVA's affiliates, or (iii) gives
FINOVA a first right of refusal to provide new financing as follows:
If ARV or its affiliate has received a bona fide offer
from a third party for such financing which ARV or its affiliate
wishes to accept, ARV or its affiliate shall give FINOVA written
notice of such offer together with a copy of a written bona-fide
proposal for such financing from the prospective third party
lender. FINOVA shall have five (5) business days from the
receipt of such notice and proposal to issue a financing
proposal to ARV or its affiliate to extend such financing upon
terms substantially equivalent to or better than those contained
in the proposal from the third party lender (it being understood
however that FINOVA has no obligation to issue such proposal).
The failure of FINOVA to issue a proposal within the foregoing
five (5) business day period shall be deemed an election by
FINOVA not to extend such financing. Following ARV or its
affiliate's acceptance of the financing proposal issued by
FINOVA, FINOVA shall have fifteen (15) business days thereafter
within which to issue a commitment to ARV or its affiliate for
such financing (it being understood however that FINOVA has no
obligation to issue such commitment). The failure of FINOVA to
issue such commitment within the foregoing fifteen (15) business
day time period shall be deemed an election by FINOVA not to
extend such financing. In addition, in the event FINOVA
determines prior to the expiration of said fifteen (15) business
day period that FINOVA does not wish to commit to provide such
financing, FINOVA shall promptly notify ARV to that effect. If
FINOVA elects not to extend such financing, ARV or its affiliate
shall have the right to accept the financing proposal from the
third party lender and close such financing on terms which are
in no material respect more favorable to the third party lender
than those contained in its proposal. ARV or its affiliate shall
not however have the right to close such financing with the
third party lender on terms materially more favorable to the
third party lender than those contained in the proposal from
such third party lender, and be relieved of the Prepayment
Premium obligation, unless FINOVA is first given the right to
provide ARV or its affiliate with financing on terms
substantially equivalent to or better than those offered by such
third party lender, as more fully provided above.
4.5 Release Provision. Upon payment by any Borrower to FINOVA of
all amounts due and owing to FINOVA by such Borrower, as allocated to
such Borrower in the final Loan Documents (including, without
limitation, any applicable Prepayment
6
7
Premium as required by this Paragraph 4 of this Section 3.1), such
Borrower shall be entitled to a release of such Borrower's Facility and
of all other Collateral which has been encumbered by such Borrower from
the lien of FINOVA's security interest in such assets.
5. Construction Monitoring Fee. Each Borrower shall pay FINOVA a
construction monitoring fee equal to $2,000 per month for the period
commencing with the Closing Date applicable to such Borrower and ending
on such Borrower's Conversion Date.
6. Interest Payments. During the construction/renovation phase
applicable to each of the Facilities, and for a period of twelve (12)
months after the completion of the renovation/construction phase for
each Facility, interest on the outstanding balance of the Loan shall be
payable monthly on the first day of each calendar month following the
first disbursement of proceeds under the Loan, calculated at the
Interest Rate. The construction/renovation phase applicable to each
Borrower shall commence on such Borrower's Closing Date and shall run
until the earlier to occur of the date construction is actually
completed and the last disbursement of either Basic Retainage or
Additional Retainage (as described in Section 2.3(c) hereof) occurs or
the Required Completion Date. The earlier of such events shall be
referred to herein as the "Conversion Date." Prior to the Conversion
Date, interest on the outstanding balance of the Loan shall be payable
by each Borrower through advances made from such Borrower's Allocated
Interest Reserve Amount, so long as (i) no Event of Default exists and
is continuing and (ii) such Borrower's Allocated Interest Reserve Amount
has not been fully drawn upon. Following the Conversion Date, interest
accruing during Borrower's twelve month interest-only period shall be
payable by Borrower first from Operating Cash Flow, and thereafter from
any remaining amounts in the such Borrower's Allocated Interest Reserve
Amount, to the extent such Borrower has experienced an Available
Operating Cash Flow Shortfall.
7. Principal Payments. Following completion of the foregoing
interest-only period, the principal balance of the Loan and all accrued
interest shall be paid in that number of monthly installments which is
equal to forty-eight (48) minus the number of monthly installments of
interest only which were paid through and including the Conversion Date
(with the result that the total term of the Loan applicable to each
Borrower shall be sixty (60) months). The final (i.e., sixtieth) monthly
installment date with respect to each Borrower shall be referred to
herein as such Borrower's "Maturity Date." Each installment of principal
and interest shall be referred to herein as a "Permanent Loan
Installment." The Permanent Loan Installments under the Loan shall
commence on the due date of the thirteenth (13th) monthly installment
following the Conversion Date (which date shall be referred to herein as
the "Amortization Date"), and shall continue on the first day of each
month thereafter, through but excluding the Maturity Date. Other than
for the Permanent Loan Installment due on the Maturity Date, each of the
Permanent Loan Installments shall be in an amount equal to the sum of
(i) interest calculated at the Interest Rate, plus (ii) a principal
component equal to the principal portion of a two hundred forty (240)
month amortization schedule, calculated based upon the Interest Rate and
the principal balance of the Loan outstanding on the Amortization Date.
On the Maturity Date, all remaining unpaid principal and any other sums
due and owing pursuant to each Borrower's obligations to FINOVA in
respect of the Loan, plus all unpaid accrued interest on the Loan, if
not sooner paid, shall be due and payable in full. The Closing Date,
Conversion Date, Amortization Date, Start Date, and Maturity Date
applicable to each Borrower shall be separate and distinct, and shall be
determined solely by reference to such Borrower's acquisition of its
individual Facility and the construction schedule resulting from its
renovation thereof. Effective as of the Amortization Date applicable to
each Borrower, no further Advances from such Borrower's Allocated
Interest Reserve Amount shall be made.
7
8
================================================================================
REPORTING REQUIREMENTS (SECTION 5.2):
1. Borrower shall provide FINOVA with annual operating
budgets (including income statements, balance sheets and
cash flow statements, by month) for the upcoming fiscal
year of Borrower within ninety (90) days prior to the
end of each fiscal year of Borrower.
2. Borrower shall provide FINOVA with copies of any
notices from any public or private entity having
jurisdiction over the lawful operation of the
Facilities, within five (5) Business Days after receipt
of same.
3. Borrower shall provide FINOVA with copies of any
notices received from any applicable licensure or
certification authority with respect to the compliance
or non-compliance of the Facilities under applicable
state or federal law, including any notices of the
pendency of any de-certification, de-licensure,
non-renewal of licensure or certification or any similar
proceedings immediately upon receipt.
4. Borrower shall provide FINOVA with copies of any
notices, submissions or other filings made by or on
behalf of Borrower to the healthcare regulatory agency
for the state in which the Facilities are located or to
any municipal public health or safety agency pursuant to
any applicable law, regulation or ordinance with respect
to operation of the Facilities as assisted living
communities.
5. Borrower shall provide FINOVA with comparisons
showing Borrower's actual operating results achieved for
the then current fiscal year compared against results
projected in the last annual operating budget provided
to FINOVA pursuant to Paragraph 1 above.
6. Borrower shall provide promptly to FINOVA, or shall
cause ARV to provide directly to FINOVA, copies of all
reports concerning the operation of the Facilities which
are prepared by ARV in accordance with the terms of the
Management Agreements.
7. Borrower shall provide to FINOVA copies of Borrower's
federal income tax returns (including all schedules and
attachments thereto) concurrently with the filing of
each such return (but in no event later than the 15th
day of the seventh calendar month following the end of
Borrower's fiscal year). In the event Borrower files an
extension for the time in which to file its federal
income tax return, Borrower shall provide to FINOVA a
copy of such extension request.
================================================================================
PERMITTED ENCUMBRANCES (SECTION 9.8):
Permitted Encumbrances shall mean:
1. Liens, security interests or other encumbrances for
taxes, assessments and other governmental charges or
levies arising by operation of law in the ordinary
course of business for sums which are not yet due and
payable, or such liens the enforcement of which are, at
all times, effectively and fully stayed and are being
contested in good faith by appropriate proceedings
diligently conducted, and for which reserves as required
under GAAP shall have been established;
2. Liens arising in the ordinary course of business in
respect of claims or demands of landlords, carriers,
warehousemen, vendors, mechanics, laborers, materialmen,
workers, repairmen and other similar Persons, whether
arising by operation of law, contractually or otherwise,
provided that the amounts
8
9
respectively secured thereby are not past due or if past
due, the enforcement of any such liens are at all times
stayed, and such liens are being contested in good faith
by appropriate proceedings diligently conducted and
reserves as required under GAAP shall have been
established therefor;
3. Liens in favor of FINOVA; and
4. Those matters set forth on the attached Exhibit B.
================================================================================
BORROWER INFORMATION (SECTION 9):
ROSSMORE RENOVATION, LLC
Borrower's State of Organization (Section 9.1): Delaware
Fictitious Names/Prior Names (Section 9.2): Rossmore House
Borrower Locations (Section 9.16): See attached List of Collateral Locations
Pending Litigation: See attached Schedule of Pending Litigation
Federal Employer ID No.: ▇▇-▇▇▇▇▇▇▇
Fiscal Year End: December 31
ENCINO RENOVATION, LLC
Borrower's State of Organization (Section 9.1): Delaware
Fictitious Names/Prior Names (Section 9.2): Encino Hills Terrace
Borrower Locations (Section 9.16): See attached List of Collateral Locations
Pending Litigation: See attached Schedule of Pending Litigation
Federal Employer ID No.: ▇▇-▇▇▇▇▇▇▇
Fiscal Year End: December 31
BERKSHIRE RENOVATION, LLC
Borrower's State of Organization (Section 9.1): Delaware
Fictitious Names/Prior Names (Section 9.2): The Berkshire
Borrower Locations (Section 9.16): See attached List of Collateral Locations
Pending Litigation: See attached Schedule of Pending Litigation
Federal Employer ID No.: ▇▇-▇▇▇▇▇▇▇
Fiscal Year End: December 31
9
10
================================================================================
FINANCIAL COVENANTS (SECTION 10.14):
Borrower shall comply with all of the following covenants. Compliance shall be
determined as of the end of each quarter.
Debt Service Coverage Ratio: Maintain a ratio (the "Debt Service Coverage
Ratio") of Operating Cash Flow to Contractual Debt Service of no less than 1.25
to 1.0 (the "Debt Service Coverage Covenant"). The foregoing covenant shall be
tested quarterly commencing with the first calendar quarter following the "Start
Date" (as hereafter defined). The Start Date shall be the first day of the first
calendar month following the month in which the earlier of the following two
events occurs: (i) a Facility attains an occupancy level of ninety-two percent
(92%) or greater or (ii) a Borrower's actual operating results have achieved a
Debt Service Coverage Ratio at least equal to 1.25:1.0; provided, however, that
in the event the Start Date has not previously occurred, each of the following
shall become the Start Date for the applicable Borrowers: for Berkshire, January
1, 2000; for Encino, January 1, 2000; and for Rossmore, October 1, 2001. For the
first twelve (12) months following the Start Date, the foregoing covenant shall
be tested for the period from the Start Date through the end of the relevant
quarter. Thereafter, the Debt Service Coverage Covenant shall be tested on a
rolling and trailing 12-month basis.
Debt Service After Management Fee Coverage Ratio: Maintain a ratio (the "Debt
Service After Management Fee Coverage Ratio") of Post Management Fees Cash Flow
to Contractual Debt Service at all times equal to at least 1.15 to 1.0 (the
"Debt Service After Management Fee Coverage Covenant"). The foregoing covenant
shall be tested from and after the Start Date, with the same frequency, and in
the same manner, as the Debt Service Coverage Covenant.
Net Worth: Each Borrower shall maintain Net Worth in an amount not less than the
following amounts: Berkshire - $2,200,000; Encino - $2,000,000; and Rossmore -
$____________. The foregoing covenant shall be tested at the end of each fiscal
quarter of Borrower.
================================================================================
NEGATIVE COVENANTS (SECTION 11):
Capital Expenditures: No Borrower shall make or incur any capital
expenditure if, after giving effect thereto, the
aggregate of all capital expenditures made by such
Borrower in any fiscal year will exceed One
Hundred Thousand Dollars ($100,000), provided,
that to the extent any Borrower makes any capital
expenditures which are paid for through additional
invested equity, such expenditures shall not be
counted against the foregoing annual limit. The
foregoing covenant shall be tested annually, on a
fiscal year basis, commencing with the period
following the Conversion Date. Testing of the
foregoing covenant for the fiscal year in which
the Conversion Date occurs shall disregard the
period prior to the Conversion Date, and shall
prorate the foregoing amount for the remaining
portion of such fiscal year. All capital
expenditures made by Borrower shall be made only
out of Borrower's internally generated funds or
additional equity invested.
Management Fees: Borrower shall not, during the term of the Loan,
pay management fees in excess of the Permitted
Management Fees during any fiscal year.
Distributions: No Borrower shall be permitted to pay dividends,
management fees (except for Permitted Management
Fees), capital distributions or other payments to
its members or other Persons (all of the
foregoing, collectively "Distributions") during
the term of the Loan without FINOVA's prior
written consent, until the first month in which
such Borrower first achieves compliance with the
Debt Service Coverage Covenant. Thereafter,
dividends and capital distributions may be made
quarterly in an amount not in excess of the
balance obtained when Operating Cash Flow is
reduced by the sum of Permitted Management Fees
and
10
11
one hundred fifteen percent (115%) of Contractual
Debt Service, as pertaining to such Borrower and
such Facility. It shall however be a condition to
the making of such dividend or distribution, that
before and after taking into account the payment
of such dividend or distribution there does not
exist an Event of Default or Incipient Default.
The foregoing restrictions on dividends and
distributions shall apply to all equity
contributed as capital, whether contributed in the
form of cash or as foregone development fees.
The foregoing notwithstanding, each Borrower shall
be permitted to make quarterly Distributions ("Tax
Distributions") to its members in an amount
sufficient for the payment of federal and state
income taxes payable by such members resulting
from the inclusion in such members' taxable income
of the members' pro rata share of the income of
the Borrower, subject to reasonable assumptions as
to the marginal tax bracket to which the members
of the Borrower generally are subject. If, at the
end of the Borrower's fiscal year, there exists a
tax credit as a result of overestimated quarterly
distributions having been made (i.e.,
distributions in excess of the amount ultimately
required for such members, on an aggregate basis,
to pay the tax due as a result of the inclusion in
such members' taxable income of the members' pro
rata share of the income of the Borrower), future
quarterly tax distributions shall cease until such
credit has been fully recaptured, unless the
Borrower's Articles of Organization provide for
refund of excess distributions or earlier
recapture of such amounts. The Borrower shall
provide to FINOVA an annual reconciliation of all
quarterly tax distributions compared against
Borrower's final annual taxable income and the
final tax distributions determined therefrom, no
later than thirty (30) days after the final
determination of the Borrower's taxable income is
made; and
Additional Indebtedness: Without the prior written consent and approval of
FINOVA, Borrower shall not modify the terms and
conditions of any existing or future debt or incur
any debt other than (i) unsecured trade debt
incurred in the ordinary course of business and
(ii) purchase money financing incurred in the
ordinary course of business which purchase money
financing shall not exceed Fifty Thousand Dollars
($50,000) in any one fiscal year.
================================================================================
CONSTRUCTION-RELATED COVENANTS, REPRESENTATIONS AND WARRANTIES:
1. Construction Loan Amount. FINOVA hereby agrees to make the
Advances to each Borrower in a principal sum not to exceed the amounts
set forth in Section 1.1 above, provided Borrower has complied with, and
subject to the terms and conditions of, this Agreement and all other
Loan Documents. Unless FINOVA, in its Permitted Discretion, agrees in
writing with Borrower to make such Advances thereafter on terms and
conditions satisfactory to FINOVA, Borrower shall not be entitled to
obtain Advances after the expiration of the Borrowing Term.
2. Use of Proceeds. Borrower shall use Advances (after the
initial Advance) only for payment of and reimbursement for hard and soft
construction costs and interest reserve set forth in the Budget and
designated as costs to be paid from the Loan proceeds. All Advances
shall be subject to the conditions and limitations of Sections 2.2 and
2.3 of the Agreement.
3. Initial Advance. The proceeds of the initial Advance shall be
disbursed by FINOVA on the Closing Date to or for the benefit of
Borrower for use in strict accordance with the Initial Advance
Disbursement Schedule attached hereto as Exhibit G.
4. No Prior Work. Borrower represents and warrants to FINOVA
that no services, work, equipment or materials of any kind that may give
rise to any mechanics or similar statutory lien, including, without
limitation, site work, clearing, grubbing, draining or fencing of the
Real Property has been
11
12
performed or commenced on the Real Property or otherwise provided in
connection with the Work, except to the extent that such services, work,
equipment, materials have been fully disclosed in writing to FINOVA and
Title Company and the Title Policy insures the priority of the Mortgage
over all mechanics and similar liens.
5. Utilities. Borrower represents and warrants to FINOVA that
all utility services (including water, storm and sanitary sewer, gas,
electric and telephone facilities and garbage removal) necessary for the
Completion of the Work and the intended use of each of the Facilities as
an assisted living community are available to the Real Property (or will
be upon Completion); the suppliers of such utilities have the capacity
to serve the Real Property and are committed to supply such utilities in
such amounts as are required upon Completion; and all fees and deposits
due to the suppliers of such utilities have been paid current or amounts
adequate for such purposes have been reserved in the Budget.
6. FINOVA's Inspector. FINOVA shall employ an independent
architect or engineer ("FINOVA's Inspector") to: (a) review the Plans,
the Budget and the Construction Contracts; (b) make periodic inspections
of the Real Property and Work so that FINOVA may monitor whether
Borrower is in compliance with the terms and conditions of this
Agreement with respect to completion of the Work; and (c) review and
approve the monthly draw request, perform an analysis of the anticipated
cost of the Work, and certify that each Work-Related Advance Request is
not in excess of the Work completed and the amount to which Borrower is
entitled under the terms and conditions of this Agreement. The cost of
retaining FINOVA's Inspector shall be borne by Borrower.
6.1 FINOVA may require an inspection of the Work by
FINOVA's Inspector (a) prior to each Work-Related Advance; (b)
monthly or more frequently if deemed necessary by FINOVA during
the course of construction of the Work; (c) upon Completion of
the Work; and (d) at such other time as FINOVA may deem
necessary due to actual or suspected non-compliance with the
Plans, Construction Contract(s), the Loan Documents, any law,
regulation or private restriction, sound architectural,
engineering or construction principles or commonly accepted
safety standards or Borrower's failure to satisfy the
requirements of the Loan Documents.
6.2 FINOVA shall have no duty to supervise or to review
and inspect the Plans, the Construction Contract(s), any budget
proposed to be the Budget, the construction of the Work, or any
books and records pertaining thereto. Any inspection made by
FINOVA shall be for the sole purpose of determining whether the
Obligations are being performed and preserving FINOVA's rights
under the Loan Documents. If FINOVA, or FINOVA's Inspector
acting on behalf of FINOVA, should review or inspect the Plans,
the Construction Contract(s), the Budget, the construction of
the Work or any books and records pertaining thereto, FINOVA and
FINOVA's Inspector shall have no liability or obligation to
Borrower or any third person arising out of such inspection; and
neither Borrower nor any third person shall be entitled to rely
upon any such inspection or review. Inspection not followed by
notice of default shall not constitute (a) a waiver of any
default then existing; (b) an acknowledgment or representation
by FINOVA or FINOVA's Inspector that there has been or will be
compliance with the Plans, the Construction Contract(s), the
Budget, the Loan Documents, applicable laws, regulations and
private restrictions, sound construction, engineering or
architectural principles or commonly accepted safety standards,
or that the construction is free from defective materials or
workmanship; or (c) a waiver of FINOVA's right to insist that
Completion of the Work occur in accordance with the Plans,
Construction Contract(s), the Budget, Loan Documents, applicable
laws, regulations and restrictions of record, sound
construction, engineering or architectural principles or
commonly safety standards and free from defective materials and
workmanship. FINOVA and FINOVA's Inspector owe no duty of care
to Borrower or any third person to protect against, or inform
Borrower or any third person of, the existence of negligence,
faulty, inadequate or defective design or construction of the
Work.
6.3 To the extent that any construction with respect to
any Facility is funded by sources other than the Loan
contemplated herein (including Borrower's equity), Borrower
shall
12
13
allow FINOVA's Inspector (at Borrower's expense) to review and
inspect such construction work and such construction work must
meet FINOVA's standards and specifications.
7. Enforcement of Contracts. Borrower shall strictly enforce all
material provisions of the Construction Contract, the Architect/Engineer
Agreement and all other contract(s) for the construction of the
Improvements to ensure that the other parties thereto are required to
promptly and diligently perform all of its obligations thereunder and in
such a manner as to preserve FINOVA's security in the Collateral and the
Facilities. Borrower shall timely perform all its obligations under the
aforementioned agreements and contracts. No material change, amendment
or modification shall be made to such contract(s) without the prior
written consent of FINOVA.
8. No Other Encumbrances. No materials, equipment, fixtures or
any other part of the Improvements, or articles of personal property
placed in the Facilities, shall be purchased or installed under any
security agreement or other arrangements wherein the seller reserves or
purports to reserve the right to remove or to repossess any such items
or to consider them personal property after their incorporation into the
Facilities.
9. Construction Commencement and Completion. Borrower shall
commence construction of the Improvements within 45 days following the
Closing Date, and shall continue the Work without material interruption,
and shall cause Completion on or before the Required Completion Date.
Borrower shall (a) permit no material deviations to occur in the
progress, timing or completion of construction of the Improvements; (b)
cause the Improvements to be constructed in accordance with the Budget;
(c) otherwise abide by the Work Progress Schedule and Budget in all
respects; and (d) cause the Completion of the Work in a good and
workmanlike manner substantially according to the Plans, free from all
legal charges, encumbrances and rights of third parties (other than the
Permitted Encumbrances), and in accordance with all applicable
ordinances and statutes, including zoning laws, all covenants,
conditions and restrictions running with the land, and all regulations
and building codes of any governmental or municipal agency having
jurisdiction over the Real Property.
10. Assurances. Borrower shall pay when due all costs, expenses
and claims pertaining to the Work and deliver to FINOVA during the
course of the Work in order to monitor and/or provide assurance that the
Work is proceeding lien free in accordance with the requirements of this
Agreement: bills of sale, conveyances and paid invoices pertaining to
the Work; all waivers and releases of lien or claims on the Real
Property and/or the Improvements on account of the Work FINOVA may deem
necessary or may request for its protection; and from persons acceptable
to FINOVA, additional engineering or architectural studies and reports
as FINOVA or FINOVA's Inspector may require.
11. Plans and Specifications. The Work shall be completed
substantially in accordance with the final drawings, plans and
specifications which have been approved by FINOVA (the "Plans") prepared
by the Architect(s)/Engineer(s), as approved by FINOVA, Construction
Contract(s), applicable laws, regulations and private restrictions, the
Loan Documents, sound construction, engineering and architectural
principles and commonly accepted safety standards and free from
defective materials and workmanship. No material changes, alterations or
modifications shall be made in the Plans or in any of the other
Principal Work-Related Items without FINOVA's prior written approval.
The foregoing notwithstanding, Borrower shall be permitted to make
changes in the Plans to the extent that such change order (a) does not
increase the cost of the Work by more than Ten Thousand Dollars
($10,000) or, with all other changes, does not increase the cost of the
Work by more than One Hundred Thousand Dollars ($100,000), and (b) does
not materially affect the design, structural integrity or quality of the
Improvements. Borrower shall deliver to FINOVA, immediately upon
execution thereof, all change orders with respect to the Work including
those within the scope of clauses (a) and (b) above.
12. Other Contracts. Borrower shall not enter into any
Architect/Engineer Agreement or Construction Contract (other than those
contracts and agreements which FINOVA approved prior to the Closing
Date) with respect to the Work except upon terms and with such parties
as FINOVA may approve in writing.
13
14
13. Notice of Commencement. Borrower shall record all notices of
commencement/completion and similar notices permitted by applicable laws
and regulations which have the effect of shortening periods within which
mechanics and similar liens may be filed.
14. Delivery of Contracts. Borrower shall deliver to FINOVA true
and complete copies of all Principal Work-Related Items and all other
Contracts, Intangibles, Licenses and Permits.
15. Borrower's Performance. Borrower shall perform all its
obligations and preserve its rights under the Principal Work-Related
Items in force and secure the performance of the other parties to the
Principal Work-Related Items and all other Contracts, Intangibles,
Licenses and Permits.
16. Endorsements. Borrower shall deliver to FINOVA prior to or
concurrently with each Work-Related Advance, a date down endorsement in
a form acceptable to FINOVA issued by the Title Company insuring that
the Mortgage at the time of each Work-Related Advance, constitutes a
valid first lien upon the Real Property or title, subject only to the
Permitted Encumbrances; upon construction of the foundation for any
building comprising part of the Improvements deliver to FINOVA an
endorsement ("foundation endorsement") insuring that the foundations, as
constructed, are located within all set-back and boundary lines of the
Real Property and do not encroach upon any easements, rights of way
(public or private) or upon any other adjoining landowner's property;
and upon the final advance of the retainage, Borrower shall deliver, or
cause Title Agent to deliver, to FINOVA a date down endorsement or a
re-issued title policy ("Re-Issued Title Policy") meeting the
substantive requirements set forth above.
17. Cost Overruns. Borrower shall notify FINOVA in writing if
and when the unpaid costs of Completion of the Work exceeds or appears
likely to exceed the undisbursed portion of the Loan and any undisbursed
Required Completion Assurance Deposit(s) held by FINOVA.
18. Additional Surveys. Borrower shall deliver to FINOVA
promptly after the completion of the foundation and, if required by
FINOVA, after the pouring of a street, curbstone or concrete slab on the
Real Property, a survey prepared in accordance with the requirements of
Section 2.1(m) of the Agreement, showing such Improvements, their
location within Real Property lines and set back lines and a lack of
encroachments, and deliver to FINOVA promptly upon the Completion, a
survey which is certified to FINOVA, showing the "as-built" Improvements
and showing all easements and other matters affecting the Real Property,
and otherwise satisfying the requirements of Section 2.1(m) of the
Agreement;
19. Defects in Work. Borrower shall, after obtaining knowledge
or receiving notice thereof, correct or cause to be corrected (a) any
material defect in the Work, (b) any material departure in the
completion of the Work from the Plans and the Construction Contract(s)
unless expressly permitted in this Agreement or consented to in writing
by FINOVA, (c) any failure of the Work to comply with applicable laws,
regulations or restrictions of record, sound construction, engineering
or architectural principles or commonly accepted safety standards or (d)
any encroachment of any part of the Improvements on any set-back or
boundary line, easement, or other restricted area.
20. Notice of Defects. Borrower shall promptly deliver to FINOVA
any and all notices received by Borrower that it is not complying with
applicable laws, regulations and private restrictions pertaining to the
Work or that the Work is not being completed in accordance with the
Plans, the Construction Contract(s), sound construction, engineering and
architectural principles and commonly accepted safety standards.
21. Safeguarding Materials. Borrower shall cause all materials
supplied for or intended to be utilized in the Completion of the Work,
but previously not affixed to or incorporated into the Improvements, to
be stored on the Real Property with adequate safeguards, to prevent
loss, theft, damage or commingling with other materials.
22. Building Permits. Borrower shall, promptly after receipt by
Borrower, deliver to FINOVA copies of all building permits and
certificates of acceptance and/or occupancy relating to the Work.
14
15
23. Required Completion Assurance Deposit Assurances. If at any
time the remaining costs which must be incurred before Completion can
occur ("Completion Costs") are more than the committed and undisbursed
portion of the Loan, and in any event within ten (10) days after
FINOVA's demand that it do so, Borrower shall deliver to FINOVA cash
deposits equal to the shortfall (the "Required Completion Assurance
Deposits"). In the event of any dispute, the necessity for an amount of
any Required Completion Assurance Deposit shall be determined by FINOVA
in its Permitted Discretion based upon the approved Budget and the
advice of FINOVA's Inspector. The Required Completion Assurance Deposits
shall be deposited in a separate interest bearing account for the
benefit of Borrower. FINOVA shall disburse the Required Completion
Assurance Deposits to pay and/or reimburse Borrower for the cost of the
Work prior to any further disbursement of Loan proceeds for such
purposes, but subject to the terms and conditions of the Loan Documents.
================================================================================
ADDITIONAL PROVISIONS:
1. Intermediaries. Borrower represents and warrants to FINOVA that it has
not engaged or dealt in any way with any broker in connection with the
transactions contemplated by this Agreement. Borrower shall pay, and
FINOVA shall have no liability for and shall be held harmless by
Borrower against any liabilities in respect of, any commission or other
amounts claimed by or payable to any broker. The terms of this paragraph
shall survive the Closing and any termination of this Agreement.
SCHEDULE TO MASTER LOAN AND SECURITY AGREEMENT SIGNATURE PAGE
Borrower:
ROSSMORE RENOVATION, LLC,
a Delaware limited liability company
WITNESS: By: ARV Assisted Living, Inc., a Delaware
corporation, Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
WITNESS: By: Vintage/ABR (Hillsdale), LLC, a
Delaware limited liability
company, Manager
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name:_Bernard ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
THE STATE OF California )
)
COUNTY OF Orange )
On this 30th day of October, 1998, before me, the undersigned notary
public, duly commissioned and sworn, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person that executed the within instrument and acknowledged to me that
he or she
15
16
executed the same in his or her authorized capacity and that by
his or her signature in the instrument the person, or the entity on behalf of
which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
----------------------------------
16
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
)
COUNTY OF Baltimore )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
10/1/99
----------------------------------
THE STATE OF California )
)
COUNTY OF Orange )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
----------------------------------
ENCINO RENOVATION, LLC,
a Delaware limited liability company
WITNESS: By: ARV Assisted Living, Inc., a
Delaware corporation, Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
WITNESS: By: Vintage/ABR (Hillsdale), LLC,
a Delaware limited liability
company, Manager
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- -----------------------------------
17
18
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- -----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
THE STATE OF California )
)
COUNTY OF Orange )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
----------------------------------
18
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
)
COUNTY OF Baltimore )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
10/1/99
-----------------------------
THE STATE OF California )
)
COUNTY OF Orange )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
-----------------------------
19
20
BERKSHIRE RENOVATION, LLC,
a Delaware limited liability company
WITNESS: By: ARV Assisted Living, Inc., a
Delaware corporation, Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
WITNESS: By: Vintage/ABR (Hillsdale), LLC, a
Delaware limited liability company,
Manager
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------- ---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------- ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
THE STATE OF California )
)
COUNTY OF Orange )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
----------------------------------
20
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
)
COUNTY OF Baltimore )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
10/1/99
-----------------------------
THE STATE OF California )
)
COUNTY OF Orange )
On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
(SEAL)
My Commission Expires:
-----------------------------
21
22
FINOVA:
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Vice President
22
23
23
24
SCHEDULE TO LOAN AND SECURITY AGREEMENT
LIST OF COLLATERAL LOCATIONS
25
SCHEDULE TO THE LOAN AND SECURITY AGREEMENT
PENDING LITIGATION MATTERS:
BERKSHIRE - NONE
ENCINO - NONE
ROSSMORE - NONE
26
EXHIBIT A
REAL PROPERTY
3
27
EXHIBIT A-1
LEGAL DESCRIPTION OF PROPERTY
(BERKSHIRE RENOVATION, LLC)
CITY OF BERKELEY
PORTION OF BLOCK 2, AS SAID BLOCK IS SHOWN ON THE "MAP SHOWING THE PROPERTY AND
LOCATION OF THE ▇▇▇▇▇▇▇▇▇ TRACT AT BERKELEY", FILED AUGUST 7, 1876; IN BOOK 2 OF
MAPS, PAGE 62, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY, DESCRIBED
AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE WESTERN LINE OF ▇▇▇▇▇▇▇▇▇ AVENUE, WITH THE
NORTHERN LINE OF ▇▇▇▇▇▇▇▇ WAY, AS SAID AVENUE AND WAY ARE SHOWN ON THE "MAP OF
▇▇▇▇▇▇▇▇ WAY OPENING, BERKELEY, CALIFORNIA" FILED NOVEMBER 20, 1916 IN BOOK 22
OF MAPS, PAGE 87, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY AND
RUNNING THENCE ALONG SAID LINE OF ▇▇▇▇▇▇▇▇ WAY, WESTERLY 192.92 FEET; THENCE
TANGENT WITH THE LAST NAMED COURSE WESTERLY AND NORTHERLY ON A CURVE TO THE
RIGHT, WITH A RADIUS OF 15 FEET A DISTANCE OF 22.40 FEET TO THE SOUTHERN LINE OF
LOT 39, IN SAID BLOCK 2; THENCE ALONG THE LAST NAMED LINE WESTERLY, 0.20 OF A
FOOT TO THE EASTERN LINE OF SACRAMENTO STREET, AS SAID STREET NOW EXISTS; THENCE
ALONG THE LAST NAMED LINE NORTHERLY 253.12 FEET TO THE NORTH LINE OF LOT 34, IN
BLOCK 2; THENCE ALONG THE LAST NAMED LINE AND ALONG THE NORTHERN LINE OF LOT 33,
IN BLOCK 2, EASTERLY 208.25 FEET TO SAID LINE OF ▇▇▇▇▇▇▇▇▇ AVENUE; AND THENCE
ALONG THE LAST NAMED LINE SOUTHERLY, 248.96 FEET TO THE POINT OF BEGINNING.
4
28
EXHIBIT A-2
LEGAL DESCRIPTION OF PROPERTY
(ENCINO RENOVATION, LLC)
PARCEL 1:
THOSE PORTIONS OF ▇▇▇▇ ▇ ▇▇▇ ▇ ▇▇ ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇, IN THE CITY OF LOS
ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
31 PAGES 62 TO 70 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTHERLY LINE OF SAID ▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 186.49 FEET FROM THE SOUTHWESTERLY CORNER OF SAID LOT 4;
THENCE NORTH 0 DEGREES 03 MINUTES 30 SECONDS WEST 435.60 FEET; THENCE SOUTH 80
DEGREES 39 MINUTES EAST 101.36 FEET; THENCE SOUTH 0 DEGREES 03 MINUTES 30
SECONDS EAST 435.60 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID ▇▇▇ ▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ROAD; THENCE ALONG SAID ROAD, NORTH 80 DEGREES
39 MINUTES WEST 101.36 FEET TO THE POINT OF BEGINNING.
EXCEPT THEREFROM THE NORTH 185.00 FEET THEREOF.
PARCEL 2:
AN EASEMENT FOR DRAINAGE PURPOSES OVER THE EASTERLY 5 FEET OF THE NORTH 185.00
FEET OF THOSE PORTIONS OF ▇▇▇▇ ▇ ▇▇▇ ▇ ▇▇ ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇ NO. 2955, IN THE
CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 31 PAGES 62 TO 70 INCLUSIVE OF MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTHERLY LINE OF SAID ▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 186.49 FEET FROM THE SOUTHWESTERLY CORNER OF SAID LOT 4;
THENCE NORTH 0 DEGREES 03 MINUTES 30 SECONDS WEST 435.60 FEET; THENCE SOUTH 80
DEGREES 39 MINUTES EAST 101.38 FEET; THENCE SOUTH 0 DEGREES 03 MINUTES 30
SECONDS EAST 435.60 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID ▇▇▇ ▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ROAD; THENCE ALONG SAID ROAD, NORTH 80 DEGREES
39 MINUTES WEST 101.36 FEET TO THE BEGINNING.
5
29
EXHIBIT A-3
LEGAL DESCRIPTION OF PROPERTY
(ROSSMORE RENOVATION, LLC)
THAT PORTION OF ▇▇▇ ▇ ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇, ▇▇ THE CITY OF LOS ANGELES, COUNTY OF
LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14 PAGES 42 AND 43
OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT IN THE SOUTH LINE OF ROSEWOOD AVENUE, AS SHOWN ON MAP OF
TRACT NO. 3345, AS PER MAP RECORDED IN BOOK 42 PAGES 63 AND 64 OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT BEING IN THE WESTERLY
END OF CURVE OF THE PROPERTY LINE CURVE, AT THE ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; THENCE SOUTH 89 DEGREES 57 MINUTES 45 SECONDS WEST
244.85 FEET; THENCE SOUTH 0 DEGREES 14 MINUTES 46 SECONDS WEST 150 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE TO THE NORTHEAST HAVING A RADIUS OF 99.51
FEET; THENCE SOUTHEASTERLY ALONG SAID CURVE, 156.80 FEET TO THE END OF SAME;
THENCE SOUTH 0 DEGREES 14 MINUTES 45 SECONDS WEST 85 FEET; THENCE NORTH 89
DEGREES 57 MINUTES 45 SECONDS EAST 175 FEET TO THE WEST LINE OF ROSSMORE AVENUE;
THENCE NORTH 0 DEGREES 14 MINUTES 15 SECONDS EAST ALONG THE WEST LINE OF
ROSSMORE AVENUE, 304.85 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE TO THE
SOUTHWEST, HAVING A RADIUS OF 30 FEET; THENCE NORTHWESTERLY ALONG SAID CURVE,
47.27 FEET TO THE POINT OF BEGINNING.
6
30
EXHIBIT B
PERMITTED ENCUMBRANCES
7
31
LIST OF CONSTRUCTION LOAN EXHIBITS
Exhibit C Budget
Exhibit D Work Progress Schedule
Exhibit E Standard Construction Loan and Administrative
Procedures
(Work-Related Advance)
Exhibit F-1 AIA 702 and 703 Forms
Exhibit F-2 Affidavit of Borrower
Exhibit F-3 Waiver of Liens
Exhibit F-4 Change Order Approval Request (AIA Document G713)
Exhibit G Initial Advance Disbursement Schedule
8
32
EXHIBIT C
Budget
33
EXHIBIT D
Work Progress Schedule
34
EXHIBIT E
FINOVA CAPITAL CORPORATION ("Lender")
STANDARD CONSTRUCTION LOAN
ADMINISTRATIVE PROCEDURES
INITIAL AND SUBSEQUENT LOAN ADVANCE
REQUIREMENTS AND EVENTS
A. With each Work-Related Advance Request Borrower must
complete, execute and deliver to Lender:
1. An Application and Certificate For Payment (AIA
Document G702) and Continuation Sheet(s) (AIA
Document G703) for all direct costs (Exhibit F-1).
2. Affidavit of Borrower for Advance (Exhibit F-2).
3. Waiver of Liens (Exhibit F-3) or such form as is
required by law for previous payment.
4. Change Order Approval Request (AIA Document G713)
when applicable (Exhibit F-4).
5. Invoices supporting all amounts shown in columns E
and F of AIA Document G702 and G703.
6. Any required surveys.
7. Such other items as Lender requests which are
necessary to evaluate the request for the
Work-Related Advance and the satisfaction of the
conditions precedent thereto.
B. The following events must take place prior to each
Work-Related Advance:
1. Contractor requests site inspection from Lender's
Inspector.
2. Contractor provides Lender's Inspector with a copy
of the AIA Document G702 and G703.
3. Lender's Inspector will perform a physical
inspection to review the work in place and make a
certification and recommendation to Lender.
Lender's Inspector forwards his report,
certification and recommendation to Lender.
4. Lender will request that the Title Agent review the
public records, advise Lender of the same, and
forward to Lender endorsement(s) as required
pursuant to the Loan and Security Agreement
(herein, the "Loan Agreement"), such endorsements
to be dated as of the date of Work-Related Advance.
5. Lender will review the Work-Related Advance Request
and input of Lender's Inspector of the Title Agent.
The Work-Related Advance Request must be
appropriate, complete and in proper order. The
order of the Work-Related Advance Request package
will determine the processing time needed.
35
6. Borrower shall have all applicable licenses,
permits and certificates for all Work under
construction at the time the Work-Related Advance
was requested.
7. All other conditions of the Loan Documents are
satisfied.
C. Upon receipt from Lender (or Title Agent, if applicable),
Borrower will execute and deliver to Lender a funding letter in connection with
the Work-Related Advance.
D. All items, except for the escrow funding letter required to be
delivered to Lender pursuant to this Exhibit shall be delivered to Lender and
Lender's Inspector at least ten (10) Business Days prior to the requested
Work-Related Advance.
2
36
EXHIBIT F-1
AIA 702 and 703 Forms
37
EXHIBIT F-2
BORROWER'S AFFIDAVIT FOR ADVANCE
Borrower: ___________________________________ Date:_______________
Project: ___________________________________
Request No.:_________________
Loan No.:_____________________Period________________to__________________
Amount:______________________
In connection with and in order to induce FINOVA Capital Corporation
("Lender"), to advance the amount requested above, Borrower hereby represents,
warrants and stipulates as follows:
1. The work listed in this Work-Related Advance Request Package
("Request") has been completed in accordance with the Loan and Security
Agreement dated ___________ between the undersigned and Lender (with any
amendments, the "Loan Agreement"); all obligations for work submitted and
received on previous Borrower's Work-Related Advance Request have now been paid
in full (except for retainage); the funds requested at this time shall be
applied only to the obligations for work set forth in this Request and that all
insurance policies (including without limitation, Builder's Risk and General
Liability Coverage policies) required by the Loan Agreement are in full force
and effect.
2. Attached hereto are the names of all contractors, subcontractors,
suppliers and materialmen who have performed or who will be performing Work and
whose names have not been previously delivered to Lender in writing. Copies are
attached hereto of contracts with all such contractors, subcontractors,
suppliers and materialmen whose contracts are required to be, but have not yet
been, delivered to Lender pursuant to the terms of the Loan Agreement.
3. All Work performed is in substantial accordance with the approved
Plans and no changes have been made in the approved Plans, except as are
permitted pursuant to the Loan Agreement or have been previously approved in
writing by Lender.
4. The amounts and percentages set forth on the attached schedules,
along with supporting documentation for each budgeted item and the Balance To
Finish in accordance with the AIA Document G702 and G703 are true and correct to
the best of Borrower's knowledge.
5. The following are included as part of this Request:
Application and Certificate for Payment (AIA G702)
Continuation Sheets (AIA G703)
Request for Advance - Indirect Costs
Check Sheet Form
6. No material adverse change has occurred in the Improvements or, since
the date of the latest financial statements given by or on behalf of Borrower to
Lender, in the financial condition of Borrower or in Borrower's business or
operations.
7. All representations and warranties by Borrower contained in the Loan
Documents are true and correct as of the date hereof.
38
8. No Event of Default, or no act or event which after notice and/or
lapse of time would constitute an Event of Default, has occurred and is
continuing.
9. Borrower has complied with all other agreements or conditions
required by the Agreement to be performed or complied with prior to or at the
date of the requested Advance.
10. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Loan Agreement.
Very truly yours,
By:
---------------------------------
Name:
Title:
5
39
EXHIBIT F-3
Release of Lien
KNOW ALL MEN BY THESE PRESENTS, that the undersigned ___________________
for and in consideration of the sum of __________ Dollars (US $___________)
lawful money of the United States of America, to the undersigned in hand paid,
the receipt whereof is hereby acknowledged, does hereby waive, release, remise
and relinquish the undersigned'/s right to claim, demand, impress or impose a
lien or liens in the sum of __________ Dollars ($__________) for materials
furnished (or any other kind or class of lien whatsoever) up to the _____ day of
__________________, 199__, on the following described property:
[Legal Description]
Dated this ______ day of _________, 199__, at _____________ County,
California.
LIENOR'S NAME
By:_______________________________
Authorized Representative
40
EXHIBIT F-4
Change Order Approval Request AIA G713
41
EXHIBIT G
Initial Advance Disbursement Schedule