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EXHIBIT 10.48
SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
(MASTER AGREEMENT)
SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP AND
OTHER SUBSIDIARIES OF SUNRISE ASSISTED LIVING, INC.
AS BORROWERS
BANK OF AMERICA, N.A.
D/B/A NATIONSBANK, N.A.
AS ADMINISTRATIVE AGENT
BANK UNITED, AS SYNDICATION AGENT
FLEET NATIONAL BANK, AS DOCUMENTATION AGENT
BANC OF AMERICA SECURITIES LLC
AS SOLE LEAD ARRANGER AND BOOK MANAGER
July 29, 1999
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TABLE OF CONTENTS
ARTICLE I.........................................................................................................3
DEFINITIONS....................................................................................................3
Section 1.1 Certain Defined Terms..........................................................................3
Section 1.2 Accounting Terms and Other Definitional Provisions............................................20
ARTICLE II.......................................................................................................21
BORROWING.....................................................................................................21
Section 2.1 The Loan......................................................................................21
Section 2.2 Procedure for Advances........................................................................22
Section 2.3 Fees..........................................................................................23
Section 2.4 Interest Rate Matters.........................................................................24
Section 2.5 Extensions....................................................................................26
Section 2.6 The Letter of Credit Facility.................................................................27
Section 2.7 Permitted Costs...............................................................................28
Section 2.8 Requisitions Demonstrating Expenses...........................................................28
Section 2.9 Co-Borrower Obligations.....................................................................29
Section 2.10 Agreement Among Borrowers....................................................................30
Section 2.11 Benefits to Borrowers........................................................................31
Section 2.12 Guaranty.....................................................................................31
ARTICLE III......................................................................................................34
COLLATERAL....................................................................................................34
Section 3.1 Collateral....................................................................................34
Section 3.2 Eligible Projects.............................................................................34
Section 3.3 Assignment of Partnership Interests...........................................................35
Section 3.4 Guaranties....................................................................................35
Section 3.5 Collateral for Obligations....................................................................35
Section 3.6 Costs.........................................................................................35
ARTICLE IV.......................................................................................................36
GENERAL FINANCING PROVISIONS..................................................................................36
Section 4.1 Conditions Precedent to Credit Facility Closing and Addition of Deeds of Trust................36
Section 4.2 Conditions Precedent to Determining Availability Under Borrowing Base.........................40
Section 4.3 Conditions Under Which an Eligible Project is a Completed Facility............................41
Section 4.4 Computation of Interest and Fees..............................................................42
Section 4.5 Liens; Setoff...............................................................................42
Section 4.6 Payment and Performance of Obligations........................................................42
Section 4.7 Payments to Others for the Account of the Borrowers...........................................42
Section 4.8 Prepayment....................................................................................43
Section 4.9 Requisitions for the Operating Reserve........................................................43
Section 4.10 Assignments..................................................................................43
Section 4.11 Liability of the Lenders.....................................................................44
Section 4.12 Stored Materials.............................................................................44
Section 4.13 Limitations on Advances or Readvances........................................................44
ARTICLE V........................................................................................................44
REPRESENTATIONS AND WARRANTIES................................................................................45
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Section 5.1 Existence/Good Standing.......................................................................45
Section 5.2 Power and Authority...........................................................................45
Section 5.3 Binding Agreements............................................................................45
Section 5.4 Litigation....................................................................................45
Section 5.5 No Conflicting Agreements.....................................................................46
Section 5.6 Financial Information.........................................................................46
Section 5.7 No Default....................................................................................46
Section 5.8 Taxes.........................................................................................46
Section 5.9 Place(s) of Business and Location of Collateral...............................................47
Section 5.10 Title to Properties..........................................................................47
Section 5.11 Margin Stock.................................................................................47
Section 5.12 ERISA........................................................................................47
Section 5.13 Governmental Consent.........................................................................48
Section 5.14 Full Disclosure..............................................................................48
Section 5.15 Business Names and Addresses.................................................................48
Section 5.16 Licenses and Certifications..................................................................48
Section 5.17 Operating Agreements and Management Contracts................................................49
Section 5.18 Participation Agreements and Resident Agreements.............................................49
Section 5.19 Compliance with Laws.........................................................................50
Section 5.20 Presence of Hazardous Materials or Hazardous Materials Contamination.........................50
Section 5.21 Nature of Credit Facility; Usury; Disclosures................................................50
Section 5.22 Compliance in Zoning.........................................................................50
Section 5.23 Plans and Specifications.....................................................................51
Section 5.24 Building Permits; Other Permits..............................................................51
Section 5.25 Utilities....................................................................................51
Section 5.26 Access; Roads................................................................................51
Section 5.27 Other Liens..................................................................................51
Section 5.28 Defaults.....................................................................................51
Section 5.29 Survival; Updates of Representations and Warranties..........................................52
Section 5.30 Accounts.....................................................................................52
Section 5.31 Year 2000...................................................................................52
ARTICLE VI.......................................................................................................53
CONDITIONS OF LENDING.........................................................................................53
Section 6.1 No Default....................................................................................53
Section 6.2 Opinion of Counsel for the Borrowers..........................................................53
Section 6.3 Approval of Counsel for the Lenders...........................................................53
Section 6.4 Supporting Documents..........................................................................53
Section 6.5 Financing Documents...........................................................................54
Section 6.6 Insurance.....................................................................................54
Section 6.7 Security Documents............................................................................54
Section 6.8 Joinder Agreement.............................................................................54
ARTICLE VII......................................................................................................55
AFFIRMATIVE COVENANTS OF BORROWER.............................................................................55
Section 7.1 Financial Statements..........................................................................55
Section 7.2 Taxes and Claims..............................................................................56
Section 7.3 Legal Existence...............................................................................56
Section 7.4 Conduct of Business and Compliance with Laws..................................................56
Section 7.6 Insurance.....................................................................................57
Section 7.7 Flood Insurance...............................................................................59
Section 7.8 Maintenance of Properties.....................................................................59
Section 7.9 Maintenance of the Collateral.................................................................60
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Section 7.10 Other Liens, Security Interests, etc.........................................................60
Section 7.11 Defense of Title and Further Assurances......................................................60
Section 7.12 Subsequent Opinion of Counsel as to Recording Requirements...................................60
Section 7.13 Books and Records............................................................................60
Section 7.14 Collections..................................................................................61
Section 7.15 Notice to Account Debtors and Escrow Account.................................................61
Section 7.16 Business Names...............................................................................61
Section 7.17 ERISA........................................................................................61
Section 7.18 Change in Management.........................................................................62
Section 7.19 Management...................................................................................62
Section 7.20 Surveys......................................................................................62
Section 7.21 Inspections; Cooperation; Payment of Inspecting Engineer.....................................63
Section 7.22 Vouchers and Receipts........................................................................63
Section 7.23 Payments for Labor and Materials.............................................................63
Section 7.24 Correction of Construction Defects...........................................................64
Section 7.25 Fees and Expenses; Indemnity.................................................................64
Section 7.26 Governmental Surveys or Inspections..........................................................64
Section 7.27 Cost Reports................................................................................64
Section 7.28 Updated Appraisals...........................................................................64
Section 7.29 Notification of Certain Events, Events of Default and Adverse Developments...................65
Section 7.30 Compliance with Environmental Laws...........................................................66
Section 7.31 Hazardous Materials; Contamination...........................................................66
Section 7.32 Participation in Reimbursement Programs......................................................67
Section 7.33 Minimum Pool A Projects......................................................................67
Section 7.34 Subordination of Distributions and Management Fees...........................................67
Section 7.35 Depository Bank..............................................................................67
Section 7.36 Copies of Notices............................................................................68
Section 7.37 Year 2000 Compliance........................................................................68
ARTICLE VIII.....................................................................................................68
NEGATIVE COVENANTS OF BORROWER................................................................................68
Section 8.1 Borrowings....................................................................................68
Section 8.2 Deeds of Trust and Pledges....................................................................68
Section 8.3 Sale or Transfer of Assets....................................................................69
Section 8.4 Other Liens; Transfers; "Due-on-Sale"; etc....................................................69
Section 8.5 Advances and Loans............................................................................69
Section 8.6 Contingent Liabilities........................................................................69
Section 8.7 Licenses......................................................................................69
Section 8.8 ERISA Compliance..............................................................................69
Section 8.9 Transfer of Collateral........................................................................70
Section 8.10 Sale of Accounts or Receivables..............................................................70
Section 8.11 Amendments; Terminations.....................................................................70
Section 8.12 Prohibition on Hazardous Materials...........................................................70
Section 8.13 Subsidiaries.................................................................................71
Section 8.14 Distributions to Partners or Members.........................................................71
Section 8.15 Mergers or Acquisitions......................................................................71
Section 8.16 Partnership Interests........................................................................71
Section 8.17 Impairment of Security.......................................................................71
Section 8.18 Conditional Sales............................................................................71
Section 8.19 Changes to Plans and Specifications..........................................................72
Section 8.20 Construction Contract; Construction Management...............................................72
ARTICLE IX.......................................................................................................72
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EVENTS OF DEFAULT.............................................................................................72
Section 9.1 Failure to Pay and/or Perform the Obligations.................................................72
Section 9.2 Breach of Representations and Warranties......................................................72
Section 9.3 Failure to Comply with Covenants..............................................................72
Section 9.4 Failure to Comply with Books and Records......................................................73
Section 9.5 Other Defaults................................................................................73
Section 9.6 Default Under Other Financing Documents.......................................................73
Section 9.7 Receiver; Bankruptcy..........................................................................73
Section 9.8 Judgment......................................................................................73
Section 9.9 Execution; Attachment.........................................................................73
Section 9.10 Default Under Other Borrowings...............................................................74
Section 9.12 Impairment of Position.......................................................................74
Section 9.13 Change in Status or Ownership................................................................74
Section 9.14 Zoning.......................................................................................74
Section 9.15 Change in Management.........................................................................74
Section 9.16 Licenses.....................................................................................74
Section 9.17 Damage to Improvements.......................................................................75
Section 9.18 Disclosure of Contractors....................................................................75
Section 9.19 Mechanic's Lien..............................................................................75
Section 9.20 Survey Matters...............................................................................75
Section 9.21 General Contractor Default...................................................................75
Section 9.22 Compliance with Law..........................................................................76
ARTICLE X........................................................................................................76
RIGHTS AND REMEDIES UPON DEFAULT..............................................................................76
Section 10.1 DEMAND; ACCELERATION.........................................................................76
Section 10.2 Further Advances; Immediate Acceleration.....................................................76
Section 10.3 Specific Rights With Regard to Collateral....................................................76
Section 10.4 Performance by Lenders.......................................................................78
Section 10.5 Remedies on Default..........................................................................78
Section 10.6 Uniform Commercial Code and Other Remedies...................................................79
Section 10.7 Receiver or Other Court Order................................................................80
Section 10.8 No Conditions Precedent to Exercise of Remedies..............................................80
Section 10.9 Remedies Cumulative and Concurrent...........................................................80
Section 10.10 Strict Performance..........................................................................81
ARTICLE XI.......................................................................................................81
MISCELLANEOUS.................................................................................................81
Section 11.1 Notices......................................................................................81
Section 11.2 Consents and Approvals.......................................................................82
Section 11.3 Remedies, etc. Cumulative....................................................................82
Section 11.4 No Waiver of Rights by the Lenders...........................................................83
Section 11.5 Entire Agreement.............................................................................83
Section 11.6 Survival of Agreement; Successors and Assigns................................................83
Section 11.7 Expenses.....................................................................................83
Section 11.8 Counterparts.................................................................................84
Section 11.9 Governing Law................................................................................84
Section 11.10 Modifications...............................................................................84
Section 11.11 Illegality..................................................................................84
Section 11.12 Gender, etc.................................................................................85
Section 11.13 Headings....................................................................................85
Section 11.14 Waiver of Trial by Jury.....................................................................85
Section 11.15 No Warranty by Lenders......................................................................85
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Section 11.16 Liability of the Lenders....................................................................85
Section 11.17 License of Tradename........................................................................86
Section 11.18 No Partnership..............................................................................86
Section 11.19 Third Parties; Benefit......................................................................86
Section 11.20 Conditions; Verification....................................................................87
Section 11.21 Signs; Publicity............................................................................87
Section 11.22 Time of Essence.............................................................................87
Section 11.23 Replacement Note.........................................................................87
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SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
(MASTER AGREEMENT)
THIS SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT
(the "Agreement") is made this 29th of July, 1999, by and among SUNRISE EAST
ASSISTED LIVING LIMITED PARTNERSHIP, a Virginia limited partnership ("SEAL")
and SUNRISE SEAL, L.L.C., a Virginia limited liability company ("Sunrise SEAL")
(collectively, the "Original Borrowers") and SUNRISE DECATUR ASSISTED LIVING
LIMITED PARTNERSHIP, a Georgia limited partnership, SUNRISE FAIRFIELD ASSISTED
LIVING, L.P., a New Jersey limited partnership, SUNRISE BELLEVUE ASSISTED
LIVING LIMITED PARTNERSHIP, a Washington limited partnership, SUNRISE WALNUT
CREEK ASSISTED LIVING LIMITED PARTNERSHIP, a California limited partnership,
SUNRISE OAKLAND ASSISTED LIVING LIMITED PARTNERSHIP, a California limited
partnership, SUNRISE PARAMUS ASSISTED LIVING LIMITED PARTNERSHIP, a New Jersey
limited partnership, SUNRISE RIVERSIDE ASSISTED LIVING, L.P., a California
limited partnership, SUNRISE HUNTCLIFF ASSISTED LIVING LIMITED PARTNERSHIP, a
Georgia limited partnership, SUNRISE STERLING CANYON ASSISTED LIVING LIMITED
PARTNERSHIP, a California limited partnership, (the "Additional Borrowers",
collectively with the Original Borrowers and any other Additional Borrowers, as
hereinafter defined, the "Borrowers"), and BANK OF AMERICA, N.A. d/b/a/
NATIONSBANK, N.A., as administrative agent (the "Administrative Agent") for
itself and for UNITED BANK, as syndication agent (the "Syndication Agent"),
FLEET NATIONAL BANK, as documentation agent (the "Documentation Agent") and
certain additional lenders who are or shall be from time to time participating
as lenders hereunder pursuant to the Agency Agreement, as hereinafter defined
(collectively with the Administrative Agent, the "Lenders").
RECITALS
A. SEAL obtained from the Administrative Agent and certain other
lenders (collectively, the "Original Lenders") a revolving credit facility in
the maximum principal sum of $250,000,000 (the "Original Credit Facility"). The
Original Credit Facility has been evidenced by an Amended, Restated,
Consolidated and Increased Master Promissory Note dated December 23, 1997 as
amended pursuant to a First Amendment to Amended, Restated, Consolidated and
Increased Promissory Note and Additional Borrower Joinder Supplement dated
December 30, 1998 (the "First Note Amendment" collectively, the "Original
Note").
B. Advances and readvances under the Credit Facility governed by the
terms and conditions of (i) an Amended and Restated Financing and Security
Agreement between SEAL and the Administrative Agent on behalf of the Lenders
dated December 23, 1997 (the "Original Financing Agreement") as amended by the
First Amendment to Amended and Restated Financing and Security Agreement dated
December 30, 1998 (the "First Amendment to Financing Agreement"; collectively
with the Original Financing Agreement, the "Existing Financing Agreement") and
(ii) an Amended and Restated Master Construction Loan Agreement
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between SEAL and the Administrative Agent on behalf of the Lenders dated
December 23, 1997 (the "Original Construction Agreement") as amended by a First
Amendment to Amended and Restated Master Construction Loan Agreement dated
December 30, 1998 (the "First Amendment to Construction Agreement";
collectively with the Original Construction Agreement, the "Existing
Construction Agreement").
C. Pursuant to the terms of the First Note Amendment, the First
Amendment to Financing Agreement and the First Amendment to Construction
Agreement, Sunrise SEAL became a co-borrower with SEAL under the Original
Credit Facility.
D. From time to time during the term of the Original Credit Facility,
each of the Additional Borrowers became a Guarantor Subsidiary and granted to
the Administrative Agent on behalf of the Lenders a first lien Deed of Trust on
an Eligible Project and certain other related collateral. The Original Borrowers
and the Additional Borrowers have requested and the Lenders have agreed to make
the Additional Borrowers co-borrowers under the Credit Facility, jointly and
severally liable with the Original Borrowers under the Original Note and the
other Financing Documents.
E. The Borrowers have applied to the Lenders to increase the maximum
principal sum of the Original Credit Facility to $400,000,000 or such greater
amount as the Lenders may from time to time commit to lend pursuant to the
Agency Agreement (such increased and modified credit facility being hereinafter
referred to as the "Credit Facility" or the "Loan"). Advances or readvances of
the Loan are to be made pursuant to the provisions of this Agreement.
F. In connection with the increase of the maximum principal sum of the
Credit Facility, the Borrowers have requested and the Lenders have agreed to
permit certain other related entities to become co-borrowers under the Credit
Facility from time to time under the terms and conditions set forth in this
Agreement.
G. Except as otherwise set forth herein, advances or readvances of the
Loan may be made to the Borrowers for the general business purposes of the
Borrowers, including, but not limited to, financing the construction or purchase
of assisted living facilities or independent living facilities and the repayment
of advances to the Borrowers previously made by SALI or its Affiliates.
H. The Borrowers and the Lenders have agreed to amend and terms of
repayment of the indebtedness evidenced by the Original Note pursuant to and
the Loan is now evidenced by that certain Second Amended, Restated, Consolidated
and Increased Master Promissory Note of even date herewith payable by the
Borrowers to Administrative Agent on behalf of the Lenders (as amended,
restated, renewed or substituted from time to time, the "Note").
I. The Borrowers and the Lenders have agreed to consolidate the
Existing Construction Agreement with the Existing Financing Agreement so that
the terms and conditions governing advances or readvances of the Credit
Facility shall be set forth in this Agreement.
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J. The Lenders have agreed to make available the Credit Facility upon
the conditions that this Agreement amending, restating and consolidating the
Existing Financing Agreement and the Existing Construction Agreement be executed
and delivered to the Administrative Agent.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers and the
Administrative Agent, on behalf of the Lenders, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms
As used herein, the terms defined in the Preamble and Recitals hereto
shall have the respective meanings specified therein, and the following terms
shall have the following meanings:
"Account", individually, and "Accounts", collectively, mean with
respect to any and all Facilities, all presently existing or hereafter acquired
or created accounts, accounts receivable, contract rights, notes, drafts,
instruments, acceptances, chattel paper, leases and writings evidencing a
monetary obligation or a security interest in or a lease of goods, all rights
to receive the payment of money or other consideration under present or future
contracts arising out of or relating to any and all Facilities (including,
without limitation, all rights to receive the payment of money or other
consideration from, or on behalf of, any private pay patient), or by virtue of
services rendered, loans and advances made or other considerations given, by or
set forth in, or arising out of, any present or future chattel paper, note,
draft, lease, acceptance, writing, bond, insurance policy, instrument, document
or general intangible, and all extensions and renewals of any thereof, all
rights under or arising out of present or future contracts, agreements which
gave rise to any or all of the foregoing, including all claims or causes of
action now existing or hereafter arising in connection with or under any
agreement or document or by operation of law or otherwise, all collateral
security of any kind (including real property mortgages) given by any person
with respect to any of the foregoing, including, without limitation, all rights
to receive payment of money or other consideration from, or on behalf of, any
private pay patient, all rights to receive payments under all Resident
Agreements, and all third-party payor contracts (including Medicare and
Medicaid to the extent permitted by Law), including, but not limited to, the
Veterans Administration, Participation Agreements, and any and all depository
accounts (other than resident trust accounts) into which the proceeds of all or
any portion of such accounts may be now or hereafter deposited, and all
proceeds (cash and non-cash) of the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable
and "Account Debtors" mean all Persons who are obligated on the Receivables.
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"Act of Bankruptcy" means the filing of a petition in bankruptcy
under the Bankruptcy Code or the other commencement of a proceeding under any
other applicable law concerning insolvency, reorganization or bankruptcy, now
or hereafter in effect.
"Additional Borrower" shall have the meaning set forth in the
definition of Joinder Agreement.
"Adjusted EBITDA" shall have the meaning set forth in Section 8.14
Distributions to Partners hereof.
"Administrative Agent" means Bank of America, N.A., d/b/a NationsBank,
N.A., its successors and assigns.
"Affiliate" means an entity in which SALI or another entity which
SALI controls, holds an ownership interest equal to or greater than twenty-five
percent (25%).
"Agency Agreement" means that certain Second Amended and Restated
Agency Agreement of even date herewith by and among the Administrative Agent
and the other Lenders, as the same may be amended, restated or substituted from
time to time.
"Agreement" means this Second Amended and Restated Financing and
Security Agreement and all amendments, extensions, restatements, substitutions
and supplements hereto which may from time to time become effective in
accordance with the provisions of Section 11.10 Modifications hereof.
"Appraised Value" means the appraised value of a Facility as
stabilized, as reviewed by the Administrative Agent.
"Architect" means the architect named in the Architect's Contract, if
any, and his or its successors and permitted assigns.
"Architect's Contract" means the architect's agreement by and between
any of the Borrowers, as owner, and the architect for the particular Facility,
or any contract for architectural services relating to the development of the
Land and/or the construction of the Improvements for all of the Facilities made
by any of the Borrowers and an architect and approved in writing by the
Administrative Agent, as the same may be amended from time to time with the
prior written approval of the Administrative Agent.
"Banking Day" means any day that is not a Saturday, Sunday or banking
holiday in the Commonwealth of Virginia and a day on which banks are open for
the transaction of business in U.S. Dollar deposits in London, England.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
101 et seq.
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"Borrowing Base" means at any time an amount equal to the lesser of
(a) the aggregate dollar amounts of the Deed of Trust Lien Amounts for each of
the Eligible Projects or, in cases where an appraisal is obtained pursuant to
Section 7.28 Updated Appraisals hereof, the lesser of the Deed of Trust Lien
Amount or 75% of the Appraised Value of such Eligible Project; or (b) the
aggregate dollar amount equal to 80% of the Costs Incurred to Date for each
Pool A Project, 60% of the Costs Incurred to Date for each Pool B Project, and
40% of the Costs Incurred to Date for each Pool C Project.
"Borrowing Base Deficiency" shall have the meaning set forth in
Section 2.1 The Loan hereof.
"Borrowing Base Report" shall have the meaning set forth in Section
2.1 The Loan hereof.
"Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or lease of specific goods; any
returned, rejected or repossessed goods covered by any such writing or writings
and all proceeds (in any form including, without limitation, accounts, contract
rights, documents, chattel paper, instruments and general intangibles) of such
returned, rejected or repossessed goods; and all proceeds (cash and non-cash)
of the foregoing.
"Collateral" means all of the Borrowers' Accounts, Equipment, General
Intangibles, documents, Chattel Paper, Instruments and Inventory, all right,
title and interest of the Borrowers in and to the Operating Agreements and
Management Contracts (including, without limitation, the Management Agreement),
Resident Agreements, Physician Contracts, Participation Agreements, the Licenses
(whether or not designated with initial capital letters), and all other
management contracts, operating agreements, service agreements and any other
agreements pertaining to the Eligible Projects as that term is defined herein
and in the Uniform Commercial Code as presently adopted and in effect in the
Commonwealth of Virginia, and shall also cover, without limitation, (i) any and
all property specifically included in those respective terms in this Agreement
or in the Financing Documents, (ii) all right, title and interest of the
Borrowers in and to Leases or subleases, rents, royalties, issues, profits,
revenues, earnings, income or other benefits of the Property, or arising from
the use or enjoyment of the Property, or from any lease or other use and
occupancy agreement pertaining to the Property, (iii) all right, title and
interest of the Borrowers under all construction, architectural and design
contracts and plans and specifications, (iv) any and all property and/or
collateral described in any of the Security Documents, including, without
limitation, this Agreement, the Deeds of Trust [and the Pledge, Assignment and
Security Agreement], (v) any and all bank accounts or other deposit accounts of
the Borrowers wherever located, and (vi) all proceeds (cash and non-cash,
including, without limitation, insurance proceeds), of the foregoing.
"Collateral Assignments" means collectively the Amended and Restated
Collateral Assignment of Licenses, Participation Agreements and Resident
Agreements dated December 23,
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1997 between the Borrowers and the Administrative Agent and the Amended and
Restated Collateral Assignment of Operating Agreements and Management Contracts
dated herewith among the Borrowers, the Management Company and the
Administrative Agent each as amended and reconfirmed pursuant to the
Confirmation of and Amendment to Security Documents of even date herewith.
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with any of the Borrowers within
the meaning of Section 414(b) or (c) of the Internal Revenue Code of 1986, as
amended and the regulations promulgated or issued thereunder.
"Completed Facility" means an Eligible Project which has met the
conditions set forth in Section 4.3 Conditions Under Which an Eligible Project
is a Completed Facility of this Agreement.
"Completion Date" shall mean the date which is fifteen (15) months
from the recordation of the Deed of Trust on such Facility or upon the issuance
of an occupancy permit.
"Construction Contract" or "Construction Contracts" shall mean
individually or collectively the general contractor's agreements by and between
any of the Borrowers as owner, and a general contractor for the development of
any of the Land and/or the construction of any of the Improvements and approved
in writing by the Administrative Agent, as the same may be amended from time to
time pursuant to Section 8.19 Changes to Plans and Specifications hereof, or
otherwise with the prior written approval of the Administrative Agent.
"Costs Incurred to Date" means as to an Eligible Project actual costs
expended by any of the Borrowers under a Total Development Budget and reported
to the Administrative Agent through the requisition process as verified by the
Administrative Agent pursuant to the provisions of this Agreement; provided,
however, no cost overruns not otherwise covered by a contingency category in
the Total Development Budget will be included in the definition of Costs
Incurred to Date without the Administrative Agent's prior written consent.
"Credit Facility" means the revolving line of credit in a maximum
principal sum at any one time outstanding equal to the Credit Facility
Committed Amount and the Letter of Credit Facility.
"Credit Facility Closing" shall mean the date on which the documents
evidencing and securing the Credit Facility as modified in connection herewith,
are executed and delivered to the Administrative Agent.
"Credit Facility Committed Amount" means $400,000,000 or such larger
amount which the Lenders may from time to time severally commit to lend to the
Borrowers pursuant to the terms of Agency Agreement and the Note.
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"Debt Service" means for any period of determination an amount equal
to 80% of an Eligible Project's Costs Incurred to Date multiplied by a mortgage
constant of 10%.
"Deed of Trust" or "Deeds of Trust" means, individually or
collectively, a Deed of Trust, Assignment and Security Agreement, a Mortgage,
Assignment and Security Agreement, an Indemnity Deed of Trust, Assignment and
Security Agreement or an Indemnity Mortgage, Assignment and Security Agreement
or comparable security documents covering Property and securing the Obligations
as the same may be from time to time amended, modified, restated or
substituted.
"Deed of Trust Lien Amount" means the dollar amount of the first
priority Lien created by a Deed of Trust on any Borrower's fee simple interest
in an Eligible Project or on any Borrower's leasehold interest in a Qualified
Ground Lease, the lien amount being the lesser of (i) 75% of such Eligible
Project's Appraised Value, or (ii) 80% of such Eligible Project's Total
Development Budget.
"Default" means, with respect to each Financing Document, a default
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default.
"Development Fee" shall have the meaning set forth in Section 2.1 The
Loan hereof.
"EBITDA" means earnings before interest, federal and state income
taxes, depreciation, amortization, but after an imputed Replacement Reserve and
a Management Fee equal to the greater of 5% of gross revenues or the actual
Management Fee paid to the Management Company.
"EBITBAR" means EBITDA plus Rent Expense.
"Eligible Project" means any location in the United States where (a)
a Borrower proposes to construct or has constructed a Facility (unless the
Lenders also authorize inclusion of one or more Facilities acquired by a
Borrower); (b) the Administrative Agent has received and reviewed an as-built
appraisal of the Facility and a Phase I Environmental Assessment of the
Property found them acceptable; (c) using the services of a consulting engineer
selected by the Administrative Agent, the Administrative Agent has received,
reviewed and found to be acceptable the Plans and Specifications and the Total
Development Budget for the proposed Facility; (d) the Administrative Agent has
received a pro forma operating budget acceptable to the Administrative Agent;
(e) a first lien Deed of Trust has been recorded on the Property; (f) other
documentation necessary to perfect a lien on the Collateral in favor of the
Lenders has been executed and delivered to the Administrative Agent and
recorded, if required; (g) a commitment for a mortgagee title insurance policy
has been issued for the benefit of the Lenders and (h) construction has
commenced or will commence within sixty (60) days and, once commenced, is being
carried on in good faith with reasonable dispatch and is not abandoned or
discontinued for a period of more than fifteen (15) consecutive days except for
delays caused by Force Majeure.
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Each acceptable pro forma operating budget provided pursuant to (d) must
demonstrate that the Facility does or can satisfy the criteria for a Pool A
Project.
"Enforcement Costs" means all expenses, charges, costs and fees
whatsoever (including, without limitation, attorney's fees and expenses) of any
nature whatsoever paid or incurred by or on behalf of the Lenders in connection
with (a) the collection or enforcement of any or all of the Obligations, (b)
the preparation of or changes to this Agreement, the Note, the Security
Documents and/or any of the other Financing Documents, (c) the creation,
perfection, collection, maintenance, preservation, defense, protection,
realization upon, disposition, sale or enforcement of all or any part of the
Collateral, including, without limitation, those sums paid or advanced, and
costs and expenses, more specifically described in Section 7.11 Defense of
Title and Further Assurances, Section 7.25 Fees and Expenses; Indemnity, Section
10.4 Performance by Lenders and Section 11.7 Expenses, (d) the monitoring,
administration, processing, servicing of any or all of the Obligations and/or
the Collateral (e) post-judgment enforcement or collection actions, and (f)
bankruptcy proceedings of any Borrower or the Guarantor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Equipment" shall mean all equipment, machinery, furniture and
fixtures and supplies of every nature, presently existing or hereafter acquired
or created and wherever located, together with all accessions, additions,
fittings, accessories, special tools, and improvements thereto and
substitutions therefor and all parts and equipment which may be attached to or
which are necessary for the operation and use of such personal property,
whether or not the same shall be deemed to be affixed to real property, and all
rights under or arising out of present or future contracts relating to the
foregoing and all proceeds (cash and non-cash) of the foregoing.
"Eurodollar Period" or "Eurodollar Periods" shall have the meaning set
forth in the Note.
"Eurodollar Rate" means, for any advance under the Loan for any
Eurodollar Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London Time) two Banking Days prior to the first day
of such Eurodollar Period for a term comparable to such Eurodollar Period. If
for any reason such rate is not available, the term "Eurodollar Rate" shall
mean, for any advance under the Loan for any Eurodollar Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London Time) two Banking Days
prior to the first day of such Eurodollar Period for a term comparable to such
Eurodollar Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.
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15
"Event(s) of Default" shall mean the occurrence of any one or more of
the events specified in ARTICLE IX of this Agreement or in the Deeds of Trust
and the continuance of such event beyond the applicable grace and/or cure
periods therefor, if any, set forth in ARTICLE IX.
"Expense Payments" shall have the meaning set forth in Section 10.4
Performance by Lenders hereof.
"Facility" and "Facilities" mean, individually or collectively, an
assisted living facility or independent living facility owned by one of the
Borrowers.
"Financing Documents" means at any time collectively and includes this
Agreement, the Note, the Deeds of Trust, the Guaranty Agreement, the
Performance Guaranty, any Joinder Agreements, the Management Fee Subordination
Agreements, the Security Documents, the Interest Rate Protection Documents, the
Letter of Credit Documents and any other instrument, agreement or document
previously, simultaneously or hereafter executed and delivered by any of the
Borrowers and/or any other Person, singly or jointly with another Person or
Persons, evidencing, securing, guarantying or in connection with any of the
Obligations and/or in connection with this Agreement, the Note and/or any of
the Security Documents, as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"Fixed Charge Coverage Ratio" means starting after the issuance of an
occupancy permit for any given Facility, such Facility shall maintain a ratio
of EBITDA for the Facility to Debt Service for the Facility equal to not less
than 0.6 to 1.0 as of the end of the second (2nd) full fiscal quarter, a ratio
of 1.1 to 1.0 as of the end of the third (3rd) full fiscal quarter and a ratio
of 1.25 to 1.0 as of the end of each of the fourth (4th) through sixth (6th)
full fiscal quarters and thereafter measured as of the end of each full fiscal
quarter on a rolling four-quarter basis.
"Force Majeure" shall mean events occasioned by strikes, lock-outs,
labor unrest war or civil disturbance, materials shortages, unavailability of
materials, fire, natural disaster or acts of God which cause a delay in any
Borrower's performance of an obligation; provided, however, that such Borrower
must give Notice to the Administrative Agent within ten (10) days after such
Borrower knew of or should have known of the occurrence of an event which it
believes to constitute an event of Force Majeure.
"Funded Debt" of the Guarantor, at any time means the sum at such time
of (a) indebtedness for borrowed money, (b) any obligations in respect of
letters of credit, banker's or other acceptances or similar obligations issued
or created for the account of the Guarantor, (c) lease obligations which have
been or should be, in accordance with GAAP, capitalized on the books of the
Guarantor, (d) all liabilities secured by any property owned by the Guarantor
to the extent attached to the Guarantor's interest in such property, even
though the Guarantor has not assumed or become liable for the payment thereof,
and in the case of the Guarantor (e) (i) amounts payable by the Guarantor under
any terminated or defaulted interest rate protection products or which remain
outstanding or (ii) take-out commitments (excluding a refinancing or a
commitment of a third party) or purchase contracts including the deferred
purchase price of
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property or services in each instance if the Guarantor does not control the
incurring obligation, (f) (i) the amount of any guaranty of indebtedness for
borrowed money or (ii) other debt owed by Persons other than the Guarantor
which is in default and for which the creditor is pursuing payment by the
Guarantor, (g) any obligation of the Guarantor or a Commonly Controlled Entity
to a Multiemployer Plan and (h) other amounts considered to be debt by all of
the following: the Administrative Agent, the Syndication Agent and the
Documentation Agent in a dollar amount to be mutually agreed upon by the
Administrative Agent and the Guarantor; but excluding trade and other accounts
payable in the ordinary course of business in accordance with customary trade
terms and which are not overdue (as determined in accordance with customary
trade practices) or which are being disputed in good faith by the Guarantor and
for which adequate reserves are being provided on the books of the Guarantor in
accordance with GAAP, all of the above whether recourse or non-recourse, secured
or unsecured. For purposes of the definition of Material Adverse Change in this
Agreement, the term "Guarantor" as used in this definition of Funded Debt shall
be deemed to read "Person".
"GAAP" shall mean generally accepted accounting principles in effect
in the United States of America from time to time.
"General Contractor" or "General Contractors" shall mean individually
or collectively the general contractors named in the Construction Contracts and
his or its respective successors and permitted assigns.
"General Intangibles" shall mean any and all general intangibles of
every nature, whether presently existing or hereafter acquired or created
arising out of or relating to any or all of the Facilities, including without
limitation all books, correspondence, credit files, records, computer programs,
computer tapes, cards and other papers and documents in the possession or
control of the Borrowers claims (including without limitation all claims for
income tax and other refunds), choses in action, judgments, patents, patent
licenses, trademarks (excluding the "Sunrise", "Dignity Home Care", "Respect
Home Care" or "Karrington" trademark or tradename), trademark licenses
(excluding any license to any of the Borrowers for the "Sunrise,"
"Reminiscence", "Dignity Home Care", "Respect Home Care" or "Karrington"
trademarks or tradenames), licensing agreements, rights in intellectual
property, goodwill, as that term is defined in accordance with GAAP (including
all goodwill of the Borrowers' business symbolized by, and associated with, any
and all trademarks, trademark licenses, copyrights and/or service marks),
royalty payments, contractual rights, rights as lessee under any lease of real
or personal property, literary rights, copyrights, service names, service marks,
logos, trade secrets, all amounts received as an award in or settlement of a
suit in damages, deposit accounts, interests in joint ventures or general or
limited partnerships, all Licenses, construction permits, Operating Agreements
and Management Contracts, Participation Agreements and Resident Agreements, and
all proceeds (cash and non-cash) of the foregoing.
"Governmental Authority or Authorities" shall mean any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
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"Guarantor" means Sunrise Assisted Living, Inc., a Delaware
corporation.
"Guaranty Agreement" means the Second Amended and Restated Master
Guaranty of Payment Agreement by SALI of even date herewith.
"Hazardous Materials" means any flammable explosives, radioactive
materials, hazardous waste, toxic substances or related materials, including,
without limitation, asbestos, polychlorinated biphenyls, urea-formaldehyde,
radon, and any substance defined as or included in the definition of (a) any
"hazardous waste" as defined by the Resource Conservation Recovery Act of 1976,
as amended from time to time, and regulations promulgated thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and
regulations promulgated thereunder; (c) any "toxic substance" as defined by the
Toxic Substances Control Act, as amended from time to time, and regulations
promulgated thereunder; (d) any hazardous or infectious medical waste
including, but not limited to, cultures and stocks of infectious agents and
associated biologicals, pathological wastes, human and animal blood specimens
and blood products, anatomical materials, blood, blood-soiled articles,
contaminated materials, microbiological laboratory wastes, sharps, chemical
wastes, infectious wastes, chemotherapeutic wastes, and radioactive wastes; (e)
any substance, the presence of which on any property now or hereafter owned,
operated or acquired by any of the Borrowers is prohibited or regulated under
any applicable Federal or state laws or regulations; and (f) any other
substance, pollutant, contaminant, chemical, or industrial toxic hazardous
substance or waste, including without limitation hazardous materials, which by
law is prohibited or is otherwise regulated as a hazardous material.
"Hazardous Materials Contamination" shall mean the contamination by,
release or spill of (whether presently existing or occurring after the date of
this Agreement), Hazardous Materials of or on any property owned, operated or
controlled by any of the Borrowers, or for which any of the Borrowers, has
responsibility, including, without limitation, improvements, facilities, soil,
ground water, air or other elements on, or of, any property now or hereafter
owned, operated or acquired by any of the Borrowers, and any other
contamination by Hazardous Materials for which any of the Borrowers is, or is
claimed to be, responsible.
"Home Healthcare Provider" means any Affiliate of SALI or of the
Sunrise Foundation which is licensed as a home health care provider in any
state in which assistance with tasks of daily living provided to a person must
be provided by a home healthcare provider licensed in such state.
"Hydric Soils" shall mean any soil category upon which building would
be prohibited or restricted under applicable governmental requirements
(including, without limitation, those imposed by the U.S. Army Corps of
Engineers based upon its guidelines as to, among other things, soil, vegetation
and effect on the ecosystem).
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"Improvements" shall have the meaning given to that term in each Deed
of Trust.
"Inspecting Engineer" shall mean such person or firm as the
Administrative Agent may from time to time appoint or designate for purposes
related to the inspection of the progress of the development of any of the Land
and the construction of any of the Improvements, conformity of construction
with the applicable Plans and Specifications, and for such other purposes as
the Administrative Agent may from time to time deem appropriate or as may be
required by the terms of this Agreement.
"Instruments" means any and all notes, notes receivable, drafts,
acceptances, and similar instruments or documents, both now owned or hereafter
created or acquired arising out of or relating to the Facility (or any part
thereof).
"Interest Rate Protection" means any or all of the interest rate
protection agreements that have been or may from time to time be entered into
between the Borrowers and the Administrative Agent or another Lender in
connection with the Credit Facility.
"Interest Rate Protection Documents" means the documents evidencing
and governing the Interest Rate Protection at any time and from time to time.
"Interest Reserve" shall have the meaning set forth in Section 2.1 The
Loan (i) hereof.
"Inventory" means any and all inventory of the Borrowers and all right,
title and interest of the Borrowers in, and to, all of its now owned and
hereafter acquired goods, merchandise and other personal property furnished
under any contract of service or intended for sale or lease arising out of or
relating to any and all Facilities, including, without limitation, all supplies
of any kind, nature or description which are used or consumed in the Borrowers'
business and all documents of title or documents representing the same and all
proceeds (cash and non-cash) and products of the foregoing.
"Joinder Agreement" means a Joinder Agreement in the form attached
hereto as EXHIBIT F executed by an additional Borrower (each an "Additional
Borrower") to acknowledge its joinder as a party to this Agreement and a
co-borrower jointly and severally liable for the Collateral Assignments and the
Management Fee Subordination Agreements of the Obligations pursuant to and in
connection with its delivery of a Deed of Trust.
"Klaassens" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Land" shall mean the land described in the applicable Deed of Trust.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or any court or
similar entity established by any thereof.
"Lease" has the meaning set forth in a Deed of Trust.
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"Lender Tax" means any present or future tax, levy, cost or charge of
any nature imposed by any Governmental Authority, excluding taxes on or
measured by the net income of any Lender imposed by any jurisdiction in which
the principal or relevant lending office of such Lender is located.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.6 The Letter of Credit Facility hereof.
"Letter of Credit Agreement" means the collective reference to each
letter of credit application and agreement substantially in the form of the
Administrative Agent's or other applicable Lender's then standard form of
application for letter of credit or such other form as may be approved by the
Lender, executed and delivered by the Borrower in connection with the issuance
of a Letter of Credit, as the same may from time to time be amended, restated,
supplemented or modified and "Letter of Credit Agreements" means all of the
foregoing in effect at any time and from time to time.
"Letter of Credit Documents" means any and all drafts under or
purporting to be under a Letter of Credit, any Letter of Credit Agreement, and
any other instrument, document or agreement executed and/or delivered by the
Borrower or any other Person under, pursuant to or in connection with a Letter
of Credit or any Letter of Credit Agreement.
"Letter of Credit Facility" means the facility established by the
Lenders pursuant to Section 2.6 The Letter of Credit Facility of this Agreement.
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.6 The Letter of Credit Facility hereof.
"Letter of Credit Obligations" means all Obligations of the Borrower
with respect to the Letters of Credit and the Letter of Credit Agreements.
"Licenses" means any and all licenses, certificates of need, operating
permits, franchises, and other licenses, authorizations, certifications,
permits, or approvals, other than construction permits, issued by, or on behalf
of, any Governmental Authority now existing or at any time hereafter issued,
with respect to the acquisition, construction, renovation, expansion, leasing,
management, ownership and/or operation of any and all Facilities, accreditation
of any Facility, and/or the participation or eligibility for participation in
any third party payment or reimbursement programs to the extent any of the
Borrowers are participating in such programs (but specifically excluding any
and all Participation Agreements to the extent required by law), any and all
operating licenses issued by any state Governmental Authority, any and all
pharmaceutical licenses and other licenses related to the purchase, dispensing,
storage, prescription or use of drugs, medications, and other "controlled
substances," any and all licenses relating to the operation of food or beverage
facilities or amenities, if any, and any and all certifications and eligibility
for participation in Medicare, Medicaid, Blue Cross and/or Blue
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20
Shield, or any of the Managed Care Plans, private insurer, employee assistance
programs or other third party payment or reimbursement programs as the same may
from time to time be amended, renewed, restated, reissued, restricted,
supplemented or otherwise modified.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien or charge of
any kind, whether perfected or unperfected, avoidable or unavoidable,
consensual or non-consensual, including, without limitation, any conditional
sale or other title retention agreement, filed or un-filed tax liens, any lease
in the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Liquid Assets" means cash, cash equivalents and readily marketable
securities for purposes of any covenant under the Financing Documents, Liquid
Assets held by the Borrowers to satisfy the requirements of Section 8.14
Distributions to Partners or Members hereof shall be included.
"Liquidation Costs" shall have the meaning set forth in Section 10.6
Uniform Commercial Code and Other Remedies hereof.
"Loan" shall have the meaning set forth in Section 2.1 The Loan hereof.
"Major Subcontractor" shall mean a subcontractor under a subcontract
in an amount of $100,000 or more pertaining to any Facility.
"Managed Care Plans" shall mean any health maintenance organization,
preferred provider organization, individual practice association, competitive
medical plan, or similar arrangement, entity, organization, or Person.
"Management Agreement" shall mean any and all Management Agreements
entered into or to be entered into by and between any of the Borrowers and the
Management Company relating to the management of the Facilities, as the same
may from time to time be amended, restated, supplemented or otherwise modified.
"Management Company" means ▇▇▇▇▇, its successors and assigns and any
other Person which may become the manager of the Facilities.
"Management Fees" shall have the meaning set forth in Section 7.19
Management.
"Management Fee Subordination Agreement" shall have the meaning set
forth in Section 7.19 Management hereof.
"Material Adverse Change" means a significant adverse change in a
Person's financial position or capacity including but not limited to
significant adverse changes in (a) liquidity, (b)
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gross revenues, (c) total expenses, (d) such Person's net worth, or (e) ability
to meet payment obligations under such Person's Funded Debt, the Obligations
and/or contingent liabilities.
"Material Lease" has the meaning set forth in a Deed of Trust.
"Minimum Occupancy Requirement" means for an Eligible Project with 77
units or fewer, a minimum Resident Occupancy of (A) 50% by the sixth (6th)
Operating Month, (B) 70% by the ninth (9th) Operating Month and (C) 85% by the
twelfth (12th) Operating Month and thereafter and means for an Eligible Project
with 78 units or more, a minimum Resident Occupancy of (A) 50% by the sixth
(6th) Operating Month, (B) 70% by the ninth (9th) Operating Month, (C) 80% by
the twelfth (12th) Operating Month and (D) 85% by the fifteenth (15th) Operating
Month and thereafter.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in SECTION 4001(a)(3) of ERISA.
"Net Operating Income" means total operating revenue less total
operating expenses (excluding interest, federal and state income taxes,
depreciation and amortization) but including a management fee to the Management
Company of the higher of five percent (5%) of gross revenues or the actual
management fee for the period in question as shown in financial information
provided by the Borrowers.
"Note" shall have the meaning set forth in Section 2.1 The Loan hereof.
"Notice" shall mean a written communication delivered as specified in
Section 11.1 Notices hereof.
"Obligations" means all present and future debts, obligations, and
liabilities, whether now existing or contemplated or hereafter arising, of the
Borrowers to the Administrative Agent or any Lender under, arising pursuant to,
in connection with and/or on account of the provisions of this Agreement, the
Note, each Joinder Agreement, the Deeds of Trust, each Security Document, and
any of the other Financing Documents, including, without limitation, the
principal of, and interest on, the Note, late charges, Enforcement Costs, and
other prepayment penalties (if any), Letter of Credit Fees or fees charged with
respect to any guaranty of any Letter of Credit, any indebtedness to the
Administrative Agent or other Lender or Lenders who make available the Interest
Rate Protection arising out of such Interest Rate Protection pursuant to the
Interest Rate Protection Documents, and also means all other present and future
indebtedness, liabilities and obligations, whether now existing or contemplated
or hereafter arising, of the Borrowers to the Lenders in connection with the
Credit Facility of any nature whatsoever regardless of whether such debts,
obligations and liabilities be direct, indirect, primary, secondary, joint,
several, joint and several, fixed or contingent, and any and all renewals,
extensions and rearrangements of any such debts, obligations and liabilities.
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22
"Operating Agreements and Management Contracts" means any and all
contracts and agreements previously, now or at any time hereafter at any time
entered into by any of the Borrowers with respect to the acquisition,
construction or renovation of a significant nature, expansion, ownership,
operation, maintenance, use or management of any or all of the Facilities or
otherwise concerning the operations and business of any or all of the
Facilities, including, without limitation, any and all service and maintenance
contracts, any employment contracts, any and all management agreements, any and
all consulting agreements, laboratory servicing agreements, pharmaceutical
contracts, physician, other clinician or other professional services provider
contracts, resident agreements, food and beverage service contracts, and other
contracts for the operation and maintenance of, or provision of services to, a
Facility, as the same may from time to time be amended, restated, supplemented,
renewed, or modified.
"Operating Month" means a full calendar month after the issuance of a
certificate of occupancy for any Facility.
"Operating Reserve" shall mean a reserve in an amount approved by the
Administrative Agent included in each Total Development Budget to cover the
costs of leasing up a Facility and initial operating deficits.
"Outstanding Letter of Credit Obligations" has the meaning described
in Section 2.6 The Letter of Credit Facility hereof.
"Participation Agreements" means any and all third party payor
participation or reimbursement agreements now or at any time hereafter existing
for the benefit of any of the Borrowers relating to rights to payment or
reimbursement from, and claims against, private insurers, Managed Care Plans,
material employee assistance programs, Blue Cross and/or Blue Shield, federal,
state and local Governmental Authorities, including without limitation,
Medicare and Medicaid, and other third party payors, as the same may from time
to time be amended, restated, extended, supplemented or modified.
"Performance Guaranty" means, individually or collectively, that
certain Amended and Restated Guaranty of Completion of even date herewith dated
December 23, 1997 as modified and confirmed pursuant to a Confirmation of and
Amendment to Master Guaranty of Performance of even date herewith executed by
the Guarantor in favor of the Lenders and any Guaranty of Performance which may
in the future be executed and delivered by the Guarantor in connection with any
Facility Closing.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent
or which the Administrative Agent has determined in the exercise of its sole
and absolute discretion (i) are being diligently contested in good faith and by
appropriate proceedings, (ii) the applicable Borrower has the financial ability
to pay, with all penalties and interest, at all times without materially and
adversely affecting such Borrower, and (iii) are not, and will not be with
appropriate filing, the giving of notice and/or the passage of time, entitled
to priority over any Lien of the Lenders; (b) deposits or pledges to secure
obligations under workers' compensation,
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social security or similar laws, or under unemployment insurance in the
ordinary course of business; (c) Liens in favor of the Lenders pursuant to the
Credit Facility or the Interest Rate Protection; (d) judgment Liens to the
extent the entry of such judgment does not constitute an Event of Default under
the terms of this Agreement or result in the sale of, or levy of execution on,
any of the Collateral; (e) Liens approved by the Administrative Agent which
have been created to secure permitted subordinated debt on a junior lien basis;
and (f) such other Liens, if any, as are identified as Permitted Encumbrances
as defined in the Deed of Trust.
"Person" shall mean and include an individual, a corporation, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated association, any Governmental Authority or any other entity.
"Plans and Specifications" shall mean any and all plans and
specifications prepared in connection with the development of the Land and/or
the construction of the Improvements for any Eligible Project and which are
approved in writing by the Administrative Agent, including but not limited to,
the plans and specifications prepared by the Architect, a copy of which have
been initialed by the applicable Borrower and the Administrative Agent for
identification and delivered to the Administrative Agent.
"Pledge, Assignment and Security Agreement" means the Amended and
Restated Pledge Assignment and Security Agreement of even date herewith
executed by the partners of the Borrower in favor of the Administrative Agent,
pursuant to which such owners of the Borrower have pledged and assigned all of
their respective partners' interests in the Borrower to the Lenders as
additional security for the Credit Facility.
"Pool A Project" means any Eligible Project for which, when the
Borrowing Base is computed at the end of a reporting period, (a) either (i)
construction has been on-going for not more than fifteen (15) months or (ii) it
is a Completed Facility not later than fifteen (15) months after the date on
which the applicable Deed of Trust was executed; or (b) after it is a Completed
Facility, meets the Minimum Occupancy Requirement and Fixed Charge Coverage
Ratio Requirement.
"Pool B Project" means any Eligible Project which, when the Borrowing
Base is computed at the end of any reporting period, does not meet the
definition of a Pool A Project.
"Pool C Project" means any Eligible Project which, when the Borrowing
Base is computed at the end of two or more consecutive reporting periods, does
not meet the definition of a Pool A Project.
"Post Default Rate" means the interest rate on the Note in the absence
of an Event of Default plus three percent (3%) per annum.
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"Primary Borrower" means SEAL or another Borrower or a Person
designated as an attorney-in-fact for the Borrowers designated as such from
time to time by the Borrowers by written notice to the Administrative Agent.
"Property" shall mean collectively the "Property" as that term is
defined in each of the Deeds of Trust.
"Qualified Ground Lease" means (i) any lease (a) which is a direct
ground lease (or indirect ground lease, so long as each ground lease in the
chain of title meets the following criteria) granted by the fee owner of real
property, (b) which may be transferred and/or assigned without the consent of
the Lessor (or as to which the lease expressly provides that (i) such lease may
be transferred and/or assigned with the consent of the lessor and (ii) such
consent shall not be unreasonably withheld or delayed), (c) which has a
remaining term (including any renewal terms exercisable at the sole option of
the lessee) of at least 50 years, (d) under which no material default has
occurred and is continuing, (e) with respect to which a security interest may
be granted without the consent of the lessor, and (f) which contains lender
protection provisions reasonably acceptable to the Administrative Agent
including, without limitation, provisions to the effect that (A) the lessor
shall notify the Administrative Agent of the occurrence of any default by the
lessee under such lease and shall afford the Administrative Agent the right to
cure such default, and (B) in the event that such lease is terminated, the
Administrative Agent shall have the option to enter into a new lease having
terms substantially identical to those contained in the terminated lease. Upon
the submission to the Administrative Agent of a written request for approval of
the lender protection provisions and other terms of a proposed Qualified Ground
Lease, the Administrative Agent may waive any non-compliances with the
foregoing which it considers in its reasonable judgment not to be material and
adverse with respect to the eligibility of the Facility subject to the
Qualified Ground Lease, and shall use its best efforts to accept or reject such
proposal within five (5) Banking Days, and shall accept or reject such proposal
within ten (10) Banking Days, in each case following receipt of such request.
"Receivables" means all of the Borrowers' now or hereafter owned,
acquired or created Accounts, Chattel Paper, Contract Rights, General
Intangibles and Instruments, and all cash and noncash proceeds and products
thereof.
"Rent Expense" means the actual rent expense incurred by the Borrower,
the Guarantor or any Affiliate as a tenant under leases with respect to any
Facility.
"Replacement Reserves" means $250 per year per bed in each Facility.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requisition" or "Requisitions" shall have the meaning set forth in
Section 2.8 Requisitions Demonstrating Expenses hereof.
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"Resident Agreements" means any and all contracts, authorizations,
agreements and/or consents executed by, or on behalf of any resident or other
person seeking services from any Borrower pursuant to which such Borrower
provides or furnishes health or assisted living care and related services at
any and all of the Facilities, including the consent to treatment, assignment
of payment of benefits by third party, as the same may from time to time be
amended, restated, supplemented or modified.
"Resident Occupancy" means the number of residents who are in
occupancy at a Facility and paying fees pursuant to a resident agreement
divided by the pro forma resident occupancy for such Facility as contained in
the pro forma operating budget of an Eligible Facility.
"Revolving Credit Expiration Date" means July 29, 2002 or any date to
which it may be extended from time to time pursuant to the terms of Section 2.5
Extensions hereof.
"Revolving Credit Termination Date" means the earlier of (a) the
Revolving Credit Expiration Date, or (b) the date on which the Credit Facility
is terminated pursuant to Section 10.5 Remedies on Default hereof or otherwise.
"SALI" means Sunrise Assisted Living, Inc., a Delaware corporation.
"SALII" means Sunrise Assisted Living Investments, Inc., a Virginia
corporation.
"▇▇▇▇▇" means Sunrise Assisted Living Management, Inc., a Virginia
corporation, formerly known as Sunrise Terrace, Inc.
"SDI" means Sunrise Development, Inc., a Virginia corporation.
"Security Documents" shall mean, collectively, any assignment,
including, without limitation, any Pledge, Assignment and Security Agreement,
the Collateral Assignments and any assignment, pledge agreement, security
agreement, mortgage, deed of trust (including the Deeds of Trust), leasehold
mortgage, leasehold deed of trust, deed to secure debt, financing statement,
initial transaction statement and any similar instrument, document or agreement
under or pursuant to which a Lien is now or hereafter granted to, or for the
benefit of, the Lenders on any collateral to secure the Obligations, as the
same may from time to time be amended, restated, supplemented or otherwise
modified.
"Stabilized Facility" means an Eligible Project with a Resident
Occupancy of at least 85% and a ratio of Net Operating Income to Debt Service
of not less than 1.25 to 1.00 measured for two consecutive fiscal quarters.
"Stored Materials" shall have the meaning set forth in Section 4.12
Stored Materials hereof.
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"Survey" shall mean a plat of the Land for any Facility which clearly
designates at least (i) the location of the perimeter of such Land by courses
and distances; (ii) the location of all easements, rights-of-way, alleys,
streams, waters, paths and encroachments; (iii) the location of all building
restriction lines and set-backs, however established; (iv) the location of any
streets or roadways abutting such Land; and (v) the then "as-built" location of
the Improvements located on such Land and the relation of such Improvements by
courses and distances to the perimeter of such Land, building restriction lines
and set-backs, all in conformity with the Minimum Standard Detail Requirements
for Land Title Surveys adopted by the American Congress on Surveying and
Mapping (1992 Edition).
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any of
the Borrowers or any of their properties or assets or any part thereof or in
respect of any of their franchises, businesses, income or profits.
"Total Development Budget" means the development, construction and
opening operating expense budget for an Eligible Project as reviewed and
approved by the Administrative Agent.
"Unused Commitment Amount" shall have the meaning set forth in Section
2.3 Fees hereof.
"Unused Line Fee" shall have the meaning set forth in Section 2.3 Fees
hereof.
"Wholly Owned Subsidiary" or "Wholly Owned Subsidiaries" means one or
more subsidiaries 100% owned by SALI or a Borrower or by any Wholly Owned
Subsidiary of SALI or a Borrower which is or has been created for the sole
purpose of acquiring or constructing and owning and operating a Facility which
is included in the Borrowing Base.
Section 1.2 Accounting Terms and Other Definitional Provisions
Unless otherwise defined in this Agreement, as used in this Agreement
and in any certificate, report or other document made or delivered pursuant
hereto, accounting terms not otherwise defined in this Agreement, and
accounting terms only partly defined in this Agreement, to the extent not
defined, shall have the respective meanings given to them under GAAP. Unless
otherwise defined in this Agreement, all terms used in this Agreement which are
defined by the Virginia Uniform Commercial Code shall have the same meanings as
assigned to them by the Virginia Uniform Commercial Code unless and to the
extent varied by this Agreement. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement,
Section, subsection, schedule and exhibit references are references to sections
or subsections of, or schedules or exhibits to, as the case may be, this
Agreement unless otherwise specified. As used in this Agreement, the singular
number shall include the plural, the plural the singular and the use of the
masculine, feminine or neuter gender shall include all genders, as the
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context may require. Reference to any one or more of the Financing Documents
and any of the Financing Documents shall mean the same as the foregoing may
from time to time be amended, restated, substituted, extended, renewed,
supplemented or otherwise modified.
ARTICLE II
BORROWING
Section 2.1 The Loan
(a) The Lenders agree to lend to the Borrowers pursuant
to the terms and conditions of this Agreement, and the Borrowers, jointly and
severally, agree to borrow on a revolving basis from the Lenders from time to
time the principal amount (the "Loan") not to exceed at any time outstanding
the lesser of (i) the Credit Facility Committed Amount, or (ii) the Borrowing
Base minus the aggregate face amount of all Letters of Credit outstanding.
(b) The obligation of the Borrowers to repay the Loan
shall be evidenced by the Second Amended, Restated, Consolidated and Increased
Master Note of even date herewith (as amended, restated, substituted, extended,
renewed and otherwise modified from time to time, the "Note") payable to the
Administrative Agent in the form attached hereto as EXHIBIT A. The Note shall
bear interest and shall be repaid by the Borrowers in the manner and at the
times set forth in the Note.
(c) The conditions precedent for making an advance under
the Loan shall be as set forth in this Agreement. Sums borrowed and repaid may
be readvanced under the terms and conditions of this Agreement. Advances shall
be made by the Lenders on a pro rata basis based on their pro rata shares of
the Credit Facility Committed Amount.
(d) No advances may be made or be outstanding under the
Credit Facility and no Letters of Credit may be issued until and during such
times as there are at least eight (8) Eligible Projects in the Borrowing Base
of which 83% must be Pool A Projects. The Administrative Agent will prepare a
Borrowing Base Report (each a "Borrowing Base Report") in the form attached
hereto as EXHIBIT B which must be certified by the Borrowers listing for each
of the Eligible Projects (i) the applicable Deed of Trust Lien Amount, (ii) the
Costs Incurred to Date, and (iii) its status as of the most recent reporting
date as a Pool A, Pool B or Pool C Project within forty-five (45) days after
the end of each of the Borrowers' fiscal quarters. The Borrowing Base Report
will be based on the outcome of the requisition procedures hereinafter
described, appraisals obtained by the Administrative Agent and other information
on the Eligible Projects provided by the Borrowers or obtained by the
Administrative Agent. The Borrowing Base shall be computed based on the
Borrowing Base Report most recently prepared by the Administrative Agent. In the
event the Borrowers shall fail to furnish other current reports or information
as reasonably required by the Administrative Agent pursuant to the Financing
Documents, or in the event the Administrative Agent believes that a Borrowing
Base Report is no longer accurate, the Administrative Agent may, in its
reasonable discretion exercised from time to time and without limiting its other
rights and remedies under the Financing Documents,
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upon notice to the Borrowers and the expiration of a cure period of five (5)
Banking Days, designate any Eligible Project as a Pool C Project or suspend the
making of or limit advances under the Loan. The Borrowing Base shall be subject
to reduction as a result of the following events: (i) the release of an Eligible
Project from the lien of the applicable Deed of Trust, (ii) by the change of
any Eligible Project's status as a Pool A or B Project to a Pool B or C Project
respectively as determined by the Administrative Agent quarterly, or (iii) the
change in appraised value of an Eligible Project pursuant to Section 7.28
Updated Appraisals. The Borrowing Base shall be subject to increase as a result
of the following events: (i) addition of Eligible Projects, (ii) increase in
the Costs Incurred to Date as determined by the Administrative Agent quarterly,
or (iii) the change of an Eligible Project's status as a Pool B or C Project to
a Pool A as determined by the Administrative Agent quarterly. The Borrowers may
request and the Requisite Lenders (as defined in the Agency Agreement) may in
their sole discretion agree to include as an Eligible Project a completed
Facility which a Borrower has acquired which meets the conditions precedent to
including a completed Facility as an Eligible Project.
(e) The Borrowers shall furnish to the Administrative
Agent such schedules, certificates, lists, records, reports, information and
documents as required by the Administrative Agent from time to time so that the
Administrative Agent may, in its reasonable discretion, determine the Borrowing
Base.
(f) If at any time the aggregate principal amount of the
Loan outstanding and the Outstanding Letter of Credit Obligations exceeds the
Borrowing Base, a borrowing base deficiency ("Borrowing Base Deficiency") shall
exist. Each time a Borrowing Base Deficiency exists, the Borrowers shall within
three (3) Banking Days of notice thereof from the Administrative Agent either
pay the amount and/or add Eligible Projects to increase the Borrowing Base to
an amount which is at least equal to the aggregate principal amount outstanding
under the Loan and the Outstanding Letter of Credit Obligations.
(g) The current Borrowing Base Report is attached hereto
as EXHIBIT C.
(h) As of the date hereof the Borrower has designated
and the Lenders have accepted certain Facilities into the Borrowing Base as
Eligible Projects. This Agreement shall govern the procedures for verification
by the Administrative Agent of Costs Incurred to Date on each Eligible Project.
This Agreement shall also govern the terms, conditions and procedures under
which Eligible Projects may be added to the Borrowing Base.
(i) The Borrower will give notice to the Administrative
Agent in writing in advance of its intention to add a particular Facility as an
Eligible Project under the Credit Facility. Each Total Development Budget for
an Eligible Project shall include an interest reserve (the "Interest Reserve"),
and Operating Reserve, a hard cost contingency reserve of not less than five
percent (5%) of the total budgeted construction costs and a development fee
payable to SDI (the "Development Fee") and shall demonstrate to the Agent's
satisfaction in its sole discretion that the Eligible Project will be
designated as a Pool A Project.
Section 2.2 Procedure for Advances
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(a) The Administrative Agent will make advances from
time to time upon receipt of written request from the Borrowers in the form
designated by the Administrative Agent, provided that after giving effect to
the Borrowers' request, the outstanding principal balance of the Loan would not
exceed the lesser of the Credit Facility Committed Amount or the Borrowing Base
minus the aggregate face amounts of all Letters of Credit outstanding. Each
advance under the Loan shall be in an amount of not less than $1,000,000, and
in increments of $250,000 in excess thereof. Advances or the renewal of a
Eurodollar Period shall be requested by the Borrowers orally or in writing by
10:00 A.M. (Baltimore time) three (3) Banking Days prior to the Banking Day on
which the funds will be advanced. The Borrowers shall advise the Administrative
Agent at the time of such notice which Eurodollar Period they are selecting.
The Administrative Agent shall have no obligation to make any advance if at the
time such advance is requested and/or is proposed to be funded, there exists an
Event of Default or an event which upon notice or lapse of time or both would
constitute an Event of Default under the Financing Documents. If the Borrowers
fail to advise the Administrative Agent three (3) Banking Days in advance of
the expiration of a Eurodollar Period of its intention to either pay off such
portion of the Loan or renew the applicable Eurodollar Period, it shall be
assumed by the Administrative Agent that the Eurodollar Period is to be
renewed.
(b) In addition, if the Administrative Agent has reason
to believe a Default or an Event of Default has occurred, the Borrowers hereby
irrevocably authorize the Lenders to make advances of the Loan at any time and
from time to time, without further request from or notice to the Borrowers,
which the Lenders, in their sole and absolute discretion, deem necessary or
appropriate to protect the Lenders' interests under this Agreement or otherwise,
including, without limitation, advances of the Loan made to cover interest on
the Loan, fees, and/or Enforcement Costs, prior to, on, or after the
termination of this Agreement, regardless of whether the aggregate amount of
the advances of the Loan which the Lenders may make hereunder exceeds the
Credit Facility Committed Amount. The Lenders shall have no obligation
whatsoever to make any advance under this subsection and the making of one or
more advances under this subsection shall not obligate the Lenders to make
other similar advances. Any such advances will be evidenced by the Note secured
by the Collateral and the Deeds of Trust.
Section 2.3 Fees
The Borrowers shall pay to the Administrative Agent the following fees:
(a) Unused Line Fee. The Borrowers shall pay to the
Administrative Agent for the benefit of the Lenders beginning on the date set
forth below a quarterly revolving credit facility fee (the "Unused Line Fee")
in an amount equal to twenty-five (25) basis points per annum of the average
undisbursed portion of the "Unused Commitment Amount" for the applicable
quarter specified in the right-hand column below. The accrued and unpaid
portion of the Unused Line Fee shall be paid by the Borrower to the
Administrative Agent as of the Credit Facility Closing Date and on the first
day of each fiscal quarter commencing October, 1999 and on the Revolving Credit
Termination Date. For purposes hereof "Average Outstandings" shall
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mean the average daily principal under the Note plus the average daily principal
amount of the aggregate face amounts of the Letters of Credit for the quarter
then ended.
Period Unused Commitment Amount
------ ------------------------
Quarter ending 6/30/1999 $180,000,000 less the Average Outstandings
Quarter ending 9/30/1999 $250,000,000 less the Average Outstandings
Quarter ending 12/31/1999 $250,000,000 less the Average Outstandings
Quarter ending 3/31/2000 $300,000,000 less the Average Outstandings
Quarter ending 6/30/2000 $350,000,000 less the Average Oustandings
Quarter ending 9/30/2000 and Credit Facility Committed
each fiscal quarter there- Amount less the Average
after Outstandings
(b) Appraisal Fees. Upon the receipt of an appraiser's
invoice from the Administrative Agent, the Borrowers shall pay the fee of the
appraiser for an Eligible Project.
(c) Extension Fee. In the event the Revolving Credit
Expiration Date of the Credit Facility is extended for a twelve-month period
pursuant to the terms of Section 2.5 Extensions
Section 2.4 Interest Rate Matters
(a) Lender Tax Adjustment. Each payment made by the
Borrowers under the Note shall either (i) be exempt from, and be made without
reduction by reason of, any Lender Tax or (ii) to the extent that any such
payment shall be subject to any Lender Tax, be accompanied by an additional
payment by the Borrowers of such amount as may be necessary so that the net
amount received by each Lender (after deducting all applicable Taxes) is the
same as such Lender would have received had such payment not been subject to
such Lender Tax. Upon any payment of Lender Tax by the Borrowers, the Borrowers
shall promptly (and in any event within 30 days) furnish to the Administrative
Agent and applicable Lender such tax receipts, certificates an other evidence
of such payment as the Borrowers may have or the Administrative Agent or the
applicable Lender may reasonably request.
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(b) Inability to Determine Eurodollar Rate. In the event
that the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that, by reason of circumstances affecting
the London interbank market, quotation of Eurodollar Rates for any portion of
the Note are not being provided in the relevant amounts or for the relevant
maturities for the purpose of determining a Eurodollar Rate for any portion of
the principal sum, the Administrative Agent will give notice of such
determination to the Borrowers and each Lender at least one day prior to the
date of an advance or any subsequent Eurodollar Period for the Loan. If any
such notice is given, no Lender shall have any obligation to make any advance
or maintain any principal sum outstanding at a Eurodollar Rate. Until the
earlier of the date any such notice has been withdrawn by the Administrative
Agent or the date when the Lenders and the Borrowers have mutually agreed upon
an alternate method of determining the rates of interest payable on the Loan,
as the case may be, the Borrowers shall not have the right to have additional
advances or maintain any portion of the Credit Facility at a Eurodollar Rate,
whereupon the Lenders and the Borrowers shall mutually agree upon an alternate
method of determining the rates of interest payable on the Loan or such
Lender's portion of the principal outstanding under all the Note shall be
immediately due and payable.
(c) Illegality. Notwithstanding any other provision of
the Financing Documents to the contrary, in the event that it shall become
unlawful for any Lender to obtain funds in the London interbank market or for
such Lender to maintain the Loan at the Eurodollar Rate, then, by written
notice to the Borrowers and to the Administrative Agent, such Lender may
declare that advances will not thereafter be made or the Loan maintained by
such Lender hereunder at the Eurodollar Rate, whereupon the Lenders and the
Borrowers shall mutually agree upon an alternate method of determining the
rates of interest payable on the Loan or such Lender's portion of the principal
outstanding under the Note shall be immediately due and payable.
(d) Increased Costs and Reduced Return.
(i) If any event shall occur (whether in the form of
a reserve requirement (not included in the definition of the
Eurodollar Rate), exchange control regulations, governmental
charges, compliance with any guideline or request from any
central bank or other Governmental Authority, changes in the
London interbank market or the position of any Lender in such
market or otherwise) and the result of any such event is, in
such Lender's reasonable judgment, to increase the costs
which such Lender determines are attributable to its making
or maintaining the Loan at the Eurodollar Rate in excess of
those costs already in effect as of July 1, 1999, or its
obligation to make available the Loan at the Eurodollar
Rate or to reduce the amount of any sum received or
receivable by such Lender under the Note, then, within ten
(10) days after demand by such Lender, Borrowers hereby
agree to pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased
cost or reduction.
(ii) In addition to any amounts payable pursuant to
Section (i), if any Lender shall have determined that the
applicability of any law, rule, regulation or
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guideline adopted pursuant to or arising out of the July
1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards,"
or the adoption after the date hereof of any other law,
rule, regulation or guideline regarding capital adequacy,
or any change in any of the foregoing or in the enforcement
or interpretation or administration of any of the foregoing
by any court or any central bank or other Governmental
Authority, charged with the enforcement or interpretation
or administration thereof, or compliance by such Lender (or
any lending office of such Lender) or such Lender's holding
company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of its making or
maintaining the Loan or its incurring any obligations under
this Agreement to a level below that which such Lender or
such Lender's holding company could have achieved but for
such applicability, adoption, change or compliance (taking
into consideration such Lender's policies and the policies
of such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be
material, then, upon demand by such Lender, the Borrowers
hereby agree to pay to such Lender from time to time such
additional amount or amounts as will compensate such Lender
or such Lender's holding company for any such reduction
suffered.
(e) Notice of Amounts Payable to Lenders. If any Lender
shall seek payment of any amounts from Borrowers pursuant to this Section or
under Section 2.4 Interest Rate Matters, it shall notify the Borrowers and the
Administrative Agent of the amount payable by the Borrowers to such Lender
hereunder. A certificate of such Lender seeking payment setting forth in
reasonable detail the factual basis for and the computation of the amount
specified, shall be conclusive and binding on all parties for all purposes,
absent manifest error, as to the amounts owned. The Borrowers' obligations under
this Section shall survive the termination of this Agreement and the repayment
of the Obligations.
(f) Change in Basis Point Spread. Any change in the basis
point margin added to the Eurodollar Rate based on a change in the rating
pursuant to the terms of the Note shall take effect one (1) Banking Day
following notice by the Administrative Agent to the Lenders of such rate change.
Section 2.5 Extensions
At any time not later than thirty (30) days nor earlier than one
hundred twenty (120) days prior to the Revolving Credit Expiration Date or any
anniversary of the Facility Closing, the Borrowers may request that the
Administrative Agent and the Lenders, in their sole discretion,
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may agree to extend the Revolving Credit Expiration Date one or more times for
a period of twelve (12) months each.
Section 2.6 The Letter of Credit Facility
(a) Letters of Credit. Subject to and upon the provisions
of this Agreement, and as a part of the Credit Facility Committed Amount, the
Borrower may, upon the prior approval of the Administrative Agent, obtain
standby letters of credit (as the same may from time to time be amended,
supplemented or otherwise modified, each a "Letter of Credit" and collectively
the "Letters of Credit") from any Lender selected by the Borrowers from time to
time until the Banking Day preceding the Revolving Credit Termination Date.
Each Letter of Credit shall be issued for a business purpose of any Borrower,
SALI or any Affiliate, provided that one or more Borrowers is a co-obligor with
SALI or any Affiliate for the Obligations arising under such Letter of Credit
and executes the applicable Letter of Credit Application to evidence such
liability. The Borrower will not be entitled to obtain a Letter of Credit
hereunder unless (a) after giving effect to the request, the outstanding
principal balance of the Loan and of the Letter of Credit Obligations would not
exceed the lesser of (i) the Credit Facility Amount, or (ii) the most current
Borrowing Base and (b) the sum of the aggregate face amount of the then
outstanding Letters of Credit (including the face amount of the requested
Letter of Credit) does not exceed Ten Million Dollars ($10,000,000).
(b) Letter of Credit Fees. Prior to or simultaneously
with the opening of each Letter of Credit, the Borrower shall pay to the
Administrative Agent or the other issuing Lender for the benefit of all the
Lenders, a letter of credit fee (each a "Letter of Credit Fee" and collectively
the "Letter of Credit Fees") in an amount equal to eighty (80) basis points per
annum of the amount of the Letter of Credit and a facing fee of 1/8th of 1% of
the amount of the Letter of Credit for the benefit of the issuing Lender only.
The Letter of Credit Fee but not the facing fee will be pro-rated if the
initial term of a Letter of Credit is less than twelve (12) months. Such Letter
of Credit Fees shall be paid upon the opening of the Letter of Credit and upon
each anniversary thereof, if any. In addition, the Borrower shall pay to the
Lender any and all additional issuance, negotiation, processing, transfer or
other fees to the extent and as and when required by the provisions of any
Letter of Credit Agreement; such additional fees are included in and a part of
the "Fees" payable by the Borrower under the provisions of this Agreement.
(c) Terms of Letters of Credit. Each Letter of Credit
shall (a) be opened pursuant to a Letter of Credit Agreement, and (b) expire on
a date not later than the Banking Day preceding the Revolving Credit Expiration
Date; provided, however, if any Letter of Credit does have an expiration date
later than the Banking Day preceding the Revolving Credit Termination Date, as
of the Banking Day preceding the Revolving Credit Termination Date an advance of
the Loan shall be made by the Lender in the face amount of such Letter of Credit
(or Letters of Credit) and the proceeds thereof shall be deposited in an account
titled in the name of the Administrative Agent as trustee for the Borrower. The
proceeds of the trustee account referred to in the immediately preceding
sentence shall be held as collateral for the Letter of Credit (or Letters of
Credit) and in the event of a draw under the Letter of Credit (or Letters of
Credit), used to pay any such draw. The aggregate face amount of all Letters of
Credit at any one time outstanding and
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issued by the Administrative Agent or any other Lender pursuant to the
provisions of this Agreement, plus the amount of any unpaid Letter of Credit
Fees accrued or scheduled to accrue thereon, and less the aggregate amount of
all drafts issued under or purporting to have been issued under such Letters of
Credit that have been paid by the Administrative Agent or any other Lender, is
herein called the "Outstanding Letter of Credit Obligations".
(d) Procedure for Letters of Credit. The Borrower shall
give the Administrative Agent written notice at least two (2) Banking Days
prior to the date on which a Letter of Credit is requested to be opened of
their request for a Letter of Credit. Such notice shall specify if a Lender
other than the Administrative Agent is requested to be the issuing bank for
such Letter of Credit shall be accompanied by a duly executed and delivered
Letter of Credit Agreement. Upon receipt of the Letter of Credit Agreement and
the Letter of Credit Fee, the Administrative Agent or other issuing Lender
shall process such Letter of Credit Agreement in accordance with its customary
procedures and open such Letter of Credit on the Banking Day specified in such
notice.
Section 2.7 Permitted Costs
Advances under the Borrowing Base shall be made available by the
Lenders pursuant to a Borrowing Base Report issued quarterly by the
Administrative Agent or more frequently in the Administrative Agent's
discretion and certified by the Borrowers in accordance with the terms of this
Agreement. That portion of the Borrowing Base composed of Costs Incurred to
Date shall be related to expenditures for each Eligible Facility described in
the applicable Total Development Budget. Each Total Development Budget may
include the cost of (i) the acquisition by the Borrowers of the Land which is
the site of such Facility, (ii) the construction on the Premises of a Facility
containing residential units and common facilities (iii) marketing, staffing
and similar pre-opening expenses and (iv) an Operating Reserve. Unless
otherwise agreed to by the Administrative Agent and to the extent specifically
permitted by the Administrative Agent, the process of verification of
Requisitions shall confirm the payment by any of the Borrowers of the following
costs and expenses related to the development of the Premises and the
construction of the Improvements and no others may be included in a Total
Development Budget: (i) the payment of interest when due without further
authorization or consent of the Borrowers; (ii) the actual cost of the Land and
all labor, services, materials, supervision, construction fees and the like
reasonably incurred by any of the Borrowers in connection with the construction
upon the Land of the Improvements in accordance with the Plans and
Specifications; (iii) for the actual cost of pre-opening expenses, marketing
expenses and operations of the Facility to the extent of operating deficits;
(iv) for the actual cost of commitment fees, extension fees, appraisal fees,
closing or settlement costs, fees of attorneys, engineers, architects and
accountants, insurance and bond premiums, ad valorem real estate taxes and
other costs directly related to the development of the Land and the
construction, marketing, initial start-up operating of the Improvements and (v)
for the development fee payable to SDI (the "Development Fee") and other
pre-opening fees.
Section 2.8 Requisitions Demonstrating Expenses
Verification of the Borrowers' Costs Incurred to Date will be
administered by the Administrative Agent's Real Estate Loan Administration
Group. Requisitions for each Eligible
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Project shall be submitted by the Borrowers from time to time setting forth
costs incurred by the Borrowers shall be in the form approved by the
Administrative Agent (each a "Requisition" collectively, the "Requisitions")
signed by ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ on behalf of the Borrowers and approved by the Architect,
showing the percentage of completion and setting forth in trade breakdown form
and in such detail as may be required by the Administrative Agent the amounts
expended and/or costs incurred for work done and necessary materials
incorporated in the Improvements. The Requisition shall also show the
percentage of completion of each line item on the applicable Borrower's cost
breakdown approved by the Administrative Agent. The Borrowers shall submit with
each Requisition a statement that the work completed to the date of such
Requisition is of quality consistent with the applicable Plans and
Specifications. In addition, at the time of delivery of each Requisition by the
Borrowers, the Borrowers shall furnish to the Administrative Agent such
additional information (such as paid receipts, invoices, statements of accounts,
etc.) as the Administrative Agent may reasonably require to assure that amounts
shown in the Requisition have been paid by the Borrowers. Requisitions verified
by the Real Estate Loan Administration Group during the course of a fiscal
quarter will be included in the calculation of the next Borrowing Base Report.
Section 2.9 Co-Borrower Obligations
Each Person included in the term "Borrowers", including each
Additional Borrower, hereby covenants and agrees with the Administrative Agent
on behalf of the Lendersas follows:
(a) The Obligations include all present and future
indebtedness, duties, obligations, and liabilities, whether now existing or
contemplated or hereafter arising, of any one or more of the Additional
Borrowers or the Existing Borrowers in connection with the Loan.
(b) Reference in this Agreement and the other Financing
Documents to the "Borrowers" or otherwise with respect to any one or more of
the Persons now or hereafter included in the definition of "Borrowers" shall
mean each and every such Person and any one or more of such Persons, jointly
and severally, unless the context requires otherwise.
(c) For administrative convenience, each Person included
in the term "Borrowers" hereby irrevocably appoints the Primary Borrower as the
Borrower's attorney-in-fact, with power of substitution (with the prior written
consent of the Administrative Agent in the exercise of its sole and absolute
discretion), in the name of the Primary Borrower or in the name of the Borrower
or otherwise to take any and all actions with respect to this Agreement, the
other Financing Documents, the Obligations and/or the Collateral (including,
without limitation, the proceeds thereof) as the Primary Borrower may so elect
from time to time, including, without limitation, actions to (i) request
advances under the Loan, and direct the Administrative Agent to disburse or
credit the proceeds of any advance under the Loan directly to an account of the
Primary Borrower, any one or more of such Persons or otherwise, which direction
shall evidence the making of such advance and shall constitute the
acknowledgment by each such Person of the receipt of the proceeds of the Loan,
(ii) enter into, execute, deliver, amend, modify, restate, substitute, extend
and/or renew this Agreement, any Additional Borrower Joinder Supplement,
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any other Financing Documents, security agreements, mortgages, deposit account
agreements, instruments, certificates, waivers, letter of credit applications,
releases, documents and agreements from time to time, and (iii) endorse any
check or other item of payment in the name of such Person or in the name of the
Primary Borrower. The foregoing appointment is coupled with an interest, cannot
be revoked without the prior written consent of the Administrative Agent, and
may be exercised from time to time through the Primary Borrower's duly
authorized officer, officers or other Person or Persons designated by the
Primary Borrower to act from time to time on behalf of the Primary Borrower.
(d) Each Person included in the term "Borrowers" hereby
irrevocably authorizes the Administrative Agent to make advances to any one or
more or to all of such Persons, pursuant to the provisions of this Agreement
upon the written, oral or telephonic request any one or more of the Persons
who is from time to time a Responsible Officer of a Borrower under the
provisions of the most recent certificate of corporate resolutions and/or
incumbency of the Person included in the term "Borrowers" on file with the
Administrative Agent and also upon the written, oral or telephone request of
any one of Responsible Officer.
(e) The Administrative Agent assumes no responsibility
or liability for any errors, mistakes, and/or discrepancies in the oral,
telephonic, written or other transmissions of any instructions, orders, requests
and confirmations between the Administrative Agent and any one or more of the
Persons included in the term "Borrowers", any advance under the Loan or any
other transaction in connection with the provisions of this Agreement except
those resulting from the Administrative Agent's gross negligence or willful
misconduct.
Section 2.10 Agreement Among Borrowers
Without implying any limitation on the joint and several nature of the
Obligations, the Administrative Agent agrees that, notwithstanding any other
provision of this Agreement, the Persons included in the term "Borrowers" may
create reasonable inter-company indebtedness between or among the Persons
included in the term "Borrowers" with respect to the allocation of the benefits
and proceeds of the advances under this Agreement. The Persons included in the
term "Borrowers" agree among themselves, and the Administrative Agent consents
to that agreement, that each such Person shall have rights of contribution from
all of the such Persons to the extent such Person incurs Obligations in excess
of the proceeds of the Loans received by, or allocated to purposes for the
direct benefit of, such Person. All such indebtedness and rights shall be, and
are hereby agreed by the Persons included in the term "Borrowers" to be,
subordinate in priority and payment to the indefeasible repayment in full in
cash of the Obligations, and, unless the Administrative Agent agrees in writing
otherwise, shall not be exercised or repaid in whole or in part until all of the
Obligations have been indefeasibly paid in full in cash. Each Person included in
the term "Borrowers" agrees that all of such inter-company indebtedness and
rights of contribution are part of the Collateral and secure the Obligations.
Each Person included in the term "Borrowers" hereby waives all rights of
counterclaim, recoupment and offset between or among themselves arising on
account of that indebtedness and otherwise. Unless otherwise consented to in
writing by the Administrative Agent, no Person included in the term "Borrowers"
shall evidence the inter-company indebtedness or rights of
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contribution by note or other instrument, and shall not secure such indebtedness
or rights of contribution with any Lien or security.
Section 2.11 Benefits to Borrowers
Each Person included in the term "Borrowers" hereby represents and
warrants to the Administrative Agent that each of them will derive benefits,
directly and indirectly, from each advance under the Loan, both in their
separate capacity and as a member of the integrated group to which each such
Person belongs and because the successful operation of the integrated group is
dependent upon the continued successful performance of the functions of the
integrated group as a whole, because (i) the terms of the consolidated
financing provided under this Agreement are more favorable than would otherwise
be obtainable by such Persons individually, and (ii) the additional
administrative and other costs and reduced flexibility associated with
individual financing arrangements which would otherwise be required if
obtainable would substantially reduce the value to such Persons of the
financing.
Section 2.12 Guaranty
(a) Each Person included in the term "Borrowers" hereby
unconditionally and irrevocably, guarantees to the Administrative Agent:
(i) the due and punctual payment in full (and not
merely the collectibility) by the other Persons included in
the term "Borrowers" of the Obligations, including unpaid and
accrued interest thereon, in each case when due and payable,
all according to the terms of this Agreement, the Note and
the other Financing Documents;
(ii) the due and punctual payment in full (and not
merely the collectibility) by the other Persons included in
the term "Borrowers" of all other sums and charges which may
at any time be due and payable in accordance with this
Agreement, the Note or any of the other Financing Documents;
(iii) the due and punctual performance by the other
Persons included in the term "Borrowers" of all of the other
terms, covenants and conditions contained in the Financing
Documents; and
(iv) all the other Obligations of the other Persons
included in the term "Borrowers".
(b) The obligations and liabilities of each Person
included in the term "Borrowers" as a guarantor under this Section shall be
absolute and unconditional and joint and several, irrespective of the
genuineness, validity, priority, regularity or enforceability of this Agreement,
the Note or any of the Financing Documents or any other circumstance which
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. Each Person included in the term "Borrowers" in its capacity as a
guarantor expressly agrees that the Administrative Agent may, in its sole and
absolute discretion, without notice to or further assent of such
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Borrower and without in any way releasing, affecting or in any way impairing
the joint and several obligations and liabilities of such Person as a guarantor
hereunder:
(i) waive compliance with, or any defaults under, or
grant any other indulgences under or with respect to any of
the Financing Documents;
(ii) modify, amend, change or terminate any
provisions of any of the Financing Documents;
(iii) grant extensions or renewals of or with
respect to this Agreement, the Note or any of the other
Financing Documents;
(iv) effect any release, subordination, compromise
or settlement in connection with this Agreement, the Note
or any of the other Financing Documents;
(v) agree to the substitution, exchange, release or
other disposition of the Collateral or any part thereof, or
any other collateral for the Loan or to the subordination of
any lien or security interest therein;
(vi) make advances for the purpose of performing any
term, provision or covenant contained in this Agreement, the
Note or any of the other Financing Documents with respect to
which the Borrower shall then be in default;
(vii) make future advances pursuant to this
Agreement or any of the other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise
transfer, the Obligations, the Note, any of the other
Financing Documents or any interest therein, all as and to
the extent permitted by the provisions of this Agreement;
(ix) deal in all respects with the other Persons
included in the term "Borrowers" as if this Section were not
in effect;
(x) effect any release, compromise or settlement
with any of the other Persons included in the term
"Borrowers", whether in their capacity as a Borrower or as
a guarantor under this Section or any other guarantor; and
(xi) provide debtor-in-possession financing or allow
use of cash collateral in proceedings under the Bankruptcy
Code, it being expressly agreed by all Persons included in the
term "Borrowers" that any such financing and/or use would be
part of the Obligations.
(c) The obligations and liabilities of each Person
included in the term "Borrowers", as guarantor under this Section shall be
primary, direct and immediate, shall not be subject to any counterclaim,
recoupment, set off, reduction or defense based upon any claim that
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such Person may have against any one or more of the other Persons included in
the term "Borrowers", the Administrative Agent and/or any other guarantor and
shall not be conditional or contingent upon pursuit or enforcement by the
Administrative Agent of any remedies it may have against Persons included in the
term "Borrowers" with respect to this Agreement, the Note or any of the other
Financing Documents, whether pursuant to the terms thereof or by operation of
law. Without limiting the generality of the foregoing, the Administrative Agent
shall not be required to make any demand upon any of the Persons included in the
term "Borrowers", or to sell the Collateral or otherwise pursue, enforce or
exhaust its or their remedies against the Persons included in the term
"Borrowers" or the Collateral either before, concurrently with or after pursuing
or enforcing its rights and remedies hereunder. Any one or more successive or
concurrent actions or proceedings may be brought against each Person included in
the term "Borrowers" under this Section, either in the same action, if any,
brought against any one or more of the Persons included in the term "Borrowers"
or in separate actions or proceedings, as often as the Administrative Agent may
deem expedient or advisable. Without limiting the foregoing, it is specifically
understood that any modification, limitation or discharge of any of the
liabilities or obligations of any one or more of the Persons included in the
term "Borrowers", any other guarantor or any obligor under any of the Financing
Documents, arising out of, or by virtue of, any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law initiated by or against any one or more of the Persons included in the
term "Borrowers", in their respective capacities as borrowers and guarantors
under this Section, or under any of the Financing Documents shall not modify,
limit, lessen, reduce, impair, discharge, or otherwise affect the liability of
each Borrower under this Section in any manner whatsoever, and this Section
shall remain and continue in full force and effect. It is the intent and purpose
of this Section that each Person included in the term "Borrowers" shall and does
hereby waive all rights and benefits which might accrue to any other guarantor
by reason of any such proceeding, and the Persons included in the term
"Borrowers" agree that they shall be liable for the full amount of the
obligations and liabilities under this Section regardless of, and irrespective
to, any modification, limitation or discharge of the liability of any one or
more of the Persons included in the term "Borrowers", any other guarantor or any
obligor under any of the Financing Documents, that may result from any such
proceedings.
(d) Each Person included in the term "Borrowers", as
guarantor under this Section, hereby unconditionally, jointly and severally,
irrevocably and expressly waives:
(i) presentment and demand for payment of the
Obligations and protest of non-payment;
(ii) notice of acceptance of this Section and of
presentment, demand and protest thereof;
(iii) notice of any default hereunder or under the
Note or any of the other Financing Documents and notice of
all indulgences;
(iv) notice of any increase in the amount of any
portion of or all of the indebtedness guaranteed by this
Section;
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(v) demand for observance, performance or
enforcement of any of the terms or provisions of this
Agreement, the Note or any of the other Financing
Documents;
(vi) all errors and omissions in connection with the
Administrative Agent's administration of all indebtedness
guaranteed by this Section;
(vii) any right or claim of right to cause a
marshalling of the assets of any one or more of the other
Persons included in the term "Borrowers";
(viii) any act or omission of the Administrative
Agent which changes the scope of the risk as guarantor
hereunder; and
(ix) All other notices and demands otherwise r
equired by law which such Person may lawfully waive.
(e) Within ten (10) days following any request of the
Administrative Agent to do so, each Person included in the term "Borrowers"
will furnish the Administrative Agent and such other persons as the
Administrative Agent may direct with a written certificate, duly acknowledged
stating in detail whether or not any credits, offsets or defenses exist with
respect to this Section.
ARTICLE III
COLLATERAL
Section 3.1 Collateral
As security for the payment of any and all of the Obligations and for
the Borrowers' performance of, and compliance with, all of the terms, covenants,
conditions, stipulations and agreements contained in the Financing Documents,
the Borrowers hereby assign, grant and convey to the Lenders, and agree that
the Lenders shall have, to the extent permitted by law a perfected, continuing
security interest in, all of the Collateral. The Borrowers further agree that
the Lenders shall have in respect of the Collateral all of the rights and
remedies of a secured party under the Virginia Uniform Commercial Code and the
Uniform Commercial Code of those other states in which the Facilities are
located, whichever is applicable, and under other applicable Laws as well as
those provided in this Agreement. The Borrowers covenant and agree to execute
and deliver such financing statements and other instruments and filings as are
necessary in the opinion of the Administrative Agent to perfect such security
interest. Notwithstanding the fact that the proceeds of the Collateral
constitute a part of the Collateral, the Borrowers may not dispose of the
Collateral, or any part thereof, other than in the ordinary course of their
business or as otherwise may be permitted by this Agreement or other Security
Agreements.
Section 3.2 Eligible Projects
The Borrowers shall from time to time designate Facilities owned by
any of the Borrowers as Eligible Projects included in the Borrowing Base
pursuant to the terms hereof. The
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Facilities which are currently Eligible Projects are listed on EXHIBIT C
attached hereto and incorporated herein by reference or any future Borrowing
Base Report. The Credit Facility shall be secured by (a) the first lien Deeds
of Trust on the fee simple interests of the Borrowers in the Eligible Projects
or on the leasehold interests of Borrowers under Qualified Ground Leases, (b) a
first lien security interest in all fixtures, building materials and all other
machinery, equipment and other personalty used or installed by the Borrowers or
each of the premises of an Eligible Project or in the Improvements constructed
thereon, and (c) all of the other Collateral relating to the Eligible Projects.
The Borrowers may release an Eligible Project from the lien of its Deed of
Trust at any time provided no Event of Default has occurred and is continuing
and provided at least eight (8) Pool A Projects remain in the Borrowing Base of
which 83% must be Pool A Projects. The Administrative Agent may in its sole
discreton agree to include a Facility occupied pursuant to a Qualified Ground
Lease; provided, however, that at no time shall Eligible Projects subject to
Qualified Ground Leases comprise more than ten percent (10%) of the
availability under the Borrowing Base at any one time.
Section 3.3 Assignment of Partnership Interests
The Obligations are further secured by one or more Pledge, Assignment
and Security Agreements, pursuant to which the partners of each of the Borrowers
have assigned to the Administrative Agent for the benefit of the Lenders one
hundred percent (100%) of all partnership or member interests in each of the
Borrowers.
Section 3.4 Guaranties
The Obligations are the subject of the Guaranty Agreement and the
Performance Guaranty executed and delivered by the Guarantor in favor of the
Lenders.
Section 3.5 Collateral for Obligations
The Borrowers acknowledge that it is the intention of the Borrowers
that the Collateral and all the Deeds of Trust be security for all of the
Obligations, both those now existing and those hereafter created or incurred by
future loans, advances, extensions of credit or otherwise and whether or not
currently contemplated by the Borrowers and/or the Lenders on or about the date
hereof.
Section 3.6 Costs
The Borrowers agree to pay on demand, to the fullest extent permitted
by applicable laws, all reasonable fees, commissions, costs, charges, travel
expenses and other expenses incurred by the Lenders, or any of them, in
connection with the taking, perfection, preservation, protection and/or release
of any security interest or lien on any of the Collateral or Deeds of Trust.
The foregoing notwithstanding, the Borrowers shall not be obligated to pay the
travel expenses of the Lenders with the exception of travel expenses incurred
in connection with any enforcement actions following the occurrence of an Event
of Default.
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ARTICLE IV
GENERAL FINANCING PROVISIONS
Section 4.1 Conditions Precedent to Credit Facility Closing and
Addition of Deeds of Trust
(a) Conditions Precedent to Credit Facility Closing. The
following shall be conditions precedent to the Credit Facility Closing or to
the addition of an Additional Borrower and/or the addition of an Eligible
Project to the Borrowing Base (each a "Facility Closing"):
(i) The Note, and modifications to the existing
Deeds of Trust and Security Documents for Eligible Projects
currently included in the Borrowing Base and the other
Financing Documents previously provided to the
Administrative Agent in connection with the Loan shall have
been properly executed and delivered to the Administrative
Agent, the applicable modifications to Deeds of Trust shall
be acknowledged and recorded in the appropriate public
office or delivered to a representative of the title
company for recording and payment shall have been made for
all conveyancing and recording in connection with the
settlement of the Loan, and for any transfer or documentary
stamp taxes due under any federal, state or municipal law.
(ii) The Administrative Agent shall have received
and approved a copy of each Borrower's fully executed
Partnership Agreement or Operating Agreement or Articles of
Organization (if a limited liability company) and a
certified copy of the recorded Certificate of Limited
Partnership (if a limited partnership) or Articles of
Organization (if a limited liability company) or a
certificate of no changes therein since the closing of the
Original Credit Facility. In connection with the addition
of an Additional Borrower, the Administrative Agent shall
have received and approved copies of all organizational
documents, including certified copies of all documents on
record with the State in which such entity is organized.
(iii) The Administrative Agent shall have received
and approved a certificate executed by all of the general and
limited partners or members of the Borrowers authorizing the
execution and delivery of the Financing Documents and
consenting to the Loan and similar authority certificates or
resolutions of any Additional Borrower.
(iv) The Administrative Agent shall have received
and approved a current certificate of good standing or
certificate of fact from the State in which any Borrower is
formed.
(v) The Administrative Agent shall have received and
approved an opinion of counsel for the Borrowers as to the
Borrowers' good standing, form, powers and authority and as
to the validity, binding effect and enforceability of
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the Financing Documents such an opinion shall be issued in
connection with the execution and delivery of each Joinder
Agreement.
(vi) The Administrative Agent shall have received
and a properly and fully executed Joinder Agreement.
(b) Conditions Precedent to Accepting an Eligible Project:
(i) The Credit Facility Closing shall have been
completed.
(ii) The Administrative Agent shall have received a
certificate of authority to do business for the applicable
Borrower in each jurisdiction where a Facility is located (if
different from the state in which such Borrower was formed).
(iii) The Total Development Budget for such Eligible
Project shall have been reviewed and approved in writing by
the Administrative Agent consistent with the provision of
Section 2.1 The Loan.
(iv) The Administrative Agent shall have received a
paid policy of title insurance (American Land Title
Association Standard Form "B" Loan Policy - Current Edition)
covering the Facility or a valid and enforceable commitment
to issue the same, together with such reinsurance
agreements and direct access agreements as may be required
by the Administrative Agent and/or endorsements to policies
issued to the Administrative Agent in connection with the
Original Credit Facility, in the amount agreed upon by the
Administrative Agent from a company satisfactory to the
Administrative Agent and which may be endorsed or assigned
to the successors and assigns of the Lenders and to
additional Lenders without additional cost, insuring the
liens of the Deeds of Trust to be valid first liens on the
Property, free and clear of all defects, exception and
encumbrances except such as the Administrative Agent and
its counsel shall have approved but without a creditor's
rights exception and (unless otherwise agreed by the
Administrative Agent) containing affirmative insurance
against mechanics liens.
(v) The Administrative Agent shall have received
advice, in form and substance and from a source satisfactory
to the Administrative Agent, to the effect that a search of
the applicable public records discloses no conditional sales
contracts, chattel mortgages, leases of personalty, financing
statements or title retention agreements filed or recorded
against the Property except such as the Administrative Agent
shall have approved.
(vi) The Administrative Agent shall have received
all policies of insurance required by the terms hereof and by
the other Financing Documents to be in effect from a company
or companies and in form and amount satisfactory to the
Administrative Agent, including without limitation, flood
insurance (in the amount or evidence that flood insurance is
not available or otherwise required
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with respect to the Property), together with written
evidence, in form and substance satisfactory to the
Administrative Agent, that all fees and premiums due on
account thereof have been paid in full.
(vii) The Administrative Agent shall have received
and accepted an appraisal of the Facility.
(viii) The Administrative Agent shall have received
from the Borrowers a complete set of the Plans and
Specifications signed and sealed by the Architect, together
with written evidence, in form and substance satisfactory to
the Administrative Agent, to the effect that the Plans and
Specifications are satisfactory to the applicable Borrowers,
the General Contractor, the Inspecting Engineer and, to the
extent required by applicable law or any effective
restrictive covenant, have been approved by all
Governmental Authorities having or claiming jurisdiction
and by the beneficiary of any such restrictive covenant,
respectively.
(ix) The Administrative Agent shall have received
and approved a fully executed copy of the applicable
Construction Contract, the Architect's Contract and a list
of Major Subcontractors as well as any information
regarding the General Contractor, the Architect and the
Major Subcontractors which the Administrative Agent has
requested.
(x) The Administrative Agent shall have received and
approved a copy of a current Survey of the Land certified to
the Administrative Agent and to the title insurance company
and any recorded subdivision plat of the Land and otherwise
complying with the survey requirements set forth on EXHIBIT F
attached hereto.
(xi) The Administrative Agent shall have received
and approved a site plan for the Improvements approved by all
appropriate Governmental Authorities.
(xii) The Administrative Agent shall have received
from the Borrowers written evidence, in form and substance
satisfactory to the Administrative Agent, from all
Governmental Authorities having or claiming jurisdiction to
the effect that all building, construction and other permits
required in connection with the development of the Land and
the construction of the Improvements have been validly issued,
that all fees and bonds required in connection therewith have
been paid in full or posted, as the circumstances may
require, and that the Improvements meet zoning requirements
and all sewer and storm drain requirements.
(xiii) The Administrative Agent shall have received
and approved a report setting forth a construction progress
schedule in form and substance satisfactory to the
Administrative Agent, calling for the completion of the
Improvements by a date no later than the Completion Date.
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(xiv) If construction work of any kind has commenced
upon the Land or materials have been placed or stored upon
the Land prior to the recordation of the Deed of Trust among
the Land Records where the Land is located, any mechanic's or
materialman's Liens or the same shall be fully insured
against by the title insurance company.
(xv) The Administrative Agent shall have received
and approved evidence that the applicable General Contractor
carries public liability and property damage insurance and
workers' compensation insurance in form and amounts and
issued by companies acceptable to the Administrative Agent.
(xvi) The Administrative Agent shall have received
and accepted a Phase I environmental audit of the applicable
Facility prepared by a person or firm acceptable to the
Administrative Agent.
(xvii) The Administrative Agent shall have received
evidence acceptable in all respects through certification by
the Architect or other source acceptable to the
Administrative Agent that the applicable Improvements, when
constructed, will comply with all legal requirements
regarding access and facilities for handicapped or disabled
persons, including, without limitation and to the extent
applicable to assisted living facilities (or, if
applicable, independent living facilities), The Federal
Architectural Barriers Act (42 U.S.C. Section 4151 et
seq.), The Fair Housing Amendments Act of 1988 (42 U.S.C.
Section 3601 et seq.), The Americans With Disabilities Act
of 1990 (42 U.S.C. Section 12101 et seq.), The
Rehabilitation Act of 1973 (29 U.S.C. Section 794) and any
applicable state statutes relating to access and facilities
for handicapped or disabled persons.
(xviii) The Administrative Agent shall have received
and approved soil reports which shall (i) demonstrate that
the soil conditions of the Land for the applicable Facility
are suitable for the construction of the Improvements and
(ii) evidence to the Administrative Agent's satisfaction
that there are no Hydric Soils on the Land.
(xix) The Administrative Agent shall have received
and approved copies of any executed Material Leases of the
applicable Property or of any portion thereof.
(xx) The Administrative Agent shall have received
and approved an opinion of local counsel for the Borrowers
in the jurisdiction where the applicable Facility is
located that the Financing Documents applicable to that
Facility are in proper form and enforceable in the context
of a revolving credit facility of the type represented by
this Credit Facility that neither the making nor the
servicing of the Loan will subject the Lenders to a
requirement of qualifying to do business or taxation
(except ad valorem taxes on the Property) in the State
where the applicable Facility is located and that the Loan
is not usurious, which opinion
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must also inform the Lenders (i) of the cost and timing of
foreclosure; (ii) of any limitations on the Lenders' right
to obtain, or the amount of, a deficiency judgment; and
(iii) the existence of and details surrounding any
redemption period enjoyed by the Borrower's following a
sale at foreclosure.
(xxi) At the Administrative Agent's sole option the
Administrative Agent shall have obtained the advice of its
own local counsel in the jurisdiction where the Facility is
located on the form and enforceability of any or all of the
Financing Documents at the Borrowers' expense.
(xxii) With regard to any Deed of Trust for a
Facility located in any state having such requirement, the
Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that a Certificate
of Need has been issued for such Facility.
Section 4.2 Conditions Precedent to Determining Availability Under
Borrowing Base
The Lenders shall not be obligated to include any Requisition for an
individual Eligible Project in the calculation of the Borrowing Base unless the
conditions described in Section 4.1 Conditions Precedent to Credit Facility
Closing and Addition of Deeds of Trust and the following additional conditions
shall have been satisfied with regard to such Eligible Project to the
Administrative Agent's satisfaction:
(a) The Administrative Agent shall have received a
monthly title report on each Eligible Project which is under construction from
the applicable title insurance company, indicating that since the last
preceding report, there has been no change in the status of title and no other
exceptions not theretofore approved by the Administrative Agent, if required by
the terms of the existing title insurance policy, the Administrative Agent
shall have received an endorsement which shall have the effect of advancing the
effective date of the policy to the date of the advance then being made and
increasing the coverage of the policy by an amount equal to the Requisition
being verified if the policy does not by its terms provide for such an increase.
(b) No Default or Event of Default shall have occurred
and be continuing under any Note or any of the other Financing Documents.
(c) The Improvements shall not have been materially
damaged by fire or other casualty unless the Administrative Agent shall have
received or reasonably anticipates receiving proceeds of insurance sufficient
in the judgment of the Administrative Agent to effect a satisfactory
restoration of such Improvements in accordance with the terms of the Deed of
Trust.
(d) The Administrative Agent shall have received written
evidence, in form and substance satisfactory to the Administrative Agent, to
the effect that all work requiring inspection by Governmental Authorities having
or claiming jurisdiction has been duly inspected and approved by such
authorities and by any rating or inspection organization, bureau, association
or office having or claiming jurisdiction.
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(e) The representations and warranties made in Article
III of this Agreement and in this Agreement shall be true and correct in all
material respects on and as of the date of the advance with the same effect as
if made on such date.
(f) All terms and conditions of the Financing Documents
required to be met as of the date of the applicable advance shall have been met
to the complete satisfaction of the Administrative Agent.
(g) In the reasonable judgment of the Administrative
Agent, all work completed on the applicable Property at the time of the
application for an advance has been performed in a good and workmanlike manner
and all materials and fixtures usually furnished and installed at that stage of
construction have been furnished and installed and that all costs covered by the
Requisition have been paid by the Borrowers.
(h) At least Eighty-three percent (83%) of the Eligible
Projects in the Borrowing Base shall be Pool A Projects. The Administrative
Agent shall have determined whether each Eligible Project is a Pool A, Pool B or
Pool C Project.
(i) Before verifying any Requisition, the Administrative
Agent shall require the Borrowers to obtain from the applicable General
Contractor and if required by the applicable title insurance company from all
subcontractors and material suppliers acknowledgments of payment and releases of
liens and rights to claim liens for work performed or materials delivered
covered by such Requisition. All such acknowledgments and releases shall be in
form AIA Forms G706 and G706A.
(j) The Administrative Agent's Inspecting Engineer will
inspect work performed which is covered by each Requisition being verified.
Section 4.3 Conditions Under Which an Eligible Project is a Completed
Facility
The Administrative Agent shall verify that an Eligible Project is a
Completed Facility based on the satisfaction of the following additional
conditions:
(a) The Administrative Agent shall have received the
final "as built" Survey for the applicable Property.
(b) The Administrative Agent shall have received written
evidence from a qualified third party, in form and substance satisfactory to
the Administrative Agent, to the effect that the applicable Improvements have
been substantially completed in accordance with their Plans and Specifications.
(c) The Administrative Agent shall have received written
evidence, in form and substance satisfactory to the Administrative Agent, to
the effect that requisite certificates for permanent occupancy or completion of
the Improvements have been validly issued.
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(d) Final waivers of liens of the General Contractor,
and if required by the applicable title insurance company, subcontractors,
laborers and material suppliers have been furnished to the Administrative Agent
or, as to any disputed lien or claim of lien, a bond in form and substance
acceptable to the Administrative Agent has been provided or other arrangements
satisfactory to the Administrative Agent have been made.
(e) The Administrative Agent shall have received a copy
of an operating License for the Facility or other evidence satisfactory to the
Administrative Agent that the Facility may be lawfully operated as contemplated
by the Financing Documents.
Section 4.4 Computation of Interest and Fees
All applicable fees and interest shall be calculated on the basis of a
year of 365 days for the actual number of days elapsed pursuant to the terms of
the Note and interest shall be payable monthly in arrears.
Section 4.5 Liens; Setoff
The Borrowers hereby grant to the Lenders a continuing lien and
security interest for all the Obligations upon any and all monies, securities,
and other property of the Borrowers and the proceeds thereof, now or hereafter
held or received by or in transit to, the Lenders, or any affiliate of any of
the Lenders, from or for any of the Borrowers, and also upon any and all
deposits (general or special) and credits of any of the Borrowers with any of
the Lenders, if any, at any time existing. During the continuance of any Event
of Default under this Agreement, each Lender is hereby authorized by any of the
Borrowers at any time and from time to time, without notice to the Borrowers,
to set off, appropriate and apply any or all items hereinabove referred to
against all Obligations then outstanding.
Section 4.6 Payment and Performance of Obligations
The payment and performance by the Borrowers of the Obligations shall
be absolute and unconditional, irrespective of any defense or any rights of
set-off, recoupment or counterclaim it might otherwise have against the Lenders,
or any of them, and the Borrowers shall pay absolutely net all of the
Obligations, free of any deductions and without abatement, diminution or
set-off; and until payment in full of all of the Obligations, the Borrowers:
(a) will not suspend or discontinue any payments provided for in the Note and
(b) will perform and observe all of its other agreements contained in this
Agreement, including (without limitation) all payments required to be made to
the Administrative Agent, and (c) will not terminate or attempt to terminate
this Agreement or any of the other Financing Documents to which any of the
Borrowers is a party for any cause.
Section 4.7 Payments to Others for the Account of the Borrowers
At the option of the Lenders and without any request from the
Borrowers, and without waiving any of its rights hereunder, the Lenders may
elect to cure or avoid any default by the Borrowers under the Financing
Documents by applying amounts due hereunder or advancing the
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Lenders' own funds to the satisfaction of the conditions of the Financing
Documents and any amounts so applied shall be part of the Loan and shall be
secured by the Deeds of Trust and the other Collateral. The Administrative
Agent agrees to endeavor to give the Borrowers notice of any such payment or
performing such act and the amount of any payment whether prior to or
contemporaneously with its making such payment or performance of such act;
provided, however, that failure to give such notice shall not constitute a
waiver by the Lenders of, or constitute a defense to, any of the rights of the
Lenders under this Agreement or the Deeds of Trust, including (without
limitation) the right of the Lenders to repayment of the amount of such
payment.
Section 4.8 Prepayment
The Borrowers shall have the right to prepay the Loan in full or in
part, at any time and from time to time, upon five (5) days' prior written
notice to the Administrative Agent without premium or penalty. The foregoing
notwithstanding, in connection with any prepayment of a principal sum on any
day other than the last day of the Eurodollar Period applicable thereto, the
Borrowers shall pay to the Administrative Agent upon request by the
Administrative Agent, such amount as shall be sufficient to compensate any of
the Lenders for any and all losses or expenses which such Lender may sustain or
incur (including without limitation, any such loss or expense arising from the
redeployment of funds obtained by such Lender). Unless an Event of Default has
occurred, any partial prepayment shall be applied first to such breakage costs,
second to accrued and unpaid interest and third to the outstanding principal
balance of the Loan due and owing at maturity. Sums borrowed and repaid may be
readvanced. The Borrowers' obligations under this Section shall survive the
termination of this Agreement and the repayment of the Obligations.
Section 4.9 Requisitions for the Operating Reserve
No portion of any Requisition for costs included in the Operating
Reserve shall be verified until both a certificate of occupancy has been issued
by the applicable governmental authorities and, if applicable to the Facility,
an operating License has been issued for the Facility by the appropriate
Governmental Authority or Authorities. Advances from the Operating Reserve
shall be for the sole purpose of paying a portion of the Debt Service on the
Loan or net operating losses as shown on a monthly financial report for such
Facility prepared in accordance with the requirements set forth in this
Agreement, and certified by the Chief Financial Officer or Executive Vice
President or President of the Guarantor.
Section 4.10 Assignments
The Borrowers agree not to transfer, assign, pledge or hypothecate any
right or interest in any payment or advance due pursuant to this Agreement, or
any of the other benefits of this Agreement, without the prior written consent
of the Administrative Agent. Any assignment made or attempted by the Borrowers,
or any of them, without the prior written consent of the
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Administrative Agent shall be void and of no effect. No consent by the
Administrative Agent to an assignment by the Borrowers shall release the
Borrowers as the parties primarily obligated and liable under the terms of this
Agreement unless the Borrowers shall be released specifically by the
Administrative Agent in writing. No consent by the Administrative Agent to an
assignment shall be deemed to be a waiver of the requirement of prior written
consent by the Administrative Agent with respect to each and every further
assignment and as a condition precedent to the effectiveness of such assignment.
Section 4.11 Liability of the Lenders
The Lenders shall in no event be responsible or liable to any person
other than the Borrowers for the disbursement of or failure to disburse the
Loan proceeds or any part thereof and neither the General Contractor nor any
subcontractor, laborer or material supplier shall have any right or claim
against the Lenders under this Agreement or the administration thereof. No
Lender shall be liable to the Borrowers for the failure of any other Lender to
fund its ratable portion of any advance pursuant to the Agency Agreement.
Section 4.12 Stored Materials
The Administrative Agent will permit inclusion of construction
materials (the "Stored Materials") to be included in Requisitions prior to
their incorporation into the Improvements if they have been fully paid for by
the applicable Borrower. The Borrowers shall securely store or cause to be
securely stored any Stored Materials.
Section 4.13 Limitations on Advances or Readvances
The following additional limitations on certain advances or readvances
of the Loan shall also apply:
(a) Interest Reserve. Except as provided in Section 2.7
Permitted Costs hereof, after the earlier of the issuance of certificate of
occupancy for a Facility or the expiration of the Construction Phase, no
further advances shall be made from the Interest Reserve in such Total
Development Budget.
(b) Development Fee. The Development Fee will be
advanced ratably with the first twelve (12) monthly Requisitions.
(c) Operating Reserve. No advances from the Operating
Reserve shall be made until both a certificate of occupancy has been issued by
the applicable governmental authorities and, if applicable to the Facility, an
operating license has been issued for the Facility by the appropriate
Governmental Authority or Authorities. Advances from the Operating Reserve
shall be for the sole purpose of paying Debt Service or net operating losses as
shown on a monthly financial report for such Facility prepared in accordance
with the requirements set forth in this Agreement, and certified by the Chief
Financial Officer, Executive Vice President or President of the Guarantor.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES
To induce the Lenders to make available the Credit Facility, the
Borrowers represent and warrant to the Lenders that:
Section 5.1 Existence/Good Standing
Each Borrower is a limited partnership or a limited liability company
duly organized and existing and in good standing under the laws of the
jurisdiction of its formation, has the power to own its property and to carry
on its business as now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which each Facility owned by
such Borrower is located and in which the character of the properties owned by
it therein or in which the transaction of its business makes such qualification
necessary.
Section 5.2 Power and Authority
Each Borrower has full power and authority to execute and deliver this
Agreement and each of the other Financing Documents executed and delivered by
it, to make the borrowing hereunder, and to incur the Obligations, all of which
have been duly authorized by all proper and necessary partnership action. No
consent or approval of partners or members of, or lenders to, the Borrowers,
and no consent or approval of any Governmental Authority or any third party
payor on the part of the Borrowers, is required as a condition to the validity
or enforceability of this Agreement or any of the other Financing Documents
executed and delivered by any of the Borrowers or to the payment or performance
by the Borrowers of the Obligations.
Section 5.3 Binding Agreements
This Agreement and each of the other Financing Documents executed and
delivered by the Borrowers have been properly executed by the Borrowers,
constitute valid and legally binding obligations of the Borrowers, and are
fully enforceable against the Borrowers in accordance with their respective
terms.
Section 5.4 Litigation
There are no proceedings pending before any court or arbitrator or
before or by any Governmental Authority which, in any one case or in the
aggregate, will cause a Material Adverse Change in any of the Borrowers or
affect the authority of any of the Borrowers to enter into this Agreement or
any of the other Financing Documents executed and delivered by any of the
Borrowers. There is no pending revocation, suspension, termination, probation,
restriction, limitation or non-renewal of any License, Participation Agreement
or any similar accreditation or approval organization or Governmental Authority
for healthcare providers, including, without limitation, the issuance of any
provisional License or other License with a term of less than twelve (12)
months, as a consequence of any sanctions imposed by any Governmental
Authority,
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nor is there any pending assessment of any civil or criminal penalties by any
Governmental Authority, the outcome of which, if determined adversely to any of
the Borrowers, could result in a Material Adverse Change in any of the
Borrowers. The Borrowers do not have any appeals regarding rates or
reimbursements currently pending or contemplated before any Governmental
Authority or any administrator of any third party payor or preferred provider
program or referral source, the outcome of which, if determined adversely to
any of the Borrowers, could result in a Material Adverse Change in any of the
Borrowers. There are no Medicare or Medicaid recoupments or recoupments of any
other third party payor being sought, requested or claimed, against any of the
Borrowers, the outcome of which, if determined adversely to any of the
Borrowers could materially impair any of the Borrowers' ability to pay the
Obligations, except as otherwise disclosed in writing to, and approved by, the
Administrative Agent.
Section 5.5 No Conflicting Agreements
There is (a) no provision of any Borrower's partnership agreement,
articles of incorporation or operating agreement and no provision of any
existing mortgage, indenture, contract or agreement binding on any of the
Borrower or affecting its property, and (b) to the knowledge of the Borrowers
no provision of law or order of court binding upon any of the Borrowers, which
would conflict with or in any way prevent the execution, delivery, or
performance of the terms of this Agreement or of any of the other Financing
Documents executed and delivered by any of the Borrowers, or which would be
violated as a result of such execution, delivery or performance, or, if so, all
necessary consents have been obtained.
Section 5.6 Financial Information
All financial statements or information hereto furnished to the Lenders
with respect to the Borrowers, each Facility and the Guarantor is complete and
correct in all material respects and fairly presents the financial condition of
the Borrowers and the financial condition of the Facilities. There are no
liabilities, direct or indirect, fixed or contingent, of any of the Borrowers
or the Guarantor which are not reflected in the their respective financial
statements or in the notes thereto. There has been no Material Adverse Change
in the financial condition or operations of any of the Borrowers or the
Guarantor since the financial statements dated December 31, 1998 (and to the
Borrowers' and Guarantor's knowledge, no such Material Adverse Change is
pending), and neither any of the Borrowers nor the Guarantor has guaranteed the
obligations of, or made any investments in or advances to, any company,
individual or other entity, except as disclosed in such information.
Section 5.7 No Default
None of the Borrowers are in default under or with respect to any
obligation under any agreement to which such Borrower is a party in any respect
which could result in a Material Adverse Change. There is no Event of Default
hereunder.
Section 5.8 Taxes
The Borrowers have filed or have caused to have been filed all
federal, state and local tax or informational returns which are required by law
to be filed, and has paid or caused to have
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been paid all Taxes as shown on such returns or on any assessment received by
them, to the extent that such Taxes have become due, or which are required by
law to be paid, unless and to the extent only that such Taxes, assessments and
governmental charges are currently contested in good faith and by appropriate
proceedings by the Borrowers and adequate reserves therefor have been
established as required under GAAP.
Section 5.9 Place(s) of Business and Location of Collateral
The Borrowers warrant that the address of the Borrowers' chief
executive office is as specified in EXHIBIT D attached hereto and made a part
hereof and that the address of each other place of business of any of the
Borrowers, are as disclosed in EXHIBIT D. The Collateral and all books and
records pertaining to the Collateral are and/or will be located at the
addresses indicated on EXHIBIT D. The Borrowers will immediately advise the
Administrative Agent in writing of the opening of any new place of business or
the closing of any existing place of business of any of the Borrowers, and of
any change in the location of the places where the Collateral, or any part
thereof, or the books and records concerning the Collateral, or any part
thereof, are kept. EXHIBIT D may be modified from time to time to add the
locations of additional Facilities.
Section 5.10 Title to Properties
The Borrowers have good and marketable title to all of their
properties, including, without limitation, the Property and the Collateral. The
Property and the Collateral are free and clear of mortgages, pledges, liens,
charges and other encumbrances other than the Permitted Liens.
Section 5.11 Margin Stock
None of the proceeds of the Loan will be used, directly or indirectly,
by any of the Borrowers for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry, any "margin security" or "margin stock" within the
meaning of Regulation U (12 CFR ARTICLE 221), of the Board of Governors of the
Federal Reserve System (herein called "margin security" and "margin stock") or
for any other purpose which might make the transactions contemplated herein a
"purpose credit" within the meaning of said Regulation G or Regulation U, or
cause this Agreement to violate any other regulation of the Board of Governors
of the Federal Reserve System or the Securities Exchange Act of 1934 or the
Small Business Investment Act of 1958, as amended, or any rules or regulations
promulgated under any of such statutes.
Section 5.12 ERISA
With respect to any "pension plan", as defined in Section 3(2) of
ERISA, which plan is now or previously has been maintained or contributed to by
any of the Borrowers and/or by any Commonly Controlled Entity: (a) no
"accumulated funding deficiency" as defined in Code Section 412 or ERISA
Section 302 has occurred, whether or not that accumulated funding deficiency
has been
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waived; (b) no "reportable event" as defined in ERISA Section 4043 has
occurred; (c) no termination of any plan subject to Title IV of ERISA has
occurred; (d) neither any of the Borrowers nor any Commonly Controlled Entity
has incurred a "complete withdrawal" within the meaning of ERISA Section 4203
from any multiemployer plan; (e) neither any of the Borrowers nor any Commonly
Controlled Entity has incurred a "partial withdrawal" within the meaning of
ERISA Section 4205 with respect to any multiemployer plan; (f) no multiemployer
plan to which any of the Borrowers or any Commonly Controlled Entity has an
obligation to contribute is in "reorganization" within the meaning of ERISA
Section 4241 nor has notice been received by any of the Borrowers or any
Commonly Controlled Entity that such a multiemployer plan will be placed in
"reorganization".
Section 5.13 Governmental Consent
Neither the nature of any of the Borrowers or of its business or
properties, nor any relationship between any of the Borrowers and any other
Person, nor any circumstance in connection with the making of the Loan, or the
offer, issue, sale or delivery of the Note is such as to require a consent,
approval or authorization of, or filing, registration or qualification with,
any Governmental Authority, on the part of any of the Borrowers, as a condition
to the execution and delivery of this Agreement or any of the other Financing
Documents, the borrowing of the principal amounts of the Loan or the offer,
issue, sale or delivery of the Note.
Section 5.14 Full Disclosure
The financial statements referred to in this ARTICLE V do not, nor
does this Agreement, nor do any written statements furnished by the Borrowers
to the Administrative Agent in connection with the making available of the
Credit Facility, contain any untrue statement of fact or knowingly omit a
material fact necessary to make the statements contained therein or herein not
materially misleading. The Borrowers have not failed to disclose any fact to
the Administrative Agent in writing which materially adversely affects or, will
or could prove to materially adversely affect the properties, business,
prospects, profits or condition (financial or otherwise) of any of the
Borrowers or the ability of any of the Borrowers to perform this Agreement or
any of the other Financing Documents.
Section 5.15 Business Names and Addresses
The Borrowers have not conducted business under any name other than
its current names or tradenames or "Karrington" and has not conducted its
business in any jurisdiction other than those listed on EXHIBIT D. The
Borrowers intend to operate the Facilities under the names set forth on EXHIBIT
D. The Borrowers shall promptly notify the Administrative Agent of any change
in the name of any Facility.
Section 5.16 Licenses and Certifications
The Borrowers further represent and warrant to the Lenders that, with
respect to any License they possess or have applied for, (a) no Default or
Event of Default has occurred or is continuing under the terms of any of the
Licenses, or any condition to the issuance, maintenance, renewal and/or
continuance of any License, (b) the Borrowers have paid all fees, charges and
other expenses to the extent due and payable with respect to, and has provided
all information
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and otherwise complied with all material conditions precedent to, the issuance,
maintenance, renewal, and continuance of all Licenses, (c) the Borrowers have
not received any notice from any Governmental Authority relating to any actual
or pending suspension, revocation, restriction, or imposition of any
probationary use, of any License, nor has any License been materially amended,
supplemented, rescinded, terminated, or otherwise modified except as otherwise
disclosed in writing to, and approved by, the Administrative Agent, (d) the
Borrowers have not made any previous assignment of any of the Licenses to any
Person, and (e) no financing statement covering any of the Licenses is on file
in any public office except financing statements in favor of the Lenders.
Without implying any limitation to the other representations and warranties
contained in this Agreement, the Borrowers are not required by any applicable
Law of any state, county or city in which any of the Facilities is located to
obtain a certificate of need to operate any Facility as an assisted living
facility or, an independent living facility or has applied for and obtained
such Certificate(s) of Need. Licenses to operate are required in all states
where the Facilities are located and Certificates of Need are also required in
the State of New Jersey.
Section 5.17 Operating Agreements and Management Contracts
The Borrowers have furnished to the Administrative Agent photocopies
of all material Operating Agreements and Management Contracts entered into with
respect to the Facilities, and all amendments, supplements and modifications
thereto including, without limitation, the Management Agreement. The Borrowers
further represent and warrant to the Lenders that (a) all of the material
Operating Agreements and Management Contracts are or will be at the time of
execution and delivery thereof valid and binding on the parties thereto and in
full force and effect, (b) no Default or Event of Default has occurred or is
continuing under the terms of any of the material Operating Agreements and
Management Contracts, and no party thereto has attempted or threatened to
terminate any such Management Contract or Operating Agreement, (c) the
Borrowers have not made any previous assignment of any Operating Agreements and
Management Contracts to any Person, and (d) no financing statement covering any
of the Operating Agreements and Management Contracts is on file in any public
office, except financing statements in favor of the Lenders in connection with
the Credit Facility.
Section 5.18 Participation Agreements and Resident Agreements
The Borrowers have furnished to the Administrative Agent, on or before
the Facility Closing, the Borrowers' form of Resident Agreement used with
respect to all Facilities and, if requested by the Administrative Agent after
the occurrence and during the continuance of a Default, copies of all current,
executed Resident Agreements for any or all of the Eligible Projects.
(a) The Borrowers further covenant to the Lenders that,
with respect to the Participation Agreements, if any, (i) to the best of their
knowledge, all Participation Agreements will be at the time of execution and
delivery thereof valid and binding on the parties thereto and in full force and
effect, and (ii) all Participation Agreements will provide for payment to the
applicable Borrower for services rendered to residents. The Borrowers represent
and warrant that as of the date hereof it has not entered into any
Participation Agreement for any Facility.
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(b) To the extent the Borrowers participates or will
participate in Medicare or Medicaid payment and reimbursement programs, the
Borrowers have complied and will comply with all notice and other requirements
under Title XVIII and Title XIX of the Social Security Act to enable the
Borrowers to participate in the Medicare and Medicaid payment and reimbursement
programs.
Section 5.19 Compliance with Laws
None of the Borrowers is in violation of any applicable laws of any
Governmental Authority pertaining to employment practices, health standards or
controls, environmental and occupational standards or controls or order of any
court or arbitrator, the violation of which, considered in the aggregate, would
result in a Material Adverse Change in any of the Borrowers. Each of the
Borrowers are in compliance with all accreditation standards and requirements
to which it is subject. Each of the Borrowers have obtained or will obtain all
Licenses necessary to the ownership of its property or to the conduct of its
activities which, if not obtained, could materially adversely affect the
ability of any of the Borrowers to conduct its activities of operating each
Facility as an assisted living facility, including, without limitation if and
as required by any Governmental Authorities for the dispensing, storage,
prescription, disposal, and use of drugs, medications and other "controlled
substances" and for the maintenance of cafeteria and other food and beverage
facilities or services or the condition (financial or otherwise) of any of the
Borrowers.
Section 5.20 Presence of Hazardous Materials or Hazardous Materials
Contamination
None of the Borrowers has placed Hazardous Materials on any real
property owned, controlled or operated by any of the Borrowers or for which any
of the Borrowers are responsible except as described in the following sentence.
To the best of the Borrowers' knowledge, no Hazardous Materials are located on
any real property owned, controlled or operated by any of the Borrowers or for
which any of the Borrowers are responsible, except for reasonable quantities of
necessary supplies for use by the Borrowers in the ordinary course of its
current line of business and stored, used and disposed of in accordance with
applicable Laws, and no property owned, controlled or operated by any of the
Borrowers has ever been used as a manufacturing, storage, or dump site for
Hazardous Materials nor is such property affected by Hazardous Materials
Contamination.
Section 5.21 Nature of Credit Facility; Usury; Disclosures
Each of the Borrowers is a business or commercial organization, and
the Credit Facility is being made solely for the purpose of carrying on or
acquiring a business or commercial enterprise. The rate or rates of interest
charged on the Note do not, and will not, violate any usury Law or interest
rate limitation. The Credit Facility is not subject to the federal Consumer
Credit Protection Act (15 U.S.C. Section 1601 et. seq.) nor any other federal
or state disclosure or consumer protection laws. The Credit Facility is being
transacted solely for business or commercial purposes and not for personal,
family or household purposes.
Section 5.22 Compliance in Zoning
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The Borrowers represent and warrant that the anticipated use of each
Eligible Project complies with applicable zoning ordinances, regulations and
restrictive covenants affecting such Land, all use requirements of any
Governmental Authority having jurisdiction have been satisfied, and no
violation of any law or regulation exists with respect thereto.
Section 5.23 Plans and Specifications
The Borrowers represent and warrant that, to the extent required by
applicable law or any effective restrictive covenant, the Plans and
Specifications for each Eligible Project have been approved by all Governmental
Authorities having or claiming jurisdiction and by any beneficiary of any such
restrictive covenant.
Section 5.24 Building Permits; Other Permits
The Borrowers represent and warrant that all building, construction
and other permits necessary or required in connection with the development of
the Land and the construction of the Improvements have been or, prior to any
advance under the Loan, will be, unless otherwise agreed to by the
Administrative Agent, validly issued and all fees and bonds required in
connection therewith have been paid or posted, as the circumstances may require.
Section 5.25 Utilities
The Borrowers represent and warrant that all utility services
necessary for the development of all the Land and the construction of the
Improvements for each Eligible Project and the operation thereof for their
intended purpose are or will be available at the boundaries of all the Land,
including, without limitation, telephone service, water supply, storm and
sanitary sewer facilities, natural gas (if available) and electric facilities.
Section 5.26 Access; Roads
The Borrowers represent and warrant that all roads and other accesses
necessary for the development of all the Land and the construction of all the
Improvements for all Eligible Projects and full utilization thereof for their
intended purposes have either been completed or the necessary rights of way
therefor have either been or will be acquired by the appropriate Governmental
Authorities or have been or will be dedicated to public use and accepted by
such Governmental Authorities and all necessary steps have been taken by the
Borrowers or such Governmental Authorities to assure the complete construction
and installation thereof by a date sufficient to ensure the timely completion
of the Improvements and in no event later than the Completion Date or such
Eligible Projects have access to a public road via a private road pursuant to
recorded easements satisfactory to the Administrative Agent.
Section 5.27 Other Liens
The Borrowers represent and warrant that except as otherwise provided
in the Financing Documents, the Borrowers have made no contract or arrangement
of any kind the performance of which by the other party thereto would give rise
to a lien on any Eligible Project.
Section 5.28 Defaults
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The Borrowers represent and warrant that there is no default on the
part of any of the Borrowers under the Financing Documents and no event has
occurred and is continuing which, with notice or the passage of time, or both,
would constitute a default under the Note or any of the other Financing
Documents.
Section 5.29 Survival; Updates of Representations and Warranties
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the date of this Agreement and the Loan made hereunder. The Lenders acknowledge
and agree that any and all representations and warranties contained in, or made
under, or in connection with, this Agreement may be amended, changed or
otherwise modified by the Borrowers at any time and from time to time after the
date of this Agreement so as to accurately reflect the matters represented and
warranted therein; provided, that such amendments, changes and/or modifications
are disclosed in writing to the Administrative Agent. The Lenders shall have no
obligation to waive any Event of Default due to any present or future
inaccuracy of such representation or warranty or to agree to any amendment,
change or modification of any such representation or warranty.
Section 5.30 Accounts
With respect to all of the Borrowers' Accounts and to the best of the
Borrowers' knowledge (a) they are genuine, and in all respects what they
purport to be, and are not evidenced by a judgment, an instrument, or chattel
paper (unless such judgment has been assigned and such instrument or chattel
paper has been endorsed and delivered to the Administrative Agent); (b) they
represent undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in the invoices relating thereto; (c) the
services rendered which resulted in the creation of the Accounts have been
delivered or rendered to and accepted by the Account Debtor; (d) the amounts
shown on the Borrowers' books and records, with respect thereto are actually
and absolutely owing to the Borrowers and are not contingent for any reason;
(e) there are no set-offs, counterclaims or disputes known by the Borrowers or
asserted with respect thereto, and the Borrowers have made no agreement with
any Account Debtor thereof for any deduction or discount of the sum payable
thereunder except regular discounts allowed by the Borrowers in the ordinary
course of their business for prompt payment; (f) there are no facts, events or
occurrences known to any of the Borrowers which in any way impair the validity
or enforcement thereof or tend to reduce the amount payable thereunder; (g) all
Account Debtors thereof, to the best of the Borrower's knowledge, have the
capacity to contract; (h) the services furnished giving rise thereto are not
subject to any Liens other than Permitted Liens; (i) the Borrowers have no
knowledge of any fact or circumstance which would impair the validity or
collectibility thereof; and (j) there are no proceedings or actions known to
any of the Borrowers which are pending against any Account Debtor which might
result in any material adverse change in its financial condition.
Section 5.31 Year 2000.
Each Borrower has (i) begun analyzing its operations and those of its
subsidiaries and Affiliates that could be adversely affected by failure to
become Year 2000 compliant (that is, the computer applications, imbedded
microchips and other systems will be able to perform date
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sensitive functions prior to and after December 31, 1999), and (ii) developed a
plan for becoming Year 2000 compliant in a timely manner, the implementation of
which is on schedule in all material respects. Each Borrower reasonably
believes that it will become Year 2000 compliant for its operations and those
of its subsidiaries and Affiliates on a timely basis except to the extent that
a failure to do so could not reasonably be expected to have a material adverse
effect upon its financial condition.
Each Borrower reasonably believes any suppliers and vendors that are
material to the operations of itself or its subsidiaries and affiliates will be
Year 2000 compliant for their own computer applications except to the extent
that a failure to do so could not reasonably be expected to have a material
adverse effect upon the financial condition of such Borrower.
ARTICLE VI
CONDITIONS OF LENDING
The making of any advance under the Loan is subject to the conditions
set forth in this Agreement and the following conditions precedent:
Section 6.1 No Default
No Event of Default and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default has occurred and
is existing or would result from the making of the Loan or any advance
thereunder and all representations and warranties set forth herein or in the
other Financing Documents are true and correct, both before and after the
making of the Loan or any advance thereunder.
Section 6.2 Opinion of Counsel for the Borrowers
At the Credit Facility Closing and any Facility Closing the Lenders
shall receive a written opinion of counsel for the Borrowers and the Guarantor
satisfactory in all respects to the Administrative Agent.
Section 6.3 Approval of Counsel for the Lenders
All legal matters incident to the Loan and all documents necessary in
the opinion of the Administrative Agent to make the Loan or the addition of
either an Eligible Project to the Borrowing Base or to add such Deeds of Trust
and related Collateral shall be satisfactory in all material respects to
counsel for the Lenders.
Section 6.4 Supporting Documents
The Administrative Agent shall receive at the Facility Closing and in
connection with the subsequent granting of a Lien on an Eligible Project: (a) a
certificate of the general partner or managing member of each of the Borrowers,
in a form acceptable to the Administrative Agent in
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all respects, dated as of the date hereof and certifying (i) that attached
thereto is a true, complete and correct copy of resolutions duly adopted by the
partners or members of each of the Borrowers authorizing the execution and
delivery of this Agreement, the Note and the other Financing Documents, the
borrowing thereunder, and the performance of the Obligations, and (ii) as to
the incumbency and specimen signature of the authorized officer of the general
partner or managing member of the Borrowers executing this Agreement, the Note
and the other Financing Documents; (b) such other documents as the
Administrative Agent may reasonably require the Borrowers and/or the partners
or members of the Borrowers to execute, in form and substance acceptable to the
Administrative Agent; and (c) such additional information, instruments,
opinions, documents, certificates and reports as the Administrative Agent may
reasonably deem necessary.
Section 6.5 Financing Documents
All of the Financing Documents required by the Administrative Agent
whether at the Credit Facility Closing or any subsequent Facility Closing shall
be executed, delivered and, if deemed necessary by the Administrative Agent,
recorded, all at the sole expense of the Borrowers.
Section 6.6 Insurance
The Borrowers shall have satisfied the Administrative Agent that any
and all insurance required by this Agreement is in effect as of the date of
this Agreement or as of the date of the addition of a Deed of Trust and related
Collateral, and that, to the extent required by the Financing Documents, the
Lenders have been named as an insured lienholder.
Section 6.7 Security Documents
In order to perfect the lien and security interest created by this
Agreement, the Borrowers shall have executed and delivered to the
Administrative Agent all Security Documents (in form and substance acceptable
to the Administrative Agent in its sole discretion) deemed necessary by the
Administrative Agent, in a sufficient number of counterparts for recordation,
and, at the Borrowers' sole expense, shall record all such financing statements
and Security Documents, or cause them to be recorded, in all public offices
deemed necessary by the Administrative Agent.
Section 6.8 Joinder Agreement
In order to perfect the lien and security interest of the Lenders in
the Collateral related to the construction and operation of any Facility
encumbered by a Deed of Trust provided by an Additional Borrower, such
Additional Borrower shall execute and deliver to the Administrative Agent, a
Joinder Agreement joining in the Note as maker and in such assignments of
Collateral and such other Security Documents as the Administrative Agent may
require or shall execute Security Documents as the Administrative Agent may
require each in sufficient number of counterparts for recordation, if required
by the Administrative Agent, at the Borrowers' sole expense. The Borrowers or
the Administrative Agent shall record all financing statements and
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other Security Documents, or cause them to be recorded, in all public offices
deemed necessary to the Administrative Agent.
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
Until payment in full and the performance of all of the Obligations
hereunder, the Borrowers shall:
Section 7.1 Financial Statements
Furnish to the Administrative Agent:
(a) Quarterly Statements. Not later than forty-five (45)
days after the close of each of the Borrowers' fiscal quarters internally
prepared, consolidated and consolidating financial statements of the Borrowers
and a balance sheet on a year-to-date basis and as of the close of such period
and an income and expense statement for such period and a Compliance
Certificate in the form of Exhibit G attached hereto, certified by the chief
financial officer of the Borrowers' general partner or managing member unless
such report is included in the quarterly report of the Guarantor; and
(b) Annual Statements. Not later than one hundred twenty
(120) days after the close of each of the Borrowers' fiscal years, (i) a copy
of the consolidated annual financial statement of the Borrowers and its Wholly
Owned Subsidiaries in reasonable detail satisfactory to the Administrative
Agent, prepared in accordance with GAAP and audited by an independent certified
public accountant satisfactory to the Administrative Agent, which financial
statement shall include a balance sheet of the Borrowers and its Wholly Owned
Subsidiaries, as at the end of such fiscal year and the related statements of
operations and retained earnings and cash flow statements for such fiscal year
in a format acceptable to the Administrative Agent and a Compliance Certificate
in the form of EXHIBIT G attached hereto, (ii) an unqualified letter or opinion
of the accountant who examined and audited the Borrowers' financial statement
and stating whether anything in such independent accountant's examination has
revealed the occurrence of an event which constitutes an Event of Default under
the Financing Documents or which would constitute such an Event of Default with
the giving of notice or the lapse of time or both, (iii) if requested by the
Administrative Agent a copy of the Management Letter prepared by the auditor,
and (iv) the related statements of operations and retained earnings and cash
flows in a format acceptable to the Administrative Agent; and
(c) Monthly Operating Reports. Beginning with the first
Operating Month (as hereinafter defined), not later than thirty (30) days after
the last day of each such calendar month, operating statements for each
Eligible Project for such month, including an income and expense statement for
such period and census and billing reports with respect to each Eligible
Project then operating for such period;
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(d) Tax Returns. Not later than thirty (30) days after
the date of filing, the federal and state income tax returns for the Borrower
for the year in question as well as any requests for extensions filed in
connection therewith; and
(e) Other Information. With reasonable promptness such
additional information, reports or statements as the Administrative Agent may
from time to time reasonably request.
(f) Certification. All required financial statements,
required pursuant to Sub-paragraphs (a) and (b) hereof shall include the
following certification:
"The undersigned as _____________ of ____________ certifies
that the financial information contained in the financial statement
dated _________, is true and complete as of this date. This statement
is provided to NationsBank, N.A. (the "Bank") as agent for the Lenders
set forth in the Second Amended and Restated Agency Agreement dated
_________, ___, 1999 as amended, restated or substituted from time to
time for the purpose of obtaining credit or in fulfillment of the terms
and conditions of credit already provided. Accordingly, it is intended
that the Bank may rely on this information".
Section 7.2 Taxes and Claims
Pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it or any of its income or properties prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a lien or charge upon any of its properties; provided, however, the
Borrowers shall not be required to pay any such tax, assessment, charge, levy
or claim, the payment of which is being contested in good faith and by proper
proceedings.
Section 7.3 Legal Existence
Maintain their existence as limited partnership or limited liability
companies in good standing in the states of their formation and in each
jurisdiction where they are required to register or qualify to do business.
Section 7.4 Conduct of Business and Compliance with Laws
Do or cause to be done all things necessary to obtain, enter into,
preserve and to keep in full force and effect its material rights and its trade
names, patents, trademarks and Licenses, Participation Agreements, and
Operating Agreements and Management Contracts which are necessary for the
operation of each Facility as an adult assisted living facility (or independent
living facility, as applicable) as contemplated by the Borrowers, engage in and
continue to engage substantially only in the business of owning and operating
an adult assisted living facility (or independent living facility, as
applicable) and related services in compliance with all applicable laws of the
state in which the applicable Facility is located or any other Governmental
Authority having jurisdiction over such Facility, and comply with all applicable
Laws, including, without limitation, regulations issued under the Omnibus Budget
Reconciliation Act of 1987 (OBRA'87) (▇▇▇.▇.▇▇. 100-203), as amended, and
observe the valid requirements of
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Governmental Authorities, and perform the terms of all Participation Agreements
to which it is a party, the noncompliance with or the nonobservance of which
might materially interfere with the performance of its Obligations or the
proper or prudent conduct of its business or the applicable Property. In
addition, the Borrowers covenant and agree that they will:
(a) obtain and maintain in full force and effect all
Licenses necessary to the acquisition and/or ownership and/or operation of each
Facility including, without limitation, Licenses and other approvals related to
the storage, dispensation, use, prescription and disposal of drugs, medications
and other "controlled substances" and, to the extent offered by the Borrowers,
the maintenance of cafeteria and other food and beverage facilities or services;
(b) administer, maintain and operate (or will cause to
be administered, maintained and operated) each Facility as a revenue-producing
assisted living facility (or independent living facility, as applicable);
(c) to the extent the Borrowers participate in any such
programs, maintain and operate each Facility to meet the standards and
requirements and to provide healthcare of such quality and in such manner as
would enable the Borrowers to participate in, and provide services in
connection with, recognized medical and healthcare insurance programs;
(d) obtain, maintain and comply with all conditions for
the continuance of, all Licenses, including without limitation, Licenses which
may at any time be required by the state in which the applicable Facility is
located or other appropriate governmental entity, necessary or desirable for
the operation of each Facility as an adult assisted living facility (or
independent living facility, as applicable); and
(e) to the extent the Borrowers presently participate or
in the future will participate in such programs, obtain, maintain and comply
with all conditions for the continuance of certification from each applicable
Governmental Authority that the Borrowers meet all conditions for participation
in the Medicare and Medicaid programs.
Section 7.5 Use of Proceeds
Use the proceeds of the Loan for the purpose or purposes set forth in
Recital G above and Section 8.1 Borrowings and Section 8.14 Distributions to
Partners herein and, without the prior written consent of the Administrative
Agent for no other purpose or purposes.
Section 7.6 Insurance
Provide or cause to be provided to the Administrative Agent and
maintain in full force and effect at all times during the term of the Loan,
such policies of insurance as may be required by the terms of the Financing
Documents from a company or companies, and in form and amounts satisfactory to
the Administrative Agent including, by way of example and not by way of
limitation, at least the following:
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(a) During any period of construction in or on an
Eligible Project, "builder's risk" insurance, including vandalism and malicious
mischief and collapse endorsements in amounts not less than the replacement
cost of the Improvements being constructed or of the Property and naming the
Administrative Agent on behalf of the Lenders as a loss payee in the mortgagee
clause thereof;
(b) Casualty or physical damage insurance coverage for
each Eligible Project affording protection against loss or damage by fire or
other hazards covered by the standard all-risk fire and hazard insurance policy
with "extended coverage" endorsement and such other risks as shall be
customarily covered with respect to projects similar in construction, location
and use as the Property, or as the Administrative Agent may from time to time
otherwise require in amounts necessary to prevent the application of any
co-insurance provisions of any applicable policies up to an amount not less
than the greater of the full insurable value of the Improvements (as defined in
the Deed of Trust) or the aggregate principal amount of the Obligations; no
policy of insurance shall be written such that the proceeds thereof will
produce less than the minimum coverage required by this Section by reason of
co-insurance provisions or otherwise; the term "full insurable value" means the
actual replacement cost of the Property (as defined in the Deed of Trust)
(excluding foundation and excavation costs and costs of underground flues,
pipes, drains and other uninsurable items); and as to Eligible Projects naming
the Administrative Agent on behalf of the Lenders as loss payee in the
mortgagee clause thereof;
(c) General public liability insurance in amounts
usually carried by similar operations against claims for bodily injury or death
and property damage insurance for claims for damage to property (including loss
of use) occurring upon, in or about the Property naming the Administrative
Agent on behalf of the Lenders as loss payee thereunder, with such insurance to
afford protection to the limit of not less than $5,000,000 for the aggregate of
all occurrences during any given annual policy period for each Eligible
Project;
(d) Workers' compensation insurance in accordance with
the requirements of applicable law or regulation naming the Administrative
Agent on behalf of the Lenders as loss payee thereunder;
(e) Business interruption insurance naming the Lenders
as additional insureds with respect to each Facility once a certificate of
occupancy has been issued for such Facility in an amount equal to at least
twelve (12) months' debt service on the applicable Loan; and
(f) To the extent that healthcare professionals are
employed by any of the Borrowers or the Management Company, medical liability,
malpractice and other healthcare professional liability insurance protecting the
Borrowers and its employees against claims arising from the professional
services performed by the Borrowers or the Management Company and their
employees with limits of (i) not less than One Million Dollars ($1,000,000.00)
with respect to injury or death for each person or occurrence, and (ii) not less
than Three Million Dollars ($3,000,000.00) in the aggregate for claims made for
injury or death in any one year, and an umbrella policy insuring against such
liability in an aggregate amount of Five Million Dollars ($5,000,000.00). In
addition, the Borrowers shall ensure that all healthcare providers with whom
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any of the Borrowers contracts to provide services at any Facility are insured
against claims arising from such services with limits as set forth in clauses
(i) and (ii) above.
The Borrowers shall file with the Administrative Agent, upon its
request, a detailed list of the insurance then in effect and stating the names
of the insurance companies, the amounts and rates of the insurance, dates of
the expiration thereof and the properties and risks covered thereby. Each
policy of insurance shall (A) be issued by one or more recognized, financially
sound and responsible insurance companies approved by the Administrative Agent
and which are qualified or authorized by the laws of the state in which the
applicable Facility is located to assume the risk covered by such policy, (B)
with respect to the insurance described under the preceding subsections (a),
(b) and (f) have attached thereto standard noncontributing, non-reporting
mortgagee clauses in favor of and entitling the Lenders without contribution to
collect any and all proceeds payable under such insurance, (C) provide that
such policy shall not be canceled or modified without at least thirty (30) days
prior written notice to the Administrative Agent, and (D) provide that any
loss otherwise payable thereunder shall be payable notwithstanding any act of
negligence of any of the Borrowers which might, absent such agreement, result
in a forfeiture of all or a part of such insurance payment. Unless an escrow
account has been established for insurance premiums pursuant to the provisions
of a Deed of Trust, the Borrowers shall promptly pay all premiums when due on
such insurance and, not less than ten (10) days prior to the expiration date of
each such policy, the Borrowers will deliver to the Administrative Agent a
renewal policy or policies marked "premium paid" or other evidence of payment
satisfactory to the Administrative Agent. The Borrowers will immediately give
the Administrative Agent notice of any cancellation of, or change in, any
insurance policy. The Lenders shall not, because of accepting, rejecting,
approving or obtaining insurance, incur any liability for (i) the existence,
nonexistence, form or legal sufficiency thereof, (ii) the solvency of any
insurer, or (iii) the payment of losses.
Section 7.7 Flood Insurance
If required by applicable law or regulation, provide or cause to be
provided to the Administrative Agent a separate policy of flood insurance in
the aggregate amount of the applicable Loan or the maximum limit of coverage
available with respect to the Property, whichever is the lesser, from a company
or companies satisfactory to the Administrative Agent and written in strict
conformity with the Flood Disaster Protection Act of 1973, as amended, and all
applicable regulations adopted pursuant thereto. In the event that flood
insurance is not required by applicable law or regulation to be provided in
connection with the applicable Loan or is not otherwise available with respect
to the Property, the Borrowers shall supply the Administrative Agent with
written evidence, in form and substance satisfactory to the Administrative
Agent, to that effect. Any such policy shall provide that the policy may not be
surrendered, canceled or substantially modified (including, without limitation,
cancellation for nonpayment of premiums) without at least thirty (30) days'
prior written notice to any and all insureds named therein, including the
Lenders.
Section 7.8 Maintenance of Properties
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Keep its properties, whether owned in fee or otherwise, or leased,
including, without limitation, all of the Property, in good operating condition;
make all proper repairs, renewals, replacements, additions and improvements
thereto needed to maintain such properties in good operating condition; comply
with the provisions of all leases to which it is a party or under which it
occupies property so as to prevent any loss or forfeiture thereof or thereunder;
and comply with all laws, rules, regulations and orders applicable to its
properties or business or any part thereof.
Section 7.9 Maintenance of the Collateral
Not permit anything to be done to the Collateral which may impair the
value thereof. Any of the Lenders or an agent designated by such Lender, shall
be permitted to enter the premises of any of the Borrowers and examine, audit
and inspect the Collateral at any reasonable time and from time to time without
notice. The Lenders shall not have any duty to, and the Borrowers hereby
release the Lenders from, all claims of loss or damage caused by the delay or
failure to collect or enforce any of the Accounts or Receivables or to preserve
any rights against any other party with an interest in the Collateral.
Section 7.10 Other Liens, Security Interests, etc.
Keep the Collateral and the Property free from all liens, security
interests and claims of every kind and nature, other than Permitted Liens;
provided, the Borrowers may lease office Equipment and other Equipment in the
used in normal course of its business for the operation of a Facility provided
the total implied cost of such leased Equipment at any Eligible Project shall
not exceed $75,000 at any one time.
Section 7.11 Defense of Title and Further Assurances
At its expense defend the title to the Collateral (or any part
thereof), and promptly upon request execute, acknowledge and deliver any
financing statement, renewal, affidavit, deed, assignment, continuation
statement, security agreement, certificate or other document the Administrative
Agent may reasonably require in order to perfect, preserve, maintain, protect,
continue and/or extend any lien or security interest granted to the Lenders
under this Agreement or any of the Security Documents and its priority. The
Borrowers shall pay to the Administrative Agent, on demand all taxes, costs and
expenses incurred by any of the Lenders, in connection with the preparation,
execution, recording and filing of any such document or instrument.
Section 7.12 Subsequent Opinion of Counsel as to Recording
Requirements
Provide to the Administrative Agent a subsequent opinion of counsel as
to the filing, recording and other requirements with which any of the Borrowers
have complied to maintain the liens and security interests in favor of the
Lenders in the Collateral in the event that the Borrowers shall transfer its
principal place of business or the office where it keeps its records pertaining
to the Accounts and Receivables.
Section 7.13 Books and Records
Keep and maintain accurate books and records, make entries on such
books and records in form reasonably satisfactory to the Administrative Agent
disclosing the Lenders' assignment
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of, and security interest in and lien on, the Collateral and all collections
received by the Borrowe on its Accounts, furnish to the Administrative Agent
promptly upon request such information, reports, contracts, invoices, lists of
purchases of Inventory (showing names, addresses and amount owing) and other
data concerning Account Debtors and the Borrowers' Accounts and Inventory and
all contracts and collection(s) relating thereto as the Administrative Agent
may from time to time specify, unless the Administrative Agent shall otherwise
consent in writing, keep and maintain all such books and records mentioned in
(a) above only at the addresses listed in EXHIBIT D, and permit any person
designated by any of the Lenders to enter the premises of the Borrowers and
examine, audit and inspect the books and records at any reasonable time and
from time to time.
Section 7.14 Collections
Until such time as the Administrative Agent shall notify the Borrowers
of the revocation of such privilege following an Event of Default, at its own
expense have the privilege for the account of and in trust for the Lenders of
collecting its Accounts and receiving in respect thereto all items of payment
and shall otherwise completely service all of the Accounts including (i) the
billing, posting and maintaining of complete records applicable thereto, and
(ii) the taking of such action with respect to such Accounts as the
Administrative Agent may reasonably request or in the absence of such request,
as the Borrowers may deem advisable; and in its discretion, grant, in the
ordinary course of business, to any Account Debtor, any rebate, refund or
adjustment to which the Account Debtor may be lawfully entitled, and may
accept, in connection therewith, the return of goods, the sale or lease of
which shall have given rise to an Account. The Administrative Agent may, at its
option but solely in accordance with applicable law, at any time or from time
to time after the occurrence of an Event of Default hereunder, revoke the
collection privilege given to the Borrowers herein by either giving notice of
its assignment of, and lien on the Collateral, subject to the provisions of
Section 3.1 Collateral hereof, to the Account Debtors or giving notice of such
revocation to the Borrowers.
Section 7.15 Notice to Account Debtors and Escrow Account
In the event that (a) a Default or an Event of Default exists, or (b)
demand has been made for any or all of the Obligations, promptly upon the
request of the Administrative Agent in such form and at such times as
reasonably specified by the Administrative Agent, give notice of the Lenders'
lien on the Accounts to the Account Debtors requiring those Account Debtors
which are permitted by applicable law to make payments thereon directly to the
Administrative Agent.
Section 7.16 Business Names
Immediately notify the Administrative Agent of any change in the name
or names under which they conduct their business.
Section 7.17 ERISA
With respect to any pension plan which any of the Borrowers and/or any
Commonly Controlled Entity maintains or contributes to, either now or in the
future, that: (a) such bonding as is required under ERISA Section 412 will be
maintained; (b) as soon as practicable and in any event
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within 15 days after any of the Borrowers or any Commonly Controlled Entity
knows or has reason to know that a "reportable event" has occurred or is likely
to occur, the Borrowers will deliver to the Administrative Agent a certificate
signed by its chief financial officer setting forth the details of such
"reportable event"; (c) neither the Borrowers nor any Commonly Controlled
Entity will: (i) engage in or permit any "prohibited transaction" (as defined
in ERISA Section 406 or Code Section 4975) to occur; (ii) cause any "accumulated
funding deficiency" as defined in ERISA Section 302 and/or Code Section 412;
(iii) terminate any pension plan in a manner which could result in the
imposition of a lien on the property of the Borrowers pursuant to ERISA Section
4068; (iv) terminate or consent to the termination of any multiemployer plan;
(v) incur a complete or partial withdrawal with respect to any multiemployer
plan within the meaning of ERISA Sections 4203 and 4205; and (d) within 15 days
after notice is received by any of the Borrowers or any Commonly Controlled
Entity that any multiemployer plan has been or will be placed in
"reorganization" within the meaning of ERISA Section 4241, the Borrowers will
notify the Administrative Agent to that effect. Upon the Administrative Agent's
request, the Borrowers will deliver to the Administrative Agent a copy of the
most recent actuarial report, financial statements and annual report completed
with respect to any "defined benefit plan", as defined in ERISA Section 3(35).
Section 7.18 Change in Management
Notify the Administrative Agent in advance of any change of the
Management Company for any Facility.
Section 7.19 Management
(a) Subject to the terms of (i) the Management Fee Subordination
Agreement by and among SEAL, ▇▇▇▇▇ and the Administrative Agent dated December
23, 1997 as amended and confirmed pursuant to the Confirmation of and Amendment
to Security Documents of even date herewith or (ii) any Management Fee
Subordination Agreement signed in connection with a Facility Closing
(individually or collectively, the "Management Fee Subordination Agreement"),
the Borrowers shall cause ▇▇▇▇▇ to agree to subordinate payment of any and all
management fees under, or in connection with, the Management Agreement (the
"Management Fees") to payment of the Obligations, in accordance with the terms
and conditions of one or more subordination agreements in form and content
acceptable to the Administrative Agent in its reasonable discretion, and not
amend, restate, supplement, terminate, cancel or otherwise modify any of the
terms or conditions of such Management Agreement, in any material respect,
without the prior written consent of the Administrative Agent, and (b)
terminate the Management Agreement upon receipt of notice from the
Administrative Agent directing the Borrowers to terminate the Management
Agreement after the occurrence of an Event of Default, and, if requested to do
so by the Administrative Agent, enter into a management agreement for the
management of any Facility with an independent manager. The Management
Agreement shall be approved in writing by the Administrative Agent prior to
execution. A fully executed copy of the Management Agreement shall be delivered
to the Administrative Agent by the Borrowers promptly after it is signed.
Section 7.20 Surveys
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Upon the Administrative Agent's request from time to time as
construction of a Facility progresses and upon the completion of the
construction of the Improvements, the Borrowers shall furnish the
Administrative Agent with a Survey with a current certification to the
Administrative Agent by a registered land surveyor of the jurisdiction in which
the Land is located. At any time the Borrowers are required to furnish a Survey
to the Administrative Agent pursuant to the terms of this Agreement, the
Borrower shall also furnish an original print thereof to the title insurance
company and such Survey shall not be sufficient for the purposes of this
Agreement unless and until the title insurance company shall advise the
Administrative Agent, by endorsement to the title insurance policy or
otherwise, that the Survey discloses no violations, encroachments or other
variances from applicable set-backs or other restrictions except such as the
Administrative Agent and its counsel shall approve.
Section 7.21 Inspections; Cooperation; Payment of Inspecting Engineer
The Borrowers shall permit the Lenders and their duly authorized
representatives (including, without limitation, the Inspecting Engineer) to
enter upon any of the Land, to inspect the Improvements and any and all
materials to be used in connection with the development of any of the Land
and/or the construction of the Improvements, to examine all detailed plans and
shop drawings and similar materials as well as all records and books of account
maintained by or on behalf of the Borrowers relating thereto and to discuss the
affairs, finances and accounts pertaining to any Facility and any of the
Improvements with representatives of the Borrowers. The Borrowers shall at all
times cooperate and cause the General Contractor and each and every one of its
subcontractors and materialmen to cooperate with the Lenders and their duly
authorized representatives (including, without limitation, the Inspecting
Engineer) in connection with or in aid of the performance of the Administrative
Agent's or Lenders' functions under this Agreement. The reasonable fees of any
Inspecting Engineer engaged or employed by the Administrative Agent in
connection with or in aid of the performance of the Administrative Agent's or
the Lenders' functions under this Agreement shall be paid by the Borrowers.
Section 7.22 Vouchers and Receipts
The Borrowers shall furnish to the Administrative Agent, promptly on
demand, any contracts, bills of sale, statements, receipted vouchers or
agreements pursuant to which any of the Borrowers has any claim of title to any
materials, fixtures or other articles delivered or to be delivered to the Land
or incorporated or to be incorporated into any of the Improvements. The
Borrowers shall furnish to the Administrative Agent, promptly on demand, a
verified written statement, in such form and detail as the Administrative Agent
may require, showing all amounts paid for labor and materials and all items of
labor and materials furnished or to be furnished for which payment has not been
made and the amounts to be paid therefor.
Section 7.23 Payments for Labor and Materials
The Borrowers shall pay when due all bills for services or labor
performed and materials supplied in connection with the development of the Land
and the construction of the Improvements. In the event any mechanics' lien or
other lien or encumbrance shall be filed or attached against the Property
without the prior written consent of the Administrative Agent in each instance,
the Borrowers covenant and agree that, within thirty (30) days after receipt of
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notice from any source of the filing of such lien, the Borrowers will promptly
discharge the same by payment or filing bond or otherwise as permitted by law;
and if the Borrowers fail to do so, the Administrative Agent may, at its
option, in addition to, and not in limitation of, all other rights and remedies
of the Administrative Agent in the Event of Default by the Borrowers, and
without regard to the priority of said mechanics' lien or other lien or
encumbrance, pay the same, and all amounts expended by the Administrative Agent
for such purpose shall constitute loans to the Borrowers and shall be secured
by the Deed of Trust and the other Financing Documents, and be due and payable
forthwith by the Borrowers to the Administrative Agent with interest thereon at
the Reimbursement Rate provided for in the Deed of Trust.
Section 7.24 Correction of Construction Defects
Promptly following any demand by the Administrative Agent, the
Borrowers shall correct or cause the correction of any structural defects in
the Improvements and any material departures or deviations from the Plans and
Specifications, as determined by the Administrative Agent in its sole but
reasonable discretion, not approved in writing by the Administrative Agent.
Section 7.25 Fees and Expenses; Indemnity
Pay all reasonable fees, charges, costs and expenses required to
satisfy the conditions of the Financing Documents. The Borrowers shall hold the
Lenders harmless and indemnify the Lenders against all claims of brokers and
"finders" arising by reason of the execution and delivery of the Financing
Documents or the consummation of the transaction contemplated hereby.
Section 7.26 Governmental Surveys or Inspections
Furnish to the Administrative Agent upon its request, within thirty
(30) days of receipt thereof, copies of any and all annual surveys or
inspections performed by any Governmental Authority or accreditation or
certification organization with respect to any Facility.
Section 7.27 Cost Reports
Prepare and file all applicable cost reports to all third-party
payors, if any, to the extent required by any such third-party payor and,
within thirty (30) days thereafter, notify the Administrative Agent of any
settlement of any cost report disclosed to the Administrative Agent as being
open or unsettled as of the Closing Date to the extent any such cost report
would have a materially adverse effect on the Borrowers.
Section 7.28 Updated Appraisals
In addition, the Administrative Agent shall have the right but not the
obligation to require annual updated appraisals of any or all the Property and
the Facilities, which appraisals shall be prepared by an appraiser or
appraisers designated by the Administrative Agent and shall be in all respects
reasonably acceptable to the Administrative Agent which appraisals shall
include, if deemed necessary by the Administrative Agent, in its reasonable
discretion, updated discounted cash flow analysis, inspections of and
commentary on the physical status of the applicable Facility and an engineering
review. The basis of the appraisal calculations shown on such
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appraisal reports and all other aspects of the appraisal reports must be
satisfactory to the Administrative Agent in all material respects. The release
of such appraisal reports by the Administrative Agent to the Borrowers shall be
at the Administrative Agent's sole option if the Borrowers have not paid the
cost of such appraisal. If the Borrowers have paid the cost of the appraisal, a
copy of the appraisal will be provided to the Borrowers upon their signing of
the Administrative Agent's standard appraisal release letter provided an Event
of Default has not occurred and is not continuing. The Borrowers shall
reimburse the Administrative Agent upon demand for all costs and expenses
incurred by any of the Lenders with respect to the preparation and review of
all future appraisals required pursuant to the terms hereof, if either (i) such
appraisal is required by law or banking regulation, (ii) an event of default
has occurred under the Financing Documents, or (iii) the Administrative Agent
has reason to believe a change in value has occurred in the Facility being
appraised due to an adverse change in the Facility's occupancy status or
operating performance.
Section 7.29 Notification of Certain Events, Events of Default and
Adverse Developments
Promptly give written notice to the Administrative Agent who will
forward a copy of the notice to the Lenders upon obtaining knowledge of the
occurrence of any of the following:
(a) any Event of Default under the Financing Documents;
(b) any event, development or circumstance whereby the
financial statements furnished under the Financing Documents fail in any
material respect to present fairly, in accordance with GAAP, the financial
condition and operational results of the Borrowers;
(c) any judicial, administrative or arbitral proceeding
pending against any of the Borrowers or any judicial or administrative
proceeding known by the Borrowers to have been threatened against any of them
in a written communication which threatened proceeding, if adversely decided,
could cause a Material Adverse Change in any of the Borrowers;
(d) the revocation, suspension, probation, restriction,
limitation or refusal to renew, or any administrative procedure then in process
for the revocation, suspension, probation, restriction, limitation, or refusal
to renew, of any License, or the decertification, revocation, suspension,
probation, restriction, limitation, or refusal to renew, or the pending,
decertification, revocation, suspension, probation, restriction, limitation, or
refusal to renew or any administrative procedure then in process for any
participation or eligibility in any third party payor program in which any of
the Borrowers elects to participate, including, without limitation, Medicare,
Medicaid or other private insurer programs or any accreditation of any of the
Borrowers, or the issuance or pending issuance of any License for a period of
less than twelve (12) months, as a consequence of sanctions imposed by any
Governmental Authority, or the assessment or pending assessment, of any civil
or criminal penalties by any Government Authority, any third party payor or any
accreditation organization or Person, which could materially adversely affect
the financial condition or operations of any of the Borrowers or an Affiliate
(present or prospective) as determined by the Administrative Agent, in its sole
but reasonable discretion;
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(e) any action, including, but not limited to, the
filing of any certificate of need application if required by law, the amendment
of any facility license or certification, or the issuance of any new license or
certification for any Facility, under which any of the Borrowers proposes (i)
to develop a new facility or service and/or (ii) eliminate, materially expand
or materially reduce any service;
(f) any actual contingent liability or a potential
contingent liability threatened or noticed in a written communication to any of
the Borrowers of $50,000 or more per Facility;
(g) any other development in the business or affairs of
the Borrower results in a Material Adverse Change; and
(h) in each case listed in clauses (a) through (g),
inclusive, of this Section describing in detail satisfactory to the
Administrative Agent the nature thereof and, in the case, if any, of
notification under clause (a), the action the Borrowers propose to take with
respect thereto or a statement that the Borrowers intend to take no action and
an explanation of the reasons for such inaction. In addition, the Borrowers
will furnish to the Administrative Agent immediately after receipt thereof
copies of all administrative notices material to Borrowers' business and
operation of any Facility and all responses by or on behalf of the Borrowers
with respect to such administrative notices.
Section 7.30 Compliance with Environmental Laws
If any Hazardous Materials are used, present or generated on any real
property owned or controlled by any of the Borrowers or for which any of the
Borrowers are responsible, such Borrower shall use, process, distribute,
handle, maintain, treat, store, dispose of and transport such substance in
compliance with all applicable laws, including, but not limited to, those
regulating PCB's, underground storage tanks, radon and medical waste tracking,
as well as any laws that are enacted after the date of this Agreement.
Section 7.31 Hazardous Materials; Contamination
(a) Give notice to the Administrative Agent within five (5) Banking
Days of any of the Borrowers' acquiring knowledge of the presence of any
Hazardous Materials on any property owned or controlled by any of the Borrowers
or for which any of the Borrowers is responsible or of any Hazardous Materials
Contamination with a full description thereof, except for reasonable quantities
of necessary supplies for use by the Borrowers in the ordinary course of their
current line of business and stored, used and disposed of in accordance with
applicable Laws; (b) promptly comply with any laws requiring special handling,
maintenance, servicing, removal, treatment or disposal of Hazardous Materials
or Hazardous Materials Contamination and provide the Administrative Agent upon
request with satisfactory evidence of such compliance; (c) provide the
Administrative Agent, within thirty (30) days after a demand by the
Administrative Agent, with a bond, letter of credit or similar financial
assurance evidencing to the Administrative Agent's satisfaction that funds are
available to pay the cost of removing, treating, and disposing of such
Hazardous Materials or Hazardous Materials Contamination and discharging any
lien which may be established as a result thereof on any property owned,
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operated or controlled by any of the Borrowers or for which any of the
Borrowers are responsible; and (d) defend, indemnify and hold harmless the
Lenders and each of their agents, employees, trustees, successors and assigns
from any and all claims which may now or in the future (whether before or after
the termination of this Agreement) be asserted as a result of the presence of
any Hazardous Materials on any property owned, operated, controlled or managed
by any of the Borrowers for which any of the Borrowers are responsible for any
Hazardous Materials Contamination.
Section 7.32 Participation in Reimbursement Programs
In the event any of the Borrowers elects to participate in any or all
plans and/or programs for third party payment and/or reimbursement, and the
revenues derived from a single plan or program exceed ten percent (10%) of the
gross revenues of the applicable Facility, such Borrower will continue its
participation in any and all such plans and/or programs for third party payment
and/or reimbursement from, and claims against, private insurers or programs for
payment and/or reimbursement from federal, state and local governmental
agencies and/or private or quasi-public insurers, including, without
limitation, Managed Care Plans, Medicaid and Medicare and the Veterans
Administration (as determined by the Borrowers in the good faith exercise of
their prudent and commercially reasonable business judgment). While
participating in such plans, the Borrowers shall comply with any and all rules,
regulations, standards, procedures and decrees necessary to maintain the
Borrowers' participation in any such third party payment or reimbursement
program or plan.
Section 7.33 Minimum Pool A Projects
At least 83% of the number of Eligible Projects in the Borrowing Base
at any one time shall qualify as Pool A Projects.
Section 7.34 Subordination of Distributions and Management Fees
Subordinate, and cause the partners or members of each of the
Borrowers to subordinate, all distributions of the Borrowers to principal and
interest payments on the Loan; provided, however, that the Borrowers may pay
distributions to partners or members of the Borrowers in accordance with
Section 8.14 Distributions to Partners prior to the occurrence of an Event of
Default and so long as the payment of any such distributions will not result in
the occurrence of an Event of Default. Subordinate the payment of management
fees with respect to each Facility pursuant to the terms of all Management Fee
Subordination Agreement (as the same may be modified from time to time) by and
among any of the Borrowers, the Administrative Agent and the Management
Company.
Section 7.35 Depository Bank
The Borrowers shall maintain its primary operating accounts, including
those accounts containing the Liquid Assets, if any required pursuant to
Section 8.14 Distributions to Partners with the Administrative Agent or one of
the other Lenders; provided that such Lender shall agree that it will exercise
any right of set-off against such account to pay the Obligations (unless the
exercise of such right would prejudice other remedies of the Lenders in any
jurisdiction) prior to
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applying them to any other indebtedness owed to such Lender and provided such
Administrative Agent or other Lender pays commercially competitive rates on the
Borrowers' funds.
Section 7.36 Copies of Notices
Promptly following the giving or receipt by any of the Borrowers of
any notice given to or received from the General Contractor or any
subcontractor or materialman with respect to the Property, if such notice
concerns any default or failure to perform by any party, or relates to any
matter requiring the Administrative Agent's or the Lenders' approval under this
Agreement, the Borrowers shall forward to the Administrative Agent copies of
any such notice.
Section 7.37 Year 2000 Compliance.
The Borrowers will promptly notify Administrative Agent in the event
Borrowers determine that any computer application which is material to the
operations of any Borrower, their subsidiaries or any of their material vendors
or suppliers will not be fully Year 2000 compliant (as such term is defined in
Section 5.31 Year 2000.) on a timely basis, except to the extent that such
failure could not reasonably be expected to have a material adverse effect upon
the financial condition of any Borrower.
ARTICLE VIII
NEGATIVE COVENANTS OF BORROWER
Until payment in full and the performance of all of the Obligations,
without the prior written consent of the Administrative Agent as permitted
pursuant to the Agency Agreement, the Borrowers will not directly or
indirectly:
Section 8.1 Borrowings
Create, incur, assume or suffer to exist any liability for borrowed
money other than the Credit Facility, Equipment leases permitted by the terms
of this Agreement or unsecured loans from Affiliates which are fully
subordinated (either by their terms or by separate written agreement) to the
Credit Facility and bearing interest at a rate no higher than that then
applicable to the Credit Facility; provided, however, so long as no Event of
Default has occurred or will occur upon the payment of interest on such
indebtedness under the Financing Documents, the Borrowers may make scheduled
payments of interest on such debt and may, with the prior written consent of
the Administrative Agent, use proceeds of the Loan to make payments on such
loans from Affiliates if the loans were for the purpose of financing the
acquiring or constructing an Eligible Project.
Section 8.2 Deeds of Trust and Pledges
Create, incur, assume or suffer to exist any deed of trust, mortgage,
pledge, Lien or other encumbrance of any kind upon, or any security interest
in, any of its property or assets, including the Collateral, whether now owned
or hereafter acquired.
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Section 8.3 Sale or Transfer of Assets
Directly or indirectly enter into any arrangement whereby any of the
Borrowers shall sell, lease, transfer, assign or otherwise dispose of more than
$50,000 of assets in connection with any Eligible Project in any one year other
than (a) sales or other disposition of assets in the ordinary course of
business for value, provided the proceeds thereof are used to pay down one or
more of the Loans or the asset sold or disposed of is replaced by one of equal
or greater value or (b) the transfer of an Eligible Project or the sale of an
Eligible Project, in either case, in which case the Borrowing Base will be
reduced by the availability attributed to such Facility.
Section 8.4 Other Liens; Transfers; "Due-on-Sale"; etc.
The Borrowers shall not, without the prior written consent of the
Administrative Agent, create or permit to be created or remain with respect to
any of the Property or any part thereof or income therefrom, any mortgage,
pledge, lien, encumbrance or charge, or security interest, or conditional sale
or other title retention agreement, whether prior or subordinate to the lien of
the Financing Documents, other than in connection with the Financing Documents
or as otherwise provided or permitted therein. Except for any grant,
conveyance, sale, assignment or transfer in the ordinary course of the
Borrowers' business and which is specifically conditioned upon the release of
record of the lien of the Deed of Trust and the other Financing Documents as to
that portion of the Property granted, conveyed, sold, assigned or transferred,
the Borrowers shall not, without the prior written consent of the
Administrative Agent, make, create, permit or consent to any conveyance, sale,
assignment or transfer of any of the Property or any part thereof, other than
in connection with the Financing Documents or as otherwise provided or
permitted therein.
Section 8.5 Advances and Loans
Make loans or advances to any Person, including, without limitation,
Affiliates, partners and employees of the Borrowers.
Section 8.6 Contingent Liabilities
Assume, guarantee, endorse, contingently agree to purchase or
otherwise become liable upon the obligation of any Person, except by the
endorsement of negotiable instruments for deposit and collection or similar
transactions in the ordinary course of business.
Section 8.7 Licenses
Allow any Licenses, permit, right, franchise or privilege necessary
for the ownership or operation of any Facility for the purposes for which any
Facility is intended to be used to lapse, be suspended or be forfeited unless
solely due to administrative delay by the licensing authority.
Section 8.8 ERISA Compliance
(a) Restate or amend any Plan established and maintained by the
Borrowers or any Commonly Controlled Entity and subject to the requirements of
ERISA, in a manner designed to disqualify such Plan and its related trusts
under the applicable requirements of the Code; (b) permit any partners of the
Borrowers or any Commonly Controlled Entity to materially adversely
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affect the qualified tax-exempt status of any Plan or related trusts of the
Borrowers or any Commonly Controlled Entity under the Code; (c) engage in or
permit any Commonly Controlled Entity to engage in any Prohibited Transaction;
(d) incur or permit any Commonly Controlled Entity to incur any Accumulated
Funding Deficiency, whether or not waived, in connection with any Plan; (e)
take or permit any Commonly Controlled Entity to take any action or fail to
take any action which causes a termination of any Plan in a manner which could
result in the imposition of a lien on the property of the Borrowers or any
Commonly Controlled Entity pursuant to Section 4068 of ERISA; (f) fail to
notify the Administrative Agent that notice has been received of a
"termination" (as defined in ERISA) of any Multiemployer Plan to which the
Borrower or any Commonly Controlled Entity has an obligation to contribute; (g)
incur or permit any Commonly Controlled Entity to incur a "complete withdrawal"
or "partial withdrawal" (as defined in ERISA) from any Multiemployer Plan to
which the Borrower or any Commonly Controlled Entity has an obligation to
contribute; or (h) fail to notify the Administrative Agent that notice has been
received from the administrator of any Multiemployer Plan to which the Borrower
or any Commonly Controlled Entity has an obligation to contribute that any such
Plan will be placed in "reorganization" (as defined in ERISA).
Section 8.9 Transfer of Collateral
Transfer, or permit the transfer, to another location of any of the
Collateral or the books and records related to any of the Collateral; provided,
however, that the Borrowers may transfer the Collateral or the books and
records related thereto to another location if the Borrowers shall have
provided to the Administrative Agent prior to such transfer an opinion of
counsel addressed to the Administrative Agent to the effect that the Lenders'
perfected security interest shall not be affected by such move or if it shall
be affected, setting forth the steps necessary to continue the Lender's
perfected security interest together with the commencement of such steps by the
Borrowers at its expense.
Section 8.10 Sale of Accounts or Receivables
Sell, discount, transfer, assign or otherwise dispose of any of its
Accounts or Receivables of any Facility, such as accounts receivable, notes
receivable, installment or conditional sales agreements or any other rights to
receive income, revenues or moneys, however evidenced.
Section 8.11 Amendments; Terminations
Amend or terminate or agree to amend or terminate any License, the
Management Agreement, or any participation agreement which exceeds 10% of the
gross revenue of the applicable Facility, or except in the ordinary course of
business any other Management Contracts and Operating Agreements which may have
been entered into by the Borrowers with respect to any Facility and which
exceeds 10% of its gross revenue, or consent to or waive any material
provisions thereof.
Section 8.12 Prohibition on Hazardous Materials
Place, manufacture or store or permit to be placed, manufactured or
stored, any Hazardous Materials on any property owned, controlled or operated
by the Borrowers or any
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Wholly Owned Subsidiary or for which the Borrowers or
any Wholly Owned Subsidiary is responsible, except for reasonable quantities of
necessary supplies for use by the Borrowers or any Wholly Owned Subsidiary in
the ordinary course of its current line of business and stored, used and
disposed of in accordance with applicable Laws.
Section 8.13 Subsidiaries
Create or otherwise acquire any subsidiaries other than Wholly Owned
Subsidiaries which are Additional Borrowers.
Section 8.14 Distributions to Partners or Members
(a) Make any distributions of net operating income to
partners or members of any of the Borrowers unless no Event of Default exists,
and at such time or times as the Borrowers have on a consolidated basis, both
before and after the distribution, at least $5,000,000 in Liquid Assets plus,
at such time or times as ten (10) or more of the Eligible Projects are not a
Stabilized Facilities, the Borrowers shall have on a consolidated basis an
additional $5,000,000 in Liquid Assets; provided, however, that after deducting
the amount of such distribution from the EBITDA (the "Adjusted EBITDA") of the
Stabilized Facilities in the aggregate, the Borrowers' consolidated ratio of
Adjusted EBITDA to Debt Service for the Stabilized Facilities in the aggregate
shall not be less than 1.0 to 1.0. For the purposes of computing EBITDA and
Debt Service, the period measured shall be on a rolling four-quarters basis.
Distributions may be made only within thirty (30) days of the end of a fiscal
quarter.
(b) Make a distribution to partners or members of any of
the Borrowers from proceeds of the Loan as a repayment of equity in an Eligible
Project unless the Borrowers give advance written notice to the Administrative
Agent of the amount of such proposed distribution and the Administrative Agent
acknowledges in writing the availability of equity to make such a distribution.
Section 8.15 Mergers or Acquisitions
Enter into any merger or consolidation or amalgamation, wind up or
dissolve itself (or suffer any liquidation or dissolution), or acquire all or
substantially all of the assets of any person, firm, joint venture or
corporation except to acquire a Wholly Owned Subsidiary.
Section 8.16 Partnership Interests
Repurchase, redeem or retire any partnership or membership interest
any of in the Borrowers.
Section 8.17 Impairment of Security
The Borrowers shall take no action which shall impair in any manner
the value of any of the Property or the validity, priority or security of any
Deed of Trust.
Section 8.18 Conditional Sales
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The Borrowers shall not incorporate in the Improvements any property
acquired under a conditional sales contract, or lease, or as to which the
vendor retains title or a security interest, without the prior written consent
of the Administrative Agent.
Section 8.19 Changes to Plans and Specifications
After review and approval of a Total Development Budget by the
Administrative Agent, the Borrowers shall not permit any change order
increasing the price of the Improvements for an Eligible Project by more than
$50,000 for any one change order or by more than 10% of the total hard cost
portion of the Total Development Budget in the aggregate or materially altering
the scope of the Improvements, without the prior written consent of the
Administrative Agent which consent will not be unreasonably withheld and
provided such changes will not cause the Facility not to qualify as a Pool A
Project.
Section 8.20 Construction Contract; Construction Management
The Borrowers shall not execute any contract or agreement or become a
party to any arrangement for the construction of any Improvements or for
construction management services with respect to any Property without the prior
written consent of the Administrative Agent.
ARTICLE IX
EVENTS OF DEFAULT
The occurrence of one or more of the following events shall be "Events
of Default" under this Agreement, and the terms "Event of Default" shall mean,
whenever they are used in this Agreement, any one or more of the following
events:
Section 9.1 Failure to Pay and/or Perform the Obligations
The Borrowers shall fail to (a) make any payment of interest on the
Note, or (b) pay any of the other Obligations including but not limited to the
Expense Payments and Liquidation Costs and such failure continues for more than
five (5) calendar days after notice thereof by the Administrative Agent, except
with regard to payment of (a) any Borrowing Base Deficiency which shall be due
as provided in Section 2.1 The Loan hereof, and (b) amounts due at maturity for
which no notice or cure period shall be required to be given.
Section 9.2 Breach of Representations and Warranties
Any material representation or warranty made in this Agreement or in
any report, certificate, opinion (including any opinion of counsel for the
Borrowers), financial statement or other instrument furnished in connection
with the Obligations or with the execution and delivery of any of the Financing
Documents, shall prove to have been false or misleading when made (or, if
applicable, when reaffirmed) in any material respect.
Section 9.3 Failure to Comply with Covenants
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Default shall be made by the Borrowers in the due observance and
performance of any covenant, condition or agreement contained in Article VII
hereof (except for Section 7.8 Maintenance of Properties, Section 7.9
Maintenance of the Collateral, Section 7.10 Other Liens, Security Interests,
etc., Section 7.17 ERISA) or in ARTICLE VIII hereof.
Section 9.4 Failure to Comply with Books and Records
Default shall be made by the Borrowers in the due observance or
performance of Section 7.13 Books and Records, which default shall remain
unremedied, and the Borrowers shall cure such default promptly, but in no event
more than ten (10) days after written notice thereof to the Borrowers by the
Administrative Agent.
Section 9.5 Other Defaults
Default shall be made by the Borrowers in the due observance or
performance of any other term, covenant or agreement other than as set forth in
this Article IX, which default shall remain unremedied for more than thirty
(30) days after written notice thereof to the Borrowers by the Administrative
Agent, unless the nature of the failure is such that (a) it cannot be cured
within the thirty (30) day period, and (b) the Borrowers institute corrective
action within the thirty (30) day period and (c) the Borrowers diligently
pursue such action and complete the cure within ninety (90) days.
Section 9.6 Default Under Other Financing Documents
A Default shall occur under any of the other Financing Documents, and
such Default is not cured within any applicable grace period provided therein.
Section 9.7 Receiver; Bankruptcy
An Act of Bankruptcy occurs with respect to the Borrowers or any of
the Borrowers becomes generally unable to pay its debts as they become due;
provided, however, if a proceeding with respect to an Act of Bankruptcy is
filed or commenced against any of the Borrowers, the same shall not constitute
an Event of Default if such proceeding is dismissed within sixty (60) days from
the date of such Act of Bankruptcy.
Section 9.8 Judgment
Any judgment against any of the Borrowers of $250,000 or more or any
attachment or other levy against any property of any of the Borrowers remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of thirty (30) days after the same shall have been issued.
Section 9.9 Execution; Attachment
Any execution or attachment shall be levied against the Collateral, or
any part thereof, and such execution or attachment shall not be set aside,
discharged or stayed within thirty (30) days after the same shall have been
levied.
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Section 9.10 Default Under Other Borrowings
(a) Default which continues beyond any applicable grace
period shall be made under any obligation of or guaranteed by any of the
Borrowers equal to or greater than $250,000, if the effect of such default is
to accelerate the maturity of such obligation or to permit the holder or
obligee thereof to cause such obligation to become due prior to its stated
maturity.
(b) Default shall be made under any obligation equal to
or greater than $1,000,000 of a consolidated Affiliate, which is otherwise
non-recourse to the Borrowers if the holder or obligee of such obligation has
commenced action on any of the remedies available to it under the obligation.
Section 9.11 Material Adverse Change
If the Administrative Agent in its reasonable discretion determines
that a Material Adverse Change has occurred in the financial condition of any
of the Borrowers; provided, however, that such Default may be cured if only one
Borrower is affected, such Borrower owns only one Eligible Project and such
Eligible Project is excluded from the calculation of the Borrowing Base.
Section 9.12 Impairment of Position
If the Administrative Agent in its reasonable discretion determines
that an event has occurred which impairs the prospect of payment of the
Obligations and/or the value of the Facilities or the Collateral.
Section 9.13 Change in Status or Ownership
Any of the Borrowers is dissolved, merged, consolidated or
reorganized, or any change occurs in the ownership of any of the Borrowers or
any Subsidiary without the prior written consent of the Administrative Agent.
Section 9.14 Zoning
Any change in any zoning ordinance or any other public restriction is
enacted, limiting or defining the uses which may be made of any of the Property
or a part thereof, such that the use of any of the Property, as specified
herein, would be in material violation of such restriction or zoning change
unless the Borrower excludes the affected Eligible Project from the calculation
of the Borrowing Base.
Section 9.15 Change in Management
The Management Agreement is terminated without the prior written
consent of the Administrative Agent.
Section 9.16 Licenses
The involuntary, imposed or required revocation, suspension,
probation, restriction, limitation or refusal to renew, or the pending
revocation, suspension, probation, restriction,
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limitation, of, or refusal to renew, of any License; other than in the ordinary
course of business or to the extent that the Borrowers deem such action to be,
in the exercise of prudent business judgment, in the best interest of Borrowers,
the decertification, revocation, suspension, probation, restriction,
limitation, or refusal to renew, or the pending decertification, revocation,
suspension, probation, restriction, limitation, or refusal to renew any
participation or eligibility in any third party payor program in which the
Borrowers elect to participate, including, without limitation, the Medicaid or
Medicare programs; or the issuance or pending issuance of any License for a
period of less than twelve (12) months as a consequence of any sanctions imposed
by any Governmental Authority; or the assessment or pending assessment, of any
civil or criminal penalties by any Governmental Authority, any third party
payor or any accreditation organization or person. Without limiting the
generality of the foregoing, the failure of the Borrowers to obtain an
operating license for any Facility within sixty (60) days of the issuance of
the certificate of occupancy for such Facility.
Section 9.17 Damage to Improvements
At any time prior to the issuance of a certificate of occupancy or
completion therefor, any of the Improvements are substantially damaged or
destroyed by fire or other casualty and the Administrative Agent determines in
good faith that such Improvements cannot be restored and completed in
accordance with the terms and provisions of the Deed of Trust unless the
Borrower excludes the affected Eligible Project from the Borrowing Base.
Section 9.18 Disclosure of Contractors
The Borrowers shall fail to disclose to the Administrative Agent, upon
demand, the names of all persons with whom the Borrowers have contracted or
intends to contract for the construction of the Improvements or for the
furnishing of labor or materials therefor.
Section 9.19 Mechanic's Lien
A lien for the performance of work or the supply of materials which is
perfected against any of the Land remains unsatisfied or un-bonded or for which
no other arrangements satisfactory to the Administrative Agent have been made
for a period of thirty (30) days after notice to the Borrowers from any source
of the filing of such Lien unless the Borrowers exclude the affected Eligible
Project from the Borrowing Base.
Section 9.20 Survey Matters
Any Survey required by the Lenders during the period of construction
shows any matters not approved by the Administrative Agent and such matters not
approved are not removed within 30 days after Notice thereof by the
Administrative Agent to the Borrowers unless the Borrower excludes the affected
Eligible Project from the Borrowing Base.
Section 9.21 General Contractor Default
The General Contractor shall have defaulted under any Construction
Contract, which default the Administrative Agent, in its sole discretion, shall
deem substantial, and the Borrowers, after thirty (30) days Notice from the
Administrative Agent, shall fail to commence
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exercising any resulting right or remedy to which it may be entitled thereunder
and diligently pursue such right or remedy unless the Borrower excludes the
affected Eligible Project from the Borrowing Base.
Section 9.22 Compliance with Law
The Borrowers fail to comply with any requirement of any Governmental
Authority having jurisdiction within the time required by such Governmental
Authority; or any proceeding is commenced or action taken to enforce any remedy
for a violation of any requirement of a Governmental Authority or any
restrictive covenant affecting the Property or any part thereof.
ARTICLE X
RIGHTS AND REMEDIES UPON DEFAULT
Section 10.1 DEMAND; ACCELERATION
THE OCCURRENCE OR NONOCCURRENCE OF AN EVENT OF DEFAULT UNDER THIS
AGREEMENT SHALL IN NO WAY AFFECT OR CONDITION THE RIGHT OF THE LENDERS TO
DEMAND PAYMENT AT ANY TIME OF ANY OF THE OBLIGATIONS WHICH ARE PAYABLE ON
DEMAND REGARDLESS OF WHETHER OR NOT AN EVENT OF DEFAULT HAS OCCURRED. Upon the
occurrence of an Event of Default, and in every such event and at any time
thereafter, the Administrative Agent may declare the Obligations due and
payable, without presentment, demand, protest, or any notice of any kind, all
of which are hereby expressly waived, anything contained herein or in any of
the other Financing Documents to the contrary notwithstanding.
Section 10.2 Further Advances; Immediate Acceleration
Following an Event of Default the Administrative Agent may from time
to time without notice to the Borrowers suspend, terminate or limit any further
advances under the Loan or other extensions of credit under this Agreement and
under any of the other Financing Documents. Further, upon the occurrence of an
Event of Default or Default specified in Section 9.7 Receiver; Bankruptcy
above, the unpaid principal amount of the Note (with accrued interest thereon)
and all other Obligations then outstanding, shall immediately become due and
payable without further action of any kind and without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrowers.
Section 10.3 Specific Rights With Regard to Collateral
Following an Event of Default, in addition to all other rights and
remedies provided hereunder or as shall exist at law or in equity from time to
time, the Administrative Agent may, without notice to the Borrowers and subject
to the terms of the Agency Agreement:
(a) assign any and all Operating Agreements and
Management Contracts to any Person designated by the Administrative Agent,
and/or exercise all rights and privileges of
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the Borrowers under such contracts and agreements for the purpose of realizing
on the Collateral and to the extent and for the time required to realize the
value of the Collateral;
(b) to the extent permitted by applicable law, assume
such management, operation and control of the Property to the extent and for
the time necessary to realize the value of the Collateral;
(c) cause the Borrowers to engage, contract with, and/or
hire qualified service, billing, collection and other such agents,
organizations and companies acceptable to the Administrative Agent to collect
and/or realize upon any or all of the Collateral and to remit the proceeds to
the Administrative Agent;
(d) subject to applicable state and federal laws
pertaining to resident confidentiality, request any Account Debtor obligated on
any of the Accounts to make payments thereon directly to the Administrative
Agent to the extent permitted by applicable law, with the Administrative Agent
taking control of the cash and non-cash proceeds thereof and/or direct the
Borrowers to (and the Borrowers shall) turn over to the Administrative Agent
immediately following receipt all payments with respect to the Collateral in
the form received (with the addition of all necessary endorsements) and not to
deposit, negotiate or otherwise deal with those payments;
(e) compromise, extend or renew any of the Collateral or
deal with the same as it may deem advisable;
(f) make exchanges, substitutions or surrenders of all
or any part of the Collateral;
(g) remove from any of the Borrowers' places of business
all books, records, ledger sheets, correspondence, invoices and documents,
relating to or evidencing any of the Collateral or without cost or expense to
the Lenders, make such use of the Borrowers' place of business as may be
reasonably necessary to administer, control and collect the Collateral;
(h) demand, collect, receipt for and give renewals,
extensions, discharges and releases of any of the Collateral;
(i) institute and prosecute legal and equitable
proceedings to enforce collection of, or realize upon, any of the Collateral;
(j) settle, renew, extend, compromise, compound,
exchange or adjust claims in respect of any of the Collateral or any legal
proceedings brought in respect thereof;
(k) endorse the name of any of the Borrowers upon any
items of payment relating to the Collateral or on any Proof of Claim in
Bankruptcy against an Account Debtor; and
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(l) notify the Post Office authorities to change the
address for the delivery of mail to the Borrowers to such address or Post
Office Box as the Administrative Agent may designate and receive and open all
mail addressed to the Borrowers.
In addition, the Borrowers shall, following an Event of Default
promptly, upon request, execute and deliver to the Administrative Agent written
assignments, to the extent permitted by applicable law, in form and content
acceptable to the Administrative Agent, of specific Accounts or groups of
Accounts; provided, however, that the lien and/or security interest granted to
the Lenders under this Agreement shall not be limited in any way to or by the
inclusion or exclusion of Accounts within such assignments. Such Accounts shall
secure payment of the Obligations and are not sold to the Lenders whether or
not any assignment thereof, which is separate from this Agreement, is in form
absolute.
Following an Event of Default, the Lenders may also direct the
Borrowers to appoint a manager for any or all of the Facilities and enter into
a management agreement with one or more management companies approved by the
Lenders, the terms of which agreement shall be approved by the Lenders.
Section 10.4 Performance by Lenders
Following an Event of Default, the Administrative Agent without the
necessity of prior notice to or demand upon the Borrowers and without waiving
or releasing any of the Obligations or any Event of Default, may (but shall be
under no obligation to) at any time thereafter make such payment or perform
such act for the account and at the expense of the Borrowers, and may enter
upon the premises of the Borrower for that purpose and take all such action
thereon as the Administrative Agent may consider necessary or appropriate for
such purpose. The Administrative Agent will give the Borrowers notice, at least
subsequently, of any such performance by the Administrative Agent. All sums so
paid or advanced by the Administrative Agent and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred in connection therewith (the "Expense Payments") together with
interest thereon from the date of payment, advance or incurring until paid in
full at the Post-Default Rate shall be paid by the Borrowers to the
Administrative Agent on demand and shall constitute and become a part of the
Obligations.
Section 10.5 Remedies on Default
The Administrative Agent shall have the right, upon the happening of
any Event of Default, to terminate this Agreement by Notice from the
Administrative Agent to the Borrowers and, in addition to any rights or
remedies available to them under the Deed of Trust or any of the other
Financing Documents, to enter into possession of any of the Property and
perform any and all work and labor necessary to complete the development of
such Land and the construction of the Improvements thereon (whether or not in
accordance with the Plans and Specifications therefor) and to employ watchmen
to protect the Property and the Improvements. All sums expended by the Lenders
for such purposes shall be deemed to have been advanced to the Borrowers under
the Note and shall be secured by the Deeds of Trust and the Collateral. For
this purpose, the Borrowers hereby constitute and appoint the Lenders, or the
Administrative Agent
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on behalf of the Lenders, its true and lawful attorney-in-fact with full power
of substitution to complete work on any Eligible Project in the name of the
Borrowers, and hereby empowers said attorney or attorneys as follows:
(a) To use any funds of any of the Borrowers including
any balance which may be held in escrow and any funds which may remain
un-advanced under any of the Loan for the purpose of completing the development
of any of the Land and the construction of any of the Improvements, whether or
not in the manner called for in the Plans and Specifications;
(b) To make such additions and changes and corrections
to any of the Plans and Specifications which shall be necessary or desirable in
the judgment of the Administrative Agent to complete the development of any of
the Land and the construction of any of the Improvements;
(c) To employ such contractors, subcontractors, agents,
architects and inspectors as shall be necessary or desirable for said purpose;
(d) To pay, settle or compromise all existing bills and
claims which are or may be liens against any of the Property, or may be
necessary or desirable for the completion of the work or the clearance of title
to any of the Property;
(e) To execute all applications and certificates which
may be required in the name of any of the Borrowers; and
(f) To do any and every act with respect to the
development of the Land and the construction of the Improvements which any of
the Borrowers may do in its own behalf.
It is understood and agreed that this power of attorney shall be
deemed to be a power coupled with an interest which cannot be revoked. Said
attorney-in-fact shall also have the power to prosecute and defend all actions
or proceedings in connection with the development of the Land and the
construction of the Improvements and to take such actions and to require such
performance as the Lenders may deem necessary.
Section 10.6 Uniform Commercial Code and Other Remedies
Upon the occurrence of an Event of Default (and in addition to all of
its rights, powers and remedies under this Agreement), the Lenders shall have
all of the rights and remedies of a secured party under the applicable Uniform
Commercial Code and other applicable laws, and the Lenders are authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of the Borrowers now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, any of the Lenders; and upon demand by the
Administrative Agent, the Borrowers shall assemble the Collateral and make it
available to the Lenders, at a place designated by the Administrative Agent;
and the Lenders or their agents may enter upon the Borrowers' premises to take
possession of the Collateral, to remove it, to render it unusable, or to sell
or otherwise dispose of it.
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Any written notice of the sale, disposition or other intended action
by the Lenders with respect to the Collateral which is sent by regular mail,
postage prepaid, to the Borrowers at the address set forth in Article XI
hereof, or such other address of the Borrowers which may from time to time be
shown on the Lenders' records, at least ten (10) days prior to such sale,
disposition or other action, shall constitute reasonable notice to the
Borrowers. The Borrowers shall pay on demand all costs and expenses, including,
without limitation, attorney's fees and expenses, incurred by or on behalf of
the Lenders, or any of them, in preparing for sale or other disposition,
selling, managing, collecting or otherwise disposing of, the Collateral. All of
such costs and expenses (the "Liquidation Costs") together with interest
thereon from the date incurred until paid in full at the Post-Default Rate,
shall be paid by the Borrowers to the Administrative Agent on demand and shall
constitute and become a part of the Obligations. Any proceeds of sale or other
disposition of the Collateral will be applied by the Lenders to the payment of
the Liquidation Costs and Expense Payments, and any balance of such proceeds
will be applied by the Lenders to the payment of the balance of the Obligations
in such order and manner of application as the Lenders may from time to time in
its sole discretion determine. After such application of the proceeds, any
balance shall be paid to the applicable Borrowers or to any other party
entitled thereto.
Section 10.7 Receiver or Other Court Order
Following an Event of Default, as a matter of right, following ten
(10) days notice and without regard to the adequacy of the security, and upon
application to a court of competent jurisdiction, the Lenders shall be entitled
to the immediate appointment of a receiver for all or any part of the
Collateral, and of the payments and proceeds thereof and therefrom, whether
such receivership be incidental to a proposed sale of the Collateral or
otherwise, and the Borrowers hereby consent to the appointment of such a
receiver and to an order of court directing that payments, including Medicare
and Medicaid payments, be made directly to the receiver. The Borrowers will pay
to the Beneficiary, upon demand, all expenses, including receiver's fees,
attorney's fees, costs and agents compensation, advanced by the Borrowers and
incurred pursuant to the provisions contained in this Section.
Section 10.8 No Conditions Precedent to Exercise of Remedies
The Borrowers shall not be relieved of any obligation by reason of the
failure of the Lenders to comply with any request of the Borrowers or of any
other person to take action to foreclose on the Property under the Deed of
Trust or otherwise to enforce any provision of the Financing Documents, or by
reason of the release, regardless of consideration, of all or any part of the
Property, or by reason of any agreement or stipulation between any subsequent
owner of the Property and the Lenders extending the time of payment or
modifying the terms of the Financing Documents without first having obtained
the consent of the Borrowers; and in the latter event, the Borrowers shall
continue to be liable to make payments according to the terms of any such
extension or modification agreement, unless expressly released and discharged
in writing by the Lenders.
Section 10.9 Remedies Cumulative and Concurrent
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No remedy herein conferred upon or reserved to the Lenders or the
Administrative Agent is intended to be exclusive of any other remedies provided
for in the Financing Documents, and each and every such remedy shall be
cumulative, and shall be in addition to every other remedy given hereunder, or
under the Financing Documents, or now or hereafter existing at law or in equity
or by statute. Every right, power and remedy given by the Financing Documents
to the Lenders or the Administrative Agent shall be concurrent and may be
pursued separately, successively or together against any or all of the
Borrowers or the Property or any part thereof, and every right, power and
remedy given by the Financing Documents may be exercised from time to time as
often as may be deemed expedient by the Lenders or the Administrative Agent.
Section 10.10 Strict Performance
No delay or omission of the Lenders or the Administrative Agent to
exercise any right, power or remedy accruing upon the happening of an Event of
Default shall impair any such right, power or remedy or shall be construed to
be a waiver of any such Event of Default or any acquiescence therein. No delay
or omission on the part of the Lenders or the Administrative Agent to exercise
any option for acceleration of the maturity of the Obligations, or any of them,
or for foreclosure of the Deeds of Trust, or any of them, following any Event
of Default as aforesaid, or any other option granted to the Lenders hereunder
in any one or more instances, or the acceptance by the Lenders of any partial
payment on account of the Obligations shall constitute a waiver of any such
Event of Default and each such option shall remain continuously in full force
and effect.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices
All notices, certificates or other communications hereunder shall be
deemed given when delivered by hand or courier, or three (3) Banking Days after
being mailed by certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Administrative Agent BANK OF AMERICA, N.A., d/b/a
or the Lenders: NATIONSBANK, N.A.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Senior Vice President
with a courtesy copy to: ▇▇▇▇ & Valentine, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Esq.
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if to the Borrowers: c/o SUNRISE EAST ASSISTED LIVING LIMITED
PARTNERSHIP
c/o Sunrise Assisted Living Investments,
Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
After September 15, 1999
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention to each of the following
separately delivered or mailed:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇
with a courtesy ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
copy to: Watt, Tieder, Hoffar & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Section 11.2 Consents and Approvals
If any consent, approval, or authorization of any Governmental
Authority or of any Person having any interest therein, should be necessary to
effectuate any sale or other disposition of the Collateral, the Borrowers agree
to execute all such applications and other instruments, and to take all other
action, as may be required in connection with securing any such consent,
approval or authorization.
Section 11.3 Remedies, etc. Cumulative
Each right, power and remedy of the Lenders as provided for in this
Agreement or in any of the other Financing Documents or now or hereafter
existing at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Agreement or in any of the other Financing Documents or
now or hereafter existing at law or in equity, by statute or otherwise, and the
exercise or beginning of the exercise by the Lenders of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later exercise
by the Lenders of any or all such other rights, powers or remedies. In order to
entitle the Lenders to exercise any remedy reserved to it herein, it shall not
be necessary to give any notice, other than such notice as may be expressly
required in this Agreement.
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Section 11.4 No Waiver of Rights by the Lenders
No failure or delay by the Administrative Agent or the Lenders to
insist upon the strict performance of any term, condition, covenant or
agreement of this Agreement or of any of the other Financing Documents, or to
exercise any right, power or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant or agreement or of
any such breach or preclude the Administrative Agent or the Lenders from
exercising any such right, power or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Agreement
or under any of the other Financing Documents, neither the Administrative Agent
nor the Lenders shall be deemed to waive the right either to require prompt
payment when due of all other amounts payable under this Agreement or under any
of the other Financing Documents, or to declare a default for failure to effect
such prompt payment of any such other amount.
Section 11.5 Entire Agreement
The Financing Documents shall completely and fully supersede all other
agreements, both written and oral, between the Lenders and any of the Borrowers
relating to the Obligations. Neither the Lenders nor the Borrowers shall
hereafter have any rights under such prior agreements but shall look solely to
the Financing Documents for definition and determination of all of their
respective rights, liabilities and responsibilities relating to the Obligations.
Section 11.6 Survival of Agreement; Successors and Assigns
All covenants, agreements, representations and warranties made by the
Borrowers herein and in any certificate, in the Financing Documents and in any
other instruments or documents delivered pursuant hereto shall survive the
making by the Lenders of the Loan and the execution and delivery of the Note,
and shall continue in full force and effect so long as any of the Obligations
are outstanding and unpaid. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrowers which are contained in this Agreement shall inure to
the benefit of the respective successors and assigns of each of the Lenders,
and all covenants, promises and agreements by or on behalf of the Lenders which
are contained in this Agreement shall inure to the benefit of the permitted
successors and permitted assigns of the Borrowers, but this Agreement may not
be assigned by the Borrowers without the prior written consent of the Lenders.
Section 11.7 Expenses
The Borrowers agree to pay all reasonable out-of-pocket expenses of
the Lenders and Banc of America Securities LLC (excluding travel expenses but
including the reasonable fees and expenses of the legal counsel of the
Administrative Agent or any other Lender) in connection with the preparation of
this Agreement, the issuance of the Loan hereunder, the recordation of all
financing statements and such other instruments as may be required by the
Administrative Agent at the time of, or subsequent to, the execution of this
Agreement to secure the Obligations (including any and all recordation tax and
other costs and taxes incident to recording), the administration of the Credit
Facility (not otherwise contemplated by any fee paid by the
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Borrowers), any future modification of the Financing Documents, the addition of
Eligible Projects to the Borrowing Base or the enforcement of any provision of
this Agreement and the collection of the Obligations. The Borrowers agree to
indemnify and save harmless the Lenders from any liability resulting from the
failure to pay any required recordation tax, transfer taxes, recording costs or
any other expenses incurred by the Lenders in connection with the Obligations.
The provisions of this Section shall survive the execution and delivery of this
Agreement and the repayment of the Obligations. The Borrowers further agree to
reimburse the Lenders upon demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and legal expenses and travel expenses)
incurred by the Lenders, or any of them, in enforcing any of the Obligations or
any security therefor or incurred in connection with any bankruptcy proceeding
or in any post-judgment enforcement or collection action, together with interest
at the Post-Default Rate which agreement shall survive the termination of this
Agreement and the repayment of the Obligations.
Section 11.8 Counterparts
This Agreement may be executed in any number of counterparts all of
which together shall constitute a single instrument.
Section 11.9 Governing Law
This Agreement and all of the other Financing Documents shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia; provided, however, any Deed of Trust and any financing statements
covering fixtures securing such Loan shall be governed by, and construed in
accordance with, the laws of the state in which the applicable Facility is
located.
Section 11.10 Modifications
No modification or waiver of any provision of this Agreement or of any
of the other Financing Documents, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice to or demand on the Borrowers in any case shall entitle the Borrowers
to any other or further notice or demand in the same, similar or other
circumstance.
Section 11.11 Illegality
If fulfillment of any provision hereof or any transaction related
hereto or to any of the other Financing Documents, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provisions herein
contained other than the provisions hereof pertaining to repayment of the
Obligations operates or would prospectively operate to invalidate this
Agreement in whole or in part, then such clause or provision only shall be void,
as though not herein contained, and the remainder of this Agreement shall
remain operative and in full force and effect; and if such provision pertains
to
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repayment of the Obligations, then, at the options of the Lenders, all of
the Obligations of the Borrowers to the Lenders shall become immediately due
and payable.
Section 11.12 Gender, etc.
Whenever used herein, the singular number shall include the plural,
the plural the singular and the use of the masculine, feminine or neuter gender
shall include all genders.
Section 11.13 Headings
The headings in this Agreement are for convenience only and shall not
limit or otherwise affect any of the terms hereof.
Section 11.14 Waiver of Trial by Jury
THE BORROWER AND THE LENDERS HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO WHICH ANY OF THEM MAY BE PARTIES, NOT
GOVERNED BY THE ARBITRATION PROVISIONS OF THE NOTE OR THE GUARANTIES ARISING
OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY OF THE FINANCING
DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS,
INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the
Borrowers and the Lenders, and the Borrowers and the Lenders hereby represent
that no representations of fact or opinion have been made by any individual to
induce this waiver of trial by jury or to in any way modify or nullify its
effect. The Borrowers and the Lenders further represent that they have been
represented in the signing of this Agreement and in the making of this waiver
by independent legal counsel, selected of their own free will, and that they
have had the opportunity to discuss this waiver with counsel.
Section 11.15 No Warranty by Lenders
By accepting or approving anything required to be observed, performed
or fulfilled by the Borrowers or to be given to the Administrative Agent or the
Lenders pursuant to this Agreement, including, without limitation, any
certificate, balance sheet, statement of profit and loss or other financial
statement, Survey, receipt, appraisal or insurance policy, the Lenders shall
not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof and any such acceptance or approval thereof shall not be or
constitute any warranty or representation with respect thereto by the Lenders.
Section 11.16 Liability of the Lenders
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No Lender shall be liable for another Lender's failure to fund its
ratable share of any advance under the Loan. The Lenders shall not be liable
for any other act or omission by the Lenders, or any of them, pursuant to the
provisions of this Agreement in the absence of fraud or gross negligence. The
Lenders shall incur no liability to the Borrowers or any other party in
connection with the acts or omissions of any of the Lenders in reliance upon
any certificate or other paper believed by the Lenders to be genuine or with
respect to any other thing which the Lenders may do or refrain from doing,
unless such act or omission amounts to fraud or gross negligence. The Borrowers
hereby agree that the Lenders shall not be chargeable for any negligence,
mistake, act or omission of any accountant, examiner, agency or attorney
employed by the Lenders, or any of them, (except for the gross negligence or
willful misconduct of any person, corporation, partnership or other entity
employed by any of the Lenders) in making examinations, investigations or
collections, or otherwise in perfecting, maintaining, protecting or realizing
upon any lien or security interest or any other interest in the Collateral or
other security for the Obligations. The Borrowers, jointly and severally, shall
indemnify, defend and hold the Lenders and their successors and assigns
harmless from and against any and all claims, demands, suits, losses, damages,
assessments, fines, penalties, costs or other expenses (including reasonable
attorney's fees and court costs) arising from or in connection with this
Agreement. Any indemnity provision for the benefit of the Lenders set forth
herein or in any of the Financing Documents shall extend to any other lender
who becomes a Lender under the Credit Facility. The provisions of this Section
shall survive the termination of the Credit Facility.
Section 11.17 License of Tradename
The Borrowers do hereby grant to each of the Lenders and their
affiliates and any trustee under a Deed of Trust and their management company a
license to use the name of any Borrower and the name "Sunrise", "Dignity Home
Care", "Respect Home Care" or "Karrington" and any marks associated therewith
in the operation of a Facility upon such Lender's or trustee's taking of
possession or taking over management of a Facility or acquiring title thereto
at a foreclosure sale which license shall be in effect for a period of thirty
(30) months from the date thereof. The Borrowers further agree that a
third-party purchaser of a Facility may continue to operate the Facility under
the name of any Borrower unless such Borrower objects in writing thereto.
Section 11.18 No Partnership
Nothing contained in this Agreement shall be construed in a manner to
create any relationship between the Borrowers and the Lenders other than the
relationship of borrower and lender and the Borrowers and the Lenders shall not
be considered partners or co-venturers for any purpose on account of this
Agreement.
Section 11.19 Third Parties; Benefit
All conditions to the obligation of the Lenders to make advances
hereunder are imposed solely and exclusively for the benefit of the Lenders and
their assigns and no other persons shall have standing to require satisfaction
of such conditions in accordance with their terms or be entitled to assume that
the Lenders will refuse to make advances in the absence of strict compliance
with any or all thereof and no other person shall, under any circumstances, be
deemed to be the beneficiary of such conditions, any or all of which may be
freely waived in
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whole or in part by the Administrative Agent at any time in the sole and
absolute exercise of its discretion pursuant to its agreements with the Lenders.
The terms and provisions of this Agreement are for the benefit of the parties
hereto and, except as herein specifically provided, no other person shall have
any right or cause of action on account thereof.
Section 11.20 Conditions; Verification
Any condition of this Agreement which requires the submission of
evidence of the existence or non-existence of a specified fact or facts implies
as a condition to the existence or non-existence, as the case may be, of such
fact or facts that the Lenders shall, at all times, be free independently to
establish to their satisfaction and in its absolute discretion such existence
or non-existence.
Section 11.21 Signs; Publicity
At the Administrative Agent's request, but at the expense of the
Administrative Agent, the Borrowers shall place a sign acceptable to the
Borrowers at a location on each of the Eligible Projects under construction
satisfactory to the Administrative Agent, which sign shall recite, among other
things, that the Lenders are financing the development of the Land and the
construction of the Improvements. The Borrowers expressly authorize the
Administrative Agent to prepare and to furnish to the news media for
publication from time to time news releases with respect to the Credit Facility
and each Eligible Project, specifically to include but not limited to, releases
detailing the Administrative Agent's and the Lenders' involvement with the
Credit Facility and the financing of any Eligible Project, all subject to prior
review by the Borrowers.
Section 11.22 Time of Essence
Time shall be of the essence for each and every provision of this
Agreement of which time is an element.
Section 11.23 Replacement Note
In the event any Joinder Agreement is ever lost or destroyed, the
Borrowers covenant and agree that they will execute and deliver to the
Administrative Agent upon demand a replacement original thereof.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
WITNESS/ATTEST: SUNRISE EAST ASSISTED LIVING LIMITED PARTNERSHIP,
a Virginia limited partnership
By: Sunrise Assisted Living Investments, Inc.,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
-------------------------- --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE SEAL, L.L.C., a Virginia limited liability company
By: Sunrise Development, Inc.,
Managing Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE DECATUR ASSISTED LIVING LIMITED PARTNERSHIP, a
Georgia limited partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
88
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ASSISTED LIVING, L.P.,
a New Jersey limited partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- -------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE BELLEVUE ASSISTED LIVING
LIMITED PARTNERSHIP, a Washington limited
partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE WALNUT CREEK ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
---------------------------- ----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
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96
SUNRISE OAKLAND ASSISTED LIVING
LIMITED PARTNERSHIP, a California limited
partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- --------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE PARAMUS ASSISTED LIVING
LIMITED PARTNERSHIP, a New Jersey limited
partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
---------------------------- ---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE RIVERSIDE ASSISTED LIVING, L.P.,
a California limited partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
----------------------------- -----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
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97
SUNRISE HUNTCLIFF ASSISTED LIVING
LIMITED PARTNERSHIP, a Georgia limited
partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- ----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SUNRISE STERLING CANYON ASSISTED
LIVING LIMITED PARTNERSHIP, a California
limited partnership
By: Sunrise Assisted Living Investments,
Inc., General Partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
--------------------------- ----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
WITNESS: BANK OF AMERICA, N.A., d/b/a/
NATIONSBANK, N.A., successor
by merger to NationsBank, N.A., as Administrative Agent for
the Lenders
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ (SEAL)
-------------------------- ----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
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LIST OF EXHIBITS
A Form of Note
B Form of Borrowing Base Report
C Current Borrowing Base Report
D Places of Business
E Form of Joinder Agreement
F Survey Requirements
G Form of Compliance Certificate
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EXHIBIT A
FORM OF NOTE
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100
EXHIBIT B
FORM OF BORROWING BASE REPORT
94
101
EXHIBIT C
CURRENT BORROWING BASE REPORT
95
102
EXHIBIT D
PLACES OF BUSINESS
AS OF JULY_29, 1999
The Borrowers' Chief Executive
Office and Principal Place of Business is:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
after September 15, 1999
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Locations of Collateral:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
after September 15, 1999
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sunrise of Decatur
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
Dekalb County
Sunrise of Lafayette Hills
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sunrise of Fairfield
Greenbrook Road
Township of Fairfield, NJ
Essex County
Sunrise of Bellevue
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
King County
96
▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contra Costa County
Sunrise of Oakland Hills
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
Alameda County
Sunrise of Paoli
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ County, PA
Sunrise of Paramus
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Bergen County
Sunrise of Riverside
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
Riverside County
Sunrise of Northville
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Sunrise of Bloomingdale
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
DuPage County
Sunrise of Huntcliff
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ County
Sunrise of Mount ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Westchester County
97
▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Roads
Township of Wall, NJ
Monmouth County
Sunrise of Smithtown
▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Suffolk County
Sunrise of Willowbrook
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
DuPage County
Sunrise of Wilton
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇▇ of Wilton
Sunrise of Huntcliff Summit I
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ County
Sunrise of Sterling Canyon
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
Los Angeles County
Sunrise of Flossmoor
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇ County
Sunrise of San Mateo
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇
San Mateo County
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EXHIBIT E
FORM OF JOINDER AGREEMENT
99
106
EXHIBIT F
SURVEY REQUIREMENTS
100
107
EXHIBIT G
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to (i) Section 7.1
of the Second Amended and Restated Financing and Security Agreement dated as of
July ____, 1999 (together with all amendments and modifications, if any, from
time to time made thereto, the "Financing Agreement") between Sunrise East
Assisted Living Limited Partnership, Sunrise SEAL, L.L.C. and certain
affiliated borrowing entities (collectively, the "Borrower") and Bank of
America, N.A. as Administrative Agent, and (ii) Section 3.1 of the Second
Amended and Restated Master Guaranty of Payment Agreement dated as of July ____,
1999 (together with all amendments and modifications, if any, from time to time
made thereto, the "Guaranty") by Sunrise Assisted Living, Inc. ("Guarantor")
and Bank of America, N.A. as Administrative Agent. Unless otherwise defined,
terms used herein (including the attachments hereto) have the meanings provided
in the Financing Agreement.
BORROWER CERTIFICATE
The undersigned, one of the Borrowers as of the date hereof, hereby
certifies and warrants that:
1. It is authorized to execute this certificate on behalf of all
Borrowers.
2. As of the (fiscal quarter) (fiscal year) ending as of
________________, 19____:
(a) No Borrower was in default under any of the
provisions of the Financing Agreement during the
period to which this Compliance Certificate relates;
(b) As of the end of this reporting period: (i) the
number of Eligible Projects was ____ [minimum number
required 8]; (ii) the number of Eligible Projects
that qualify as Pool A Projects is ____; (iii) the
ratio of Pool A Projects to Eligible Projects is
____% [minimum required percentage 83%].
(c) The attached Borrowing Base Report accurately
represents the status of each Eligible Project with
regard to any and all applicable covenants set forth
in the Financing Agreement (including the ratio of
Net Operating Income to Debt Service for such
reporting period and the Minimum Occupancy
Requirement and actual occupancy as of the end of
such reporting period).
(d) As of the end of this reporting period: (i) the
number of Eligible Projects that are not Stabilized
Facilities is ____; (ii) the amount of Liquid Assets
held by the Borrower on a consolidated basis, after
taking into account any distributions
("Distributions") of net operating income to
partners or members of any of the Borrowers made
less than 30 days prior to the end of such reporting
period, is $____________ [minimum required
$5,000,000 plus an additional $5,000,000 if 10 or
more Eligible Projects are not Stabilized
Facilities]; (iii) if there have been any
Distributions, then the ratio of Adjusted EBITDA to
Debt Service (calculated on a rolling four-quarter
basis), for the Stabilized Facilities in the
aggregate, is _____ [minimum required 1.0].
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SUNRISE EAST ASSISTED LIVING
LIMITED PARTNERSHIP
By: Sunrise Assisted Living
Investments, Inc. its general
partner
By: (SEAL)
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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109
GUARANTOR CERTIFICATE
The undersigned, being the duly elected, qualified and acting Chief
Financial Officer of the Guarantor, on behalf of the Guarantor, hereby
certifies and warrants that:
1. He is the Chief Financial Officer of the Guarantor and that, as
such, he is authorized to execute this certificate on behalf of the Guarantor.
2. As of the (fiscal quarter) (fiscal year) ending as of
________________, 19____:
(a) The Guarantor is not in default under any of the
provisions of the Guaranty;
(b) The Guarantor's Tangible Net Worth was $_________ as
computed on Attachment 1 hereto;
(c) The Guarantor's ratio (on a consolidated basis with
all subsidiaries) of Funded Debt (as defined in the
Guaranty) to EBITDAR was ______ as computed on
Attachment 2 hereto;
(d) The Guarantor's ratio (on a consolidated basis with
all subsidiaries) of EBITDAR to the sum of____
Interest Expense (as defined in the Guaranty) and
Rent Expense (as defined in the Guaranty) was _______
as computed on Attachment 3 hereto;
(e) The value of the Guarantor's Minimum Liquid Assets
was $_____ as computed on Attachment 4 hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate, this ______ day of ______________, 19____.
SUNRISE ASSISTED LIVING, INC.
By: (SEAL)
---------------------------
Christian ▇.▇. ▇▇▇▇▇▇
Chief Financial Officer
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ATTACHMENT 1
Period Ending: ____________, _______
Tangible Net Worth
1. net worth (defined by GAAP) $________________________,
less
2. (a) all intangible assets (except for deferred taxes
recorded as goodwill) $____________________
(b) write-up in book value of assets subsequent to most
recent financial statement $_____________
(c) loans and advances to, or investments in, any person or
entity (except: (i) cash equivalents or deposit accounts at
financial institutions; (ii) mortgage revenue bonds issued by
Bucks County, PA Industrial Development Authority; and (iii)
individual investments less than $2,500,000, but not
exceeding $10,000,000 in the aggregate) $________________
(d) advances or loans to, or receivables from, unconsolidated
affiliates (except subordinated debt of unconsolidated
affiliates) $______________
Actual Tangible Net Worth = $_______________
Required Tangible Net Worth equal to the sum of:
(i) Guarantor's net worth
as of June 30, 1999 $255,000,000
(ii) Guarantor's net income (if positive)
for each quarter subsequent
to June 30, 1999 x 75% = $____________
(iii) Net proceeds received by Guarantor
of any equity capital transaction
during each quarter subsequent
to June 30, 1999 x 85% = $____________
TOTAL $____________
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ATTACHMENT 2
Period Ending: ____________, _____
Ratio of Funded Debt to EBITDAR
1. Funded Debt $ *
-----------------
2. EBITDAR (as calculated
on Attachment 3) $
-----------------
Actual Ratio: ____
Required Ratio:...not greater than (i) 5.75 for fiscal year 1999 and
2000, and (ii) 5.50 for fiscal year 2001 and 2002
* "Funded Debt" means the sum of the following but shall exclude trade and
other accounts payable in the ordinary course of business in accordance with
customary trade terms and which are not overdue (as determined in accordance
with customary trade practices) or which are being disputed in good faith by
the Guarantor and for which adequate reserves are being provided on the books
of the Guarantor in accordance with GAAP:
(a) indebtedness for borrowed money (excluding the 5 1/2% convertible
subordinated notes issued by the Guarantor) $____________
(b) obligations in respect of letters of credit, banker's or other
acceptances or similar obligations issued or created for the account
of the Guarantor $____________
(c) (i) lease obligations which have been or should be, in accordance with
GAAP, capitalized on the books of the Guarantor, plus (ii) the product
of Rent Expense (as defined in the Guaranty), with respect to
operating leases, multiplied by 8 $____________
(d) liabilities secured by any property owned by the Guarantor, to the
extent attached to the Guarantor's interest in such property, even
though Guarantor is not liable for the payment thereof $____________
(e) (i) amounts payable by Guarantor under any terminated, defaulted or
outstanding interest rate protection products, or (ii) take-out
commitments (excluding a refinancing or a commitment of a third party)
or purchase contracts including the deferred purchase price of
property or services in each instance if the Guarantor does not
control the incurring obligation $____________
(f) (i) the amount of any guaranty of indebtedness for borrowed, or (ii)
other debt owned by Persons other than the Guarantor which is in
default and for which the creditor is pursuing payment by the
Guarantor $________________
(g) any obligation of the Guarantor or a Commonly Controlled Entity to a
Multiemployer Plan $___________________
(h) other amounts considered to be debt by the Administrative Agent, the
Syndication Agent and the
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112
Documentation Agent in a dollar amount to be mutually agreed upon by the
Administrative Agent and the Guarantor (excluding trade and other accounts
payable in the ordinary course of business in accordance with customary trade
terms which are not overdue or which are being disputed in good faith by the
Guarantor and for which adequate reserves are being provided on the books of
Guarantor in accordance with (GAAP) $___________________
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113
ATTACHMENT 3
Period Ending: ____________, ______
Ratio of EBITDAR to Interest Expense plus Rent Expense
1. EBITDAR $_____________ (calculated as follows)
Net Income $_____________
Plus Interest $_____________
Plus Taxes $_____________
Plus Depreciation $_____________
Plus Amortization $_____________
Plus Rent Expense $_____________ (actual rent expense incurred
by Borrower, Guarantor or
any Affiliate as a tenant under
leases for any senior living
facility)
Plus Actual
Management Fees $_____________
Minus Replacement
Reserve $_____________ ($250/year/bed for each Facility)
Minus Management
Fees $_____________ (equal to the greater of 5% of gross
revenues or actual Management Fees)
2. Interest Expense $_____________ (actual interest expense incurred by
Guarantor and its subsidiaries on all
debt owed to unaffiliated third parties,
including 5 1/2% convertible subordinated
notes)
3. Rent Expense $_____________
Interest Expense $_____________
Sum of Rent Expense
and Interest Expense $_____________
Actual Ratio:________________
Required Ratio: 2.50
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ATTACHMENT 4
Period Ending: ____________, ______
Minimum Liquid Assets
Value of cash, cash equivalents and marketable securities $_______________
Required Value: not less than the greater of (a) 90 days of Debt Service, or
(b) $25,000,000.
108